VTEX(VTEX) - 2022 Q3 - Quarterly Report

Financial Information This section presents the company's unaudited interim financial statements and management's discussion and analysis of its financial condition and results of operations Financial Statements The company presents unaudited interim financial statements for September 30, 2022, detailing a decrease in total assets and equity, a net loss, and negative operating cash flow Balance Sheet The balance sheet shows a decrease in total assets to $356.4 million and total shareholders' equity to $277.6 million, primarily due to reduced cash and accumulated losses Balance Sheet Summary | Balance Sheet Items | Sep 30, 2022 (in thousands USD) | Dec 31, 2021 (in thousands USD) | | :--- | :--- | :--- | | Total Current Assets | 285,536 | 349,516 | | Cash and cash equivalents | 29,857 | 121,006 | | Marketable securities | 212,237 | 177,191 | | Total Assets | 356,419 | 414,970 | | Total Current Liabilities | 56,856 | 58,888 | | Total Liabilities | 78,817 | 87,781 | | Total Shareholders' Equity | 277,602 | 327,189 | | Accumulated losses | (116,050) | (63,955) | - Total assets decreased from $415.0 million on December 31, 2021, to $356.4 million on September 30, 2022, primarily due to a significant reduction in cash and cash equivalents[7][9] - Total shareholders' equity also declined from $327.2 million to $277.6 million, driven by accumulated losses[7][9] Statement of Profit or Loss The statement of profit or loss shows a 21.6% revenue increase in Q3 2022, a narrowed net loss for the quarter, but a slightly widened net loss for the nine-month period Statement of Profit or Loss Summary | Metric (in thousands USD) | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 38,754 | 31,864 | 112,135 | 88,657 | | Subscription Revenue | 36,513 | 29,627 | 105,743 | 83,937 | | Gross Profit | 26,127 | 19,073 | 73,897 | 52,825 | | Loss from Operation | (11,294) | (24,369) | (46,893) | (52,787) | | Net Loss for the Period | (11,542) | (21,959) | (52,097) | (49,889) | | Basic Loss Per Share | (0.060) | (0.119) | (0.273) | (0.280) | - For the third quarter of 2022, revenue grew 21.6% year-over-year to $38.8 million, and the net loss narrowed to $(11.5) million from $(22.0) million[11] - For the nine-month period, revenue grew 26.5% to $112.1 million, while the net loss slightly widened to $(52.1) million from $(49.9) million in the prior year[11] Statement of Changes in Shareholders' Equity Shareholders' equity decreased to $277.6 million by September 30, 2022, primarily due to the period's net loss, partially offset by share-based compensation - Total shareholders' equity decreased from $327.2 million at the beginning of 2022 to $277.6 million as of September 30, 2022[13] - The primary driver for this reduction was the net loss of $(52.1) million for the period, partially offset by share-based compensation of $8.9 million[13] Statement of Cash Flows Cash flow analysis reveals consistent negative operating cash flow, significant cash usage in investing activities, and a substantial decrease in financing cash flow due to the absence of IPO proceeds Cash Flow Summary | Cash Flow Activity (in thousands USD) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | (31,808) | (31,830) | | Net cash provided by (used in) investing activities | (46,102) | 11,057 | | Net cash provided by (used in) financing activities | (10,456) | 284,956 | | Net (decrease) increase in cash and cash equivalents | (88,366) | 264,183 | | Cash and cash equivalents, end of the period | 29,857 | 321,629 | - For the first nine months of 2022, cash used in operating activities was $(31.8) million, consistent with the prior year[15] - A significant shift occurred in financing activities, which used $(10.5) million compared to providing $285.0 million in 2021, due to the absence of IPO proceeds[15] - Investing activities used $(46.1) million, primarily for the purchase of short-term investments[15] Notes to Financial Statements Notes provide details on VTEX's SaaS platform, share-based compensation trends, and the fair value measurement of financial instruments including short-term investments and contingent liabilities - VTEX provides a SaaS digital commerce platform for enterprise brands and retailers, enabling them to build online stores, manage orders, and create marketplaces[17][19] - The company's shares are listed on the NYSE under the symbol "VTEX"[17][19] - Total share-based compensation expense for the nine months ended September 30, 2022, was $7.9 million, a significant decrease from $17.4 million in the same period of 2021[59] - The company holds financial instruments valued at fair value, including short-term investments of $212.2 million (Level 1) and contingent consideration (earn-out) liabilities of $0.7 million (Level 3)[71][77] Management's Discussion and Analysis (MD&A) Management discusses the company's performance, highlighting a 21.6% YoY revenue increase and 29.4% GMV growth in Q3 2022, alongside improved operating loss and gross margin, and addresses liquidity and market risks Overview and Key Metrics VTEX provides a SaaS digital commerce platform, with Gross Merchandise Value (GMV) as a primary metric, which grew 29.4% in Q3 2022, and subscription revenue comprising 94.2% of total revenue - VTEX's platform enables customers to execute their commerce strategy, including building online stores, managing orders across channels, and creating marketplaces[94] - Subscription revenue, primarily based on a transaction-based fee model tied to customer GMV, accounted for 94.2% of total revenue in Q3 2022[96] GMV and Growth | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | GMV (in millions USD) | 2,957.5 | 2,284.8 | 8,783.9 | 6,760.2 | | GMV Growth FX Neutral (%) | 28.7% | 4.2% | 25.8% | 37.0% | Results of Operations Q3 2022 saw a 21.6% revenue increase, 37.0% gross profit growth, and reduced operating expenses across all categories, leading to a significantly narrowed net loss for the quarter Revenue Performance | Revenue (in thousands USD) | Q3 2022 | Q3 2021 | % Change | Nine Months 2022 | Nine Months 2021 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Subscription Revenue | 36,513 | 29,627 | 23.2% | 105,743 | 83,937 | 26.0% | | Services Revenue | 2,241 | 2,237 | 0.2% | 6,392 | 4,720 | 35.4% | | Total Revenue | 38,754 | 31,864 | 21.6% | 112,135 | 88,657 | 26.5% | - Gross profit for Q3 2022 increased by 37.0% to $26.1 million, and the gross margin expanded to 67.4% from 59.9% in Q3 2021[132] - This improvement was due to subscription revenue growing faster than personnel costs[132] - Operating expenses for Q3 2022 decreased compared to Q3 2021: - General & Administrative: Decreased 30.2% to $6.9 million[135] - Sales & Marketing: Decreased 16.3% to $16.2 million[137] - Research & Development: Decreased 2.6% to $13.8 million[140] - These decreases were primarily due to lower share-based compensation and efforts to optimize company structure[135][137][140] - Net loss for Q3 2022 was $11.5 million, a significant improvement from a net loss of $22.0 million in Q3 2021[150] - For the nine-month period, net loss was $52.1 million, slightly higher than the $49.9 million loss in the prior year, mainly due to higher financial expenses[150] Liquidity and Capital Resources Cash flow for the nine months ended September 30, 2022, shows consistent negative operating cash flow, significant investing outflows, and a sharp decline in financing cash flow due to the absence of IPO proceeds Cash Flow Summary | Cash Flow (in thousands USD) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | (31,808) | (31,830) | | Net cash provided by (used in) investing activities | (46,102) | 11,057 | | Net cash provided by (used in) financing activities | (10,456) | 284,956 | - The significant change in financing cash flow is primarily attributable to the absence of the $296.3 million in IPO proceeds received in 2021[154] - Capital expenditures for the first nine months of 2022 were $0.3 million, down from $1.6 million in the same period of 2021[155] Market Risk Disclosures The company faces interest rate risk and significant foreign currency exchange risk, particularly between the U.S. Dollar and Latin American currencies, due to a currency mismatch in assets and liabilities - The primary foreign exchange risk relates to fluctuations between the U.S. Dollar and currencies in Latin American countries where VTEX operates, such as the Brazilian real and Argentine peso[161] - As of September 30, 2022, 70.2% of assets were denominated in U.S. dollars, while 84.9% of liabilities were denominated in other currencies, creating a significant currency mismatch exposure[162]