Zenvia Inc.

Hugo, there are some questions here on the webcast. I'll start with them and we'll keep going. Can you put a bit more color on for guidance, for example, customer cloud? How's Q3 looking and Q4 in terms of bookings? How's the franchise channel doing? And are you still expecting to hit the 200 million BRL target with 65 to 70 gross margin range for the full year? Um, let me, let me, uh, start here with some, uh, with, with numbers and, uh, and then, uh, Castle, feel free to add some, uh, qualitative, uh, uh, uh, points about, about same customer cloud. And there are a couple of other questions on it. Um, So in terms of numbers, as we said earlier in the year, in January, when we talked about the new strategic cycle and our focus on Zenvia Customer Cloud, we disclosed that we were expecting this business to be around $200 million. rise in revenues with growth of between 25%, around 25%, and gross margin close to 70%. And we are keeping this as you saw in our results here in the first half of the year. Zenvia Customer Cloud is growing close to 25%. It grew 23%. So it is as we were expecting and we continue to maintain our expectations of a business around 200 million rise in revenues and gross margin around 7% growing close to 25%. No changes to that. Cassio, I think it would be interesting if you can share some thoughts on how is it going. There are the questions here about if we changed anything since we launched a business in October. There was an acceleration of the business now in the second quarter. Can you share us some qualitative points and your view on where we're going with Xavier Customer Cloud?

Sure. Although we have this seasonality on the CPL side, when we look at Zambia Customer Cloud, we're doing pretty well. We're excited with the whole performance of the business as we look not only in the revenue growth, but also in the usage of the software, which is very important in a SaaS model that is based on how much a company uses our software. We're seeing a very strong adoption. on this side uh for for instance uh um q2 we had around 80 percent increase in total usage comparing to q1 we have a customer cloud which means this uh block of the stream of adoption of the software is going to bring results on the mid short to mid term So it's doing pretty well in that sense. And about the franchisee model, we launched that on Q1. So we're still in the early days of this strategy, but it's already representing around 15% of our new MRR in Brazil, where it is the country that we launched the first of these models. So even though it's in the early days, it's already making a difference on new MRR. We have around 30 or so franchises that made sales. We had zero in January, so we now have around 34. And we're starting to test this model outside Brazil as well. We already have some partners operating in different countries, and we're going to evolve them into franchisees in the midterm. So expect this strategy to be in the next couple of quarters, the main generator of new MRR for the business, which means we're building skill around the customer cloud. And this is doing pretty well business-wise. That's why when we see the targets that we're having for customers, mid to long-term on Zephyr Customer Cloud. It's been improved on the combination of new customers and software adoption, which of course translates into revenue. So we're very excited about these results.

Thanks, Cássio. Another question here, on the CPAS side, are these tight margins the new level or should we expect some recovery? So as I mentioned, and Castro also just mentioned, CPAS has been very competitive. We saw, and Castro correct me if I'm wrong here, but the last time we saw business being that competitive was in the second half of 22, when we saw a lot of pricing pressure. And but we are navigating this and we understand that our strategies is the right one in terms of and we've been accelerating revenues, which means we are competitive in pricing. That will obviously put some pressure on margins in the short term, but that's important from a relationship perspective and that business helps generating EBITDA after all. So it's important to keep that in mind. And also, first half of the year is usually when we have cost increases from the carriers and we pass that through prices throughout the year. So we expect later on the year, closer to year end and Q4, to have passed through most of the cost increase that we suffered from the carriers and therefore margins will stabilize at a higher level than it is right now. But it's a commoditized business. It gets volatile. It gets pricing pressure from time to time. There was the logic behind, one of the logics behind our decision to move in the last strategic cycle to move and to diversify revenues into a different type of business and adding value to the pure channel, which was the business back in late 2018, 2019. But it's still a good chunk of our revenues and it's important, although margins are under pressure, it's important because that business generates EBITDA. I don't know, Cassio, if you want to add anything on the CPAS side in the market dynamics.

Yeah, sure. We have been executing a long-term strategy and we're sticking to the plan. There is, of course, the maturity of this past business model, which brings more pressure on the margins. It's highly competitive. And of course, there is the volatility that affects results. That's why we understand that when we compare with the SaaS business, which is also, of course, every business is competitive in software, but it's more stable and we can grow customer base and have a more recurrent revenue that's much more reliable in terms of forecasting. So understand that this strategy is why we IPO is the one that being executing and is doing pretty well. The acquisitions are doing integrations or launched the new product that consolates all that and it's performing pretty well. So I'll see that that although we have this volatility, we're sticking to the band and it's working.

Another here for you, Cassio. On the enterprise side, how are you seeing the businesses on both Zenvia Customer Cloud and the rest of SaaS? How are the dynamics have been?

Sure. In the past, business is pretty mature. It's low margin, high volume. And of being able to keep enterprise customers, as we are the main player, the more robust and reliable in Brazil. So we are able to keep the best customers on board. That's why we have all these big revenue on the SIPA side. When I look at SaaS, especially Zenfone Customer Cloud, we aimed initially into SMBs. That was the beginning of the launch of the product. But as we brought this product and our whole experience with enterprise customers to some of our customers, they started to adopt as well. That's why we are seeing the adoption of Xenobio Customer Cloud by enterprise customers. That wasn't the initial focus, but it's doing well. Of course, sales cycles are longer. Adoption takes some more time. But we're seeing that the combination of SMBs and enterprise customers for Xenobio customers is also increasing. operating. So it's a good, it's an upside on the initial strategy. And we're being able with the whole experience that the team has and serving these customers, being able to bring that to this new product.

Another one here. This is for me. Could you please provide some color on cash flow and divestitors? Sure. So on cash flow, and we put on the presentation chart with it, if we look into our trailing last 12 months EBITDA, it's close to, on a normalized basis, it's close to 100 million reais, which is pretty much the same level that we saw in the last couple of quarters. which means thinking about pure cash flow. So EBITDA is about 100 million reais in 12 months. There is about 35, 40 million reais in capex that you have to exclude from that EBITDA. So that leaves us with approximately 60, 65 million reais in cash flow to serve the debt. Which is pretty much puts us close to break even by year end. And that's why we've been analyzing alternatives to divest. There's not much we can add on divestment. on selling assets on top of what we are already mentioned in our prepared remarks. We've been analyzing opportunities and looking into alternatives. And if and when there is anything new to talk about it, we'll let all the market and investors know about it. As of now, there's nothing we can add on this. how should we think about the potential divestment of CPS? In an interview, the CFO had mentioned that they tend to sell for one-time revenue, which would be more than a hundred million dollars. Is that achievable? That would put the company in a net cash position if you manage to sell it. So again, We can't discuss specifically any of the divestments that we have possibilities. I did mention historical, it is correct, I did mention historical transactions in CPAS close to one-time revenue, but that's on a global basis and it's very... Again, it depends on market conditions. It depends on macro environments, such as interest rates, such as the volatility in the local market. So it's, again, it could range. And we are looking more into divestment. It doesn't matter if it's... So if it's CPAS, if it's other SaaS that we don't see in the long term as relevant to the business, the reality is that asset divestment has to do with the leverage in balance sheet. It should be opportunistic to leverage balance sheet as simple as that. We understand that all our assets are important. They add value to our clients. So it's a matter of using this as a financial strategy to accelerate balance sheet leveraging and being able actually to have a better capital structure to accelerate in the customer cloud. So it's as simple as that. We're not sharing any numbers and evaluation now. What we can say is we are looking in an opportunistic way to the leverage balance sheet. Hugo, can you repoll to see if there is any questions alive to be made?

Sure, Shaya. 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 no microphone at the end of the question and our operator will read it aloud. So this concludes our Q&A session. I'd like to turn the conference back over to Mr. Cassio Bobson for his closing remarks.

I still have a question there. I'm not sure if I should answer this last one. Sorry.

Yeah, it just came in. Cassio, what do you think the business will look like in two to three years?

Wow, what a nice question. Well, what we're working on is to have the core of Zenvia being built around Zenvia Customer Cloud. And that means that we're working to provide companies a centralized way to manage all customer relationships, especially for B2C or massive B2B companies. And this means providing a software for marketing sales, customer support, customer service, and customer engagement. And this is, over time, it's a kind of technology that will be, although nowadays it's different providers, it's very specialized providers, this is getting more unified. So we're seeing this adoption. of companies using just one provider to manage all of these relationships. And as we're building these software, we see that it creates lots of benefits. When we put that in context of AI automation, the way we provide that for our customers is a way that helps them to automate and reduce costs, become more efficient, and provide more value to their customers. so when you look from a business perspective we're in the right track to be the as ai cxs provider for this company and this means getting very sticky getting recurrent revenues which builds of course a strong business all the time uh we're not of course disclosing that in terms of finance uh but uh we tend to move from these volatile revenues, low margins, to a recurrent, stable, high margin business. As we've been able to optimize the whole company, we're seeing that we're able to increase recurring revenues and reduce G&A, which brings, of course, a combination of not only a very strong growth, but with a high profitability on the whole business. That's what we're building. As a founder and CEO, we're building the foundations and we're seeing the results of this strategy. That's why I see that in the next two to three years, it's going to be a very different company financial-wise. And we're seeing that operating in the early days of Zendikus for Cloud. And we expect to have all this benefit in the next two to three years. So for that, I also close here the webcast. Thank you very much for all your attention and to seeing the evolution of Zenvia. We've been building this strategy from long-term. We're just starting a new strategic cycle with Zenvia Customer Quality Score. And we expect that next double quarters, we are going to understand how this is all playing out to be a very strong AI SaaS provider for Latin America and the whole world. Thank you very much.

So this concludes our Q&A session. And I'd like to turn the conference back over to Mr. Kassababsin for his closing remarks.

Well, I already closed my remarks, so that's it, guys. Thank you very much. See you next time.

The conference has now concluded. Zenvia's IR team is at your disposal to answer any additional questions. Thank you for attending today's presentation. You may now disconnect. Have a nice day.