VTEX Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 9, 2023

There are 9 speakers on the call.

Operator

Hello, everyone, and welcome to the BTEX Earnings Conference Call for the Quarter Ended March 31, 2023. I'm Julia Bartel Fernandez, Investor Relations Director for BTEX. Our senior executives presenting today are Gerardo Tomas, Jr, Founder and Co CEO and Ricardo Camata Sodres, Chief Financial Officer. Additionally, Marino Ramirez de Bahia, Founder and Co CEO and Andres Folidoro, Chief Strategy Officer, will be available during today's Q and A session. I would like to remind you that management may make forward looking statements related to such matters as continued growth prospects for the company, industry trends and product and technology initiatives.

Operator

These statements are based on currently available information and our current assumptions, expectations and projections about future events. While we believe that our assumptions, expectations and projections are reasonable in view of the current available information, we are cautioned not to place undue reliance on these forward looking statements. Certain risks and uncertainties are described under risk factors under forward looking statements section of Vitek's Form 20 F for the year ended December 31, 2022, and other Vitek's filings within the U. S. Securities and Exchange Commission, which are available on our Investor Relations website.

Operator

Finally, I I would like to remind you that during the course of this conference call, we might discuss some non GAAP measures. A reconciliation of those measures to the nearest comparable GAAP measures can be found in our first quarter 2023 earnings press release available on our Investor Relations website. Now I'll turn the call over to Gerardo. Gerardo, the floor is yours.

Speaker 1

Thank you, Julia. Welcome, everyone, and thanks for joining our Q1 2023 earnings conference call. The year's Q1 has been promising as we have experienced robust growth and successful implementation of the strategy in all regions. This has further reinforced our leading position in the digital landscape of Latin America and enhances our presence globally. It gives me great pleasure to share with you the strides we have made in establishing Vitek as one of the leading worldwide digital commerce platforms.

Speaker 1

Despite the persistent challenges presented by the macroeconomic environment, we achieved a strong performance in the Q1 With GMV growing by 22% year over year, a reflection of the resilient performance of our customers. The performance of our customers during this period allow us to surpass our revenue projections, while at the same time, We delivered quarter over quarter subscription gross margin improvements. In the Q1 of 2023, we added Several new customers who previously did not have an online store presence in the countries, they started operating with us. These include Prezuniq, Fologia and Hejador in Brazil, Intime in Chile and Onle Muebles in Colombia. We've also added customers that migrated from other platforms.

Speaker 1

This includes companies that went live in Q1 Such as Banco Provincia in Argentina, White Bird in Canada, IZ in Colombia, Pharma and Lenz in Ecuador, Canali in Italy, Tonopar in Peru, Floria in Romania and Konarap in the U. S. Going back to the Q1 2023, in addition to attracting new customers, We also focus on strengthening our relationships with existing customers by supporting their expansion efforts. During the Q1, several premier brands and retailers chose to expand their operations with us by opening new stores And further integrating with us, this includes Belcourt, who added a store in Ecuador, currently operating in 6 countries in Latin America. PAE, who added 2 of its brand B2C stores in Canada, Operating with us both B2B and B2C in North America.

Speaker 1

Majda, who added Netherlands, currently operating in 6 countries in Europe. H and M, who added a store in Ecuador, currently operating in 5 countries in Latin America. Motorola, who added a store in Singapore, Currently operating in 20 countries across the globe and Samsung is now present in 4 countries, both B2B and B2C across the globe. The decision of these brands to expand their operations with us is a testament of the strength of our platform, Its relevant value proposition and the trust we have built with our customers. We are excited to continue supporting them As they expand the reach into new geographies and leverage the assets of the future stores.

Speaker 1

I would like to draw attention to a significant event In the Q1 of 2023, the NRF Retail's Big Show, which brings together the most influential players in the retail to set trends and discuss the future of retail. The event was held in New York City and attracted over 6,000 retailers And 2,500 unique brands from over 90 countries. During the event, we positioned Vitex as a Challenger Brands focusing on profitable growth for our customers, highlighting our out of the box capabilities And raising awareness among participants. Also during the event, we announced the release of our proprietary white paper, Three investments to drive e commerce growth by Vitek's analyst in residence, Jordan, Jewel, which I would like to invite you all to take a look at it available at Vtech's homepage. In the Q1 of 2023, we are excited to announce our partnership with Comte, a Equifax Company, one of the most well known credit bureau globally.

Speaker 1

This partnership will allow us to offer our customers a world class anti fraud solution, Further enhancing the security and reliability of our platform. This partnership will also be monetized through a profit sharing approach with minimum monthly fees. Finally, we are pleased to formally announce that we have initiated the monetization process Of our ITB partner ecosystem. To this end, we have successfully concluded agreements with 3 players such as InSwitch, A omnichannel 360 FinTech as a service that will help our customers to implement digital financial service quickly and efficiently. Although we do not foresee a significant contribution to revenue in the immediate future, these partnerships and other initiatives establish a Strong groundwork for monetizing our ecosystem and the long term revenue growth for Vitex.

Speaker 1

Let me now share with you some success Story of our customers that demonstrate the capabilities of our platform and the remarkable outcomes they have achieved. I'm thrilled to share Samsung's recent success in creating data observability operations using Vtech. Io. This project has allowed Samsung to improve its operational efficiency by more intelligently centralizing and integrating information From multiple channels, the project was initiated just 2 weeks before Black Friday 2022 and has TIM produced remarkable results for its digital commerce operation in Brazil. Relying on Vitek's IO back end services and API, SunSung implemented various solutions, including pixel app templates, order feed, order hook And custom control dashboards, also an alert mechanism via Telegram.

Speaker 1

The result was a more proactive operation, Informed decision making and an enhanced customer experience with better delivery quality and faster response times. 6 months after implementation, Samsung saw a decrease in response time from 4 hours to 40 minutes. With this success, Samsung continues developing innovative launch strategy and automation to improve inventory tracking And predict purchase flow, ensuring peace of mind for themselves, their partners and end customers. Overall, this project has been a game changer for Samsung and set a new operational excellence standard. Claro, a leading telecommunication company in Latin America chose Vtech's composable architecture as the digital commerce platform in Peru to simplify their current architecture and achieve a fast time to market.

Speaker 1

With our out of the box features, Claro solved their business requirements, including marketplaces. Divino, one of the Brazil's largest online wine platform, selected Vitek to improve its front end capability and ensure A frictionless migration for its subscribers. As a result, Divino now has an internal marketplace And has increased its revenue channels by selling new products such as wine accessories. Hi, Aesthetic. We are brand operating in Saudi Arabia and the United Arab Emirates chose Vtech's For our headless implementation capabilities and flexibility to culture specific product requirements.

Speaker 1

With our platform, they now have a catalog that enable multi language product translations and the checkout.com payment tool, which provide a better customer experience for the users. Vitek, a large wholesale supermarket brand in Argentina, Customized the checkout with different payment options with Vitek. Furthermore, the customer incorporated a shopping cart rule feature During the checkout process, enabling the implementation of purchasing rules for approving, canceling or modifying online orders. This has assisted their consumers in adhering to the requirements necessary for completing the purchase, leading to an increase in conversion rates. With these key improvements, VITAAR has increased their orders by more than 140%.

Speaker 1

Banco Provinci, a publicly listed bank in Argentina, selected Vitek as the technology partner due to our ability to handle complex Architecture requirements, including adding sellers and implementing multiple internal and external integrations. Vitek's previous experience with similar customers such as Banco Winter made us a suitable choice for Banco Provinces. With Vitek's help, BocoProfins has successfully launched its platform, becoming a highly successful marketplace in Argentina with a daily record of more than 10,000 orders. Although their journey is ongoing, Banco Provinci plans to double the number of salads in their portal and expand the product catalog in various industries with Vitek's assistance. Their continued drive to enhance the platform will enable their growth and success.

Speaker 1

Over Ochifruit, A grocery chain with more than 70 stores and 2 distribution centers in Brazil chose Vtech's omnichannel strategy To leverage sales opportunities with our features such as shipping from stores and pickup in stores, all but improve the Logistics and customizes the web user experience. Jefferies Pet, an online pet retailer in the USA that operates in B2C and B2B models chose Vitek to strengthen its customer experience And increased sales using our live shopping feature. Our customers has experienced a significant increase in their conversion rates during live events, Doubling the average sales volume during the sessions. I also want to share an update on the Sia Erling A case, a major Brazilian fashion group with over 800 physical stores. With CAPI, They replatformed to Vitex in only 3 months, focusing the process on growth and website performance.

Speaker 1

The replatforming process provided our customers with a fully customizable storefront, faster user experience, Improved checkout experience and a first party apps and multiple channels integrations. As a result, The company saw already a 30% increase in the average order value and a 40% decrease in the abandoned cards. To include the operational update, I would like to inform you that our ESG framework has been made available in our Investor Relations website, highlighting all the initiatives Vitek has implemented and supported in this regards. At Vitek, we believe Leading by example and driving positive change in the world through ethical and responsible action. We see ourselves as agents of transformation in the e commerce field working towards a more sustainable society.

Speaker 1

In our desired future, we declare and are committed to become the leaders in diversity within the technology sector, Value the importance of fostering a culture that embraces multiple perspectives and creating a Safe and respectable environments for all members of our ecosystem. I would like to express my gratitude To our 1339 Vitek's employees who are dedicated to making our declared future a reality as well as to our customers, partners and investors. Before I turn the call to Ricardo, I'm happy to inform you that we will be hosting the Vtech Day, the largest e commerce event in Latin America and 3rd globally on June 5th 6th in Sao Paulo. I'm excited to invite you to come and Experience the Vitek's culture and witness the strength of our ecosystem at this magnificent event. Additionally, on June 6, we'll be holding a Q and A session for investors, where Mariana and I will answer all these questions and exchange ideas.

Speaker 1

If you are interested in participating on this session, contact Julia and she will provide all the details. We will be delighted to have you to join us. I will now hand the call over to Ricardo to discuss our financial performance for the quarter.

Speaker 2

Thank you, Geraldo. Hi, everyone. I'm pleased to share Vitek's Q1 2023 financial results with you. Despite the challenging macroeconomic environment, our company's top line performance remained robust. As highlighted by Gerardo, Our Q1 GMV achieved 22% year over year growth in U.

Speaker 2

S. Dollars and 21% on an FX neutral basis. Our Q1 revenue exceeded our expectations and surpassed the upper end of our guidance, reaching $42,300,000 And reflecting a year over year growth of 22% in U. S. Dollars and 22% on an FX neutral basis.

Speaker 2

This outcome clearly demonstrates the resiliency of our blue chip customer base, and we are reassured to observe that we are continuing to assist Our customers are outperforming the market. Double clicking on our top line, our subscription revenue reached CAD39.8 million in the first quarter of 2023 from CAD32.6 million in the same quarter last year, a year over year increase of 22% in U. S. Dollars and 22% on an FX neutral basis. Our services revenue reached CAD2.5 million in the Q1 of 2023 From CAD2.1 million in the same quarter last year, a year over year increase of 21% in U.

Speaker 2

S. Dollars and 28% on FX neutral. Even with seasonality being a headwind this quarter, our subscription gross margin was slightly better than last quarter's. Our non GAAP subscription gross profit was CAD29.4 million compared to CAD22.7 million in the Q1 of 2022. Non GAAP subscription gross margin was 73.9% in the Q1 of 2023 compared to 73.5% in the last quarter and 69.6% in the same quarter of 2022.

Speaker 2

The 430 basis points year over year margin expansion shows the commitment of our team to keep improving our margins. This margin improvement was driven mainly by the migration of non core Services to more efficient hosting providers and the optimization and operational leverage of our support cost. We are more than proud of what we have achieved in this front and we are excited about what is to come. We delivered a year over year improvement of 190 basis points on our overall gross margin in Q1. We are working on a few implementations in the U.

Speaker 2

S. And Europe, where we have proactively invested on our services offering to ensure successful go lives. By design, this impacted our services gross margin, And therefore, our overall gross margin experienced a slightly decline quarter over quarter. While this commercial decision may have a small impact On our gross margin in the short term, it will position us better in newer regions in the medium to long term, enabling us to implement new customers smoothly and successfully. Our non GAAP total operating expenses reached CAD31,900,000 in the Q1 of 2023 from CAD29,100,000 in the prior quarter and CAD35,900,000 in the same period last year.

Speaker 2

The year over year improvement reflects the organizational restructuring we made over the past couple of quarters. As a result of the better than expected margin improvements with the top line coming at a robust pace, our non GAAP operating income improved from a negative 39.5 percent margin in the same quarter last year to a negative 9.7% margin in Q1 2023. This represents 30 percentage points improvement year over year. As of the 3 months ended March 31, 2023, Vitex had a negative CAD5.0 million free cash flow compared to a positive CAD2.5 million in the prior quarter and a negative $16,100,000 free cash flow in the Q1 of 2022. Before I move to the outlook for the Q2 fiscal year 2023, I would like to update you on the share repurchase program approved in August of last year.

Speaker 2

As of March 31, 2023, the remaining balance under this authorization was nearly $12,000,000 We repurchased 4,600,000 shares at an average price of $3.91 per share. We expect to continue executing our plan based on the evaluation of market conditions and applicable legal requirements. Looking ahead, while macroeconomic conditions remain uncertain, We are pleased with the resiliency of our results. We are confident in our ability to navigate these uncertainties and remain committed to supporting our customers through every step of their journey. We are currently targeting revenue in the CAD45,000,000 to CAD45,800,000 range for the Q2 of 2023, implying a year over year growth of 19% on FX neutral basis in the middle of the range.

Speaker 2

For the full year 2023, considering the current performance of the company, We are increasing the bottom of the range, now targeting the full year to end between 16% 19% on FX neutral year over year base, implying a range of $185,000,000 to $190,000,000 based on year to date average FX rates. In conclusion, we remain committed to our customers' digital transformation journey and supporting them with the appropriate set of tools and products. Despite the uncertain times we are currently facing, our customer base continues to show its resiliency. We are grateful for our customers' unwavering trust VITEX platform, which is evident through our consistently low annual revenue churn. This has resulted in a robust business model for VITEX that will continue to generate growth in a sustainable and ambitious matter.

Speaker 2

As we continue executing on our strategy for profitable growth, We anticipate a substantial year over year expansion in our non GAAP operating income margins in the Q2 of 2023, followed by incremental improvements in the second half of the year. Our commitment to delivering value for our customers, Partners and shareholders has never been stronger, and we are excited about the opportunities ahead. With that, let's open it up for questions now. Thank you.

Speaker 3

Our first question comes from the line of Marcelo Santos with JPMorgan. Your line is open.

Speaker 4

Hi, good evening. Thanks for taking my questions. The first question, I wanted to understand a bit better if you could give some more color on the GMV growth. It was a good growth on the Q1, but there was a Sequential deceleration. So if you could explain the moving parts here and I think that would be very interesting.

Speaker 4

And the second question is about the competitive environment. 1 Brazilian software company launched a new brand called Wake Targeting midsized companies. Is that something that somehow crosses your path or that you have seen Somehow impacting maybe the low end of your clients or is this totally a different business? Thank you.

Speaker 1

Hello, hello, Marcelo. This is Geraldo speaking. Good to talk to you. So about the GMV growth, We're seeing that we are outperforming the general market, although the pace of the GMV growth is Lower than last year, mainly because of the same store sales, right, the same store sales Decelerate a little bit. We're still growing more than the average market.

Speaker 1

And we attribute that to the fact that we have More robust customers and also that the platform allow these customers to succeed. I think the greatest and latest example of that It's the fact that we have this capability that allow our customers to deliver from physical stores. Delivery from physical stores is very good for most of our customers, especially fashion customers. They have That's ruptured. They have more inventory available at the website.

Speaker 1

It allows also the Salesperson at the physical store to sell products that are not available at the currently at the physical store. So this allow collaboration between the online and offline world in a very seamless way. And this is growing a lot at YUTEC. The capability is ramping up very fast. In the last 2 years, we almost more than doubled the volume of With what we call collaborative orders on omni channel, it was less than half of 2 years ago.

Speaker 1

So this is our explanation for our growth on GMV more than the markets recently. About the competition with Wake, like e commerce started from we have several competitors all the time. There's always a new Set of competitors, I do believe Wake is positioned to compete with our Tier 3 and Tier 2 customers. I know like we're going to do our work as we should do and we're going to serve our customers in the best way possible. So we plan to continue to serve them well.

Speaker 4

Perfect. Thank you very much.

Speaker 3

And our next question comes from the line of Clark Jefferies with Piper Sandler. Your line is open.

Speaker 5

Hello. Thank you for taking the question. I wanted to follow-up on the sort of question around GMV growth and specifically, Was it in line with your expectations? And what seems most curious to me is The deceleration in GMV growth, but the actual acceleration in subscription growth, was there a reason or a dynamic in which Typical economic model was changing such that GMV growth coming down didn't result in An equal drawdown in subscription.

Speaker 2

Yes. Hi, Clark. Ricardo here. Thank you for the question. Very good question.

Speaker 2

So on the GMV growth, what we saw was, as Gerardo mentioned, For the existing stores, existing customers, same store sales was slightly below, But we did see new customers coming on board, especially through some upselling initiatives That was above what we expected. So this helps to explain also your second part of the question That because of these slightly better mix or higher mix of new customers that have a slightly higher Implied take rate because they paid the fixed fee, but in the beginning they don't bring a lot of GMV, has improved This performance on the revenue side. So that has matched a little bit more the GMV growth with the revenue growth. Hopefully that answers the question.

Speaker 5

Yes, absolutely. And then I think a follow-up to that is really around Some of the commentary around maybe subsidizing or maybe being flexible on price for the services and implementation. So fair to say that there was some economic sensitivity around that implementation, but that The customers were more than willing to pay the fixed fee of the subscription fee once implemented and this is really around Trying to accelerate or reduce the friction to adoption. And then I guess the last follow-up to that is, how long do you expect to maybe Have those concessions? Is it still a good ROI to maybe be flexible on services to promote adoption?

Speaker 6

Yes. So, Mariano here. Thank you for the question. So, I think you are mentioning about the service gross margin. So the overall gross margin in Q1, it was an improvement year over year from 63.6% to 65.6 percent.

Speaker 6

But the quarter over quarter was a compression, right? So seasonality can explain part of the quarter over quarter, if you see last year's. But we also made a deliberate commercial decision to closely support the implementation of relevant new customers In the U. S. And in Europe.

Speaker 6

And these kind of over care, It is to ensure the success of their go lives. So as a result of this strategy move, we are creating strong relationships with recent Signed customers ensuring a high quality integration and onboarding experience and advancing our expansion into these New geos with reputational cases. This is quite important for our declared future To pursue reputational cases, it is what makes us strong. So while this decision may impact our servicing the gross margin in the short term, It will position us better in newer regions as U. S.

Speaker 6

And Europe in the mid and long term. Additionally, it is important to clarify that this Commercial decision should not compromise our ability to reach a sustainable breakeven by the Q4 Of this year. And we have mentioned in previous earnings calls, so we are on track. Instead of it will enable us Pursue a much greater market opportunity. So we are optimistic by taking this decision and we are looking forward for the results of it.

Speaker 5

Thank you very much.

Speaker 3

And our next Question comes from the line of Franco Baranda from D. A. Davidson. Your line is open.

Speaker 4

Hi. Good afternoon. Thanks for taking my questions here. I was hoping to follow-up on the gross margin question on the other side of the business and subscription side. You obviously had some nice uptick from your infrastructure improvements.

Speaker 4

But I was wondering, is there more room for upside there? Or how should we think about that as

Speaker 5

we go through the year?

Speaker 1

Thank you. Thank you very much for the question. This is Geraldo here. Thank you. So you know at the time of the IPO, we were our gross margin was getting smaller than historically was And we were growing a lot, like we're bringing customers in, we were Investing in new capabilities very fast because of the pandemic, we needed to be much faster than efficient At Beneficient, I would say that since you see consistent improvements in our gross margin since I guess 1 year or a little bit more than 1 year ago.

Speaker 1

And this is deliberate effort of R and D and of course optimizations in our support processes. This is related mostly to how we architecture our hosting capabilities, How we make them more efficient, how we move from Windows instances To Linux instances, we move to more modern processors. This is an area where there's A lot of improvements should be done. And while the growth is a little bit lower in our end, There is more bandwidth on the R and D side for us to focus on these improvements. So to answer your question Yes, we continue to invest in the improvement of our gross margin.

Speaker 1

And we thought you cannot expect that You know like we almost improved the subscription glass version by 400 basis points, right, in the year over year. You won't expect that rhythm, but you expect marginal improvements, yes.

Speaker 5

All right. Thank you. That's some good color. I appreciate it.

Speaker 4

And then for my second question, I

Speaker 5

was hoping to get some color on the costs Associated with Lojenge Grada, your SMB business. On the 6 ks

Speaker 4

that you filed, I noticed that the costs Nearly doubled year over year. Can you speak about those increases there?

Speaker 2

Hi, Franco. Ricardo here. Happy to take that one. So on the 6 ks, we don't disclose the breakout of the expenses For Large Integrada versus the overall Vitex, we do have some disclosure on the Stock based compensation for the management team there, but that's not the full picture of the expenses for Logia Integrada. But what I could say is that, Loya Integrada has been performing in a similar pace to BTEX, I would say both on revenue growth perspective as well as on operating margin perspective.

Speaker 2

So it's not exactly the same, but it's similar. So they are going through the same trends that we are seeing at Vitex On the overall numbers, right. They are underneath the numbers, the details are pretty different because they are in the SMB business. BTEC is more enterprise, But the overall numbers are similar. So it's not a boost to our results, but it's not also a detriment to our results.

Speaker 5

Thanks for that clarification. Appreciate it.

Speaker 3

And our next Question comes from the line of Cesar Medina with Morgan Stanley. Your line is open.

Speaker 7

Hi. Thanks for taking my question. On the commentary on the release, you mentioned that you haven't seen Additional deterioration on sales cycles and on that front. Can you comment on how this is impacting Sales time, ramp time, your backlog and more importantly, your expansion outside of Brazil in LatAm and developed markets? Thank you.

Speaker 6

So yes, proud to answer here, Mariano. So the sales cycle is not changing. It is The maturity of each region can influence the sales cycles. But the sales cycles in each region, We are seeing kind of, let's say, a commoditization of the sales cycle. So we are not expecting not a good surprise or even a worse surprise based on the sales cycle.

Speaker 7

And the international expansion, how are your clients outside of Brazil reacting Amit, the market uncertainty.

Speaker 6

Perfect. So, I can say some words about our international expansion. Like for example, we shifted our approach Towards a more technical sales strategy early last year and we have been focused on building a kind of POCs And engaging the clients on a more technical way. This is only possible because of the Vtech's platform features and capabilities, the out of the box Capabilities allow us to prove to our clients by doing it instead of selling it. And this approach of not Speech the selling, but speech the product is making the difference.

Speaker 6

We are seeing the conversion rate answering to this kind of approach. So it's of course, it's making it harder for our competitors to replicate our proof of concept approach. Additionally, we have been dedicating more and more to tech teams, solution engineering to engage on the first calls with our prospects. And I believe Vitek is pioneering on the sense and it is a big bet For the U. S.

Speaker 6

And Europe, putting more engineering in front of the clients as early in the process as possible. So We anticipate being able to disclose some of the customers we have signed contracts with over the coming quarters as they are having their go lives. And we can say that B2B demand, it is in high. So and Vtech has a unique offer for B2B, the digital commerce platform Plus, the distributor order management, plus the marketplace ready platform makes Vtech a unique Offering for the B2B Industry. So we do feel optimistic that we are moving into the right direction and the consistency of our reputational cases Going live, we'll create more and more the brands that we want in U.

Speaker 6

S. And Europe. And you can call, for example, Gartner and IDC And analysts, and they will share with you their perspective about Vtech. So I believe The increase of those analyst companies on the coverage of Vitex, It is a good sign of our reputation increasing as well. So we are optimistic for the Quarters and years to come in the U.

Speaker 6

S. And Europe.

Speaker 7

Perfect. Thank you so much for the color.

Speaker 3

BTEC. Our next question comes from the line of Luca Brendam with Bank of America. Your line is open.

Speaker 8

Hi, good evening, everyone. Thank you for taking my question. Two questions here. The first one, if you could just clarify a little bit. On those higher expenses to support the implementation costs, Is this related just to clients that are yet to go live?

Speaker 8

Or has this already been implemented before started to Vitek before with the previous clients. And then the second question, if you could give us some color on how you're seeing the e commerce market, Mainly in Brazil, but if you could also give a color for how things are going in the other regions compared to what we saw In the Q1, if we're seeing some sort of recovery or if the market remains difficult? Thank you.

Speaker 2

Hi, Luca. Ricardo here. Happy to answer the first one. So on the investment that we are making on the services side, This is connected with the implementation, so new customers coming on board. It's not with the existing customers of Vtech.

Speaker 2

It's very specific on helping cases that we have signed customers in U. S. And Europe To undergo a successful implementation and go live. And the second question, if you could repeat, please.

Speaker 8

If you could just tell us how you're seeing the e commerce market so far in the second quarter and the outlook going forward Comparing it to the Q1.

Speaker 6

So, the e commerce market, we are A lot of retailers in the world suffering. These are kind of, let's call the God In fact, right? COVID plus war plus inflation plus high interest rate, it is one of the kind of worst kind of a pivot of macro conditions we have In the market in the last 30 years. So all the retailers that needs to finance themselves in a new environment, they will suffer. So you can see the Body Bath and Beyond and others retailers in the U.

Speaker 6

S, in Europe, they will suffer and they will go Chapter 11, they will go bankrupt. So that's not different in Latin America. Maybe Latin America is a little bit more resilient because the companies there are more used to crisis. But at the end of the day, it's something that is pretty obvious in effect. The money is much more Expensive than used to be before.

Speaker 6

That brings the client, the customers to make more pragmatic decisions. So in terms of the positioning where Vitex is, we're a kind of a backbone for Connected Commerce, Where you can have your time to market faster than other platforms, we might see a demand coming That we need to be very caution on being optimistic on this because crisis is never good, but Might have an effect that allows us to serve a wave that clients that wants to not use anymore a custom software And use Vtech or any other platform to serve a more lean approach. So We can say like for good and for bad, we can expect the same pace. So we are keeping seeing Our 2 quarter on a $45,000,000 to $45,800,000 year over year with a 19% FX neutral and we keep seeing the 2023 In between $185,000,000 to $190,000,000 that's a 16% to 19% FX neutral. So We didn't change roughly the guidance that we have been doing in the last quarter.

Speaker 8

Perfect. Very clear. Thank you for the answers.

Speaker 3

And there are no further questions at this time. Geraldos Thomas, I'll turn the call back over to you.

Speaker 1

To conclude the earnings call, I would like to thank everyone You will join us today for our Q1 2023 earnings conference call. We're thrilled to share Our successes from past quarter, which includes robust growth and successful implementation of strategy in all regions, Further reinforcing our leading position in the digital landscape of Latin America and enhancing our presence globally. We have experienced an increase in GMV by 22% year over year, which reflects our customers' resilient performance Even in challenging times, we have also expanded our customer base, adding several new customers And strengthen our relationship with the existing ones. I'm looking forward to keep you updated on new customers' ads across the years. Great things are about to come.

Speaker 1

We continue to be excited about our path of being the backbone for Connected Commerce. Thank you again for your continued support and we look forward to your participation on our future updates. You may now disconnect.

Speaker 3

And this concludes today's conference call. You may now disconnect.

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