Zenvia Inc. Q1 FY2025 earnings call

• Revenue growth was mainly driven by CPaaS, which had strong volume growth but lower margins. - Gross profit declined due to CPaaS mix with lower margins and SaaS transition to Zenvia Customer Cloud being in ramp-up. - G&A expenses decreased 24% year-over-year to BRL 24 million, including BRL 8 million in severance costs. - Normalized EBITDA was BRL 20 million in Q1, expected to increase progressively. - Focus on expanding Zenvia Customer Cloud in Brazil and Latin America, leveraging AI for internal efficiency, and evaluating divestment of noncore assets.

In Q1 2025, Zenvia's revenue increased by 39% to almost BRL 300 million. The CPaaS segment saw revenue growth of 58%, making up 73% of total revenues, amounting to BRL 219 million. The SaaS segment had revenue growth of 5%, representing 27% of total revenues, or BRL 81 million. For CPaaS, adjusted gross profit was impacted by new clients with lower margins and carrier SMS cost increases. The SaaS adjusted gross profit was flat at BRL 43 million, but the adjusted gross margin decreased to 54% due to the transition to Zenvia Customer Cloud. Zenvia Customer Cloud revenues increased 15% year-over-year.

• No formal annual guidance, but Q2 CPaaS continues strong though slightly decelerating. - Zenvia Customer Cloud is expected to grow 25%-30% in full year 2025. - Recurring EBITDA was around BRL 25-30 million in Q1, with second half expected to be stronger due to seasonality.

• Margin pressure in CPaaS from new clients with lower margins and carrier SMS cost increases. - SaaS margin impact from Zenvia Customer Cloud ramp-up. - Potential challenges in the speed of Zenvia Customer Cloud adoption among customers.

Q: Could you talk on some more of the reasons behind the CPaaS growth in terms of SMS volume? Do you think there is an AI tailwind here with companies spending a lot more on campaigns now? Or is this a temporary short-term trend?

A: Cassio Bobsin Machado said there is seasonality in SMS volumes due to marketing campaigns, not directly AI related, and it's a strong pace with tailwind in next quarters.

Q: Any more color on Zenvia Customer Cloud, would be helpful to understand how the 15% year-over-year growth for Customer Cloud is being calculated, given that Customer Cloud only launched in Q4? And does the 15% growth change the BRL 180 million to BRL 200 million guide for the year?

A: Shay Chor explained 15% growth includes new clients in Zenvia Customer Cloud and migrated clients, and they remain confident in 25%-30% full-year growth.

Q: What are the current headwinds for the faster adaptation for Zenvia Customer Cloud? Are the headwinds associated with the current high interest rates or customers cautious to migrate to Zenvia Customer Cloud?

A: Cassio Bobsin Machado said they are cautious in migrating customers to ensure a good experience, not due to high interest rates or customer caution.

Q: Can you provide us with guidance for the year or at least tell us how the trends are looking?

A: Shay Chor said no formal annual guidance, but Q2 CPaaS strong though slightly decelerating, Zenvia Customer Cloud and SaaS expected to continue growing with second half stronger.

Q: Cassio, how Zenvia Customer Cloud is different from the solutions offered by competitors?

A: Cassio Bobsin Machado said Zenvia Customer Cloud unifies customer experience processes, has a volume usage model, and sees broad customer adoption including large companies.

Q: Can you talk a little bit about clients who have been using customer cloud for longest? What the trends look like? How do they mature usage?

A: Cassio Bobsin Machado said early cohorts show high cross adoption, customers easily use new modules, and cohorts grow usage with upselling.

Q: Would love if you guys can provide more color into the new franchise model. How is it going? And expansion into other countries in Latin America, how big is this an opportunity?

A: Cassio Bobsin Machado said franchise model launched in Q1 with over 30 franchises, LatAm Zenvia Customer Cloud revenues around 40% and growing, expecting growth from franchise model.

Q: Can you please address the issue of customer churn? Is this a result of your business transition? What are you doing currently to retain customers?

A: Cassio Bobsin Machado said churn is a mix, low for core software like Zenvia Customer Cloud, working on retention through cross adoption and volume usage model.