Earnings Call Transcript - VTEX Q2 2022

Julia Vater Fernández, Investor Relations Director

Hello everyone, and welcome to the VTEX Earnings Conference Call for the quarter ended June 30, 2022. I’m Julia Vater Fernández, Investor Relations Director for VTEX. Our senior executives presenting today are Geraldo Thomaz, Founder and Co-CEO; and Ricardo Camatta Sodre, Finance Executive Officer. Additionally, Mariano Gomide de Faria, Founder and Co-CEO; and Andre Spolidoro, Chief Financial Officer, will be available during today’s Q&A session. I would like to remind you that management may make forward-looking statements relating to such matters as continued growth prospects for the company, industry trends and product and technology initiatives. These statements are based on our 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 currently available information, you are cautioned not to place undue reliance on these forward-looking statements. Certain risks and uncertainties are described under Risk Factors and Forward-Looking Statements sections of VTEX’s Form 20-F for the year ended December 31, 2021 and other VTEX’s 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 second quarter 2022 earnings press release available on our Investor Relations website. Now, let me turn the call over to Geraldo. Geraldo, the floor is yours.

Geraldo Thomaz, Founder and Co-CEO

Thank you, Julia. Welcome everyone and thanks for joining our second quarter 2022 earnings conference call. We’re excited to announce that once again this quarter our GMV outperformed the overall commerce markets. That was driven by two key factors; first our existing customers' GMV growth outpaced the market, demonstrating the resiliency of our enterprise-focused customer base. Second, new customers joined our platform demonstrating the trust in the VTEX platform to add value even under the volatile macroeconomic conditions. As a testament to that, in Q2, our GMV grew year-over-year by 27.6% in USD, while global and Latin American ecommerce growth was flat, with just single-digit growth at most. We continue seeing VTEX consolidating its leadership position in Latin America. During the quarter, we delivered solid results in special events, such as hot sales in Mexico and tax-free day in Colombia, giving us confidence in the ramp-up of Mexico and the consolidation of more mature markets such as Colombia. Additionally, we continue making solid steps forward in our international expansion, something that was recognized by industry experts, which I will address later. Over the past couple of years, we were in a type of investment cycle, an important phase for the tax that allowed us to roughly triple our headcount and create a menu of future growth opportunities. Now, as part of the plan, it is only natural for us to prioritize the opportunities created and leverage our currency structure to continue delivering strong growth. With this, VTEX is doubling down on the most promising growth opportunities. This prioritization of growth opportunities and setting of our optimal structure came with the hard decision that included the layoff of 193 employees. We deeply appreciate and thank the hard work and commitment of those employees who were impacted by the layoff. We are happy to inform that approximately 50% of them have already found new opportunities, and we will continue helping to reallocate the remaining employees of VTEX. Pursuing strong growth in a sustainable manner is not something new to us. VTEX was born in Latin America; we practically self-funded our growth into $100 million in ARR in 2020. We welcome and we are actually excited about demonstrating how we at VTEX can deliver strong and consistent top-line growth while being disciplined with our investments. We're confident in the future growth of the company and we feel the power of having all of our teams aligned in pursuing the enormous opportunities that we have in front of us. The underlying long-term trends from the sector continue to be positive. In the shorter term, some of our key priorities for the remainder of the year will be to continue helping our customers outperform the market, keeping improving our gross margin, and optimizing our expenses to gain operational efficiency. On helping our customers outperform the market, we will continue innovating to provide the infrastructure our customers need to accelerate their operations and stay relevant to consumers through multiple sales and fulfillment channels. A great demonstration of how that translates into value-add to our customers is that in the second quarter of 2022, our customers' GMV outperformed the Latin American ecommerce market. On gross margin, I'm extremely proud that we’ve been able to increase our non-GAAP subscription gross margin by 370 basis points on a year-over-year basis. This margin expansion was mostly driven by technology improvements, such as the migration of some of our cloud environments to more efficient processes, operating systems and frameworks, among other initiatives. We also improved our service gross margin, which contributed to an overall non-GAAP gross margin improvement of 510 basis points on a year-over-year basis. We expect to continue showing improvements in this line going forward, while also providing best-in-class service levels to our customers. On expenses, we will show significant operational leverage in the second half of the year without jeopardizing our growth in the short, medium or long term. As I mentioned before, we calibrated our organizational structure in order to deliver our adjusted priorities, which resulted in that one-off layoff expenses in Q2 on top of the already anticipated additional Q2 expenses related to the Tax Day, an event that is key for positioning our company among prospects, partners, and existing customers. In Q3, we expect to have a clean P&L that will start to clearly demonstrate the trajectory of our operating income. Now, moving to our commercial updates, in the second quarter, we continued attracting premier brands and retailers. Some new customers that went live this quarter that didn't have online store presence in their respective countries before were Elo, SumUp, ZeBrands in Brazil, Groupe Seb Andeans in Colombia, and BRF in Chile. Additionally, new customers that migrated from other platforms that went live this quarter included Hering in Brazil, Garbarino in Argentina, Grainger and Citric in Mexico, and Yamaha in Colombia. On top of that, we continued building and strengthening relationships with our existing customers. Some premier brands and retailers that expanded their operation with us by opening new line stores in new countries during the second quarter were AB InBev, which added the Dominican Republic in addition to nine other countries in Latin America, and Sugo, which added Mexico in addition to four other countries in Latin America. As mentioned last quarter, while the average number of months our new customers are taking to implement the VTEX platform continues to be above the historical average, we see no structural changes in the demand for the VTEX platform. Therefore, we continue to be encouraged by the long-term opportunity we have ahead of us. On that note, in May of this year, VTEX was named a contender in the first wave of B2C Solutions Q2 2022. The Forrester report stated that VTEX has recently begun to succeed in its mission to gain a foothold in markets outside Latin America, and that VTEX is strong in digital products and subscriptions. We are proud of this recognition, and we will continue to work hard on our international expansion as we see a strong feed from our product and sales traction is increasing according to plan in this new geography. We know we cannot do all this alone. We believe in the multiplying force of collaboration. One of our key competitive advantages is our ecosystem, and that's why we will continue to nurture and expand our partners. Aligning with our payment partnership strategy shared last quarter, we are excited to announce that we launched a partnership with Adyen, the global payments platform of choice for many of the world’s leading companies. We're confident that the partnership brings a powerful value proposition to the ecosystem. Both companies are committed to enabling enterprise brands and retailers to start having an omni-channel operation that drives business growth and provides a consistent customer experience across offline and online channels. We are also focused on generating partnerships with independent software vendors, or ISVs, to boost innovation and keep expanding the offering and customization layers available in our platform. The VTEX acceleration program seeks innovative ecommerce-related solutions that can meet the needs of our customers. The project is focused on fostering the global ecommerce ecosystem by integrating third-party apps with the VTEX app store. In the second quarter of 2022, we included a few new partners in this program. One of them was MailUp, which launched an app called Bizu in Brazil that helps customers gain detailed control and analytics of their ecommerce operations. Another one was WoowUp, which added CRM capability to our ecosystem, enabling us to already win customers. Before wrapping up, I'd like to revisit our four strategic priorities, focusing on our innovation update section and VTEX cases from our customers. For instance, Ken, a retailer selling clothing and home appliance technologies, with two business units and more than 400 stores in 200 cities in Brazil, chose VTEX for its headless approach. They wanted to implement continuous customization in their website and mobile app while avoiding any limitations. Additionally, they wanted a solution that enabled them to maintain a consistent experience across channels, providing a true omni-channel experience. The internal team from Pernambucanas, with the support of the VTEX team, was able to implement this complex case in only five months, achieving our clients’ goal to reformulate the online experience within an impressive timeline. Last quarter, we mentioned that we were going to have our first live shopping event in the U.S. Now looking back at the results, our customer experience and a time increase in conversion rate from viewers during that event led them to consider leveraging live shopping not only for product launches but also for sales events, social media campaigns, and product demonstrations. Live streaming is a global trend, and we are encouraged to see our solution continue to penetrate our customer base. In fact, this quarter, we had 231 live shopping events, which represents a quarter-over-quarter increase of almost 80%. Briggs and Stratton, the world's largest producer of air-cooled petrol engines for outdoor power equipment, chose VTEX in the U.S. for a B2B project, with three different business units supporting multiple languages and currencies with one single account. They use VTEX to run operations with two different platforms and decided to re-launch with us on a single ecommerce platform, resulting in a more consistent user experience, improving the maintainability of the platform while leveraging all of our out-of-the-box ecommerce features, including our quick order app that provides a frictionless process to place orders. Embargosalobestia, a home appliance retailer in Spain with 20 physical stores, chose us to help them with our robust omni-channel capability in order to scale up their sales and unify the multiple sales channels. The company has been experiencing a high growth trajectory over the last five years. In fact, they were recently included in the list of the top 1000 highest growth companies in Europe by the Financial Times. The in-house development website was facing difficulties scaling up given the growth of SKUs. They wanted to grow both the physical and online operations while generating synergies between them, clearly indicating the need for robust omni-channel capabilities. They are now leveraging VTEX to improve checkout statistics, conversion rates and other key commerce performance metrics while also building a true omni-channel strategy by integrating the physical stores and other sales channels. We are proud to announce that we continue attracting developers to our local platform, gaining momentum in the community and scaling our capabilities. Monthly active developers accessing the VTEX developer portal increased to more than 28,000 in the second quarter of 2022, from more than 24,000 in the first quarter of the same year. Wrapping up the operational update section, I would like to thank our 1560 VTEX employees who are working to fulfill our mission, as well as our customers, partners and investors. Now, I will turn the call to Ricardo so he can cover our financial performance reports for the quarter.

Ricardo Camatta Sodre, Finance Executive Officer

Thank you, Geraldo. Hi everyone. It's a pleasure to be here to update you on our financial performance for the second quarter of 2022. This quarter, our revenue increased to $38.7 million, a year-over-year increase of 25% in US dollars and 20% on our FX neutral basis. Subscription revenue reached $36.6 million in the second quarter of 2022 from $29.7 million in the same quarter last year, a year-over-year increase of 24% in US dollars and 17% on FX neutral basis. This quarter, subscription revenue accounted for 95% of total revenue versus 96% in the same quarter last year, explained by the implementation of our backlog, which leads to increases in our services revenue. Non-GAAP subscription gross profit was $26.6 million, compared to $20.4 million in the second quarter of 2021. Non-GAAP subscription gross margin was 72.5% in the second quarter of 2022 compared to 68.8% in the same quarter of 2021. The 370 basis points year-over-year margin expansion reflects operational hosting improvements as we migrate non-core hosting services and optimize our cloud computing usage. On top of the non-GAAP subscription gross margin expansion, we also improved our services gross margin, which led to an overall non-GAAP gross profit reaching $25.7 million, representing a year-over-year increase of 36% and a margin improvement of 510 basis points. Our non-GAAP total operating expenses increased to $43.3 million in the second quarter of 2022 from $29.4 million in the same period last year. This resulted in our non-GAAP loss from operations of $17.5 million during the second quarter of 2022, compared to $10.4 million in the second quarter of 2021. The increase in expenses and loss from operations were primarily due to VTEX Day and one-off layoff expenses. Both accounted for slightly more than $5 million, with VTEX Day representing the majority of this amount. Along these lines, and when taking into account all those previous comments, we expect not only to continue delivering gross margin improvements but also to see significant operational leverage in our expenses in the second half of 2022. Leverage on the expense side will come from our already well-invested structure as well as a result of the hard decision of laying off 193 employees, a decision we handled with transparency, respect and utmost responsibility. Our end market and business model make us confident in our ability to demonstrate attractive capital allocation while achieving top line growth for many years to come. Our non-GAAP operating income margin from existing stores has ranged between 35% and 15% in 2020 and 2021, respectively, giving us a clear path to continue executing our growth plans while also seeing our potential operating margin opportunity. As of the three months ended June 30, 2022, in June, VTEX had negative $12.7 million free cash flow compared to negative $14.7 million free cash flow in the second quarter of 2021. Since the beginning of 2022, we've been working diligently to optimize our working capital, which resulted in an improvement in cash flow despite the one-off expenses already mentioned. These improvements in working capital are a result of operational improvements in our collection of receivables, as well as procurement optimization in our prepaid expenses and accounts payables. Regarding our future outlook, we continue to see macroeconomic uncertainty impacting our new stores' average time to implement the VTEX platform, as well as generating volatility in our existing customers' GMV performance. We had a solid performance in Q2, and for the second half of the year, we will continue focusing on helping our customers outperform the market while also improving our gross margin and operating income margins. In the third quarter of 2022, although we are entering into cleaner comps, macroeconomic conditions remain uncertain. Therefore, we are currently targeting revenue in the $37.0 million to $38.0 million range for the third quarter of 2022, implying a year-over-year growth of 18% in US dollars and 20% on FX neutral basis in the middle of the range. For the full year 2022, despite the incremental volatility, we maintain our FX neutral year-over-year revenue growth target of 24% to 27%, implying a range of $158 million to $162 million based on July average FX rates. VTEX is well positioned to navigate the current environment. We have clear visibility of our path to break even. We are capitalized with over $250 million in liquidity on the balance sheet. Considering our excess liquidity after funding our organic growth plans, we see three key areas as potentially interesting capital allocation opportunities. We could use part of this capital to pursue M&A opportunities. Although the gap between public and private markets may pose short-term challenges, over the medium and long term, this could be an interesting capital deployment opportunity. We could also use part of this capital to accelerate our international expansion. Although we are in the early and intermediate stages of international expansion, capital should be deployed with caution, while over the medium and long term, as we see clear evidence of commercial traction, this could be an interesting capital allocation. Finally, as approved by our board of directors, we now have share repurchases as an additional tool for capital deployment, which could be useful in moments of market dislocations. We will always diligently evaluate these options and allocate capital in the best interest of long-term shareholders based on the evaluation of market conditions and applicable legal requirements. Wrapping up today's call, we are clearly adding value to our customers by helping them outperform the market. We continue to have a strong backlog undergoing implementation. We have an expanding gross margin and expect to deliver operating income margin improvements in the second half of the year. All these together give us confidence in our business today and in the long-term opportunity we have ahead of us. We continue focusing on what makes VTEX unique: our blue chip and resilient customer base, the quality of our platforms, technology, products and features, and a strong and difficult-to-replicate ecosystem. With that, let's open it up for questions now. Thank you.

Operator, Operator

Thank you. The first question is from Fred Mendes with Bank of America. You may proceed.

Fred Mendes, Analyst

Hello, good afternoon, everyone, and thanks for the call. I have two questions here. The first one you mentioned again at Kleiner, US Momentum Textiles. It looks like it’s wrapping up this operation. So if you could share any information in terms of the profile of these clients, the roadmap for gaining market share in the U.S., and any kind of information on the U.S. market would be great. That'd be my first question. The second question: when I look at the guidance for 2022, considering what you already delivered in $38 million for the third quarter, the top of the range for the third quarter would imply needing to deliver something like $47 million in the fourth quarter. That's like a 23% acceleration quarter-over-quarter, which is higher than what happened last year. So just how confident are you in terms of reaching this guidance considering that the fourth quarter needs to be a strong one in order to deliver the numbers for the year? Thank you.

Mariano Gomide de Faria, Founder and Co-CEO

Okay, Fred. I’m going to answer regarding the expansion in the U.S. first, and then I will pass to Sodre. So in the U.S., we keep seeing a strong pipeline. We are witnessing a change in the profile with a bit more organic leads coming. This is good in our view; this is recognition of our visibility increasing our ability to generate our own deals. And the pipeline is planned to be stronger as we announced that in the beginning of the year. So all the clients that we are implementing in the U.S. are following the plan. The momentum that you saw in the client is going to continue to focus on midsize B2B as Briggs and Stratton, as we put live them, and we are going to continue to focus on the migration of old legacy platforms. We are confident that we will be able to deliver the momentum that we planned for the U.S.

Ricardo Camatta Sodre, Finance Executive Officer

Perfect. And Mariano, just to complement your answer to the second question. Hi Fred, it’s Ricardo Sodre here. Thanks for the question. Regarding the implicit guidance right for Q4, we believe Q4 may show some acceleration versus Q2 in our guidance for Q3. That will be driven mainly by fourth quarter 2022 seasonality, which is more aligned with previous years than the fourth quarter 2021 seasonality, which was a little weaker than usual, as well as the GMV performance of our existing customers and the ramp-up of our recently implemented new customers. So those are the key drivers for some acceleration in the fourth quarter.

Fred Mendes, Analyst

Perfect, super clear. Thank you, Mariano. Thank you, Ricardo.

Operator, Operator

The next question is from the line of Clarke Jeffries with Piper Sandler. You may proceed.

Clarke Jeffries, Analyst

Hello, thank you for taking my question. From a high level, Ricardo, you guided to 20% FX neutral growth, you hit the 20% FX neutral growth, and you're maintaining the full year. So I guess beyond the GMV trends, and sort of adjusting for that, what are you seeing in terms of pipeline bookings? And especially, comparing to Q1, how has the appetite changed as 2022 is going on?

Ricardo Camatta Sodre, Finance Executive Officer

Yes, thanks. Happy to start and others to complement. For the second quarter, we delivered the 20% FX neutral growth in the middle of the guidance. We are guiding for 20%, and we have the guidance for Q3 as well. We are maintaining the guidance for the year. As we mentioned in the prepared remarks, we continue to see strong demand for the VTEX platform. E-commerce continues to have a very attractive long-term opportunity, and the omni-channel strategy and integrating different channels, both on the sales and on the fulfillment sides, is increasingly important for the brands and retailers out there. VTEX helps a lot with that. So we continue to see strong demand for the VTEX software, which is the most important driver for the long-term of the company. Macroeconomics and uncertainties do impact some volatility in the GMV of our existing customers, but that’s taken into account in our guidance for the next quarters as we see it right now.

Clarke Jeffries, Analyst

All right, perfect. And then, anyway, to help us think through how to think through the margin expansion for the second half of the year. Might it be fair to say that operating expenses could go back to Q1 levels and then stay there for the rest of the year? Any insight there would be helpful in thinking through what's possible on an expansion basis.

Ricardo Camatta Sodre, Finance Executive Officer

Yes, great question. We appreciate the opportunity to share some additional details on this topic. We believe a good way to look at it is that our layoffs reduced our headcount by roughly 10%. We are also optimizing other expenses not related to headcount at a similar level. Therefore, after excluding the layoff impacts from our Q2 expenses, you could expect 10% savings going forward. In other words, that will translate into slightly more than $1 million savings per month going forward.

Clarke Jeffries, Analyst

Perfect. Thank you very much.

Operator, Operator

Thank you. The next question is from the line of Diego Aragão with Goldman Sachs. You may proceed.

Diego Aragão, Analyst

Yes. Hi, thanks for taking my question. Two questions, if I may. The first one is maybe a follow up on the previous one related to the cost control initiative started during the quarter. I guess, Ricardo, what can you share with us regarding any efficiency program in place? And how should we be thinking about potential impact at the EBITDA level, right? Not only for the next quarters, but just want to understand how this could structurally impact your business and eventually also change your views regarding the breakeven at the EBITDA level, which if I'm not mistaken, was expected for the end of 2023. This is the first question. Thank you.

Ricardo Camatta Sodre, Finance Executive Officer

Great. Thanks, Diego, for the question. So maybe first starting from the breakeven: as mentioned in the previous earnings call, we are aiming to reach non-GAAP operating income by the fourth quarter of 2023. That continues to be our commitment. The recent adjustment that we mentioned, the layoff, is a clear demonstration of this commitment. Now, if there is an opportunity to reach breakeven sooner, while not impacting our growth plans, we will definitely pursue it. So I think that's on the timing there. On EBITDA level impact, as I mentioned in the previous question from Jeff, the optimization we did in our organization structure should create savings of roughly slightly more than a million dollars per month going forward. So if you remove our total expenses for Q2, which was roughly $43 million, and move the slightly more than $5 million that we had from the tax day and layoff expenses, you'd get to your $38 million or something around that neighborhood. And then if you remove these slightly more than $1 million per month, there'll be the expected expenses going forward. With that, you can have a sense of the EBITDA impact. Hopefully, I answered the question, Diego. But if it's not clear, please do a follow-up question.

Diego Aragão, Analyst

No, no, this was very, very helpful, Ricardo. Thank you for that. And I guess we can jump into the second question, which is regarding the profitability of existing customers versus new customers. As I understand, the operating margin for existing stores in 2021 was around 50%, which compares to a negative margin of 100%, 200%, for new stores opened the same year. I was just wondering if you can comment about the long-term margin for those existing clients as your business matures. How should we be thinking about those margins in the long term? And maybe if I can follow up on Fred's question regarding the profile of customers you are adding, particularly in the U.S. and Europe. I just want to understand if you are adding new brands to your portfolio or if you are adding brands that have been using the VTEX platform in Latin America in these regions. Thank you.

Ricardo Camatta Sodre, Finance Executive Officer

Great, Diego. Starting with the margins on existing customers and how they're evolving long term. We are not providing long-term margins for the business, but we do believe that breaking down our P&L between the existing customers’ P&L and the new customers’ P&L, as we are doing on a yearly basis, is very helpful to understand the potential margin of the business. As you mentioned, in 2021, our existing customers P&L had roughly 15% non-GAAP operating margins. If you look back in 2020, this was actually 35%. This shows the margin opportunity that we have ahead of us. Over time, customers tend not to change their margins after they transition from new customers into existing customers. Now, as we have been showing over the past few quarters, we are improving our subscription gross margin, which is the driver for the gross margin of the existing customers, and we believe there's an opportunity to continue improving the gross margins. The second question was regarding customers in the U.S. Mariano, if you want to take that one?

Mariano Gomide de Faria, Founder and Co-CEO

Yes, yes. So on the expansion of brands, we continue seeing brands expanding with VTEX. For example, we launched in India with Whirlpool. It is a global contract, and every single new country that has been added it is added value for VTEX, and we're very proud to support global clients like Whirlpool, Motorola, AB InBev, and others. Regarding the profile of the clients in the U.S. and Europe, we are focusing on two profiles: midsize B2B companies and midsize online versions for enterprise companies like Briggs & Stratton, and those are the clients we are seeing momentum with. Additionally, we are migrating from legacy platforms on both the B2B side and the B2C side. So you can expect those as the client profiles that we're going to be adding in the next year in the U.S. and Europe.

Diego Aragão, Analyst

Sounds good, Mariano and Ricardo. Thank you again.

Operator, Operator

Thank you. The next question is from Josh Beck with KeyBanc. You may proceed.

Maddie Schrage, Analyst

Hey, guys, this is Maddie on for Josh. Just to double-click a bit on what we were just talking about regarding your capital allocation priorities. What kind of investments do you think you need to make internationally from this point with the momentum that you're seeing? And could any of that be achieved through M&A? Are you looking through M&A from a product perspective or a geographic perspective or any other insight that would be helpful? Thanks.

Mariano Gomide de Faria, Founder and Co-CEO

So Mariano here, and please, I invite Sodre and Geraldo to complement. In terms of capital allocation, we will always be open to M&A. We are being very selective in how we analyze the opportunities right now in this market and this location. We want to see the right prices for the right companies with the right values. We will always be looking for M&A, but this is not the case that we are seeing many opportunities right now in the market. The other way, we will continue to invest in our organic growth, which has always been our plan. We will be prudent with our investment allocations. We have a playbook at VTEX that provides us with the economics of each region, enabling us to be responsible in our approach to market entry. We are on track with our plan, which should reflect positively in our numbers.

Ricardo Camatta Sodre, Finance Executive Officer

And Mariano, just to complement. Sorry just to add, I believe we have a well-invested structure in the U.S. and Europe that we are looking to continue leveraging going forward. There are many opportunities; we see some gaps in the data mask between private and public markets. So that's something that we are mindful of in the short term. As the question was also related to capital allocation, right. We also have now share repurchases as an additional option for capital allocation. As a high-growth company, we will prioritize our organic growth plans, international expansion, product development, and M&A opportunities. Now, considering the excess liquidity that we have in our balance sheets, as well as current market volatility, having the ability to repurchase shares during market dislocations could be a very attractive capital allocation to the long-term shareholders as well.

Maddie Schrage, Analyst

Awesome. And just one follow-up for me. Do you have any color on where you feel your most defensive verticals are in the perspective of your total GMV going forward? Thanks.

Geraldo Thomaz, Founder and Co-CEO

Hello, this is Geraldo. Nice to talk to you. I would say that the ideal customer profile of VTEX right now and in the future are customers that sell through multiple channels and have several physical stores. They can be grocery retailers, fashion brands, or B2B companies, as long as they are omni-channel and want to serve multiple channels through a single source of truth. We are the platform that's the ideal customer profile for us.

Maddie Schrage, Analyst

Thanks. I appreciate the color.

Operator, Operator

Thank you. There are no questions remaining in the queue. I'd like to pass the call back over to Geraldo for closing remarks.

Geraldo Thomaz, Founder and Co-CEO

We are encouraged about our results in the second quarter and excited about the results to come. As we are already seeing opportunities arising from the engineering, sales, and product teams with strong top line growth. We can control the macroenvironment, but we can certainly be bold in our actions to help our customers navigate this environment with the right set of tools to accelerate their businesses and drive growth higher than the market. Our discipline in capital allocation will continue to translate into a high-growth company with an extraordinary commitment to its mission to become the backbone for commerce globally. The opportunity we have ahead of us is huge. E-commerce penetration in Latin America still has a long road ahead, while our journey outside of the region is just starting. None of the fundamentals changed. Enterprise brands and retailers need to partner with companies such as VTEX to build a proper omni-channel strategy to stay relevant. The best is yet to come. Thank you, everyone, for joining us today. I'm looking forward to updating you about our progress in our next earnings call.

Operator, Operator

That concludes today's conference call. Thank you for joining and enjoy the rest of your day.