It was today that Zenvia Inc. (NASDAQ: ZENV), a leading cloud-based CX platform in Latin America that empowers companies to transform their customer journeys, announced its operational and financial metrics for the third quarter and first nine months of 2023.
The ZENVIA founder and CEO, Cassio Bobsin, commented on the results of the third quarter of 2023: "I am pleased to report that our results for the third quarter of 2023 further underscore our efforts to balance revenue growth with profitability," he said.. Although the economic environment continues to be challenging, we have been able to expand our SaaS business and increase volumes in CPaaS with healthy margins in spite of the challenging economic environment. The progress we've made in this third quarter demonstrates our adaptability and strategic foresight as we navigate this market that is constantly transforming. Currently, we are working on integrating SenseData into our operations as well. As we reach the end of this process, we will have completed the full integration of the acquired companies. It is our goal to continue to integrate platforms and systems throughout key structuring projects that will allow us to deepen our product bundling and cross-selling capabilities by the end of 2024.
It is our goal to continue to integrate platforms and systems throughout key structuring projects that will allow us to deepen our product bundling and cross-selling capabilities by the end of 2024.
In his remarks, Shay Chor, ZENVIA's Chief Financial Officer & IRO, said: "Our third quarter 2023 results attest to our ability to successfully navigate Brazil's complex macroeconomic environment. This is particularly evident in our double digit sequential increases in SaaS revenues, which we expect to be the foundation for our growth in 2024.. There was also a sequential increase of 13% in total revenues for the quarter. A strategic decision to offer more balanced pricing and service level agreements to certain large enterprise customers resulted in a strong recovery in SMS volumes, as a result of a more balanced pricing strategy. Continuing our streak of delivering positive EBITDA, we recorded BRL162 in the first quarter of 2016.It was the fifth quarter in a row that Normalized EBITDA was positive, marking the fifth consecutive quarter of positive normalized EBITDA. In the first half of the year, our EBITDA has already amounted to BRL55 million.As a result, we are on track to meet the guidance for the full year, and we are tracking towards it. As a matter of fact, our LTM EBITDA was BRL78 million.In terms of the guidance for FY 2023, 7 million is already within the range of expectations
In terms of the guidance for FY 2023, 7 million is already within the range of expectations
Highlights of the financial results for the third quarter of 2023
Highlights of the 9M 2023 financial performance
Segments that we serve
The revenue and non-GAAP gross profit we report for the quarter is broken down by SaaS and CPaaS, since we believe that this is the best way for all stakeholders to understand our business and the levers we are using to grow.
Business model based on SaaS (Software as a Service)
Our SaaS business revenue grew by 23% in Q3 2023 as compared to Q3 2022.The BRL75 has increased by 2% YoY.There are 3 million Brazilian reals, out of which 58 million are in Brazil.As compared to BRL73 million, $2 million of this was recurring-based.BRL58 million will be spent in Q3 2022, of which BRL7 million is expected to be spent.A total of $9 million was recurring in nature. It is interesting to note that when we compare 9M 2023 to 9M 2022, there is an increase of 12 percent..As a result of the full consolidation of Movidesk, which was completed in May 2022, 1% of the growth was driven by the company. There was a BRL233 million revenue generated by our SaaS annual recurring revenue (ARR)(5) at the end of September 2023. Furthermore, our SaaS revenues for the third quarter of 2023 increased by 11 percent.From BRL67 to BRL68, there has been a sequential increase of 6%.It is expected that we will reach a minimum of $5 million in Q2 2023, in all customer profiles, which will be the foundation of our growth for the next year
It is expected that we will reach a minimum of $5 million in Q2 2023, in all customer profiles, which will be the foundation of our growth for the next year
In Q3 2023, as expected, we saw a double-digit sequential increase in SaaS revenue, primarily in our large enterprise business, partially reversing the negative impact of the downsell caused by macroeconomic activities in the previous couple of quarters, but it was still not enough to return to the levels of Q3 2022.
As a result of lower Non-GAAP Gross Profit from large enterprises during the quarter, our Non-GAAP Gross Profit for the quarter decreased 4.2% YoY to BRL46.0 million from BRL48.0 million. Our SaaS Non-GAAP Gross Margin for the third quarter of 2023 was 61.0%, a reduction of 4.1 percentage points YoY. For the nine months of 2023, our Non-GAAP Gross Profit went up 13.0% as a result of revenue growth and the consolidation of Movidesk.
We would like to draw your attention to the integration of SenseData, which started at the beginning of Q4 2023 with the end of the earn-out period. We are already integrating the SenseData teams and we expect to consolidate their platforms and systems throughout 2024.
The Imóveis Crédito Real SaaS Case Study is an example of a SaaS application
With over 90 years of experience in the Brazilian market, Crédito Real is a pioneer in the real estate segment and has consistently adapted to evolving trends and client demands throughout this time. During the pandemic, Crédito Real saw an increase in the demand for digitized services within the sector, where clients were looking for quicker solutions for their issues and even to complete the entire rental process in a digital and autonomous manner.
This is why Crédito Real chose Zenvia's customer experience platform for optimizing and automating their WhatsApp service, increasing the responsiveness of their channels, and having a complete record of all their client contacts integrated with their CRM system as a way to increase their customer satisfaction.. The Zenvia platform enabled Crédito Real to integrate more than 14 chatbot journeys to meet demands ranging from rentals, scheduling, notices, and evaluation of visits to property rental proposals, documentation transmission, issuance of duplicate bills, maintenance, and much more.
The Zenvia platform enabled Crédito Real to integrate more than 14 chatbot journeys to meet demands ranging from rentals, scheduling, notices, and evaluation of visits to property rental proposals, documentation transmission, issuance of duplicate bills, maintenance, and much more.
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It is calculated by multiplying the recurring revenue of September 2023 by 12 in order to calculate the ARR.
As a result, nearly 30% of the contracts signed in 2023 will come from WhatsApp leads. There have been more than 139,000 messages recorded on this channel in July alone by clients. It is important to note that the transition to digital services has remained humane, as clients still have the option of contacting human service during the transition.
We have created a process where the clients are able to send all the rental documentation on their own, which makes things easier for them. We let our potential clients tell us what their needs are, whether it's the neighborhood or the city, and they can even schedule a visit directly via WhatsApp if they want to see it in person. It was essential for Crédito Real to be partnered with a partner who understood the needs of the company. The Zenvia team was able to follow the flow we designed and we were able to do everything we could to speed up the process for the client," said Priscila Santos, Project Manager at Imóveis Crédito Real.
The Zenvia team was able to follow the flow we designed and we were able to do everything we could to speed up the process for the client," said Priscila Santos, Project Manager at Imóveis Crédito Real.
Business Models for CPaaS
It has been our goal since the beginning of the year to improve profitability in the CPaaS business, as we explained in previous quarters, by not engaging in price wars, which has lead to lower volumes, but also higher Non-GAAP Gross Profit as a result.. In spite of the fact that we are aware that the results of this strategy were positive, they had also been very specific for the dynamics of the market at the time.. We have been able to gain market share with certain strategic large enterprise customers by leveraging our more efficient cost structure, which is a result of our undisputed leadership in the Brazilian SMS market and the more balanced market dynamics. As a result, we have seen a strong recovery in SMS volumes and profitability while maintaining healthy levels.. By implementing this strategy, we believe we will be able to improve the relationship we have with these customers, which will allow us to upsell and cross sell to them as well
By implementing this strategy, we believe we will be able to improve the relationship we have with these customers, which will allow us to upsell and cross sell to them as well
As a result, we reported a 34 percent decline in.Revenues from CPaaS, which totaled BRL143 million, increased by 4% YoY in the quarter.There were 3 million in the third quarter of 2023, an increase of 14 percent.Comparing Q2 2023 with Q2 2024, the increase was 2%. The year-over-year comparison. There was a decrease of 11% in our Non-GAAP Gross Profit.The value of BRL38 increased by 6%.From the BRL38 million, we have received $0 million.A Non-GAAP Gross Margin of 26.5% was achieved on a revenue of $6 million.There will be a 5% increase in Q3 2023 as compared to Q3 2022.There was a decline of 9 percentage points in Q3 2022, down to 2%.There was a 7 percentage point difference. The success of our CPaaS business is a direct result of the strategy we implemented to find the right balance between volume and profitability, and this is demonstrating our ability to solidify the mature CPaaS business as well as demonstrate its potential to generate cash, which will be crucial for funding the expansion of our SaaS business.
The success of our CPaaS business is a direct result of the strategy we implemented to find the right balance between volume and profitability, and this is demonstrating our ability to solidify the mature CPaaS business as well as demonstrate its potential to generate cash, which will be crucial for funding the expansion of our SaaS business.
In line with Zenvia's vision of offering customers a new world of opportunities through an integrated platform that unites fluid, engaging, and personal experiences, the company has announced a partnership with Google in order to integrate Google Messages RCS (Rich Communications Service) into Zenvia's platform.. It is important to note that Google's RCS technology, which is only available on Android devices, not only offers greater customization of sent messages, but also end-to-end encryption and deeper metric analysis over SMS, enabling access to data such as read confirmations, clicks, and interactions over SMS.. RCS has become a more important channel in marketing and customer service operations in Brazil as a result of the widespread adoption of Android devices, which are part of daily life for millions of Brazilians.
RCS has become a more important channel in marketing and customer service operations in Brazil as a result of the widespread adoption of Android devices, which are part of daily life for millions of Brazilians.
The program is currently in the pilot stage with certain clients testing RCS messaging on the Zenvia platform. When the pilot stage has been completed, Zenvia plans to become the benchmark in offering Google Messages RCS for the same price as SMS contracts to all clients, thus improving the customer experience, and providing Zenvia clients with even greater insights through the use of smart features and data-driven approaches.
Case Study: UniCesumar - CPaaS as a Service
As one of the ten largest educational organizations in Brazil, UniCesumar has over 400,000 students spread over 1,000 distance learning centers in every Brazilian state, six on-site campuses, and three international hubs, making up the largest educational network in the country. The UniCesumar organization realized that as its expansion continued, a switch to digital support channels was necessary, as its service operations previously relied solely on the telephone, resulting in an overloaded customer service team and long waiting times for students who wanted to reach out.
UniCesumar utilized Zenvia's customer experience platform to send SMS messages to students to direct them to digital channels such as WhatsApp in order to address this issue. In the future, when students reach out for assistance, they will automatically receive a message allowing them the option to complete the service via the digital channel rather than via telephone when they reach out for assistance. There has been a 21% decrease in service over the phone since its implementation, which has resulted in a significant increase in service capacity as a result of this improvement. There has been a 101% increase in take up of digital channels as the main contact tool since Q1 2023 to Q2 2023, with digital channels now serving as the main contact tool. Thankfully, our students are now experiencing drastically reduced waiting times, which has resulted in a drop in contact abandonment rates and an increase in customer retention as a result
Thankfully, our students are now experiencing drastically reduced waiting times, which has resulted in a drop in contact abandonment rates and an increase in customer retention as a result
There are several ways to contact us at our website, and we believe that giving our customers a variety of ways to reach us is important. There is a lot more to this than just a simple telephone service. In order to truly innovate, one has to be able to migrate smoothly and efficiently from one channel to another. In order to provide our customers with the best possible service, we have invested in implementing omnichannel. This construction has been made possible by Zenvia because with its innovative solutions, we have been able to connect and integrate our platforms, so that our customers can have a variety of ways to reach out to UniCesumar," said William Diego Marcondes, Head of Channels at UniCesumar.
This construction has been made possible by Zenvia because with its innovative solutions, we have been able to connect and integrate our platforms, so that our customers can have a variety of ways to reach out to UniCesumar," said William Diego Marcondes, Head of Channels at UniCesumar.
Financial Results for the Consolidated Period
In Q3 2023, we recorded a total of BRL218.6 million in consolidated revenues, a 21.2% increase over the previous quarter, primarily owing to the 34.4% growth in CPaaS revenues resulting from the expansion of SMS volumes as a result of our decision not to participate in price wars in Q3 2022, as well as the 2.2% growth in SaaS revenues over the previous quarter.
In the sequential comparison, revenues went up 13.3%, as a result of an increase in SMS volumes with certain large enterprise customers in CPaaS, along with an increase of 11.6% in SaaS revenues with customers from all size profiles.
In Q3 2023, our Non-GAAP Gross Profit decreased 3.1% YoY to BRL83.9 million, primarily due to a higher number of large enterprises in the CPaaS business, which have lower margins, and lower results for large enterprises in the SaaS business (as explained above). As a result of increased participation of CPaaS in the revenue mix, the Non-GAAP Gross Margin in Q3 2023 decreased by 9.6 percentage points to 38.4% from 48.0% in Q3 2022.
The EBITDA in Q3 2023 was positive by BRL15 in comparison with Q3 2022.In comparison with a negative BRL0 of 9 million,.A total of 2 million will be added in Q3 of 2022. According to our EBITDA for the first nine months of 2023 and 2022, our EBITDA has improved to a positive BRL55 million figure.From a negative BRL24 million in 2023 to a positive BRL24 million in 2023.In 2022, there will be 9.9 million - an increase of 79%.There are nine million people in the world. A big part of the reason for this stronger EBITDA is related to the 10.There was a 9% increase in Gross Profits as a result of the execution of the savings plan initiated in July 2022, including the restructuring announced in November 2022 that led to an increase of 8%.There has been a 4% drop in G&A expenses to BRL 100 million.From BRL107 million in 9M 2023, to BRL4 million in 9M 2023.As compared to the same period in 2022, there will be an increase of 5 million. Consequently, the ratio of G&A as a percentage of revenue was reduced to 16 as a result of this change.From 18M23 to 9M23, there was a 7% increase.In 9M22, there will be a 5% increase
In 9M22, there will be a 5% increase
It is important to note that we ended September 2023 with a solid cash balance of BRL116 at the end of the month.This represents a decrease of 3 million from the previous year.In comparison to the same period of 2022, the growth rate was 8%. There is no doubt that this solid cash balance is the direct result of our focus on cash preservation without jeopardizing our sustained growth, especially with the earn-out negotiations announced in October 26, 2022 and December 21, 2022.. Due to a combination of stronger EBITDA and a stricter control of working capital, we were able to cover our capital expenditures and debt service in the period by using the EBITDA as a source of income
Due to a combination of stronger EBITDA and a stricter control of working capital, we were able to cover our capital expenditures and debt service in the period by using the EBITDA as a source of income
Guidance for FY 2023
In order to discuss its operational and financial metrics, the Company will host a webcast to be held on Friday, November 17, 2023, at 10:00 am Eastern Time. To access the webcast presentation, click here.
If you would like to learn more about Zenvia, you can visit their investor website at https://investors.zenvia.com.
Getting in touch
ZENVIA is a company driven by the purpose of empowering companies to create unique experiences for end-consumers through its SaaS end-to-end platform that provides a unified customer experience framework. Through ZENVIA, companies are able to transform their existing customer experience from non-scalable, physical and impersonal interactions into highly scalable, digital-first and hyper-contextualized experiences that extend across the entire customer journey.. In Zenvia's end-to-end Customer Experience SaaS platform, we offer (i) SaaS solutions that are focused on campaigns, sales teams, customer service, and engagement, as well as (ii) tools, such as software application programming interfaces, or APIs, chatbots, single-customer views, journey designers, document composer and authentication, and (iii) channels, such as SMS, Voice, WhatsApp, Instagram, and Webchat.. With its comprehensive platform, customers can automate a wide range of tasks, such as marketing campaigns, customer acquisition, customer onboarding, warnings, customer service, fraud protection, cross-selling and customer retention, among many others, through the platform.. ZENV is the ticker under which ZENVIA's shares are traded on Nasdaq, under the symbol ZENV.
ZENV is the ticker under which ZENVIA's shares are traded on Nasdaq, under the symbol ZENV.
In this section, we provide forward-looking statements about the preliminary third quarter and first nine months operating results, which are based solely on the information that is currently available to us, and are subject to change.. The preliminary operating results provided in this release constitute forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.. It should be noted that forward-looking statements were made as of the date they were first published and were based on current expectations, estimates, forecasts, and projections, as well as the beliefs and assumptions of management at the time of publication. It is intended to identify these statements by using words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," variations of these terms, or the negative of these terms and similar expressions.. As a result of the forward-looking nature of these statements, they are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Zenvia's control. Zenvia's actual results could differ materially from those stated or implied in forward-looking statements due to several factors, including but not limited to: our ability to innovate and respond to technological advances, changing market needs and customer demands, our ability to successfully acquire new businesses as customers, acquire customers in new industry verticals and appropriately manage international expansion, substantial and increasing competition in our market, compliance with applicable regulatory and legislative developments and regulations, the dependence of our business on our relationship with certain service providers, among other factors
Zenvia's actual results could differ materially from those stated or implied in forward-looking statements due to several factors, including but not limited to: our ability to innovate and respond to technological advances, changing market needs and customer demands, our ability to successfully acquire new businesses as customers, acquire customers in new industry verticals and appropriately manage international expansion, substantial and increasing competition in our market, compliance with applicable regulatory and legislative developments and regulations, the dependence of our business on our relationship with certain service providers, among other factors
We have been growing our SaaS portfolio organically and through acquisitions over the past few years. There are now four SaaS solutions available from our platform, and each is designed for a different phase of the customer journey, from the initial interaction with the brand, all the way through to a continuous relationship with the company in the future. Our SaaS segment has higher Gross Margins than our other businesses, and this is the segment from which the majority of our growth will come in the future.. We are already generating more than half of our margin from our SaaS solutions, which is an increase over three years ago when this percentage was zero.
We are already generating more than half of our margin from our SaaS solutions, which is an increase over three years ago when this percentage was zero.
The SaaS solutions we offer can be used individually or in combination, enabling companies to start a program in minutes or take it all the way up to a fully integrated, automated, intelligent, and automated customer journey based on our SaaS solutions.. As part of our customer experience solution, we also provide CX Tools that can be used to integrate and automate the customer experience in a number of ways. Our main tools are Application Programming Interface (APIs), a robot-like software program that performs automated, repetitive, predefined tasks (Bots), Natural-language understanding (NLU), as well as tools that make it possible to manage documents securely and securely during the end-consumer journey (Docs).. Using the Quantum platform, all our solutions and tools can be connected with the client's systems and processes in a seamless manner. There is no limit to the number of tools and solutions that companies can choose from on our platform. In the course of their adoption of multiple parts of the platform, we are able to break down all the barriers that restrict the end customer's experience and unlock their true potential.
In the course of their adoption of multiple parts of the platform, we are able to break down all the barriers that restrict the end customer's experience and unlock their true potential.
A SAMPLE OF FINANCIAL DATA The following selected financial data are preliminary, unaudited, and are based on management's first review of the company's operations for the third quarter and the first nine months of 2023.
An Important Note Regarding Non-GAAP Financial Measures
This press release presents certain non-GAAP financial measures, which are not recognized under IFRS, specifically Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Gross Profit for our SaaS business segment, Non-GAAP Gross Profit for our CPaaS business segment, Non-GAAP Gross Margin for our SaaS business segment, Non-GAAP Gross Margin for our CPaaS business segment, Non-GAAP Gross Margin for our SaaS business segment, Non-GAAP Gross Margin for our CPaaS business segment, Non-GAAP Gross Margin, EBITDA, Normalized EBITDA, and Non-GAAP Operating Cash Flow.. According to GAAP accounting standards, a non-GAAP financial measure refers to a measure of financial performance that excludes or includes amounts that would not be adjusted in the most comparable GAAP measure in order to determine financial performance. It is important to note that non-GAAP financial measures do not have standardized meanings and may not be directly comparable to similarly titled measures adopted by other companies.. For the purpose of decision-making, our management uses non-GAAP financial measures to assess the financial and operating performance of the company, generate future operating plans, as well as make strategic decisions regarding the allocation of capital to the company's operations.. We also believe that the disclosure of our Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Gross Profit for our SaaS business segment, Non-GAAP Gross Profit for our CPaaS business segment, Non-GAAP Gross Margin for our SaaS business segment, Non-GAAP Gross Margin for our CPaaS business segment, EBITDA, Normalized EBITDA and Non-GAAP Operating Cash Flow provides useful supplemental information to investors and financial analysts and other interested parties in their review of our operating performance. As potential investors, it is important to remember that they should not rely on information that is not recognized under IFRS as a substitute for the IFRS measures of earnings, cash flows, and profit (loss) when making investment decisions
As potential investors, it is important to remember that they should not rely on information that is not recognized under IFRS as a substitute for the IFRS measures of earnings, cash flows, and profit (loss) when making investment decisions
It is shown in the following table how our consolidated Non-GAAP Gross Profit and consolidated Non-GAAP Gross Margin are reconciled:
The Non-GAAP Gross Profit is calculated as Gross Profit plus amortization of intangible assets acquired as part of business combinations. (3) Non-GAAP Gross Margin is calculated as Non-GAAP Gross Profit divided by Revenue. (4) Non-GAAP Gross Margin is calculated as Non-GAAP Gross Profit divided by Revenue.
Here are the reconciliations for Non-GAAP Gross Profit and Non-GAAP Gross Margin for our SaaS and CPaaS business segments, which can be found in the following tables:
(1)   The Non-GAAP Gross Profit for our SaaS business segment is calculated based on the gross profit for our SaaS business segment plus amortization of intangible assets that have been acquired through business combinations for our SaaS business segment. Secondly, we calculate gross margin for our SaaS business segment as the gross profit for our SaaS business segment divided by the revenue for our SaaS business segment.. In order to calculate Non-GAAP Gross Margin for our SaaS business segment, we divide our Non-GAAP Gross Profit for our SaaS business segment by the revenue for our SaaS business segment.
In order to calculate Non-GAAP Gross Margin for our SaaS business segment, we divide our Non-GAAP Gross Profit for our SaaS business segment by the revenue for our SaaS business segment.
The calculation of the Non-GAAP Gross Profit for our CPaaS business segment is as follows: gross profit for our CPaaS business segment plus amortization of intangible assets acquired from business combinations within our CPaaS business segment. In our CPaaS business segment, gross margin is calculated as the gross profit of our CPaaS business segment divided by the revenue of our CPaaS business segment.. (3) We calculate Non-GAAP Gross Margin for our CPaaS business segment by dividing Non-GAAP Gross Profit for our CPaaS business segment by revenue for our CPaaS business segment.
(3) We calculate Non-GAAP Gross Margin for our CPaaS business segment by dividing Non-GAAP Gross Profit for our CPaaS business segment by revenue for our CPaaS business segment.
Here is the reconciliation between our EBITDA and Normalized EBITDA as shown in the following table:
In calculating EBITDA, we adjust for income tax and social contributions (current and deferred), as well as financial expenses, net and depreciation for the period. (2) Normalized EBITDA is defined as a loss adjusted for the period by income tax and social contributions (current and deferred), financial expenses, net, depreciation and amortization as well as non-cash impacts from earn-out adjustments.
As shown in the following table, our Non-GAAP Operating Cash Flow has been reconciled to our GAAP Operating Cash Flow:
As a measure of operational cash generation, we believe that Non-GAAP Operating Cash Flow is a good indicator that can be used.
Zenvia is the source of this information
The leading cloud-based customer experience platform in Latin America that empowers companies to transform their customer journeys through the power of cloud computing, Zenvia, Inc. (NASDAQ: ZENV), today announced...
We are pleased to announce that Zenvia Inc. (NASDAQ: ZENV) (the "Company") has become the leading cloud-based customer experience platform in Latin America, enabling companies to transform their...
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