VTEX

Thank you for standing by and welcome to the VTAC's first quarter 2024 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. I'd now like to turn the call over to Julia Vatter-Fernandez, Investor Relations Director. You may begin.

Hello, everyone, and welcome to the VTEX Earnings Conference Call for the quarter ended March 31st, 2024. I'm Julia Vatter-Fernandez, Investor Relations Director for VTEX. Our senior executives presenting today are Geraldo Thomas, Jr., founder and co-CEO, and Ricardo Camatas-Odre, Chief Financial Officer. Additionally, Mariano Gomila 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 related 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 under risk factors and forward-looking statement sections of BTEX Form 20F for the year end of December 31, 2023, and other BTEX filings within the U.S. Securities and Exchange Commission, which are available in our investor relations website. Finally, I would like to remind you that during the course of this conference call, we might discuss some non-GAAP measures. A reconciliation of those measures to the nearest comparable GAAP measures can be found in our first quarter 2024 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, Julia. Welcome, everyone, and thanks for joining our first quarter 2024 earnings conference call. As we step into 2024, despite macroeconomics uncertainties, our GMV continued to outperform the market, growing 22% year-over-year. Slightly above that, our revenue grew 25% year-over-year in the first quarter of 2024. We remain encouraged by new contract signatures and the operational leverage of our business model, resulting in significant operating margin expansion. In today's retail landscape, seamless integration of software solutions, content creators, and suppliers within an efficient architecture is imperative for low maintenance costs and rapid revenue generation. Commerce has evolved into an ecosystem-driven play, and VTech is at the forefront of connectivity. With an extensive network comprising over 1,000 system integrators and independent software vendors and over 6,000 ZTEX IO extensions by third parties, we deliver comprehensive solutions with remarkable speed and efficiency. Our ecosystem extends beyond that. Our customers can easily become marketplaces and connect to external marketplaces. Sales rep also play a crucial role in the consumer journey, and we're investing in connecting them across all channels. Additionally, this year, we're strengthening connections through data, leveraging AI to extract valuable insights. We envision VTech as the source of truth for sales attribution data, which is vital for developing AI models in commerce. At Vitax, we are delivering significant year-over-year operating margin increases while also launching products that reshape commerce for IT and business teams, driving sustainable growth with compelling ROI. Introducing new revenue streams paves the way for our long-term expansion while enhancing operational efficiency and margins. We're excited about Vitek's future, focusing on growth, margin optimization, and customer success. Positive feedback from customers and industry experts reaffirms our position as the global leader in connected commerce. We're leveraging these strengths to drive significant sales momentum. Our recent expansion into Germany underscores our commitment to global growth, while sustained sales momentum in Brazil highlights our long-term growth potential. In the first quarter of 2024, we celebrated successful go-lives of new customers, including CUNY Hair Cosmetics, manufacturing in Belgium, the Netherlands, and France, Arado, Cruzeiro do Sul, Pet Yard in Brazil, Tres Montes in Chile, OVI in Germany, Pagina d'Ale shop in Italy, KFC in Romania, and H-Mart in the U.S. Furthermore, we have strengthened our relationship with existing customers, such as Grupo Soma, who added a new store in Chile, expanding its presence to more than 10 stores across Latin America and the U.S. Himno De Group, who added a B2B store in Brazil, now operating both B2B and B2C models across two countries in Latin. Hugo Boss, who added a new store in Colombia and Peru, increasing its footprint to four stores across Latin America. And Nike, who added a new store in Colombia, extending its reach to three countries in Latin America. This year, Vitex achieved a significant milestone in its journey of growth and innovation by successfully launching the OBI operation in Germany. These moves marked a pivotal moment in our commitment to the European market. Talking about milestones, I would like to draw attention to a significant event in the first quarter of 2024 that happened right after NIF. Vitex Connect Live New York City made a resounding debut at the first U.S.-based event of its kind, drawing over a thousand influential in-person attendees eager to immerse themselves in the latest trends and strategy shaping digital commerce. The event was a hub of inspiration and network opportunities for commerce leaders seeking to navigate the evolving retail landscape. In addition to featuring the renowned entrepreneur and Basketball Hall of Fame, Magic Johnson, our event included a panel discussion with Hearst. They shared insights into their decision to partner with VTech. highlighting how this choice enabled them to significantly decrease the total cost of ownership, transitioning from a TCO of high single digits after GMV to low single digits with Vitex. The event highlighted the significance of equipping retailers and brands with the essential tools in today's high interest rate environment. As global interest rates remain high, business must optimize organic sales channels and enhance margins. The event demonstrated that ZTEX strikes the balance between flexibility and low maintenance commerce technology, enabling its customers to stay ahead in the dynamic world of retail. Additionally, as mentioned, we started 2024 with strong momentum with industry analysts, firms recognizing VTech as top performer. In January, we were recognized as the customer's choice and got the voice of the customers for digital commerce. By February, we also earned the top spot in the IDC marketplace worldwide B2C digital commerce platform for mid-market growth vendor assessment study. With this strong start, 2024 is shaping to be an even more remarkable year for BTEX. Now, let's focus on what matters most, our customers. Here are just a few customer success stories that exemplify our platform capabilities and the remarkable outcomes they achieved. OBI, one of our new live customers this quarter, is a titan in Europe's home improvement sector. With more than 640 stores scattered across 10 European countries, with headquarters in Germany, By migrating away from the previous legacy platform and choose VTEX over the others, ODI can now leverage the VTEX composable and complete commerce platform, marketplace capabilities, and unparalleled automation processes. OBI seamlessly integrated to its e-commerce operation 349 Germany-located physical stores and third-party sellers into a unified transaction platform, expanding product offerings and providing customers with a seamless shopping experience across various delivery and pickup options. With integrated physical stores nationwide, Customers can now pick up online orders within just two hours, showcasing the platform efficiency and effectiveness and meeting consumer needs. Since migrating to VTEX, OBI has experienced significant enhancements, including unified franchise management, smooth ramp-up of platform traffic, improved front-end metrics, and increased agility in development processes. This collaboration not only enhances OBI's current operation, but also opens doors to a world of future possibilities. It's a testament to VTech's enabling commitment to driving profitable growth and fostering innovation for enterprise brands globally. Chloe, the most relevant leather goods brand in Mexico, partnered with Vitex to lead through omni-channel strategies and its international expansion. Vitex's composable platform helped them reduce implementation costs and streamline processes. Among its standout features, personal shoppers emerged as a game changer, offering customized shopping experiences. With exact innovative solutions, Chloé achieved remarkable results, a 14% increase in digital sales by the end of 2023. Standout features like personal shopper reduced returns and improved decision making, while enhancing checkout performance and diverse permanent methods boosted offline sales. Chloé's e-commerce success evidenced by a 60.5% conversion rate increase and a 12.5% growth in average order value underscored the impactful collaboration between VTech and Chloé. Future plans include adding the cross-border functionality for expansion into new markets and personalize our experiences through live shopping. demonstrating Chloe's commitment to continual growth and innovation. Colgate's partnership with E-Tech is the embodiment of innovation in digital commerce. Recognizing a gap in the customer experience between dental professionals and their customers, Colgate got to work by building a unique B2B2C marketplace e-commerce model with a network of consultants covering diverse regions, Scalability of this digital transformation was vital. Colgate saw a platform accommodating complex B2B requirements, including a specialized login system for certified dentists and seamless integration with partners. Leveraging VTAC's native scalability, Colgate developed a pioneering marketplace for dentists, offering integrated distributor products and fostering sales growth without logistical expenses, streamlining implementation and reducing costs. The strategic enhancements like cashback promotions and the loyalty program further augmented its sales. Colgate started its operation with Vitex in Brazil, and in the fourth quarter of 2023, it added two B2B sites in the U.S. PCA's keen and co-gated profession, further leveraging our fully composable and marketplace-enabled architecture. Dimach, a grocery distributor in Chile catering to over 24,000 customers across eight regions, partnered with Vitex to revolutionize their B2B operations. Embracing VTech's innovative solutions, DMACC embarked on a digital journey to tap into strategic growth opportunities by expanding its sales channels. With the launch of the B2B website, DMACC established 24-7 online stores, ensuring seamless access to their products for customers around the clock. Utilizing B2B Suite as the cornerstone of their architecture, DMACC implemented a closed website model, offering product prices exclusively upon customer's login, while leveraging essential tools such as checkout, catalog, and OMS. With VTEX guidance, DeMarc is streamlining its pricing strategy, condensing its price list from 600 to 60 years based on location and customer segment. Since the platform launched within a swift four-month implementation period, DeMarc witnesses remarkable growth, experiences a 10x increase in GMV and orders, doubling their commercial rate, and achieving a 4% point boost in profitability compared to traditional channels alone. First, the leading global diversified media information and service company chose Vitex for its extensive native capabilities, adaptable multi-site architecture and Vitex IO development platform, enabling the integration of custom features. Leveraging Vitex, Hertz established a marketplace supporting multi-vendor business models, thereby seamlessly enhancing the customer experience across its publication and shoppable interfaces, facilitating the easy purchase of feature products. With VTech's out-of-the-box features and acceptable APIs, Hearst swiftly launched its platform and iteratively leveraged new business models in the digital economy. Furthermore, Hearst serves as the flagship customers piloting VTech's data pipeline and VTech's fast checkout, currently undergoing A-B testing for the Men's Health website as the primary checkout experience. Interfood, a leading Brazilian beverage importing company with a global presence of over 100 locations, has been a satisfied VTEX B2C customer since 2020. Recently, they chose VTEX also to power their B2B operations, unlocking a new realm of opportunities. Leveraging V-TECH's B2B switch tool, InterFood seamlessly integrated APIs to create microservices, streamline customer registrations, and credit control processes for enhancing organizational management. Additionally, with V-TECH's IO App, The VTEX team tailored tax requirements to match internal food needs precisely, exemplifying VTEX dedication to meeting and exceeding customer expectations. KFC, a quick service restaurant giant, selected VTEX in Romania to power the B2C operations. Seamlessly aligning with VTech's out-of-the-box functionalities, KFC switched and launched the website and mobile app for both iOS and Android, all from a single code base. I am proud to say that VTech's team was able to adapt and tailor ordering and payment methods to meet KFC's specific requirements and be ready to launch the products in only four months. Meso, a leading Brazilian dermal cosmetics chain expanding nine states, partnered with Vitex to develop the B2C and B2B platforms. The Swift launched two stores, Meso Cosmetics and Meso Professionals, leveraging seamless connectivity with physical stores and a unified data source for streamlined operations. Each franchisee account serves as a white-label seller representing individual physical stores and ensuring optimal inventory management across territories. Remarkably, the project was completed within a mere three months. New Balance, the global brand catering to sneakers, is two guests and migrated to Vitex and doubled their website conversion rates in Brazil. With the previous e-commerce platform, New Balance has struggled to deliver innovative experiences limited to basic sales journey due to the high development costs and resource allocation constraints. The text-composable platform, plug-and-play functionalities, and extensive partners ecosystem caught New Balance's attention. Once manual and labor-intensive, integration of pricing catalogs and XML automation became seamless with Vitex API integrations, empowering their teams to manage promotion and discounts autonomously. The migration to Vitex facilitated rapid results for new balances e-commerce, which led to a significant increase in product page visits double conversions and revenue growth within a month was post-migration. Before handing over to Ricardo, I want to revisit some exciting announcements from VTech today. This year's event boasted over 20,000 attendees, highlighting the impressive reach of the VTech ecosystem. Some of the announcements include the Fresh Store, empowering brands with agile front-end solutions for tailored store experiences, now available for both B2B and B2C use cases. The TechEd Network, revolutionizing digital advertising through AI-driven targeting and auctions. The Tech Data Pipeline, offering specialized APIs for seamless data retrieval and sharing. detect shoot, safeguarding against security threats, and preserving revenue and trust, along with AI-powered features across the search engine, like shopping and pick-and-pack operations, optimizing user experiences and boosting conversion rates, and marketplace enhancements for streamlined operations and accelerated time-to-revenue. This represents just a handful of the training advancements we've reviewed on our innovation and growth journey here at Vitex. We're reshaping the commerce landscape with pioneering products specifically designed for enterprise customers and their IT and business teams. Our solutions empower our IT teams with patchy net functionality, while our intuitive interface empowers businesses' teams to implement strategies seamlessly. Ultimately, our products are geared towards optimizing end-user retention and attraction, boosting conversion rates, helping our customers optimize their e-commerce platform to amplify their ROI. Moreover, these products will open up new revenue streams for VTechs. While the short-term impact may not be significant, they could play a role in our long-term growth trajectory. I'd like to take a moment to express my gratitude to our 1,334 dedicated VTechs employees. whose unwavering dedication and commitment propel us forward as the backbone for connected commerce. I'd like also to thank our valued customers, partners, and investors. I will now hand the call over to Ricardo.