Zenvia Inc.

Hello everyone and welcome to Zenvia's Q2 2022 earnings call. I'm Cassio Babsin, founder and CEO. Today we're going to present the key highlights of our second quarter results, demonstrating that we are on track to deliver guidance for the year. Let's start with slide four. During our investor day at the end of July, we disclosed to the market how we unified our portfolio of customer experience solutions after accelerating R&D investments and concluding all planned acquisitions in this first year as a public company. We're now able to provide a complete end-to-end customer experience journey to support companies to attract leads, convert into customers, search them when needed, and guarantee a successful relationship. Xavier Attraction, former Xavier Campaign, is a SaaS solution that allows companies to create valuable communication campaigns for their prospects and customers in an easy, connected and fast way by using data intelligence and automation across multiple channels. It allows companies to communicate with customers at the right time with the right channel. Companies using this solution can segment their campaign by audience, profile, or behavior, managing and enriching their contact base with data captured from multiple sources. Zainview Conversion comes from Serena. It's our sales solution that allows companies to improve sales through intelligent and multi-channel conversations while ensuring better performance of the sales team through data and integrations. For example, companies can optimize their entire sales process by starting with lead generation from digital ads then all the way through the lead qualification process, sales engagement, sales closing and even payment collection along the same conversation with the customer. Zinvia Service comes from Movidask. It is our SaaS solution that enables companies to provide amazing customer service with structured support across multiple channels. It is deployed to ensure a consistent experience for a long-term relationship while improving team performance and efficiency. As an example, companies can manage performance with several KPIs, establish multiple customized service level agreements, control tickets across internal teams, and much more. Ziva Success, which comes from SenseData, is our SaaS solution for the customer success phase, enabling companies to continuously engage customers based on their individual context, promoting healthy and long-lasting relationships. With this solution, companies can connect multiple data sources to create a 360-degree understanding of their customers, including customized KPIs and behavioral tagging, so actionable insights are generated and transformed into proactive and highly contextualized customer interactions. Let's move to slide 5, where you can understand exactly how our platform is structured. In addition to the solutions I have presented, our platform also provides 6 tools that companies can use to integrate and automate their customer experiences in various ways. Our main tools are APIs, bots, NLU, and docs. We're building a new world where experiences become more personal, engaging, and fluid for all humans. Our platform enables companies to break down the barriers that exist in customer experiences today. Quantum is the essence of this platform. It connects all of our solutions and tools with the company's systems and processes. Quantum remembers your name, your latest interaction, and even your sentiment towards brands at any point of the journey. It consists of four core components. Quantum Connect enables companies to bring customer data and events from other software into our platform, allowing highly contextualized interactions. For example, when a customer enters a physical store and buys a product, it is possible to immediately communicate with the customer by reading the data from the back systems with Xenvia Connect. Quantum CDP, or Customer Data Platform, stores end-customer information from either the platform itself or for Quantum Connect and assists in reaching both automated and human-based interaction according to the customer history of the company. With Quantum CDP, a company can define the best channel to impact an end-customer by accessing this end-customer's previous behavior in terms of communication channels. quantum abstraction enables communication with customers through various channels in a simple way streamlining processes and enabling the end customer to switch channels while keeping the conversation going for example the end customer can start a conversation for support on instagram and on the next day continue it on whatsapp and finally quantum cognitive automates predictive data analysis to unlock value from customer relationships based on their behavior, conversations, and transactions, enabling highly contextualized and proactive experiences. For example, by analyzing the profile of a particular end customer, we can identify that they always buy a certain product during a certain period, but this period is about to end and the end customer has not made the purchase yet. Maybe we can trigger a reminder for them or create a promotional campaign. This is how our platform connects all the dots along the customer journey, providing multiple ways for companies to create unique experiences that are more personal, engaging, and fluid. Companies can start working with us by subscribing to any solution or tool, and as they go deeper into adopting multiple parts of the platform, we can break down all CX pairs and unlock the true potential for end customers. For you to see how all this really works, we prepared a short video that presents the journey of a fictional end customer, Johnny. We call it Johnny's Journey. Right after the video, Shai will discuss our key financial metrics in more detail, and I'll be back after for the Q&A.

Get to know Johnny, a Zenvia's client consumer, top store. Johnny usually buys at two stores. One is a Zenvia client, the other one isn't. Johnny's experience with the Sousa store, which is not a Zenvia client, is impersonal and out of context. It generates high costs without effective results for the company. Johnny is at work when he receives a message from the Sousa store, offering a women's shoe, but he doesn't even check it. The offer, product, and time did not fit Johnny's profile. Top Store, on the other hand, which is a Zenvia client, is going to provide a unique end-to-end experience for Johnny. The following day, Johnny is having breakfast, the time of day when he uses his smartphone the most. Then he receives a message with a picture of a sneaker he has researched. It is the specific model he has been highly interested in. But he has some questions before making his purchase decision, such as, is the sole soft? So he has to speak to a salesperson. He talks to the salesperson on his phone, gets the answers he needed, and decides to buy the sneaker. As Johnny is a customer of the store, his card was already registered for future purchases. Actually, the purchase is quick and easy. In the message Johnny received, there was a pay now button and he completes the purchase without making efforts. All you have to do now is wait for your product to arrive. A few days later, Johnny receives an identified message and chooses the best day and time for receiving the sneaker from the options given. He also confirmed that he would be at home to receive the product. On the scheduled day, he receives his product, but unfortunately, the sole wasn't as soft as Johnny expected. With those sneakers, it wouldn't be possible to run as he wanted to. Then, he visits the company's website and goes to the customer service area. he chooses to send a message by chat he talks to the support team and agrees to return the product johnny explained what he needed and the salesperson suggested another sneaker model ideal to run but the store didn't have his size in stock so the salesperson asked if he would like to be notified when his shoe size was available in stock johnny replies yes seven days later No one had picked up Johnny's sneaker. As his order was opened, the platform's intelligence knows that new promotions should not be sent. Very angry. Johnny made a post on Instagram tagging, at Top Store. A few minutes later, he receives a direct message on Instagram from the Top Store support team. They agreed that within 24 hours, the sneaker would be picked up at his home. Johnny was very pleased because the problem was solved. 48 hours later, Johnny receives a message informing that the shoes he wanted are back in stock. And to his surprise, he received a coupon to buy extra items. After 30 days, Johnny checks the card bill and realizes that the first purchase had not been refunded by the store. Then he decided to call the store. He saved the contact on his phone. At the end of the call, he is targeted to a satisfaction survey in which he scores 2 on a scale of 0 to 10. Very angry, he hangs up the phone. Johnny receives an identified message asking if he would like to talk about the incident. Johnny answers yes. Johnny's phone rings. The call had the logo and the reason for that contact. He answers right away, and the situation was solved. Johnny is happy. and posts on his social media saying, Top Store made me feel unique. What an incredible journey. Mistakes happen, but it managed to surprise me even when we had problems. Top Store built a unique journey and experience for Johnny with Zenvia's customer experience platform. Build a world of experiences with Zenvia.

Hello, everyone. And thank you for being with us today. I got to say, I love this video. The first time I saw Johnny's journey was back in December 21. At that point, I worked with Zenvio for less than three months. And that was the moment when I understood what we do and when we're going. So I hope this video was enlightening to you as it was for me a couple of months ago. Now, before I jump specifically into Q2 numbers, I would like to highlight that this is the fourth quarterly earnings we published post our IPO. So it's important for us to emphasize the improved results quarter after quarter after quarter reflects how the proceeds from our IPO were critically allocated to M&A and R&D, which puts us exactly where we plan to be, contributing to our accelerated transformation to a SaaS company. That's what this snapshot of our Q2 and first half 22 numbers show. It has been a strong quarter, both in terms of organic growth and acquisition integration into our results. These numbers have already consolidated two months of MovieDesk since the transaction closed in May. We recorded R$ 204 million in revenues for Q2, an increase of 50% year-over-year due to a solid client-based expansion of 37% and the consolidation of MovieDesk over the past two months. The growth in the first half was even better, with a 55% year-over-year increase, totaling R$ 402 million in revenues. Of this total, 70 million came from the three recently acquired companies. The acceleration of our transformation to a SaaS company is also already positively impacting our margins. The gross margin for Q2 stood at almost 38%, a solid increase of 5 percentage points from Q2 2021, while for the first half, the gross margin was 35.8%, up 5.6 percentage points from the year before. As you will see further in the slides, these numbers are all within the guidance range for the year. As of Q2, we are starting to report results under a new breakdown, one that is more aligned with our decision-making process and will make it easier for you to understand what we do and where we're going. The format change is also driven by the announcement we made in mid-June on the evolution of our business areas, CPaaS and SaaS. While the CPaaS business still generates 71% of our revenues, over half of our gross profit is already coming from SaaS, which actually makes us a SaaS company. So let's take a deeper dive into our SaaS numbers. Revenues originated from our SaaS business, which is now headed by Rafael Godoy, our former CMO, totaled 115 million reais, with a monthly revenue recurrence of over 80%. This means that we are talking about an annual recurring revenue of this business, including full consolidation of MovieDesk at almost 230 million reais as of June, and almost 280 million rises of December 2022. We currently serve over 6.5 thousand SaaS customers, generating an adjusted gross margin of 66.5%. Other important metrics are the NRE of 120% and a CAC payback of approximately 11 months. Keep in mind that these numbers are just a fraction of the total addressable market for SaaS services in Latin America, is expected to reach 29 billion reais by 2026 according to IDC. Out of these almost 30 billion reais in TAM, 60% is white space and we have jumped from zero to slightly over two percent market share in just one year. So there's a huge opportunity for us to continue growing our SaaS revenues at the 50% level we've been growing, bringing Zenvia to another level of size and profitability. Our CPaaS business, now headed by the CRO Chris Franco, is also very healthy and continues to expand. Although the future growth of the company will be coming mostly from our SaaS business, there is value in our CPaaS business that cannot be ignored. For 2022, this business is expected to reach around 600 million reais in revenues with a gross margin of approximately 23%, generated by almost 9,000 clients. CPAS is a fast-growing market in Latin America, which is expected to multiply by 3.5 times in the next five years, from a total market size of 3.5 billion reais to nearly 19 billion reais, according to IDC. Moving on to the next slide, you can see that in this quarter, half of the growth came organically, and the other half from acquisitions. These results fully consolidate the one instance data and consider only two months of movidesk. Together, the three companies contributed approximately R$ 70 million to our consolidated net revenues, while the organic growth brought R$ 73 million. This combination of solid organic growth with M&A positively impacted our adjusted gross margin, which ended up almost 6 percentage points to reach 35.8% in the first half. And in the second quarter, our margin has already reached 38%. All these metrics are within the guidance range for the full year, as you can see in the next slide. Our total revenue growth and adjusted gross margin for the six months of the year are both within the guidance range. For the second half of the year, we expect to continue to focus on integrating our M&As and improving profitability as we add a full six months of movie desk gross margin into our numbers. We expect to generate positive EBITDA during the second half of the year, while our operating cash flow should already be at a break-even in the next six months. Finally, I would like to say that we know that funding gap is a concern. While this issue does not prevent us from slipping, we do not live in denial. We have been working on several different alternatives, and we expect to be able to announce something to you in the next coming months. With this in mind, we can now move to the Q&A session.