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spk04: choose which products best fit their needs and thereby expand the margin of 32 percent up almost eight percentage points let's now look at the same data but comparing the first half of 23 to the first half of 22. when we compare the first half of 23 to the first half of 22 we see similar trends We can see solid performances in both businesses, with increased margins, meaning that our focus on profitability is paying off. Our SaaS business reached R$ 88 million in gross profit in the first half of the year, a 25% increase compared to the first half of 2022, and reaching a gross margin of 65%, which implies a 3% point expansion compared to the first half of 2022. CPAS, in turn, delivered a solid 21% increase in gross profit when compared to the first half of 2022, reaching a gross margin of 37%, up roughly 12 percentage points. Let's now look at this data in terms of weight in our financial metrics. Our SaaS business continues to gain momentum in annual recurring revenue, totaling almost 240 million reais. As I mentioned previously, the challenging environment negatively impacted our net revenue expansion, which totaled 116% compared to 120% in Q2 2022. Our SaaS services represented 35% of the total revenue as we had a boost in CPaaS revenues. In terms of gross profit, we had a 50-50 split this quarter. Let's now move to the next slide on our EBITDA evolution. As you can see in this slide, sequentially our EBITDA declined to R$ 15 million from R$ 24 million in Q1. While we expected some increase in infrastructure costs related to renewed suppliers' contracts, the higher mix of CPS and revenues, combined with non-recurring costs related to severance costs and slightly higher provisions, led to some pressure in EBITDA this quarter. Despite that, we delivered a solid R$ 39 million EBITDA in the first half of the year. Moreover, as you can see in the next slide, We have now delivered four consecutive quarters with EBITDA in positive territory. This is a direct result of the decision to pivot Zenvia into a SaaS company and focus on improving profitability. It has not been easy, particularly given the complex macro environment, but as you can see, our strategy is paying off. Our trailing 12 months EBITDA is totaling R$ 72 million, which makes us confident in reiterating our EBITDA guidance range for this year. Now we got to the most important slide of this quarter. as it shows that we have been able to convert EBITDA into cash and solve our funding gap for 2023. This is an important milestone for us that attests to all the hard work of our humans with ZEE to grow profitability and a lot of other initiatives we undertook to close the gap, coupled with extended earn-out payments and stricter treasury policies. While EBITDA minus CAPEX was already enough to generate a positive R$13.6 million, Total operating cash flow reached R$ 118 million as a result of better working capital management, especially due to higher anticipation from clients and renegotiation with SMS providers to more flexible payment terms. This working capital improvement and strong operating cash flow allow us to pay down debt and solve our funding gap for 2023, putting us in a better position to continue deleveraging balance sheet and invest in new projects. To finish, I would just like to reiterate the guidance we previously set for 2023. On the revenue side, we are aiming at the low end of the guidance, while for EBITDA, we are confident to deliver close to the top end of the range. Given the positive trend we are seeing, we are confident in our ability to deliver the solid EBITDA in 2023, which puts us on track to deliver the 15% EBITDA margin mid- to long-term level we presented during our 2022 investor day. With this, we conclude our prepared remarks and we are ready to take your questions.
spk01: 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'll 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. Our first question comes from Lucas Chaves, Annalisa Selside of LocaWeb. We are now opening the audio so that you can ask your question live. Please go ahead.
spk03: So, just saying, Lucas from UBSBB here. So, two things, two questions from our side. How should we just feed the focus on large clients going to the second half of the year? And at the time, how do we see, especially the consulting part of enterprises? And how do you see these large clients impacting on margins on the second half? Thank you very much.
spk02: thank you lucas for the question uh we always keep a very strong profile of large customers and we are seeing that although we have uh more uh like environment a market environment that is not like pushing uh uh growth uh as a trend we're able to bring new projects to these customers and uh hence we expect to grow on the large customers, even though the margins on large customers are not as high as the margins from small customers. That's why we counterbalance growth on large customers with continuous growth of the long tail. which brings margins, which kind of balance these margin profiles can get the best of both. Because large customers bring lots of revenue and small customers not so much of revenue, but they counterbalance margins, getting us a better profile. And we are seeing these large customers getting more adoption of the whole portfolio that we launched in the last couple of quarters through acquisitions and R&D. So coming from a higher presence of CPaaS on large customers, we are now getting more presence of our SaaS solutions on these large customers, which we expect in the next couple of quarters to increase margins for large customers overall. So that's why I've been investing into integrating these SaaS solutions into the whole, on the core of the platform. So we can migrate customers from pure channel usage coming from CPaaS to more software-based usage of our platform, which of course brings us the SaaS-like margins that we have, which of course is good for the whole platform. picture, especially by creating more locking for these large customers. As we go into more deep adoption of our platform, we're able to not only get revenues, but also sustain those margins over time.
spk03: That is very clear. Many thanks.
spk04: Let me get some questions here from the system. Can you comment more on the CPaaS competitive environment and if the improvement is sustainable moving forwards?
spk02: Sure. We see that CPaaS industry and CPaaS end market is a more competitive market than SaaS. But as we have a very strong position on the regional market, this is bringing us lots of strength to compete better than other players in the market, especially global companies that try to address the same opportunity. As we became, over time, the market leaders on that space, We are now leveraging that position and making that pace of growth that we're able to track over the course of this year. to be sustainable over the mid to long term, as we're able to achieve better negotiations with carriers, which brings us a close advantage. Hence, we are able to position ourselves, especially with big customers, with the large purchases of uh messaging on the market we're able to position ourselves as a company that is better like that is able to achieve a better pricing uh framework in order to capture the majority of this demand so we expect this to continue going forward thanks one easy one for you castle what do you see the company stock looking like in five years i'm not sure what i'm able to tell from that sense i don't have i don't have my lawyer by my side but as we've been working as uh to build a long-term vision and we are starting to get uh the first uh benefits of this uh movement of building a very strong uh sas layer comprised of solutions from different parts of the customer journey that are now being integrated. We're starting to get lots of traction on the cross-sell and the bundling of the solutions. And in the next couple of quarters, we're going to see the effects of that. So as we capture all those investments in the last two, three years, and I would say beginning Q3, Q4 this year, but fully on 2024 and on, we expect that the next five years would look awesome on that aspect of getting all the results of this strategy, which is a long-term strategy. That will become very clear for the market that we are building Zangief to become the leader in customer experiences software. And that's why we understand that there's a very good opportunity for long-term investors to capture that over time.
spk04: Another one here. Congrats on solving the funding gap for 23. How do you see this moving on for 24? So as we we've been working hard and to deliver strong EBITDA and cash flow, it puts us in a better situation than we were a couple of months ago when negotiating with banks and funding alternatives. So we are very confident that by continuing to deliver these strong results, we'll be able to solve the funding gap not only for 24, but the entire funding gap of the company mainly arising from the earn-out structure that we have. So we are confident that we will come up with good news for all stakeholders on this front. But as of now, we feel that we are in a much better situation than we were a couple of months ago.
spk01: Again, if you have a question, please use the Q&A icon at the bottom of your screen to write it down and we'll open your microphone. If you prefer not to open your microphone, please write down no microphone at the end of your question and our operator will read your question aloud.
spk04: I'll continue here. In order to meet the 2022 revenue guidance, you would need a relatively high revenue growth in H2. How is your visibility on achieving this? Caio, do you want to take this?
spk00: Yes, of course. Of course. So as I said, we are aiming on the low part of the guidance for revenue. For CTAS business, we have a seasonality of the business. In Q4, we had a strong revenue due to Black Friday and Christmas, so that gave us more room for growth in the Felipe Cruz- Second half of the year so that's why you're going to see a strong growth when compared to the first half and for staff business. Felipe Cruz- We have also shy already said we have we already seen the pipeline for large enterprise getting stronger and also you can see in our results. Felipe Cruz- Our number of clients for SAS start to strong had a strong growth so. as we start small in their business and we have a strong revenue expansion, we are confident that we can deliver the growth that we need in order to reach the low part of the guidance in terms of revenue.
spk04: Thanks, Caio. Cassio, can you give more color on the one that you highlighted in your opening remarks?
spk02: Sure. What we've been doing the last, strategically looking at the past three years, is building our SaaS layer. And that movement was a combination of a stronger investment on R&D and also some acquisitions that we did on companies that had complementary SaaS offerings that are now part of our portfolio. But of course, doing so created a certain complexity in terms of how we offer those products to our customers and how we operate the company internally. So part of the integration process that we've been doing in the last couple of quarters started with the corporate infrastructure and organizational chart. and basic process integration, which are pretty much concluded. And now we're beginning to combine all these products into a single suite. So that's what we are aiming at to provide over the next couple of quarters. So we've been working on that. to make it available on q1 on q2 uh next year and part of that uh without recalling one same field and it considers all of the uh projects that are being executed to make that happen So that's the combination of integration of corporate systems, integration of the billing systems, integration of the products, user interface and user experience, identification of business models. So everything that we've been working on the last couple of quarters and we'll continue so in the next couple of months. So we're able to deliver everything. that a unified offer for our customers. And we are calling that movement of doing all these executions be synchronized internally so we can provide value for our customers in a way that makes a lot of effect, a lot of impact on the market, being almost pretty much a unique offering for customers in the region. We're calling that movement One Zenvia. So it's a combination of all of these projects being executed to provide a unified platform for our customers.
spk04: Can you comment on how is the large corporate interest on AI driven solution evolving? Are they demanding more solutions that are AI based? How does this impact your pricing strategy?
spk02: Yeah, sure. We have seen a lot of demand from companies to First, it's more of a broad search for how they can use generative AI on their processes. What we launched in the last couple of months are different features that boost these companies' productivity, especially from sales agents or customer service agents. to have pre-written responses to their customers based on customer history and the kind of demand, that kind of inquiry coming from customers. So this is already available on our products and we're evolving some also around understanding what are the customer's expectations, combining not only what the customer is saying, but also the behavior of the customer around these communications and other data sources that we have access from this company. So we're providing these combined insights based on this customer history. And now we have all these customers testing and some of them going into prediction on these features that use AI. In terms of how we monetize that, we are seeing that although some companies are building some extra layers of charging customers for that, we're seeing that instead of building specific modules for AI, we're putting AI in the core of the platform. So this will be part of all of our customers will have access to these features over time as we are rolling that out for all the customers. As we consider this, this will be something that we It will be like a basic requirement for companies that are looking for software that will improve their sales or improve their customer service. That's why we're merging all these initiatives into the core of our SaaS offerings instead of trying to make that accessible to just one or two customers or making that available at the core. So we expect this to differentiate the whole platform, considering that most competitors are still not doing that kind of approach. They're mostly testing. We're already into production and making that available for our customers.
spk04: Another one here. Can you comment on the difference between acquiring new clients in SaaS and the revenue that didn't grow in the same pace? Caio?
spk00: Yes, of course. So what we saw is the strong growth in number of clients, special income for solution attraction. And also we can see strong growth on conversion and service. And as we said, we start small in small use cases, especially in the client. Then when they see result, we start to grow with more use cases or more seats. And that's why our net revenue expansion for the clients that are longer than 12 months is close to 120%. So as we see the clients start to use our solutions, then they learn, we help them learn, we help them using more use cases inside their business, so they start to grow revenue. That's why we see first the number of clients growing, then the revenue will keep the pace up for the next quarter.
spk04: uh can you comment the risk of the listing from nasdaq due to the efficiency on minimum bid price are you confident to revert it um yes we are confident we'll be able to revert it uh without needing any uh technical solution uh it's on us to continue delivering um strong results it's on us uh to be able to solve the funding gap once and for all. And that, in our opinion, will be the most important single catalyst for share price. So we are confident we'll be able to revert it without the need of any technical solutions such as reverse splits. Those are the questions we have here. Hugo, can you report to see if there are any further questions?
spk01: 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 to open your microphone, please write down no microphone at the end of your question and our operator will read your question aloud. Please, do you have any further questions? Shai, there is a question here by Gabriel Carbonelli Menezes. Can you please read?
spk04: There are 94 million Reais on bank debt to be paid in one year, plus 150 of advance of clients. plus 122 million of earnouts to be paid with only 142 on cash and 27 of adjusted EBITDA. How do you plan to solve the one-year funding gap? So again, the 150 UC advances from clients is that contract we have with the contract of rent, especially we have with Tuilho. That contract is in final stages of renegotiation for 24 months, which will put us in a very good situation of only needing to pay when we are generating enough cash for that. uh our ebitda uh uh i i'm not sure that i agree with you gabrielle on the 27 million uh adjusted because this year is going to be uh between 70 and 90 next year is going to be probably 120 130 so we are confident with that and and obviously by generating enough cash and where we are with EBITDA now uh it puts us in a good situation discussing with with the banks uh for rolling the debt for longer term and longer structure that that will ease uh the payments in the next 24 36 months so we are able to uh to pay all those liabilities when the company is generating higher EBITDA and obviously more cash.
spk01: So this concludes our question and answer session. I would like to turn the conference back over to Mr. Cassio Bobsin for his closing remarks.
spk02: Thank you very much, everybody, for joining this call. We're very excited with the year going forward, especially that we aim to achieve our guidance for the year. And not only that, but looking into the future, we are very happy with the path that we have and the opportunity that we have to become a very unique offering for our customers by providing a unified suite of customer experience SaaS which will become a very strong competitor in the field by bringing lots of value for customers and connecting all the dots along the journey. That's our purpose. That's what we're building for the future. And we are very happy to be on track of that. So thank you very much and see you next time.
spk01: The 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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