Zenvia Inc.

Good morning and thank you for standing by. Welcome to Zangier's third quarter 2021 earnings conference call. Today's speakers are Mr. Kassir Babsi, Zangier's founder and CEO, and Shai Shaw, investor relations officer. Please be advised that today's conference has been recorded and the replay will be available at the company's IR website, where you can also access today's presentation. At this time, All participants are in listen-only mode. After the report remarks, there will be a question and answer session. For the Q&A session, we ask you to write down your question via the Q&A icon at the bottom of the screen. Your name will then be announced and you will be able to ask your question live. At this point, a request to activate your microphone will appear on your screen. If you do not want to open your microphone live, please write down no microphone at the end of your question. In this case, our operator will read your question aloud. Now, I would like to welcome one of your speakers for today, Mr. Cassio Babsin, founder and CEO. Sir, the floor is yours.

Welcome to Senvia's Q3 earnings call. I'm Cassio Babsin, founder and CEO of Senvia. Today, we're going to present the key highlights of the quarter and provide you with an update of our business. I'd like to start by highlighting that we delivered on what we promised investors during our IPO process in late July, solid revenue growth and strong gross margin expansion year over year. Shai will review with you the numbers in more detail, but I'd like to highlight a very healthy revenue growth above 40%, with more than 60% increase in adjusted gross profit and a 4% point expansion in gross margin. We are confident in our ability to continue delivering a strong set of results in the next couple of quarters. I'll tell you how in the next slides. Here at Senvio, we are building a long-term vision from the ground up. Let me explain a little bit more how we evolved and where we are headed. In our early days, 18 years ago, we started by enabling communications for our businesses with their end customers. We would enable our clients to send one-way messages with product offerings and services through our platform. After some time, we started enabling conversations for our customers, so the one-way message became two-way conversations. A good example of this is when a customer from our client can chat with a person or chatbot for support. Today, we're moving to our next digital phase of enabling journeys that happen when the end customers of our clients are engaged in a variety of ways across their lifecycle through multiple communication channels. But we are already foreseeing and preparing for our next phase, which will be focused on enabling experiences, allowing customers to experience a streamlined relationship with the brand, no matter the channel or moment in time. On their minds, everything will be perceived as a continuous conversation, resulting in more valuable customer interactions and brand loyalty. Let's move to the next slide to better understand it. So how do we do this at Sanfia? Our unified end-to-end platform currently provides our customers with a combination of channels that enable them to talk and engage directly with customers in multiple ways, tools that enable these channels to be automated and integrated into the company's processes and systems, and software service solutions that are suited for each moment during the customer journey. This is how we got here, but as I said, we are already evolving, and this evolution is data-driven. The ability to collect data and build better profiles of the end customer is becoming increasingly relevant to companies working in the customer experience as a service segment. In this sense, for us, the main change is that data will now be at the core of our platform. By reusing data analytics, we can provide our clients with actionable insights, enable them to generate automated customized actions in different touchpoints of the customer journey, creating more and more personalized and seamless experiences to end customers. And here is where our M&A strategy is key, as you will see in the next slide. We have been pursuing acquisitions to grow throughout our lifetime. Until our IPO, we had completed eight acquisitions. In the beginning of November, we announced our first transaction after the IPO. We acquired Sense Data, a very strategic movement for us as it represents the first step into putting data in the core of our solutions. SenseData was founded only six years ago, conquered 140 clients across 13 different industry verticals, mainly in finance, retail, health, and software. Its annual recurring revenues grew by 75% in the last 12 months to approximately R$ 11 million, with an adjusted gross margin of 60% on a standalone basis. We estimate acquisition to be done at a multiple of 2.2 times EV over sales 2023, at the end of the earn-out period. SenseData solutions based on these three main concepts and technology. SenseConnect, this proprietary framework simplifies integration with several software platforms to connect customer data in a fast and secure way. SenseScore, the main feature behind SenseData's success, is its proprietary platform and framework to analyze data in order to generate valuable analysis about each customer's journey. And actionable insights, sense data technology that enables companies to create automated communication processes based on sense score that lead to better customer experience and engagement. Still on the M&A topic, I'd like to provide you with a quick update on D1 integration. We've been moving fast into integrating D1 with our platform, with their customer base already benefiting from the scale and robustness of our communication channels. At a commercial front, we've been working together to lead the CX transformation of our enterprise customers, joining forces and expertise to move these customers-based communication processes into a journey-wide implementation that is integrated and leveraged by data and AI. Finally, we are seeing a lot of opportunities to continue consolidating the market. Our strategy will continue the same, to acquire companies that can complement our technological ecosystem and our pool of talent, and therefore improve our value offering. I'll now pass on to Shai, who will discuss our key financial metrics in more detail.

Thank you, Cassio. This is my first earnings call since I joined the company two months ago. I'm excited with the challenge of helping investors better understand our company. I believe we're flying below radar screen, and this is the main reason why our shares are undervalued. We are working to change this, and as Cassio mentioned, we are confident in our ability to continue delivering improved results and generating positive news flow. Before I move into the numbers, I would like to emphasize that as of Q3, we are already consolidating D1 in our results. For this quarter, we have only two months of D1, so Q4 will actually be the first one with full impact of D1 acquisition. Now moving to the results. Our client base grew by almost 25%, ending the quarter with 11.3 thousand active clients, already consolidating both Sirena and D1 in our base. Our strategy allows us to retain existing clients and to continue growing their usage of the platform through upselling and cross-selling. This directly impacts our net revenue expansion rate that reached 122% in the quarter, a 10 percentage point increase when compared to the same period of 2020. And also 5 percentage points from June 2021 when it was 117%. These numbers do not include D1, as in this metric we only consider clients that have been in the base for 12 months. If we were to include D1 clients, the net revenue expansion rate would have been 128% in this quarter. All this led consolidated revenues to expand 43.7% to R$163.7 million, accumulating R$422.1 million in the nine months period. Revenues beyond SMS termination already accounted for 32% of total revenues this quarter, a sequential improvement when compared to the 22% in Q2, and double from the 16% reported in Q1, even with higher revenues. This is in line with our objective and promise of improving revenue mix to generate higher profitability and attest to the solid execution of our team. Our adjusted gross profit increased 61.5% year over year to R$57.8 million, reflecting the solid revenue growth. In addition, as a result of the evolution of our platform, both organic and inorganic, we estimate that the portion of our business that goes beyond SMS termination represented 60% of our adjusted gross profit in Q3. This improved mix led adjusted gross margin to improve 3.9 percentage points to 35.3%, a record high since Q1 2019, which attests for the improvement we have delivered quarter after quarter for a while now. Xavier have been a profitable company, since the beginning of its operations during late 2018 we realized our unit economics work and then we had a large and untapped market opportunity ahead of us. As a result, during 2019 we decided to reinvest in our business to accelerate growth expand our platform and capture share in this highly fragmented market. By design and with the full support of our board and shareholders, we have reduced our EBITDA margins in order to invest heavily in sales and marketing and R&D to accelerate our go-to-market strategy. With that said, our normalized EBITDA in the first nine months of 2021, which excludes expenses related to earnouts, was positive R$ 4.1 million. Let's move to our mid-term guidance. Given the solid set of results we have delivered in Q321, our pipeline of acquisitions and our confidence in continued delivering strong growth with high capital efficiency, we will reiterate our objectives for the next two to three years. Revenue growth ranging between 30% and 35%, gross margin reaching 45% to 50%, and finally EBITDA margin scaling back to historical levels ranging from 15% to 20%. This concludes our prepared remarks. We can now move to the Q&A session.