Zenvia (US:ZENV)2023-05-18 16:23Financial Data and Key Metrics Changes - The company reported an EBITDA of BRL24 million in Q1 '23, compared to a negative BRL8 million in Q1 '22 and positive BRL23 million in the previous quarter, indicating a solid performance trend [58] - Total operating cash flow reached BRL95 million this quarter, attributed to better working capital management [3] - The company achieved a gross margin of 52% in Q1, reflecting a commitment to profitability, although it is expected that gross profit for the full year will not remain at the same level as Q1 [57] Business Line Data and Key Metrics Changes - The SaaS business generated BRL46.4 million in gross profit, a nearly 40% increase year-over-year, with a gross margin of 68%, up 4 percentage points compared to Q1 '22 [26] - The CPaaS business also saw a 38% increase in gross profit year-over-year, reaching a gross margin of 42%, up almost 19 percentage points [26] - SaaS services represented 38% of total revenue in terms of gross profit, with an annual recurring revenue of BRL59 million in Q1, which annualizes to almost BRL240 million [19] Market Data and Key Metrics Changes - The company experienced a 9% year-over-year drop in total revenues, attributed to a focus on a profitable CPaaS business, while the SaaS business continued to be a growth engine with a pro forma expansion of 32% when excluding the consulting business [38] - The competitive landscape in the CPaaS space has shifted, with less predatory pricing among competitors, allowing for better margins [44] Company Strategy and Development Direction - The company is focused on transforming into a full SaaS company and is advancing the integration of acquired companies to capture synergies [22] - Future strategies include leveraging generative AI, particularly through the integration of ChatGPT, to enhance customer experience and operational efficiency [36][40] - The management emphasized a balance between revenue growth and profitability, projecting a decline in gross margins as volumes increase [5] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the EBITDA guidance for '23 of BRL70 million to BRL90 million, despite a challenging macroeconomic environment [29] - The company is actively managing its funding gap and exploring various options, including debt and equity, to address financial needs [21][64] - There is an expectation for improved performance in the CPaaS business in the second half of the year, driven by better pipeline performance [45] Other Important Information - The company recorded a 9.5% reduction in G&A expenses compared to Q1 '22, reaching just over BRL31 million [41] - The average financing cost for working capital transactions is about 12% per year, which is significantly lower than bank loans [51] Q&A Session Summary Question: How is the company addressing the funding gap? - Management acknowledged the ongoing funding gap and is working on solutions, including negotiating better terms with suppliers and exploring various financing options [21][64] Question: What is the expected impact of AI investments on margins? - Management indicated that while AI investments are expected to enhance productivity, it is too early to measure their impact on margins [49] Question: Can you elaborate on the competitive dynamics in the CPaaS space? - Management noted a reduction in predatory competition, which has allowed for better margins and profitability [44] Question: What is the outlook for the SaaS business growth? - The company expects continued growth in the SaaS business, with a focus on improving sales cycles and pipeline performance [45][50]