Zenvia Inc (ZENV) 2025 Q2 法說會逐字稿

Good morning, and thank you for standing by. Welcome to Zenvia's Q2 2025 earnings conference call. Today, Shay Chor, CFO and Investor Relations Officer, will be our speaker. And both he and Mr. Cassio Bobsin, Zenvia's Founder and CEO, who will be available for the Q&A session.

Please be advised that today's conference is being recorded, and a replay will be available at the company's IR website, where you can also access today's presentation. (Operator Instructions) Now I'd like to welcome Shay Chor. Sir, the floor is yours.

Hello, everyone. Thank you for being with us here today to discuss Zenvia's secondquarter and first half 2025 results. I'm Shay Chor, CFO and IRO.

Let's start with a snapshot of Q2 '25 performance where you can see all the main financial KPIs of the period. As we pointed out in our first quarter earnings call, the second quarter delivered the financial performance following the same trend we saw in Q1. It was another period of strong top line growth of 24%, mainly driven by CPaaS and also highlighted by the continued advance with the rollout of the Zenvia Customer Cloud.

While we are making steady progress on the evolution of Zenvia Customer Cloud and on streamlining our operations in line with our plans, as I will detail in this presentation, it's important to recognize the environment we are operating in, especially on the CPaaS side. The market remains highly volatile and extremely competitive, which has been putting pressure on our profitability in the short term.

Our SaaS gross profit showed an increase for the first time since Q2 of '24, with margins slightly up year-over-year, but this was more than offset by the CPaaS sharp drop of gross profit and margin. As a result, consolidated adjusted gross profit fell to BRL69 million with gross margin down to 24%.

Compared to Q1, this margin remained stable. That said, we see these pressures as temporary. With the initiatives already underway and with the continued scaling of our platform, we expect profitability levels to gradually recover and return to more normalized level by the end of the year.

This drop in adjusted gross profit was partially offset by a decrease in G&A of BRL9 million or 27% when compared to the same period of last year. The combination of strong top line growth and streamlining efforts brought our G&A to revenues ratio down to 9% of our revenues in the quarter.

As a result of all these factors, our normalized EBITDA came in at BRL11 million this quarter, below our expectations. We anticipate a progressive recovery throughout the year, and I will walk you through the reasons for that in the next slides.

Here, you can see the breakdown between our SaaS and CPaaS revenues. SaaS revenues grew 3% year-over-year in Q2 mainly from SMB customers. As you know, we are ramping up Zenvia Customer Cloud, our new core business launched in October of last year and which is moving on as expected.

We are proud to report that revenues from Zenvia Customer Cloud are up 23% in the first half of this year when compared to the same period of last year, accelerating from the 15% increase reported in Q1. We feel confident about delivering growth of 25% to 30% from Zenvia Customer Cloud in '25 as we said earlier this year.

On the rest of our SaaS business, we continue to see a tough and competitive environment, especially the enterprise segment in Brazil for our SaaS legacy solutions, which have been partially offsetting the growth coming from the Zenvia Consumer Cloud.

We believe that the strong value that Zenvia Consumer Cloud delivers sets us apart in this highly competitive segment, and we're already seeing proof of that with the first dozen projects in the last couple of months that will help strengthen our SaaS metrics in the next periods.

Now talking about CPaaS, the revenues were up by 33%, coming mainly from customers with higher margins, and we believe this strategy will prove valuable over time as these accounts keep scaling without G&A costs. CPaaS accounted for 72% of total revenues, and this higher mix with low margin was the main responsible for the performance of our gross profits and margin, as we can see in the next slide. Here, we have a comprehensive view on how gross profit and margin performed in the quarter broken down by business segment.

The first chart on the left shows the SaaS business. Adjusted gross profit was up 5% year-over-year to BRL45 million in Q2, with adjusted gross margin also slightly up by 1 percentage point to 55%. This is the first quarter we are seeing positive gross profit expansion in SaaS since Q2 of '24, driven by the transition into Zenvia Consumer Cloud that I mentioned earlier.

Another point I would like to go into more detail is the competitive landscape we are facing with enterprise clients in the SaaS business. As I mentioned earlier, this has been partially offsetting the performance of Zenvia Consumer Cloud.

That said, as enterprises adopt Zenvia Consumer Cloud, they quickly recognize the benefits of earning their customer services on a fully integrated solution. For us, this has been translated into higher quality revenues and more profitable clients.

The second chart in the middle of this slide shows the CPaaS performance that was again impacted by strong volumes from clients with lower margins, coupled with the cost increase from the carriers that we mentioned last quarter that is still being passed on to clients throughout the year. We expect to see CPaaS margins normalizing closer to 20% by Q4 of this year. Both performances is mainly explain the drop in consolidated adjusted gross profit and margin that you can see in the third chart.

Moving on, let's now discuss our G&A, which helped offset a bit this increase in gross profit. When comparing first half of '25 with the same period in '24, G&A expenses went down 25% reaching BRL48 million. If we exclude the BRL8 million severance expense from Q1, this figure will be closer to BRL40 million. We have been very diligent and strict with our expenses since the end of '22 when we started our streamlining efforts. Our current level is now one-third of what it was in the first half of '22 and less than half of what we recorded in the nine months of '22.

Also, as a percentage of revenues, G&A is now at 8.3%, down 6.2 percentage points from the 14.5% reported in the same period of '24. Excluding the severance, the ratio would be at 7% of revenues. At the end of '22, this ratio was around 18%.

This strong performance is mainly related to workforce reduction of approximately 15% announced in January that is expected to result in cost savings between BRL30 million and BRL35 million in full year '24, already factoring in the severance expenses.

Now looking into our EBITDA, we recognize this quarter came in below our expectations for the reason I just explained. However, when we look at the trailing 12 months in June in this chart, we can see a more resilient performance, especially considering the very volatile and competitive environment we have been navigating in the recent quarters.

We are consistently delivering around BRL00 million in normalized EBITDA in a 12-month period. In this sense, we are confident to be in the right direction to accelerate profitability from the second half of the year and create a solid foundation for 2026.

Let me finish with the key takeaways to wrap up my prepared remarks. As we announced in January, when we disclosed our new strategic cycle, Zenvia Consumer Cloud is our new core business, and 2025 is the year that we are ramping up the platform in Brazil and Latin America.

We knew this process will take a toll on our short-term profitability but we start to see first signs of performance already in this quarter. At the same time, we are making our operations leaner and stepping up our efficiency efforts with AI playing a key role. It is shaping both how we deliver for clients and how we operate day-to-day inside the company.

So in a nutshell, our focus is clear: grow faster, scale smarter and keep deleveraging the company. As for the CPaaS, market dynamics will remain volatile, but we expect profitability levels to gradually recover and return to more normalized level by the end of the year. Back in January, we also shared that we are evaluating options to divest noncore assets.

We see meaningful value in these businesses and selective divestments could be an important lever to optimize our balance sheet. Our goal with all these actions is to build a stronger company with solid metrics that translate into real value for our shareholders.

With that, I'll wrap my prepared remarks and open the floor for your questions.

(Operator Instructions)

Hugo, there are some questions here on the webcast. I'll start to read them. We'll keep going. Can you put a bit more color on forward guidance for Zenvia Consumer Cloud? How is Q3 looking in Q4 in terms of bookings? How is the franchise channel doing? And are you still expecting to hit the BRL200 million target with 65% to 70% gross margin range for the full year?

Let me start here with some good numbers and then Cassio, feel free to add some qualitative points about Zenvia Consumer Cloud, and there are a couple of other questions on it. So in terms of numbers, as we said earlier in the year, in January, when we talked about the new strategic cycle and our focus on Zenvia Consumer Cloud, we disclosed that we were expecting this business to be around BRL200 million in revenues with growth of between 25% -- around 25% and gross margin close to 70%. And we are keeping this. As you saw in our results here in the first half of the year, Zenvia Consumer Cloud is growing close to 25%. It grew 23%.

So it is as we were expecting, and we continue to maintain our expectations of a business around BRL200 million in revenues and gross margin around 7% growing close to 25%. No changes to that. Cassio, I think it would be interesting if you can share some thoughts on how is it going. There are other questions here about if we changed anything since we launched the business in October? There was an acceleration of the business now in the second quarter.

Can you share us some qualitative points and your view on how -- where we'll go with Zenvia Consumer Cloud?

Sure. Although we have this seasonality on the CPaaS side, when we look at Zenvia Consumer Cloud, we're doing pretty well. We're very excited with the whole performance of the business as we look not only on the revenue growth, but also on the usage of the software, which is very important in a SaaS model that is based on how much companies use our software.

We're seeing a very strong adoption on this side. For instance, Q2, we had around 80% increase in total usage comparing to Q1 with Zenvia Consumer Cloud, which means this block of the stream of adoption of the software is going to bring results on the mid -- short to midterm to our company.

So it's doing pretty well in that sense. And about the franchisee model, we launched that in Q1. So we're still in the early days of this strategy, but it's already representing around 15% of our new MRR in Brazil, where -- it is the country that we launched first of this model. So it's -- even though it's in the early days, it's already making a difference, new MRR. We have around 30 so franchisees that made sales.

We had zero in January. So we now have around 34. And we're starting to test this model outside Brazil as well, where we have some partners operating in different countries, and they're going to evolve them into franchisees and the midterm. So we expect this strategy to be in the next couple of quarters. The main generator of new MRR for the business, which means we're building skill around Zenvia Consumer Cloud.

And this is doing pretty well business-wise. That's why we -- when we see the targets that we're having for mid- to long-term Zenvia Consumer Cloud, it's been improved on the combination of new customers and software adoption, which, of course, translates into revenue. So we're very excited about these results.

Thanks, Cassio. Another question here. On the CPaaS side, are these tight margins the new level? Or should we expect some recovery?

So as I mentioned, and Cassio also just mentioned the CPaaS has been very competitive. We saw -- I would -- and Cassio correct me if I'm wrong here, but the last time we saw business being that competitive was in the second half of '22 when we saw a lot of pricing pressure.

And -- but we are navigating this and we understand that our strategy is the right one in terms of -- I know you've been accelerating revenues, which means we are competitive in pricing. That will -- obviously that put some pressure on margins in the short term, but that's important from a relationship perspective, and that business helps generating EBITDA after all. So it's important to keep that in mind.

And also, first half of the year is usually when we have cost increases from the carriers and we pass that through prices throughout the year. So we expect later on the year closer to year-end and Q4 to have passed through most of the cost increase that we suffered from the carriers, and therefore, margins will stabilize at a higher level than it is right now. But it's commoditized business. It gets volatile. It gets pricing pressure from time to time.

There was the logic behind -- one of the logics behind our decision to move in the last strategic cycle to move and to diversify revenues into a different type of business, and adding value to the pure channel, which was the business back in late 2018, 2019.

So -- but it's still a good chunk of our revenues and it's important, although margins are under pressure, it's important because that business generates EBITDA. I don't know, Cassio, if you want to add anything on the CPaaS side and the market dynamics.

Yeah, sure. We have been executing a long-term strategy, and we're sticking to the plan. There is, of course, the maturity of the CPaaS business model, which brings more pressure on the margins. It's highly competitive. And of course, there is the volatility that affects results.

That's why we understand that when we compare with the SaaS business, which is also, of course, every business is competitive in software, but is more stable, and we can grow customer base and have a more recurrent revenue that's much more reliable in terms of forecasting.

So I understand that this strategy is why we IPO-ed is the one that's been executing and is doing pretty well. With the acquisitions, are doing integrations. We launched the new product that consolidates all that, and it's performing pretty well. So I will see that although we have this volatility, we're sticking to the plan and it's working.

Another here for you, Cassio. On the enterprise side, how are you seeing the businesses on both Zenvia Consumer Cloud and the rest of SaaS, how the dynamics have been?

Sure. On the CPaaS, business is pretty mature. It's low margin, high volume and being able to keep enterprise customers as we are main player, the more robust reliable in Brazil. So we are able to keep the best customers on board. That's why we have all these big revenue on the CPaaS side.

When you look at SaaS, especially Zenvia Consumer Cloud, we aimed initially into SMBs. That was the beginning of the launch of the product. But as we brought this product and our whole experience with enterprise customers to some of our customers, they started to adopt as well.

That's why we are seeing the adoption of Zenvia Consumer Cloud by enterprise customers that wasn't the initial focus, but it's doing well. Of course, sales cycles are longer, production takes some more time, but we're seeing that the combination of SMBs and enterprise customers for Zenvia customers is also operating.

So it's a good -- it's an upside on the initial strategy. And we're being able with the whole experience that the team has in serving these customers, being able to bring that to this new product.

Another one here. Could you -- this is for me. Could you please provide some color on cash flow and divestitures?

Sure. So on cash flow, and we put on the presentation chart with it. If we look into our trailing last 12 months EBITDA, it's close to -- on a normalized basis, it's close to BRL100 million, which is pretty much the same level that we saw in the last couple of quarters, which means thinking about pure cash flow. So EBITDA is about BRL100 million in 12 months. There is about BRL35 million, BRL40 million in CapEx that you have to exclude from that EBITDA.

So that leaves us with approximately BRL60 million, BRL65 million in cash flow to serve the debt, which is pretty much puts us close to breakeven by year-end. And that's why we've been analyzing alternatives to divest. There is not much we can add on selling assets on top of what we already mentioned in our prepared remarks.

We've been analyzing opportunities and looking into alternatives. And if and when there is anything new to talk about it, we'll let all the market and investors know about it. As of now, there's nothing we can add on this. How should we think about the potential divestment of CPaaS?

In an interview, the CFO had mentioned that they tend to sell for onetime revenue, which will be more than $100 million. Is that achievable? That would put the company in a net cash position if you manage to sell it. So again, we can't discuss specifically any of the divestments that we have possibilities. I did mention historical -- it is correct.

I did mention historical transactions in CPaaS close to onetime revenue. But that's on a global basis, and it's very -- again, it depends on market conditions. It depends on macro environment such as interest rates, such as the volatility in the local market. So it's -- again, it could range in the -- we are looking more into divestment. It doesn't matter if it's CPaaS, if it's other SaaS that we don't see in the long term as relevant to the business.

The reality is that the asset divestment has to do with deleveraging balance sheet. It should be opportunistic to the leverage balance sheet as simple as that. We understand that all our assets are important. They add value to our clients. So it's a matter of using this as a financial strategy to accelerate balance sheet deleveraging and being able actually to have a better capital structure to accelerate Zenvia Consumer Cloud.

So it's as simple as that. We are not sharing any numbers, any valuation now. What we can say is we are looking in an opportunistic way to deleverage the balance sheet. Hugo, can you repoll to see if there is any questions live to be made?

(Operator Instructions)

So this concludes our Q&A session. I would like to turn the conference back over to Mr. Cassio Bobsin for his closing remarks.

Actually we have a question there. I'm not sure if I should answer this last one.

Yeah, it just came in. Cassio, what do you think the business will look like in two to three years?

Nice question. Well, what we've been working on is to have the core of Zenvia being built around Zenvia Consumer Cloud. And that means that we're working into provide companies a centralized way to manage all customer relationships, especially for B2C or massive B2B companies.

And this means providing a software for marketing, sales, customer support, customer service and customer engagement. And this is over time, gets -- its kind of technology that will be -- although it's nowadays it's different providers, it's very specialized providers.

This is getting more unified. So we're seeing this adoption of companies using just one provider to manage all of these relationships. And as we're building this software, we see that creates lots of benefits. When we put that in the context of AI and automation, the way we provide that for our customers is a way that helps them to automate and reduce costs, become efficient and provide more value to their customers. So when you look from a business perspective, we're on the right track to be the AI CX SaaS provider for these companies.

And this means getting very sticky, getting recurrent revenues, which builds, of course, a strong business over time. We're not, of course, disclosing that in terms of finance. But we tend to move from this volatile revenues, low margins to a recurrent stable high-margin business.

As we've been able to optimize the whole company, we're seeing that we're able to increase recurring revenues and reduce G&A, which brings, of course, a combination of not only the very strong growth, but with a high profitability in the whole business. That's what we're building.

As the Founder and CEO, reviewing the foundations, and we've seeing the results of this strategy. That's why I see that in the next two to three years, it's going to be a very different company financial-wise. And we're seeing that operating in the early days of Zenvia Consumer Cloud. And we expect to have all this benefit inyears. So for that, I also close here the webcast.

I thank you very much for all your attention and to seeing the evolution of Zenvia. We're building this strategy for long term. We're just starting a new strategic cycle with Zenvia Consumer Cloud at its core. And we expect that the next couple of quarters, we are going to understand how this is all playing out to be a very strong AI SaaS provider for Latin America and the whole world. Thank you very much.

So this concludes our Q&A session. And I'd like to turn the conference back over to Mr. Cassio Bobsin for his closing remarks.

I already closed my remarks. That's it, guys. Thank you very much. See you next time.

The conference has now concluded. Zenvia's IR team is at your disposal to answer any additional questions. Thank you for attending today's presentation. You may now disconnect. Have a nice day.