VTEX Second Quarter 2021 Form 6-K Summary
Business Context and Reporting Period
VTEX, an enterprise software-as-a-service digital commerce platform for brands and retailers, reported unaudited results for the three and six months ended June 30, 2021. The filing was furnished on August 17, 2021, under Form 6-K and prepared under IAS 34. VTEX operates primarily in Latin America and is expanding internationally.
Financial and Operating Metrics
| Metric | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 |
|---|---|---|---|---|
| GMV | $2.439 billion | $1.871 billion | $4.475 billion | $2.823 billion |
| GMV growth, FX neutral | 25.4% | 178.0% | 64.8% | 108.6% |
| Revenue | $30.9 million | $25.3 million | $56.8 million | $41.9 million |
| Revenue growth, FX neutral | 18.2% | 118.6% | 41.5% | 84.2% |
| Subscription revenue | $29.7 million | $23.9 million | $54.3 million | $39.4 million |
| Subscription gross profit | $20.2 million | $18.1 million | $36.1 million | $28.5 million |
| Subscription gross margin | 68.1% | 75.7% | 66.5% | 72.4% |
| Net income (loss) | $(15.5) million | $5.7 million | $(27.9) million | $0.5 million |
| Non-GAAP operating income (loss) | $(10.4) million | $6.7 million | $(18.9) million | $4.3 million |
| Non-GAAP free cash flow | $(14.7) million | $5.4 million | $(22.7) million | $(4.5) million |
Subscription revenue represented 96.1% of second-quarter revenue. Reported gross profit was $18.7 million in the quarter, compared with $17.8 million in the prior-year quarter. Operating expenses rose substantially, including sales and marketing expense of $15.7 million and research and development expense of $10.7 million. Total headcount reached 1,486 at June 30, 2021, up 88.1% year over year.
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 classified as loans and financing was $5.0 million, comprising $2.1 million current and $2.8 million non-current. Lease liabilities totaled $6.5 million. The filing does not provide a separate committed revolving-credit or unused-borrowing capacity figure.
Material Changes Versus Comparable Period
- Revenue increased 22.1% in U.S. dollars and 18.2% on an FX-neutral basis in the second quarter.
- GMV increased 30.4% in U.S. dollars and 25.4% on an FX-neutral basis.
- Subscription gross margin declined year over year from 75.7% to 68.1%, although it improved from 64.7% in the first quarter of 2021 because of hosting-cost efficiencies.
- VTEX moved from $6.1 million of IFRS operating income in Q2 2020 to a $16.4 million operating loss in Q2 2021. The non-GAAP operating result changed from $6.7 million of income to a $10.4 million loss.
- Net loss increased from $5.7 million of income in Q2 2020 to a $15.5 million loss in Q2 2021, principally reflecting increased operating expenses and a deterioration in the net financial result.
- Six-month net cash used in operating activities increased to $21.6 million from $3.8 million. Investing activities used $1.8 million and financing activities used $11.0 million, including $9.7 million of loan and financing repayments and a $2.4 million share buyback.
- Accumulated losses increased to $31.4 million at June 30, 2021 from $3.4 million at December 31, 2020.
Guidance, Outlook, Risks, and Unusual Items
Management expects online commerce penetration in Latin America to remain above pre-pandemic levels despite the gradual reopening of physical retail. VTEX expects revenue to grow sequentially during the remaining quarters of 2021 while continuing to invest in sales, marketing, research and development, Latin American leadership, and international expansion.
Management provided revenue guidance of $31.0 million to $31.5 million for the third quarter of 2021 and $124 million to $126 million for fiscal 2021, assuming current-period foreign-exchange rates. The company expects third-quarter year-over-year trends to be similar to the second quarter and to begin normalizing toward the end of 2021.
Key product initiatives included enhancements to Intelligent Search and the order-management system, scheduled-delivery capacity management, localized payment, tax, checkout, and regulatory features, and broader rollout of the redesigned VTEX administration interface.
The results are unaudited and the press release does not constitute a complete interim financial report. Management cautioned that guidance is forward-looking and subject to risks including COVID-19 and macroeconomic conditions, foreign-exchange fluctuations, changing year-over-year comparisons, execution of growth investments, international expansion, and factors beyond VTEX’s control. Non-GAAP operating income, free cash flow, and FX-neutral measures are not IFRS measures and may not be comparable with similarly titled measures used by other companies.
Important Facts for Investors to Verify
- Reconcile the $124 million to $126 million fiscal 2021 revenue outlook with subsequent reported results and any later guidance revisions.
- Assess whether continued sales, marketing, and research-and-development investment can support growth while reducing operating losses and cash burn.
- Monitor liquidity after the decline in cash and cash equivalents to $23.6 million and the reported six-month operating cash outflow of $21.6 million.
- Evaluate the sustainability of subscription gross-margin recovery following the year-over-year decline to 68.1%.
- Review acquisition-related obligations, including $10.4 million of accounts payable from acquisitions and $9.8 million of unpaid business-combination amounts disclosed in supplemental cash-flow information.
- Distinguish IFRS results from management’s non-GAAP and FX-neutral measures when comparing VTEX with peers.