Zenvia Q1 2025 Earnings Call Transcript

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July 3, 2025

Key Takeaways

  • Positive Sentiment: Recorded 39% top-line growth to nearly BRL 300 million in Q1, driven by a 58% surge in CPaaS revenue that now represents 73% of total sales.
  • Negative Sentiment: Consolidated adjusted gross profit fell 21% YoY to BRL 74 million, with gross margin down 25% due to a higher-mix of lower-margin CPaaS and increased SMS costs from carriers.
  • Positive Sentiment: G&A expenses declined 24% YoY to 8% of revenues, supporting a normalized EBITDA of BRL 20 million in line with guidance and expected to ramp up through the year.
  • Positive Sentiment: Xenvia Customer Cloud revenues grew 15% YoY as migrations ramp, with management confident of achieving 25–30% full-year growth in FY25.
  • Neutral Sentiment: Strategic focus remains on expanding cloud offerings across Brazil and Latin America (with over 40% of Customer Cloud revenues now from outside Brazil) and exploring opportunistic asset divestitures to improve capital structure.
AI Generated. May Contain Errors.
Earnings Conference Call
Zenvia Q1 2025
00:00 / 00:00

Transcript Sections

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Operator

Please be advised that today's conference is being recorded, and a replay will be available at the company's IR website, where you can also access today's presentation. At this time, all participants are in listen only mode. After the prepared remarks, there will be a question and answer session. For the Q and A session, we ask you to write down your question via the Q and A icon at the bottom of your screen. Your name will then be announced, and we'll be able to ask your question live.

Operator

At this point, a request to activate your microphone will appear on your screen. If you do not want to open your microphone live, please write down no microphone at the end of a question. In this case, our operator will read your question aloud. Now I would like to welcome Shay Shore. Sir, the floor is yours.

Shay Chor
Shay Chor
CFO at Zenvia

Good morning, everyone. Thank you for being with us here today to discuss Cenvia's first quarter twenty twenty five results. I am Shay Chor, CFO and IRO. Let's start with a snapshot of the q one twenty five performance where you can see all the main financial KPIs of the period. As you can see, in the first quarter, we recorded strong top line growth of 39%, reaching almost 300,000,000 reais, mainly driven by CPaaS.

Shay Chor
Shay Chor
CFO at Zenvia

On the profitability side, we continue to experience margin pressure in the CPaaS business and some temporary impacts on the SaaS business as we ramp up our Xender customer cloud solution. Therefore, our consolidated adjusted gross profit declined 21% to 74,000,000 reais from 94,000,000 reais a year ago, with gross margin decreasing 25%. There were two main drivers behind this. First, on the CPaaS side. We saw another quarter with higher CPaaS mix due to strong volume growth with lower margins, combined with an increase in SMS cost supplied by the carriers in January, which is expected to be passed through prices throughout the year.

Shay Chor
Shay Chor
CFO at Zenvia

Second, on the SaaS side, while adjusted gross profit remained stable year over year, the margins were impacted by the transition to Zevia customer cloud as we're still ramping up the business. I'll talk more about this later on. This drop in adjusted gross profit was partially offset by a 7,500,000.0 reais decrease in G and A, which represented 8% of our revenues in the quarter, practically half of what it represented a year ago. As a result, normalized EBITDA totaled 20,000,000 reais in the quarter, in line with our expectation, and is expected to increase progressively over the course of the year. It is important to highlight that we incurred approximately 8,000,000 reais in one time severance costs during q one related to the workforce reduction as announced on January 13.

Shay Chor
Shay Chor
CFO at Zenvia

Let's take a deeper look at these results. In this slide, you can see the breakdown of our revenues between SaaS and CPaaS. The revenue increase in this quarter came mainly from CPaaS, which remains very dynamic and volatile and went up 58%, making up 73% of our total revenues. The CPaaS revenue growth came mostly from certain customers that currently have tight margins. We are confident that the strategy of acquiring clients at tighter margins will pay off in the middle and long term as we do not need additional g and a expenses to manage them.

Shay Chor
Shay Chor
CFO at Zenvia

In the SaaS business, revenue went up 5% year over year, mainly driven by higher revenues from SMB customers, an encouraging sign given that it is the target audience of Xevia customer cloud. The SaaS business represented 25% of our revenues in the quarter. This higher mix of CPaaS with low margins still impacts our gross margins. Let's move to the next slide to discuss our profitability. This slide gives us a comprehensive view on how gross profit and margin performed in the quarter.

Shay Chor
Shay Chor
CFO at Zenvia

The first chart on the left shows the SaaS business. Adjusted gross profit was flat year over year at 43,000,000 reais in q one twenty five, while adjusted gross margin from SaaS went down 2.7 percentage points to 54%. Even though SMB customers have higher margins than the average mix, we saw a decrease in the SaaS adjusted gross margins primarily due to the transition to Zenvia customer cloud as the business is still in its ramp up phase. We expect to keep scaling over the next quarter and improve profitability. It is worth noting here that revenues from Xevia customer cloud solutions increased 15% year over year and are expected to increase even more as we ramp up the business.

Shay Chor
Shay Chor
CFO at Zenvia

In the middle of the slide, we can see the CPaaS performance that was again impacted by the newly acquired CPaaS clients with lower margins and the increase from the carriers that I already mentioned. As a result, our consolidated adjusted gross profit totaled BRL74 million in Q1 twenty five, with an adjusted gross margin of 25%. Moving on, let's now discuss our g and a. Our g and a expenses this quarter went down 24% year over year, reaching 24,000,000 reais, already including around 8,000,000 reais in seven costs incurred in q one twenty five, as I mentioned earlier in this presentation. This brings GNA as a percentage of revenues to 8%, down 6.7 percentage points from the 14.7% reported in the same period of '24.

Shay Chor
Shay Chor
CFO at Zenvia

This is due to the workforce reduction of approximately 15% announced in January that is expected to result in cost savings between 30 and 35,000,000 reais in '25 already factoring in the severance expenses. Moving on to the next slide. Another key index that we have been highlighting in our presentation for a couple of quarters now, EBITDA minus CapEx, recorded a positive 10,000,000 reais inflow in the quarter. When we look year over year, this metric remained mostly stable, and we also ended the quarter with a cash balance of 86,000,000 reais. We expect EBITDA to continue growing at a faster pace than our CapEx as it has been the case for the last few quarters.

Shay Chor
Shay Chor
CFO at Zenvia

CapEx for '25 should remain in the same level of 24. Moving on to the next slide to talk about our next steps. Although they've been very consistent for the last couple of quarters, it's always important to remind you what we've been doing at one of the next steps. As we embark on our new strategic cycle, we are focused on expanding Xenvia Customer Cloud in Brazil and Latin America. We are focused on accelerating organic growth, leveraging our scalable new platform and partner ecosystem, while maintaining our commitment to deleveraging the company.

Shay Chor
Shay Chor
CFO at Zenvia

The rollout of the new strategic cycle announced in January is taking a toll on short term profitability, but we're steadily advancing efforts to boost our medium and long term performance. At the same time, we are streamlining operations even further, where AI play in a key role, not just in how we serve clients, but in how we operate internally with greater efficiency and intelligence. As we disclosed in January, we will carefully evaluate opportunities to divest on core assets. We believe we own assets that hold significant value in their segments, and an opportunistic divestment could play a role in optimizing our capital structure. We are working hard for these actions to result in a more efficient company with exceptionally solid business metrics, enabling us to unlock value to our shareholders.

Shay Chor
Shay Chor
CFO at Zenvia

With this, we conclude our prepared remarks, and we are ready to take your questions.

Operator

We will now begin the question and answer session. Once again, for this Q and A session, we ask you to write down your question via the Q and A icon at the bottom of your screen. Your name will then be announced, and you'll be able to ask your question live. At this point, a request to activate your microphone will appear on your screen. If you prefer not to open your microphone live, please write down no microphone at the end of your question,

Shay Chor
Shay Chor
CFO at Zenvia

Let let me take your first question here in in the webcast. Could you talk on some more of the reasons behind the CPaaS growth in terms of SMS volume? Do you think there is an AI tailwind here with companies spending a lot more on campaigns now, or is this a temporary short term trend? Caso, do you want to talk about the trends on the in the SMS and if there is anything AI related to this?

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

Yeah. Sure. There is some, seasonality in terms of SMS volumes due to, marketing campaigns that are relying on SMS as its main channel. We, understand that this is keeping a strong pace in the last couple of quarters and still giving us a bit of tailwind on the next couple of quarters as well. And so so it's not related to AI itself, but mostly to marketing campaigns that are being resulting in these volume increases in the last couple of months.

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

And I think we do have a second question, right, Shay, from the same army.

Shay Chor
Shay Chor
CFO at Zenvia

Yeah.

Shay Chor
Shay Chor
CFO at Zenvia

Let me just just and before we go to second question on on trends, q one was actually pretty strong following what we saw in Q4 and actually the entire second half of last year. When we look into Q2, we see somewhat softening, although continue to be very strong and we continue to see SMS volumes growing year over year above two digits, high two digits. So it's not as strong as it grew in Q1, but continues to be with a strong growth in Q2 in terms of volumes. Now going to the second question, any more color on Zenvia Customer Cloud would be helpful to understand how the 15% year over year growth for Customer Cloud is being calculated given that customer cloud only launched in q four? And does the 15% growth change the one eighty to 200,000,000 BRL guide for the year given that it's lower than the 25, 30% productive growth?

Shay Chor
Shay Chor
CFO at Zenvia

So let let me let me start here, and, Casio, feel free to to to add on anything here. So, when we talk about Xenvia customer cloud, we always include, what is native Xenvia customer cloud, meaning new clients, since we launched in October coming in directly, in into Zenvea Customer Cloud, but also, the former businesses that are being migrated and clients that are being migrated to Zenvea Customer Cloud. So just to put into perspective, when we say about 15% growth year over year, it includes new clients indirectly in Xenva customer cloud, but also, we compare, the growth overall of the, what we call, the Xenva Customer Cloud Plus, which includes the clients being migrated. Second, obviously, that we we believe that as we ramp up and and and and people get to know more and more Cloud, this will be accelerated. And and, therefore, we continue confident that this business will grow 25 to 30% into in in full year '25.

Shay Chor
Shay Chor
CFO at Zenvia

There's another question here in the webcast. What are the current headwinds for the faster adaptation for Xenvia customer cloud? Are the headwinds associated with the current high interest rates or customer cautious to migrate to Xenvia customer cloud? Caso, do you want to take us on the challenges that we see on on the first months of Xenvia customer cloud?

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

Sure. We're seeing strong adoption for new customers that are coming to Xeno customer cloud in terms of migration. We're being cautious when migrating customers because we want them to experience a very interesting improvement on their current solution. So we're taking time to get them by hand and and having them understand what are the whole package that they are being deployed to them as this new solution gives them lots of different opportunities to adopt as in the customer cloud. So I would say that we're being cautious to get these customers to have a good experience to stay on the platform to evolve their usage.

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

So, it's not about the customer being cautious. It's not about about us, being cautious to bring them an awesome experience when migrating.

Shay Chor
Shay Chor
CFO at Zenvia

Thank you, Kasio. Another one here, could you please provide some color on asset sale progress? How is the earn out payments going and more color on the leverage? So, obviously, we cannot, as was the case with the previous earnings call, we cannot comment specifically on on on asset sale. As as we keep highlighting, this is something opportunistic, and we'll continue to evaluating opportunities if and when they they arise.

Shay Chor
Shay Chor
CFO at Zenvia

All the rest so in terms of capital structure and and already taking the next question here and and putting them together, We we are we continue to seek a way to deleverage balance sheet faster and improve our capital structure. This is important not only, obviously, from a pure financial reason and with high interest rates, deleveraging is is even more important, but also because we believe that we could accelerate our growth if we had a better capital structure compared to our to our EBITDA. So it it's a two it's not it's not a one way progress or a one alternative progress. It will have to come from liability management as we've been doing, and we did again in the first half of this year when we renegotiated with some banks grace period on loans amortization and also sales of noncore assets if it's the case. So it's combined effort.

Shay Chor
Shay Chor
CFO at Zenvia

As you can see also, we've been streamlining operation and reducing G and A expenses to accelerate EBITDA. So all of the usual tools and combination that we have to deleverage balance sheet. Hugo, can you report there are no further question at this moment in the webcast?

Operator

Sure. Sure. Again, if you have a question, please use the Q and A icon at the bottom of your screen to write it down, and we'll open your microphone.

Shay Chor
Shay Chor
CFO at Zenvia

There's one more here. Can you provide us with guidance for the year or at least tell us how the trends are looking? So the same way that we did in q four, it's been a very volatile year, especially on the CPaaS side. And there are some ramp ups on the Zynga customer cloud side, so we decided to give a to give a formal guidance for the year, but discuss short term trends. So as I mentioned in the first question, when we look into Q2, the SMS business CPaaS business continues to be strong, although slightly decelerating compared to what was Q1.

Shay Chor
Shay Chor
CFO at Zenvia

And we continue to expect Xenvia customer cloud and and SaaS to continue growing the same trends that we saw in in q one with some acceleration on Xenvia customer cloud side. EBITDA reported was 20,000,000 reais in q one. But as as we mentioned in our earnings release, there was a 8,000,000 reais one onetime expense related to severance cost as as we discussed on January 13, the reduction on our And so if we consider around closer to between BRL25 million and BRL30 million in recurring EBITDA in Q1, this is more what it should look like in Q2. And then second half is usually stronger because of seasonality. So these are the trends on a quarterly basis that we are looking at.

Shay Chor
Shay Chor
CFO at Zenvia

There are no oh, there's one more question here. Casio, how Zevia Customer Cloud is different from the solutions offered by competitors?

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

Okay. So, usually, companies that are, using software for their customer experience, they tend to have a very fragmented, ecosystem of providers, which means they use software for marketing campaigns, another for sales, another one for customer support, and some other solution for customer engagement, and sometimes different provider for automation, chatbots, and AI. So what we were able to do as a customer cloud is to unify all those processes and solutions into the same software, meaning that it's in the same interface, same logins, same contract, and business model, sharing customer data among all these different perspectives or processes, which in practical terms means that you can do a marketing campaign or sales process or serve your customer, serve their tickets or demands, having the data of all the data from the customer within the same place, so you can, see the whole context of the customer. And all these, is shares the same database, which means every time you interact with a customer, you have the data being available for the whole customer journey. And what we're doing right now, on Zebra customer cloud, is to we're building we're allowing customers to build agents and also providing some agents that automate some of these operations, such as identifying with the best customers or helping to understand what is the customer context for some support.

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

And all this is able to, to be developed and and and provided because we are a unified solution, and that's not something you can easily make with this fragmented ecosystem. So majority of small and medium customers have no other way to make that happen. That's why they're seeing huge benefit from the customer cloud. And they have a large customers that we didn't necessarily expect to adopt Xenva customer cloud at at as a at the zero solution are beginning to use our software. So we have huge banks and and retailers using Xenva customer cloud as their solution, and that's something we're seeing that there's a really very good opportunity for us as a white space that we'll be able to fill.

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

So that's why we are very excited about this solution being somewhat unique to the market.

Shay Chor
Shay Chor
CFO at Zenvia

Follow-up on this. Can you talk a little about clients who have been using customer cloud for longest? What do trends look like? How do they mature usage? Just give us some cast some view on use case and and what's been going in the customer cloud from a client perspective.

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

Sure. We're still early on the cohorts, but we're able to see the behavior of these customers easily adopting new modules by themselves. Before Zimbra customer cloud, we were we provided our solutions as a stand alone, which each solution has a stand alone offering, And we measured cross sell of these solutions, and we're which was very difficult to sell a second software as every time a customer would consider adopting a new software, we would compete with any other provider that we're able to provide a niche solution. But as we provide Zeneca's cloud, all these software embedded, they are a click away from current customers to try to experiment these of new solution, which means there's let's say, they're doing marketing campaigns. If they want to engage with with customers and make a sale, that's just a mini menu item.

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

They just click, and they start interacting with these customers. If they want to create to provide a ticket control for customer support, they just click, and they're able to to test the solution. So this is creating a huge effect of cross adoption that it is around, I would say, 15 times what we had before in terms of cross adoption that we compared early to cross sell. And that is getting a very good traction for customers. Every new customer that start with one module over time, they easily go to a second or to a third, module, and that is happening throughout the customer base.

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

And as we the business model that we created is able to monetize that as we charge per interactions with end customers. It's kind of a volume usage model. We are able to monetize that. So we see these cohorts growing usage and then upselling their plans as they continuously use all these new adaptive solutions. So so that's the trend that we're seeing.

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

And the the kind of customer that are using this is very broad, but with that's it's fair to say that we see health, education, retail, and financial services are are being, like, the ones that benefit the most of the solution. And we thought it would be mostly for medium sized companies, but we're also seeing large companies adopting the software. So that's kind of an unexpected trend for us that we're seeing, occur in the last couple of months. So that's pretty much what we're seeing nowadays.

Shay Chor
Shay Chor
CFO at Zenvia

Another one for you, Cascio. Would love if you guys can provide more color into the new franchise model. How is it going? And expansion into other countries in Latin America, how big is this an opportunity?

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

Sure. Just starting on on LATAM, when we look at Zimbra customer cloud, it we have around Sharp, please correct me if I'm wrong, but around 40% of our revenues from ZCC plus already coming from countries other than Brazil and mostly are from from LATAM. So we see there's a very it's a very competitive solution that that we're providing for the whole of LATAM. That's why we are investing to grow, and we're already seeing growth for for LATAM as well. In terms of the franchise model, we launched that that that model on q one beginning q one with zero partners, and we have more than 30 franchises already contracted, already working with us.

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

It it it was our goal for the year, but we were able to achieve that on the first half of the year. Now we're working with them on training and and helping them on their first customers, and that is doing pretty well. That's why we are very excited with this new model. We understand that throughout the year as these new partners, they mature, we will able to see important part of our growth from Xavier customer cloud coming from these this model. And let's see what happens for all the years.

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

We're we're able to to see, the amount of growth and the amount of, leverage that will bring us, but it's been interesting, very interesting so far.

Shay Chor
Shay Chor
CFO at Zenvia

And, Kasim, just just to add on on on the LatAm side. So it's been we we've been putting more focus on that to have a team based out of Mexico. And it's been, as Caso mentioned, competitive, but we see opportunities. We estimate around 50,000,000 reais in revenues coming from ATOM in in in 2025. So it's a and it it's more than 50% growth when we compare to to to 2024.

Shay Chor
Shay Chor
CFO at Zenvia

So it's a it's a strong strong strong improvement, strong growth. Obviously, opportunity is way bigger than this, but it also, as I mentioned, there there there's a lot of growth that that depends on on our ability to to deleverage balance sheet and and being able to accelerate growth. But despite that, we are very happy with what we're seeing in our LATAM expansion as as we put focus on it, and it's one of the specific goals that we have for 2025. Can you please address the issue of customer churn? Is this a result of your business transition?

Shay Chor
Shay Chor
CFO at Zenvia

What are you doing currently to to retain customers, Cacio?

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

Sure. As we have some solutions that are that we considered legacy solutions, we're we expect that we have a bit of churn that is higher on this legacy software than on the on the core software. When we look at the core software, which means ZCC and the and the the ones that are gonna be migrated to ZCC, There, we don't see a huge problem in terms of churn that has been healthy. Of course, we're always working to get a better retention of these customers. Usually, what we have in terms of churn for these portion of the business is more early churn, and these tends to be customers that try.

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

And at some point, they understand it's not the best solution for them. But when we see the the base churn that is pretty low, and with benchmarks, we're very healthy in terms of churn for the base of customers. So it's a mix of different portions of churn. We're we're very satisfied in the churn level considering all these aspects. But, of course, we're always working to get not a model not only a better rotation, but also better development of customers that stay on the base.

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

And we're able to do that with the cross adoption and the usage the volume usage business model.

Shay Chor
Shay Chor
CFO at Zenvia

Thank you. Thank you, Casio. I'm not seeing any further question. Hugo Hugo, can you repeat? I guess that's it from Q and A side, Hugo.

Operator

Okay. This concludes our Q and A session. I would like to turn the conference back over to Mr. Casio Babson for his closing remarks.

Cassio Bobsin
Cassio Bobsin
Founder and CEO at Zenvia

Thank you very much for everyone's attention. We are very happy to share with you the results of Q1, and we're seeing a very interesting year for us. It's a year of getting profitability and growth combined. We're seeing the beginning of the year giving good trends for the whole of 2025. So expect you to see expect to see you in the next quarter.

Operator

The conference has now concluded. Zenvia's 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.

Executives
    • Shay Chor
      Shay Chor
      CFO
    • Cassio Bobsin
      Cassio Bobsin
      Founder and CEO
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