VTEX

Hello, everyone, and welcome to the VTEX Earnings Conference Call for the quarter ended December 31st, 2025. I'm Julia Bater Fernandez, VP of Investor Relations for VTEX. Our senior executives presenting today are Geraldo Thomas Jr., founder and co-CEO, and Ricardo Camata-Sodré, Chief Financial Officer. Additionally, Mariana Gomira 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 of continuous 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 undue reliance on these forward-looking statements. Certain risks and uncertainties are described under risk factors and forward-looking statement sections of VTEX Form 20F for the year end of December 31st, 2025, and other VTEX 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 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 fourth quarter 2025 Ernie's press release available on our investor relations website. With that, I hand the call over to Geraldo. Geraldo, the floor is yours.

Thank you, Julia, and good afternoon, everyone. Thank you for joining us today. Today's call is primarily about giving shareholder transparency into how we're positioning the tax to strengthen growth over time. Let me start by acknowledging that our recent growth has been below our long-term ambition. We believe that this is largely cyclical, not structural, driven primarily by three external factors, a more challenging macro environment in Brazil and Argentina, and a more promotional marketplace environment in Brazil. and longer decision cycles as enterprises reassess its priorities in a rapidly evolving AI landscape. More broadly, we recognize the market debate around AI and what it means for software. Although the combination of rapid AI innovation with limited tangible commerce applications so far may elongate sales cycle, the consistent view from our conversations with enterprise CIOs is that AI will change how software is built and operated, but it won't eliminate the need for deeply integrated enterprise-grade platforms that run mission-critical processes. And while AI lowers the cost of writing code, it raises the bar for security, complex integrations, and reliability. Precisely, the attributes enterprises rely on VTech to provide. And consistent with broadly stable dollar churn we delivered in 2025. As value shifts from seed-based to outcome-based, VTech is structurally aligned with this shift. We are not just building AI features, we're building the mission critical backbone for connected commerce that global brands can rely on to deploy AI safely and effectively. We couldn't dive deeper into each of three external factors mentioned, but as we cannot control the environment, let's focus on what we can control, our execution and product roadmap. Starting on that, we see a clear opportunity to improve growth with a plan anchored in four levers, global expansion, B2B, retail media, and AI. While we execute this growth plan, our enterprise focus remains front and center. In 2025, customers generating over $250,000 in ARR reached 158, with revenue from this cohort up 13% year over year. And to illustrate the relevance of our plan, in Q4, our four growth levels represented roughly 15% of subscription revenue. delivering approximately 20% FX-neutral growth and contributing to nearly half of subscription revenue growth. The addressable market for these levers is materially larger than our core Latin American opportunity, and we believe we are well positioned competitively, so our focus now is discipline execution. With that, let me bring our four growth levers to life. First, global expansion. We're winning and scaling in markets where complexity is highest. In 2025, global markets delivered 22% subscription revenue growth. For instance, in Europe, our partnership with Manchester City reached its First milestone with the stadium tour store, offering personalized fan experiences and a single high-performance flow. Second, B2B. We're modernizing large enterprises by delivering complex capabilities that are AI-ready and composable by design, such as contract pricing, curated catalogs, punch-outs, and omni-channel fulfillment. Mondelez launched B2B in Brazil on the text, extending a multi-region footprint. While we're still early in the mix, B2B demanding the U.S. and Europe signals a durable shift, one we are now driving to digitalize across Latin America as well. Third, retail media. 2025 was a turning point. We moved from pilots to a core growth engine with clear margin and creative outcomes. With VTEX ads, customers run on-site, off-site, and in-store campaigns and measure them end-to-end through closed-loop attribution anchored in first-party data. The retail media market evolution plays directly to our integrated model. Enterprise retailers monetize traffic they already own, brands gain performance media tied to transactions, and both parties see results in a single source of fruit. For example, Essity achieved a 39% increase in average conversion rate on average ROAS of about 17x. and consistent month-over-month acceleration in sales driven by retail media performance, demonstrating the power of data-driven campaigns to elevate brand performance in digital retail environments. Finally, AI. Our work here spans two dimensions. First, our product. We're redesigning VTechs with an AI-first approach. For example, Leading Brazilian retailers like Americanas and CNA are using WENI by Vitex to automate high volume support journeys with deep enterprise integrations, such as orders, invoice, and CRM, reducing manual ticketing, speeding resolution, and improving customer satisfaction. Beyond WENI by Vitex, We see AI reshaping how commerce is built, operated, and optimized. We're embedding intelligence across the platform while simultaneously rethinking how we build commerce and run the company. Our multi-talent architecture and role as a mission critical commerce data aggregator give us advantages that point solutions and legacy platforms can't easily replicate. Second, our own operations. AI is already showing up results. Automation in support has expanded gross margins by approximately three percentage points. And in December, we implemented a reorganization in sales and marketing that impacted almost 100 headcounts. This move simplified management layers and centralized our global team for greater agility and efficiency. As we embrace an AI-first operating model, we are aligning our organizations to operate with increased speed, consistency, and technical depth. In summary, we chose structural transformation over incremental steps. Despite the challenging environment, discipline execution and already identified productivity gains support continued improvement in profitability and enable increased R&D investments that drive our AI transformation and deepen our value with top-tier customers. We're evolving VTACs from a platform that powers commerce to a multi-product company. AI-first platform that increasingly automates and orchestrates. We will keep executing behind this plan, expanding with existing customers as they scale on VTech and adding more enterprises to the mix. So these four growth levers translate into sustained compounding growth. With that, And moving to the fourth quarter of 2025, we added new enterprise customers, including Atacado Villanova, Loft Style, Luz da Lua, and TCL in Brazil, Merca Centro in Colombia, Pharmacies and Cruz Azul in Ecuador, Lantas Avanti and T-Fall in Mexico. We also saw expansion activity within our existing customer base such as Estilor Luxottica, launched two new brands in Brazil, E-Ottica and E-Lens, adding to its existing portfolio of stores. Houston launched their B2B website in Colombia, adding to its B2C operation running on Vitex. Mondelez launched a B2B operation in Brazil, expanding its VTACS footprint, ranging from Latin America to Europe. OBI, who expanded to Italy, adding to its operation in Germany and Austria. And Whirlpool launched KitchenAid in Canada, building on its successful store launch in the U.S., while continuing a global relationship in over 20 countries. Even in a softer market environment, customers continue to choose Vitex to support strategic initiatives involving new channels, new geographies, and more complex operating models. Now, before I hand over the call to Ricardo, I would like to express my sincere gratitude to our 1,139 Vitex employees whose dedication and adaptability were critical. I also would like to thank you, customers, partners, and investors for their trust and support. Ricardo, over to you.

Thank you, Geraldo, and hello, everyone. I will now walk you through our financial performance for the fourth quarter and the full year of 2025. Before going to the details, I'd like to frame the year in context. As mentioned by Geraldo, while the external environment pressured our customers' GMV growth and lengthened enterprise decision cycles, 2025 demonstrated the resilience of our business model and the strength of our unit economics. As evidence, we continue to drive efficiency gains and deliver record profitability even in a slower growth environment. In the fourth quarter of 2025, our GMV reached $6.3 billion, representing a year-over-year growth of 17.2% in U.S. dollars and 10.0% in FX neutral. For the full year, GMV reached $20.5 billion. up 12.1% in U.S. dollars and 12.9% in effects neutral. Subscription revenue reached $66.7 million in the fourth quarter, representing a growth of 12.2% year-over-year in U.S. dollars and 5.4% in effects neutral. For the whole year, subscription revenue reached $234.9 million, growing 7.9% in U.S. dollars and 9.5% in effects neutral. Turning to revenue retention, in 2025, subscription revenue from existing stores reached $194 million, and our net revenue retention was 99.5% in FX neutral. Annual dollar turn remained broadly stable year over year. However, given that roughly 60% of our revenue come from a take rate on our customers' GMV, The decline in net revenue retention compared to 2024 was primarily driven by lower same-source sales growth of 6.8% in effect neutral in 2025. This lower same-source sales growth reflected continuous softness in Argentina and more muted consumer spending in Brazil, which weakened over the course of the year. A key highlight for the year was the continued improvement in the profitability of our existing stores. Existing stores gross margin increased from 80% in 2024 to 82% in 2025, while operating margin reached 44%, representing a one percentage point increase year-over-year. This marks the second consecutive year in which DSP&L exceeded the Rule of 40, reinforcing our confidence in sustaining a Rule of 40 performance as the business scales. Moving on to subscription revenue addition, in 2025, new stores added $25 million to our base, representing approximately 13% of our 2024 VTEX platform revenue. As discussed in prior quarters, elongated sales cycles throughout the year impacted revenue added from new stores and will carry over some impact in 2026. On the new source P&L, our focus remains on maintaining a healthy return on the capital allocated to sales and marketing. On that front, LTV over CAC reached approximately four times in 2025. The year-over-year decline in this metric was primarily driven by longer sales cycles and timing, rather than changes in win rates or the underlying attractiveness of the cohort. In fact, our continued enterprise focus drove our number of customers generating over $250,000 in AR to reach 158 customers in 2025. While this represents only 1.9% increase in customer count, it resulted in 14.5% FX neutral revenue increase from this cohort. Looking forward, as mentioned by Geraldo, we adjusted our sales and marketing investments, and we are reallocating capital toward R&D investments to enhance key product offerings such as B2B, retail media, and AI-powered after-sales support. From a geographic perspective, Brazil's subscription revenue grew 12.2% in FX Neutral, supported by the go-live and ramp-up of new stores despite softer sales. Latin America, excluding Brazil, grew 2.1% in effects neutral, and excluding Argentina, the region grew just slightly below Brazil's pace. Subscription revenue from global markets, formerly reported as rest of the world, grew 19.2% in effects neutral, demonstrating continued compounding even as the base expands. Additionally, global markets represented 11.1% of our total revenue. Its contribution margin, defined as gross profit minus directly allocated sales and marketing expenses, improved significantly and approached break-even. Moving down the P&L, we maintained strong cost and expense discipline, while continuing to prioritize investments aimed at supporting revenue re-acceleration. All figures I will now reference are non-GAAP unless otherwise stated. You can find all GAAP to non-GAAP reconciliations on our investor relations website. Subscription gross profit reached $54.6 million in the fourth quarter, resulting in 81.8% subscription gross margin, up from 78.8% in the same period of the prior year. Total gross margin increased to 79.6% compared to 75.0% in the fourth quarter of 2024, driven largely by AI-powered customer support automation and, for a smaller extent, a higher mix of subscription revenue. Operating expenses total $38 million in the fourth quarter, resulting in income from operations of $16.2 million and an operating margin of 23.8%, up from 19.9% in the same period of last year. During the quarter, we executed a reorganization in the sales and marketing to simplify layers, centralize global teams to better leverage AI, as well as align investments with the expected demands. These actions resulted in approximately $2 million severance expense above normalized level. Excluding that one-off impact, operating margin would have been just under 27%. Free cash flow reached $11.1 million in the quarter, representing a 16.3% margin. Adjusted for one-off severance payments above normalized levels, free cash flow margin would have been just over 19%. Considering these level of cash generation and our current cash position as percentage of our market cap, we are announcing a new $50 million 12-month share repurchase program for Class A shares. Looking ahead into 2026, as Geraldo highlighted at the beginning of the call, we remain focused on our four growth levers, global expansion, B2B, retail media, and AI. We are executing with discipline. The productivity we have unlocked across cost of revenue, sales and marketing, and G&A are expanding profitability while funding higher R&D to accelerate our AI transformation and deepen our value with top tier customers. While macro headwinds persist, we remain encouraged by the quality of new customers' additions, our competitive position among global enterprise customers, and the compelling market opportunity across our four key long-term growth initiatives. With that, and recognizing that Q1 seasonality is our lowest GMV quarter and faces the toughest year-over-year comparison, for Q1 2026, we expect subscription revenue to grow at mid-single-digit percentage rate on a FX-neutral year-over-year basis, gross profit to grow at a high single-digit percentage rate on an FX-neutral year-over-year basis. Non-GAAP income from operations should be in the mid-teens percentage margin, and free cash flow should be in the high-teens percentage margin. For the full year 2026, we are targeting subscription revenue to grow at mid- to high-single-digit percentage rate on an FX-neutral year-over-year basis. Gross profit to grow at a high single-digit to low-teens percentage rate on an FX-neutral year-over-year basis. Non-GAAP income from operations to be in the low-20s percentage margin, and free cash flow to be in the low-20s percentage margin. Assuming FX rates remain broadly consistent with January 2026 averages, The FX neutral growth guidance outlined above would translate into higher reported USD subscription revenue growth, adding approximately 8.4 percentage points in the first quarter and 4.5 percentage points in the full year 2026. Before we open to Q&A, I would like to reiterate, we are executing with discipline. investing behind our four growth levers to drive durable growth and shareholder value, and expanding profitability while maintaining a strong balance sheet. With that, let's open it up for questions now. Thank you.

We will now begin the question and answer session. If you would like to ask a question at this time, simply press star followed by the number one on your telephone keypad. And our first question comes from the line of Laveya Mizobaba with JP Morgan. Laveya, please go ahead.

Hi, everyone. Can you hear me? Can you hear? Hello?

Yes, we can.

Hi, yes, we can hear you. Okay. Thank you. Thank you. So, hi, everyone. Thank you for the opportunity for asking questions. I would like to explore a little bit the point of the sales cycle. So what I would like to understand is mainly if you see a turning point on this elongated sales cycle. I mean, from your conversations with CTOs and industry players, what is the feedback that you are having regarding this point? And is there any market intelligence that you could share with us to help us understand when this could normalize? And what do you think is necessary to happen in the market to change the scenario? Is there something that you see as a turning point? And the second point that I would like to explore is the gross margin gains in the fourth quarter. Is it all coming from AI? Is there other elements that are helping you to bring this margin level up? Thank you.

Thanks. Mariano will take the first question and I can take the second one.

Yeah, I can take. Yep, perfect. So make no mistake, what we were seeing is not a deterioration in competitiveness, but a clear allocation of sales cycle. 2024 was a record year for bookings. In 2025, we signed fewer new contracts. That's a fact. and RFP process are taking longer to close. So enterprise customers are simply taking more time to make platform decisions due to macro scenarios and uncertainty of AI future. The primary driver is what we call the AI wait and see effect. There is an enormous amount of discussions around how AI will reshape software. When companies are making a five to 10 years infrastructure decision, with high switching costs, they want clarity. So decisions are being delayed. Sales cycles are being elongated. Importantly to mention is that our win rates remain stable. Our assurance remain in the mid single digits, and it's stable. And this is, in my opinion, a market wide hesitation, not a VTEX specific issue. In response, we streamline our sales and marketing organization to operate more efficient, leveraging all the new AI paradigm and capabilities. The productivity gains are being redirected into R&D, accelerating our AI roadmap and positioning Vitek as an AI-first native platform for commerce enterprise companies. So, yes, momentum is lower and cycles are longer, but fundamentals remain strong. So, Drea?

Perfect. Thanks, Mariano. Drea, on the second question on gross margin, as we mentioned in the previous remarks, we gained roughly three percentage points in subscription gross margin this quarter, from 78.8% to 81.8%. and this is uh basically all ai driven so just to recap over the past three years uh we we gained a lot of uh subscription gross margin uh over the past or the first two years in this three-year period was mostly driven by hosting uh optimizations and gains over the last one year so during 2025 uh it was driven on the support uh function of our existing customers And by automating the support using AI tools, we have managed to gain, you know, three percentage points in margin, and this is sustainable going forward as well.

Perfect. Very clear. Thank you.

And our next question comes from the line of Luca Brendem with Bank of America. Luca, please go ahead.

Hi, everyone. Thank you for taking my questions. I have two on my side here. The first one, if you could comment a little bit on what you think are the main risks and also the main opportunities of AI that you see for the company, both in the short term, but also in the long term. And how do you think this, both sides will pan out in the long run? And also second, if you could comment a little bit on capital allocation, you guys announced the new buyback program. which is very robust. So how can we think about what Vitek plans to do with the cash generation that will be coming in the next years? Thank you.

So thank you very much, Luca, for the question. Gerardo, I'll answer that. So first of all, AI is not a feature upgrade. It's a structural shift comparable to the move to the cloud that we did a decade ago. and make us viable as a company. Our role in this transition is very clear to be the mission-critical orchestration layer of AI-driven commerce. AI is lowering the cost of writing code, everybody's talking about it, but it's raising the bar for security, integration, and reliability. Global enterprise, they don't buy lines of code. They buy future-driven domain knowledge packaged around security and reliability. They need a backbone that propels them for the future with resilience and security. As commerce fragments across AI agents, bots, and new interfaces, the front end becomes increasingly commoditized. But every transaction still needs a centralized system of records to validate inventory, manage price, and trigger fulfillment. That orchestration layer, the single source of truth, is where VTechs operate. We have a cloud-native multi-tenant architecture that gives us access to billions of real-world commerce data points across a lot of verticals. That deterministic data is a strategic asset for training proprietary models certain silos that are on legacy platforms that they cannot replicate. In our own operations, like Sodré and Mariano talked about this already, we've seen a lot of tangible impact. So I would say, Luca, that the risk is that for us and for any other software company is that we don't embrace and adopt the revolution the technological revolution but if we do you know a software company that uh goes to towards these uh technological shift they will be stronger not be weaker than and and we are working very hard to get there with The strength that we already got from a lot of years from now, which is the credibility, the security, the customer base, the proprietary data, I think there's a lot of room for us to use and leverage the high resolution.

Perfect. And on the capital allocation, Luca, So our capital allocation is guided by a simple principle. We prioritize long-term value creation while maintaining the flexibility to navigate a dynamic macro environment. So we are operating from a position of significant financial strength. As our year end 2025, we held roughly, you know, $200 million in cash. So this robust position combined with our consistent free cash flow generation allow us to announce a new $50 million 12-month share repurchase program that I just mentioned. So we view buybacks as a discipline tool to optimize our capital structure, and importantly, to mitigate dilution from our share-based compensation program. While organic growth remains our primary focus, and we talked a lot in the prepared remarks about how we plan to reaccelerate the organic growth, And we are investing more in R&D, you know, to boost our AI transformation and strengthen our, you know, main key growth pillars. We are also strategically active in the M&A market. More recently, our approach has been about acquiring capabilities that accelerate our product roadmap to enhance the platform differentiation. So you've seen these recently, you know, with the WENI acquisition, which has strengthened our Agentech CX product. and Newtail, which accelerated our retail media capabilities. So our capital allocation remains anchored in discipline, ROI, and long-term view for the shareholders.

Very clear. Thank you for the answers.

And your next question comes from the line of Rafael Oliveira with UBS. Rafael, please go ahead.

Hi everyone. Thanks for taking my questions. I got two questions here on my side. So first I want to start here by asking what are the main drivers that could drive revenue growth back to double digits in the next years? If you could disclose any regional breakdown on the current macro backdrop would be very helpful. And the second question would be how is the B2B pipeline evolving both in terms of size and quality

and uh again any color on the global expansion of b2b will be very helpful thank you good good i'll get that uh so to address the back forward like we we know as i said in the paper in the first remarks we're not satisfied and we think that we have a lot of more bandwidth to deal with more complex problems to re-accelerate to come to initiate to start other initiatives that will make the company accelerate and go back to the growth we were used to. So first of all, we need to distinguish between what is cyclical and what is structural. While our Q4 of 2025 subscription revenue growth of 5.4% affectionately reflects a cyclical slowdown mostly driven by Microsoft in Brazil and Argentina, and also an unusually promotional marketplace environment, our structural foundations have never been stronger, in my opinion. We have deliberately evolved the tech into a multi-product company, AI-driven commerce platform, and we're now seeing double-digit growth momentum across four levels that will power our next phase. And I'll try to give some picture on these four levels. So, first of all, is the global expansion. Our markets in the U.S. and Europe delivered 22% subscription revenue growth in 2025. These operations are now approaching break-even contribution margins and are becoming largely self-funded. Characterized B2B commerce, this is a natural extension of our platform that effectively doubles our addressable market, in our opinion. Roughly half. of our new deals in the US and EMEA are now B2B related as enterprise migrate from outdated 20 years old legacy systems to a modern architecture. The third one is retail media. We moved from a pilot to a core engine this year by enabling retailers to monetize the digital traffic capturing ad revenue that represents three to 8% of GMV for marketplace We're creating a high margin, attractive revenue streams for our customers and for VTechs. The fourth one is the AI first approach. AI is already delivering measurable outcomes, such as the 3% point expansion on the gross margin that we talked about. But we also reinvest these productivity gains back into R&D to lead the transition to our AI workspace and vision products that can be transformational to our customers. For the full year of 2026, as comps ease throughout the year, we anticipate a trajectory of gradual acceleration with the expectation that we will exit the year at a faster pace than we entered. While we recognize there are external factors that we do not control, such as the interest rate cycles, the consumption cadence, the broader market volatility, we believe we have the right tools to help our customers reaccelerate their same-store sales and reinvigorate our own sales funnel. So we're staying the course. Executing with discipline and positioning the text as the backbone for the next era of connected commerce. All of that while delivering record profitability, as you noticed.

Okay. About the B2B, can you, if I am not answering correctly, but can you please repeat the B2B question if I misunderstand? But just an overall perspective on B2B. VTEX is a company that has three products and multiple solutions. The products are commerce platform, retail media platform, and agentic CX platform. And we do support with those three products, multiple solutions. Omni-channel B2C, B2B commerce, advertising, retail media for advertisers, retail media for publishers, about B2B, We are seeing that B2B is getting traction, something that we call an acceleration phase, each in deploys and pipeline generation. Our commerce platform product delivers multiple solutions, especially in B2B, showing great momentum. So in fact, something that we can share is roughly half of our deals in the US and EMEA are now B2B related. So that effectively doubles our addressable market within the enterprise tier. If I didn't answer what you wanted about B2B, please let me know.

No, it was super clear. I was just asking about how the B2B pipeline is evolving, but thanks for the call. If I may do just a follow-up here on the AI team, How are you guys seeing the development of these new AI tools from the large tech or LLM providers? Are you guys seeing some competitive pressure? And if you guys could comment about agent e-commerce and how this should be maybe beneficial for the D2C platforms?

You know, I think... Every one of us are very impressed with the velocity of this revolution and eventually are getting to conclusions that are maybe faster than we should have. I see that these AI companies, they're very powerful. They're doing a lot of nice work, a lot of aggregated value, but they're also enabling companies like us to deliver even better software. Just like the cloud revolution, they are enabling us to build much better software. And if we embrace that technology, if we embrace the APIs that they provide to us, I believe that companies like us can provide to the retailers and brands and manufacturers a better solution than they could do it alone. Why? Because, you know, these are high risk workflows. These are problems that are difficult to articulate. These are problems that requires more than building software. This requires credibility, as I said, security, compliance, trust. And I believe we're better positioned as a domain application to provide the solution to our customers than the generic ones. This was always true. We always believed that. In every revolution, when open source code arrived, we believed that. When everybody thought open source code would dominate the world and we're here selling software, selling subscription. When the cloud revolution came, everybody thought that people would internalize There's software because now it's so easy to deploy a server and software industry and detect is much bigger because of the cloud revolution, not despite of that. And now I believe that the AI revolution will give us even more strength to deliver even more value to our customers.

And just adding up on Geraldo's comments here, If the question on other lamps were about the kind of the monopoly on traffic control that can generate the way we see the world of traffic, we used to be controlled by Meta, Google and few marketplaces. And now with a new entrance like Chinese brands becomes a huge traffic controllers. OpenAI with the LLM, like cracking the code of become a huge aggregator. Actually, we are seeing more fragmentation on the traffic industry. So when the traffic layers fragment, the backbone for a multi-channel operation increases value. WhatsApp in Latam, for example, is a huge traffic originator. So the world is evolving rapidly. on creating more channels and not more consolidation of channels. This is, we see as a foundation for strengthening the positioning of anyone in the backbone for commerce market as we are.

We talk about that in our founders' letter on this earnings annual report. I think it's worth it to take a look on our perspective on how this revolution affects us and the market in general.

Yeah, this is a good call.

Thank you so much. I will take a look on that. Thanks.

And our final question comes from the line of Maddy Schreger with KeyBank Capital Markets. Maddy, please go ahead.

hey guys uh thanks for taking the question um obviously you guys called out some macro headwinds but also we're emphasizing global expansion as a key growth lever so how are you thinking about the pace and prioritization of geographic investments um and then in particular as you guys move faster internationally what do you think um is the biggest factor in terms of gaining traction? Was it brand awareness, maybe partnerships or product localization? Is there something we should call out?

Perfect. I can give some color and Geraldo can give as well. We cannot avoid to understand that A company that will leverage the most of the AI revolution is the company that can group competences under org charts. So recently, precisely in December, we changed a lot of our regional approaches by having same competences of people below different managers in many regions in the world, countries and regions, we understood that we need to bring them more in a specialization like functional oriented workshop. So we announced a big reward on the growth structure where now majority of the sales and marketing organizations are oriented by functions and with that we can leverage the most of the AI agentic revolution. The agents are unified by knowledge. What we are seeing Vitex reach the level of brand by being recognized on Gartner for two years consecutive as a customer choice in the Gartner voice. The brand of Vitex now was able to produce clients in all the regions. And now with the global oriented by function org chart, we can deliver through our ecosystem services and solutions among any kind of a regional definition uh we we believe the company that will crack the code on on really uses ai in favor of operational gains will be the ones with a global redness by joining a human plus agents labor and so the regional approach lost importance for us this doesn't mean that the regional localization it is less it's quite the opposite we reduced our solution architect layer of FTEs increasing the trust we do have in our ecosystem that's the sign of the maturity of our ecosystem in the world we are delivering global projects in Abu Dhabi, in Asia, in Nemea, in Africa, in North America, in Latin. And now we are doing this through the ecosystem. That is a transition coming from the last five years. So we are not seeing anymore the go-to-market of edX heavily or kind of exclusively based on regions. Now we are defining our scope to the world that is three products, commerce platform, retail media platform, and agentic tax platform with multiple solutions. The two of the biggest solutions are B2B commerce and omnichannel B2C.

Super helpful. And if I could just ask one follow-up. In your conversations with CIOs and digital leaders. How often are you guys talking about discoverability in the age of agentic commerce and conversion?

DAI, agentic, it is a kind of a top-notch topic in any RFP today, right? What VTech is really focused is to deliver the value aggregation of the disruption in technology. To talk about the technology itself doesn't aggregate outcomes to our customers. But with the Agentech CX platform or Vitex, we have already deployed clients that have saved 80% in the customer service costs. This is AI for us. AI is a medium to deliver the outcome results. that our clients need. And our clients, all over the world, they trust us to future-proof them in terms of AI. So the AI bat of Vitex is pretty big. It's across all our products and solutions. But the one that I would say that is delivering the most results It is our solution of agentic customer service based in our product of agentic CX platform.

Very helpful. Thank you guys very much.

There's no further questions at this time. I will now turn it back over to Geraldo Thomas for closing remarks. Geraldo?

Before we conclude, I want to step back once more and reflect on where the taxi stands today. 2025 tested the market, our customers and our industry, but it also reaffirmed the strength of our foundation. We navigated a challenging environment to deliver record profitability while deepening our relevance with enterprise customers. Crucially, We did this while increasing our investment in R&D to accelerate our AI transformation. As we look ahead, our focus is on execution. As discussed, we remain focused on our four growth levels, global expansion, B2B, retail media, and AI. We believe VTech is structurally aligned with where enterprise commerce is going. and that alignment position us to improve growth over time at this initiative scale. Finally, I want to thank you employees, customers, partners, and investors for their continued trust. Vitex has been built over decades by navigating moments of transitions just like now. Our history shows that our willingness to adapt early, and invest with discipline creates durable value over time. We enter the next chapter with clarity, resiliency, and confidence in our ability to deliver long-term growth and profitability. Thank you for joining us today and we look forward to update you in our progress in the quarters ahead.

That concludes today's call. You may now disconnect.