VTEX - Earnings call transcript Q3 2024

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Julia Fernandez

Hello, everyone, and welcome to the VTEX Earnings Conference Call for the quarter ended September 30, 2024. I am Julia Vater Fernandez, VP of Investor Relations for VTEX.

Our senior executives presenting today are: Geraldo Thomaz Junior, Founder and Co-CEO; and Ricardo Camatta Sodre, Chief Financial Officer.

Additionally, Mariano Gomide de Faria, Founder and Co-CEO; and Andre Spolidoro, Chief Strategy Officer, will be available during today's Q&A session. I would like to remind you that management may make forward-looking statements relating to such matters as continued growth prospects for the company, industry trends, and product and technology initiatives. These statements are based on currently available information and our current assumptions, expectations, and projections about future events.

on our the and are current to undue that in are cautioned believe place of statements. view available reliance we assumptions, projections expectations, reasonable not While forward-looking these information, you risks the statements of December U.S. forward-looking XX, uncertainties factors the other and XX-F section described the VTEX on Certain risk and VTEX and XXXX, for Form year-ended are filings within which website. Exchange Commission, are and our Relations available Securities Investor on

call, comparable the I might would those remind to non-GAAP earnings of available our A discuss in we Finally, can press conference measures. you that some on XXXX found Investor course measures this during third to GAAP like reconciliation website. be Relations quarter release our of the measures nearest

the Now, let me turn the Geraldo, is floor call Geraldo. over yours. to

Geraldo do Carmo Thomaz

thank Welcome, for XXXX Julia. Third Quarter and Conference you, our everyone, Earnings joining Call. you Thank

complete are driving and to moat. drivers growth, innovation line high-profile further We strengthening be retailers, while strides brands are also existing growth. expanded growth attracting customers top platform our composable that product towards competitive key report made continue to deepening strong relationships profitability. VTEX of and profitable and proud our and with both approach, we our capabilities Through

presenting from Investor a up the this last quarters XX% on target subscription period in is [ may of period XX% also uncertainty, of continue a this revenue the progress Significant achieving growth on FX-neutral slightly year. Day our quarter, quarter. gross we During from of be optimizing notable growth Rule handful profit XX with bases, delivering macro also a strong our reaching year. while than basis, resulting VTEX away of cost ] XX% a in XX% We last in more same

Commerce. retailers, opportunities may begin and proud streamlined for On clear, success, engine. most ahead. We're trusted customers' existing top the become customers vision Finally, robust ultimately the us to market attractive new VTEX relationships of to as influential performance, growth Connected our pushes to have some brands and serve our fully supporting fostering toward adding the capitalize our which on the backbone of macro we uncertainty strengthens further to

remained signatures robust. contract New have

we we base Europe us the throughout the The in products go-live implementing in and successful the Brazil, newer and including to accounts Austria, FQM Electrical in solid of long-term Brazil; Relogios, market and potential. On big in our XXXX, our U.S. Services the expanded offering profitable BXB and Brazil, VTEX customer progress Shop new Farmacia our give in are quarter, Rimax the one in Bischoff were sales compounded in we've go-live Universal Colombia; confidence Calidda growth with This Beko year. QX wins, Jorge ad GremioMania, and in of mature Peru; in excited Ferramentas the our Fast most and in by network the such Consumo, U.S. as highlight U.S. and Negrao, momentum beyond Shop's Fast Comfama Champion Bemol,

we stores, Switzerland, Harper's with operating across serving X expanded count U.K., added geographies, across strengthen existing new talking future of are look our the X Samsung and the hosted commerce, including excellence. deep their decision countries across the in the Haircosmetics grateful Europe. new launched serving U.S. Prevention, Keune key Uruguay, future our added in a And this France and to whom in in Brazil store entrust the Belgium, Hearst trust new Switzerland, the year, Our Netherlands. events The Hair the the with their U.K., the also and partnership as Belgium, into store value -- U.S. now stores across of to now VTEX. X Brazil we to various its now forge forward to Bazaar a U.S., of Mazda countries VTEX reflects collaboratively Barcelona. in customers, commerce. launched operating customers for several collaboratively Latin we relationship brand the shape footprint in about America. We're And X new we shaping store Colgate X the expanding and and presence of bringing products our deepening

boosting This Coppel, and recognition, which future quarter over as in HEB, region keynote Co-Founder, in many was become TikTok the Apple commerce generation LatAm our Wozniak, VTEX in Steve a potential awareness was as conversion players featured VTEX [ speaker. Like flagship Decathlon, a Connect turn a Mexico market others such with registered lead other for and driving this prominent year, Mexico, L'Oreal, ] event event in redlining us; of participants The the potential Connect digital sales high brand Amazon, our instrumental City. Mondelez, LatAm, events Grupo with and has for funnel. XX,XXX

reinforcing also complete our and composable designed with This map let's position highlight announcements. leading needs road align VTEX the quarter, some Vision key we launched prospects, customer to Edition, as commerce an platform of showcase Fall product initiative our the robustness our to the platform of and

On offering terms now clicks. the with auto-complete advertisers media data, addition, in expanded reports new facilitating Retail appear with comprehensive portfolio product Ad of easily now search visualize the Network also and a VTEX search decisions. seamless We've and experience. and ad simplified can and product engagement insights providing insights, measure data-driven suggestions performance, this process deeper to a and Media Advertisers boosting side, just formats. campaign we visibility export the with campaign few galleries, kit in customer Sponsored products

VTEX everyone external The already new a where their data in VTEX compatible VTEX deliver encourage optimize marketplace also publishers such operations, ads Vision Paulo These e than upcoming the allowing phase. Edition. warehouse, announced models models and I the to visit offer complete for catalog, powered of data we Ad capabilities commerce of targeting Shop, of product Sao easier innovations. In view XXXX, the data enhancements introduced the data Synerise now expanded to acquisition and preferred a and of and among banners promotion Sul, in just data Fall a businesses systems, the are any platform Zona with BI making such seamlessly. is others. We've Network AI-powered CRM ever releases, pipeline. we new tools the vision.vtex.com discovery with for These commerce also Additionally, to the VTEX quarter it leader website our exciting Fast Service it strategy Drogarias product post-purchase features Pacheco most. Weni, unified to needed the list leading as third updates our with at with sponsored and recommendation product as comes by The few at Solutions. Customer of shoppers

customer deliver a success Through enhances drive options more tailored platform a to needs will AI, from deliver customers center strategic customer we outdated offer connected of consumers. this the experience than engagement that VTEX's support VTEX's ability will comprehensive significantly inefficient to efficiency business business sustainable end-to-end and investment, optimizing financial small AI-driven a increased Although to and more seamless and personalized through boost benefit us today's acquisition while now intuitive customer and software. operations. journey. Weni's outcomes allow commerce capabilities measurable call AI of satisfaction

to shaping commerce to our by perfectly for empowering and deliver experience this point. retailers be personalized commerce, touch connected Finally, backbone aligns every future digital omnichannel at the the vision of with brands acquisition

XX migrated our heart XX successfully pharmacies Brazil's the to the our largest to and Vale including [ of stores, its X like scalable, the Bonus, Credit platform unify Bemol like of streamline franchise PIX. I'd Store turning one some operation and ] share retailers introduce and to innovative efficient distribution its app, customers. success solutions with Bemol, model centers, VTEX, company, Now Bemol a sales entire Bemol BXC headless Bemol to Credito and seeking and operations, financial stories.

advancements VTEX. not on experience. Colgate-Palmolive, user mobile to the session. After With XX% fully further VTEX, in XX% financial capitalizing in conversion Bemol continued the organic now only power migrating pet phased and positioned Internet reinforced revenue rose provide X%, device with processing and connectivity. expansions faster performance limited architecture with per experience, loading its global by and improve a website experienced already During to boost a all Brazil. oral the grow, scalable integrations traffic rollout, and average expansion These traffic in is by rates a XX% a omnichannel supported but increase a to superior VTEX, across care, leader Bemol's in also the skin strong

has and scalability Colgate's enhance digital from of By business across a VTEX goods the our successful and cost enable fully-unified a retail sporting efficiency in a digital journey, selected customer storefront, shopping its Fast commitment deep leveraged platform. They've support service, a strategy Decathlon architecture create Shop, leader personalizing BXB platform. Fast Sales experience powered channels, seamless and now to to Shop customers digital ecosystem lack the The BXB. in-store commerce purchase to its and app stores. operational their operations, XX strengthened demonstrating commerce the be of into its legacy conversion Professional visibility and Brazilian Skin platform and and Oral in high of This Professional with Fast now strategy This experience. of of App seamless launching thrilled and diverse models. customer-centric and with premium custom physical Europe, third-party a its Brazil its headless international VTEX's stores, including and shopping developed innovation. Decathlon, gained shift Prime. Decathlon program, unified expansion centers global by checkout, experience. PCA to enabled its across site Fast solutions, innovation strategic sales all Professional across marketplace channels happily like Colgate team, implementations due in customer countries, VTEX migrate omnichannel and significantly integrating shopping retailer markets a unified has local Sales to loyalty maintain and adaptability commitment for to XX not lowered helped offering and faster, access exclusive underscoring stores All items flexibility. distribution the integrated physical European more stocks stores. to their in delivering sales real-time seamless expanded Following single cost to accessing online enhancing continued VTEX's markets, a XX stock and in across customer U.S. inventory Oral agile flexible rollout, increasing Colgate's personalized a service global omnichannel history, interactions, allow and VTEX. total App the into a ensuring delivering both years experience to and a BXB to in rates high-quality has robust We're expanding strong leading recently BXB also ownership by XX Shop now driving Colgate U.S., Switzerland experience platform new will on

performance improvements of extensive VTEX's thrilled conversions and VTEX flexibility expanding IO the digital with integrate diversified agility them supporting multisite see capabilities, to prestige leveraged has Hearst's in the with native sales are of becoming forward information developments. Hearst, immediate architecture We retailer, largest in companies global look to to and marketplace. successfully media one and beauty developer future Sephora, site and cloud and part all

point to favorite content in Women's the become magazine websites, instantly touch Now available buying the the trusted with by experience publications opportunity. Consumer Women's across a lifestyle products sales Cosmopolitan, new purchase a from reach a expanded Health, now or enabling Health leading featured Bazaar, and Harper's and its transforming women readers Men's can that everywhere Sephora national contributing Prevention, to well-being of has seamlessly mentioned business. Readers marks Hearst's published era customers. integration for Media making Health, are publication like every

session, are Hearst rewards journey loyalty in a assortment Commerce. effort. Now with products together, reshaping diverse and its major Insider I shoppable sincere my a that customization this extend media the excited to establishing advancement Beauty Sephora the interfaces offering as VTEX product industry, It for discovery backbone to And a would We're over effortless with for we're X,XXX marks for seamless a and just collective this the VTEX-ers. accompany Connected available, gratitude delivering the click, experience through program. to future, X,XXX takes popular like with purchase. Closing

have Ricardo. We now will we to the ambitious goals, hand call will over seize every opportunity. I and united,

Ricardo Sodre

Geraldo. I'm pleased everyone. financial XXXX results. VTEX's you, share Thank to QX Hi,

a in remaining with the marking U.S. billion, same-store quarter, of dollars growth GMV and sales our This FX-neutral $X.X range. XX% in XX% year-over-year reached teens in

and many of cases, services our an million, on XX% dollars onboard Our customers representing good a XX% FX-neutral, FX-neutral and reduction add-on ecosystem signatures, in revenue $X.X regions. direct performance which, on that in from loss revenue reached in initial evolution of our XX% $XX.X XX% customers and to million, less increase rely given by million, were stood momentum in year-over-year revenue dollars representing these contract increase totaled VTEX, at from the new basis. of in has solid Europe a an $XX.X in services. Services primarily new to Subscription a design by the customers of U.S. sold driven allowed U.S. in U.S. at larger existing our and cross-selling

to going Now our expenses. costs and

gross driven in by quarter XX% same basis margin last subscription QX up the XX% in approximately was mainly in basis increasing XXX in efficiencies, reaching non-GAAP year. from year. non-GAAP Our the gross resulting from margin XX% The points, our improvement quarter XX%, points hosting XXXX reached same last XXX year-over-year cost

work While Investor fully may marginal. improvements margin model remains gross to more our target future subscription reach Day be goal,

Moving out to P&L.

a non-GAAP point a marking margin, XX% improvement positive income This quarter, XX operating we percentage achieved year-over-year.

million, from year. expenses $XX.X quarter up is slightly million Our last operating non-GAAP total same were the $XX.X in

may emerge. with Combining management reaching million, same QX resulted operating XXXX well-invested us efficient in as Sales a this income earlier, X% margin most a allow and last quarter up Marketing our is expansion to fully results our representing of and $X.X capitalize R&D margin which flow by the capital and from on working mentioned invest market to year. driven cash As revenue supported free structure, organizational opportunities disciplined will by in margin and they in in growth, XX%

some We remain short-term the cash for positioned our cash continue to managed strong free delivering term. Notably, conversion, opportunities will our $XXX even and long strong capital we to million, we increase given suitable to on position opportunities. allocating most are the after pursuing well flow, investment and cash high-return inorganic in focused

and operational encouraged remain Looking leverage. momentum ahead, our sales by we

begin we on may reaffirm fully focusing We growth have profitable on revenue our market commitment and by capitalize uncertainty to to VTEX to opportunities. macro As clear, delivering long-term streamlined maximizing value. current continuously

evaluate Rule levels conversion with to return with Star. XX our demand, continue our the alignment North as of sales investment and on will in We rates investment

XX% ease revenue in XXXX, fourth XX% of $XX.X a in we From range. million given QX, a implying million guidance. up targeting revenue of to to tougher on will FX-neutral for the year-over-year the QX are comps Moving perspective, that growth $XX.X to quarter

executing For range XX.X%, profitable continue million million of our year-over-year to we growth growth the revenue full QX's implying based year to average XXXX, strategy, a we of on $XXX targeting FX FX-neutral as $XXX XX.X% are rate.

progress non-GAAP operating low margin profitable towards significant We by free growth. and to are cash our raising income growth holds conclusion, teens. In flow VTEX target potential, supported our

customers in sales and existing brand We efficiency, strong large momentum opportunities. customers, to attractive optimistic We Brazil's new seize geographical in U.S. operational us vast and are seeing potential, and about the remain future from with positioning Europe. markets expansion opportunities and the improved the America Latin and

questions making We open that, global ambition Thank will backbone up disciplined the for continue our pursuing to become towards Connected let's for growth, now. it you. Commerce. With firm steps

Operator

comes first from from the line Marcelo [Operator question of JPMorgan. Instructions] Santos Your

Marcelo Santos

tougher that color if is subscription you provide had on You The Argentina. some first region? of the additional some How question revenues. is could growth situation per going in

about level but with combo? question second are So you And that? do this see other a I margin you you there, as the focus happy would if you sustainable? talk margin is, also just wanted the -- growth could bit to consider How the regions? And

Ricardo Sodre

here. Ricardo Thanks Marcelo, for question. your

call. And a last It's we for your growth QX, from in revenue add it X-year XX.X% CAGR Weni solely growth mentioned on a we FX-neutral. midpoint of August until of that's revenue quarter. organic as did an only was to in important guidance of year, given we last -- consumption amount our XX% question, XX% positively XX% for to revenue in CAGR revenue. would to acceleration X-year also the that achieved and That's of year's in the impacted a revenue as of contributed total acquisition XX% this the And note similar the in last Argentina close subscription November, the it earnings last by revenue. And provided also that growth, FX-neutral very I So were month range in an to negligible of to the and total that from quarter. total

question, impacts points pre-devaluation outlook, growth Argentina in revenue, affected December the a year's challenging and last last FX-neutral on subscription in these happened mentioned growth that year-over-year more your by bottom consumption behavior underlying comps right, our in revenue of we where we started headwind ecosystem these remained on of consumption even at company delivered continuing I performance design the partners, decision baseline. And of our ex-Argentina as our XX% the instances, positively add a we devaluation a against adjusting. would our in to the services reduction last when noted recurring Argentina, quarter. So a in services percentage we Argentina of offering. and many as more also services reduce sold quarter, And this QX gross this impacts And This our experienced the and expect to FX negatively year on couple strong underscores margin headwind were robust line as the rely by performance as loss. basis. And VTEX

last increase by services the confident And as and couple doing strategic lower U.S. now larger were services the year minimizing a and did was in offering, design we margins. implementations, we consequence to our first the the decision to already implementations offering ecosystem Europe. impact the on So our are of the matures bigger

momentum profitable ability to performance the ahead, are factors comps, lap strong instill the as fundamental our stores looking tough in and of deliver confidence we robust growth. that So existing solid sales our

answers repeat the believe question, question? So Marcelo, I please the you first second that could

Marcelo Santos

with of The second margins combo? the the and happy question sustainability you're if about margin is gross

Ricardo Sodre

to free this others feel and one I'm start perfect. on to Yes, complement. happy

sustainable. the margin target gross of a model we the So have Yes, margin. subscription is for XX%

that. toward progress making are We

quarter. this in XX.X% at are We

From gross is are the still at and target XX%. X.X get percentage overall the margin, there. we have XX%-and-change, we So to points

we quarter, is this look XX% operating then are margin, our the reached moving we we while when towards at XX%. So that level. And goal

So margins drive time. come these over and as will we leverage incremental scale revenue

And prioritize committed Marketing are a fit. to see we aligned hires So and this growth. to as continue are profitable high-growth company, we in growth and revenue we well R&D additional and Sales we with

the all continues, and margins this improve well we as certainly you momentum moment on a on progress. structure continue So forward. to we'll the invested update feel we will at like going we But have

Operator

Morgan of next question from from line comes Medina Cesar Your the Stanley.

Cesar Medina

asking quick And quarter you A this as on seems you what contract reported signature it the Can that as provide more during a context I'm because strong accelerated. question. new you highlighted if bookings momentum?

have on? great What would this acceleration? of So more is terms type some color it regions to importantly, be in coming of the And what's getting from? mix this where you're going of Where sectors?

Mariano Gomide de Faria

you I if take this join So can adding Andre, And anything. please one.

So Mariano the question, thanks for here.

solution As our TCO shows mentioned our to we market very remarks, commerce to prepared steady flexible by testing our in compared fueled very pretty pipeline multiple and deliver and our platform, strategies. time composable for improvement, low complete go-to-market global unique fast competitors,

Our that studies from Forrester might technical customer case see. Gartner, you from and momentum from sales contribute successfully model, to all recognition IDC, this -- and

challenging growth. today's profitable sustainable the pop rate, partner growth retail and interest as with for in landscape the high VTEX So

couple example on of a goes a clients know, for that only -- platforms sense, we are in growth now to be clients open Brazil, legacy And analysis, and the are under the implementation. there VTEX go-lives away only to big VTEX. homegrown of had migrate So of as live. BXC more from narrow an we migrating the comment more quarter, see based Shop evidence Fast strong or and are couple that like legacy players homegrown. In the custom But moving movement an is that we this Bemol, retailers as just you this potential to on these

a Europe. growing and in modernize On States including their which opportunity customers, landscape the approach, also give and our redefining America. portfolio and and is front-end omnichannel categories, in grows OBI to Hearst us huge Latin as keep in in the Brazil commerce side, the Europe, marketplace across U.S. In channels expanding company the BXB United the

and we in while BXB countries. Colgate Europe. this BXB have across Mart now Keune quarter, both go-lives both in the in U.S. also European Europe. celebrate is X can in H models Keune, and Colgate-Palmolive U.S., U.S., and We operates the BXC Auchan from And live in

So further with VTEX. expanding footprint retail their

So our have our strengthened these milestones, presence and coupled pipeline. with brand significantly industry recognition

capture building confident of forward, success in We [ to our ] on reputation ahead are us. path customer the market histories and that's opportunity execution,

Ricardo Sodre

perspective, with And now. by revenue strong consistent signature said just deferred what in the without any deferred the important momentum it's there in by complement Mariano to contract some adjustment, the bit adjusting pretty financial but having was is more still the Cesar, prepared in improvement. increase balance revenue remarks just modest is in further note from also than our was the mentioned revenue and a to now that, a that sheet a duration solid in increase Therefore, duration, average deferred And increase duration. presented

Operator

from comes line Olmos question next of Leonardo UBS. from Your the

Leonardo Olmos

about Can question types one talk you What integrators? of are terms it or relevance if relationship Just you more thinking in a for system you has in talk Can And with competitors side. been XXXX? one bit growing system evolving? of distribution my integrators? from strategy little about have that you How the them? are your current about

Mariano Gomide de Faria

Yes.

matures. ecosystem VTEX So

We maturing ecosystem as of in a all you our are sign our That's that numbers SIs it's VTEX, the not service revenue and are the regions. increasing seeing, on revenue. see can of as

So VTEX has direct VTEX to the -- need has direct needs to service provide provide declined. service

notice in for our leverage reduced contribution on service target we be a world. to new can that can integrators higher bring and all the implementation resulting stronger executing roles QX margins. And projects in the and our believe geos as or We gradually platform Since company. over SI, is a it system from that can us deploy experience pretty aforementioned. our our you the strength and revenue complete lower expect you So implementations, direct the now in projects ] [ in

only. ecosystem this Our and XX% Notably, global a a core model revenue to support are contribute product-driven while our a X% of of on our us profitable system focus integrator subscription-based, and revenue, growth. the business subscription enables global mature service remains have Leveraging key driver reach, of profitability. of

it So and the gross in subscription FX-neutral. with of the answer quarter. XX% QX, indicator revenue rose business profit, Did is Paired I your we true this XX% in grew health, FX-neutral increasing question? our

Leonardo Olmos

great yes, and news. Yes,

The any advancing question, competitor could in double-click is on Just SIs form? my a you asked, competitors if that small with that part maybe part I any or there of is it. other

Mariano Gomide de Faria

So competition, remained environment the competitive has stable.

While we always peers potentially or enterprise receive or long expanding region competitors we SMB any another about increased in from questions region, or haven't tail observed segments displaying one some aggressiveness significant shifts.

Our remains overall the environment, consistent we share the mid-single competitive didn't in market continue landscape. remain highly gain kind of shift Nevertheless, annual major are in the churn to globally. and see stack and revenue ensuring we prop But we competitive. competitive just value digits summarizing, any range, technology monitoring to our

Operator

no questions. And there are [Operator further Instructions]

So turn the question-and-answer Thomaz, VTEX Founder this now over our for will to conclude call and does Geraldo I session. remarks. closing of Co-CEO

Geraldo do Carmo Thomaz

our Rule objective I the XX. growth and to profitable to to our conclusion, returning like of commitment would delivering of reaffirm In

our at progress quarter's years dedication and team our say is VTEX. work no them, goals, With VTEX grows the exception. we we Once set to over of stronger each this of that This can scale achieve reflects relentlessly history, XX matter year of our year, ambitions. confidently no the we

together, as channels redefine honored are and physical strengthening we and and the the between digital brands bridging to commerce retailers potential an We ahead. gap of support leading industry with some immense world's

adaptable innovation, to an positioned curve, continued the global well momentum as role of and the sales platform resilient ahead e-commerce its change. With solidify VTEX is in customers sustained face our keep on basis. for to constant growth of strong and and a is leader purpose Our

it as customers, as updated you, fully -- to We have our our being stakeholders are commerce. Thank keeping we part journey. a earnings we forward call. long for journey to of here value backbone ahead seize remain connected to and deliver next We at our and we look us, invigorating continue to committed the to becoming of as you investors this journey everyone, for and

You wonderful Have may disconnect a week. now.

Operator

participation. today's call. you your concludes for Thank conference This

may You disconnect. now

VTEX (VTEX) 5 Nov 242024 Q3 Earnings call transcript