VTEX (Cayman Islands) Q3 FY2024 earnings call

• Product innovation and expanded platform capabilities are key growth drivers, with subscription revenue growing strongly despite macro uncertainty. - Achieved 28% gross profit growth in FX neutral and a 32% Rule of 40. - New contract signatures remained robust, with successful go-lives like Fast Shop in Brazil and new wins in various regions. - Hosted events like VTEX Connect Latam and launched VTEX Vision Fall edition with updates on retail media and data models. - Acquired Weni to enhance AI-powered customer service capabilities. - Highlighted success stories of customers like Bemol, Colgate, Decathlon, Fast Shop, and Hearst showcasing platform benefits.

In Q3 2024, VTEX's total revenue was $56.0 million, with subscription revenue at $53.9 million (representing 96.25% of total revenue) and services revenue at $2.1 million (3.75% of total revenue). GMV reached $4.4 billion, up 10% year-over-year in USD and 17% in FX neutral. Non-GAAP gross margin was 75%, with non-GAAP subscription gross margin at 79%. The Rule of 40 was 32% in Q3 2024, up from 28% in the same period last year.

• For Q4 2024, targeting FX neutral year-over-year revenue growth of 14% to 17%, implying a range of $64.8 million to $66.8 million. - For full year 2024, targeting FX neutral year-over-year revenue growth of 18.5% to 19.5%, implying a range of $230 million to $232 million. - Raising non-GAAP operating income and free cash flow margins target to low teens.

• Macro uncertainty which could impact market opportunities. - Competitive landscape where peers might pose challenges. - Argentina's past impact on growth as a headwind, though expected to reduce in the future.

Q: Provide additional color on growth of subscription revenues per region, especially Argentina, and margin sustainability.

A: Subscription revenue grew 22% in FX neutral. Argentina was a headwind but expected to reduce by December. Margin is sustainable with progress toward subscription gross margin target of 80% and operating margin goal of 20%.

Q: Provide context on strong new contract signature momentum, including sectors and regions.

A: Strong momentum due to composable platform, low TCO, fast time to market. Brazil has B2C growth potential with migrations like Fast Shop and Bemol. US and Europe have growth in B2B and omnichannel customers like Colgate, Keune. Deferred revenue increase supports this.

Q: Talk about system integrators, relationship evolution, and competitors.

A: VTEX ecosystem matures, reducing need for direct service. System integrators are key for global reach. Competition is stable with no major shifts observed, and VTEX continues to gain market share.