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spk04: As you can see here, while the CPAS contribution to the top line was higher in the third quarter when compared to 9 months results, the trend on gross profit is the other way around. While we continue to be the undisputed leader in CPaaS in the region, it is important to remind you that CPaaS is a volume-based business and therefore volatile in nature. Reason why we decided to pivot the business to add value to the channels in first place. In terms of size, our CPaaS business ended September with an annual recurring revenue of R$233 million. On the negative side, the downsell in large enterprise in our consulting business pulled net revenue expansion down to 102% compared to 120% in Q2 of 22. As I explained earlier, we have already seen early signs of improvement in the conversion of our sales cycle to large enterprise customers in Q3, but we expect most of the impact to positively impact revenues in Q4. Let's now see how our margins perform within this strategy. On this slide, we can see the performance of both businesses in terms of profitability in the first nine months of 2023, compared to the same period of last year. If we isolate the third quarter of 2023, our gross profit for both businesses went down year over year, mainly due to lower gross profit from large enterprise customers and CPaaS. However, when we look at the results accumulated in the first nine months of the year, we see solid performance in both businesses with increased margins, demonstrating our ability to navigate this dynamic competitive environment without losing focus on the medium and long-term profitability. The performance of our CPS business in the first nine months of the year has been above our expectations. Given our leadership in the Brazilian SMS market and the more balanced market dynamics, we have been able to leverage a more efficient cost structure to gain market share with certain strategic large enterprise customers, which led to the strong recovery in SMS volumes with healthy profitability levels. CPaaS also delivered a solid 13% increase in gross profit when compared to the first 9 months of 2022, reaching a gross margin of 33.2%, up 5 percentage points. We are confident that this strategy will help us improve our relationship with these customers, allowing us to capitalize on cross-selling and up-selling opportunities. Also, our SaaS business, despite facing the downsell in large enterprise on our consulting business, reached 134 million rise in gross profit in the first nine months of the year, a 13% increase compared to the first nine months of 22, and reaching a gross margin of nearly 64%. This is mainly related to revenue growth and the consolidation of MovieDesk. Moving to the next slide, we highlight our EBITDA evolution since the second quarter of 22, which is a direct result of the decision to pivot Zenve 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, with the third quarter of 2023 marking the fifth consecutive quarter of positive EBITDA. EBITDA was positive R$16.5 million in the quarter, up from R$9.9 million a year ago and R$15 million in Q2 of 2023. This stronger EBITDA is mainly related to the gross profit expansion I just explained, coupled with the execution of our savings plan initiated in July 2022. The disciplined execution of this efficiency plan led to an 8.4% drop in nominal G&A expenses, reducing the ratio of G&A as a percentage of revenue to 16.7% in 9 months of 2023 from 18.5% in 9 months of 2022. Also, in Q3 2023, we had a R$ 0.6 million impact from non-cash earn-out to expense related to SENS data. Year-to-date, our EBITDA already totals R$ 55.7 million, on track to meet the guidance for the full year. In fact, our last 12 months EBITDA of R$ 79 million is already within the guidance range. In terms of cash flow, we ended September 23 with a solid cash balance of nearly R$ 120 million, in line with the previous quarter, and a direct result of our focus in cash preservation without jeopardizing sustainable growth. The combination of stronger EBITDA and a stricter control of working capital was enough to pay for capital expenditure and debt service accumulated in the year. Now let's discuss our guidance for 2023. To finish, I would just like to reiterate the guidance we previously set for 2023, as we are confident with our performance so far and we are expecting a good Q4, which normally boosts our revenue and will positively impact our EBITDA, which as I just said, is already on track to meeting the guidance. With this, we conclude our prepared remarks and we are ready to 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'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.
spk04: You all get one here on the webcast. Can you comment on your consulting business and why it has been so difficult to make it work?
spk02: We're going to take this one. So when we are addressing the enterprise market, this year has been a tough year, a tough environment, which means Decision-making cycles are taking longer than expected. That's why even though we're bringing new enterprise customers, especially to our SaaS offerings, it is taking longer than expected to ramp up their revenues. We expect in the next couple of quarters to get this on track. especially as we're seeing new logos coming and new projects being under launch phase. It's still not appearing in our results, but we expect in the next couple of quarters to have a higher flow of enterprise customers coming and impacting our revenues.
spk03: Thank you, Cássio. So I'll keep going here.
spk04: we saw an acceleration of cps in the third quarter seems completely different from h2 of last year can you comment on this different dynamic sure um
spk02: Last year, we had a very tough competition on the CPaaS space. We've been talking about that in the last couple of quarters. We were able to get back with a more competitive approach this year. So that's why we're getting back our market share and also advancing more than we had in the past. uh and with profitability so we're being able to combine more aggressive combine more aggressiveness on the market with a positive uh flow of cash coming from this business we see the market even though it is a mature business it still has lots of opportunities uh for us considering we are the largest players on the region so we're able to being able to benefit from that position in the market to bring especially big customers that are driving their growth on the space with Zenvia. And these same customers, we're exploring new opportunities with them to also advance more into the solution side, which means the SaaS revenues within the seed and customers. So we're getting more presence on the CPaaS space and we expect that in the short to mid-term to also benefit us on the SaaS market as well.
spk03: Thanks, Cassio.
spk04: Can you give us an update on earnouts due next year? Have you been able to restructure any more of those? Are you trying to restructure some of your debt? So I'll take this one. Yes, as we've been discussing with you since Q2 of this year, we've been discussing with all our creditors, banks and including the sellers finance. to continue restructuring as we did. This is an ongoing conversation. We have time helping us here because markets seem to be improving somewhat in terms of credit and funding alternatives. and due to our effort in generating EBITDA, but also having a very strict control of working capital, we've been able to push our cash and our liquidity to put us in a better position to renegotiate that. So we hope to give you news on this sooner than later, but we continue being comfortable with the timing of those renegotiations. Another one for you here, Cassio. We saw a hype with HDP and AI. Following that hype, what has changed or evolved? What trends are you seeing?
spk02: We're seeing that what we had in the beginning, which is the beginning of the hype curve, is a thought that it would dramatically change everything in a very short term. as every new technology does just initial hype. But what we're seeing is that the benefits and the use of Gentry AI into our solutions is coming and it's starting to get traction within our products. We had a handful of different initiatives being tested with customers, and now we're starting to deploy them and have them skilled customers. And this comes from this goes from simple understanding of what is the next best answer for the customer up to insights on what is going on with customer support or sales. So there are some improvements that are very useful for customers. And the mid term, we expect that the way companies build their processes and when they make these processes available on conversational interfaces such as WhatsApp or Google RCS, that generative AI will be mixed with structured natural language understanding processes, which like the Watson technology did before. So we're seeing these two technologies being mixed so they can provide a reliable service for customers, of course, and also good in terms of conversation. So it can be more fluid than Watson-based chatbots. So that's starting to occur and we expect that next year will be the year that these generative AI technologies will be fully deployed to most of our customers.
spk04: um there's one for me here you're the cheapest enterprise software company in the world valuation wise when can we start to consider stock buybacks so we are not against stock buybacks uh it's just a matter of uh timing and and use of capital and capital preservation right we're still as i previously uh answered one of the questions about uh Our funding gap and liquidity. So that is a priority now over share by back. Once the funding gap and our liquidity situation is behind us, then we can discuss all sorts of how to return to accelerate capital return to shareholders. One here for you, Cassio. Can you elaborate more on the RCS that you mentioned in your prepared remarks? How is that different from SMS? Any idea of potential market size versus SMS cannibalization?
spk02: Sure. RCS is a technology that's been evolving for about a decade. It's part of GSM protocol And since Google started pushing that technology a couple of years ago, it was up to this year not yet deployed within carriers. This year, 2023, is the year that carriers arranged and deployed the technology. So that's the year things started ramping up. So we partnered with Google to bring that to the market. and what basically rcs does is that is a smooth transition from sms to more more rich communication model with customers which means you have 100 coverage when you're sending a message because the fallback goes over SMS, but for those end users that have a handset compatible with RCS, they have a much richer experience. That's nowadays available not to the majority of end users, even though we cover 100% with SMS fallback. And over the next two or three years, we expect that 60% to 80% of users will be RCS compatible. And that means, in terms of business, that from Zenvia perspective, creates lots of opportunities for upsell. Because when a user receives a rich message, it brings more interactions with that message, which means better conversion rates, possibly conversation over the message, which leverages all of our conversational platform. and AI capabilities. And also the message itself from the simple, simplest message up to the rich message brings more revenues talking only on the pure messaging side. So for us, and that's why we're leading that transition from SMS to RCS, brings lots of different opportunities for upsell and of course, better experiences for end users and better results for our customers.
spk03: Another one here.
spk04: Can you provide color on why the number of customers in your SaaS business was lower quarter over quarter and why your net retention keeps going lower? Caio, can you address that one?
spk01: Yes, of course. So talking first about the net revenue expansion, as Shai said, that impact is related to the consulting part of the business where we saw some revenue churn come from huge client from last year because our net revenue expansion used last 12 months as basis, but we already seen recovery in Q3, the pipeline recovery, and in Q4, we expect an increase on also the net revenue expansion. Regarding the number of clients, the clients that we lost between quarters is not relevant in terms of revenue. And as we saw, we increase our revenue quarter over quarter in the SaaS business. And we still have a lot of opportunity in the cross-selling basis. That's why we are focused a lot on one Zenzya because we have a huge client base with low cross-selling. That's a huge opportunity for us. So it's not a huge, it's not some issue for us losing clients, especially number of clients, especially because of their small revenues.
spk04: Hugo, can you reprompt to see if you have live questions?
spk05: Again, if you have a question, please use the Q&A icon at the bottom of your screen to write it down and it 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.
spk03: We have no more questions here on the webcast as well.
spk05: This concludes our question and answer session. I would like to turn the conference back over to Mr. Cassio Bobson for his closing remarks.
spk02: Thank you, everyone, for joining us today. We're very excited with this year and especially next year coming. We expect to have you guys on our next call. Thank you very much. See you.
spk05: The conference has now concluded. Zenvia'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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