Business Wire | Aug 17, 2021 04:05PM EDT

VTEX Reports Second Quarter 2021 Financial Results

Aug. 17, 2021

NEW YORK--(BUSINESS WIRE)--Aug. 17, 2021--VTEX (NYSE: VTEX), the enterprise digital commerce platform for premier brands and retailers, the leader in accelerating the digital commerce transformation in Latin America and now expanding globally, today announced results for the second quarter of 2021 ended June 30, 2021. VTEX results have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting."

Geraldo Thomaz Jr., co-CEO and co-founder of VTEX, commented, "We are humbled to present our first quarterly earnings results as a publicly-traded company. Our robust performance highlights the size of the opportunity of digitalization in the emerging markets, despite the gradual reopening of brick-and-mortar retail." Mariano Gomide de Faria, co-CEO and co-founder of VTEX, added, "We are focused on transforming the future of ecommerce. We expect to continue to enhance our leadership position in Latin America through strong execution and focus. We are only at the beginning of the digital commerce journey and VTEX is here to accelerate it."

Second Quarter 2021 Operational and Financial Highlights

* GMV reached US$2.4 billion in the second quarter of 2021, representing a year-over-year increase of 30.4% in USD and 25.4% on an FX neutral basis. * Total revenues increased to US$30.9 million in the second quarter of 2021, from US$25.3 million in the second quarter 2020, representing a year-over-year increase of 22.1% in USD and 18.2% on an FX neutral basis. * Subscription revenue represented 96.1% of total revenues and increased to US$29.7 million; in the second quarter of 2021, from US$23.9 respectively in the second quarter of 2020, a year-over-year increase of 23.9% in USD and 20.0% on an FX neutral basis. * Subscription gross profit was US$20.2 million in the second quarter 2021, compared to US$15.9 million in the first quarter of 2021. Subscription gross margin improved to 68.1% in the second quarter of 2021 from 64.7% in the first quarter of 2021. Subscription gross profit margin quarter-over-quarter improvements reflect operational hosting cost efficiencies. * Non-GAAP loss from operations was US$10.4 million during the second quarter of 2021, compared to Non-GAAP income from operations of US$6.7 million in the second quarter of 2020, primarily due to incremental investments in sales and marketing and research and development, as we have been investing to capture the acceleration of ecommerce growth. * Non-GAAP free cash flow was US$(14.7) million during the second quarter of 2021, compared to US$5.4 million in the second quarter of 2020. * Our total headcount increased to 1,486 as of June 30, 2021, representing an 88.1% year-over-year increase.

Second Quarter 2021 Product Innovation Highlights:

* VTEX launched enhancements to the core commerce capabilities to further differentiate its value proposition. VTEX Intelligent Search now can leverage VTEX OMS and inventory intelligence to regionalize search results, increasing conversion. VTEX OMS also launched a new feature allowing customers to manage their capacity for scheduled deliveries, aiming to improve the precision of promised SLAs to shoppers and % of SLAs kept on scheduled deliveries. * VTEX launched selected features to improve local differentiation in some strategic markets. In Brazil, new payment parameters were added to native integrations for our customers to comply with new marketplace regulation. In Argentina, checkout geolocation precision was enhanced to improve conversion. In the US, OMS reports added local tax business rules. * The new VTEX Admin with a new consistent user interface and a new sales dashboard is being rolled out and was launched to all US customers. Furthermore VTEX continues to evolve its product in a way that removes usability friction for enterprise users and enhanced user experiences to manage inventory, create promotions, and for marketplace operators to evaluate and catalog new offers from sellers.

Business Outlook

We are seeing the economy slowly recover in 2021, rebounding from the contraction of 2020, due to the adverse effects of the COVID-19 pandemic.

Online commerce penetration in Latin America continues at a higher level than it was pre-pandemic, demonstrating that the 2020 quarantine-related acceleration in online consumption appears sustainable, even as brick-and-mortar retail stores gradually reopen throughout the region.

Our customers with brick-and-mortar retail presence can now operate an omni-channel strategy. We expect our business to face similar year-over-year trends in the third quarter and start to normalize towards the end of 2021. We believe that the strong sector tailwinds will continue to drive our growth and overall ecommerce growth rates in the region, despite the near-term year-over-year comps. We expect seasonal patterns to remain the same as in prior years and expect that our revenue will grow sequentially for the remaining quarters in 2021.

In view of the aforementioned trends and VTEX's performance during the six months ending June 30, 2021, we currently expect to deliver growth at healthy levels. We are targeting revenue in the US$31.0 million to US$31.5 million range for the third quarter of 2021, and US$124 million to US$126 million range for the fiscal year ended December 31, 2021, assuming current period FX rates.

Importantly, we will continue to invest to grow our business as we work towards continuing to enhance our leadership position in Latin America and explore new opportunities outside the region.

The business outlook provided above constitutes forward-looking information within the meaning of applicable securities laws and is based on a number of assumptions and subject to a number of risks. Actual results could vary materially as a result of numerous factors, including certain risk factors, many of which are beyond VTEX's control. See the cautionary note regarding ''Forward-Looking Statements'' below. Fluctuations in VTEX's operating results may be particularly pronounced in the current economic environment. There can not be assurance that VTEX will achieve these results.

The following table summarizes certain key financial and operating metrics for the three and six months ended June 30, 2021 and 2020.

Three months Six months ended ended June 30th June 30th

(in millions of US$, except as otherwise 2021 2020 2021 2020indicated)

GMV 2,439.3 1,870.8 4,475.3 2,823.2

GMV growth YoY FXN (1) 25.4% 178.0% 64.8% 108.6%

Revenue 30.9 25.3 56.8 41.9

Revenue growth YoY FXN (1) 18.2% 118.6% 41.5% 84.2%

Subscription gross profit (2) 20.2 18.1 36.1 28.5

Subscription gross profit margin (2) 68.1% 75.7% 66.5% 72.4%

Non-GAAP income (loss) from operations (3) (10.4) 6.7 (18.9) 4.3

Total number of employees 1,486 790 1,486 790

(1)

Calculated by using the average monthly exchange rates for the applicable months during 2020, adjusted by inflation in countries with hyperinflation, and applying them to the corresponding months in 2021, as applicable, so as to calculate what our results would have been had exchange rates remained stable from one year to the next.

(2)

Corresponds to our subscription revenues minus our subscription costs.

(3)

For a reconciliation of non-GAAP income (loss) from operations to income (loss) from operations, can be found in tables below.

Conference Call and Webcast

The conference call may be accessed by dialing +1-844-200-6205 (Conference ID - 217753 -) and requesting inclusion in the call for VTEX.

The live conference call can be accessed via audio webcast at the investor relations section of the Company's website, at https://www.investors.vtex.com/.

An archive of the webcast will be available for one week following the conclusion of the conference call.

Definition of Selected Operational Metrics

"GMV" means the total value of the orders processed through our platform, including value-added taxes and shipping.

"Stores" or "Active online stores" means the number of unique domains generating gross merchandise value. Each customer might have multiple stores.

"FX Neutral" or "FXN" means a way of using the average monthly exchange rates for each month during the previous year, adjusted by inflation in countries with hyper-inflation, and applying them to the corresponding months of the current year, so as to calculate what results would have been had exchange rates remained stable from one year to the next.

"Customers" means companies ranging from small and medium-sized businesses to larger enterprises that pay to use VTEX's platform.

Special Note Regarding Non-GAAP financial metrics

For convenience of investors, this document presents certain non-GAAP financial measures, which are not recognized under IFRS, specifically Non-GAAP Income (Loss) from Operations, Free Cash Flow and FX Neutral measures.

We understand that Non-GAAP Income (Loss) from Operations, Free Cash Flow and FX Neutral measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations presented in accordance with IFRS. Additionally, our calculations of Non-GAAP Income (Loss) from Operations, Free Cash Flow and FX Neutral measures may be different from the calculation used by other companies, including our competitors, and therefore, our measures may not be comparable to those of other companies.

Reconciliation of Non-GAAP measures

The following table presents a reconciliation of our Non-GAAP Income (loss) from operations for the following periods:

Calculated by using the average monthly exchange rates for the applicable months during 2020, adjusted by inflation in countries with hyperinflation,(1) and applying them to the corresponding months in 2021, as applicable, so as to calculate what our results would have been had exchange rates remained stable from one year to the next.

(2) Corresponds to our subscription revenues minus our subscription costs.

(3) For a reconciliation of non-GAAP income (loss) from operations to income (loss) from operations, can be found in tables below.

Conference Call and Webcast

The conference call may be accessed by dialing +1-844-200-6205 (Conference ID - 217753 -) and requesting inclusion in the call for VTEX.

The live conference call can be accessed via audio webcast at the investor relations section of the Company's website, at https://www.investors.vtex.com/.

An archive of the webcast will be available for one week following the conclusion of the conference call.

Definition of Selected Operational Metrics

"GMV" means the total value of the orders processed through our platform, including value-added taxes and shipping.

"Stores" or "Active online stores" means the number of unique domains generating gross merchandise value. Each customer might have multiple stores.

"FX Neutral" or "FXN" means a way of using the average monthly exchange rates for each month during the previous year, adjusted by inflation in countries with hyper-inflation, and applying them to the corresponding months of the current year, so as to calculate what results would have been had exchange rates remained stable from one year to the next.

"Customers" means companies ranging from small and medium-sized businesses to larger enterprises that pay to use VTEX's platform.

Special Note Regarding Non-GAAP financial metrics

For convenience of investors, this document presents certain non-GAAP financial measures, which are not recognized under IFRS, specifically Non-GAAP Income (Loss) from Operations, Free Cash Flow and FX Neutral measures.

We understand that Non-GAAP Income (Loss) from Operations, Free Cash Flow and FX Neutral measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations presented in accordance with IFRS. Additionally, our calculations of Non-GAAP Income (Loss) from Operations, Free Cash Flow and FX Neutral measures may be different from the calculation used by other companies, including our competitors, and therefore, our measures may not be comparable to those of other companies.

Reconciliation of Non-GAAP measures

The following table presents a reconciliation of our Non-GAAP Income (loss) from operations for the following periods:

Three months Six months ended ended June 30th June 30th

(in millions of US$, except as otherwise 2021 2020 2021 2020indicated)

Income (loss) from operation (16.4) 6.1 (28.4) 3.1

Share-based compensation expense 5.5 0.4 8.7 0.7

Amortization of intangibles related to 0.5 0.2 0.8 0.5acquisitions

Non-GAAP income (loss) from operations (10.4) 6.7 (18.9) 4.3

The following table presents a reconciliation of our Non-GAAP free cash flow from operation for the following periods:

Three months Six months ended ended June 30th June 30th

(in millions of US$, except as otherwise 2021 2020 2021 2020indicated)

Net cash provided (used) by operating (14.2) 5.6 (21.6) (3.8)activities

Acquisitions of property and equipment (0.5) (0.2) (1.1) (0.7)

Non-GAAP free cash flow (14.7) 5.4 (22.7) (4.5)

The following table sets forth the FX neutral measures related to our reported results of the operations for the three months period ended June 30, 2021:

Three months ended June 30th As FXN As FXN Reported Reported

(in millions of US$, except 2021 2020 Percentage 2021 2020 Percentageas otherwise indicated) change change

Subscription revenue 29.7 23.9 23.9% 28.7 23.9 20.0%

Services revenue 1.2 1.3 (9.0)% 1.2 1.3 (12.5)%

Total revenue 30.9 25.3 22.1% 29.9 25.3 18.2%

Subscription cost (9.5) (5.8) 62.5% (9.3) (5.8) 60.2%

Services cost (2.8) (1.7) 66.3% (2.6) (1.7) 55.8%

Total cost (12.2) (7.5) 63.4% (11.9) (7.5) 59.2%

Gross profit 18.7 17.8 4.8% 18.0 17.8 1.0%

Operating expenses (35.0) (11.7) 200.4% (33.6) (11.7) 188.5%

Income (loss) from (16.4) 6.1 n/a (15.7) 6.1 n/aoperation

This announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, "Interim Financial Reporting" nor a financial statement as defined by International Accounting Standards 1 "Presentation of Financial Statements." The financial information in this press release has not been audited.

About VTEX

VTEX provides a software-as-a-service digital commerce platform for enterprise brands and retailers. Our platform enables our customers to execute their commerce strategy, including building online stores, integrating and managing orders across channels, and creating marketplaces to sell products from third-party vendors. Founded in Brazil, we have been a leader in accelerating the digital commerce transformation in Latin America and are expanding globally. Our platform is engineered to enterprise-level standards and functionality. As of December 31, 2020, we were trusted by more than 2,000 customers with over 2,500 active online stores across 32 countries to connect with their consumers in a meaningful way.

Forward-looking Statements

This announcement contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1993, as amended, and Section 21E of the Securities Exchange of 1934, as amended. Statements contained herein that are not clearly historical in nature, including statements about the VTEX strategies and business plans, are forward-looking, and the words "anticipate," "believe," "continues," "expect," "estimate," "intend," "strategy," "project," "target" and similar expressions and future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may," or similar expressions are generally intended to identify forward-looking statements.

VTEX may also make forward-looking statements in its periodic reports filed with the U.S. Securities and Exchange Commission, or the SEC, in press releases and other written materials and in oral statements made by its officers and directors. These forward-looking statements speak only as of the date they are made and are based on the VTEX's current plans and expectations and are subject to a number of known and unknown uncertainties and risks, many of which are beyond VTEX's control. A number of factors and risks could cause actual results to differ materially from those contained in any forward-looking statement. Further information regarding these and other risks is included in VTEX filings with the SEC.

As a consequence, current plans, anticipated actions and future financial position and results of operations may differ significantly from those expressed in any forward-looking statements in this announcement. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented as there is no guarantee that expected events, trends or results will actually occur. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information or future events or for any other reason.

This announcement may also contain estimates and other information concerning our industry that are based on industry publications, surveys and forecasts. This information involves a number of assumptions and limitations, and we have not independently verified the accuracy or completeness of the information.

VTEX

Condensed Consolidated Statements of Operations

(In thousands of U.S. dollars, unaudited)

Three months ended Six months ended

June 30, June 30, June 30, June 30, 2021 2020 2021 2020



Subscription revenue 29,652 23,937 54,310 39,379

Services revenue 1,217 1,338 2,483 2,538

Total revenue 30,869 25,275 56,793 41,917



Subscription cost (9,461) (5,821) (18,176) (10,881)

Services cost (2,757) (1,659) (4,865) (3,337)



Total cost (12,218) (7,480) (23,041) (14,218)



Gross profit 18,651 17,795 33,752 27,699



Operating expenses

General and administrative (7,806) (2,402) (15,029) (5,505)

Sales and marketing (15,697) (5,360) (26,732) (11,106)

Research and development (10,669) (3,638) (19,092) (7,700)

Other income (losses) (868) (263) (1,317) (310)

Income (loss) from operation (16,389) 6,132 (28,418) 3,078



Finance income 2,136 2,714 2,548 1,620

Finance expense (3,490) (1,145) (5,257) (2,848)

Financial result, net (1,354) 1,569 (2,709) (1,228)



Equity results 139 1 235 (9)



Income (loss) before income (17,604) 7,702 (30,892) 1,841tax



Income tax

Current (297) (1,598) (504) (1,756)

Deferred 2,432 (442) 3,466 379



Net income (loss) for the (15,469) 5,662 (27,930) 464period



Attributable to controlling (15,469) 5,619 (27,927) 417shareholders

- 43 (3) 47Non-controlling interest



USD USD USD USD

Earnings (loss) per share

Basic earnings (loss) per (0.090) 0.034 (0.163) 0.003share

Diluted earnings (loss) per (0.090) 0.033 (0.163) 0.003share

VTEX

Comprehensive Income (Loss)

(In thousands of U.S. dollars, unaudited)

Three months ended

Six months ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Net income (loss) for the period

(15,469)

5,662

(27,930)

464

Items that are or may be reclassified subsequently to profit or loss:

Foreign cumulative conversion adjustment

847

(441)

304

(1,395)

Total comprehensive loss for the period

(14,622)

5,221

(27,626)

(931)

VTEX

Comprehensive Income (Loss)

(In thousands of U.S. dollars, unaudited)

Three months ended Six months ended

June 30, June June 30, June 2021 30, 2021 30, 2020 2020



Net income (loss) for the period (15,469) 5,662 (27,930) 464



Items that are or may be reclassified subsequently to profit or loss:

Foreign cumulative conversion adjustment 847 (441) 304 (1,395)



Total comprehensive loss for the period (14,622) 5,221 (27,626) (931)

VTEX

Condensed Consolidated Balance Sheet

(In thousands of U.S. dollars, unaudited)

June 30, 2021 December 31, 2020

ASSETS

Current assets

Cash and cash equivalents 23,598 58,557

Restricted cash 1,360 1,429

Marketable securities 13,503 16,969

Trade receivables 31,330 24,491

Recoverable taxes 4,257 4,071

Deferred commissions 191 438

Prepaid expenses - Current 6,103 2,379

Derivative financial instruments - Curt - 174assets

Other current assets 278 223

Total current assets 80,620 108,731



Non-current assets

Deferred tax assets 5,840 2,174

Prepaid expenses 1,860 3,134

Recoverable taxes 535 674

Deferred Commission 1,160 389

Other 221 53

Right-of-use assets 5,611 5,076

Property and equipment, net 5,361 4,551

Intangible assets, net 37,256 15,093

Investment in joint venture 310 136

Total non-current assets 58,154 31,280



Total assets 138,774 140,011

LIABILITIES

June 30, 2021

December 31, 2020

Current liabilities

Accounts payable and accrued expenses

28,465

20,709

Loans and financing

2,135

1,585

Taxes payables

3,240

6,790

Lease liabilities

969

850

Deferred revenue

16,837

14,170

Derivative financial instruments

304

-

Accounts payable from acquisition of subsidiaries

8,686

2,794

Other

80

159

Total current liabilities

60,716

47,057

Non-current liabilities

Loans and financing

2,826

4,774

Lease liabilities

5,492

5,303

Accounts payable from acquisition of subsidiaries

1,687

1,206

Deferred revenue

10,543

5,005

Deferred tax liabilities

2,162

731

Other

269

187

Total non-current liabilities

22,979

17,206

EQUITY

Issued capital

17

17

Capital reserve

86,025

78,945

Other comprehensive income

408

104

Accumulated losses

(31,371)

(3,444)

Equity attributable to VTEX's shareholders

55,079

75,622

Non-controlling interests

-

126

Total shareholders' equity

55,079

75,748

Total liabilities and equity

138,774

140,011

LIABILITIES June 30, December 31, 2021 2020

Current liabilities

Accounts payable and accrued expenses 28,465 20,709

Loans and financing 2,135 1,585

Taxes payables 3,240 6,790

Lease liabilities 969 850

Deferred revenue 16,837 14,170

Derivative financial instruments 304 -

Accounts payable from acquisition of 8,686 2,794subsidiaries

Other 80 159

Total current liabilities 60,716 47,057



Non-current liabilities

Loans and financing 2,826 4,774

Lease liabilities 5,492 5,303

Accounts payable from acquisition of 1,687 1,206subsidiaries

Deferred revenue 10,543 5,005

Deferred tax liabilities 2,162 731

Other 269 187

Total non-current liabilities 22,979 17,206





EQUITY

Issued capital 17 17

Capital reserve 86,025 78,945

Other comprehensive income 408 104

Accumulated losses (31,371) (3,444)

Equity attributable to VTEX's shareholders 55,079 75,622

Non-controlling interests - 126

Total shareholders' equity 55,079 75,748

Total liabilities and equity 138,774 140,011

VTEX

Condensed Consolidated Statements of Cash Flows

(In thousands of U.S. dollars, unaudited)

Six months ended

June 30, June 30, 2021 2020



Net income (loss) of the period (27,930) 464



Adjustments on income ( loss) for the period

Depreciation and amortization 1, 814 1,270

Deferred income tax (3,466) (379)

Loss on disposal of property, equipment and 1 34intangible assets

Allowance for doubtful accounts 294 744

Share-based compensation 3,995 702

Adjustment of hyperinflation 876 126

Loss (profit) on investments in joint venture (235) 9

Fair value gain (losses) (88) (76)

Other costs and foreign exchange, net 27 (2,093)

Working capital adjustments

Trade receivables (6,553) (8,760)

Recoverable taxes (47) (4)

Prepaid expenses (2,450) (2,752)

Other assets 28 (546)

Accounts payable and accrued expenses 9,422 1,570

Taxes payable 206 2,915

Deferred revenue 6,894 6,102

Other liabilities (525) (1,889)



Cash used in operating activities (17,737) (2,563)

Income tax paid (3,879) (1,193)



Net cash used in operating activities (21,616) (3,756)



Cash flows from investing activities

Redemption of marketable securities 3,316 -

Interest received 384 757

Acquisition of subsidiaries net of cash acquired (4,449) (2,599)

Acquisitions of property and equipment (1,065) (734)

Net cash used in investing activities (1,814) (2,576)



Cash flows from financing activities

Changes in restricted cash 69 731

Proceeds from the exercise of stock options 927 52

Capital increase 1,000 -

Buyback of shares (2,423) -

Payment of loans and financing (9,653) (1,159)

Interest paid (59) (78)

Principal elements of lease payments (460) (102)

Lease interest paid (351) (395)

Net cash used in financing activities (10,950) (951)



Net decrease in cash and cash equivalents (34,380) (7,283)



Cash and cash equivalents, beginning of the period 58,557 29,762

Effect of exchange rate changes (579) 2,632

Cash and cash equivalents, end of the period 23,598 25,111

Supplemental cash flow information:

Lease liabilities arising from obtaining right-of-use 156 37assets

Issue of ordinary shares as consideration for a 1,469 -business combination

Unpaid amount related to acquisition of 27 -non-controlling interest

Unpaid amount related to business combinations 9,810 -

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CONTACT: Julia Vater Fernndez Investor Relations Director investors@vtex.com