Zenvia Inc.

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.

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.

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?