Zenvia Inc. Q2 FY2024 earnings call

• Rolled out Zenvia Customer Cloud with positive client response and healthy recurring revenue, churn, and cross adoption. • Launched GenAI chatbot in June 2024, with about 100 companies across eight industries in Latin America building chatbots in the two months since launch. • Both SaaS and CPaaS segments saw double-digit growth in Q2 and first half of 2024, driven mainly by large enterprises. • Focused on capturing CPaaS volumes with high margins, which expanded CPaaS contribution to revenue mix. • G&A as a percentage of revenues decreased to 14.4% in Q2 2024 from 19.4% in Q2 2023 due to increased productivity. • Plan to expand organically outside Brazil, focusing on Argentina and Mexico where they already have operations.

In Q2 2024, Zenvia's revenue grew 20% year-over-year to R$231 million. The CPaaS business saw 22% growth in Q2, with CPaaS contributing 66% of net revenues and 58% of gross profit, having margins of almost 38%. The SaaS business grew almost 16% in Q2, with SaaS contributing 34% of net revenues and 42% of gross profit, having margins of 54%. For the half-year, EBITDA was R$57 million, and the full-year EBITDA guidance remains R$120 million to R$140 million.

• Reaffirmed full-year EBITDA guidance of R$120 million to R$140 million. • Revenue growth for full year is expected to be in the 15%-20% range, with H1 2024 revenue growth tracking at the high end of this range. • Gross margin forecasted to be between 42% and 45%, with H1 2024 results slightly above the midpoint. • Expect SMB clients to be the main growth driver of Zenvia Customer Cloud. • Aim to start deleveraging the balance sheet by H2 2025.

• Margin variations can occur due to customer mix, with CPaaS margins varying based on client profiles and SaaS margins affected by the mix of large enterprises with lower margins. • FX effects can impact reported numbers, though they have no cash impact.

Q: Regarding migration of client base to Zenvia Customer Cloud and client-base cleanup.

A: Cassio Bobsin said migration of products to Zenvia Customer Cloud is ongoing, expected to finish by Q4 2024 and into Q1 2025, with good reception from clients and adoption from SMB and enterprise. Shay Chor said most client-base cleanup needed was already done, with no relevant actions expected going forward.

Q: On margins and working capital.

A: Cassio Bobsin discussed that long-term margins are expected to be beyond 50% as SaaS portion grows, and Shay Chor explained that working capital is managed by negotiating DSO and DPO with telcos, with no specific agreements but a symbiotic relationship.

Q: On FX losses and funding gap.

A: Cassio Bobsin talked about FX losses being accounting effects related to BRL invoicing, and Caio Figueiredo discussed that integration of companies is advanced with most integrations to be finished within the year, and Shay Chor mentioned focus on deleveraging and using ATM program for funding if needed