Zenvia, Inc. Q1 FY2023 earnings call

• Zenvia focused on profitability and executed a savings plan, achieving positive EBITDA for three consecutive quarters.
• Three acquired companies are fully integrated organizationally, with systems/platforms integration ongoing to capture synergies.
• The Quantum platform is leveraging generative AI, such as ChatGPT, to enhance productivity and customer experiences.
• CPaaS volumes from large clients recovered with sustained margins, aiding cash generation for SaaS expansion.
• Implemented cost reduction initiatives, with a 9.5% reduction in G&A expenses compared to Q1 '22.

In Q1 '23, Zenvia's SaaS business had a gross profit of BRL46.4 million, a nearly 40% increase compared to Q1 '22, with a gross margin of 68% (up 4 percentage points). The CPaaS business saw a 38% increase in gross profit compared to Q1 '22, reaching a gross margin of 42% (up almost 19 percentage points). The SaaS business contributed 38% of the total revenue in terms of gross profit.

• EBITDA guidance for 2023 is between BRL70 million and BRL90 million.
• Gross margin is expected to remain at a similar level to 2022.
• Strong cash generation from working capital management helps address the funding gap.

• Predatory competition in the CPaaS space affected revenues and margins.
• Challenging macro environment leading to longer sales cycles for SaaS large clients.
• Funding gap still exists, requiring management of earn-out payments and consideration of debt/equity options.

Q: Quick follow-up regarding top line dynamics on CPaaS and competition.

A: Predatory competition led to a temporary dip in CPaaS revenues but margins improved; expecting revenue growth in CPaaS in the second half of 2023.

Q: About funding gap and working capital.

A: Cash generation is expected to cover earn-out payments through 2026; working capital management with DSO (days sales outstanding) and DPO (days payable outstanding) improvements is providing financial flexibility.