International Presence and Competition - In the years ended December 31, 2024 and 2023, the company generated 43.4% and 45.7% of total revenue from customers outside Brazil, respectively [62]. - The company currently has customers in 43 countries, indicating a broad international presence [62]. - The company faces intense competition from established companies such as SAP Hybris, Oracle Commerce, and Shopify Plus, which may impact its ability to attract and retain customers [55]. - The company may face risks related to international sales, including competition with established local competitors and increased costs associated with cross-border operations [63]. - The company faces significant risks in managing international operations, including increased costs and compliance challenges, which could limit growth potential [65]. Sales and Revenue Generation - The company primarily generates revenue through subscription plans, which include a fixed fee and a revenue-sharing component based on a percentage of the customer's GMV [173]. - The company experienced seasonal fluctuations in subscription revenues, historically generating higher revenues in Q4 due to increased GMV during the holiday season [120]. - The company generates a disproportionate amount of revenue in the fourth quarter, making any disruptions during this period particularly detrimental to operating results [89]. - Total revenue increased by 12.5% to US$226.7 million in 2024, up from US$201.5 million in 2023, following a 27.8% increase in 2023 from US$157.6 million in 2022 [173]. - The sales cycle for customers can be long and unpredictable, particularly for mid-market and large enterprise customers, which may delay revenue recognition [146]. Marketing and Customer Acquisition - The company plans to continue expanding its sales force and strategic business partners both domestically and internationally to increase its customer base [52]. - The effectiveness of the company's online advertising may vary due to competition for key search terms and changes in search algorithms, potentially affecting traffic to its website [53]. - The company has made significant expenditures in marketing campaigns, but there is no guarantee that these investments will lead to cost-effective customer acquisition [44]. - The company relies on search engines and social networking sites for customer acquisition, making it vulnerable to changes in algorithms and advertising policies that could reduce traffic [125]. Cybersecurity and Data Protection - Cybersecurity risks, including potential data breaches, could harm the company's reputation and lead to significant liabilities [81]. - The company experienced a significant increase in cybersecurity threats, with a noted rise in cyberattack activity since the onset of the COVID-19 pandemic [84]. - The company relies heavily on third-party service providers for data security, and any vulnerabilities in these providers' systems could compromise the company's operations and data integrity [84]. - The company maintains cybersecurity insurance for limited customers in the US and EU, but this coverage is not global and may not be sufficient for large claims [86]. - The company is subject to various data protection laws, and any failure to comply could result in significant fines and damage to reputation [87]. Regulatory and Compliance Challenges - The company must navigate complex international regulations, including data privacy laws, which could affect operations and customer deployment of products [65]. - The company must comply with data protection laws such as Brazil's LGPD, which imposes strict requirements on the processing of personal data [107]. - Penalties for violations of the LGPD can include fines up to R$50 million per violation and restrictions on data access [109]. - The company faces potential fines of up to 4.0% of annual worldwide revenues or €20 million for serious breaches of GDPR, which could significantly impact its financial condition [110]. - Compliance with privacy and data protection laws is becoming increasingly complex and may require significant resources to adapt, potentially affecting business operations [116]. Financial Performance and Risks - In 2024, the company generated a net income of US$12.0 million, marking the first profitable year since 2019, after incurring net losses of US$13.7 million in 2023 and US$52.4 million in 2022 [173]. - The company recorded net losses from 2019 to 2023, indicating challenges in generating sufficient revenue to sustain profitability [172]. - The company may require additional financing to support future capital needs, and failure to raise capital could harm its business and financial condition [139]. - The company faces uncertainty regarding tax liabilities due to complex and varying interpretations of tax laws across different jurisdictions [155]. - Changes in tax laws or regulations could adversely affect the company's operations and financial performance, potentially leading to increased costs for both the company and its customers [151]. Operational and Management Challenges - The company is dependent on the continued performance of senior management and key employees, with potential adverse effects on business if key personnel leave [76]. - The company may face challenges in hiring and retaining qualified personnel, particularly in technical and engineering roles, which could impact future success [71]. - The company has identified material weaknesses in internal controls over financial reporting, which could impact the accuracy of financial statements and investor confidence [166]. - The company may face challenges in maintaining its corporate culture as it grows, which could affect innovation and employee retention [132]. - Legal proceedings and investigations may divert management's attention and resources, potentially harming the company's reputation and financial condition [179]. Economic and Market Conditions - Political and economic instability in Brazil and Latin America could adversely impact the company's operations and the trading price of its Class A common shares [180]. - The ongoing war between Ukraine and Russia has led to increased oil prices, affecting operational costs and financial conditions for companies operating in Brazil [218]. - Inflation rates in Brazil were 4.8%, 4.6%, and 5.8% for the years ended December 31, 2024, 2023, and 2022, respectively, indicating ongoing inflationary pressures [207]. - The U.S. Federal Reserve's interest rate changes, which reached 5.50% in July 2023, may redirect capital flows from emerging markets, impacting the financial condition of companies in Latin America [217]. - The company is subject to significant foreign currency exchange controls in countries like Argentina, which may limit its ability to transfer funds and increase operational costs [186].

Core Viewpoint - VTEX has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of changing earnings estimates as a key driver of stock price movements, particularly due to institutional investors' reliance on these estimates for valuation [4][6]. - For VTEX, the rising earnings estimates suggest an improvement in the company's underlying business, likely leading to increased stock prices as investors respond positively [5][8]. Earnings Estimate Revisions - VTEX is projected to earn $0.08 per share for the fiscal year ending December 2024, reflecting a substantial year-over-year increase of 214.3% [8]. - Over the past three months, the Zacks Consensus Estimate for VTEX has risen by 9.3%, indicating a trend of increasing analyst optimism [8]. Zacks Rank System - The Zacks Rank system categorizes stocks based on earnings estimate revisions, with only the top 5% receiving a 'Strong Buy' rating, positioning VTEX favorably for potential market-beating returns [7][10]. - The Zacks Rank 1 designation for VTEX places it among the top stocks in terms of earnings estimate revisions, suggesting a likelihood of upward price movement in the near term [10].

Core Viewpoint - VTEX shares have increased by 1.4% recently, closing at $6.64, with a mean price target of $9.74 suggesting a potential upside of 46.7% [1] Price Targets and Analyst Estimates - The mean estimate consists of five short-term price targets with a standard deviation of $2.50, indicating variability among analysts [2] - The lowest estimate is $6.70 (0.9% increase), while the highest is $12.50 (88.3% increase) [2] - A low standard deviation signifies a high degree of agreement among analysts regarding price movement [7] Earnings Estimates and Market Sentiment - Analysts show increasing optimism about VTEX's earnings, with a positive trend in earnings estimate revisions correlating with potential stock price increases [9] - Over the last 30 days, the Zacks Consensus Estimate for the current year has risen by 5.9%, with one estimate moving higher and no negative revisions [10] - VTEX holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [11] Caution on Price Targets - Analysts' price targets can often mislead investors, as empirical research indicates they rarely predict actual stock price movements accurately [5][6] - While price targets should not be ignored, relying solely on them may lead to disappointing returns on investment [8]

Core Viewpoint - VTEX has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][2]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of earnings estimate revisions, which are strongly correlated with near-term stock price movements [3][5]. - Institutional investors often adjust their valuations based on changes in earnings estimates, leading to significant stock price movements [3]. VTEX Earnings Outlook - For the fiscal year ending December 2024, VTEX is expected to earn $0.09 per share, reflecting a 228.6% increase from the previous year [7]. - Over the past three months, the Zacks Consensus Estimate for VTEX has risen by 42.1%, indicating a positive trend in earnings expectations [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [6]. - The upgrade of VTEX to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Financial Data and Key Metrics Changes - VTEX reported a GMV of US$4.4 billion, reflecting a year-over-year growth of 10% in US dollars and 17% in FX neutral [42] - Revenue reached US$56.0 million, representing an 11% increase in US dollars and 19% in FX neutral [42] - Subscription revenue grew to US$53.9 million, up 13% in US dollars and 22% in FX neutral, driven by new contract signatures and strong performance from existing customers [43] - Non-GAAP gross margin improved to 75%, up from 71% year-over-year, with subscription gross margin at 79% [45] - Free cash flow reached US$7.7 million, representing a 14% margin, up from 5% in the same quarter last year [48] Business Line Data and Key Metrics Changes - Services revenue totaled US$2.1 million, a reduction by design as new customers in the US and Europe rely less on direct services from VTEX [44] - The company achieved a positive 14% non-GAAP operating income margin, marking a 10 percentage point improvement year-over-year [46] Market Data and Key Metrics Changes - Strong sales momentum was noted in Brazil, with significant new customer wins including Fast Shop and Bemol [11][68] - In the US and Europe, the portfolio expanded across categories, with notable go-lives from Colgate-Palmolive and Keune [70] Company Strategy and Development Direction - VTEX aims to become the backbone for connected commerce, focusing on profitable growth and maximizing revenue [50][84] - The company is committed to achieving the Rule of 40, with a target subscription gross margin of 80% [63][82] - Strategic acquisitions, such as Weni, enhance VTEX's customer experience capabilities [23][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the macroeconomic environment clearing, allowing VTEX to capitalize on market opportunities [49] - The company anticipates FX neutral year-over-year revenue growth of 14% to 17% for Q4 2024, and 18.5% to 19.5% for the full year [51][52] - Management highlighted the importance of strong sales momentum and operational efficiency in seizing future opportunities [53][84] Other Important Information - VTEX hosted VTEX Connect Latam 2024, a significant event for digital commerce in the region, enhancing brand awareness and lead generation [16][17] - The company introduced new features in the VTEX Ad Network, improving advertising capabilities and customer engagement [19][21] Q&A Session Summary Question: Growth of subscription revenues by region - Management noted a total revenue growth of 18.7% in FX Neutral, with subscription revenue growing 22% in FX Neutral despite challenges in Argentina [56][59] Question: Sustainability of margins - Management confirmed that margins are sustainable, with ongoing progress towards target gross margins of 80% for subscription revenue [63][64] Question: New contract signature momentum - Management highlighted strong B2C growth in Brazil and expanding portfolios in the US and Europe, with notable new contracts and go-lives [68][70] Question: Relationship with system integrators - Management indicated that the ecosystem of system integrators is maturing, reducing the need for direct services and enhancing profitability [74][76] Question: Competitors and system integrators - Management observed a stable competitive environment with no significant shifts, maintaining a focus on subscription revenue as the key indicator of business health [78][79]

| --- | --- | |---------------|-------| | | | | November 2024 | | Safe Harbor This presentation has been prepared by VTEX ("we," "us," "our," "VTEX" or the "Company"). This presentation may contain 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 t ...

Core Insights - VTEX reported revenue of $56 million for the quarter ended September 2024, reflecting a year-over-year increase of 10.6% [1] - The earnings per share (EPS) was $0.02, an improvement from -$0.01 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $57.08 million by 1.89% [1] - The company did not deliver an EPS surprise as the consensus estimate was also $0.02 [1] Financial Metrics - Gross Merchandise Volume (GMV) was reported at $4.38 billion, below the average estimate of $4.51 billion from two analysts [3] - Services revenue was $2.10 million, significantly lower than the average estimate of $2.56 million, representing a year-over-year decline of 31.9% [3] - Subscription revenue reached $53.90 million, slightly below the average estimate of $54.52 million, but showed a year-over-year increase of 13.4% [3] Stock Performance - VTEX shares have returned -4.6% over the past month, compared to a -0.5% change in the Zacks S&P 500 composite [4] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [4]

Core Viewpoint - VTEX reported quarterly earnings of $0.02 per share, matching the Zacks Consensus Estimate, and showing improvement from a loss of $0.01 per share a year ago [1]. Financial Performance - The company posted revenues of $56 million for the quarter ended September 2024, which was a 10.5% increase from $50.63 million year-over-year but missed the Zacks Consensus Estimate by 1.89% [2]. - Over the last four quarters, VTEX has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2]. Stock Performance - VTEX shares have declined approximately 0.3% since the beginning of the year, contrasting with the S&P 500's gain of 19.8% [3]. - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [6]. Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.04 on revenues of $67.66 million, and for the current fiscal year, it is $0.07 on revenues of $233.92 million [7]. - The estimate revisions trend for VTEX is mixed, and changes in earnings expectations may occur following the recent earnings report [6]. Industry Context - The Internet - Software industry, to which VTEX belongs, is currently ranked in the top 26% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]. - Another company in the same industry, Soho House & Co, is expected to report a quarterly loss of $0.01 per share, reflecting a year-over-year change of +95.5% [9].

Revenue Growth - Total revenue for the three months ended September 30, 2024, was $55,996, an increase of 10% compared to $50,628 for the same period in 2023[14] - Subscription revenue reached $53,897 for the three months ended September 30, 2024, up from $47,544 in the prior year, representing a growth of 13%[14] - Total revenue for the nine-month period ended September 30, 2024, was US$12.85 billion, compared to US$11.14 billion for the same period in 2023, reflecting a significant growth[68] - Subscription revenue for the nine months ended September 30, 2024, reached $158,244, up 19.8% from $132,078 in the prior year[46] - Approximately 96.3% of total revenue for the three-month period ended September 30, 2024, was derived from subscription services, up from 93.9% in the same period of 2023[68] Profitability - Gross profit for the three months ended September 30, 2024, was $41,718, compared to $35,608 for the same period in 2023, reflecting an increase of 17%[14] - Net income for the three months ended September 30, 2024, was $3,244, a significant improvement from a net loss of $2,379 in the same period last year[14] - The company reported a basic earnings per share of $0.018 for the three months ended September 30, 2024, compared to a loss per share of $0.013 in the same period last year[14] - Net income for the period ended September 30, 2024, was $5,719 thousand, compared to a net loss of $16,917 thousand for the same period in 2023[17] - The company reported a Non-GAAP income from operations of $1.7 million for the three months ended September 30, 2023, compared to a loss of $4.1 million in the same period of 2022[74] Assets and Liabilities - Total assets increased to $373,159 as of September 30, 2024, up from $341,145 at the end of 2023, marking a growth of 9%[10] - Total liabilities stood at $110,946 as of September 30, 2024, compared to $100,813 at the end of 2023, indicating an increase of 10%[10] - Equity attributable to VTEX's shareholders rose to $262,168 as of September 30, 2024, from $240,293 at the end of 2023, reflecting an increase of 9%[10] - Deferred revenue increased to $56,363 as of September 30, 2024, up from $42,532 at the end of 2023, representing a growth of 33%[10] Cash Flow - Cash provided by operating activities was $15,979 thousand, a significant increase from cash used in operating activities of $(5,655) thousand in the prior year[17] - The company reported a net cash used in investing activities of $(17,977) thousand, compared to a net cash provided of $30,294 thousand in the same period last year[17] - The company’s cash and cash equivalents decreased to $22,525 as of September 30, 2024, from $28,035 at the end of 2023, a decline of 20%[8] - Net cash provided by operating activities was US$14.5 million for the nine-month period ended September 30, 2024, compared to cash used of US$5.4 million in the same period of 2023[100] Expenses - Operating expenses for the three months ended September 30, 2024, were $38.846 million, compared to $39.983 million for the same period in 2023, reflecting a decrease of 2.8%[85] - Research and development expenses for the three months ended September 30, 2024, were $13.366 million, down from $15.508 million in the same period of 2023[85] - Sales and marketing expenses increased by 8.7% to $16.4 million for the three-month period ended September 30, 2024, primarily due to increased compensation expenses[93] - Share-based compensation expense for the nine months ended September 30, 2024, was $12,136, slightly up from $12,068 in the same period of 2023[51] Market Position and Strategy - VTEX was recognized as a Customers' Choice in the 2024 Gartner® Voice of the Customer Digital Commerce report, with 98% of customers willing to recommend the platform[65] - The company has been named a Leader in the IDC MarketScape for Worldwide B2C Digital Commerce Platforms for Midmarket Growth, rated highest among 25 vendors[65] - The transaction-based fee model aligns the company's revenue growth with the success of its customers, indicating a strong correlation between GMV growth and revenue growth[67] - The company aims to redefine the boundaries between digital and physical commerce, enhancing customer conversion and efficiency rates[65] Financial Instruments and Risks - The notional value of derivative financial instruments designed as a hedge of foreign currency risk in Argentina was $12,000, with maturity due in December 2024[61] - The company aims to minimize interest rate risk by maintaining a portfolio of cash equivalents in a variety of investment-grade securities[106] - As of September 30, 2024, the company is not materially exposed to the risk of changes in market interest rates due to the short-term maturities of its cash and investments[106]

VTEX (VTEX) is set to report its third-quarter 2024 results on Nov. 5.It expects third-quarter 2024 revenues between $56 million and $57 million, indicating 18-20% year-over-year growth. The Zacks Consensus Estimate for third-quarter earnings has been steady at 2 cents per share over the past 30 days. VTEX reported a loss of 1 cent in the year-ago quarter.The consensus mark for third-quarter revenues is pegged at $57.08 million, indicating an increase of 12.73% from the figure reported in the year-ago quart ...