VTEX (Cayman Islands) Q4 FY2024 earnings call

• VTEX saw robust sales momentum in signing new enterprise customers, with the number of customers paying over $250,000 per year increasing 23%. Deferred revenue increased 29% year-over-year.
• Annual revenue churn remained stable in mid-single digits. Launched new products like VTEX add data pipeline and Shield, enhancing customer outcomes.
• Highlighted customer success cases: Carajas transformed with Weni by VTEX, achieving 15x higher conversion rate on WhatsApp; Heineken Brazil used VTEX Ads for successful digital campaigns; Pashmina.com migrated to VTEX for global growth; Sony adopted Sales App for LatAm sales operations; Walmart launched new apps in Central America using VTEX IO infrastructure.
• Strengthened partnerships, including with Accentric prologic to modernize digital commerce infrastructure for US enterprises.

In the fourth quarter of 2024, VTEX's GMV reached $5.4 billion, flat year-over-year in US dollars but 11% up in FX-neutral. Full year 2024 GMV was $18.2 billion, 10% and 16% growth in US dollars and FX-neutral respectively. Revenue totaled $61.5 million in Q4 2024, up 1% in US dollars and 12% in FX-neutral, with full year revenue at $226.7 million, 13% and 18% growth in US dollars and FX-neutral. Subscription revenue in Q4 2024 was $59.5 million, up 2% in US dollars and 13% in FX-neutral year-over-year, with full year subscription revenue at $217.7 million, 14% and 20% growth in US dollars and FX-neutral. Existing stores revenue in 2024 was $169 million, with net revenue retention at 104% in FX-neutral. Geographically, revenue outside Brazil accounted for 43.4% of total revenues in 2024. Brazil subscription revenue grew 28% in FX-neutral, Latin America excluding Brazil subscription revenue increased 6% in FX-neutral, and Rest of the World subscription revenue grew 34% in FX-neutral.

• Target FX-neutral year-over-year subscription revenue growth of 13%-15% for Q1 2025, implying $51M-$52M range.
• For full year 2025, target FX-neutral year-over-year subscription revenue growth of 14%-17%, implying $235M-$241M range based on quarter-to-date average FX rate.
• Target non-GAAP operating income and free cash flow margins in mid-teens. Expect to increasingly rely on ecosystem of system integrators for new customer implementations.

• Short-term revenue volatility due to revenue model with two-thirds from customer GMV, leading to volatility in line with customer GMV performance.
• FX volatility, particularly the US dollar's meaningful appreciation against currencies like the Brazilian Real, impacting US dollar reported results.
• Consumer spending softness in Brazil, especially affecting same-store sales in Brazil, which pressured revenue.

Q: Can you discuss the assumptions for guidance, especially regarding Latin America ex-Brazil and the rest of the world?

A: Ricardo Sodre said Q4 2024 subscription revenue growth was ~13%, with Q1 guidance midpoint 14% and full year midpoint 15.5%. Headwinds from Argentina and Brazil's lower same-store sales impact guidance. New customer side assumes increase in average implementation plus ramp-up time due to larger customers in backlog.

Q: On Brazil's payroll tax exemption and margins for existing vs new stores?

A: Ricardo Sodre said payroll tax change in Brazil has minimal material impact. For margins, new stores achieved 10 percentage point gross margin improvement but reinvested in sales and marketing, with LTV/CAC above 6x cash-on-cash, focusing on long-term growth.