VTEX Form 6-K Summary
Business Context and Reporting Period
VTEX provides a software-as-a-service digital commerce platform for enterprise brands and retailers, combining commerce, order management, marketplace, and related collaborative-commerce functionality. The filing, dated August 17, 2021, presents unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 2021, with comparisons to the same periods in 2020. Amounts are in thousands of U.S. dollars unless otherwise indicated.
Key Financial Metrics
| Metric | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 |
|---|---|---|---|---|
| Total revenue | $30.9 million | $25.3 million | $56.8 million | $41.9 million |
| Subscription revenue | $29.7 million | $23.9 million | $54.3 million | $39.4 million |
| Gross profit | $18.7 million | $17.8 million | $33.8 million | $27.7 million |
| Gross margin | 60.4% | 70.4% | 59.4% as stated in MD&A | 66.1% as stated in MD&A |
| Operating income (loss) | $(16.4) million | $6.1 million | $(28.4) million | $3.1 million |
| Net income (loss) | $(15.5) million | $5.7 million | $(27.9) million | $0.5 million |
| Net cash used in operating activities | Not provided for the quarter | Not provided for the quarter | $(21.6) million | $(3.8) million |
- Second-quarter GMV was $2.4 billion, up 30.4% in U.S. dollars and 25.4% on an FX-neutral basis. Six-month GMV was $4.5 billion, up 58.5% in U.S. dollars and 64.8% on an FX-neutral basis.
- Subscription revenue represented 96.1% of second-quarter revenue, compared with 94.7% in the prior-year quarter. Services revenue represented 3.9%, compared with 5.3%.
- Second-quarter total cost increased 63.3% to $12.2 million, primarily due to higher IT and hosting expenses. Six-month total cost increased 62.1% to $23.0 million.
- Second-quarter operating expenses were $35.0 million, including general and administrative expenses of $7.8 million, sales and marketing expenses of $15.7 million, and research and development expenses of $10.7 million.
- Share-based compensation expense was $5.5 million in the second quarter and $8.7 million for the first six months, compared with $0.4 million and $0.7 million, respectively, in the prior-year periods.
- Cash and cash equivalents were $23.6 million at June 30, 2021, compared with $58.6 million at December 31, 2020. Marketable securities were $13.5 million, and restricted cash was $1.4 million.
- Total debt consisting of loans and financing was $5.0 million, compared with $6.4 million at December 31, 2020. Lease liabilities totaled $6.5 million.
- Total assets were $138.8 million and total shareholders’ equity was $55.1 million at June 30, 2021.
- Net cash used in investing activities was $1.8 million, including $4.4 million for acquisitions and $1.1 million for property and equipment. Net cash used in financing activities was $11.0 million, including $9.7 million of loan repayments and $2.4 million of share repurchases.
Material Changes Versus the Prior Comparable Period
- Revenue increased 22.1% in the second quarter and 35.5% for the first six months. On an FX-neutral basis, revenue increased 18.2% and 41.5%, respectively.
- Revenue growth was driven by higher GMV, growth in active online stores, and expansion outside Brazil. Services revenue declined 9.0% in the quarter and 2.2% year to date.
- Gross margin contracted materially because hosting and infrastructure costs grew faster than revenue.
- Operating results shifted from profit to loss as the company expanded its workforce and increased sales, marketing, research, development, and administrative spending.
- Net losses also reflected higher finance expense, including losses on derivative financial instruments, and substantially higher share-based compensation.
- Operating cash outflow increased to $21.6 million from $3.8 million, primarily because of the net loss and workforce expansion, partially offset by higher accounts payable and share-based compensation.
- Intangible assets increased to $37.3 million from $15.1 million at year-end 2020, mainly reflecting acquisitions. Accounts payable related to acquisitions increased to $10.4 million, including $7.8 million of estimated earn-out liabilities.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- Management expects revenue to grow sequentially during the remaining quarters of 2021 and expects historical ecommerce seasonality to continue, with stronger activity generally in the fourth quarter.
- Management cautions that growth rates may moderate as the company laps the 2020 COVID-19-driven ecommerce surge and as some customers shift volume back to physical stores.
- Management expects continued investment in sales and marketing and research and development to support geographic expansion, customer acquisition, and product innovation.
- The company completed its IPO on July 21, 2021. It issued 16.7 million new Class A shares, and the underwriters exercised an option for an additional 2.85 million newly issued shares. Gross proceeds to VTEX were $317.8 million and net proceeds were $296.3 million. The shares began trading on the NYSE under the symbol VTEX.
- On August 11, 2021, VTEX acquired Guava Desenvolvimento de Software for total consideration of $517 thousand. The purchase-price allocation remained incomplete at the filing date.
- During the second quarter, VTEX acquired Suiteshare for approximately $1.9 million in cash and $1.3 million in shares, with potential additional earn-out consideration. WorkArea was acquired in the first quarter.
- Probable litigation contingencies totaled $76 thousand at June 30, 2021; possible contingencies without recorded provisions totaled $287 thousand. The company reported no off-balance-sheet arrangements.
- Principal risks include foreign-exchange volatility, derivative valuation changes, liquidity needs from operating losses and acquisitions, customer and ecommerce seasonality, COVID-19 normalization, and execution risk from rapid international expansion.
Important Facts for Investors to Verify
- Reconcile the reported gross margin figures and assess whether hosting-cost growth is moderating relative to GMV and revenue growth.
- Evaluate post-IPO cash, liquidity, and cash-burn trends using subsequent quarterly filings.
- Monitor operating leverage, particularly sales and marketing, research and development, general and administrative, and share-based compensation expense.
- Review acquisition earn-outs, purchase-price allocations, and the financial contribution of Suiteshare, WorkArea, and Guava.
- Assess the sensitivity of results to foreign-exchange movements, derivative losses, and the normalization of COVID-19-related ecommerce demand.
- Confirm the effect of the dual-class share structure, under which Class B shares represented approximately 93.98% of combined voting power following the IPO.