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spk05: Good afternoon, and thank you for standing by. Welcome to Zambia's Q1 2022 earnings conference call. Today's speakers are Mr. Cassio Bobsing, Zambia's founder and CEO, and Shai Cho, investor relations officer. Please be advised that today's conference is being 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 prepared 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 your 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 in 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 Bobson, founder and CEO. Sir, the floor is yours.
spk03: Hello everyone and welcome to Zenvia's Q1 2022 earnings call. I'm Cassio Babsin, founder and CEO. Today we'll present the key highlights of our first quarter results, which demonstrate that we're off to a strong start of the year. Let's start with slide 4. Q1 was again a very strong quarter for Zenvue. We continued to deliver solid revenue growth and robust cross-margin expansion on a year-over-year basis. Revenue went up 61% for Q1 2022 compared to Q1 2021, including the effects of acquisitions of D1 and SenseData. Organically, our growth reached 36% for the quarter. Both numbers are ahead of our 2022 guidance. It just had gross profit doubled in Q1, while gross margin expanded 6.5 percentage points to almost 34%. Let's now take a closer look at the development of our acquisitions and respective integration processes. Following our decision to speed up the D1 integration process in mid-February, teams are now fully integrated. Also, we have initiated extracting synergies on the cold side, including suppliers and systems, and began cross-selling. We can now offer highly customized journey orchestrations and a much more comprehensive suite of products and services for the brands that want to raise the bar in their customer journeys. Since data back office activities and structures are also fully integrated, with team integrations still in process, we expect to start integrating the platform and cross-selling in Q3. As to Movidask, we announced the closing of the transaction last Tuesday. We expect to start integration in Q3. Let's talk in more detail about Movidask in the next slide. MoviDesk is a perfect and absolute complementary addition to our ecosystem. Their help desk solution is focused and designed for solving the pains of Brazilian companies. It's a user-friendly, easy-to-use platform, in Portuguese, charged in reais, and most importantly, allows our clients to pay for the features they really need. A huge competitive advantage in terms of cost-benefit versus the global shoots. And this is not just our opinion. Media review sites are also attached to the platform's excellence. In less than six years, MovieDesk grew to attract 2,500 customers, who are currently providing an ARR of 46 million reais. Just to compare, the company ended 21 with revenues of 33 million reais, practically double that of 2020. On top of this accelerated growth, given its SaaS model, it adds a recurring revenue profile with a high gross margin of around 70%, which will positively impact our own margins moving forward. The acquisition of Movidask topped off our M&A strategy to position Zenviap as a SaaS company, aiming to provide brands with a unique platform for unified end-to-end customer experience communications in Latin America. We are very proud to have acquired all the companies that were in our plan A. In other words, we acquired the exact companies with the exact capabilities we have in our strategic plan. And the benefits are already visible in our revenue growth and growth margin expansion, even though we have only just begun to strike surges without even starting to consolidate Movidask. We are also very proud of our organic growth and how we were able to use the proceeds from the IPO to substantially increase our investments in R&D. In 2021, R&D spending reached 12% of our revenues, up from 2% in 2020. We expect this level to continue in the next couple of years, allowing us to launch new products that will significantly leverage our growth and marketing position. And the launch of Xavier Campaign in April attests to the efficiency of our strategy. Xavier Campaign is an intuitive, effortless, and prompt campaign creator that was launched to meet a highly demanded need, a tool through which our clients can manage marketing campaigns across various channels. With our solution, companies can now interact with their current and potential customers using a combination of direct and indirect channels, allowing users to react to their actions in the channel they are most active in, contributing to better experiences and ultimately better results. The tool has a time engagement ruler that allows companies to initiate the first contact through WhatsApp and present another message at the scheduled period to be sent through a different available channel. It's also possible to program the journey so that messages will always arrive at the most suitable moments. This is what we call orchestration. The solution also created an environment for the centralized management of the customer base, regardless of the channel in which the conversation happened. But one of its most essential features is applying data analytics to convert the reactions from consumers into effective success metrics. which can be used to improve the strategic decision-making process and achieve higher customer loyalty and profitability. As I like to say, we analyze every step of the customer journeys, transform them into superior experiences to benefit them, the brands, and ultimately us. As you can see, the proceeds from our IPO were quickly allocated to M&A and R&D, which put us exactly where we planned to be at this moment, contributing to our accelerated transformation into a SaaS company. I will now pass to Shai, who will discuss our key financial metrics in more detail, and I will be available for the Q&A.
spk02: Thanks, Cassio. And hello, everyone. Let's take a deeper dive into our results. Our revenue in the quarter was greatly boosted by the combination of organic growth, solid client retention and acquisitions. Our client base went up 21.7% to 12.4 thousand clients, while our net revenue expansion rate ended the quarter at 122%, up by 13 percentage points year over year and leading to an organic growth of 36%, as you can see in the chart on the right. The combination of this organic growth with the 30.7 million reais from D1 and Sense data brought our total revenues up 61%. And as Cassio mentioned, both our organic and total revenue grew above our provided guidance for 2022. Another important highlight is the quality of our revenues. Out of the total, revenues from beyond SMS termination were 41% for the quarter, In line with what we guided in our last earnings call for Q421. With the consolidation of MovieDesk as of May, we expect this mix to be closer to 45%. And the best indicator that our revenue mix is moving in the right direction is the improved profitability, as you can see in the next slide. As we promised during our IPO, we continue to expand our profitability. Adjusted gross profit doubled when we compared Q122 to Q121, with the adjusted gross margin expanding 6.5 percentage points to almost 34%. As you can see in the chart to the right, almost 80% of our adjusted gross profit in the quarter already comes from beyond a semester termination, which is a direct result of our diversification strategy and recent acquisitions to become a SaaS company. In the first quarter alone, we have already achieved one-third of our adjusted gross profit earned in the entire 21 years in absolute terms. And this without even starting to consolidate movie desk, cross-selling sense data, or recording games from new products such as Zenvia Campaign. In terms of EBITDA, our non-gap adjusted number was negative R$ 9.5 million in Q1 and includes earn-out expenses related to the acquisitions of Total Voice and Sirena. When we exclude these non-cash expenses, adjusted EBITDA in Q1 2022 was negative 7.6 million reais. As Cassio highlighted, we are off to a really strong start of the year, which makes us confident to reiterate our 2022 guidance and excited about the opportunities ahead. With this, we conclude our prepared remarks and we can now take your questions.
spk05: We will now begin the question and answer session. Once again, for this Q&A session, we ask you to write down your question via the Q&A icon at the bottom of your 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 prefer not to open your microphone live, please write down no microphone at the end of your question, and our operator will read your question aloud. Okay then, our first question comes from Christian Faria, Southside Analyst from Itaú BBA. We are now opening the audio so that you can ask your question live. Please go ahead.
spk01: Hi, good afternoon, Bob, Cassio, and Shai. So I think my question here is regarding the gross profit margin. So we saw that the mix of products here stayed almost flat, quarter over quarter, when we compare to the last quarter of the year. when we know that we had a higher seasonality of the SMS business. I think that the main point here is to address is that if this improvement in the gross margin that we saw here recovering the 4.5% from the last quarter, it's related to the SMS business and what has driven this improvement here. Thanks.
spk02: Thanks for the question, Christian. I'll let Cassio run through this before Cassio talks about it. The main reason was that we negotiated some inflation pass-through with some large clients and that's the main reason. It happened in Q1 and it's going to happen again in Q2 with another client. This is important because We've been getting a lot of questions and concerns from investors about the ability to pass on prices in this commoditized business and I guess the results speaks for themselves. Cassio, do you want to add anything on that?
spk03: There's a bit of seasonality on the Assamas side considering the quarter-over-quarter analysis. That's why we prefer to look at the year-over-year. So we can see the big trends here of beyond the Samas revenues growing at a faster pace and adding a better gross margin and then moving our whole company gross margin up through that trajectory.
spk01: Okay, thanks.
spk05: Christian, thanks for your question. And now we move on. The next question comes from Andres Salles, Southside Analyst from UBS. We are now opening the audio so that you can ask your question live. Please go ahead.
spk04: Hi, Cassian, Shai. Thanks for the Thanks for the call here and the opportunity to make this question. I have a couple of questions to begin. On the first one, could you give a little more color on the organic growth and what was the main driver on this front if it was price increase or volume? And the second one is on MoviDesk integration. Is there any specific aspect of the process that you believe is more challenging and how comfortable are you guys in terms of maintenance of growth pace and gross margin seen in 2021 on MoviDesk in the upcoming quarters. Thank you.
spk02: Thanks, André. On the MoviDesk, let's start with that. Castro, do you want to talk about MoviDesk and then we come back to... Yes, please.
spk03: First on the MoviDesk deal. It was on our... plan for the IPO to acquire companies on the markets that we wanted to enter and to participate and Movedusk was the last one in our IPO plan. So we finished our first phase of the M&A strategy. for the user proceed to the IPO. And Novodask specifically adds the possibility for companies to manage customer support with a whole set of rules and process structuring based on their solution. and that's for us a very important part of the customer journey because there are a lot of opportunities to help companies to improve their experiences by adding better customer support and what makes sense by combining both of us with Zanviem is that we have lots of demand for that kind of solution so there's a Lots of them are currently coming from Xavier customers. So we're already having customers starting to use Movidask over the demand that we come from Xavier and over time integrating Movidask into our platform. will usually benefit from all of the core of the platform, which means having other solutions attached to the core of the platform so companies can benefit from the whole journey being managed by our platform. And also on the side of communication channels, automation with chatbots, data integration, there's a lot of things that we plan to bring to Movedesk customers that will add lots of value for these customers. And not even mentioning the cross-sell opportunity that's already happening, but as we integrate both solutions, we expect to have lots of customers coming from one of our other solutions to add Movidask to their suite of solutions being used from Zenvia. So we're very excited about that. We are looking at the first days of integration. Lots of things to do, but at the same time, lots of opportunities to unlock in terms of value for customers coming from Zenvia and also from Movidask.
spk02: And on your first question, Andre, on the growth, it's been obviously a combination of client base and net revenue expansion. The net revenue expansion has higher is more relevant, right? We're talking about 122% net revenue expansion over a client base of almost 12,000 clients, right? So the net revenue extension plays a more relevant role. But it's been a combination of that and Obviously, some inflation passed through in the SMS business, as I mentioned, but the majority is volume-based and more sales. And we expect, as Cassio mentioned, with the integration of not only Movedesk, but also faster integration from a product perspective of SenseData and ND1, that going forward, the cross-sell and up-sell will be important to continue with a healthy net revenue expansion.
spk04: Got it. Thank you.
spk02: I have one question here for you, Cassio, on the web. You mentioned in your prepared remarks about the first phase of M&A. Can you elaborate your plans going forward, balance between M&A and R&D, how you're seeing things?
spk03: Yeah, looking from this combination of growth coming from M&A or indeed, historically, where they have been structuring lots of these innovation through M&A, that's why Movedesk was our 10th acquisition. And since the IPO, we've been adding lots of capabilities of R&D. Just to add a better idea, before, like in 2019, we had almost 2% of our revenues being invested in R&D. Nowadays, we have around 12. And that capacity of having more investments in R&D is what is resulting in the whole evolution of our platform. And the launch of Semicampaign is one of these examples that shows that we can combine with R&D, bringing a more complete suite of solutions to our customers. In looking from the strategic perspective and what we've been doing in terms of evolving that portfolio, Our plan for the IPO was to complete our first phase of our set of solutions that we understand were what we needed to have in terms of portfolio to consolidate our position as a CX platform. And that's exactly what we did. We acquired just before the IPO, Sirena. And then during the IPO, we acquired D1 and SmartCube. And afterwards, SenseData and more recently, Movidask. And we more of a couple of weeks ago launched the Zainvi campaign. So with these set of solutions, we understand we have our plan fulfilled in terms of portfolio. Of course, we intend to invest more to evolve the solutions so we can capture even more market demand. And looking at the future, we will intend to keep that strategy of investing more R&D because we have lots of opportunities on the platform side and evolving the platform and its core capabilities and also launching some more specific solutions for specific niche markets. And that's why we expect to combine both the R&D investments at this phase of 12% in terms of of revenues and also keep our M&A strategy active so we can move to our second phase of acquisitions that will open our thesis to more possibilities in terms of market consolidation in terms of international expansion and also to bring more value as a mission to specific niche markets. Although we're very happy with what we currently did and we are forced to having the user proceed to the IPO directed to consolidate that strategy in its first phase.
spk02: Another one from the web here. Cassio, can you elaborate on more on the inflation pass-through? How has been the process on the SMS businesses been different for large clients and small clients? Can you help us understanding how that goes?
spk03: Yeah, in Brazil, we're used to inflation. So that's not something that's new to us. It's part of our economic environment. What we have been structuring over these last years and we were able to fulfill that over the last couple of quarters is to attach a whole set of providers and customers so we can have a more predictable margin. So whenever we have any sort of impact on inflation, at the same time, we can pass through these to our customers and a contract-based. So we avoid any kind of movement and margins that may cause They would be great, but that kind of inflation peak. So now we have almost all of our revenues at some way tied to any kind of increase in terms of cost structure.
spk02: Another one from the web here. Can you discuss movie desk impact on your number, especially EBITDA going forward? And can you share any targets for December 23 that are linked to earnouts? So let me start with this. As of now, we are not... sharing any EBITDA specific for MovieDesk. We've been only discussing on a gross margin level and it's been around 70%. We believe it can go up to around 75% at some point next year. The structure that we are paying for all M&As, not only for MovieDesk, is based on specific targets. for the end of the earn-out period. And here, specifically, we're paying between six and eight times gross profit that will depend on the results. Roger, can you repo for questions?
spk05: Okay, I'm going to check here. And again, If you have a question, please use the Q&A icon at the bottom of your screen to write it down and we will open your microphone. If you prefer not open your microphone, please write down no microphone at the end of your question. And then our operator will read your question aloud. Okay, then we have another question from André Salles, Cell Site Analyst from UBS. We are now opening the audio so that you can ask your question live. Please go ahead.
spk04: Thanks, guys, for the follow-up here. On the Zenvia campaign project, could you share with us a little more details on the strategy to escalate and monetize the new service? And if you can just share with us also what's the size that you expect for this solution to reach and in what timeline?
spk03: Yeah, I'll go direct for this on Andrea, thanks for the question. uh looking at it's a recent product launch so we've been trading a lot of with customers about how we can scale we already have more than 100 customers that uh hired this product so it's been doing pretty well in terms of acceptance and expect to grow uh evolve into a very important solution uh that as part of our portfolio and at the beginning of this uh offering of this product is uh first as uh an upsell for customers that want to use some communication channel more actively. So customers that come with that kind of demand, we upsell them to manage the campaign with us. So it's like a new customer, but bringing the value of the campaign management along with the demand they have for some sort of marketing campaign. And that's, of course, bringing lots of traction and helping us to evolve the product pretty fast. And we are looking also over time to combine this product with our other products. As we connect the different dots along the customer journey, we see a very important interest from customers today. to use a campaign solution along with another solution that we have. So they can have, for instance, a campaign being managed by a civic campaign, and then when the customer is going to engage into a sales process, then they use Sirena as a solution. The same goes for SenseData or they have customers that are combining a Zendaya campaign with SenseData so it can bring data from your own systems and your own databases and use that kind of data to better contextualize campaigns for your customers. so this combination of our different solutions is something that we expect to really leverage so one solution can leverage the other and that's something we've been working on and having all the feedback and evolving with customers and starting to have that kind of combination of solutions That is, of course, the core main reason why we've been evolving that strategy and we're already having traction on that. So that's why we have a very good expectation for the future, not only on this solution, but also by the combination of these and other solutions that will be not only launching, but acquiring and now combining them into the platform.
spk04: Okay, Cassio, thank you.
spk02: Another one from the web here, can you help us better understanding your OPEX given some swings in recent quarters, so GNA up, R&D down, and how the R&D of 13 million in Q1 compares to the 12% full year you shared earlier in your commentary. I'll start here and then I'll ask Caio to help us here. The 13 million R&D you were talking about is OPEX only. When we add the capitalized R&D in Q1, it was around 10 percent of revenue, so closer to the 12 percent. But looking on a quarterly basis can get volatile as you spend throughout time. So you should look into a full year basis and we expect R&D as percentage of revenues OPEX plus CAPEX to remain in this 12% level. On the other OPEX lines sales and marketing you should expect to be between 12 and 15 percent of sales it can range it depends on our ability if we believe there is a room to accelerate grow or if things are difficult from a economic environment and we should decelerate so it should range between 12 and 15 percent of revenues. I don't know, Caio, if you want to add anything on GNA. We had a one-off expense, although we don't consider it specifically one-off. because it's business as usual. But we had, if you look into our results, you'll see in other expenses approximately 6 million reais. There is one SMS contract that was terminated with unused SMS volumes that we booked as expenses. We expect to more than offset this with new contracts going forward until year-end. And that's it on DNA. Caio, can you help us on just a DNA as percentage of where it should be?
spk00: Yeah, yeah. And also, Shai, it's important to highlight that we have the earnouts considered as expense for sirena in DNA that we won't have in the near future because the urinary period is close to the end. So that will... get as an upside on DNA, saving on DNA that is not specific expenses, it's considered as expenses, a matter of auditing and everything, but that is considered in the Q1, but this year we don't have this expense anymore. So that's one important point that we have impacting the DNA.
spk02: Roger, can you check any more questions live? We don't have anything additional on the web as of now.
spk05: I'm going to check in just one moment. And this concludes our question and answer session. I would like to turn the conference back to Mr. Cassio Bobson for his closing remarks.
spk03: Well, thank you very much for the time and the opportunity to talk a bit about what we've been doing. As I mentioned before, we're very excited looking at the future and what we've been doing. We've been delivering the plan that we promised on the PO and we've been executing it and that last acquisition and the last product launch really exemplifies that. We're now ready for our next phase of growth, integrating all these companies and looking at all the synergies that we are starting to extract from these acquisitions. gives us a very good perspective on the future and the capacity to not only deliver our guidance, but also to evolve substantially in our strategy for the future ahead. So thank you very much for the time and see you next time.
spk05: This conference has now concluded. Zambia's IR area is at your disposal to answer any additional questions. Thank you for attending today's presentation. You may now disconnect. Have a nice day.
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