VTEX(US:VTEX)2022-11-10 23:56Financial Data and Key Metrics Changes - In Q3 2022, VTEX reported a GMV growth of 29% year-over-year, both in USD and FX neutral [9][31] - Revenue increased to $38.8 million, a year-over-year increase of 22% [33] - Subscription revenue reached $36.5 million, up 23% year-over-year, accounting for 94% of total revenue [33] - Non-GAAP subscription gross margin improved to 73.8%, a 560 basis points increase year-over-year [34] - Non-GAAP total operating expenses decreased to $32.4 million from $43.3 million in the prior quarter [35] - Non-GAAP operating income improved from a negative 41.6% margin to a negative 15.5% margin year-over-year [36] - Free cash flow was negative $3.3 million, an improvement from negative $12.7 million in the prior quarter [37] Business Line Data and Key Metrics Changes - Existing customers' same store sales increased to the high teens, outperforming the market [32] - New customer acquisitions included brands like Giassi B2B in Brazil and Asics in Peru, while existing customers expanded operations in new countries [14][15] Market Data and Key Metrics Changes - Strong growth was observed in markets such as Mexico, the US, and Europe, which outpaced the company's average growth [32] - Mature regions like Brazil continued to grow robustly, albeit slightly below the overall company average [32] Company Strategy and Development Direction - The company aims to optimize its cost base while enhancing service levels to provide the best solutions for customers [12] - VTEX is focused on building partnerships, such as with Checkout.com and AWS, to enhance its service offerings and expand into new markets [19][21] - The company was recognized as a Visionary in the 2022 Gartner Magic Quadrant for Digital Commerce, indicating strong market positioning [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic uncertainties and elongation of sales cycles for new customers [39] - The company targets Q4 2022 revenue in the range of $46.0 million to $48.0 million, implying a year-over-year growth of 27% [40] - For the full year 2022, the FX neutral revenue growth target was reduced to 23% to 24% due to macroeconomic volatility [41] Other Important Information - VTEX hosted its first event in Mexico, VTEX Connect Latam, which gathered over 3,000 attendees [28] - The company has a share repurchase program with a remaining balance of almost $25 million [38] Q&A Session Summary Question: Margin performance and breakeven target - Management remains committed to achieving positive non-GAAP operating income by Q4 2023, with a focus on growth while operating efficiently [46] Question: Dynamics between GMV and net revenue growth - The revenue growth is impacted by the share success model, where only two-thirds of GMV growth translates to revenue growth [54] Question: Headcount reduction implications - The headcount reduction is part of an adjustment to optimize the company structure, primarily affecting sales and marketing [51][52] Question: Subscription gross margin drivers - The improvement in subscription gross margin is mainly due to hosting cost efficiencies and support optimization [62] Question: Demand in the US market - There is momentum in both B2B and B2C segments in the US, with a balanced pipeline of new customers [69] Question: AWS partnership structure - The partnership with AWS involves collaboration to deliver ecommerce solutions, with AWS actively promoting VTEX to its customers [73]