VTEX

executives presenting today are Geraldo Thomas Jr., Founder and Co-CEO, and Ricardo Camatas-Odre, Chief Financial Officer. Additionally, Mariano Gomide de Faria, Founder and Co-CEO, and Andres 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 relating to such matters as continued growth prospects for 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 current 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 PTEX Form 20F for the year ended December 31, 2022, and other BTEX filings within the U.S. Securities and Exchange Commission, which are available on our investor relation website. Finally, I would like to remind you that during the course of this call, first call, we might discuss some non-GAAP measures. A reconciliation of those measures to the nearest comparable GAAP measures can be found in our third quarter 2023 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 2023 earnings conference call. I'm pleased to announce that ZTEX delivered another quarter of strong results. We achieved a 35% year-over-year growth in GMV, driven by the resilience of the same-store sales of our existing customers and the successful go-lives of new stores. On the latter Despite the ongoing uncertainty in the macroeconomic environment, we're pleased to continue to see a stabilization of the ramp-up period and the implementation times, which, as mentioned before, also contributes to our robust performance. Turning briefly to our financial results, as Ricardo will delve into it later, I'd like to highlight two points. First, We've surpassed our revenue projections, reaching $50.6 million this quarter and a 31% growth year-over-year. Second, we achieved our break-even targets from a non-GAAP operating income and free cash flow basis one quarter before our expectations. This is a clear testament of our focus on growth and the power and scalability of our team. Efficiency is ingrained in our DNA, amplifying our results and bringing us closer to becoming the backbone for commerce. Additionally, we delivered a 36% year-over-year gross profit growth and held expenses steady while accelerating our growth under uncertain macros. demonstrating our business model's resiliency and operational leverage. Now, let's go into some operational updates. In Key3, we added several new customers that migrated from other platforms, including Naudo in Argentina, Aiva, Pressolandia, and PicPay B2B in Brazil, Handwheel in Canada, ICB Food in Chile, Coupedrogas, Gabrica, Eurosuper and Matelta in Colombia, V&A and Pharmaciel in Mexico, and Beauty Counter and Pierce Manufacturing B2B in the U.S. In addition to attracting new customers, we also focus on strengthening our relationship with existing customers, actively supporting their growth initiatives. During the third quarter, several premier brands and retailers chose to expand their operations with us by opening new online stores and further integrating with us. This includes Calvin Klein, who added a new store in Ecuador, now operating in nine countries in Latin America. Pharmacity, who added its Simplicity brand in Argentina, now operating with three stores in Argentina and one in Uruguay. Kibok, who added a store in Panama, now operating in six countries in Latin America. And Whirlpool, who added its KitchenAid brand in Austria, Denmark, Finland, France, the UK, and Italy, now operating in Latin America, EMEA, and APAC. We're excited to provide an update on one of the new customers' wins, We shared during our investor day. Beauty Counter, a Callao portfolio company, successfully migrated from its legacy platform to VTech. This migration enabled the consolidation of all their channels into a unified commerce experience. VTech, globally recognized as the number one unified commerce platform provided by Gartner, has demonstrated its ability to launch, large and complex projects in the U.S. These accomplishments represent significant milestones in our global expansion journey, and we are committed to our partnership with Beauty Counter. Furthermore, in addition to the new customer acquisition and the existing customers expanding their operation with us, Two significant events this quarter underscore our progress in solidifying our position as the global enterprise digital commerce platform, where forward-thinking CEOs and CIOs smarten up their investments. The success of VTEX Connect Latin in Mexico and our inclusion in the 2023 Gartner Magic Quadrants for digital commerce. We saw remarkable growth at our second VTEX Connect Latin in Mexico, expanding from over 3,000 to over 7,000 participants. The impressive success of VTEX Connect in Mexico demonstrates our opportunity to continue expanding Latin, especially in Mexico. The event features 60-plus global e-commerce experts, and success stories from VTech customers like Accor, Dior, Levi, D-Box, and Samsung. We also introduced AI-driven improvements focused on customer experience and operational efficiency, such as AI in live shopping, which automates product recognition during live streams, eliminating the need for a production team, AI for the intelligent search to personalize customer experience and boost conversion rate. And AI in pick and pack, which enhances fulfillment efficiency, adapting to demand fluctuations for precise resource allocation. On the industry experts recognition side, Vitex was named a visionary in the 2023 Gartner Magic Quadrant for digital commerce. for its ability to execute and completeness of vision. Vitex was also ranked second for the following use cases, B2C digital commerce, B2C and B2B digital commerce on the same platform, and complex business models. Additionally, Vitex was the top-rated digital commerce platform by Gartner Peer Insights. over the last 12 months. We are both humble and excited about the recognition, underscoring our commitment to helping enterprises achieve agility and cost effectiveness by choosing the best components for their business. Continue our commitment to fostering our ecosystem and offering our customers the most comprehensive solutions We're thrilled to announce two partnerships that have materialized this quarter. First, we're partnering with Cielo, a leading name in payment solutions in Brazil. Their expertise in accrediting establishments for card payments and picks will expand our payment offerings, ensuring our customers access robust solutions in the Brazilian market. Additionally, We've joined forces with PayU, extending our reach across Latin America. These partnerships cover Brazil and all Latin countries, offering a comprehensive payment ecosystem with diverse options, including credit cards and alternative methods like PSA in Colombia. Our mission is to create a seamless payment experience to our customers in the region, These partnerships showcase our dedication to delivering top-tier solutions and enhancing the customer experience. Now, before leaving the stage to Ricardo, I would like to share a couple of success cases from our customers that demonstrate the tangible impact and potential of our platform. At the core of our organization, our customers are in the spotlight, their success will always remain our focus therefore skinny group a leading south african retailer with a diverse portfolio of 26 brands successfully transformed its commerce landscape by partnering with vtex they launched the innovative bash marketplace consolidating 18 brands into one while retaining the flexibility for each brand to customize its marketplace. Since the platform launch, there has been a remarkable 73% increase in multi-brand orders, showcasing the effectiveness of the marketplace and a surge in app sales, accounting for over 35% of total online sales within just two months. Its conversion rate surpassed both mobile web and desktop by over 200% and 80%, respectively. Furthermore, TFG achieved a remarkable 33% improvement in page load speed, contributing to a handset user experience. Sochi Online, a leading Brazilian lottery intermediation platform, shows the VTech had the solution to meet their unique business needs. The decision aimed to enhance their go-to-market strategy, focus on flexibility, experimentation, and improved availability. After migrating to VTech, Sochi Online saw significant conversion rate improvements across multiple channels, thanks to reduced latency and VTech scalability. enabling seamless management of high traffic without downtime. A U.S. aftermarket vendor partnered with Vitex to enhance their B2B online experience, improve customers' interactions, and optimize product tracking. By seamlessly integrating Vitex with their ERP system, they achieved efficient data exchanges and utilized a unified B2B commerce platform. enhancing both sales operations and buying experiences. Detect data redundancy and an extensive product catalog allowed customized dealer experience without extensive development. This adaptability combined with detached platform flexibility underscores the transformative power of modern digital commerce in delivering seamless and enhanced customer experiences. Naudu, an Argentine retail brand specializing in appliances, electronics, and beauty products, with a presence in 14 states and over 70 physical stores, chose the Vitex platform to manage its extensive range of SKUs in the marketplace efficiently. Naudu has implemented payment and promotion features and logistics integrations with third parties. enhancing their ability to seize sales opportunity and improve their customer experience. Pharmacondi, a major Brazilian chain with numerous physical stores, partnered with Vitex to implement omnichannel capabilities. They integrated over 160 of their stores with Vitex, harnessing regionalization, intelligent search, and third-party solutions from the Vitex ecosystem. like Mercado Pago and Google Analytics, for enhanced customer experiences and business performance monitoring. Tejo Car, a premium men's fashion brand in Brazil with 11 physical stores and 200 points of sales, shows VTech's composable architecture for the digital commerce platform. They implemented features like the wish list using VTech's I.O. to enhance the customer experience. Tejoka also leverages VTech's shipping network for efficient delivery and integrates with Google Analytics for user-friendly sales data visualization. This integrated solution significantly improved performance, results in a 7x increase in order conversion rate, a 25% boost in average order value, and a 60% reduction in shipping costs. Our global clothing and accessories retailer, operating in 39 countries through 11 online stores and 10 marketplaces, recently adopted an innovative approach. They integrated VTech's headless CMS with an app that directly retrieves contents and seamlessly integrates into the store framework using native components. This implementation empowers them to customize and oversee web page content efforts. As they can easily define structure and reposition sections, they improve their performance by reducing errors and safeguarding against content loss. PagMenos, a leading player in pharmaceutical retail, swiftly integrated extra pharma into the digital ecosystem using VitaxIO store framework. In just 29 days, this strategy integration led to remarkable results, a substantial increase in sales, a 200% boost in conversion rate, significant audience growth, and reduced operational costs, enhancing the financial efficiency of the PagMianos group while uniting both stores seamlessly. This quarter, we achieved significant success with our live shopping solution. Notably, Pat Bo, in collaboration with ZTEX, hosted a live shopping event during New York Session Week, becoming the sole Brazilian brand to do so. The results were outstanding, with Patibo experiencing a remarkable 300% sales increase and a 125% boost in orders and a remarkable 79% rise in average order value. This event underscores the growing preeminence and effectiveness of live shopping as a dynamic sales channel. Additionally, at Vitex Connect LATAM, Live Shopping took center stage, hosting seven 40-minute events from customers such as KitchenAid, which experienced a remarkable 152% sales spike in their events. In Argentina, Style Store did an event at the most relevant night TV show, attracting over 75,000 viewers. and achieving a 700% sales boost compared to the previous month. To conclude this session, I would like to express my gratitude to our 1,276 VTech employees dedicated to making our declared future a reality and to our customers, partners, and investors. I will now hand the call over to Ricardo to discuss our financial performance for the quarter.

Thank you, Geraldo. Hi, everyone. I'm pleased to share VTAC's Q3 2023 financial results with you. In the nine months of 2023, our performance was consistently strong, surpassing expectations and resulting in positive free cash flow one quarter ahead of schedule. Our Q3 GMV grew by 35% in U.S. dollars and 28% on an FX neutral basis. with Q3 revenue reaching $50.6 million, our 31% year-over-year growth in US dollars, and 25% on an FX neutral basis. Our existing customers remain resilient, and new customers exceeded our expectations with faster-than-expected goal lives. In Q3 2023, our subscription revenue hit $47.5 million, marking a solid 30% year-over-year growth in US dollars. while services revenue climbed from $2.2 million to $3.1 million, largely due to new project implementations. In Q3 2023, our subscription gross margin continued to increase. Non-GAAP subscription gross profit rose to $36.2 million from $26.9 million in Q3 2022. a 35% increase year-over-year, with the margin at 76.2% compared to 75.3% last quarter and 73.8% in Q3 2022. The 247 BIPs year-over-year margin increase reflects our commitment towards efficiency and customer success. The margin increase resulted mainly from optimizing our hosting costs and architecture. We are excited about the progress and remain dedicated to delivering further margin improvements in the future. Our overall non-GAAP gross profit rose to $35.8 million from $26.3 million in Q3 2022, a 36% increase year-over-year, with the margin at 70.7% compared to 68.0% in Q3 2022. This achievement was driven by hosting improvements that I just mentioned and an improvement in our services gross margin in the quarter as we started dialing back on the hypercare mode for Qnew customers in US and Europe. In Q3 2023, our non-GAAP total operating expenses stood at $34.1 million, remaining steady compared to our previous quarter. Therefore, our expenses as a percentage of our revenues significantly improved from 83% in Q3 2022 and 71% last quarter to 67% in Q3 2023, demonstrating our commitment towards efficient expense management while also accelerating our business under uncertain macro conditions. In Q3 2023, we achieved positive non-GAAP operating income a quarter earlier than expected. Our Q3 2023 non-GAAP operating margin reached a positive 3.4% compared to a negative 15.5% margin on the same quarter last year. The significant 19 percentage points year-over-year increase was exclusively driven by revenue growth and gross margin improvements as non-GAAP total operating expenses actually slightly increased year-over-year. Furthermore, we saw a solid 6.1 percentage points improvement in our non-GAAP operating income margin on a quarter over quarter basis. These trends underscore our commitment to profitable growth, subscription cost efficiencies, and stable expenses aligned with market demand and sales efficiency, demonstrating our dedication to strengthening financial performance while sustaining high revenue growth. We are delighted to announce that for the three months ending on September 30, 2023, VTEX achieved a positive free cash flow of $2.7 million. This is a significant improvement from the negative free cash flow of $3.3 million reported in the previous quarter and the corresponding quarter of the previous year. Our positive non-GAAP operating income and improvements in our payables and collection efforts primarily drove this free cash flow result. Before I move to the outlook for Q3 and fiscal year 2023, I would like to update you on our share repurchase program. As of September 30, 2023, the remaining balance under the current authorization was nearly $10.1 million. We've purchased 1.9 million shares at an average price of $5.533 per share. Considering the previous plan that concluded on August 8, 2023, The total repurchase shares amounted to 9.0 million shares with an average price of $4.16 per share and a total cost of $37.9 million. As we look to the future, we are thrilled about Vitek's remarkable adaptability and resilience. Regardless of market conditions and their inherent volatility, Vitek has consistently surpassed market expectations while delivering strong long-term performance metrics. For the fourth quarter of 2023, we are currently targeting revenue in the $55.0 to $57.0 million range, implying a year-over-year growth of 22% on a FX neutral basis in the middle of the range. For the full year 2023, considering the current performance of the company, we are increasing the bottom and the top of the range. now targeting the full-year trend between 22% to 23% on FX-neutral year-over-year basis, implying a range of $196 to $198 million based on October average FX rate and assuming a devaluation of the Argentina's currency aligned with the market futures rates. As we continue executing our profitable growth plans, We anticipate year-over-year improvements in the non-GAAP operating income margin quarter 2023. We hold strong confidence in VTAC's distinctive value proposition. centered on empowering our customers to achieve profitability and sustainable growth by reducing their total cost of ownership and simplifying their commerce infrastructure. Our commitment to incorporating physical stores as the centerpiece of the omnichannel experience position us to provide the rapid growth and profitability our customers aspire to. We'll continue to work towards building outstanding success cases with our customers, offering innovative solutions and seizing opportunities to ensure long-lasting success for our dedicated employees, value customers, innovative partners, and long-term investors. The future is filled with exciting prospects that we are eager to pursue. With that, let's open it up for questions now. Thank you.