Q1 2022 VTEX Earnings Call
Yes.
[music].
Okay.
Yeah.
Thank you for joining and welcome to the <unk> tactical its first quarter 2020 financial results. My name is breaker and it will be to gauge event specialist.
There will be a question and answer session and if you wish to ask a question.
May press Star followed by one on your telephone keypad.
Your host for today's call will be <unk> Fernandez.
Julia please begin when you're ready.
Hello, everyone and welcome to the <unk> earnings Conference call for the quarter ended March 31, 2022, and Julio Library Fernandez Investor Relations Director Therapeutics, our seniors executive presenting today are <unk> founder and CEO and think garlock on at Assembly.
Finance Executive Officer. Additionally, Mariano will need at the gondola.
<unk> CEO and Andy <unk>, Chief Financial Officer will be available during today's Q&A session.
I would like to remind you that management may make forward looking statements relating to such matters as continued growth prospects for the company industry trends and product and technology initiatives.
These statements are based on our current gigabit level information and our current assumptions expectations and projections about future events.
But we need that our thunder expectations and projections are reasonable in view of the corn given level of information.
Not to place undue reliance on these forward looking statements.
Certain risks and uncertainties are described under risk factors and forward looking statements section.
20-F for the year ended December 31, 2021, now there will be tax filings with the U S Securities and Exchange Commission, which are the level on our Investor Relations website.
Finally, I would like to remind you that during the course of this conference call. We may discuss non-GAAP measures a reconciliation of both measures to the nearest comparable GAAP measures can be found in our first quarter 2022 earnings press release available on our Investor Relations website.
Now, let me turn the call over to Gerald did algo for Acos.
Thank you Julia.
Welcome everyone and thanks for joining our first quarter 2022 earnings conference call.
We started the year with a strong first quarter.
Our business delivered solid growth with good execution across all regions solidify our position as the leader in the landscape in Latin America.
Strengthening our global footprint.
Im excited to update you on our progress in May.
The backbone of global Commerce.
In the first quarter Gms has a robust performance as a consequence of healthier consumer sentiment and Latin America as well as initial recovery of some verticals such as electronics that were affected by inventory assured that this is the second half of last year.
Meanwhile, vertical such as apparel and accessories beauty and healthier groceries.
<unk>.
High growth performance, all above 50% year over year growth in the U S.
As a consequence GMB growth accelerated to 33, 2% in U S dollars resumed.
Two six percentage points increases versus our fourth quarter Gms growth.
Another highlight here is that Mexico's performance outpacing the region this quarter showing strong indications of traction.
We continue attracting premier brands and retailers this quarter, we more than doubled in dollar amounts. The go lives of new stores in the textbooks.
Demonstrating that we're bringing into production the attractive backlog, we mentioned during the second half of last year.
Some new customers that went live this quarter.
Given half full line store presence in the respective countries before.
Boston Medical group in Mexico, Chile, and Peru.
In Uruguay, our cold weather in Canada, and Colgate in Brazil, We also added customers that migrated from other competitive platforms, including Briggs <unk> Stratton in the U S alone in Brazil, Moulinex, an encore in Argentina and Chile.
Chile.
Furthermore, during the quarter, we had a healthy sales momentum in new stores contract signatures.
Which gives us confidence in the sustainability of our business model.
On top of strong momentum new customers will continue to build entrenched sticky relationship with our existing customers some premier brands and we've.
Taylor.
Spend their operations with us by opening new online stores EU countries during the first quarter.
Being that added Mexico. Additionally, two eight.
Eight countries in Latin America.
And then added Colombia now totally full countries in Latin America.
<unk>, who was previously operating in six countries in Latin America now added Argentina.
<unk> Central America, expanding operation from five to seven countries in the region and Whirlpool and the trends Asia and Singapore.
Currently operating with us across 50 countries across the globe.
Additionally in March of this year go through partnership.
Peer insights voice of the customer digital Commerce reports with you was it tax was named a strong performer.
One of the things that we're most proud of is the report is that as of January 2022, 96% of pretax customers reviewers.
Willing to recommend us to others.
Highest score amongst our peers.
We believe this is a huge validation of our product and technology purely base of our customers feedback and give us confidence to continue pushing forward towards us.
You too.
We know we cannot do all this alone we believe in the mood to blind force of collaborations one of our key competitive advantages is our ecosystem and Thats why we will continue to nurture and expand our partners since our last earnings release, we have launched this strategic path.
This is Dave Paul E banks.
As well as extended our partnership with Mercado Libre.
Our partnership with faithful to strengthen <unk> embolization strategy and Green VITAS customers close to excellent technological solutions for local and cross border trade.
38 countries, where we operate.
In line with our payment strategy.
Partnership will contribute to the further monetization of our ecosystem.
Subsequent to the first quarter of 2022 launch.
The ship with ebay and kicked off our partnership with the Bank is also focused on cross border payments collaborations in Latin America and to broaden cross border payments for Brazilian E Commerce companies in Latin America.
For this union Brazilian companies will be able to enjoy more than that.
Payment messaging 50 countries across Latin America.
Partnership we reinforce more left the pillars of the duplex spot at this point, which is to offer our customers new ways to grow their business through a complete solution.
Similarly, too painful the ebay partnership will be monetized with a rebate on the payment volume that flows through our platform.
We also partnered with Tic Toc for business in order to offer and that debt is available will be picked up store for all customers that integrate directly to tick tock, improving our customer's asset sharing process with the social media guidance. We expect this to also.
Help our customers to get better results as consumers will find more accurate product and avoid ads for sold out and out of stocks bloggers.
This app will help customers to use tick tock business features.
It takes the IBD directly initially it will be available for <unk> customers in Brazil, and in the coming months it will be extended to other countries.
Europe Asia and the U S.
We are happy to share that we have already early adopters that are anxious to test the app such as carrier fluid loading al has downloaded among many others.
Last but not least in addition to Brazil, we now have the certified integrations with Mercado Libre in Argentina, Chile, Colombia and Peru.
This is a significant milestone in our journey to become the center of it.
Net natively connect every part of the global digital Commerce ecosystem before wrapping up I'd like now to revisit.
For product strategic priorities. This time I'm going to focus our innovation update section on cases that our customers share would be <unk> during the <unk>.
For context <unk> de is the largest digital cognitive event in Latin America.
The third largest in the world.
In placing so Paulo <unk> data has over 25000 I think these during its two days.
Starting with CLA multi national fashion retailer that decides special items also sells smartphones unnecessary.
Whenever a smartphone and solid of stocking CNA zones warehouse digital starter form enables a transparent connection to Samsung inventory, which does the fulfillment and delivery.
Exactly to the consumer.
With this frictionless connection between the brands inventory CNA significantly improves its called virtual right and same store sales and additional smartphone.
Both are also enhancing the end consumer experience.
This is a clear demonstration of how CNA is.
Benefit for knowledge zero friction Onboarding and collaboration project pivot.
Another interesting case is the one call by one of the largest pet shops in Brazil.
Pioneer is a magnet store concept focus, especially on the tier of bats, and home and garden with wasn't a 100 stores.
During Gtech's day co bonds, it's shared the benefits the witnesses.
After adopting multiple <unk> solutions, Inc.
The silver portal Oems in store external and internal marketplace shipping from store live commerce among others.
That enables co buys that you simplified processes and more importantly make sure that the offer a consistent experience.
Customers across all channels.
For instance, since they adopted our shipping from store feature.
The delivery time to two hours and 60% of the deliveries.
Increased omni channel penetration to 70% up to towards us.
In line with our vision to become the single control panel for every order called by the highlight the relevance of heavy one source of true for centralizing the multiple channels the commercialized products.
During the tax date Rupert talked about the challenges that <unk> has a huge brand manufacturer.
The digital transformation required structural changes such as beauty and in house technology team did.
Building. This tech team enabled rupel to build critical business solutions into Italy, and on top of the textbook.
One of the outcomes of this partnership is the supply chain integration projects.
Through which we will consolidate all product information in a single place with delivery time precision in all regions and distribution channels. This capability goes as far as enabling the manufacturer to sell a refrigerator currently located in a container.
In the middle of this.
With this work.
<unk> achieved a positive impact on business indicators, such as an increase in consumer NPS by 15%.
Along this line.
Cash flow is also driving a unified commerce strategy and since forming do roll a brick and mortar stores with detection score.
During the tax day.
The capital we stated that the coal versions across sales channels is the foundation for a successful customer experience.
Sporting goods chain backed on the implementation of our endless aisle and consumer modules, Inc. All each stores.
With the endless aisle capability the store's sales rep has access to all the commerce available inventory and even other stores enabling.
Sales that took place the order and not lose the opportunity with the consumer.
For companies with law with the large catalog such as the capsule, which has over 50000 skus with solution that increases the chances of conversion by expanding the inventory and catalog assortment using both warehouses in physical stores.
Leveraging the <unk> capabilities the capital shared that the endless aisle orders placed the E store currently represent 5% of total brick and mortar sales.
The capital is now able to run the full customer journey.
Please.
<unk> with a single control panel.
Every order.
Additionally.
During the next day.
Sure. It's lives sharpening adoption joined me as the highlight the head the live shopping event in Mexico. This quarter, what did launched a new Galaxy S 22 five.
In the event they sold more than $1 million in June and.
Engaging almost 12000 viewers in only 55 minutes.
Samsung used cases, another demonstration of our vision.
Becoming the single console better for every order.
Looking at our large shopping app adoption throughout the text customer base.
During the first quarter of 2022, we had more than 130 large shopping events with the positive trends month over month, we started the year with 24 events in January 'twenty, two and ended the quarter with 61 events in March 'twenty two.
Along with Samsung Company July initially.
Coca Cola group, we're exiting <unk> among many others have already adopted the solution.
Additionally, and subsequent to the first quarter of 2022 on May two 2000.
We had our first large shopping event in the U S with multiple.
We're now offering life shop across 14 countries with over 150 active accounts.
Michael Kors shared their experience with the adoption of a new REIT that shipping network featured.
The new functionality acts as a broker of shipping services choosing the most efficient partner for each vaults and project delivery, Michael Kors not only shared that experience in terms of improvements in delivery times and Thats at least but also focus on the efficiencies.
Being able to reach with around 10% shipping cost patients.
And the traceability of the deliveries.
This use case for micro CT is a demonstration of how we are delivering commerce on auto pilot and copilot your customers to help them succeed in their digital transformation.
Looking at our logistics market opportunity.
According to industry sources shipping costs represents around 10% of our customers' revenue.
Early adopters of the detect shipping network.
Experienced significant shipping cost savings aligned with Michael Kors Kate.
<unk>, a low single digit percentage point increase in the digital commerce operating income.
All the development platform of choice for digital Commerce, we're proud to announce that we continue attracting developers to our low code platform gaining momentum in the community and scaling our capabilities, mostly active developers assessing the vertex development portal increased two more.
The <unk> thousand in the first quarter of 2022 for more than 20000 in the first quarter.
2021 ramping up our operational update section.
I would like to thank our 765 taxes that have work it and continue working efficiently to fulfill our mission as well as our customers partners and investors now I will turn the culture.
So he can cover our financial progress report for the quarter. Thank you hi, everyone. So pleasure to be here update you on our financial performance for the first quarter of 2022.
This quarter, our revenue increased to $34 7 million a.
Year over year increase of 33, 7% in U S dollars and 29, 7% on an FX neutral basis.
This increase was on top of our same quarter last year revenue growth of 77 zero percent on an FX neutral basis.
These growth rate acceleration was driven by a significant increase in the same store sales of our existing customers and by new stores coming online.
Subscription revenue represented 94% of total revenue versus 95, 1% in the same quarter last year.
This is explained by the strong sales momentum, we are having and the implementation of our backlog leads to increased services revenue.
Subscription revenue increased to $32 6 million in the first quarter of 2020 from $24 7 million in the first quarter of 2021.
The year over year increase of 32, 1% in U S dollars and 27, 7% on an FX neutral basis.
Now moving down our P&L non-GAAP subscription gross profit was $22 7 million compared.
Compared to $16 1 million.
First quarter of 2021.
non-GAAP subscription gross margin was 69, 6% in the first quarter of 2022 compared to 65, 1% in the same quarter of 2021.
466 basis points year over year improvement reflects operational hosting cost efficiencies as we migrate noncore hosting services and improve our cost efficiency.
On top of the subscription gross margin expansion. We also increased our services gross margin.
Each led to overall gross profit, reaching $22 1 million.
Representing a year over year increase of 46, 1% and a margin improvement of 563 basis points.
Our non-GAAP loss from operations was $13 7 million during the first quarter of 2020 compared.
Compared to $8 <unk> million dollars in the first quarter of 2021, primarily due to incremental personnel related investments in sales and marketing and research and development as we have been investing to capture market share and benefit from the further penetration of e-commerce.
We continue to see attractive unit economics from our investments to bring new online stores to our platform.
We also have some key areas of investments related to our product site such as live shopping conversation in social commerce fast for Veep ex shipping network <unk> among others.
We are going to continue to pursue these opportunities as we believe they are fundamental for our long term growth, while being committed to be disciplined on our allocation of resources.
As of the three months ended March 31, 2022 did that had a negative $16 1 million free cash flow compared to $21 3 million negative free cash flow in the fourth quarter of 2021.
This improvement of almost 25% quarter over quarter on top of the sequential acceleration on a top line perspective is the reflection of our capability to deliver sustainable growth, while moving towards a cash generative scenario as.
<unk> you have.
In addition, it is important to mention that we ended the quarter with more than $270 million net cash in our balance sheet.
On top of this strong cash position, we are committed to efficiency.
We increased our headcount from 1727 at the end of the fourth quarter 2021 to 1765 employees by the end of the first quarter 2020, Q, a moderate increase of two 2% quarter over quarter.
Our non-GAAP total operating expenses increased from $34 4 million to $35 9 million slightly higher increase of four 4% quarter over quarter, even some single highest we on boarded in our team over the last couple of months.
While the tax date will have some one off impact on our expenses in Q2, we expect our Q3 in Q4 expenses to reflect an even lower quarter over quarter increase when we deliver in Q1.
Therefore, looking forward to the remainder of 2022, we continue to expect delivering significant operating margin expansion.
Regarding our future outlook, while we had a solid year over year performance in Q1, we continued to see significant macroeconomic uncertainty and volatility in our customer GMB performance.
Additionally, it is important to note that the second quarter of 2022 has a harder year over year comp due to the second wave of Covid in Latin America with cases, increasing significantly from March to June of last year.
Therefore, we are currently targeting revenue in the $37 5 million to $38 $5 million range for the second quarter of 2022.
Our year over year growth of 23% in U S dollars and 20% on FX neutral basis in the mid of the range.
For the full year 2022, given the macro conditions and recent volatility previously mentioned, we expect the FX neutral year over year revenue growth of 24% to 27%, implying a range of $160 million to $164 million.
On the first quarter average FX rates wrapped.
Wrapping up todays call VITAS had a solid start of the year with robust top line performance margin expansion and strong backlog undergo implementation and of course, many new exciting products and partnerships now available in our platform.
All of this together gives us the confidence in our business today and in the long term opportunity. We have ahead of US we will continue focusing on our differentiation the quality of our platform technology product and features as well as continued developing the ecosystem around it which will push us even further.
With that let's open it up for questions now thank you.
Thank you.
We'll now begin the question and answer session.
To ask a question you May press Star then one on your kind of thank you Pat.
If you can speak please pickup your handset before pressing the case if any time your question has been addressed.
And you would like to answer your question. Please press Star then Kay.
We have a first question on the phone lines from Cesar Medina from Morgan Stanley . Your line is open.
Hi, Thanks for taking my call I have two questions.
The first one is related to the guidance can do because it has changed and I believe is different relative to that.
One that we presented at the <unk>.
In the fourth quarter result, can you break down the drivers behind that team to fit more difficulty in acquiring new customers is it the lower outlook for net revenue retention.
Things like that that's the first question second question any comments on your historic backlog in the past it was growing I don't know if I recall correctly at triple digits, where where are you seeing right now.
Yes.
Thanks for your question further that's a very good question and happy to elaborate further.
Before talking about the guidance and forward looking aspects. It's important to note that we had a strong performance in Q1, our GMB growth of 33% and revenue growth of 34% in U S dollars were quite robust continuing the current macro scenario in the organic growth of the digital commerce software market.
Now on the top line guidance, specifically I would highlight two key factors we took into consideration the.
First one is macroeconomic conditions, we are all seeing inflation rising globally and interest rates being increased to reduce inflation.
These increasing rates can obviously impact the retail sector. Although it is still uncertain to what extent. So this is what we mean by macro uncertainty.
Second one is consumer behavior post COVID-19.
<unk> seen the reopening of stores for a few months now.
Consumer behavior continues to change.
Believe omnichannel strategies will be of the utmost importance.
And we can help our customers with that however, the path to get there may not be linear always move.
So this is what we mean by the volatility in our customers' GMB.
Having said that we adjusted our FX neutral growth guidance to 24%.
From 'twenty.
Guidance from 24% to 27%.
In 2020, but.
But given the appreciation of the currencies in Latin America that now implies a range of $160 million to $164 million.
In addition, we also committed to efficiency in Q1, we delivered more than 500 basis points increase in gross margin year over year, and we only increased our head count by 2%.
Finally, we continue to be committed to deliver significant operating margin expansion in 2022.
So I think that answers the guidance question and I can talk a little bit about the backlog that you that you asked as well.
So we continue to have a strong backlog our backlog was doubling year over year. As you mentioned in your question for a couple of quarters and now we see the backlog growth more aligned with our revenue growth, which is expected and it's at a healthy level to sustain our revenue growth projections.
We also continued to see contracts to answers at a healthy pace.
We're monitoring closely how the strong backlog translates into online stores go live in new revenue for defects.
And given the current macro conditions, we are being more conservative in our assumption of go lives is less ramp up time of new customers.
Having said that we continue to win new customers at a healthy pace with some new wins mentioned in our press release and we continue to implement our backlog for instance, as mentioned by hit all during the prepared remarks. The dollar amount of go lives to be adding Q1 was more than double what we had in Q1 2021.
And it's also interesting to note that we have been able to attract more large enterprise customers across the globe with these large enterprise customers increasing their dollar share of the backlog over the past year. So I hope that answers both of your questions.
Thank you.
Thank you.
Next question, we have comes from Joe Fenech from Goldman Sachs. Your line is now open.
Good evening, Thanks for taking our questions two questions from our side. The first one on activity developers. The overall number of activity of <unk> accessing the <unk> portal increased quite a bit as far as the fed could you give us some more color on the drivers for that and also how the number of.
Developers, particularly outside Latam is evolving second question from our side thinking about your partnerships with payments providers, which you have emphasized in this call.
Become a driver for our relevance and improvements in our overall take rate in the longer term, perhaps thank you.
I think you're on mute.
I'm, so sorry, sorry.
Sorry.
I was on mute.
So thank you for your question about the developers business.
We have this idea of being the development part of Commerce developers.
And we.
We think the worthy of commerce will be more complex not less confidence will be more fragmented less fragmented and we need.
The long term.
Support.
The ecosystem around us. So this is a very importantly, the indicator for us it's growth it's coming from from.
A lot of reduced not only the U S not only at all and it's driven by the states.
States push that we are doing that we call <unk>, which is.
Providing a development environment for the developers so that they can use the balance to get revenue out of the ecosystem that we created on the merchant side.
So this is.
We are.
Our big push.
As we grow to others.
The returns as well we need to be more for more.
When we were in Brazil that was bid.
Since our deep knowledge of both our platform now that we have.
A lot of other countries, we need the support of the documentation and we can track as we are being successful educating.
Ecosystem with this these kpis.
About the what's the second question again I'm sorry.
<unk> no problem.
Andrew Tucker could do there.
Could you talk a little bit about the payments and.
And feedback from the take rates.
Yes.
One geraldo.
Perfect.
Before talking about our partnerships with Paypal and ebay.
E banking and payments in general, let's just take a step back and talk about payments more broadly and how we see it.
So the tax focuses on enterprise customers and as you probably know Victor payments volume is an inverted pyramid, where enterprise customers tend to bring a large amount of TBD, but the payment profit pool is a regular payments were enterprise customers tend to bring only a limited amount of.
The profitable.
Additionally payments for enterprises is premature and competitive market.
So in this context <unk> has decided to build our payments gateway and through these gateway do partnerships with payment providers. These last four years instead of building our own payments acquiring or processing solution for enterprise customers.
By doing partnerships and payments, we create value in two ways.
First we should beat that customers are happy as they can implement payment solutions in our friction friction last way as.
As well as switch providers as needed.
This potentially help us reduce our churn and increase the lifetime value of our customers.
Second we EBIT distribution network to payment providers.
They can offer their solution to <unk> customers in a scalable way.
So considering these this strategy we are starting to monetize our payments partnerships based on the <unk> customers that flowed through at CPD to our payment partners.
And we charge a low double digit basis point fee on our payment partners CPD that flows through the <unk> platform. So hopefully that answers your question.
Very clear global double digits. Thank you.
Thank you.
Your next question comes from Jeffrey of Piper Sandler Your line. Thank you.
Hello, and thank you for taking the question certainly encouraging to hear about the <unk> new store starts, but I kind of wanted to refine a previous question around the inputs to guidance.
I recognize the macro considerations to GMT, but maybe talking specifically about the sentiment of the brands and the merchants that you're talking to.
Has anything fundamentally changed in the last year anything that would change your confidence in new contract signings are new new brands being on boarded onto the platform.
We recognize that <unk> is hard to control and a little bit external to the platform, but wanted to get it to.
But to your gauge on the brand conversations at this point in time.
Yep, Hi, Cory Thanks for the question and happy to further elaborate.
So as I mentioned right on the on the guidance and future looking aspects, we have the macroeconomic conditions in our customers' GMB right regarding the microeconomic conditions. There is uncertainty of how much the ingredient interest rates will impact retail sector globally and going one level deeper given the.
Low level of penetration of e-commerce, especially in Latin America, some increasing penetration could have helped soften the impact of our performance. So there are a couple of moving pieces here and we will have more clarity on these as we move through the year now more specifically to your question right so moving onto our customers GMB.
Human behavior post COVID-19 could impact our existing customers GMB and the ramp up of the new customers right. So for example, as we mentioned in the prepared remarks.
Same time last year most countries in Latin America, we're going through a second wave of Covid.
And in Q2 2020, we were undergoing the first wave of Covid.
With many countries in lockdown.
Therefore in Q2. This year, we are facing the toughest two year CAGR bumping GMT, we thought FX.
So two year CAGR of 87%.
Considering these natural to see a lower future growth and expect to recover in the second half of the year.
For instance, these 87% Julia <unk> will reduce to 74%.
363% in Q4.
Now on new.
New contracts and implementation.
Continued to sign new contracts at a healthy pace and as I said the <unk>.
Innovation of new customers could be impacted on the ramp up.
Given the macroeconomic conditions, so we are being mindful of that as well.
Got it and then maybe clarify my question is the second part of that is just the willingness to purchase and implement is at the same pace that it has been before there's been no change to sort of the interest level on the pipeline for new contract signings.
Maybe just a second question.
Yeah.
I think I heard Briggs <unk> Stratton is a U S customer and maybe if I heard correctly a live streaming.
Kind of functionality used by Motorola and in North America, how do you feel about the U S market at this point it is still any kind of an exploratory phase with existing customers any new learnings that you can share in terms of how you are hiring in North America to address that locale.
Hi, Mariano here and so the first question is no fundamental changes on the wellness.
Of retailers' environment factors to re platform and engaging for the east.
We are seeing a strong trend on that.
But as I said on the implementation stage maybe.
We.
Recognizing some delaying let's say in how they ramp up the operation. So the urgency that we saw in 2020 2021 because of Covid. It is not in that 100% as was before but we didn't change anything on the willingness of investing for new platforms in digital.
The life shopping and as you mentioned it is 52% market in Asia.
And in markets like the United States is almost zero. So we see that as a big trend we have been investing needs in the last two years, we launch a product on the east and the likes shopping we do have more than 100 clients.
In more than 15 countries already using the like shopping so we see that as a new channel open and it is for sure an opportunity for us and for our clients.
Yes.
Really appreciate it.
Thank you again, if you'd like to ask a question. Please press Star then one.
We now have a question from Carlson of Keybanc capital markets. Your line is open.
Hey, guys will on for Josh Beck.
I think it would be really helpful. If you could just give a little bit more color on the trends that youre seeing in sub verticals, specifically looking at mobile social and physical and then also just kind of going off that if you could talk a little bit to how you're seeing customers react.
Yes in certain ways.
Maybe kind of how they're modernizing certain aspects.
Their online stores.
You mentioned something about a delay as compared to COVID-19, but yes, just a little bit of color on that would be awesome. Thanks.
Yes, Mariano here again so.
Social.
Let's divide social into the social but the fate.
Social channels.
Was a boom in the last five years, but actually the social churn was now becomes very expensive for the expansion and cost acquisition of new customers.
That said marketplaces in the paid channels are in the limits of the price retailers and <unk> sectors, we will not pay much more than what they are paying out. So we have seen in march of a more organic channels.
Like like shopping like channels like conversational channels like personal shopper those other channels I believe.
Retailers and brands.
And that is also social right. So we are seeing a much bigger kind of a trend by merging the physical stores and online operation by having the salespeople as the central piece of the social engagement. So these engagement.
Digital economy will remark in the markets that we are we believe Latin America will be in the forefront because of the penetration of Whatsapp, but we also believe that the United States will follow with the Apple business chat.
Social at easing the center, what we are doing mobile.
Two really high right.
<unk> change what we are seeing is now companies investing more in a very simple ways to approach mobile.
We try to replicate what was the desktop.
Experience by now that he's asking to simplify these and the results of it it is increasing conversion rates.
What we see is a.
Raptor. It is these new social selling that's for sure it will change.
Percentage in between the channels that we can see right now.
The bulk of the speed of implementation right. So what we are seeing is that.
The speed and the urgency of the projects it is not as a survival mode.
It was in 2021 and 2020 because of Covid. It is more likely to recover the pace off was at 2019 and 2018. So we are expecting and being conservative on the implementation phase of the account the accounts that we have now.
And Josh let me let.
So by the end of this.
This might be a little bit.
Accentuated by the fact that everybody may be expecting a recession in the future and maybe do you think you start to think a little bit so because of that we're seeing.
Right.
AEG in our backlog.
And so people are less clearly building product.
<unk> project.
Cause.
The phase of Kobe.
<unk> business also because they are expecting some downturn in the economy.
Super helpful. Thanks, guys.
Thank you there are no further questions I'd like to hand, it back to the team.
Thank you for joining us once again, we are honored to be here with you sharing our progress.
We are witnessing an increasing momentum in vertex attractiveness for enterprise brands worldwide. We are committed to continue maximizing growth while being disciplined on how we deploy capital.
We have set the foundations for sustainable growth over the years to come while progressively improving margins over time.
We are now a stronger company than ever and we are confident in the long term opportunity for Victor.
Looking forward to keeping you updated on our progress good afternoon for everyone. You may now disconnect.
<unk>.
Okay.
Yes.
This does conclude today's call.
Okay.
Sure.
Okay.
Okay.