VTEX

Good afternoon. Thank you for attending today's VTEC's fourth quarter 2022 financials results conference call. My name is Megan, and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to Julia Viter-Hernandez with VTECs.

Julia, please go ahead. Hello, everyone, and welcome to the VTEC's earnings conference call for the quarter ended December 31st, 2022. I'm Julia Báter Fernández, Investor Relations Director for BTEX. Our senior executives presenting today are Geraldo Thomas Jr., Founder and Co-CEO, and Ricardo Camato Sodré, Chief Financial Officer. Additionally, Mariana Domínguez de Faría, Founder and Co-CEO, and Andrés Polidoro, Chief Strategy 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 continuing growth prospects of the company, industry trends, and product 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 currently available information, you are cautioned not to place a new reliance on these forward-looking statements. Certain risks and uncertainties are described on the risk factors and forward-looking statement sections of the BTEX Form 20-F, of the year end of December 31st, 2022, and other BTEX filings within the U.S. Security 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 fourth quarter 2022 earnings press release available on our investor relations website. Now, let me turn the call over to Geraldo. Geraldo, the floor is yours.

Thank you, Juliette. Welcome, everyone, and thanks for joining our fourth quarter 2022 earnings conference call. 2022 was a year filled with uncertainty and volatility for the industry. Still, despite the challenges, our customers' performance and business model demonstrated resiliency and the ability to navigate the ever-changing environment smoothly. In 2022, e-commerce in Latin America grew single digits, while our GMV growth reached 31%, exceeding the market performance by more than 20%. Vitek's customer same-store sales increased to 17% on an FX-neutral basis, indicating that, in addition to new customer ads, existing customers performed above the curve and contributed significantly to our outperformance versus the overall market. As we move forward, our focus for 2023 is clear. We aim to consistently drive growth above market performance, improve our gross margin, and optimize expenses to gain operational efficiencies as we scale. Our goal is to provide a reliable solution to our customers so they can solely focus on expanding their business, while at the same time, we continue to strengthen our comprehensive range of assisted sales products to enable our customers to grow their GMV. Our global expansion journey is evolving with solid steps made in the US and Europe. We also announced that customers going to other countries such as India and South Africa this year. We expect to continue to deliver consistent and tangible results, aiming to become the global backbone for commerce. Reflecting on the performance of the last quarter of 2022, we're delighted to report that our business has seen resilient growth. Although GMV and revenue were below our expectations, we have solidified our position as a regional leader and expanded our reach beyond Latin America. Specifically, in Q4, our GMV increased by 34% year-over-year in US dollars and 29% on an FX-neutral basis, reaching almost the $4 billion mark in a quarter. That's more than our GMV for the entire year of 2019. It was noting that the retail industry faced challenges during the Q4 of 2022 due to lower than expected sales volumes around Black Friday and the holiday season. Despite being impacted by this trend, our business maintained strong performance with Q4 same-store sales improving quarter over quarter. This demonstrates our business strength, resiliency, and ability to navigate challenging macroeconomic environments. Throughout our company history, we have established solid and long-term relationships with our customers, as evidenced by the growing number of stores and countries per customer. In 2022, we were honored to have the trust of over 2,600 customers, with a total of 3,400 stores across 38 countries. Our top 100 customers in 2022 averaged 5.9 stores per customer, with operations in 34 countries. an improvement from 4.8 stores per customers in 2021. In the fourth quarter, we kept making significant commercial progress. We are proud to have attracted and onboarded several premier brands and retailers. In the fourth quarter of 2022, we added several new customers who previously did not have an online presence in the countries they started operating with us. These include Reebok in Argentina, Brazil, Chile, Colombia, and Peru, Super Palm and Brepes in Brazil, InPost Fresh in Poland, and Old Navy in Mexico. We've also added customers that migrated from other platforms. This includes companies that went live in Q4, such as Oboa Hortifruti in Brazil, Garmin in Colombia, Unchained in Romania, and Danone Front Valley in Spain. These brands are well established in their respective markets, and we are excited to have them on board as they will help us expand our reach and strengthen our position in these regions. In addition to attracting new customers, we also focused on strengthening our relationship with existing customers by supporting their expansion efforts. During the fourth quarter, several premier brands and retailers chose to expand their operation with us by opening new stores and further integrating with us. This includes Bell Corp, who added stores in Mexico and Peru, currently operating in four countries in Latin America. Electrolux, who added a store in Brazil, currently operating in six countries in Latin America. Samsung, who added B2B in Brazil. currently operating both B2C and B2B with us, and Carrefour, who integrated more than 150 physical stores into their omni-channel operations in Brazil. This brand's decision to expand their operation with us is a testament of our platform's strength, relevant value proposition, and the trust we provide to our customers. We are excited to continue supporting them in reaching consumers in new geographies and leveraging the physical store's asset base. I would like to briefly mention a significant event this quarter, the Black Friday month of November. Vitex achieved a GMV of $1.75 billion, an increase of 33% in USD compared to November 2021, and 27% on an FX-neutral basis. We were particularly proud of two accomplishments during the holiday season. The dependability of our network, which provided scalability, reliability, and security while giving our customers peace of mind with 100% of time during Black Friday and Cyber Monday week. And the growth in volumes in countries such as Mexico and the United States, both of which joined the top five countries with the highest year-over-year GMV dollar increase among all the tax countries. demonstrating international expansion tangible results. 2022 was a year where we were excited to announce many outstanding partnerships, such as the one with ADN, AWS, eBanks, Facebook, Instagram, MercadoLibre, MercadoPago, PayPal, Stripe, and TikTok. In Q4, we added deals with ClearSale and Nuvei, among others. We entered into a partnership agreement with ClearSail, a company specialized in digital anti-fraud solutions in Brazil and with global expansion ambitions. ClearSail's plugin gives our customers the peace of mind and trust to maintain approval rates and avoid false positives. According to ClearSail, it increases average customer's approval rate by more than 10%. With Nuvei, we entered into our global partnership that will provide greater flexibility and customizations for retailers as VTEX expands deeper into Latin America and new markets across Asia Pacific, North America, and Europe. This new partnership is already available for VTEX customers around the globe. Retailers and brands benefit from Nuvei's advanced acceptance rate optimization capabilities. stimulus on board, and a fully customized approach to accelerate the revenues. Shifting to our customer success story, I'm eager to share with you some examples that demonstrate the capability of our platform and how our customers have achieved exceptional results. A leading global kitchen and laundry appliance company through its global account has continued to expand its partnership with VTech. Our global contract signed by VTech's US branch was a crucial factor in successfully launching their high-end home appliance brand in Europe. Our customer is now utilizing a composable approach in EMEA with VTech's new customized checkout solution, which allows customers to have more flexibility in their checkout page by leveraging VTech's APIs with all store framework components. Their high-end home appliance brand fully adopted the headless approach in the front end with its new e-commerce website for Ireland. With that, they can now select the tools they need to create a tailored user experience and quickly build content-rich shopping experiences without starting from scratch. Motorola leveraged its global contract to launch its online store in India. The localization provided by VTEX in that region was crucial for the successful implementation, particularly during the local regulatory compliance framework. On top of that, the easy integration of third parties helped Motorola to enable multiple 3PLs, third-party logistics. Motorola has also highlighted that the VTEX customer success team was extremely helpful in addressing all technical challenges without needing third-party vendors. They went live with a new homepage layout, including different banners and sections that were extremely easy to customize for their non-technical team. As a result, Motorola has benefited from a fast checkout process and an intuitive website navigation, which has increased its conversion rate. We continue to attract new customers in Europe, including Anshan, one of the world's largest retailers with a relevant presence across Europe, who went live with Vitex in Q4 to relaunch its online operations by introducing new features to enhance the customer experience in Romania. The new platform is more user-friendly and offers new integrated functionalities that can be accessed from any device including fresh product delivery along with new delivery and pickup locations. Vitex is also helping Anshan with website page loading speed and mobile adaptability. There are still more features for customers and user-generated content improvements to come. Anshan aims to provide a first-class online shopping experience that complements what consumers already find in their physical stores by leveraging our solutions. The grocery industry is undergoing a digital transformation, with e-commerce operations being the fastest-growing subsector, according to a report by Statista. Vitex, through its FastStore platform, has established itself as the go-to partner for retailers offering this type of service. It does this by leveraging its omnichannel capabilities and time-saving features for speed and flexibility. increasing efficiency and boosting sales by integrating brick-and-mortar inventory and onboarding third-party sellers from a wider product selection with no added operational costs. Additionally, VTech's distributed order management system allows retailers and brands to handle complex fulfillment scenarios, leveraging multiple commerce channels to offer various delivery options while streamlining operations. These enable grocery commerce channels to provide fast in-store and curbside pickup by assembling orders from multiple inventory sources, such as pickup locations, distribution centers, and other brick-and-mortar stores, resulting in optimal fulfillment. For example, Tenkonsud, a large conglomerate with a range of products from grocery to home improvement, trusts Vitex to run their 14 brands operations. The company has been operating with us since 2016. With VTech's new speed delivery filter capability, they increase their conversion rates, accelerating sales, and customer satisfaction level. VTech's highly customized solution is helping them to sort different categories and sessions, improving their search tools and models to show the best promotions and delivery times for their customers. Along these lines, Carrefour, a leading French multinational corporation specializing in retail, selected Vitex in 2020 to operate in Brazil, the second largest market worldwide, among other Latin American countries. Carrefour has a strong presence in Brazil with 817 stores, including 241 hypermarkets, and 41 supermarkets offering both grocery and no-grocery products. The company selected us to significantly improve its performance in order management, marketplace, and omni-channel service. This migration was made possible due to the scalability offered by Vitex, which allowed for seamless control of the vast number of SKUs in their catalog and the sheer volume of clients in the database. More recently, in Q4 of 2022, Carrier Food integrated their physical stores with our OMS capabilities, including the ability to orchestrate multiple omnichannel strategies, personalize search based on previous purchases, click and collect options, improve home delivery services, and an integrated POS system, among others. These enhancements will leverage Carrier Food's physical stores asset base and undoubtedly lead to an improved customer experience and increased operation efficiency for Carrefour. Our live shopping feature, a native live streaming application that enables brands and retailers to utilize Vitex Commerce platform to create engaging one-to-many or one-to-one live shopping experiences, is boosting engagement and conversion rates, attracting more customers to our base. This feature is opening up new growth opportunities for our customers by streamlining the process of starting, planning, managing, and monitoring the performance of live shop events. This quarter, we had 302 events with a 21 increased quarter-over-quarter, and there were 912 events in 2022. To conclude the operational update, I would like to express my gratitude to our 1,347 VTEX employees who are dedicated to making our declared future a reality, as well as to our customers, partners, and investors. I will now hand the call over to Ricardo to discuss our financial performance for the quarter.