Vtex Q4 FY2022 Earnings Call

Good afternoon. Thank you for joining the VTEX 2022 Financial Results Conference Call. My name is Megan, and I will be your moderator for today. I would now like to hand the call over to Julia Fernandez from VTEX.

Hello, everyone, and welcome to the VTEX Earnings Conference Call for the quarter ended December 31, 2022; I'm Julia Fernandez, Investor Relations Director for VTEX. Our senior executives presenting today are Geraldo do Carmo Thomaz, Founder and Co-CEO; and Ricardo Sodre, Chief Financial Officer. Additionally, Mariano Gomide de Faria, Founder and Co-CEO; and Andres Polit, Chief Strategy Officer, will be available during today's Q&A session. I would like to remind you that management may make forward-looking statements related to such matters as continued growth prospects of the company, industry trends, and product and technology initiatives. 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, you are cautioned not to place undue reliance on these forward-looking statements. Certain risks and uncertainties are described in the risk factors and forward-looking statement sections of the Bite Form 20-F for the year ended December 31, 2022, and other VTEX filings with the U.S. Securities and Exchange Commission, which are available on our Investor Relations website. Finally, I would like to remind you that during the course of this conference call, we may discuss some non-GAAP measures. A reconciliation of those measures to the nearest comparable GAAP measures can be found in our fourth quarter 2020 earnings press release available on our Investor Relations website. Now let me turn the call over to Geraldo. Geraldo, the floor is yours.

Thank you, Julia. Welcome everyone, and thank you for joining our fourth quarter 2022 earnings conference call. The year 2022 was marked by uncertainty and volatility in the industry. Despite these challenges, our customers showed resilience and a strong business model to navigate the changing environment effectively. In 2022, Latin America's e-commerce grew in single digits, while our GMV growth reached 31%, significantly outperforming the market by over 20%. VTEX's same-store sales increased by 17% on an FX-neutral basis, indicating that both new customer acquisitions and existing customers contributed significantly to our strong performance relative to the market. As we look ahead to 2023, our focus is clear: we aim to consistently drive growth that exceeds market performance, enhance our gross margin, and optimize expenses to improve operational efficiency as we scale. Our objective is to provide a dependable solution for our customers, allowing them to focus on expanding their businesses. Meanwhile, we will continue to strengthen our broad range of site sales products to enable our customers to grow their GMV. Our global expansion is progressing well with significant strides made in the U.S. and Europe, and we have announced plans to enter new markets such as India and South Africa this year. We anticipate delivering consistent and tangible outcomes, positioning ourselves as the global backbone for commerce. Reflecting on the fourth quarter of 2022, we are pleased to report resilient growth in our business. Although GMV and revenue fell short of our expectations, we have solidified our status as a regional leader, extending our reach beyond Latin America. Specifically, in Q4, our GMV grew by 34% year-over-year in U.S. dollars and 29% on an FX-neutral basis, approaching the $4 billion milestone for the quarter, which exceeds our total GMV for the entire year of 2019. It's important to note that the retail sector encountered challenges during Q4 of 2022, particularly due to lower-than-anticipated sales volumes surrounding Black Friday and the holiday season. Despite facing this trend, our performance remained strong, with same-store sales improving quarter-over-quarter, showcasing our business strength and resilience in navigating difficult macroeconomic conditions. Throughout our history, we have built solid, long-term relationships with our customers, demonstrated by the increasing number of stores and countries per customer. In 2022, we garnered the trust of over 2,600 customers operating a total of 3,400 stores across 38 countries. Our top 100 customers averaged 5.9 stores each, operating in 34 countries—an increase from 4.8 stores per customer in 2021. In the fourth quarter, we made significant commercial progress, attracting and onboarding several premier brands and retailers. In the first quarter of 2022, we signed several new customers who had not previously established an online presence in their respective countries. This includes Reebok in Argentina, Brazil, Chile, Colombia, and Peru; Super [indiscernible] in Brazil; and [indiscernible] in Poland and Mexico. We also welcomed customers migrating from other platforms, including companies that went live in Q4, such as [indiscernible]. These well-established brands in their markets will help us expand our reach and solidify our position in these regions. Additionally, we focused on strengthening our relationships with existing customers to support their expansion efforts. In the fourth quarter, several leading brands opted to expand their operations with us by opening new stores and further integrating with our platform. This includes Belcorp, which added stores in Mexico and Peru; Electrolux, which opened a store in Brazil; Samsung, expanding their B2B operations in Brazil; and Carrefour, integrating over 150 physical stores into their omnichannel operations in Brazil. These decisions by premier brands to expand with us highlight our platform’s strength, relevant value proposition, and the trust we foster with our customers. We are excited to continue supporting them and reaching consumers in new regions while leveraging their physical assets. I would like to highlight a notable event from this quarter, Black Friday in November, where VTEX achieved a GMV of $1.75 billion, marking a 32% increase in USD compared to November 2021 and a 27% increase on an FX-neutral basis. We are especially proud of our accomplishments during the holiday season. The reliability of our network provides scalability, dependability, and security, giving our customers peace of mind with 100% uptime during the Black Friday and Cyber Monday week. We also experienced growth in markets like Mexico and the United States, both of which ranked in the top five countries for the most significant year-over-year GMV dollar increase, underscoring the tangible results of our international expansion. In 2022, we were excited to forge numerous outstanding partnerships, including ones with Amazon Web Services, e-banks, Facebook, Instagram, MercadoLibre, [indiscernible], PayPal, Stripe, and TikTok. In Q4, we also added deals with [indiscernible] and Nova, among others. We formed a partnership agreement with Clear Sale, a company specializing in digital anti-fraud solutions in Brazil, which has global expansion ambitions. Clear Sale's plugin instills confidence in our customers by helping them maintain approval rates and avoid false positives, reportedly boosting average customer approval rates by over 10%. Our global partnership with Nova will enhance flexibility and customization for retailers as VTEX deepens its presence in Latin America and enters new markets in Asia Pacific, North America, and Europe. This collaboration is now available to VTEX customers worldwide, enabling retailers and brands to benefit from Nova's sophisticated optimization capabilities. I would like to share some customer success stories that showcase our platform’s capabilities and how our customers have realized remarkable results. A leading global kitchen and laundry appliance company has continued to expand its partnership with VTEX. Our global contracts signed by VTEX's U.S. branch were crucial in successfully launching a high-end home appliance brand in Europe. This customer is now using a composable approach in EMEA with VTEX’s new customized checkout solution, allowing for greater flexibility at the checkout page by utilizing tax APIs alongside all store framework components. The high-end appliance brand has fully embraced a headless approach for its new e-commerce website for [indiscernible], which enables them to select the necessary tools to craft a tailored user experience and efficiently assemble content for shopping experiences without starting afresh. Motorola has utilized its global contract to launch its online store in India, with VTEX's localization being vital for a successful rollout, especially concerning local regulatory compliance. Furthermore, the seamless integration of third-party logistics has facilitated Motorola's operations. They expressed great satisfaction with the assistance from the VTEX customer team in resolving technical challenges without needing external vendors, enabling a swift launch with a new homepage layout that includes customizable banners and actions. Consequently, Motorola has benefited from a fast checkout process and user-friendly website navigation, enhancing its conversion rates. We continue to attract new customers in Europe, including Onshore, one of the largest global retail companies, which went live with VTEX in Q4 to revamp its online operations and introduce new features for a better customer experience in Romania. The new platform offers a more user-friendly interface and integrated functionalities accessible from any device, including fresh product delivery and new delivery and pickup locations. VTEX is also helping showcase website page loading speed and mobile adaptability. Additional features and user-generated content improvements are forthcoming to provide an exceptional online shopping experience that complements what consumers already enjoy in physical stores. The grocery industry is experiencing a digital transformation, with e-commerce operations now the fastest-growing sales sector according to Statista. VTEX has positioned itself as the preferred partner for retailers offering this service by leveraging its omnichannel capabilities and efficient features for speed and flexibility, which boost sales by integrating brick-and-mortar inventory and onboarding third-party sellers for a broader selection without increasing operational costs. Additionally, VTEX's distributed order management system enables retailers and brands to effectively manage complex fulfillment scenarios, providing various delivery options while streamlining their operations. This allows grocery e-commerce channels to offer rapid in-store and curbside pickup by collating orders from multiple inventory sources, including pickup locations, distribution centers, and brick-and-mortar stores, ensuring optimal fulfillment. For example, a major conglomerate with a diverse range of products from groceries to home improvement has entrusted VTEX for its operations across 14 brands. This company, operating with us since 2016, has harnessed VTEX's speed delivery capabilities to enhance conversion rates, thereby increasing sales and customer satisfaction. VTEX's highly customized solution allows them to sort different categories and features, refining search tools to highlight the best promotions and delivery timeframes for customers. In a notable partnership, Carrefour, a leading French multinational retail corporation, selected VTEX in 2020 for its operations in Brazil, a key market globally, along with other Latin American countries. Carrefour has an extensive presence in Brazil, with 817 stores, consisting of 241 hypermarkets and 41 supermarkets, offering both grocery and non-grocery products. They chose VTEX to significantly enhance their order management performance, marketplace, and omnichannel service. This integration was made possible due to VTEX’s scalability, enabling seamless control over a vast array of SKUs in their catalog and a large customer database. More recently, in Q4 2022, Carrefour integrated their physical stores with our OMS capabilities, which includes orchestrating multiple omnichannel strategies, personalized searches based on previous purchases, Click & Collect options, enhanced home delivery services, and an integrated POS system. These upgrades enhance Carrefour's physical store assets and are poised to improve customer experiences and operational efficiency. Our live shopping feature, a built-in live streaming application, allows brands and retailers to utilize the VTEX platform to create engaging live shopping experiences, enhancing engagement and conversion rates while attracting more customers. This quarter, we hosted 302 events, indicating a 21% increase quarter-over-quarter, with a total of 912 events in 2022. To conclude our operational update, I want to express my heartfelt gratitude to our 1,347 dedicated VTEX employees who are committed to realizing a brighter future, as well as to our customers, partners, and investors. I will now turn the call over to Ricardo to discuss our financial performance for the quarter.

Thank you, Geraldo. Hi, everyone. It's a pleasure to be here to update you on our financial performance for the fourth quarter of 2022. As highlighted by Geraldo, our Q4 GMV performance reached 34% year-over-year in U.S. dollars and 29% in FX neutral. This quarter, our revenue increased to $45.5 million, a year-over-year increase of 23% in U.S. dollars and 20% in FX neutral. Subscription revenue reached $42.7 million in the fourth quarter of 2022 from $34.5 million in the same quarter last year, a year-over-year increase of 24% in U.S. dollars and 20% in FX neutral. This helped us achieve a revenue of $157.6 million for 2022, showing a 25% growth in U.S. dollars and 22% on a tax-neutral basis. Although below our expectations, given weak market performance during Black Friday week and the cancellation of the tax-free day in Colombia, our active performance versus the overall market gives us confidence in our future growth projections. Our revenue from existing stores increased to $113.8 million in 2022, representing a net revenue retention of 105% on an FX-neutral basis. When analyzing the number on an annual basis, we see stable net revenue retention compared to last year. Although still volatile given macro uncertainty, the exiting net revenue retention pace for this year was higher than the annual average. This indicates that the net retention is approaching historical rates of around 110%, driven by same-store sales that are closing in on historical levels after many quarters of being impacted by tough COVID comparisons and physical stores reopening. In addition to our existing store growth, we continue attracting new stores, adding $21.3 million in revenue to our base, representing 20% of our 2021 VTEX platform revenue. Our sales efficiency, measured as new store revenues from the current year divided by non-GAAP sales and marketing expenses from the prior year, decreased this year, as we anticipated last year. Although that resulted in lower unit economics, our LTV over CAC remained healthy over time. The decrease is due to the fact that we invested during 2021, a higher portion in regions where our sales efficiency is lower, such as the U.S. and Europe, accounting for 35% of sales and marketing expenses. Additionally, and not part of our initial expectations, we also experienced elongations in our customers' implementation and ramp-up times during 2022, which also impacted this metric, pushing revenues further out as mentioned in previous quarters. With that said, towards the end of 2022, we have already made meaningful adjustments in our sales and marketing expenses to improve our sales efficiency ratio. Among new customers, we are excited to announce that we continue to gain traction in the high end of the market; the number of customers with revenue above $250,000 per year reached 94 from 76 in 2021. The number of stores reached 557 from 424 in 2021, representing a year-over-year increase of 24% and 31% respectively. We have consistently demonstrated improvement in this metric, which we believe is the strongest validation of the suitability of our product for even the most demanding customers within this segment. We continue expanding our geographical reach, with revenues outside of Brazil accounting for 45% of our total revenues. In a three-year FX-neutral CAGR, Latin America, excluding Brazil, grew 57%, while the rest of the world grew 78%. Regarding our FX-neutral year-over-year growth in 2022, Brazil grew 24%, Latin America, excluding Brazil, grew 14%, and the rest of the world grew 47%. The growth in Latin America excluding Brazil this year was influenced by a larger share of customers with relevant physical stores that were fully operational in 2022, which generated a rebalancing between their online and offline operations. Additionally, although Argentina saw lower growth rates given its macro situation, countries like Mexico are experiencing significant growth and gaining a larger share in the mix. Latin America holds immense potential. The 2022 growth rates do not fully reflect it, especially as Mexico continues to gain momentum and 2023 starts to have a cleaner year-over-year comparison. Now moving down our P&L, non-GAAP subscription gross profit was $31.4 million compared to $24.1 million in the fourth quarter of 2021. Non-GAAP subscription gross margin was 73.5% in the fourth quarter of 2022, compared to 69.9% in the same quarter of 2021. The 360 basis points year-over-year margin expansion shows the commitment of our team to keep improving our margins. We also continue improving our services non-GAAP gross margin, resulting in an even higher non-GAAP gross margin expansion, 54 basis points year-over-year. Our performance has remained steady compared to last quarter's 73.8% non-GAAP subscription gross margin, declining only 30 basis points. This is mainly due to scaling our infrastructure to handle increased sales during Black Friday week and the GSA EVA event in Colombia, which did not materialize as expected. Despite this, we anticipate further improvements in 2023 as we continue to implement our migrations and quote optimization plans. Our non-GAAP total operating expenses decreased to $29.1 million in the fourth quarter of 2022 from $32.4 million in the prior quarter and $36.5 million in the same period last year. The current results reflect the organizational restructuring we implemented in the second quarter of 2022 and further margin optimizations following the third and fourth quarters of 2022. As a result of the better-than-expected gross margin improvements and controlled expenses with the top line showing resilience, our non-GAAP operating income improved from a negative 29.3% margin in the same quarter last year to a positive 4.6% margin in the fourth quarter of 2022. This represents a 33.9 percentage points improvement year-over-year. It is important to remember that the operational breakeven achieved in Q4 is not yet sustainable, as our industry experiences a positive seasonal trend during the fourth quarter, which has contributed to our current performance. With that in mind, we reaffirm that by the fourth quarter of 2023, we will be able to sustainably achieve positive non-GAAP operating income. As of the three months ended December 31, 2022, VTEX had a positive $2.5 million free cash flow compared to negative free cash flow in the prior quarter and negative $21.3 million free cash flow in the fourth quarter of 2021. Our strong cash generation result this quarter was primarily driven by our strong operational P&L performance. On the share repurchase program we approved in August of 2022, as of December 31, 2022, the remaining balance available for share repurchases under this authorization is almost $70 million. We purchased slightly less than 3.3 million shares at an average price of $3.90 per share. We expect to continue executing our plan based on the evaluation of market conditions and applicable legal requirements. Before moving to our Q1 and full year 2023 outlook, I'd like to remind the audience that from a business perspective, we think about our P&L as a combination of two P&Ls, our existing stores P&L and our new stores P&L. You'll find this reference in Slide 28 of our fourth quarter earnings presentation. VTEX existing stores revenue, excluding our SMB platform, represented almost 85% of total revenues, while our new stores revenue, also excluding our SMB platform, represented approximately 15% of total revenues. Comparing our P&L breakdown for 2022 and 2021, I would like to make a couple of comments. This year, our gross margin reached 67%, approximately 600 basis points higher than the overall gross margin from 2021. It's noteworthy that both existing and new stores had significant improvements in their gross margin profiles, with existing stores showing a 5 percentage points year-over-year improvement and new stores reaching a 10 percentage points year-over-year improvement in gross margin. As previously discussed, we optimized our expenses in 2022, and even though we don't have a full year clean P&L, we can already see how the operating margin for existing stores increased from 15% in 2021 to low 20s in 2022, as well as operational margin losses from new stores improved by 16 percentage points. As a result, we had an overall operational margin improvement of 11 percentage points year-over-year, with more to come this year since we are exiting the year with our operational margin approaching sustainable breakeven. As we move forward with our business outlook, it is important to note that the macroeconomic conditions remain uncertain. Compared to historical averages, we continue to see an elongated sales cycle related to an increase in the average time to implement the VTEX platform and longer ramp-up times for new customers. Despite these challenges, which mostly impact our new stores' time to revenue, we remain confident in our ability to help our customers outperform the market and control our costs and expenses to deliver meaningful operational leverage. Considering the uncertain macro conditions, we are currently targeting revenue in the $41.0 million to $41.5 million range for the first quarter of 2023, implying a year-over-year growth of 19% in U.S. dollars and on an FX-neutral basis in the middle of the range. Also, given the persistent macroeconomic volatility for the full year 2023, we target an FX-neutral year-over-year revenue growth between 15% and 19%, implying a range of $183 million to $189 million based on February FX rates. With that, let's open it up for questions now.

Our first question comes from Marcelo Santos with JPMorgan.

My first question is I wanted to explore a bit more the gap between GMV and revenue growth. I think in the previous quarter, there was already some gap that widened to, I think, more than 10 points in U.S. dollars. So just wanted to understand the moving parts here. And the second question is regarding the selling expense. I think that was maybe the most noteworthy line. It declined to, I think, around $11 million, its lowest level since the first quarter of 2021, sorry. Could you please describe a bit if this is just the result of the headcount cut or what else is there, and is this a sustainable level going forward?

Marcelo, thanks for the question. I'll take the first one. So as we mentioned in the Q&A from last quarter's earnings release, it is crucial to note that the company's revenue is derived from fixed fees and a take rate on our customers' GMV. Two-thirds of the revenue comes from the take rate, while the remaining one-third comes from fixed fees. Considering that it is natural to have a lower implied take rates in Q4 because the seasonally strong GMV dilutes the fixed fee portion of our revenue. For instance, the implied take rate of the fourth quarter of 2022, although below the fourth quarter of 2021, was in line with the fourth quarter of 2020. These changes in implied take rate are simply a function of our revenue model and mostly driven by mix. It is important to mention that we are not seeing pricing pressure when comparing like-for-like figures. On this point regarding mix, as mentioned in the prepared remarks, we are adding larger customers to the base who come with a lower variable take rate following our price table. Finally, it's worth noting as well that we are passing through inflation to the fixed fee component of our contracts in most countries. While this is more challenging to achieve in developed economies, we have managed to do so in Brazil and are beginning to implement this in some countries in LatAm outside of Brazil as well. For the second question, I'll pass it over to Mariano.

So on the second question, we see good momentum to do the adjustment from what we saw in 2021 and 2022. We keep seeing a strong pipeline in Brazil, LatAm, and the rest of the world. You can expect good contracts and good kind of momentum coming from the United States and Europe. The cuts that we did in the expenses do not expect to generate any write-off opportunity? On the opposite side. So we are seeing, with a lean team, we can absorb more and more opportunities from this uncertainty that we see in the market. So we don't expect any decrease in our sales operations in terms of performance.

Our next question comes from the line of Fred Mendes with Bank of America Merrill Lynch.

I have two questions as well. First, I noticed the recent reduction in headcount. The world is changing rapidly, and I'm trying to understand the strategy behind this and its impact on the team. Secondly, regarding strategy, it's evident that VTEX is focusing more on achieving profitability, which has affected growth for various reasons. I'm curious about the discussions surrounding the relationship with the ecosystem, especially with those involved in implementation and distribution, as you make this shift towards increased profitability.

Thank you for the question. This is Geraldo responding. We are maintaining a disciplined operational model and are achieving our short, medium, and long-term growth goals. We don't feel like we are missing opportunities; rather, being lean and agile allows us to quickly adapt and create value in these uncertain times. The current growth rate falls short of our long-term growth potential due to macroeconomic conditions. Although we have adjusted our team to meet current demand, we remain committed to strong long-term investments. Our R&D team is performing well, and we plan to continue investing and possibly expand the team over the year. As mentioned, we are adjusting the sales team according to current demand. Ultimately, we are well positioned to continue gaining market share, which will help us emerge stronger once the market stabilizes, allowing us to seize the significant market opportunities ahead.

Our next question comes from the line of Clarke Jeffries with Piper Sandler.

First one is on guidance. Ricardo, is it safe to say that the most important factor contemplated in the revenue guidance, is this dynamic around deployment times, looking at the sort of trend lines of existing store contribution, new store contribution. Is that really the sort of meaning behind all of this? And then with reference to that exit rate being higher than the 105, do you expect 2023 to be a year where it's above 105?

Clark, thanks for your question. Yes, it's fair to say your assumption. As mentioned in the prepared remarks, we continue to see macro uncertainty. This environment of high interest rates and inflation may impact consumer consumption, which may affect our same-store sales and the revenue growth from our existing stores. But as also mentioned, the more relevant impact is that we continue to see stable but longer than average implementation times and ramp-up times, which impacted our new store revenue growth during part of 2022 and we expect to impact the full year of 2023. These two factors contributed a combined result in potentially lower growth in 2023, which we reflected in our guidance. Having said that, we believe we have made the necessary adjustments to come out stronger once this macro situation is resolved. We are capturing market share, as Geraldo mentioned, and we have a well-invested structure to support our long-term growth, which we believe is above the current growth rates that are impacted by the macro scenario.

Certainly. And then one follow-up. Great to see 20-plus percent margins on the existing store cohort, higher margins on the new cohort, especially considering that was a full year number, and I'm sure there are adjustments still to be made there. Do you expect those trends to continue in the next year? Would you expect existing stores to maintain that kind of 20% handle in terms of margins? And then any sense for dynamics in terms of margins on new stores and all other revenue, be that SMB and services?

Yes, Clark. No, that's a good question. So the disclosure that we are making on the P&L, splitting between existing stores and new stores is an annual cut. So that's the 2022 full-year margin. So this 22% margin reflects the full year. But as you mentioned, we are exiting at a higher margin because we made adjustments right in the middle of the year. We continue to see good operational leverage in our model. So it would be expected in 2023 for the existing stores to have a higher margin than in 2022. So we'll continue to operate in a disciplined way, but given the operational leverage, that should help us moving forward.

Our next question comes from the line of Josh Beck with KeyBanc.

This is Maddie on for Josh. My first question for you is how are you guys thinking about LTV to CAC compared to maybe the historical average? And do you have a goal for that metric going forward? And do you think that we hit the bottom in terms of the headcount, where it's at?

Maddie, thanks for the question. Happy to take the first one. So regarding LTV over CAC, as we mentioned in the prepared remarks, it continues to stay above 6x, and we believe this level is a healthy level for a company like ours. We also look at the internal rate of returns and the payback time of our customers since we have a pretty low churn. So we don't want to rely on cash flows that are coming from the customers that are far off in advance in the future. But we do believe that the 6x LTV over CAC is a healthy metric for us to pursue. Sorry, on the second question, could you repeat, please?

Yes. I was just wondering if we've hit the bottom in terms of the headcount number or if there might be more reductions implied?

I can address that. Regarding R&D, we are quite satisfied with our current headcount. There may be a slight increase based on the talent available in the market who is interested in joining VTEX. As for sales and marketing, it appears that we have reached a low point; however, this can vary based on the actual demand we experience. If we find that we haven't truly reached the bottom of demand, we might make further adjustments in the future, but that is not what we are currently anticipating.

Okay, Mariano here. So AWS is one of the foundational partners of VTEX. And in the go-to-market of the United States and Europe, they are helping us a lot. We are part of the marketplace solution of AWS and AWS reps are matching resources with VTEX reps in the field and offering B2B and B2C solutions. We already signed some deals together and modules will come. They are an incredibly penetrated company in the United States and Europe, and we are serving this amazing partnership. On the second question on B2B, yes, we are seeing a solid trend in B2B signatures on our contracts in the United States particularly. So we already released some public names on the B2B, and we are consistently seeing signatures quarter-over-quarter in the B2B market.

Our next question comes from the line of Andre Salles with UBS.

I have one question regarding competition here. We have seen some movements in Brazil from other platforms, which are more focused on smaller businesses trying to target larger customers here. Are you seeing substantial changes here in the compensation environment in Brazil, especially in your lower base clients? Or is this more a specific movement?

So thank you for the question, Mariano here. We, of course, saw kind of every year we do have a new player trying to penetrate Latin America, and they can come from the high end or the low end. We saw Shopify penetrating the Latin American market. But on our low SMB solution, LogIntegrada, we didn't see any huge growth changes in what we expect. So we are on track with what we expect from the company. Yes, there are some flipping from the other vendors to Shopify. But we continue to see consistent growth from our SMB business.

Thank you. There are no additional questions waiting at this time. So I'll pass the conference back over to the management team for any closing remarks.

In conclusion, while 2022 may have presented some challenges, we are optimistic about our ability to drive growth and overcome obstacles in 2023 despite the uncertain macroeconomic environment. We're committed to delivering exceptional service and supporting our customers while expanding our operations in key regions. We look forward to the opportunities and progress that the new year will bring. Thank you, everyone, for joining us today. I'm looking forward to updating you about our progress in our next earnings call. Thank you.

That concludes the VTEX Fourth Quarter 2022 Financial Results Conference Call. Thank you for your participation. I hope you have a wonderful day.