Good morning and thank you for standing by. Welcome to Zenvia's Fourth Quarter 2021 Earnings Conference Call. Today's speakers are Mr. Cassio Bobsin, Zenvia's Founder and CEO and Shay Chor, Investor Relations Officer.

Please be advised that today's conference is being recorded and the reply will be available at the company's IR website, where we can also access today's presentation. At this time, all participants are in a listen-only mode. After the prepare remarks, there will be a question and answer session.

[Operator instructions] Now I would like to welcome one of your speakers for today; Mr. Cassio Bobsin, Founder and CEO. Sir, the floor is yours..

Hello everyone and welcome to Zenvia's Q4 and full year 2021 earnings call. I'm Cassio Bobsin, Founder and CEO. Today, we're going to present the key highlights of the peer and provide you with an update of our business. Let's start at Slide Four. Q4 was a very strong quarter with sales with an excellent 2021 for year [ph].

We delivered again on what we promised investors during our PO process; solid revenue growth and strong growth margin expansion year over year. Revenue wound up 46% in Q4 '21 compared to Q4 '20 and 42.5% in the full year. While Q1 and data acquisitions contributed to this total, we highlight our solid organic growth of 32.8% in '21.

This is a direct result of our client base going up 25% to almost 12,000 customers and our revenue expansion reaching 122% up by almost eight percentage points from last year. Adjusted gross profit web up 147% in Q4 and 78% in '21 to R$198 million.

Adjusted gross margin was 32.6% in Q4 adding 13.3 percentage points and 32.3% in the year adding 6.4 percentage points. We've been building a long term vision from the ground up.

We spent the first years mainly focused on evolving one way communication and becoming the leader in mobile services and push [ph] in Brazil, which was only in the last couple years that we started our transformation to become a SaaS company focused on customer experiences and we mean to provide brands with the unique platform for unified and to enhance the communication in Latin America.

We are currently in the phase of enabling juries that happen with end customers of our clients are engaged in a variety of ways across their life cycle, through multiple channels that are enabled by our communications platform, but they already foresee and prepare for our next phase, which will be focused on enabling experiences, allowing end customers to experience some streamlined relationship with the brand, no matter the channel or moment in time.

Latin America has enormous growth potential as it is in the early stage of digital information and adoption of technology, especially in the small and media companies.

And this will be data driven by using Moody channel engagement solutions and data analytics, we can provide our clients with actionable insights, enable them to generate automated, customized actions and different touchpoints of the customer journey, creating more and more personalized and seamless experiences to end customers.

So let's take a closer look at how we have been evolving our value offering to clients and customers, what you already delivered in '21 and where we are headed moving forward. '21 was a year of important milestones for us from brand positioning to new products to M&A, and obviously the year of our IPO.

During the year, we reposition our brand involve our culture, to align the company's ambitions and long term vision with our beliefs and behaviors, making sure we recognize the value of our humans and maximize value to our stakeholders.

Combination of these two elements are key to pave the way for us to achieve goal of becoming a global platform that empowers companies to create a new world of experiences. Our internationalization plans were implemented with the acquisition of [indiscernible] in the second half of '20, and the launch of our operations in Mexico.

In '21 international revenues already represented roughly 6% of total. To improve our CPAs offering, we have launched new products, such as trusted SMS, and also added new channels, such as RCS [ph] and Instagram API.

We were very active in the last three years in M&A as we have completed five acquisitions that are effectively transforming our company. Our M&A strategy involving acquiring companies that complimented our technological existent at its solutions, new geographies and pool of talent.

Integration of these companies will rather transform our value referring to clients in the short, immediate terms while to increase our client base and net revenue expansion. In '21, we implemented the integration of ceramic with full integration achieves now in Q1 '22.

We're also working together with A1 [ph] team to map and understand the synergies, which led us to decide accelerating integration. Since data integration is on track with back office activities and structures already fully integrated, since data plays an important role changes the core of our platform by adding data analytics and AI.

As to [indiscernible] we expect to close this transaction now in the second quarter. The best query for us to understand the fact of this integration is we're putting ourselves in the client's shoes.

We have been doing these by incorporating since data and desk solutions into our own customer service and implementing changes to ultimately improve our very own customer experience. It's already had tangible impact in the onboarding of new clients for example. In the sense, we're happy to report and receive recognition with our 8,000 key in January.

This recognition was granted to 25 companies in Brazil, and it means that our clients recognized that we provided them the best customer experience. I would like to quickly share with you three different cases in the past, how we can help brands.

One of the largest fashion retailers in Brazil started relationship with us when they needed an SMS broker. The relationship that involved and they started using our conversational platform, turning Zenvia into their trust advisor and provider for end to end submissions.

Through strategically designed journeys, they're able to use WhatsApp, which enabled their salespeople to reach out to customers as soon as the pandemic lockdown started to offer products. After 90 days of lockdown, they had already reached 75% of revenues through online and WhatsApp sales.

One of Brazil's unicorns, well known real estate platform is the same automate journeys through WhatsApp to revolutionize the local real estate market of deals among sellers, buyers and renters. They will work closely with them to understand their business needs and involve the product according to the market requirements.

Through our advice of customer program, we brought their team closer to our R&D and product teams, and we're able to jointly build a product roadmap. The solutions helped them record improve the performance.

And in [indiscernible], one of the largest education congregates in Brazil is essential products to provide self-service solutions to their students who no longer need to interact with human agents to address most of their needs.

These are everyone to gain 40% and productivity in their customer care, releasing their agents to support a broader number of students who indeed require human interaction. And what's even better, the levels of section from students with journey totally aligned with the ones held by human agents.

Finally, our IPO in July of '21 was a special occasion when we saw the market welcome our investment thesis and that's what we have been doing since then experience and preparing it for the next level, our customer experiences in Latin America and globally. Looking ahead, we are now at an inflection point in our expansion route.

'22 will be the year when we lay out the foundations for the profitable growth we had, accelerating the integration of all businesses into one powerful platform, deploying a new good market strategy, provide the best SaaS experiences for brands along them to offer a parallel and and customer journey.

In this sense, we released in mid-February, our decision to accelerate the one integration as we have been seeing strong demand for highly customized and customer journey selections. We're ready to speed up both platforms and team integrations to better serve our enterprise clients.

Our goal is to move these customers from base communication processes, into a journey wide implementation, integrated and leveraged by data in an eye, all in one single platform.

We expect to extract several senators from those integrations that will ask to offer a much more comprehensive shoot of product and services for the brands that want to improve their customer journeys. As you can see all we do aim at evolving our value offering always focusing on generating value into the end customer.

This is how being our priority and dare to say, this is the main differential between us and our peers in the region. Everything we do at Zenvia has the end customer first. This may seem pretty obvious, but it's not.

We analyze every step of the customer journeys, which will also to transform journeys into ex versus benefiting them the brands and ultimately us. We combine requiring with usage based revenue models that allows us to grow with our customers.

We initially adopt alarm and expand strategy in which we introduce our platform based on one simple use case, and then develop the customer relationship over time by upsell and cross selling.

That's the main reason why our focus for opportunities will be connecting our SaaS products will with our platform core in order to create a unified end to end experience. This will allow our clients to further engage with our platform, leveraging adoption of all used cases that covers different parts of the customer journeys.

We believe we're now very all positioned to do what you do best, enable the amazing customer experiences for our current and new clients. Very proud of the results we achieved in '21 and excited about the prospects for '22.

We expect to keep the strong place of growth in '22 as we see increasing demand for our services and a lot of opportunity for growth. We're focused on integrating and launching new products and services that will help us pursue even more substantial organic growth in '22.

I will now pass on to Shay, who will discuss our key financial metrics in more detail, and I will be available for the Q&A..

Thank you, Cassio. Hello everyone. Thanks for joining us for today's call. Let me share with you some thoughts on our results. The combination of organic growth, solid client retention and acquisitions boosted our revenues in the year. Our client base went up to 25% to almost 12,000 clients.

Our net revenue retention rate ended the year at 122% up almost eight percentage point from last year. In the chart on the top, right, you can also see the contribution of organic growth and acquisition of our revenue. Data contributed R$41.5 million to the consolidated revenue, while R$141 million were organic, representing a 33% growth.

Another important highlight is the quality of our revenues. Out of the total revenues from beyond SMS rumination were 35% in the year. But if you look at Q4 '21 alone, it is already over 40%. We're very proud to see the pace of this transformation as only two years ago most of our revenues were from SMS termination.

Even within '21, if we look into Q1, we started the year with only 16% SMS Termination. For us, this is an amazing indicator that we are moving the right direction. The increase in revenues was also profitable one, and this is an important because we promised this during our IPO.

Adjusted, profit increased 147% when we compare Q4 '21 to Q4 '20, with the adjusted gross margin, expanding a solid 13.3 percentage points to almost 33%. In the year, adjusted gross profit increased 78% to almost R$200 million with the adjusted gross margin, expanding 6.4 percentage points to 32.3%.

It is important to highlight that this improved revenue mix helps soften the Q4 seasonal impact of higher SMS volumes over profitability, mainly related to Black Friday and Christmas.

As you can see the chart at the right, 77% of our adjusted gross profit in '21 comes from beyond a Beyond SMS Termination and these are direct results of our diversification strategy and recent acquisitions and as we move more and more to become a SaaS company. To finalize, we are introducing our guidance for the fiscal year '22.

As Cassio pointed out in his remarks, '22 will be the year where we lay the foundations for the profitable growth ahead. We expect our revenues to be within the range of R$875 million to R$925 million, representing a year-over-year growth of 43% to 51% with organic growth standing between 32% to 34%.

We also expect adjusted gross margin to be within the 35% to 36% range representing a year-over-year expansion of 2.7 to 3.7 percentage points. This concludes our prepared remarks. We can now move to the Q&A session..

We will now begin the question and answer session. [Operator Instructions] And our first question comes from Andreas Salish [ph] SELL side analyst from UBS BB. Andreas Salish, we are now opening the audio so that you can ask your question live, please go ahead..

Hi guys.

Can you hear me well?.

Yes, yes we can..

All right, so, so thanks for the call and thanks for taking my question here. I have a question on the revenue breakdown here it's really positive that you guys grew SMS, non-SMS revenues to 35% during the full year. I'm trying to assess the short-term dynamics of it.

How was the breakdown? You could give more specifics on the breakdown for Q3 2021 and what we expect for the upcoming quarters? Thanks..

Thanks enough for your question. Specifically in Q4 revenues from beyond the SMS were fully 1% as you can see, in, in our presentation, I'll let Cassio discuss the trends.

Andreas we're seeing this continuous growth for solutions that are being launching and, and also the ones that come from acquisitions. So as this layer of solutions that drive different parts of the platform are being leveraged.

We're seeing this net at higher pace on the SMS revenues, so we're seeing naturally these percentages of beyond some SMS growing up on a quarterly basis. Hence we expect that infinity to all keep the same kind of dynamics..

Got it. Super good. Thank you..

Thanks for - thanks for your question, Andre. And now the next question comes from Enrico [ph] SELL side analyst from [indiscernible]. We are now opening the audio so that you can ask your question live, please go ahead..

Sure, sure, so good morning guys.

Can you hear me well?.

Yep. Yep. Go.

Ahead. Okay. Oh, hi. Hi Cassio. Hi, Shay. So, two, two quick questions here. One also again, on, on, the, the share here of the beyond SMS termination in the revenue mid, we know that of course you have been increasing these numbers as you, as you mentioned, 41%, in the Q4. So it has been growing consistently.

Also, of course you have the acquisitions, but we know that in the 4Q you have a seasonality effect, as you guys mentioned on the SMS, right? So if you were to adjust, I don’t know if you have this kind of performer number, but if you adjust by the seasonality effect of, or of the Q4 what would be the share of the beyond SMS termination? So this would be my, my first question.

And the second question, I don’t know if you could comment a little bit about the cross-sell opportunities, the cross-selling solution here of the, the more profitable solutions, the API basic solution.

So if you could open what percentage of the clients that are using SMS are also using more than, than one solution here on the API basic kind of product loop. So if you could provide a little bit of more detail here on how this has been evolving? That's it on my side, guys. Thank you very much..

Thank you, Enrico [ph].

I'm -- I'm not sure if we have Chor do -- do you have what would be revenues from the [indiscernible] if we were to, we can assist on it?.

Yeah, we can assume the, we have mid 20% higher than the, the average for SMS would assume that the beyond SMS revenue grew four-five percentage points, around 45%. I would say something like that.

And Cassio, can you comment on cross selling what we're doing, how this is evolving?.

Yeah, definitely. We don't disclose numbers for cross-selling, but it's fair to say that we've been structuring different approaches for customers to adopt more widely our whole platform.

And we have I'd say more than 5,000 customers that are using solutions beyond SMS currently, which means it's becoming a strong part of our market process, being driven by these new solutions that have been launching.

And we, the way these customers usually start now-a-days, most of their, these customers start now-a-days based from solutions other than SMS termination. That's most of the reason we're seeing is because the demand is huge. We do of course work the cross-sell, but it's not solely these revenues from the SMS, they don't come solidly from cross sell.

They come, especially from new customers, arriving at [indiscernible] and sometimes occur both ways. A customer can start with some as, and then go into one of our solutions. Other on the other side can come from one of our beyond SMS solutions and then use some as over time.

So this basically how the dynamic works, where these for the portfolio adoption and Chor I think that we are, we don't have that kind of number of, for cross being disclosed, right?.

Yeah, you're right, Cassio..

Thanks for your question Enrico and now the next question comes from Eugo [ph] SELL side analyst from Goldman Sachs. Eugo, we are now opening the audio so that you can ask your question live, please go ahead..

Yes. Good morning guys. Thanks for taking my question. I guess my question is just like a follow up on this on the revenue mix.

I mean, I'm please correct me if I'm wrong, but if we would assume this 41% SMS revenue in the fourth quarter and according to, what we can see for the full year 2021 we are getting here into a negative margin on the SMS business. So is this right or what we are missing here? Thank you..

Thank you, Eugo [ph].

Chor do, do you want to share I can tell this some numbers, but, I can tell this you, it's not negative, definitely Q4 has a lower margin on the SMS business and the reason being that, because this seasonality is because of the client mix that that impact seasonality, the, the, the profitability is slightly smaller for instance, in Q4 versus Q3, but definitely not negative.

We, we cannot take this offline and I'll help you do the math..

Okay. All right. Sounds good. Thank you, Shay..

Perfect. Thanks for your question, Eugo [ph]. And now the next question comes from Andre Sal again, SELL side analysts from UBS BB. Andrea, we are now opening the audio so that you can ask your question live, please go ahead..

Right. Thanks guys for the, for the follow here. I have a question on, on, on margins. We've seen some I just wanted the dynamic of R&D and commercial expenses here.

As we seen little increase during the -- during the fourth quarter, in terms of percentage of revenue, which level does the Company understand that it's should be the normalized level R&D and commercial expenses going forward?.

Thanks Andrea.

Cassio do you want to take this?.

Thanks. In terms, in terms of, I think in terms of percentage how you can disclose maybe what we have yeah. The forecast, right? Yeah. We understand that we have point room for growth, especially R&D cause we came from a few years back of less than 5% and we only aiming for the next years to reach a live between 13% and 15% of the net revenue.

And for sales in marketing, we already think that we, for now in 2021 and the beginning of 2022, we reach the level that we think is, is good for the Company for, to sustain their growth ahead. It's around 13%, 13%to 14% of net revenue..

Super clear thanks guys..

[Operator Instructions].

Roger, I'll take it, I have a question here on the, on the webcast cast.

Can, can you comment on the integrations of the companies that you acquire, how, how those are going?.

That's definitely, I talking about most recent acquisitions, we finished a soon integration process during last quarter and the Company that we acquired middle last year, we've been now into a full old integration. We expect to finish the process during the next couple of months.

It's quite interesting the way of being able to pull synergies as with being integrating different teams and talking directly to customers and offering our whole portfolio for customer experience solutions. So it's been quite interesting to going into that direction of a full integration and talking about sales data.

We started the integration process. We just finished phase one, which means the corporate structure. Now we're going to phase two, which means approaching the product platform so we can benefit feed from the different function analyst number that we can create combining both our platforms.

I'm talking about [indiscernible] as we mentioned before, we expect a closed operation in Q2. And after that closing, of course, we start first with the corporate integration and then we go the same way by integrating the platform.

So we can bring a whole set of customers that have this kind of demand that have been served by, with different partners portfolio to benefit from solution as well. And also of course connect our whole platform with mobile data so we can increase the value for these them three 3000 customers that they serve.

So that's pretty much how I've been going in terms of integration. We're very happy and excited with what we, what, what we've been seeing in terms of benefits for customers.

And what we're able to pull in terms of synergies and product is considering that of, with each acquisition we expand our tab and as we deliver integration, we create even more value with the same customer we serving..

Perfect. Then, and now we have a next question. It comes from [indiscernible] SELL site analyst from Goldman Sachs [indiscernible] we are now opening the audio so that you can ask your question live, please go ahead..

Yes. Thanks for, for the follow up question. So look given where the stocks trading and the price, I mean, would you consider doing like a share by back program or something like this? We've been getting a lot of questions from investors and so I was wondering if you can just share your let's say perspective given current, market environment.

Thank you..

Thanks Eugo.

What, what we can tell you is when we consider our capital location especially in light of other questions that we get in terms of additional M&A what we can tell you is all, all the M&A that were must have we did there could be not a one or two small that they are nice to have not urgent to be done with all the crisis interest rates going up.

So we decided to take a step back and, and, and preserve some of, of the liquidity that we need to run the, the business and in terms of, share by back it's, it's part of the consideration when we decide how to locate capital, right? So at certain point, when we decide to resume capital location for M&A, one of the considerations will definitely be if it's better to buy our own shares or to buy another Company that will depend on valuation, that will depend on, on a couple of things, but it's definitely an alternative that we have..

That's. That’s great. Thank you, Shay..

Thanks for question Eugo, and now we have another question from [indiscernible] SELL side analyst from [indiscernible], we are now opening the audio so that you can ask your question live, please. Go ahead..

Hey guys, no. Another question here regarding competition like to understand from you guys, how is the, the competitive environment we have been seen different players here, looking at communication and also experience platform. So we have been seeing a lot of different willing to become an ecosystem.

And in this creation of, of what they call ecosystem also involves several solutions that J is offering right now here on the communication side of the business.

So, I mean, how has been the competition, if you could elaborate a little bit on that, if this has been impacting churn levels, I mean, how, how, how do you see this by product, if you could provide more granularity here on this level? Thank you..

Thanks for the question, Cassio, you can take this one..

Yeah, yeah, very good question. So talking about the competitive dynamic, we have a best, the two parts of, of the business. The first, the CPaaS where we started the CPaaS market is being always a competitive market. And we are very used on these dynamics, especially on the customers.

So I would say they have, hasn't changed since last couple years, in terms of the competing the market. When we look at SMS, it's a bit different for CPaaS, then it's much less competitive than it is for enterprise market.

So haven't seen any change on that sounds, looking at CPaaS customer experience SMS solutions, which are majority of our beyond SMS revenues. Now here, we see a huge demand for different solutions and ways to improve customer experiences and dynamics of competition and the solutions they differ for each specific solution.

It's start to say that we mostly compete with niche SaaS companies across different markets and regions across and for each one of these solutions. When we face competition from global players we are very efficient in competing with these global players.

That's why we've been very successful in achieving a high growth pace on these solutions throughout the region. And as we invest more on the integration of these solutions into the core of our platform, we expect to create a very unique approach for the market.

As customers will be able to experiment and task different solutions and benefit from the data that we are able to provide an insights we're able to provide.

And also of course, the multichannel approach as we are the best platform, and we work full stack, we're able to help these customers to adopt solutions, considering the whole bunch of channels they, they need sometimes provide awesome services for the end customers.

And basically looking at these [indiscernible] for SaaS customer experience SMS offerings. We don't see any high competition, or even if some players are in some parts bringing one of two solutions on the platform. We don't see it something as, as a, and kind of threat our strategy, because it's quite unique.

Then the way of being evolving or all that we expect to be really successful as we evolve that integration. And that's most of the focus for 2022, as chime mentioned, we already have very interesting and highly competitive solutions for the market.

And as we invest more on these solutions and we, as we scale them through the markets and assessing the high demand, we expect that this would really be interesting in terms of how the percentage and how that would represent in terms of how revenues and results of the time..

Thank for your question and concludes question. And I would like to turn the conference back over to Mr. Cassio for his closing remarks..

Thank you very much all of you for joining your session.

It's been a great year and looking ahead at 2022 looks back to really focus and lots of opportunities that've been working on and seeing all that evolve into our strategy in order to fulfil vision and deliver a purpose of creating a new world of expenses for, and customers and empowering all of those business across the region to really make a difference from how people enjoying experience their services engagement with brands.

So thank you very much and see you next time..

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