VTEX (Cayman Islands) Q1 FY2025 earnings call

• Subscription revenue grew 15% in FX Neutral in Q1. Gross profit was $41 million, with 22% FX Neutral growth and 3.7 pp margin increase YOY.
• Non-GAAP operating income was $5.3 million, up 85% YOY with 4.3 pp margin increase YOY. Free cash flow was $6.6 million.
• New customers live included Magazzino, LG, Americanas, etc. Strengthened relationships with existing customers like Bemol, Colgate, etc.
• Manchester City Football Club joined the VTEX platform. Launched Give You All campaign and hosted VTEX Connect New York. Recognized in Gartner Voice of Customers report.
• Acquired Newtail for retail media strategy. Customer stories: Americanas, Spanish frozen food retailer, Cencosud, J.W. Pepper, Nestle, Procarga.

In the first quarter of 2025, VTEX achieved solid financial results. Subscription revenue grew 15% in FX Neutral. Gross profit reached $41 million, a 22% growth in FX Neutral with a 3.7 percentage points margin increase year-over-year. Non-GAAP operating income increased to $5.3 million, an 85% growth and 4.3 percentage points margin increase year-over-year. Free cash flow was $6.6 million. GMV for the quarter reached $4.3 billion, growing 8% year-over-year in U.S. dollars and 17% on an FX neutral basis. Subscription revenue was $52.6 million, a 4% increase in U.S. dollars and 15% on an FX neutral basis. Non-GAAP subscription gross margin was 79%, up 191 basis points year-over-year from 77% in Q1 2024. Total gross margin, including services, rose to 76%, up 371 basis points year-over-year. Non-GAAP operating expenses were $35.9 million, slightly up from $35.2 million in the same quarter last year. Non-GAAP operating income reached $5.3 million in Q1 2025, up from $2.9 million in Q1 2024, an increase of over 80% year-over-year in U.S. dollars.

• Q2 FX-neutral subscription revenue growth targeted at 12.5%-15.5% ($57M-$58.5M).
• Full-year 2025 FX-neutral subscription revenue growth targeted at 14%-17% ($238M-$244M).
• Target non-GAAP operating income and free cash flow margins in mid-teens.

• Macroeconomic volatility posing challenges to sales and GMV growth projections. Uncertainty around customer go-lives and consumption trends due to shifting seasonality.

Q: Comment on subscription gross profit and headcount reduction.

A: Ricardo Sodre stated subscription gross margin improved due to customer support optimization and ecosystem partners. Mariano Gomide mentioned headcount changes were minimal, with the support area being the only meaningful change.

Q: R&D expense increase and U.S. expansion.

A: Ricardo Sodre said R&D increase was due to investment in product development. Mariano Gomide noted U.S. sales focus on high-value enterprise customers with ongoing momentum.

Q: Macro situation, tariffs, and U.S. impact.

A: Ricardo Sodre said VTEX is resilient to macro volatility. Q2 guidance reflects increased uncertainty. VTEX is less exposed to U.S. tariff impacts.

Q: Subscription revenue build-up per geography and retail media economics.

A: Ricardo Sodre provided qualitative on geography. Geraldo Thomaz Jr. said retail media business is growing with acquisition of Newtail, having almost 400 advertisers already