Q2 2024 Zenvia Inc Earnings Call

September 6, 2024

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[inaudible]

Operator: Good morning, and thank you for standing by.

[inaudible]

Speaker Change: Good morning, and thank you for standing by. Welcome to Zendia's Q2 2024 earnings conference call. Today's speakers are Mr. Cassio Machado, Zendia's founder and CEO, and Shai Shor, CFO and Investor Relations Officer.

Operator: Welcome to Zenvius Q2, 2024, earnings conference call.

Operator: Today's speakers are Mr. Casio-Bobs in Zenvius Sounder and CEO, and Shay Chor, CFO and Investor Relations Officer. Please be advised that today's conference is being recorded, and a replay will be available on the company's IR website, where it can also access today's presentation. At this time, all participants are in listen-only mode. After the prepared remarks, there will be a question-and-answer session. For the 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 will be able to ask your question live.

Speaker Change: Please be advised that today's conference is being recorded and a replay will be available on the company's IR website, where you can also access today's presentation.

Speaker Change: At this time, all participants are in listen only mode.

Speaker Change: After the prepared remarks, there will be a question and answer session.

Speaker Change: For the Q&A session, we ask you to write down your question via the Q&A icon at the bottom of your screen.

Speaker Change: your name will then be announced and will be able to ask your question to live.

Operator: At this point, a request to activate your microphone will appear on your screen. If you do not want to open your microphone live, please write "no microphone" at the end of your question. In this case, our operator will read your question aloud.

Speaker Change: at this point a request to activate your microphone will appear on your screen.

Speaker Change: If you do not want to open your microphone live, please write no microphone at the end of your question. In this case, our operator will read your question aloud. Now I would like to welcome one of our speakers for today, Mr. Cassio Machado, founder and CEO, Sir, the floor is yours.

Operator: Now, I would like to welcome one of our speakers for today, Mr. Casio-Bobs in Sounder and CEO. Sir, the floor is yours.

Cassio Machado: Hello everyone, and thank you for joining us at Zenvius Second Quarter, 2034, Earnings Hall, and Casio-Bobs in Pounders CEO. Thank you all for being with us today. Let me start by sharing with you that this quarter has been a significant one for us. As have been related to practice and rolling out the Zenvius customer cloud solution, then please report that the response to our clients has been extremely positive, with health and level of recording revenue, churn, and cross-adaption. We have also introduced in June our Genai chatbot solution; this cutting-edge innovation delivers substantial value to our customers.

Cassio Machado: Hello, everyone. Thank you for joining us at Saint-Veis Second Quarro, 23-4 early-school and Cassio Machado, Paldo Rciu. Thank you all for being with us today.

Speaker Change: Let me start by sharing with you that this quarter has been a significant one for us. As has been related to practice and rolling out the regime, the customer cloud solution, then please report that response to our clients has been extremely positive.

Speaker Change: With health and allowable for recording revenue, churn and cross-adduption.

Speaker Change: We have also introduced in June our Gen. A.I. chatbot solution, this cutting edge innovation will be a substantial value to our customers.

Cassio Machado: As it is so simple that a chatbot can be built in just under six minutes. I am happy to share that in these two months since its launch, about a hundred companies across eight industries in Latin America build their chatbots. They are confident this number will keep them freezing. Chatbots are evolving more and more, and are expected to become the primary customer service channel for at least 25% of all global businesses by 2027, according to Gartner. This shift represents not just a simple automation, but a significant enhancement of the customer experience.

Speaker Change: As it is so simple that a chatbot can be used in just under 6 minutes.

Speaker Change: I have a share and this two months since it's launched about a hundred companies across eight industries in Latin America, build their shut-bots. Their constant, this number of keeping free.

Speaker Change: is a chatbot that will be more and more and not expected to become the primary customer service channel for at least 25% of all global businesses by 2027, according to Gardner. This shift represents not just a simple automation, but a significant enhancement of the customer experience.

Cassio Machado: Here at San Diego, our long-term vision is to revolutionize customer service and business processes automation with the smarter and more intuitive chatbots. We are leading this transformation in Latin America, offering fluid and personalized solutions that boost efficiency and enhance the customer experience, and they are more profitable to us. In terms of the next steps, additional features of our GenAI chatbot will include real-time sendman analysis, continuous learning from past interactions, and seamless integration with multiple systems. We are unlocking endless possibilities for the future of customer experience, all with the help of AI. These advanced highlighted tremendous opportunities have every important commitment to driving, growth, and solidifying our leadership position in the market.

Speaker Change: Here at Sandia, our long-term vision is to revolutionize customer service and business process automation with the smarter and more and two dish chat bots.

Speaker Change: We're leading the transformation Latin America offering fluid and personalized solutions that boost efficiency and enhance the customer's experience and their mark profitable to us.

Speaker Change: In terms of the next steps, additional features of our gen and I chat, what will include real-time sentiment analysis, continuous learning from past interactions and seamless intuition with the multiple systems.

Operator: Good morning, and thank you for standing by. Welcome to Zenvius Q2, 2024, Earnings Conference Call. Today's speakers are Mr. Casio-Bobs in Zenvius Sounder and CEO and Shay Chor, CFO and Investor Relations Officer.

Operator: Good morning, and thank you for standing by.

Speaker Change: We're unlocking endless possibilities for the future of customer experience, all with the help of AI. These advanced high-lighted tremendous opportunities to have, and reinforcement to driving growth and solidifying a relationship position in the market.

Operator: Welcome to Zenvius Q2, 2024, earnings conference call.

Cassio Machado: The dedication for our team and the enthusiastic feedbacks from our clients at task or conference in the transformative potential of these solutions. We are committed to continuing this momentum and exceed expectations as we move forward.

Operator: Please be advised that today's conference is being recorded, and a replay will be available on the company's IR website, where it can also access today's presentation. At this time, all participants are in listen-only mode. After the prepared remarks, there will be a question and answer session. For the 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 will be able to ask your question live.

Speaker Change: The dedication for our team and enthusiastic feedback from our clients at tasks or conflicts in the transformative potential of these solutions. We're committed to continuing this momentum and exceed the expectations as we move forward.

Shay Chor: Now, I'll hand it over to Shai to cover our performance in the quarter.

Speaker Change: Now I'll have it over to Shay to cover our performance in the quarter.

Shay Chor: Thank you, Casio. Good morning, everyone. Let's start on slide 5. Here's a snapshot of our performance in the second quarter and first half of 2024, compared to the same periods of last year. As you can see, we are happy to report solid numbers in both periods. The second quarter 2024 results came again in line with our expectations, combining strong revenue growth and strict expense control that resulted in an EBITDA of almost 34 million reais in the quarter and 57 million reais in the first half. When looking at the last of months, our EBITDA totals 110 million reais, allowing us to reaffirm our 120 million to 140 million reais full-year guides for 2024.

Speaker Change: [inaudible]

Shay: Thank you, Cassio. Good morning, everyone. Let's start on slide five.

Shay: Here's a snapshot of our performance in the second quarter and first half of 2024 compared to the same period of last year. As you can see, we are happy to report solid numbers in both periods.

Speaker Change: The second quarter 2020 for results came again in live with our expectations, combining strong revenue growth and strict expense control that resulted in an EBITDA of almost 34 million rise in the quarter and 57 million rise in the first half.

Cassio Machado: Now, I would like to welcome one of our speakers for today, Mr. Casio-Bobs in Sounder and CEO. Sir, the floor is yours.

Operator: At this point, a request to activate your microphone will appear on your screen. If you do not want to open your microphone live, please write no microphone at the end of your question. In this case, our operator will read your question aloud.

Speaker Change: We're looking at the last of months, our EBITDA totals 110 million reais, allowing us to reaffirm our 120 million to 140 million reais full year guidance for 2024.

Operator: Now, I would like to welcome one of our speakers for today, Mr. Casio-Bobs in Sounder and CEO. Sir, the floor is yours.

Shay Chor: Our revenues grew by 20% year over year in the second quarter of 24, reaching 231 million reais. These growth was matched by a 20% increase in adjusted growth profit for the same period, while our adjusted growth margin remained stable at 43.2%. This is right in the middle of our 2024 guidance range. Our EBITDA figures also showed significant strength, with both periods recording more than double the EBITDA compared to the same periods of last year, a testing our continued operational efficiency in growth.

Speaker Change: Our revenues grew by 20% year over year in the second quarter of 2004, reaching 231 million reais.

Speaker Change: This growth was met by a 20% increase in adjusted growth profit for the same period. While our adjusted growth margin remains stable at 43.3%.

Speaker Change: This is right in the middle of our 2024 guidance range.

Cassio Machado: We have also introduced in June our Genai chatbot solution, this cutting edge innovation delivery substantial value to our customers. As it is so simple that a chatbot can be built in just under six minutes. I am happy to share that in this two months since its launch, about a hundred companies across eight industries in Latin America build their chatbots. They are confident this number will keep them freezing. Chatbots are evolving more and more, and are expected to become the primary customer service channel for at least 25% of all global businesses by 2027, according to Gardner.

Speaker Change: Our EVA figures also show significant strength with both periods recording more than double the EVA compared to the same period of last year, a testing our continued operation of efficiency in growth. Let's now dive deeper to understand these results.

Shay Chor: Let's now dive deeper to understand these results. Both SASS and CPAS kept expanding by two digits in the second quarter and first half of 24, with the revenue increase driven mainly by large enterprises in both segments. In the CPAS business, the performance keeps reflecting our ability to grow, while maintaining profitability at healthy levels, leveraging on better cost structure. CPAS revenues grew 22% in the second quarter after growing 23% in the first quarter and 30% in the fourth quarter of last year. These are tests aimed at quality and market leadership. Our SASS business grew almost 16% in the second quarter, compared to the same period of last year.

Speaker Change: Bolt Sassen CPS kept expanding by two digits in the second quarter and first half of 2004, with the revenue increase driven mainly by large enterprise and Bolt segments.

Speaker Change: In the CPS business, the performance keeps reflecting our ability to grow while maintaining profitability at healthy levels, leveraging on better cost structure.

Cassio Machado: This shift represents not just a simple automation, but a significant enhancement of the customer experience. Here at San Diego, our long-term vision is to revolutionize customer service and business processes automation with the smarter and more intuitive chatbots. We are leading this transformation in Latin America, offering fluid and personalized solutions that boost efficiency and enhance the customer experience, and they are more profitable to us. In terms of the next steps, additional features of our Genai chatbot will include real-time sendman analysis, continuous learning from past interactions, and seamless integration with multiple systems.

Speaker Change: CPAS RAVIL is route 22% in the second quarter after growing 23% in the first quarter and 30% in the fourth quarter of last year.

Speaker Change: This is a test to send the quality and market leadership.

Speaker Change: Our Sass Business Group almost 16% in the second quarter compared to the simpler of last year.

Shay Chor: The expansion came primarily from large enterprise customers, especially in the consulting business, that has a low comparison base in Q223.

Speaker Change: The expansion came primarily from large enterprise customers, especially in the consulting business that has a low comparison base in Q223.

Cassio Machado: We are unlocking endless possibilities for the future of customer experience, all with the help of AI. These advanced highlighted tremendous opportunities have every important commitment to driving, growth, and solidifying our leadership position in the market. The dedication for our team and the enthusiastic feedbacks from our clients at task or conference in the transformative potential of these solutions. We are committed to continuing this momentum and exceed expectations as we move forward.

Shay Chor: Looking ahead, we expect SMB clients to be the main growth driver of our new Zenvi Customer Cloud. When we look for the figures of the semester in the graph on the right of the slide, we see mostly the same picture, with growth variations that are very similar to the quarter numbers.

Speaker Change: Looking ahead, we expect that in big clients to be the main growth driver of our new Zainve customer cloud.

Speaker Change: When we look for the figures of the semester and the graph on the right of the slide, we see most of the same picture, with growth variations that are very similar to the quality numbers.

Shay Chor: Let's take a better look on how the expansion has translated into a balance and profitable portfolio mix. We continue to pursue and convert revenue opportunities in the CPAS business. Particularly in the second quarter, we gain some volumes with unusually high margins from certain large enterprises, expanding CPAS contribution to our revenue mix. The second quarter numbers show SASS reaching 34% of net revenues and 42% of gross profit. All CPAs made 66% of net revenues and 58% of gross profit. In the same quarter last year, we had just a little bit more of SASS revenues, 35% versus 65% of CPAS; that translated into a 50-50 participation in the gross profit mix.

Speaker Change: Let's now take a better look on how this expansion has translated into a balanced and profitable

Speaker Change: We continue to pursue and convert revenue opportunities in the CPS business.

Speaker Change: Particular in the second quarter, we gain some volumes within usually high margins from certain large enterprises, expanding CPAS contribution to our revenue mix.

Shay Chor: Now, I'll hide it over to Shai to cover our performance in the quarter. Thank you, Casio.

Shay Chor: Now, I'll hand it over to Shai to cover our performance in the quarter. Thank you, Casio.

Speaker Change: The second quarter of numbers shows such which in 34% of net revenues and 42% of gross profit, also past made 66% of net revenues and 58% of gross profit.

Shay Chor: Good morning, everyone. Let's start on slide 5. Here's a snapshot of our performance in the second quarter and first half of 2024, compared to the same periods of last year. As you can see, we are happy to report solid numbers in both periods. The second quarter 2024 results came again in line with our expectations, combining strong revenue growth and strict expense control that resulted in an EBITDA of almost 34 million reais in the quarter and 57 million reais in the first half.

Speaker Change: In the same quarter last year, we had just a little bit more of Sassravenus, 35% versus 65% of C.P.S. that translated into a 50-50 participation de-gross profit mix.

Shay Chor: As you know, a higher CPAS participation in the revenue mix impacts our margins. But how the highlight that the focus here was again on capturing volumes in CPAS that have converted directly to EBITDA, even that we do not need the initial DNA to generate that revenue. Here on slide 8, you can see exactly what I just explained. As our growth discourse was mainly driven by large enterprises in both segments, and with a much higher CPAS participation, we were expecting some decrease in revenue. and Marginz. We recorded almost 38% CPS margins and 54% SaaS margins in Q224.

Speaker Change: As you know, a higher CPAS participation in the revenue mix impacts our margins. But how the highlight that the focus here was again on capturing volumes in CPAS that are converted directly to Ibita, even that we do not need the National DNA to generate that revenue.

Speaker Change: Here on slide 8, you can see exactly what I just explained.

Shay Chor: When looking at the last of months, our EBITDA totals 110 million reais, allowing us to reaffirm our 120 million to 140 million reais full-year guides for 2024. Our revenues grew by 20% year over year in the second quarter of 24, reaching 231 million reais. These growth was matched by a 20% increase in adjusted growth profit for the same period, while our adjusted growth margin remained stable at 43.2%. This is right in the middle of our 2024 guidance range. Our EBITDA figures also showed significant strength, with both periods recording more than double the EBITDA, compared to the same periods of last year, a testing our continued operational efficiency in growth.

Speaker Change: As our growth this quarrel was mainly driven by large enterprises in both segments and with a much higher CPAS participation, we were expecting some decrease in margins.

Shay Chor: Our revenues grew by 20% year over year in the second quarter of 24, reaching 231 million reais. These growth was matched by a 20% increase in adjusted growth profit for the same period, while our adjusted growth margin remained stable at 43.2%. This is right in the middle of our 2024 guidance range. Our EBITDA figures also showed significant strength, with both periods recording more than double the EBITDA compared to the same periods of last year, testing our continued operational efficiency in growth.

Speaker Change: We recorded almost 38% CPS margins and 54% SAS margin killed 2204.

Shay Chor: For the half-year, the margin numbers are very similar. The lower SaaS margins are related to the mix of large enterprises with lower margins. The decrease was totally offset by the higher than expected CPS margins that we do not expect to be repeated going forward. The performance of both segments drove our consolidated margins. The adjusted gross margin remains stable when we compare the colors. We're noting here that we are reporting margins that are well within the guidance range, all according to our plan. And more important than looking at the margins as percentage, we highlighted gross profits expanded 20% year over year or 17 million reais, which is one of the drivers for our EBITDA more than doubling.

Speaker Change: For the half year, the Modular numbers are very similar.

Speaker Change: The lower mass margins are related to the mix of large enterprises with lower margins.

Speaker Change: This decrease of slowly offset by the higher than expected C++, that we do not expect to be repeated going forward.

Speaker Change: The performance of both segments drove our consolidated margins, the adjusted gross margin remains table with a lot of copper.

Speaker Change: We're noting here that we are reporting margins that are well within the guidance range, all according to our plan.

Speaker Change: And more important than looking at the margin of percentage, we highlighted gross profit expanded 20% year over year or 17 million reais, which is one of the drivers for our EBITDA more than doubling.

Shay Chor: The other driver for EBITDA expansion is our discipline on GNA execution, as you can see in the next slide. As I mentioned in the beginning of my remarks, we remain laser-focused on keeping costs strictly under control. We have been growing the top plan by double digits without adding additional GNA, which enabled us to more than double our EBITDA in both periods. In fact, we are doing this all, bringing down our GNA as a result of increased productivity. This led the GNA as percentage of revenues to decrease to 14.4% in Q224, from 19.4% in Q223, representing a 5,500 basis points drop.

Speaker Change: The other driver for EBITDA expansion is our discipline on GNA execution as you can see in the next slide.

Speaker Change: As I mentioned in the beginning of my remarks, we will mainly lay their focus on keeping cost-free clean and their control.

Speaker Change: We have been growing the top plant by double digits without adding a disrogene, which enabled us to modern dubber ebit and both periods.

Shay Chor: These are tests aimed at quality and market leadership. Our SASS business grew almost 16% in the second quarter, compared to the same period of last year. The expansion came primarily from large enterprise customers, especially in the consulting business, that has a low comparison base in Q223.

Speaker Change: In fact, we are doing this all bringing down our DNA that a result of increased productivity.

Shay Chor: The expansion came primarily from large enterprise customers, especially in the consulting business, that has a low comparison base in Q223. Looking ahead, we expect SMB clients to be the main growth driver of our new Zenvi Customer Cloud. When we look for the figures of the semester in the graph on the right of the slide, we see mostly the same picture, with growth variations that are very similar to the quarter numbers.

Speaker Change: This led the DNA as percentage of revenues to decrease to 14.4% in 22.24% from 19.4% in 22.23. Representing a 500-based points drop, the lowest level since our Pripyo years, and a key factor positive impact our EBITDA.

Shay Chor: Looking ahead, we expect SMB clients to be the main growth driver of our new Zenvi customer cloud. When we look for the figures of the semester in the graph on the right of the slide, we see mostly the same picture, with growth variations that are very similar to the quarter numbers.

Shay Chor: The lowest levels is our pre-IPO years, and a key factor positively impact our EBITDA. When we compare the semesters, the drop of 400 basis points reaching 14.5% of revenues. Obviously, we are very happy with our EBITDA expansion that we just discussed.

Speaker Change: When we compare the semesters, the drop was a 400-based point, reaching 14.5% of revenues.

Shay Chor: Let's take a better look on how the expansion has translated into a balance and profitable portfolio mix. We continue to pursue and convert revenue opportunities in the CPAS business. Particularly in the second quarter, we gain some volumes with unusually high margins from certain large enterprises, expanding CPAS contribution to our revenue mix. The second quarter numbers show SASS reaching 34% of net revenues and 42% of gross profit. All CPAS made 66% of net revenues and 58% of gross profit.

Shay Chor: Let's take a better look on how the expansion has translated into a balance and profitable portfolio mix. We continue to pursue and convert revenue opportunities in the CPAS business. Particularly in the second quarter, we gain some volumes with unusually high margins from certain large enterprises, expanding CPAS contribution to our revenue mix. The second quarter numbers show SASS reaching 34% of net revenues and 42% of gross profit. All CPAs made 66% of net revenues and 58% of gross profit. In the same quarter last year, we had just a little bit more of SASS revenues, 35% versus 65% of CPAS. That translated into a 50-50 participation in the gross profit mix.

Speaker Change: Obviously we are very happy with our EBITDA expansion we just discussed.

Shay Chor: But we cannot lose sight of how this EBITDA is converted into cash. So here we have a view of EBITDA minus CAPEX. In the first half of last year, when we deducted the CAPEX from our EBITDA, we still saw a negative figure, small but negative. This year we generated a positive 24 million reais from the EBITDA minus CAPEX. Also, if we consider the midpoint of our EBITDA guidance of 130 million reais for the year, and that our expected CAPEX should be around 50 million, is indexing projected to be positive at 80 million reais for 2024.

Speaker Change: But we cannot lose sight of how this EBITDA is converted into cash.

Speaker Change: So, here we have a view of EBITDA-CAPICS.

Speaker Change: In the first half of last year, when we deducted the capex from our EBITDA, we still saw a negative figure, small but negative.

Speaker Change: This year, we generate the positive 24 million reais from the EBITDA minus capex.

Speaker Change: Also, if we consider the midpoint of our EBITDA guidance of 130 million rise for the year, and that our expected cup should be around 50 million rise. It's indexed projected to be positive at 8 million rise for 2024.

Shay Chor: In the same quarter last year, we had just a little bit more of SASS revenues, 35% versus 65% of CPAS, that translated into a 50-50 participation in the gross profit mix. As you know, a higher CPAS participation in the revenue mix impacts our margins. But how the highlight that the focus here was again on capturing volumes in CPAS that have converted directly to EBITDA, even that we do not need the initial DNA to generate that revenue.

Shay Chor: EBITDA minus CAPEX is a crucial metric for assessing our ability to generate cash flow from our core operations after accounting for the necessary investment in the business. This metric not only highlights our operational efficiency, but also helps understand how well we are positioning ourselves to leverage, fund future growth, maintain financial flexibility, and reward shareholders. Since we expected our EBITDA, we will increase at a faster pace than our CAPEX, as it has been the case for the last few years. We believe we will be able to start the leverage and our balance sheet by the age 2 of 25.

Speaker Change: EBITDA minus capital accrual metric for assessing our ability to generate cash flow from our core operations after accounting for the necessary investment in the business.

Speaker Change: This matrix not only highlights our operational efficiency, but also helps understand how well we are positioned ourselves to the leverage, fun future growth, maintain financial flexibility and reward shareholders.

Shay Chor: Here on slide 8, you can see exactly what I just explained. As our growth discourse was mainly driven by large enterprises in both segments, and with a much higher CPAS participation, we were expecting some decrease in revenue, and Marginz. We recorded almost 38% CPS margins and 54% SaaS margins in Q224. For the half-year the margin numbers are very similar. The lower SaaS margins are related to the mix of large enterprises with lower margins.

Speaker Change: Since we expected our rebuild, we will increase at a faster pace than our capex, and it has been the case for the last few years. We believe we will be able to start the leverage our balance sheet by the H2 of 25. Until there, we are working to obtain more flexibility in our cash flow through new data or accuracy.

Shay Chor: Until there, we are working to obtain more flexibility in our cash flow to new data or records.

Shay Chor: On slide 11, we are rating our guidance for the full year 2024. Our revenue growth of 19% in the first half of the year is tracking at the high end of our 15 to 20% full-year guidance. In terms of margins, we are forecasting growth margin in line with 23 figures between 42 and 45%. And our first half result of 42.7% tracks slightly above the midpoint of the range. And finally, in terms of EBITDA, our first half of the year came in line with our expectations, including the seasonally weak first quarter. Considering second half seasonality, especially Q4, we are confident in rate-erating our EBITDA guidance of between 120 and 140 million reais.

Speaker Change: On slide 11, we are reiterating our guidance for the full year 2024.

Speaker Change: Our revenue growth of 19% in the first half of the year is striking at the high end of our 15-20% full year guidance.

Shay Chor: The decrease was totally offset by the higher than expected CPS margins that we do not expect to be repeated going forward. The performance of both segments drove our consolidated margins. The adjusted gross margin remains stable when we compare the colors. We're noting here that we are reporting margins that are well within the guidance range all according to our plan. And more important than looking at the margins as percentage, we highlighted gross profits expanded 20% year over year or 17 million reais, which is one of the drivers for our EBITDA more than doubling.

Speaker Change: In terms of margins, we are forecasting Ross margin in line with 23 figures between 42 and 45%. And our first half result of 42.7% track slightly above the midpoint of the range.

Speaker Change: and finally, in terms of EBITDA, our first half of the year came in line with our expectations, including the seasonally week first quarter. Considering second half seasonality, especially Q4, we are confident in reiterating our EBITDA guidance of between 120 and 140 million

Shay Chor: To wrap up, let's talk about the next steps that we have been discussing with our board. The conclusion of our liability management in the first quarter, which included both capital raise and debt refinance, was an important step to better align our cash flow from operations to the financial requirements we have. With greater financial flexibility, we can focus on executing our strategic planning, accelerating profitable growth, and the leverage in the balance sheet. As we roll out Zenvia Customer Cloud, that Caso mentioned in his prepared remarks, we become even more confident that it will accelerate our organic growth.

Shay Chor: The other driver for EBITDA expansion is our discipline on GNA execution as you can see in the next slide. As I mentioned in the beginning of my remarks, we remain laser focused on keeping costs strictly under control. We have been growing the top plan by double digits without adding additional GNA, which enabled us to more than double our EBITDA in both periods. In fact, we are doing this all bringing down our GNA as a result of increased productivity.

Speaker Change: To wrap up, let's talk about the next steps that we have been discussing with our board.

Speaker Change: The conclusion of our liability management in the first quarter, which included both capital rates and debt refinance, was an important step to better line our cash flow from operations to the financial requirements we have.

Speaker Change: With greater financial flexibility, we can focus on equity cuteness or strategic planning, accelerating profitable growth and the leverage in the balance sheet.

Speaker Change: As we roll out Xavier Cassio Machado, that Cassio Machado mentioned in his repair remarks, we become even more confident in it, who will accelerate our organic road.

Shay Chor: This led the GNA as percentage of revenues to decrease to 14.4% in Q224, from 19.4% in Q223, representing a 5500 basis points drop. The lowest levels is our pre-IPO years and a key factor positively impact our EBITDA. When we compare the semesters, the drop of 400 basis points reaching 14.5% of revenues. Obviously, we are very happy with our EBITDA expansion that we just discussed.

Shay Chor: We are also preparing to expand organically outside Brazil, with a focus on Argentina and Mexico, where we already have operations and where we see high growth potential. Once again, we appreciate your continued trust as we move ahead. We are committed to building a profitable and exciting future for Zenvia, maximizing value for torsion holders.

Speaker Change: We're also preparing to expand organic dioxide Brazil with a folks in our Argentina and Mexico where we already have operations and where we see high growth potential.

Speaker Change: Once again, we appreciate your continued trust as we move ahead. We are committed to building a profitable and exciting future for Zendia, maximizing value to our shareholders.

Operator: With this, we conclude our prepared remarks and are ready to take your questions.

Speaker Change: With this, we conclude our prepared remarks and ready to take your questions.

Shay Chor: But we cannot lose sight of how this EBITDA is converted into cash. So here we have a view of EBITDA minus CAPEX. In the first half of last year, when we deducted the CAPEX from our EBITDA, we still saw a negative figure, small but negative. This year we generated a positive 24 million reais from the EBITDA minus CAPEX. Also, if we consider the midpoint of our EBITDA guidance of 130 million reais for the year, and that our expected CAPEX should be around 50 million is indexing projected to be positive at 80 million reais for 2024.

Operator: We will now begin the question and answer session. Once again, for this Q&A session, we ask you to write down a question via the Q&A icon at the bottom of your screen. Your name will then be announced and will be able to ask a question live. At this point, a request to activate a microphone will appear on your screen. If we prefer not to open your microphone live, please write "no microphone" at the end of the question, and our operator will read your question aloud.

Speaker Change: We will now begin the question and answer session. Once again, for the skew and a session, we ask you to write down a question via the Q&A icon at the bottom of your screen.

Speaker Change: Your name will then be announced and will be able to ask a question live. At this point, a request to activate a microphone will appear on your screen. If we prefer not to open a microphone live, please write no microphone at the end of a question. An operator will read your question aloud.

Operator: Our first question comes from Gustavo Ferrius, cell site analyst from UDS. Gustavo, we are now opening the audio so that you can ask a question live. Please go ahead.

Speaker Change: Our first question comes from Gustavo Ferrier, Felsight Analyst from UDS, Gustavo. We are now opening the audio so that you can ask a question live. Please go ahead.

Shay Chor: EBITDA minus CAPEX is a crucial metric for assessing our ability to generate cash flow from our core operations after accounting for the necessary investment in the business. This metric not only highlights our operational efficiency, but also helps understand how well we are positioning ourselves to the leverage, fund future growth, maintain financial flexibility and reward shareholders. Since we expected our EBITDA, we will increase at a faster pace than our CAPEX, as it has been the case for the last few years, we believe we will be able to start the leverage and our balance sheet by the age 2 of 25. Until there, we are working to obtain more flexibility in our cash flow to new data or records.

Speaker Change: [inaudible]

Gustavo Ferrius: Hi, guys. Can you guys hear me? We can. Hi, everyone. Thank you for taking my questions.

Gustavo Ferrier: Hi guys!

Gustavo Ferrier: i

Speaker Change: The guy's gonna go to hear me?

Speaker Change: We can.

Speaker Change: Everyone, ah...

Gustavo Ferrius: Two questions from my end. The first one regarding the migration of the client base to Ziviruskas and Clouds. I'd like to know if you could look at our caller on being feedback from clients, what kind of clients you expect to have go forward in terms of large enterprises versus SMB. Just to confirm, understanding your focus will be on SMB. I'd like to confirm that.

Speaker Change: Let's go!

Speaker Change: Thank you for taking my questions from my end. The first one regarding the migration of the fine-based tube.

Shay Chor: Until there, we are working to obtain more flexibility in our cash flow to new data or records.

Speaker Change: Vibersk

Shay Chor: On slide 11, we are rating our guidance for the full year 2024. Our revenue growth of 19% in the first half of the year is tracking at the high end of our 15 to 20% full year guidance. In terms of margins, we are forecasting growth margin in line with 23 figures between 42 and 45%. And our first half result of 42.7% tracks slightly above the midpoint of the range. And finally, in terms of EBITDA, our first half of the year came in line with our expectations, including the seasonally weak first Quora. Considering second half seasonality, especially Q4, we are confident in rate-erating our EBITDA guidance of between 120 and 140 million reais.

Speaker Change: because it's a cloud, I like to know.

Speaker Change: and the feedback from clients, what kind of...

Speaker Change: Clients, you expect.

Speaker Change: and his name is Cassio Machado.

Speaker Change: to have going forward in terms of large enterprise versus SMB, just to confirm understanding your focus will be on SMB.

Speaker Change: I'll just go...

Gustavo Ferrius: And the second one, it's a guide in the client base cleanup that you mentioned this water on them. I'd like to know if it's already over or should we expect some more based cleanup for next waters? That'll be. Thank you.

Speaker Change: I'd like to confirm that. And the second one, it's a garden.

Speaker Change: the client-based cleanup that you mentioned, the squadron on them.

Speaker Change: or like to know is already over or should we expect some more based enough.

Speaker Change: for the next waters.

Cassio Machado: All right.

Cassio Machado: I'll take the first part of the question, and then I will take the second part. So, talking about migration of customers to Ziviruskas and Clouds, we first started with launching these platforms for new customers. So have the cohorts of new customers coming from a portion of our demand generation already using this new platform. And we're seeing a very interesting increase in the usage and retention and cross-adduction and deep adoption, which is translating into a very, very healthy profile of these cohorts, comparing to what we had on the standalone solutions before the customer cloud. We've been rolling out the migration of all of our products to become a part of the customer cloud.

Speaker Change: B. Thank you.

Speaker Change: Alright, I'll take the first part of the question and then I will take the second part. So talking about migration of customers, she has the Invictus McClub.

Speaker Change: We first started with launching these new platforms for new customers, so we have the cohorts of new customers.

Shay Chor: As we roll out Zenvia customer cloud, that Caso mentioned in his prepared remarks, we become even more confident that it will accelerate our organic growth. We are also preparing to expand organically outside Brazil with a focus on Argentina and Mexico where we already have operations and where we see high growth potential.

Speaker Change: Coming from a portion of hard-demand generation, already using this new platform. And we're seeing a very interesting increase in the usage, in a retention.

Shay Chor: Once again, we appreciate your continued trust as we move ahead. We are committed to building a profitable and exciting future for Zenvia, maximizing value torsion holders. With this, we conclude our prepared remarks and ready to take your questions.

Speaker Change: and Cross-Adduction and Deep Adduction, which is translating into a very, very healthy profile of these cohorts, comparing to what we had on the standalone solutions.

Operator: With this, we conclude our prepared remarks and are ready to take your questions. We will now begin the question and answer session. Once again, for this Q&A session, we ask you to write down a question via the Q&A icon at the bottom of your screen. Your name will then be announced and will be able to ask a question live. At this point, a request to activate a microphone will appear on your screen. If we prefer not to open your microphone live, please write "no microphone" at the end of the question, and our operator will read your question aloud.

Operator: We will now begin the question and answer session. Once again, for this Q&A session, we ask you to write down a question via the Q&A icon at the bottom of your screen. Your name will then be announced and will be able to ask a question live. At this point, a request to activate a microphone will appear on your screen. If we prefer not to open your microphone live, please write no microphone at the end of the question and our operator will read your question aloud.

Speaker Change: for the customer called. With being rolling out the migration of the whole for products.

Speaker Change: to become a part of the customer cloud. So this is a...

Cassio Machado: So, this is a project that is being rolled out. We expect to finish that in terms of migration of products up to Q4 this year and a little bit more in terms of our customers from our former solutions to this new platform. That is also being rolled out over the early days of that. But we're already seeing that we have a very good reception for these customers because they are able to have access to more features, usually paying the same amount in the beginning. I mean, they migrate, and they pay the same but have access to more features.

Speaker Change: a project that has been rolled out to expect to finish that in terms of migration of products to Q4 this year, and a little bit up to Q1 next year, and at the same time we are migrating customers from our former solutions.

Gustavo Ferrius: Our first question comes from Gustavo Ferrius, cell site analyst from UDS. Gustavo, we are now opening the audio so that you can ask a question live. Please go ahead. Hi, guys. Can you guys hear me? We can. Hi, everyone. Thank you for taking my questions. Two questions from my end. The first one regarding the migration of the client base to Ziviruskas and Clouds. I'd like to know if you could look at our caller on being feedback from clients, what kind of clients you expect to have go forward in terms of large enterprises versus SMB, just to confirm understanding your focus will be on SMB.

Operator: Our first question comes from Gustavo Ferrius, cell site analyst from UDS. Gustavo, we are now opening the audio so that you can ask a question live. Please go ahead.

Speaker Change: 2D's new platform that is also being rolled out.

Speaker Change: or we're still the early days of that, but we're already seeing that we have a very good reception from this customer because they are able to...

Gustavo Ferrius: Hi, guys. Can you guys hear me? We can.

Speaker Change: have access to more features.

Speaker Change: are usually paying the same amount on the beginning. They migrate and they pay the same but have access to more features. As they keep using more, then we benefit from these usage with the volume based.

Gustavo Ferrius: Hi, everyone. Thank you for taking my questions. Two questions from my end. The first one regarding the migration of the client base to Ziviruskas and Clouds. I'd like to know if you could look at our caller on being feedback from clients, what kind of clients you expect to have go forward in terms of large enterprises versus SMB. Just to confirm, understanding your focus will be on SMB. I'd like to confirm that.

Cassio Machado: And as they keep using more, then we benefit from these usage with the volume-based. business model that we have that make these customers be more monetized as they grow their usage. So as we're rolling out this migration of customers, we expect that this will increase both customer retention and also customer expansion. That's where you are already seen in the courts of new customers. And about customer size and profile for these new solutions, we're seeing adoption from small, medium, and large companies. We have, of course, as we launched more towards SMBs. But as we are approaching our enterprise customers with this new platform, we're having adoption of huge customers of this new platform.

Speaker Change: and business model that we have that make this customers.

Speaker Change: Be more monetized as they grow their usage.

Speaker Change: So, as we rolling out this migration of customers

Speaker Change: We expect that this will increase both customer retention and also customer expansion. That's where you are already seen in the courts of new customers. And about customer size and profile, you know, for these new solutions.

Speaker Change: We're seeing a depth from a small medium and large companies. We have, of course, as we launched, we launched more towards SMBs, but as we are approaching our enterprise customers.

Gustavo Ferrius: I'd like to confirm that. And the second one, it's a guide in the client base cleanup that you mentioned this water on them. I'd like to know if it's already over or should we expect some more based cleanup for next waters? That'll be. Thank you. All right.

Speaker Change: with the new platform, we're having adoption of huge customers of these new platform. And we are ready.

Cassio Machado: And we are very happy and glad that they're already seen value in this new platform. And we expect, as we roll out to all of our customers, this platform to have improvement in both SMBs and enterprise in terms of both retention and expansion.

Speaker Change: I mean, happy and glad that they're already seen value in this new platform and expect as we roll out all of our customers, these platform to have improvement in both SMBs and enterprise in terms of both retention and expansion.

Cassio Machado: All right.

Cassio Machado: I'll take the first part of question and then I will take the second part. So, talking about migration of customers to Ziviruskas and Clouds, we first started with launching these platform for new customers. So have the cohorts of new customers coming from a portion of our demand generation already using this new platform. And we're seeing a very interesting increase in the usage and retention and cross-adduction and deep adoption, which is translating into a very, very healthy profile of these cohorts, comparing to what we had on the standalone solutions before the customer cloud.

Shay Chor: And Shay, I think you can now have another second quarter question about seeing up the customer base.

Speaker Change: and Shay, I think you can now have the second important question about cleaning up the casserole base.

Shay Chor: Thanks, Caio. So Gustavo, pretty simple. We understand that most of what we needed to do was already done. So we don't expect anything relevant going forward.

Shay: Thanks Cassio. So we'll stop pretty simple. We understand that most of what we needed to do was already done. So we don't expect anything relevant going forward.

Gustavo Ferrius: All right, thank you, guys.

Shay: i

Speaker Change: Alright, thank you guys.

Shay Chor: Hugo, see some questions here on the web. I'll take them. I'll read them, and then we will be able to see if we have live questions again.

Speaker Change: Hugo, see some questions here on the web, I'll take them all, read them and then we will report to see if we have live questions again.

Gustavo Ferrius: So congrats on the progress, particularly in resolving the earnings gap to questions, first on margins and the other one on working capital on margins. The company's margins for both CPS and SAS FI are considerably a bit quarter to quarter over the past three years. CPS margins have been as low as 20, as 20s and high as high as 40s while SAS has been as low as 40s and as high as 60.

Speaker Change: So, congrats on the progress, particularly in resolving the earnings gap to questions.

Cassio Machado: We've been rolling out the migration of all of our products to become a part of the customer cloud. So, this is a project that is being rolled out, we expect to finish that in terms of migration of products up to Q4 this year and a little bit more in terms of our customers from our former solutions to this new platform. That is also being rolled out over the early days of that.

Speaker Change: First on the margins and the other one on the working capital on the margins.

Speaker Change: The company's margins for both CPS and South Africa are considerably a bit quarter to quarter. Over the past three years, CPS margin has been as low as 20% as 20% and high as high as 40s, while South has been as low as 40s and as high as 60.

Cassio Machado: Beyond customer size, what is the best way to think about the long-term margin profile of Zenvi, especially as it scales? Castellano, if you want to go on a more helicopter view, then I can go. Yeah, sure. We've been investing a lot on the equation of the SAS solutions, and we expected these investments over the last two years are now starting to leverage the growth of SAS as we expect this to happen in the next couple of quarters in a higher pace than CPS, which will naturally bring our margins a bit higher in terms of revenue meets.

Speaker Change: Beyond customer size, what is the best way to think about the long-term margin profile of Xenve especially as it scales?

Speaker Change: [inaudible]

Speaker Change: I said I don't know if you want to go on a more helicopter view and then I can...

Speaker Change: Oh, that's her.

Speaker Change: We've been investing a lot on the equation of the SaaS solutions and the expect that these investments over the last two years are now starting to...

Cassio Machado: But we're already seeing that we have a very good reception for these customers because they are able to have access to more features, usually paying the same amount in the beginning. I mean, they migrate and they pay the same but have access to more features. And as they keep using more, then we benefit from these usage with the volume-based, business model that we have that make these customers be more monetized as they grow their usage.

Speaker Change: Leverage the grill, not sass, as we expect this to happen next to a book orders in a higher pace.

Speaker Change: then CPAS, which will naturally bring our margins a bit higher in terms of revenue mix. And the variation of margins on CPAS.

Cassio Machado: And the variation of margins on CPS is mainly customer mix. There's this variation of different customer profiles over time, as it is mostly volume-based, depending on seasonality and the penny of negotiations, especially on high volume or margin customers. Sometimes they have some boost on high volume customers with lower margins, and this creates this fluctuation of CPS margins. Looking at SAS, it's mostly about the revenue mix of different products in the portfolio, as we acquired companies, and we combined that with our and these solutions. Each has its own profile, of course, structure. Sometimes what we see in the terms of variation is that one solution is growing at a passer pace and carries different margins.

Speaker Change: It's mainly customer mix, there's this variation of different customer profiles of a time as it is mostly volume based, depending on seasonality and the plenty of negotiations.

Cassio Machado: So as we're rolling out this migration of customers, we expect that this will increase both customer retention and also customer expansion. That's where you are already seen in the courts of new customers. And about customer size and profile for these new solutions, we're seeing adoption from small medium and large companies. We have, of course, as we launched more towards SMBs. But as we are approaching our enterprise customers with this new platform, we're having adoption of huge customers of this new platform.

Speaker Change: Specialty on high volume low-marking customers sometimes have some boost.

Speaker Change: on the high-bad with customers with lower margins and this is creative.

Speaker Change: Flectuation of CITAS margins.

Speaker Change: Looking at SAS, it's mostly about the revenue mix of different products in the portfolio as we acquire companies.

Speaker Change: and we combine that with our end solutions. Each has its own profile of course structure.

Cassio Machado: And we are very happy and glad that they're already seen value in this new platform. And we expect as we roll out to all of our customers this platform to have improvement in both SMBs and enterprise in terms of both retention and expansion.

Speaker Change: Sometimes we see in the terms of variation, is that the one.

Speaker Change: Tradition is growing at a faster pace.

Cassio Machado: We expect that our margin at the long-term, as we gave a night in our IPO, our long-term range, will probably be beyond 50% on long-term, as we have expected the SAS portion of the business to become a long-term majority of our revenues.

Speaker Change: and Cares different margin. We expect that our margin at the long-term, as we have been, as we gave in our IPO, our long-term range will probably be beyond a 50% on long-term.

Shay Chor: And Shay, I think you can now have another second quarter question about seeing up the customer base. Thanks, Caio. So Gustavo, pretty simple. We understand that most of what we needed to do was already done.

Shay Chor: And Shay, I think you can now have another second quarter question about seeing up the customer base.

Shay Chor: Thanks, Caio. So Gustavo, pretty simple. We understand that most of what we needed to do was already done. So we don't expect anything relevant going forward.

Speaker Change: As we have...

Speaker Change: is expecting the South portion of the business to become a long term, a majority of our revenues. But the source is always be combined with some of the CPS volumes going on. That will, at some point, vary the margin profile of the company.

Shay Chor: But, of course, always be combined with some of the CPS volumes going on that will at some point vary the margin. Yeah, thanks Cassio. The only thing I would add here is as we move more and more, all the businesses to the new model on the Zenvia customer cloud and it becomes on a similar to SaaS, right? So it's a monthly sub-description. It tends to soften, especially on the pure channel side as well. So that's the only thing I would add here.

Gustavo Ferrius: So we don't expect anything relevant going forward. All right, thank you, guys.

Gustavo Ferrius: All right, thank you, guys.

Operator: Hugo, see some questions here on the web. I'll take them. I'll read them and then we will we'll be able to see if we have live questions again.

Shay Chor: Hugo, see some questions here on the web. I'll take them. I'll read them, and then we will be able to see if we have live questions again.

Speaker Change: Thanks Cassio, the only thing I would add here is as we...

Operator: So congrats on the progress, particularly in resolving the earnings gap to questions, first on margins and the other one on working capital on margins. The company's margins for both CPS and SAS FI are considerably a bit quarter to quarter over the past three years. CPS margins have been as low as 20, as 20s and high as high as 40s while SAS has been as low as 40s and as high as 60.

Speaker Change: Move more and more, all the businesses to the new model on the design, because from my cloud, any becomes.

Speaker Change: on the...

Speaker Change: Similar to Sass, right? So it's a monthly subscription. It tends to soften especially on the pure channel side as well. So that's the only thing I'll do then here.

Shay Chor: On the second part of the question here on leverage, what is the best way to think about the negative working capital? I assume there's a significant amount from telcos that continue to be pushed out since late '22. It would be useful to understand if there is any liquidity gap related to this or does the company have agreements in place to keep extending this out? So that's a good question. We've been focusing a lot on managing our working capital since mid of '22.

Speaker Change: On the second part of the question here on leverage, what is the best way to think about the negative working capital?

Operator: Beyond customer size, what is the best way to think about the long-term margin profile of Zenvi, especially as its scales? Castellano, if you want to go on a more helicopter view, then I can go. Yeah, sure. We've been investing a lot on the equation of the SAS solutions, and we expected these investments over the last two years are now starting to leverage the growth of SAS as we expect this to happen in the next couple of quarters in a higher pace than CPS, which will naturally bring our margins a bit higher in terms of revenue meets.

Speaker Change: I assume there's a significant amount from telcos that continue to be pushed out since sleigh 22. We'll be used to understand if there is any liquidity gap related to this or the company have agreements in place to keep extending this out.

Operator: And the variation of margins on CPS is mainly customer mix, there's this variation of different customer profiles over time, as it is mostly volume-based, depending on on seasonality and the penny of negotiations, especially on high volume or margin customers, sometimes they have some boost on high volume customers with lower margins, and this creates this fluctuation of CPS margins. Looking at SAS, it's mostly about the revenue mix of different products in the portfolio, as we acquired companies, and we combined that with our and these solutions.

Speaker Change: So that's a good question. We've been focusing a lot on managing our working capital.

Speaker Change: Since mid of 2022, by nature this business does not have negative working capital. We usually receive from our clients.

Shay Chor: By nature, this business does not have negative working capital. We usually receive from our clients before or at the same time that we have most of our costs, which is the SMS that we acquire from the telcos. So there's no negative working capital by nature on this business. Obviously, that we'll always do the effort as we've been doing since mid of 22 to improve our, both our DSO and DPO, and we'll keep negotiating every time that we see room for that to postpone the payments for the telcos or to anticipate or to deal that we can have prepared from clients at interesting costs.

Speaker Change: before, right, the same time that we have most of our costs, which is the SMS that we acquire from the telcos. So there's no negative working capital by nature on this business.

Shay Chor: And the variation of margins on CPS is mainly customer mix; there's this variation of different customer profiles over time, as it is mostly volume-based, depending on seasonality and the penny of negotiations, especially on high volume or margin customers. Sometimes they have some boost on high volume customers with lower margins, and this creates this fluctuation of CPS margins. Looking at SAS, it's mostly about the revenue mix of different products in the portfolio, as we acquired companies, and we combined that with our and these solutions. Each has its own profile, of course, structure. Sometimes what we see in the terms of variation is that one solution is growing at a passer pace and carries different margins.

Speaker Change: Obviously that we'll always do the effort as we've been doing since May 22.

Speaker Change: to improve our both our DSO in DPO and we'll keep negotiating every time that we see room for that to postpone the payments for the telcos or to anticipate or to do deals that we can...

Speaker Change: I have prepared from clients at interesting cost, so it's a matter of analyzing your opportunities versus cost of issuing short-term debt, so as simple as that.

Shay Chor: So it's a matter of analyzing opportunities versus the cost of issuing short-term debt. So simple as that, there's no specific agreement with the telcos, but we understand that our relationship with the telcos is very symbiotic; they depend on us, we depend on them. So it's been a healthy relationship from this perspective.

Operator: Each has its own profile, of course, structure. Sometimes what we see in the terms of variation is that one solution is growing at a passer pace and carries different margins. We expect that our margin at the long-term, as we gave a night in our IPO, our long-term range, will probably be beyond 50% on long-term, as we have expected the SAS portion of the business to become a long-term majority of our revenues.

Speaker Change: There's no specific agreement with the telcos, but we understand that our relationship with the telcos is a very symbiotic, they depend on us, we depend on them. So it's been a healthy relationship from this perspective.

Shay Chor: Another question here. FX losses are up significantly in this quarter. What was the driver for the increase?

Speaker Change: Another question here, effects losses are up significantly in this quarter. What was the driver for the increase?

Shay Chor: The main reason for these effects is that it has no cash impact, so just to make it clear. Basically, we have some clients that we invoice them abroad outside of Brazil. So what happens is that we incur the cost in local currents in BRL. We then invoice them, and the timing between the day that we invoice them and register, they invoice our balance sheet, and the day we are paid, there could be some differences. But again, since the cost is in BRL and we end up receiving in BRL, it's just a matter of accounting these effects.

Speaker Change: The main reason for this effect is that it has no cash impact, so just to make it clear.

Speaker Change: Basically we have some clients that we invoiced them abroad.

Operator: But, of course, always be combined with some of the CPS volumes going on that will at some point vary the margin Yeah, thanks Cassio. The only thing I would add here is as we move more and more, all the businesses to the new model on the Zenvia customer cloud and it becomes on a similar to SaaS, right? So it's a monthly sub-description. It tends to soften, especially on the pure channel side as well. So that's the only thing I would add here.

Shay Chor: But, of course, always be combined with some of the CPS volumes going on that will at some point vary the margin. Yeah, thanks Cassio. The only thing I would add here is, as we move more and more, all the businesses to the new model on the Zenvia customer cloud and it becomes on a similar to SaaS, right? So it's a monthly sub-description. It tends to soften, especially on the pure channel side as well. So that's the only thing I would add here.

Speaker Change: Outside of Brazil. So what happens is that we incur the cost.

Speaker Change: in local currents in BRL, we then invoiced them and the timing between the data that we invoiced them and registered the invoice or balance sheet and the day we are paid, there could be some differences. But again, since the cost is in BRL and we end up receiving in BRL, it's just a bit of overcoming.

Shay Chor: It's related to the operations in Brazil, not outside of Brazil.

Speaker Change: This FX, it's related to the operations in Brazil, not outside Brazil.

Shay Chor: Another one here. Congratulations on a great set of numbers to questions. How is the funding gap for the next year? Is India need additional capital in the near term?

Speaker Change: Another one here.

Cassio Machado: Congratulations on great set of numbers to question, how is the funding gap for the next year? Zemden needs additional capital in your term, how is the impact progressing with the integration of companies and what is the work left here? Cassio, I don't know if you want to talk about the integration of the companies and then I'll go on the funding gap.

Shay Chor: On the second part of the question here on leverage, what is the best way to think about the negative working capital? I assume there's a significant amount from telcos that continue to be pushed out since late 22 would be useful to understand if there is any liquidity gap related to this or does the company have agreements in place to keep extending this out? So that's a good question. We've been focusing a lot on managing our working capital since mid of 22.

Shay Chor: On the second part of the question here on leverage, what is the best way to think about the negative working capital? I assume there's a significant amount from telcos that continue to be pushed out since late '22. It would be useful to understand if there is any liquidity gap related to this, or does the company have agreements in place to keep extending this out? So that's a good question. We've been focusing a lot on managing our working capital since mid of '22.

Cassio Machado: How is India progressing with the integration of companies, and what is the work left here?

Cassio Machado: Casual, I don't know if you want to talk about the integration of the companies, and then I'll go on. I think it's funny. Yeah, sure. But in the creation of these companies, who have this project, we disclose what we call one same here. And that is basically the project that finishes all these integrations. We are very advanced in that project. Some of these integrations are already finished. And what we mean as finished is now making these products, these former products, standalone products that were originated from these acquired companies to become part of Senvia Customer Cloud at the end game of these of hope integration process.

Cassio Machado: Yes, sure.

Cassio Machado: But in the creation of these companies, we have these projects we disclose, we're to call one same here, and that is basically the project that finishes all these integrations. We're very advanced.

Cassio Machado: and that project.

Shay Chor: By nature, this business does not have negative working capital. We usually receive from our clients before or at the same time that we have most of our costs which is the SMS that we acquire from the telcos. So there's no negative working capital by nature on this business. Obviously that we'll always do the effort as we've been doing since mid of 22 to improve our, both our DSO and DPO and we'll keep negotiating every time that we see room for that to postpone the payments for the telcos or to anticipate or to deal that we can have prepared from clients at interesting costs.

Shay Chor: By nature, this business does not have negative working capital. We usually receive from our clients before or at the same time that we have most of our costs, which is the SMS that we acquire from the telcos. So there's no negative working capital by nature on this business. Obviously, that we'll always do the effort, as we've been doing since mid of 22, to improve our, both our DSO and DPO, and we'll keep negotiating every time that we see room for that to postpone the payments for the telcos or to anticipate or to deal that we can have prepared from clients at interesting costs.

Speaker Change: Some of these integrations are already finished and what we mean as finished is now.

Speaker Change: Making these products, these former products, standalone products.

Speaker Change: and we're co-originated from the required companies to become part of St. Vikas McCall, that the end game of these hope integration process. We expect all these to be finished at the majority of the finished within the year.

Cassio Machado: We expect now these to be finished. The majority will be finished within the year. And we have some components still to be finished on first quarter and second quarter next year. But we are very proud to say that we are now in this end phase of integrations. And we are already seen some of the benefits in terms of efficiency already being translated in January reduction. And we expect up to the next year to still have more benefits of the integrations into our cost structure, and our that will of course be reflected in the profitability of the company.

Speaker Change: and we'll have some components still to be finished on 4th floor and 2nd floor next year. But we are very proud to say that we are now in this...

Speaker Change: and phase of integrations.

Shay Chor: So it's a matter of analyzing opportunities versus cost of issuing short-term debt. So as simple as that, there's no specific agreement with the telcos but we understand that our relationship with the telcos is very symbiotic, they depend on us, we depend on them. So it's been a healthy relationship from this perspective.

Speaker Change: Cows, we...

Speaker Change: is already seen some of the benefits in terms of efficiency already been translated in GNA reduction and we expect up to the next year to still have more benefits of these integrations.

Speaker Change: into our co-structure and our...

Shay Chor: So it's been a healthy relationship from this perspective.

Speaker Change: Ah, that will...

Speaker Change: Of course, the reflective and the profitability of the company.

Cassio Machado: So we're seeing these benefits not only that, but also be made by providing a better and more complete solution for our customers. So we're happy, very happy to see that being finished.

Operator: Another question here. FX losses are up significantly in this quarter. What was the driver for the increase?

Shay Chor: Another question here. FX losses are up significantly in this quarter. What was the driver for the increase?

Speaker Change: So we're seeing this but if not only that but also

Shay Chor: The main reason for these effects is that it has no cash impact so just to make it clear. Basically, we have some clients that we invoice them abroad outside of Brazil. So what happens is that we incur the cost in local currents in BRL. We then invoice them and the timing between the day that we invoice them and register, they invoice our balance sheet and the day we are paid, there could be some differences. But again, since the cost is in BRL and we end up receiving in BRL, it's just a matter of accounting these effects.

Shay Chor: Second part here. So, on the funding gap, as you know, we announced earlier this year in February a liability management, which included rollover of the bank loans that we had. Also ring negotiation with extension of the period for payment on the seller's finance related to the M&As. And finally, a capstone injection by Casio of 50 million reais.

Speaker Change: [inaudible]

Speaker Change: Second part here, so on the funding gap, as you know, we announced earlier this year in February, a liability management, which included...

Speaker Change: Roll over of the day.

Speaker Change: Thank Lone that we had, also a re-ingotiation with extension of the period for payment on the seller's finance related to the M&A's and finally a capital injection by Cassio of 50 million reais.

Shay Chor: One important thing about this is that one of the benefits of the ring negotiation, especially in the seller's finance, is that we are able, at the discretion of the company, to convert up to 100 million reais into equity if needed to accelerate the leveraging of the balance sheet. So, with that said, it's part of our job to continue looking for alternatives, especially in terms of financing and alternatives to continue doing liability management if there are alternatives there. The fact that we are increasing the part of our the mix of our revenues that is subscription versus usage improves a lot the credit profile.

Shay Chor: It's related to the operations in Brazil, not outside of Brazil.

Speaker Change: One important thing about this is that one of the...

Operator: Another one here. Congratulations on great set of numbers to questions.

Shay Chor: Another one here. Congratulations on a great set of numbers to questions. How is the funding gap for the next year? Is India need additional capital in the near term?

Speaker Change: Benefits of the renegotiation, especially in the cell as finance, is that we are able at the discretion of the company to convert.

Operator: How is the funding gap for the next year? Is India need additional capital in the near term?

Speaker Change: up to 100 million reais into equity if needed to accelerate the leveraging of the balance sheet. So with that said, it's part of our job to continue looking for alternatives, especially

Cassio Machado: How is India progressing with the integration of companies and what is the work left here? Casual, I don't know if you want to talk about the integration of the companies and then I'll go on the I think it's funny. Yeah, sure. But in the creation of these companies who have this project, we disclose what we call one same here. And that is basically the project that finishes all these integrations. We are very advanced in that project.

Shay Chor: How is India progressing with the integration of companies, and what is the work left here?

Speaker Change: in terms of financing and alternatives to continued doing reliability management if there are alternatives there. The fact that...

Speaker Change: We are increasing.

Speaker Change: the part of our, the mix of our revenues, that is.

Speaker Change: Sub-scripion.

Cassio Machado: Some of these integrations are already finished. And what we mean as finished is now making these products, these former products, standalone products that were originated from these acquired companies to become part of Senvia customer cloud at the end game of these of hope integration process. We expect now these to be finished. The majority will be finished within the year. And we have some components still to be finished on first quarter and second quarter next year.

Speaker Change: Versus usage improves a lot of credit profile so we put something...

Shay Chor: So we put us in front of us alternatives that we didn't had in the past. So that's something we've been looking at all the time. And in terms of equity, we need to be opportunistic. So we have an ATM at the market program running. So if there is any investor that needs liquidity, the ATM is there for this reason. So we've been very cautious on that to avoid a lot of dilution, but it's an important tool that helps us fund the business.

Speaker Change: in front of us alternative that we didn't had.

Speaker Change: in the past.

Speaker Change: So that's something we've been looking all the time.

Speaker Change: and in terms of equity, we have we need to be opportunistic.

Speaker Change: We have an ATM at the market program.

Speaker Change: Running. So if there is any investor that needs liquidity, the ATM is there for this reason. So we've been very cautious on that to avoid a lot of dilution, but it's an important tool that helps us.

Cassio Machado: But we are very proud to say that we are now in this end phase of integrations. And we are already seen some of the benefits in terms of efficiency already being translated in January reduction. And we expect up to the next year to still have more benefits of the integrations into our cost structure and our that will of course be reflected in the profitability of the company. So we're seeing these benefits not only that, but also be made by providing a better and more complete solution for our customers.

Shay Chor: By the end of the day, the leveraging funding app, everything will have to come from our capacity to generate Ibita.

Speaker Change: Funding the business. By the end of the day, the leveraging funding gap, everything we have to come from our capacity to generate EBITDA.

Speaker Change: i

Cassio Machado: Another question here. This is for Cassio. You are already using, as per your comments, a lot of AI. Do you have visibility on what should we expect on next step for features on this front? Sure, we have several features being deployed, means in the customer cloud platform, and they range from, as we already mentioned, GenAI chatbots generation. With these, solution customers are being able to create chatbots in the average of six minutes, and they go live within six minutes. We have a lot of customers already benefiting from that up to capacity, which means helping sales reps or customer service agents to give better contextualized answers to customer demands and thus proving customer sales conversion and also improving customer engagement and tax action over customer support.

Cassio Machado: Another question here. This is for Cassio. You are ready using a superior commence, a lot of AI. Do you have visibility on what should we expect on next step for features on this front?

Cassio Machado: Sure, we have several features being deployed in the Cosmic Cloud platform and they range from, as we already mentioned, Gena Chatt Box and Ration with these solution customers are...

Cassio Machado: So we're happy, very happy to see that being finished.

Shay Chor: Second part here. So on the funding gap, as you know, we announced earlier this year in February, a liability management, which included role over of the bank loans that we had. Also ring negotiation with extension of the of the period for payment on the seller's finance related to the M&As. And finally, a capstone injection by Casio of 50 million reais. One important thing about this is that one of the benefits of the ring negotiation, especially in the seller's finance, is that we are able at the discretion of the company to convert up to 100 million reais into equity if needed to accelerate the leveraging of the balance sheet.

Speaker Change: being able to create chatbot in a average of six minutes.

Speaker Change: and they go live within 6th.

Speaker Change: Six minutes and we have a lot of customers already benefiting from that.

Speaker Change: up to a copywriting, which means helping sales wraps for customer service agents.

Speaker Change: to give better contextualized answers to customer demands and death.

Speaker Change: Proving customer, I mean, sales conversion and also improving customer engagement and section over customer support, and we have different tools being deployed also for customer context analysis, sentiment analysis, and insights.

Cassio Machado: And we have different tools being deployed also for customer context analysis, sentiment analysis, and insights from customer behavior or improvement of campaigns. And these all these are already deployed, and we've been working on some interesting features that utilize not only the conversation with customers but also data from past customer transactions, the customer transaction history, and what which correlations can be made and from these transactions so they can create better journeys that will help customers to buy more, to engage more, to renew, to avoid churn, and so forth and so on.

Speaker Change: from customer behavior or improvement of campaigns.

Shay Chor: So with that said, it's part of our job to continue looking for alternatives, especially in terms of financing and alternatives to continue doing liability management if there are alternatives there. The fact that we are increasing the part of our the mix of our revenues that is subscription versus usage improves a lot the credit profile. So we put us in front of us alternatives that we didn't had in the past. So that's something we've been looking all the time.

Speaker Change: and this is already deployed.

Speaker Change: and we've been working on some interesting features.

Speaker Change: that utilize not only...

Speaker Change: the conversation with customers, but also...

Speaker Change: Data from PASCOS where it's actually made a customer transaction history and which correlations can be made and with

Speaker Change: from these transactions, so they can create better journeys that will help customers to.

Shay Chor: So we put us in front of us alternatives that we didn't had in the past. So that's something we've been looking at all the time.

Speaker Change: by more to engage more, to renew, to avoid churn and so forth and so on. So we have lots of interesting things going out.

Shay Chor: And in terms of equity, we need to be opportunistic. So we have an ATM at the market program running. So if there is any investor that needs liquidity, the ATM is there for this reason. So we've been very cautious on that to avoid a lot of dilution, but it's an important tool that helps us funding the business. By the end of the day, the leveraging funding app, everything will have to come from our capacity to generate Ibita.

Shay Chor: And in terms of equity, we need to be opportunistic. So we have an ATM at the market program running. So if there is any investor that needs liquidity, the ATM is there for this reason. So we've been very cautious on that to avoid a lot of dilution, but it's an important tool that helps us fund the business. By the end of the day, the leveraging funding app, everything will have to come from our capacity to generate Ibita.

Cassio Machado: So we have lots of interesting things going on. The AI is very practical. We have practical use cases that are easy to understand and to utilize on a daily basis for our customers. That's very happy to have this kind of technology now being made available and becoming cheaper and cheaper, so we can create value for all of our customers.

Speaker Change: The AI is very practical. We have practical use cases that are easy to understand.

Speaker Change: and to utilize on a daily basis for our customers. That's very happy to have this kind of technology now being made available and becoming cheaper and cheaper so we can create value for our customers.

Shay Chor: Thanks, Kassio.

Speaker Change: i

Shay Chor: Here one for I guess Kaya can take this one. Congrats on the GNA discipline. Is this the level we should expect going forward? Is the team sizes you have now enough for future growth? Yes, what I expect here is minor adjustments, but what the team, the structure that we have now, is enough to support all the growth that we have planned ahead. So all the growth and revenue growth brought will leverage more than GNA that we have in place right now.

Speaker Change: Thanks Cassio. Here, one for I guess a kayak can take this one. Congrats on the G&A discipline. Is this the level we should expect going forward? Is the team size, you have no enough or future growth?

Cassio Machado: Another question here, this is for Cassio. You are already using as per your comments a lot of AI. Do you have visibility on what should we expect on next step for features on this front? Sure, we have several features being deployed, means in the customer cloud platform and they range from, as we already mentioned, Genai chatbots generation. With these, solution customers are being able to create chatbots in the average of six minutes and they go live within six minutes and we have a lot of customers already benefiting from that up to capacity, which means helping sales reps or customer service agents to give better contextualized answers to customer demands and thus proving customer sales conversion and also improving customer engagement and tax action over customer support.

Cassio Machado: Another question here. This is for Cassio. You are already using, as per your comments, a lot of AI. Do you have visibility on what we should expect on next step for features on this front? Sure, we have several features being deployed, means in the customer cloud platform, and they range from, as we already mentioned, GenAI chatbots generation. With these, solution customers are being able to create chatbots in the average of six minutes, and they go live within six minutes. We have a lot of customers already benefiting from that up to capacity, which means helping sales reps or customer service agents to give better contextualized answers to customer demands and thus proving customer sales conversion and also improving customer engagement and tax action over customer support.

Speaker Change: Yes, what I expect here is...

Speaker Change: Minor adjustments, but the team, the structure that I have now is enough to support. All the growth that we have planned, I have, so all the growth and revenue growth brought will leverage more than DNA that we have in place right now.

Shay Chor: Thanks and a follow-up here for you, Kaya. And on EBITDA, is Q2 the level for the second half?

Speaker Change: Thanks, and I follow up here for you, Kyle, on EBITDA, is Q2, the level for the second half.

Shay Chor: As the business, what we, the business, naturally has a personality special in Q4 due to the Christmas and Black Friday and everything. So what we expect here is if we deliver the same EBITDA, we reach our guidance, but of course we are aiming it higher. So our expectation is the personality of the business or leverage EBITDA.

Speaker Change: That's the business, what we, the business naturally has a sonality special in Q4, do it to the...

Speaker Change: Prismans and Black Friday and everything, so what we expect here is if we deliver the same habitat, we reach our guidance, but of course, we're aiming it's higher. So our expectation is that it's as on the knowledge of the business of leverage there be that.

Shay Chor: Thanks, Kyle.

Operator: Hugo, we don't have any further questions here. Can you just report to see if anyone has additional questions? Of course I. Again, if you have a question, please use the Q&A icon at the bottom of your screen to write it down, and we will open your microphone. If you prefer not to open your microphone, please write "no microphone" at the end of a question, and our operator will read your question aloud.

Speaker Change: Thanks, Kyle. You go, we don't have any further questions here. Can you just report to see if anyone has additional questions?

Cassio Machado: And we have different tools being deployed also for customer context analysis, sentiment analysis, and insights from customer behavior or improvement of campaigns. And these all these are already deployed and we've been working on some interesting features that utilize not only the conversation with customers but also data from past customer transactions, the customer transaction history and what which correlations can be made and from these transactions so they can create better journeys that will help customers to buy more, to engage more, to renew, to avoid churn and so forth and so on.

Speaker Change: Of course, Shay. Again, if you have a question, please use the Q&A icon at the bottom of your screen to write it down and we will open your microphone. If you prefer not to open your microphone, please write no microphone at the end of a question, and our operator will read your questions aloud.

Speaker Change: [inaudible]

Operator: It looks like this is a table.

Speaker Change: Looks like this is it here, bro.

Operator: This concludes our question and answer session.

Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Mr. Cassio Machado for his closing remarks.

Cassio Machado: I would like to turn the conference back over to Mr. Casio Babson for his closing remarks. Thank you, everyone, for joining us at this call. We are very proud and excited about what we achieved in Q2 and hoping that over the course of the year, we are able to keep our projections and forecast our guidance for the year, and we're building a very strong foundation for 2025. And so I'm very glad to have you guys on board with us.

Speaker Change: Thank you everyone for joining us this call.

Speaker Change: We are very proud and excited about what we achieved.

Speaker Change: and Q2 and hoping that over the cost of a year, we're able to keep our projections on our forecasts or guidance for the year and we're building a very strong foundation for 2025 and so I'm glad that we've got to have all of you guys on board with us and.

Cassio Machado: Thanks, Kassio.

Cassio Machado: The AI is very practical. We have practical use cases that are easy to understand and to utilize on a daily basis for our customers.

Operator: Here one for I guess Kaya can take this one.

Cassio Machado: That's very happy to have this kind of technology now being made available and becoming cheaper and cheaper, so we can create value for all of our customers.

Cassio Machado: See you next call.

Speaker Change: Q, next call.

Operator: The conference has now concluded. Vendous IR area is at your disposal to answer any additional questions. Thank you for attending to this presentation.

Shay Chor: Thanks, Kassio.

Operator: You may now disconnect. Have a nice day.

Shay Chor: Congrats on the GNA discipline. Is this the level we should expect going forward? Is the team sizes you have now enough for future growth? Yes, what I expect here is minor adjustments but what the team, the structure that we have now is enough to support all the growth that we have planned ahead. So all the growth and revenue growth brought will leverage more than GNA that we have in place right now.

Operator: Goodbye.

Shay Chor: Thanks and a follow-up here for you, Kaya. And on EBITDA, is Q2 the level for the second half? How does the bees, what we, the bees is naturally, has a personality special in Q4 due to the Christmas and Black Friday and everything. So what we expect here is if we deliver the same Abida, we reach our guidance, but of course we are aiming it higher. So our expectations is the personality of the bees is our leverage Abida.

Shay Chor: Thanks and a follow-up here for you, Kaya. And on EBITDA, is Q2 the level for the second half?

Operator: Thanks, Caio. Hugo, we don't have any further questions here, can you just report us if anyone has additional questions? Of course, Shay. Again, if you have a question, please use the Q&A icon at the bottom of your screen to write it down and we will open your microphone. If you prefer not to open your microphone, please write no microphone at the end of a question. And our operator will read your question aloud.

Operator: Looks like this is a table.

Shay Chor: How does the bees, what we, the bees is naturally, has a personality special in Q4 due to the Christmas and Black Friday and everything. So what we expect here is if we deliver the same Abida, we reach our guidance, but of course we are aiming it higher. So our expectations is the personality of the bees is our leverage, Abida.

Shay Chor: Thanks, Caio.

Shay Chor: Hugo, we don't have any further questions here. Can you just report us if anyone has additional questions? Of course, Shay. Again, if you have a question, please use the Q&A icon at the bottom of your screen to write it down, and we will open your microphone. If you prefer not to open your microphone, please write "no microphone" at the end of a question. And our operator will read your question aloud.

Operator: Looks like this is a table.

Cassio Machado: This concludes our question and answer session.

Operator: This concludes our question and answer session.

Cassio Machado: I would like to turn the conference back over to Mr. Cassio-Bobsin for his closing remarks. Thank you everyone for joining us this call. We are very proud and excited about what we achieved in Q2 and hope in that over the course of the year we are able to keep our projections on our forecast or our guidance for the year. And we are building a very strong foundation for 2025. And so I am very glad to have you guys on board with us. See you next call.

Cassio Machado: I would like to turn the conference back over to Mr. Cassio-Bobsin for his closing remarks. Thank you, everyone, for joining us this call. We are very proud and excited about what we achieved in Q2 and hope in that over the course of the year we are able to keep our projections on our forecast or our guidance for the year. And we are building a very strong foundation for 2025. And so I am very glad to have you guys on board with us.

Cassio Machado: See you next call.

Operator: The conference has now concluded. Then the IR area is at your disposal to answer any additional questions. Thank you for attending today's presentation.

Operator: You may now disconnect. Have a nice day. Good bye.

Q2 2024 Zenvia Inc Earnings Call

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