VTEX

Ladies and gentlemen, thank you for your patience. This call is due to start in a couple minutes time. © transcript Emily Beynon Thank you. Thank you. Hello and welcome to the VTEX reports third quarter 2022 financial results. My name is Elliot and I'll be coordinating your call today. If you would like to register a question during the presentation, you may do so by pressing star one on your telephone keypad. I would now like to hand over to our host, Julia Fernandez, The floor is yours. Please go ahead.

Hello, everyone, and welcome to the BTEX Earnings Conference Call for the quarter ended September 30, 2022. I'm Julia Barra Fernandez, Investor Relations Director for BTEX. Our senior executives presenting today are Geraldo Tomas, Jr., Founder and Co-CEO, and Ricardo Camatas, Finance Executive Officer. Additionally, Mariano Gómez de Faria, Founder and Co-CEO, and Andrés Polidoro, Chief Financial Officer, will be available during today's Q&A session. I would like to remind you that management may make forward-looking statements related to such matters as continued growth prospects for the company, industry trends, and products and technology initiatives. These statements are based on currently available information and our current assumptions, expectations, and projections about future events. While we believe that our assumptions, expectations, and projections are reasonable in view of the current available information, you are cautioned not to place any reliance on these forward-looking statements. Certain risk and uncertainties are described on the risk factors and forward-looking statement sections of BTEX Form 20F for the year end of December 31st, 2021, and other BTEX filings within the U.S. Securities and Exchange Commission, which are available on our investor relations website. Finally, I would like to remind you that during the course of this conference call, we may discuss some non-GAAP measures. A reconciliation of those measures to the nearest comparable GAAP measures can be found in our third quarter 2022 earnings press release available on our investor relation website. Now, let me turn the call over to Geraldo. Geraldo, the floor is yours.

Thank you, Julia. Welcome, everyone, and thanks for joining our third quarter 2022 earnings conference call. Last quarter, we shared three key focuses for the company. Continue helping our customers outperform the market, keep improving our gross margins, and optimize our expenses to gain operational efficiency. And most importantly, all of that while we continue to deliver our high growth plans. With that in our north, let's deep dive on our operational performance this quarter. We're excited to announce that our business continues to deliver robust growth, solidifying our position as a regional leader while also building momentum outside of Latin America. A clear demonstration of our robust growth is that in Q3, our GMV growth accelerated to 29% year-over-year, both in USD and FX neutral. Given our Blue Ship Enterprise customer base, VTEX customers continue to outperform the market consistently. A long-term historical trend that we have been highlighting with more emphasis for the last three quarters. Not only did the GMV and top line come stronger than expected, but also both our costs and expenses came below as a result of a leaner and more agile organizational structure. Our non-GAAP subscription gross margin increased by 560 pips year over year. The margin expansion trend that started in the second half of last year is a reflection of gradual code optimization, migration to more efficient servers, operating systems, and processors, optimizations of non-core cloud providers, as well as operational leverage on our personnel support costs. Although there could be some gross margin volatility as we migrate non-core cloud providers, there's still a long hold ahead of us on gross margin improvements, and we are excited about what should come in the medium and long term. We plan to continue optimizing our cost base while at the same time pushing our service levels up to provide the best solution for our customers. I'm extremely proud of what our team has accomplished on the expenses side. As anticipated in our previous earnings call, we delivered significant operational leverage. Our team's efforts enable us to continue growing our top line at a robust pace, which is our main objective as a high-growth company. While still finding incremental opportunities to operate our businesses with a leaner and more agile structure. Now, moving to our commercial updates. In the third quarter, we continue attracting premier brands and retailers. Some new customers that went live this quarter that didn't have online store presence in the respective countries before were Piazzi B2B in Brazil and ASICS in Peru. New customers that migrated from other platforms and went live this quarter were Levi's in Argentina, Vivara and Pharma Delivery in Brazil, Belcourt in Colombia and Chile, Chedral in Mexico, Claro in Peru, the Foschini Group in South Africa, and W8 Candy in the US. On top of that, we continue building and transitioning sticky relationship with our existing customers. Some premier brands and retailers that expanded their operation with us by opening new stores in new countries during the third quarter war. H&M adding a store in Uruguay, currently operating in five countries in Latin America. Motorola adding a store in Saudi nation, currently operating in 19 countries across the world with more than 20 stores. And Whirlpool, adding a store in Germany, currently operating in 16 countries across the world with more than 30 stores. In the third quarter, Vitex was named a visionary in the 2022 Garten Magic Quadrant for Digital Commerce report. This industry recognition follows the result we shared in the first quarter of this year with customer recognition in the 2022 Gartner Peers Insight Voice of the Customer Digital Commerce Report, where VTACS was named a strong performer. Additionally, in July of this year, Paradigm B2B released its early combined report in which it evaluates e-commerce providers across key areas of interest in the B2B technology buyer. In 2022, GTEX was awarded medals in each one of the 12 categories that Paradigm assesses in the mid-market edition with gold medal for exceptional performance or capability in marketplace, promotion management, and customer service and support. Vitex was the only vendor awarded a gold medal for marketplace capabilities and scored silver medals awarded to vendors with superior capability in site search, ability to execute, total cost of ownership, and vision and strategy. We're grateful and humble about the recognition from our multinational customers expanding their relationship with us, opening new stores, as well as from market experts such as Gartners and Paradise. This gives us the confidence and strength to continue pushing further with our strategic plans. We stay committed to continue executing with excellence and precision our vision. But as we always say, we know we cannot do all this alone. We are certain that the multiplying forces of collaboration from the ecosystem we built around the text will continue to enable and to unlock even greater outcomes. So we will continue to consistently nurture and expand those relationships. Aligned with our payment partnership strategy and the further monetization of our ecosystem, we're excited to announce that we launched a partnership with Checkout.com, a global payment service provider and leading fintech in EMEA, able to deal with the most relevant international and local payment methods, as well as digital wallet. They are a resourceful solution, especially in new markets for details like North America, Europe, Middle East, and Asia. Checkout.com's partnerships agreement will enable international and local payment methods, nurturing a vast and solid ecosystem of partners and solutions, and promoting better conversion for our enterprise customers. Additionally, A couple of quarters ago, we launched the news of our partnership with AWS. We are now happy to share that more than supporting VTechs, AWS is actively enabling our global expansion. As we become one of their preferred global partners, we're excited to announce that Bell Corp is one of the customers, among others, that went live with us in the third quarter thanks to this partnership. We are extremely excited about this positive momentum and VTech is really looking forward to continue unlocking the potential of this partnership as AWS is also committing themselves to invest along with us in our global expansion, especially in Europe. Great things yet to be done. Before wrapping up, I'd like to share with you some customer success stories as the success speaks volumes more than any other data points. We don't innovate in a vacuum. And for us, seeing how our four guiding pillars are helping our customers achieve their goals is more than fulfilling. So let me go straight to it. The Foskini Group, one of the biggest fashion retailers in South Africa, With more than 4,000 stores, 29 brands, and operations in 26 countries, it's now operating with Vitex gradually rolling out their brands, which are expected to increase over time. With our solution, they will be able to centralize their 29 brands into a main marketplace, customizing the login process, for their end users, providing a frictionless consumer experience while at the same time helping them to have a single source of truth for the multi-brand sales process. We're more than pleased to welcome them to Vitek's family with confidence that we're going to do amazing things together. Eric's Bike Shop, one of the largest bike shops in the U.S., with more than 30 physical stores across the country, chose Vitex to deliver a superior shopping experience to their online consumers. Vitex worked hand-in-hand with Eric's Bike Shop to do a complete revamp of their homepage, and as a result, our customers benefited not only from higher stickiness on the website, which was reflected in lower bouncing rates, and higher number of page views per visitors, but also with a double digit improvement in their conversational rates, session durations, and number of page views per user. Finally, the average order value almost doubled. Adding the leading textile and retail clothing company in Latin America with more than 800 stores, chose VTech's headless approach to provide their end users with the best purchasing experience across all channels, proprietary stores, franchisees, multi-brand third-party stores, e-commerce, as well as additional sales channels such as Facebook and Google Shopping. With us, adding benefited from consistent improvements in all their websites, performance metrics, such as page speed times, conversion rate, average tick times, bounce rates, and kind of enrollment rates, among others. Motorola US, a pioneer in the mobile phone industry, optimized with the product detail page experience, keeping the look and feel while in gaming efficiencies for the page loading time. We're happy to share that together we've been able to achieve an overall paging loads time improvement of 45% and 54% for desktop and mobile respectively, reaching an average time of one to two seconds. Motorola now has active online stores in 19 countries operating with the text and continue expanding to new geographies. This year, they expanded to EMEA and Asia Pacific leveraging our marketplace architecture. Blurring the lines between physical and digital commerce, we continue to see customers implementing our endless IOS solution. This quarter, we had companies such as Samsung and ZDock adopting this new wave that enables their physical stores to sell products from other stores, franchisees, and their commerce operations to enhance conversion in their physical stores. Social commerce continues to show a strong fit for enterprises to meet and sell to consumers, both on their preferred social media channels or at the discovery stage of the product in live shopping events. Belcorp, a multi-level marketing built-in personal care company, present in 13 countries and with three commercial brands, is already a heavy user of this feature. which was one of the many reasons they decided to come to Vitex. We believe that offering this product can become an interesting engine of growth and Vitex adoption, as we position ourselves as innovation frontrunners across the globe. This quarter, we also had an important milestone. We hosted our first event in Mexico, Vitex Connect Lacta, The event took place in Mexico City on September 7th, gathering more than 3,000 in-person attendees and with the participation of 65 speakers from 11 countries. We're proud to have hosted the largest e-commerce event in the country, which we believe marks a watershed moment for VTAC's positioning in the country and in the region. Wrapping up the operational update section, I would like to thank our 1,405 detectors that are working to fulfill our mission, as well as our customers, partners, and investors. Now, I'll turn the call to Ricardo so he can cover our financial progress report for the quarter.