Zenvia (ZENV) - 2024 Q4 - Annual Report

Financial & Operational Performance Overview Management Commentary Management highlighted the strategic shift to the Zenvia Customer Cloud and acknowledged that while EBITDA grew, it missed guidance due to Q4 challenges - CEO Cassio Bobsin emphasized the launch of Zenvia Customer Cloud, an integrated, AI-driven platform, as the new core business, with nearly 6,000 clients adopting it by year-end[6] - CFO Shay Chor noted that 2024 Normalized EBITDA grew 38% YoY but missed guidance, impacted by Q4 cost adjustments and increased SMS costs, with profitability expected to normalize in 2025[6] Key Financial & Operational Highlights Full-year 2024 revenue grew 18.8%, but gross margin declined, guidance was missed, and the active customer base shrank by 17.8% Full Year 2024 vs. 2023 Financial Metrics | Key Financial Metrics (BRL MM) | FY 2024 | FY 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | 959.7 | 807.6 | 18.8% | | Gross Profit | 294.8 | 330.5 | -10.8% | | Normalized EBITDA | 105.1 | 76.1 | 38.1% | | Income/Loss of the Period | (154.7) | (60.8) | 154.5% | | Total Active Customers | 10,622 | 12,929 | -17.8% | Q4 2024 vs. Q4 2023 Financial Metrics | Key Financial Metrics (BRL MM) | Q4 2024 | Q4 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | 231.4 | 217.0 | 6.6% | | Gross Profit | 36.6 | 110.3 | -66.8% | | Normalized EBITDA | 34.8 | 37.1 | -6.2% | - G&A expenses as a percentage of revenue improved significantly, decreasing by 4.1 percentage points to 11.9% in FY 2024 from 16.0% in FY 2023[5][12] - The company's cash balance increased by 83.4% YoY to BRL 116.9 million at the end of 2024, reflecting a focus on cash preservation[6][19] Subsequent Events & Strategic Outlook Post-year-end, Zenvia launched a new strategic cycle focused on its Zenvia Customer Cloud solution for future growth - On January 13, 2025, Zenvia announced a new strategic cycle centered on its newly launched Zenvia Customer Cloud solution[13] - The Zenvia Customer Cloud platform has been adopted by approximately 6,000 companies, with 20% being international clients[13] - The platform is estimated to have generated close to R$180 million in revenue for the year ended December 31, 2024[13] Business Segment Performance SaaS Business SaaS revenue grew 8.0% annually but declined in Q4, with full-year gross margin falling due to competition and platform launch costs SaaS Business Performance (FY 2024 vs. FY 2023) | Metric (BRL MM) | FY 2024 | FY 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | 318.7 | 295.0 | 8.0% | | Non-GAAP Adj. Gross Profit | 179.1 | 188.3 | -4.9% | | Non-GAAP Adj. Gross Margin | 56.2% | 63.8% | -7.6 p.p. | | Total Active Customers | 5,936 | 7,127 | -16.7% | - Q4 2024 revenue declined 9.7% YoY, primarily due to a decrease in revenues from Enterprise customers facing a very competitive environment[14][16] - The full-year Non-GAAP Adjusted Gross Margin decline was attributed to tighter margins from large enterprises and higher infrastructure costs for the Zenvia Customer Cloud launch[17][18] CPaaS Business CPaaS revenue grew 25.1% annually, but profitability was severely impacted by higher SMS costs and a strategic shift to lower-margin clients CPaaS Business Performance (FY 2024 vs. FY 2023) | Metric (BRL MM) | FY 2024 | FY 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | 641.0 | 512.6 | 25.1% | | Non-GAAP Adj. Gross Profit | 166.4 | 194.3 | -14.3% | | Non-GAAP Adj. Gross Margin | 26.0% | 37.9% | -11.9 p.p. | | Total Active Customers | 4,963 | 6,263 | -20.8% | - Q4 2024 Non-GAAP Adjusted Gross Margin was exceptionally low at 4.0% due to a BRL 27.8 million SMS cost adjustment related to the full year; excluding this, the margin would have been 21.8%[22] - The full-year margin decline was attributed to higher SMS costs and a deliberate strategy to acquire new clients with tighter margins, which is expected to pay off in the long term[23][25] Consolidated Financial Result Analysis Strong revenue growth was offset by significant margin pressure from higher costs and strategic pricing, leading to a miss on annual EBITDA guidance - Q4 performance was negatively impacted by a combination of factors: higher SMS costs and lower margins from new CPaaS clients, alongside fierce competition and increased infrastructure costs in the SaaS segment[25][26] - Despite a 37% YoY reduction in Q4 G&A expenses, the drop was not enough to offset the lower gross margins from both business segments[27] - The company missed its annual guidance for 2024, with Normalized EBITDA of BRL 105.1 million falling below the BRL 120-140 million range, due to the aforementioned margin pressures[19][30][31] Detailed Financial Statements Income Statement FY 2024 saw 18.8% revenue growth but a 10.8% gross profit decline, with a surge in net financial expenses driving a 154.5% larger net loss Key Income Statement Items (FY 2024 vs. FY 2023) | Metric (in thousands of BRL) | FY 2024 (audited) | FY 2023 (audited) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 959,680 | 807,577 | 18.8% | | Gross profit | 294,773 | 330,542 | -10.8% | | Operating gain (loss) | 3,275 | (10,711) | n.m. | | Financial expenses, net | (131,309) | (44,052) | 198.1% | | Income/Loss for the period | (154,658) | (60,771) | 154.5% | Balance Sheet The balance sheet shows a significant cash increase and higher total liabilities, while equity decreased due to accumulated losses Key Balance Sheet Items (as of Dec 31) | Metric (in thousands of BRL) | 2024 (audited) | 2023 (audited) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 116,884 | 63,742 | | Total current assets | 318,990 | 250,331 | | Intangible assets | 1,318,099 | 1,347,327 | | Total assets | 1,743,554 | 1,711,564 | | Liabilities & Equity | | | | Total current liabilities | 674,759 | 607,374 | | Total non-current liabilities | 297,380 | 215,243 | | Total liabilities | 972,139 | 822,617 | | Total equity | 771,415 | 888,947 | Cash Flow Statement Operating cash flow decreased, while a reversal in financing activities led to a net BRL 53.1 million increase in cash for the year Cash Flow Summary (FY 2024 vs. FY 2023) | Metric (in thousands of BRL) | FY 2024 (audited) | FY 2023 (audited) | | :--- | :--- | :--- | | Net cash from operating activities | 107,771 | 162,547 | | Net cash used in investing activities | (62,618) | (53,903) | | Net cash from (used in) financing activities | 9,105 | (143,766) | | Net increase (decrease) in cash | 53,142 | (36,501) | Indebtedness Total indebtedness increased to BRL 126.9 million at year-end, driven primarily by a rise in working capital financing Indebtedness (as of Dec 31) | Category (in thousands of BRL) | 2024 (audited) | 2023 (audited) | | :--- | :--- | :--- | | Working capital | 114,762 | 69,667 | | Debentures | 12,093 | 18,129 | | Total | 126,855 | 87,796 | Non-GAAP Financial Measures Reconciliation Reconciliation of Gross Profit Non-GAAP Adjusted Gross Profit fell 9.7% to BRL 345.5 million after adding back BRL 50.7 million in amortization from the SaaS segment Consolidated Gross Profit Reconciliation (FY 2024) | Metric (in thousands of BRL) | Amount | | :--- | :--- | | Gross profit (IFRS) | 294,773 | | (+) Amortization of intangibles | 50,746 | | Non-GAAP Adjusted Gross Profit | 345,519 | | Non-GAAP Adjusted Gross Margin | 36.0% | - The amortization of intangible assets from business combinations, which is the sole adjustment to gross profit, is entirely allocated to the SaaS segment[45][47] Reconciliation of EBITDA Normalized EBITDA rose 38.1% to BRL 105.1 million, primarily adjusted for non-recurring items like a significant Q4 SMS cost accrual EBITDA Reconciliation (FY 2024) | Metric (in thousands of BRL) | Amount | | :--- | :--- | | Income/Loss for the period | (154,658) | | (+) Taxes, Net Financial Exp, D&A | 250,000 | | Adjusted EBITDA | 95,294 | | (+) Earn-outs | 9,822 | | Normalized EBITDA | 105,116 | - A significant non-recurring event of BRL 27.8 million, related to an SMS cost adjustment, was excluded from Q4 2024 results to arrive at Normalized EBITDA[50]