Q3 2023 Zenvia Inc Earnings Call
Speaker 1: all of our customers to provide fluid, personal, and engaging experiences for each.
To provide fluid personal and engaging experience for each and customers will benefit from our regional leadership on the <unk> market and its new technological advances with the power of our CX solutions coming both from R&D and M&A initiatives into a unified offering that is expected to be rolled out to Walter.
Speaker 1: will benefit from our regional leadership on the CPaaS market and its new technological advances with the power of our CX solutions coming both from R&D and M&A initiatives into a unified offering that is expected to be rolled out throughout 2024.
24, as I mentioned, the <unk> market continues to advance as demonstrated by our partnership with Google for the launch of Google message Rcs or rich communication service, we're incredibly excited by the potential of Rcs as a natural evolution from us bringing reach interactive.
Speaker 1: past market continues to advance, as demonstrated by our partnership with Google for the launch of Google Messages RCS, or rich communications.
Speaker 1: We're incredibly excited by the potential of RCS as a natural evolution of SMS, bringing rich interactive content that boosts marketing campaign results as compared to traditional SMS.
Confident that boost marketing campaign results and comparing to traditional asset box by the end of 'twenty three Google expects to reach 1 billion Rcs users make.
Speaker 1: By the end of 2023, Google expects to reach 1 billion RCS users, making it an upward trend.
Making it an opportunity that we must capitalize on.
Speaker 1: We are highly motivated by the ongoing evolution of our platform and its potential, as we look forward to sharing more information with you in the coming months.
Highly motivated by the ongoing evolution of our platform and its potential as we look forward to sharing more information with you in the coming months now I'll hand, it over to Shai to cover our performance in the third quarter.
Speaker 1: Now I'll hand it over to Shai to cover our performance.
Speaker 2: Thank you, Cassio. Hello, everyone, and thanks for being with us today.
Thank you Pasha.
Hello, everyone and thanks for being with us today.
Let's start on slide five.
Speaker 2: I'll start by saying that the third quarter results attest to the consistency of our strategy to balance revenue growth and profitability, despite the complex microeconomic climate
I'll start by saying that the third quarter results attest to the consistency of our strategy to balance revenue growth and profitability. Despite the complex microeconomic climate in Brazil.
Speaker 2: During this quarter, we delivered double-digit top-line growth in both SAS and CPaaS, while maintaining healthy margins.
Due to this quarter, we delivered double digit top line growth in both SaaS and sea bass, while maintaining healthy margins.
Speaker 2: Specifically in CPaaS, we saw an opportunity to gain market share with certain large enterprise
Specifically in Cps, we saw an opportunity to gain market share with certain large enterprise customers.
Speaker 2: We believe this move is instrumental to set the foundation that will allow us to cross-sell our SAS products in the near future, evolving from bundle packages to one single unified offering.
We believe this move is instrumental to set the foundation that will allow us to cross sell our SUS product in the near future evolving from bundled packages to one single unified offering this.
This is what we're calling one xavier.
Speaker 2: Now looking into the numbers, total revenue increased 21% year-over-year to R$219 million from a fairly stable client base of R$13.6 billion.
Now looking into the numbers total revenue increased 21% year over year to 219 million Reais from a fairly stable client base of $13 6000 clients.
Speaker 2: We registered growth in our SaaS business across all customer profiles, while the growth in our CPaaS business was mainly driven by the expanded SMS volumes with large enterprise customers, as I just said.
We registered growth in our SaaS business across all customer profiles, while the growth in our Cps business was mainly driven by the expanded SMS volumes with large enterprise customers as I just explained.
Speaker 2: Gross profit reached R$83.9 million, down 3.1% year-over-year, with gross margin decreasing 9.6 percentage points to 38.4%, due to lower margins in both segments.
Gross profit reached $83 9 million Reais down three 1% year over year with gross margin decreasing nine six percentage points to 38, 4% due to lower margins in both segments.
Speaker 2: In the SaaS segments, the lower profitability is a result of the still complex macroeconomic environment, which is mainly affecting our consulting.
In the <unk> segments, the lower profitability as a result of the stool complex microeconomic environment, which is mainly affect our consulting businesses.
Speaker 2: While our large enterprise customers remain cautious on their investment decisions during this quarter, we have already seen early signs of improvement in Q3, but the higher impact will be seen in Q4-Q5.
While our large enterprise customer remain cautious in their investment decision. During this quarter, we have already seen early signs of improvement in two three but the higher impact will be seen in Q4 2023.
Speaker 2: In the CPaaS business, as I just mentioned, we saw an opportunity to accelerate revenues and gain market share with strategic large enterprise customers while keeping.
In the sea bass business as I, just mentioned, we saw an opportunity to accelerate revenues and gain market share with strategic for large enterprise customers, while keeping profitability at healthy levels.
Speaker 2: To test our strategy to balance top-line growth and profitability is paying off, we delivered an EBITDA of R$16.5 million in the quarter, up from R$9.9 million in Q2 of 2022, marking the fifth quarter in a row of positive EBITDA.
Desktop strategy to balance top line growth and profitability is paying off we delivered an EBITDA of $16 5 million rise in the quarter up from $9 9 million Reais in Q2 of 'twenty, two marking the fifth quarter in a row of positive EBITDA.
Let's now take a look at our key financials for the first nine months of 2023.
Speaker 2: Looking at the first nine months of 2023 makes it even easier to understand our decision to accelerate revenue growth in the quarter while maintaining profitability at a healthy level.
Looking at the first nine months of 2023 makes it even easier to understand our decision to accelerate revenue growth in the quarter, while maintaining profitability at healthy levels.
Speaker 2: Revenue growth in the quarter led to a catch-up in the first 9 months of the year when compared to the same period of time.
Revenue growth in the quarter led to a catch up in the first nine months of the year when compared to the same period of 2022.
Speaker 2: At the same time, we saw strong margins across the business lines that led to a gross profit growth of 13% year-over-year and gross margins growth of 4.5 percentage points to 4.5% year-over-year.
And at the same time, we saw strong margins across the business lines that led to a gross profit growth of 13% year over year and gross margin growth of four five percentage points to 44, 1%.
Speaker 2: Moreover, normalized EBITDA in the first 9 months of 2023 reached almost R$56 million, compared to zero in the same period of last year.
Moreover, normalized EBITDA in the first nine months of 'twenty, three which almost 56 million reais compared to zero in the same period of last year.
Speaker 2: On a reported basis, our EBITDA was R$55 million, an improvement of R$80 million when compared to the negative R$24.9 million reported in the first nine months of the year.
On a reported basis, our EBITDA was 55 million Reais and improvement of 80 million reais when compared to the negative $24 9 million Reais reported in the first nine months of 2002.
Speaker 2: We'll talk about EBITDA in more detail soon. Our stronger EBITDA and better work in capital management led to solid operating cash flow of almost R$124 million in the nine months.
We'll talk about EBITDA in more detail soon or stronger EBITDA and better working capital management led to solid operating cash flow of almost 124 million reais in the nine months period.
Speaker 2: Now, let's compare the third quarter of 23 to the second quarter of the year, which shows our continued progress in growing revenue.
Now, let's compare the third quarter of 23 to the second quarter of the year.
It shows our continued progress in growing revenues.
Speaker 2: Here on this slide, we can see that sequentially, we grew consolidated revenues by 13.3%, we doubled this.
Here on this slide we can see that sequentially. We grew consolidated revenues by 13, 3%.
With double digit increase in both segments.
Speaker 2: This was driven by the recovery in profitable SMS volumes from some CPaaS large enterprise clients, but also due to the growth of our SaaS ecosystem.
This was driven by the recovering profitable SMS volumes from some see best large enterprise clients, but also due to the growth of our SaaS business.
Speaker 2: It is all important to remind you that our CPaaS is a mature business and our strategy is to have the cash generation from the CPaaS business funding the expansion of our SaaS
It is all important to remind you that our C pass as a mature business and our strategy is to have the cash generation from the sea bass business funding the expansion of our SASSA business.
Speaker 2: Despite that, we may come across with opportunities to gain market share at healthy profitable levels which was the case in the third quarter.
Despite that we may come across with opportunities to gain market share at healthy profitable levels, which was the case in the third quarter.
Speaker 2: While this may create some volatility in the contribution of CPaaS to the revenue line, it does not affect the trend of having SaaS increasing its percentage to gross profit, as you can see in the next slide.
While this may create some volatility in the contribution of C pass with the revenue line. It does not affect the trend of having SaaS, increasing as a percentage of gross profit as you can see in the next slide.
Speaker 2: As you can see here, while the CPAS contribution to the top line was higher in the third quarter when compared to nine months results, the trend on gross profit is the other way around.
As you can see here on the <unk> contribution to the top line was higher in the third quarter when compared to nine months results. The trend on gross profit is the other way around.
Speaker 2: While we continue to be the undisputed leader in CPaaS in the region, it is important to remind you that CPaaS is a volume-based business and therefore volatile in nature.
While we continue to be the undisputed leader in surpassing the region. It is important to remind you that he passes a volume based business and therefore volatile in nature.
Speaker 2: Reason why we decided to pivot the business to add value to the channels in first place.
Reason, why we decided to pivot the business to add value to the channels in the first place.
Speaker 2: In terms of size, our CPAS business ended September with an annual recovery revenue of 233 million reais.
In terms of size, our Cps business ended September with an annual recurring revenue of 232 million Reais.
Speaker 2: On the negative side, the downsell in large enterprise in our consulting business will net revenue expansion down to 102% compared to 120% in Q2 of 2020.
On the negative side the down sell in large enterprise in our consulting business will net revenue expansion down to 102% compared to 120% in Q2 of 'twenty two.
Speaker 2: As I explained earlier, we have already seen early signs of improvement in the conversion of our sales cycle to large enterprise customers in Q3, but we expect most of the impact to positively impact revenues in Q4.
As I explained earlier, we have already seen early signs of improvement in the conversion of our sales cycle to large enterprise customers in Q3, but we expect most of the impact to positively impact revenues in Q4.
Let's now see how our margins perform within this strategy.
Speaker 2: On this slide, we can see the performance of both businesses in terms of profitability in the first nine months of 2023 compared to the same period of last year.
On this slide we can see the performance of both businesses in terms of profitability in the first nine months of 'twenty three compared to the same period of last year.
Speaker 2: If we isolated 12 of 23, our gross profit for both businesses went down year over year, mainly due to lower gross profit from large enterprise customers.
If we isolate the 12 of 23, our gross profit for both businesses went down year over year, mainly due to lower gross profit from large enterprise customers and sea bass.
Speaker 2: However, when we look at the results accumulated in the first nine months of the year, we see solid performance in both businesses with increased margins, demonstrating our ability to navigate this dynamic competitive environment without losing focus on the medium and long-term.
However, when you look at the results accumulated in the first nine months of the year, we see solid performance in both businesses with increased margins demonstrate our ability to navigate this dynamic competitive environment without losing focus on the medium and long term profitability.
Speaker 2: The performance of our CPaaS business in the first nine months of the year has been above our expectations.
The performance of our <unk> business in the first nine months of the year has been above our expectations.
Speaker 2: Given our leadership in the Brazilian SMS market and the more balanced market dynamics, we have been able to leverage a more efficient cost structure to gain market share with certain strategic large enterprise customers.
Given our leadership in the Brazilian SMS market in a more balanced market dynamics, we have been able to leverage a more efficient cost structure to gain market share with certain strategic large enterprise customers.
Speaker 2: which led to the strong recovery in SMS volumes with healthy profitability levels.
Which led to the strong recovery in SMS volumes with healthy profitability levels.
Speaker 2: CPAS also delivered a solid 13% increase in gross profit when compared to the first 9 months of 2021.
<unk> also delivered a solid 13% increase in gross profit when compared to the first nine months of 'twenty, two reaching a gross margin of 33, 2% up five percentage points.
Speaker 2: reaching a gross margin of 33.2% of 5% at
Speaker 2: We are confident that this strategy will help us improve our relationship with these customers, allowing us to capitalize on cross-selling and up-selling of our products.
We are confident that this strategy will help us improve our relationship with these customers, allowing us to capitalize on cross selling and upselling opportunities.
Speaker 2: Also, our SaaS business, despite facing the downsizing large enterprise on our consulting business, reached 134 million rising gross profit in the first nine months of the year, a 13% increase compared to the first nine months of 22, and reaching a gross margin of
Also our SaaS business, despite facing the downtown in the large enterprise on our consulting business, which was 134 million rise in gross profit in the first nine months of the year, a 13% increase compared to the first nine months of 'twenty two.
And reaching a gross margin of nearly 64%.
Speaker 2: This is mainly related to the revenue growth and the consolidation of MovieDesk.
This is mainly related to revenue growth and a consolidation of movie desk.
Moving to the next slide.
We highlight our EBIT evolution in the second quarter of 'twenty two.
Speaker 2: which is a direct result of the decision to pivot Xavier into a SaaS company and focus on improving profitability.
Which is a direct result of the decision to pivot saving to assess company and focus on improving profitability.
Speaker 2: It has not been easy, particularly given the complex macro environment, but as you can see, our strategy is paying off, with the 3rd quarter of 2023 marking the 5th consecutive quarter of 2022.
He has not been easy, particularly given the complex macro environment, but as you can see our strategy is paying off with the third quarter of 2003, marking the fifth consecutive quarter of positive EBITDA.
Speaker 2: If it was positive, 16.5 million rise in the quarter, up from 9.9 million a year ago and 15 million in 2020.
EBITDA was positive $16 5 million rise in the quarter up from $9 9 million a year ago, and 15 million in Q2 of 'twenty three.
Speaker 2: The Stronger EBITDA is mainly related to the Gross Profit Expansion I just explained, coupled with the execution of our Savings Plan initiated July 2021.
The stronger EBITDA is mainly related to the gross profit expansion I just explained coupled with the execution of our savings plan initiated in July 22.
Speaker 2: The disciplined execution of this efficiency plan led to an 8.4% drop in nominal G&A expenses, reducing the ratio of G&A as a percentage of revenue to 16.7% in 9 months of 2023, from 18.5% in 9 months of 2020.
The disciplined execution of this efficiency plan led to an eight 4% drop in nominal G&A expenses, reducing the ratio of G&A as a percentage of revenue to 16, 7% in nine months of 'twenty three from $18 five and nine months of 'twenty two.
Speaker 2: Also in Q3 2023 we had a 0.6 million reais impact from non-cash earn also expense related.
Also in Q2 'twenty three we had a 0.6 million reais impact from non cash earn out expense related since steel.
Speaker 2: Year to date, our EBITDA already totals R$ 55.7 million, on track to meet the guidance for the full year. In fact, our last 12 months EBITDA of R$ 79 million is already within the guidance.
Year to date, our EBITA already totals $55 7 million Reais on track to meet the guidance for the full year. In fact are less of months EBITA of 79 million Reais is already within the guidance range.
Speaker 2: In terms of cash flow, we ended September 2023 with a solid cash balance of nearly R$120 million, in line with the previous quarter, and a direct result of our focus on cash preservation without jeopardizing our sustainable economy.
In terms of cash flow. We ended September 30 through the solid cash balance of nearly 120 million Reais in line with the previous quarter and a direct result of our focus on cash preservation without jeopardizing our sustainable growth.
Speaker 2: The combination of stronger EBITDA and a stricter control of working capital was enough to pay for capital expenditure and debt service accumulated in the year.
The combination of stronger EBITA and a stricter control of working capital was enough to pay for capital expenditure and that service accumulated in the year.
Now, let's discuss our guidance for 2023.
Speaker 2: To finish, I would just like to reiterate the guidance we previously set for 2023, as we are confident with our performance so far and we are expecting a good Q4, which normally boosts our revenue and will positively impact our EBITDA, which, as I just said, is already on track to meet the guidance.
To finish I would just like to reiterate the guidance. We've previously set for 2023 as we are confident with our performance so far and we're expecting a good Q4, which normally boost our revenue and will positively impact our EBITDA, which as I. Just said is already on track to meeting the guidance.
Speaker 2: With this, we conclude our prepared remarks and we are ready to take your questions.
With this we conclude our prepared remarks, and we're ready to take your questions.
Speaker 3: We will now begin the question and answer session. Once again, for this Q&A session, we ask you to write down your question via the Q&A icon at the bottom of your screen. Your name will then be announced, and you'll be able to ask your question live. At this point, a request to activate your microphone will appear on your screen. If you prefer not to open your microphone live, please write down no microphone at the end of your question, and our operator will read your question aloud.
We will now begin the question and answer session.
Once again for this Q&A session. We ask you to write downward question via the Q&A icon at the bottom of your screen your.
Your name will then be announced and you'll be able to ask a question lives.
At this point a request to activate your microphone will appear on your screen. If you prefer not to open your microphone live. Please write down no microphone at the end of your question and our operator will read your questions aloud.
Hugo one.
Here on the on the webcast.
Speaker 2: Can you comment on your consulting business and why it has been so difficult to make it work?
Can you comment on your consulting business in N Y has been so difficult to make it work.
Speaker 1: So when we are addressing the enterprise market these years been a tough year, a tough environment, which means.
We've got to take this one.
So.
When we are addressing the enterprise market. These years been a tough year, the Gulf environment, which means.
Speaker 1: Decision-making cycles are taking a larger next step.
A decision making.
Making cycles are taking alert a mix factor.
Speaker 1: That's why even though we're bringing new enterprise customers, especially to our SaaS offerings, it is taking longer than expected to ramp up their revenues.
That's why even though we're bringing new enterprise customers, especially to our SaaS offerings. It has been take it is taking longer than expected to ramp up their revenues.
Speaker 1: And we expect in the next couple of quarters to get this on track, especially as we're seeing new logos coming and new projects being under launch phase. It's still not appearing in our results, but we expect in the next couple of quarters to have a higher flow of enterprise customers coming and impacting our revenue.
Hence we expect in the next couple of orders should get this on track, especially as we're seeing new logos coming in new projects being up.
They're at launch phase.
Still not kept reading our results, but we expect next of our partners to have a higher flow often device customers commie in the backyard revenues.
Speaker 2: Thanks, Kasia. So I'll keep going here.
Thanks, Cassia, so I'll keep going here.
Speaker 2: We saw an acceleration of CPaaS in the third quarter. Seems completely different from H2 of last year. Can you comment on this different dynamic?
Yeah.
We saw an acceleration of surpassing the third quarter seems completely different from H two of last year can you comment on this different dynamic.
Speaker 1: Last year, we had a very tough competition on the CPaaS space. We've been talking about that in the last couple of quarters. We were able to get back with a more competitive approach this year. So that's why we're getting back our market share and also advancing more than we had in the past.
Sure.
Yes.
Last year, we had a very tough.
Competition on the ship as space for being talks about laughed about that in the last couple of quarters, we are able to get back with a more competitive approach.
These year. So that's why we're getting back our market share and are also advancing more than we had in the past.
Speaker 1: and with profitability, so we'll be able to combine more aggressiveness on the market with a positive flow of cash coming from this business. We see the market, even though it is a mature business, it still has lots of opportunities for us.
And with profitability. So are we able to combine more grass from the carbon more aggressiveness.
The market with a positive flow of cash coming from this business, we see the market, even though it is a mature business and they still have lots of opportunities for us considering we are the largest player still on the region. So we're able to being able to.
Speaker 1: considering we are the largest players on the region. So we're able to, being able to benefit from that position in the market to bring especially big customers that are driving their.
You.
Benefit from that.
Our position in the market to bring especially big customers that are driving there.
Speaker 1: growth on the space with Xenvia and these same customers, we're exploring new opportunities with them to also advance more into the solution side, which means the SAS revenues within the same customer.
Growth in the space with Xavier and these same customers, we're exploring new opportunities with them to also advance four into distribution side, which groups of SaaS revenues within the seat and customers. So we're getting more.
Speaker 1: So we're getting more presence on the CPaaS space and expect that in the short to midterm to also benefit us on the SaaS market as well.
Our process on the ship as a space and expect that in the short to mid term to also benefit us on the SaaS ops market as well.
Thanks Kessel.
Speaker 2: Can you give us an update on earnouts due next year? Have you been able to restructure any more of those? Are you trying to restructure some of your debt?
Can you give us an update on earn outs. Due next year have you been able to restructure any more of those are you trying to restructure some of your debt.
Speaker 2: I'll take this one. Yes, as we've been discussing with you since Q2 of this year, we've been discussing with all our creditors, banks, and including the seller's finance.
So I'll I'll take this one yes as we've been discussing.
Discussing with you since our Q2 of this year.
We've been discussing with all our creditors.
Banks and including the seller silence.
Speaker 2: restructure, continue restructuring as we did. This is an ongoing conversation.
The restructure our continued restructuring as we did.
This is an ongoing conversation.
Speaker 2: We have time helping us here because markets seem to be improving somewhat in terms of credit and funding alternatives. And due to our effort in generating EBITDA, but also having a very strict control of working capital, we've been able to push our cash and our liquidity.
We have time, helping us here because the markets seem to be improving somewhat in terms of credit and funding alternatives.
And and due to our effort and generating EBITDA, but also a heavier very strict control of working capital we've been able to push our.
Our our cash and our liquidity.
Speaker 2: to put us in a better position to renegotiate that. So we hope to give you news on this sooner than later, but to continue being comfortable with the timing of those renegotiations.
Two two to put us in a better position to renegotiate debt. So we hope to have.
To give you news on this.
Sooner than later, but we continue being comfortable with the timing of of those renegotiations.
Speaker 2: Another one for you here, Cassio. We saw a hype with HTTP and AI. Following that hype, what has changed or evolved? What trends are you seeing?
Another one for you here Castle we.
We saw a hype, which actually P and AI.
Following that hype, what has changed or evolved what trends are you seeing.
Speaker 1: We're seeing that what we had in the beginning, which is the beginning of the hype curve, is a thought that it would dramatically change everything in the very short term, as every new technology does just the initial hype. But what we're seeing is that.
We're seeing that too.
What we had at the beginning which is the beginning of the hype curve is.
Linda.
Thought that it would dramatically change our retained in a very short term.
Every new technology, that's just the initial hype, but what we're seeing is that job.
Speaker 1: the benefits and the use of Gentrive AI into our solutions is coming. And it's starting to get traction within our products. We had a handful of different initiatives being tested with customers. And now we're starting to deploy them and have them scaled to customers. And this comes from, this goes from.
Bob.
The benefits and the use of Gen <unk> AI into our solutions is coming and it's starting to get traction within our products. We had a handful of different initiatives being tested with customers and now we're starting to.
Deploy them and have them.
Killed car source and this comes from this golf's from.
Speaker 1: simple understanding of what is the next best answer for the customer up to insights on what is going on with customer support or sales. So there are.
Simple understanding you will walk off what is the next best elsewhere for the customer up to insights on what is going on with customer support or sales. So there are.
Speaker 1: some improvements that are very useful for customers.
Some improvements there.
That are very useful for our for customers.
Speaker 1: And the mid-term, we expect that the way companies build their processes and when they make these processes available on conversational interfaces such as WhatsApp or Google RCS,
And in the mid term, we expect that the way companies build their processes.
On Wednesday.
Make these processes available on conversational interfaces, such as Whatsapp or no guar shaft that generative ai's is will be.
Speaker 1: that generative AIs will be mixed with structured.
B.
Mixed with structure.
Speaker 1: natural language understanding processes, which is like the Watson technology did before. So we're seeing these two technologies being mixed so they can provide a reliable and
Natural.
Language understanding processors, which the Watson technology did before so where we're seeing this being these chief technologist be mixed so they can provide a reliable and E N.
Speaker 1: service for customers, of course, and also good in terms of conversation. So it can be more fluid than Watson-based chatbot.
Service for our customers of course and also a good in terms of conversation.
So it can be more fluid than watchful based.
Speaker 1: So that's starting to occur and we expect that next year will be the year that these generative AI technologies will be fully deployed to most of our customers.
Chat bots, so that's starting to occur and we expect that next year will be the year that feast adjunctive AI technologies will be fully deployed to most of our customers.
Speaker 2: There's one for me here. You're the cheapest enterprise software company in the world valuation wise. When can we start to consider stock buyback?
There's one for me here, you're the cheapest enterprise software company in the World valuation wise when can we start to consider stock buybacks.
Speaker 2: So, we are not against stock buybacks, it's just a matter of timing and use of capital and capital preservation. Right, we're still, as I previously answered one of the questions about...
So we are not Ah.
Against stock buybacks is just a matter of a timing and use of capital and capital preservation right. We're still as I previously answered one of the questions about the our funding gap in liquidity.
Speaker 2: our funding gap and liquidity, so that is a priority now over share buyback.
So that there is a priority now over a share buyback.
Speaker 2: funding gap and our liquidity situation is behind us, then we can discuss all sorts of how to return, to accelerate capital return to shareholders.
Once a day.
The funding gap and in our liquidity situation is behind US then we can discuss all solves a how to return that to accelerate capital return to shareholders.
On here for Ya costume.
Speaker 2: Can you elaborate more on the RCS that you mentioned in your prepared remarks? How is that different from SMS? Any idea of potential market size versus SMS cannibalization?
Can you elaborate more on the Rcs that you mentioned in your prepared remarks, how is that different from SMS and the idea of potential market size versus SMS cannibalization.
Speaker 1: Sure, RCS is a technology that's been evolving for about a decade. It's part of GSM protocol.
Sure.
She asked as metallurgy that has been evolving for about a decade, it's part of just the.
Speaker 1: And since Google started pushing that technology a couple of years ago, it's it was up to this year, not yet deployed within.
But coal.
Uh huh.
Since Google.
Started pushing that technology, a couple of years ago.
It's.
It was up to this year.
Speaker 1: This year, 2023, is the year that Caterers arranged and deployed the technology, so that's the year things started ramping up. So we partnered with Google to bring that to the market. And what basically RCS does is that is a smooth transition from SMS to a more rich communication model with customers.
Not yet deployed within carriers this year can be trade to veer that carriers.
Arrange and deployed the technology. So that's weird thing just started ramping up so we partnered with Google to bring that to the market and what basically Rcs dos is that is a smooth transition from mathematics more more reach communication.
Speaker 1: You have 100% coverage when you're sending a message.
Mato with customers, which means you have 100% coverage when you're sending a message.
'cause it just for the fallback goes over a smashed but for those.
And the users that have a handset compatible with our shaft you have a much richer extra shifts.
Speaker 1: That's nowadays available not to the majority of end users.
That's nowadays available lots to the majority of the users.
Speaker 1: even though we cover 100% with SMS fallback. And over the next two or three years, we expect that 60 to 80% of users will be RCS compatible.
Even though you recover 100% whether from a fallback and all over the next two or three years, we expect that 660% to 80% of users who will be our CF compatible.
Speaker 1: And that means in terms of business that from from the perspective creates lots of opportunities for upsell.
Uh huh.
And that means in terms of some business that from from a vendor perspective creates lots of opportunities for upsell.
Speaker 1: Because when a user receives a rich message, it brings more interactions with that message, which means better conversion rates, possibly conversation over the message, which leverages all of our conversational platform and AI capabilities.
Cuts when a user receives a rich message it brings more.
Interactions with that message, which means better commercial rates.
Possibly.
Conversation over the message, which leverages all for conversational platform.
Speaker 1: And also the message itself, from the simple message up to the rich message, brings more revenues, talking only of the pure messaging side. So for us, and that's why we're leading that transition from SMS to RCS, brings lots of different opportunities for upsell and, of course, better experiences for end users and better results for our customers.
And AI.
Where it is and also the message itself Gulf from the simple simple message up to the rich message brings more revenues chocolate only of the pure messaging side. So for us and that's why we're we're leading that transition from us the last rush as brink's lots of different bird changes for upsell and of course <unk>.
Other expenses for NV users by the results for our customers.
Speaker 4: Another one here. Can you provide color on why the number of customers in your SaaS business was lower quarter over quarter, and why your net retention keeps going lower? Caio, can you address that one? Yes, of course. So talking first about the net revenue expansion, as Shai said, that impact is related to the consulting part of the business, where we saw some.
Another one here.
Can you provide color on why the number of customers in our SaaS business was lower quarter over quarter and why your net retention keeps going lower.
Kyle can you address that one yes of course, so talking first about the net revenue exploration.
Is that that impact is related to the consumer part of the business, where we saw some.
Speaker 4: revenue churn come from clients, huge clients from last year because our net revenue expense used last 12 months as basis. But we already seen recovery in Q3, the pipeline, the pipeline recovery and in Q4 we expect an increase on also the net revenue expense.
Revenue churn come from clients.
Huge decline from last year, because all of them are grabbing expense use last 12 month basis are we already seen recovery in Q3, the pipeline the pipeline recovery in Q4 or we expect.
<unk> increase.
Speaker 4: Regarding the number of clients, the clients that we lost between quarters is not relevant in terms of
The increase on also then at Radnet expansion regarding the number of clients.
Declines that we lost between quarters is not relevant in terms of revenue.
Speaker 4: revenue, and as we saw, we've increased our revenue.
Speaker 4: quarter over current business. And we still and we still have a lot of opportunity in the cross selling basis. That's why we
As we thought we will increase our revenue quarter over quarter in the SaaS business.
And we still and we still have a lot opportunity in the cross selling majors, that's why we.
Speaker 4: We are focused a lot on one Zendia because we have a huge client base with
Focus a lot on one Zane here, because we have a huge client base with low cross Sally that's a huge opportunity for us so it doesn't.
Speaker 4: low cross-salary, that's a huge opportunity for us. So it doesn't, it's not a huge, it's not some issue for us losing clients, especially number of clients, especially because of their small revenues.
Is not a huge is not some esher fraud, losing clients, especially member of client spectrum because of there is more revenues.
Yeah.
Okay.
Yeah.
Speaker 2: Hugo, can you re-prompt to see if we have a live?
Hugo can you a re prompt to see if you have a.
Speaker 3: Again if you have a question please use the Q&A icon at the bottom of your screen to write it down and it will open your microphone. If you prefer not to open your microphone please write down no microphone at the end of your question and our operator will read your question aloud.
A lot of questions.
Again, if you have a question. Please use the Q&A icon at the bottom of your screen to write it down and he will open your microphone. If you prefer not to open a microphone. Please write down no microphone at the end of your question and our operator will read your questions aloud.
We have no more questions here Hugo on the webcast as well.
Speaker 3: This concludes our question and answer session. I would like to turn the conference back over to Mr. Caspio Babsin for his closing remarks.
This concludes our question and answer session I would like to turn the conference back over to Mr. Cassio Bobzien for his closing remarks.
Speaker 1: Thank you everyone for joining us today. We're very excited with this year and especially next year coming. We expect to have you guys on our next call. Thank you very much. See ya.
Thank you everyone for joining us today.
We're very excited with these year and especially next year coming.
We expect to have you guys on our next call. Thank you very much.
Speaker 3: The conference has now concluded. Xenvia's IR area is at your disposal to answer any additional questions. Thank you for attending today's presentation. You may now disconnect. Have a nice day.
The conference has now concluded Zambia's IR area is at your disposal to answer any additional questions. Thank you for attending today's presentation. You may now disconnect have a nice day.