Semantix, Inc. (NASDAQ: STIX), a leading Latin American enterprise
AI platform and applications provider, today announced its
financial results for the quarter ended June 30, 2023.
“Second Quarter results reflect ongoing momentum in margin
accretive proprietary SaaS revenue, which has been primarily fueled
by the adoption of our cutting-edge AI applications. As an AI
centric company, we have always been at the forefront of
innovation, and we are thrilled to witness our customers'
increasing realization of how AI can solve their challenges,” said
Leonardo Santos, CEO and Founder of Semantix. “With the benefits of
AI becoming more tangible, we are leveraging our product
positioning and go-to-market communication to showcase our AI
platform and application capacities and empowering our customers
with real-world solutions to unleash the full potential of
artificial intelligence.”
Second Quarter 2023 Financial Highlights
- Proprietary SaaS revenue for the second quarter of 2023 grew
47% year-over-year.
- Gross profit increased 51% in the second quarter of 2023
year-over-year, with gross margin improving 15 percentage points
year-over-year to 47% in the second quarter of 2023.
- Net revenue for the second quarter of 2023 of R$48 million,
reflecting an increase of 4% year-over-year as compared to the
second quarter of 2022.
- Semantix had 14 customers in 2Q23 each contributing more than
US$1 million in revenue in the last twelve months.
- Adjusted EBITDA loss in the second quarter of 2023 was R$26
million. Cash and cash equivalents of R$151 million as of June 30,
2023. Net cash (net of the loans and borrowings) was R$90 million
as of June 30, 2023.
Key Business Highlights
- Product and Go-to-market natural evolution towards AI platform
and applications: substantial investments in product development
and acquisitions over the past twelve months have propelled
Semantix to evolve its product portfolio and refine its
go-to-market communication to a comprehensive, integrated AI
platform and a range of readily applicable AI applications tailored
to diverse business use cases, such as in the finance, retail,
health and pharma industries.“The partnership with Semantix enables
Quasar to explore machine learning and GenAI. Projects include data
integration, advanced models, and automation. This strategic move
forms the basis for cognitive application intelligence with GenAI,
transforming processes and service.” – Carlos Maggioli, CEO of
Quasar, a Brazilian independent investment manager and
foundational customer of Semantix AI Finance
Applications.
- Synergistic Offerings via User-Friendly Web Portal: Semantix
has strengthened its strategic alliances with Elastic and NEO4J and
is strategically integrating these renowned global providers'
complementary products with Semantix's cutting-edge AI platform and
applications on a unified channel. Therefore, Semantix will
reinforce its partners go-to-market in Latam while simultaneously
expanding its own market penetration across diverse customer
segments.
- Elastic1: Semantix will be the agent for building the LATAM
reseller chain, which will be trained and certified in Elastic’s
technology.
- Neo4j2: The partnership between Semantix, Google Cloud and
NEO4J aims to serve all Latin America and will provide local
support in Portuguese and monthly payment in local currency.1 –
Elastic is a prominent software company known for its search and
analytics solutions, helping organizations efficiently manage and
obtain insights from vast amounts of data.2 – Neo4j is a leading
graph database platform that specializes in managing and analyzing
complex relationships in data.
- Cash Control and Efficiency: Semantix has identified key
opportunities to reduce cash outflows by approximately 20% of its
annual costs1 and expenses. These efforts, focused on contract
optimization including insurance, cloud services, and vendor
arrangements, alongside with workforce adjustments aligned with
employee performance, are expected to significantly contribute to
the company's path to profitability. The implementation of these
strategies is anticipated to be realized over the next 12 months,
commencing from July 2023.1 – do not consider Resale of Third-party
Software related costs.
|
2Q23 and 1H23 Financial Metrics(In BRL million,
except for percentages) |
|
|
2Q 2023 |
2Q 2022 |
Y/Y Change |
|
1H23 |
1H22 |
Change |
Net Revenue |
R$ 48 |
R$ 46 |
4% |
|
R$ 88 |
R$ 86 |
3% |
Gross Profit |
R$ 23 |
R$ 15 |
51% |
|
R$ 40 |
R$ 28 |
42% |
Gross Margin |
47% |
33% |
15 pp |
|
45% |
32% |
13 pp |
Adjusted EBITDA |
(R$ 26) |
(R$21) |
(20%) |
|
(R$ 58) |
(R$ 36) |
(61%) |
Adjusted EBITDA Margin |
(54%) |
(47%) |
(7 pp) |
|
(66%) |
(42%) |
(24 pp) |
|
Jun 30, 2023 |
Dec 31, 2022 |
Change |
Cash and Cash Equivalents |
R$ 151 |
R$ 338 |
(55%) |
Net Cash (Debt) |
R$ 90 |
R$ 259 |
(65%) |
|
|
|
|
Financial Outlook
Based on current market conditions and management expectations,
Semantix continues to expect that proprietary SaaS revenue for 2023
will be between R$ 75 million and R$ 80 million. Aligned with
Semantix’s financial objectives to prioritize improved product
margins and revenue quality and its long-standing strategy of
focusing on proprietary SaaS growth, the company is no longer
guiding for full year total revenue.
Historically, Semantix has received a higher volume of orders
from new and existing customers during the second half of the year
and, in particular, in the fourth quarter of each year, which we
believe is due to, among other factors, the procurement, budgeting,
and deployment cycles of many of our customers, particularly large
enterprise customers.
Conference Call and Webcast Information
Semantix will host a conference call today, August 17, 2023, at
8:30 a.m. Eastern Time to discuss its financial results and
financial outlook. The conference call will be webcast live on
Semantix’s Investor Relations website at
ir.semantix.ai/news-events/events. Parties interested in
participating via telephone may register using this online form.
Upon registration, all telephone participants will receive the
dial-in number along with a unique PIN number that can be used to
access the call. A replay of the conference call webcast will be
archived on Semantix’s Investor Relations website for at least 30
days.
Forward-Looking Statements
This press release and the earnings call referencing this press
release contain forward-looking statements and forward-looking
information within the meaning of applicable United States
securities legislation that involve substantial risks and
uncertainties (collectively herein referred to as “forward-looking
statements”). All statements other than statements of historical
facts contained in this press release and addressed on our earnings
call, including statements regarding our future financial position,
results of operations, business strategy and plans and objectives
of management for future operations, are forward-looking
statements. For example, forward-looking statements include,
without limitation, statements concerning the following: the growth
of Semantix’s business and its ability to realize expected results,
including with respect to its net revenue, gross profit, gross
margin, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA
margin, cash and cash equivalents and net cash (debt); the
viability of its growth strategy, including with respect to its
ability to grow market share in Brazil and internationally,
particularly through the expansion of its proprietary SaaS data
solutions, grow revenue from existing customers, and consummate and
achieve expected benefits through acquisitions; opportunities,
trends and developments in the data industry, including with
respect to future financial performance in the industry; the size
of Semantix’s total addressable market; macroeconomic and
geopolitical factors, including as a result of the policies and
actions of the new administration in Brazil following the 2022
presidential election. In some cases, you can identify forward
looking statements by terminology such as “believe,” “may,” “will,”
“estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,”
“would,” “could,” “plan,” “project,” “forecast,” “predict,”
“potential,” “seem,” “seek,” “future,” “outlook,” “target,” “trend”
or other similar expressions (or the negative versions of such
words or expressions).
Such forward-looking statements are based on the current
expectations of our management and are inherently subject to
uncertainties and changes in circumstance and their potential
effects and speak only as of the date of such statement. There can
be no assurance that future developments will be those that have
been anticipated. Such forward-looking statements are subject to
risks, uncertainties, and other factors which could cause actual
results to differ materially from those expressed or implied by
such forward-looking statements and could adversely affect the
outcome and financial effects of the plans and events described
herein. In addition, even if the outcome and financial effects of
the plans and events described herein are consistent with the
forward-looking statements contained in this press release and the
earnings call referencing this press release, those results or
developments may not be indicative of results or developments in
subsequent periods. Although Semantix has attempted to identify
important risks and factors that could cause actual actions, events
or results to differ materially from those described in
forward-looking statements, there may be other factors and risks
that cause actions, events or results not to be as anticipated,
estimated or intended. Forward-looking information contained in
this press release and the earnings call referencing this press
release are based on current estimates, assumptions, expectations
and projections, including with respect to the management’s
expectations regarding Semantix’s growth based on historical
financial results and anticipated commercial developments, the
anticipated success of current strategies for market penetration in
Brazil and globally in light of competition from existing market
participants and the emergence of competitors in the future,
management’s expectations with respect to the development of
technology and other proprietary intellectual property by Semantix
based on existing technological realities and strategies with
respect to intellectual property development, management’s
expectations regarding the likelihood Semantix will be able to
enter into commercial arrangements with relevant third-parties and
customers, Semantix’s ability to maintain adequate margins based on
financial metrics available to management, the ability of Semantix
to finance its ongoing capital needs, the continued involvement of
Semantix’s management in Semantix’s operations and the ability of
Semantix to attract and retain talent in the future, which are
based on the information available as of the date of this press
release, and, while considered reasonable by Semantix, are
inherently uncertain. Historical statements contained in this
document regarding past trends or activities should not be taken as
a representation that such trends or activities will continue in
the future. In this regard, certain financial information contained
herein has been extracted from, or based upon, information
available in the public domain and/or provided by Semantix. In
particular, historical results should not be taken as a
representation that such trends will be replicated in the future.
No statement in this document is intended to be nor may be
construed as a profit forecast.
Nothing in this press release and the earnings call referencing
this press release should be regarded as a representation by any
person that the forward-looking statements set forth herein will be
achieved or that any of the contemplated results of such
forward-looking statements will be achieved. You should not place
undue reliance on forward-looking statements in this press release
and the earnings call referencing this press release, which speak
only as of the date they are made and are qualified in their
entirety by reference to the cautionary statements herein. This
press release also contains certain financial forecast information
of Semantix. Such financial forecast information constitutes
forward-looking information and is for illustrative purposes only
and should not be relied upon as necessarily being indicative of
future results. The assumptions and estimates underlying such
financial forecast information are inherently uncertain and are
subject to a wide variety of significant business, economic,
competitive, and other risks and uncertainties. Actual results may
differ materially from the results contemplated by the financial
forecast information contained in this press release, and the
inclusion of such information in this press release should not be
regarded as a representation by any person that the results
reflected in such forecasts will be achieved. You must make your
own determinations as to the reasonableness of these projections,
estimates, goals, trends and other statements and should also note
that if one or more estimates change, or one or more assumptions
are not met, or one or more unexpected events occur, the
performance and results set forth in such projections, estimates,
goals, trends and other statements may not be achieved. We can give
no assurance as to future operations, performance, results or
events.
WE DO NOT UNDERTAKE ANY OBLIGATION AND EXPRESSLY DISCLAIM ANY
RESPONSIBILITY TO UPDATE OR REVISE, OR PUBLICLY DISCLOSE ANY UPDATE
OR REVISION TO, ANY FINANCIAL FORECASTS CONTAINED HEREIN TO REFLECT
CIRCUMSTANCES OR EVENTS, INCLUDING UNANTICIPATED EVENTS, THAT MAY
HAVE OCCURRED OR THAT MAY OCCUR AFTER THE PREPARATION OF THESE
FORECASTS. HOWEVER, WE MAY ELECT TO UPDATE OUR BUSINESS OUTLOOK AT
ANY TIME FOR ANY REASON.
Non-GAAP Financial Measures
This press release includes certain non-IFRS financial measures
and industry metrics such as EBITDA, EBITDA margin, Adjusted
EBITDA, Adjusted EBITDA margin and net cash (debt). These measures
are an addition, and not a substitute for or superior to, measures
of financial performance prepared in accordance with IFRS and
should not be considered as an alternative to net income, operating
income or any other performance measures derived in accordance with
IFRS. Semantix believes that these measures (including on a
forward-looking basis) provide useful supplemental information to
investors about Semantix, particularly as they exclude the impacts
of certain events that we believe are isolated in nature incurred
as part of our recent expansion and, therefore, not reflective of
our underlying results. Semantix’s management does not consider
these non-IFRS measures in isolation or as an alternative to
financial measures determined in accordance with IFRS. Semantix’s
management uses forward-looking non-IFRS measures to evaluate
Semantix’s projected financials and operating performance. However,
there are a number of limitations related to the use of these
measures, including that they exclude significant expenses that are
required by IFRS to be recorded in Semantix’s financial statements,
including certain expenses with share based plan expenses, D&O
insurance, gains from fair value of Semantix’s warrants and
concentrated expenses of an extraordinary nature incurred in
connection with our completed business combination with a SPAC
occurred in 2022 and the earn-out compensation related to our
acquisitions. In addition, other companies may calculate non-IFRS
measures or industry metrics differently or may use other measures
to calculate their financial performance, and therefore, Semantix’s
non-IFRS measures and industry metrics may not be directly
comparable to similarly titled measures of other companies.
Additionally, to the extent that forward-looking non-IFRS financial
measures are provided, they are presented on a non-IFRS basis
without reconciliations of such forward-looking non-IFRS measures
due to the inherent difficulty in forecasting and quantifying
certain amounts that are necessary for such reconciliations.
Other Business Metrics
Proprietary SaaS and Resale of Third-party
Software: Proprietary SaaS consists of Semantix’s data
platform software, while resale of third-party Software consists of
the resale of licenses from third-party data platform software
providers.
Customers with Trailing 12-Month Revenue Greater than
US$1 Million: Large customer relationships lead to scale
and operating leverage in our business model. Compared with smaller
customers, large customers present a greater opportunity for us to
sell additional capacity because they have larger budgets, and a
wider range of potential use cases. As a measure of our ability to
scale with our customers and attract large enterprises, we count
the number of customers that contributed more than US$1 million in
revenues in the trailing 12 months, considering the Brazilian real
to US Dollar exchange rate as of March 31, 2023. Our customer count
is subject to adjustments for acquisitions, consolidations,
spin-offs, and other market activity.
Net Cash (Debt): Net cash (debt) reflects
Semantix’s cash and cash equivalents balance at a given date in
time, net of the loans and borrowings balance as of the same
date.
About Semantix
Semantix is a leading Latin America integrated AI software
platform and applications provider. Semantix has more than 300
clients with operations in approximately 15 countries using
Semantix’s software and services to enhance their businesses. The
company was founded in 2010 by CEO Leonardo Santos. For more
information, visit www.semantix.ai.
|
Semantix,
Inc. Unaudited Consolidated Statement of Profit or
Loss (in BRL thousands) |
|
|
|
|
|
|
Three Months Ended, Jun, 30 |
Six Months Ended, Jun, 30 |
|
2023 |
2022 |
2023 |
2022 |
Revenues |
48,003 |
46,108 |
87,682 |
85,542 |
Cost of sales |
(25,346) |
(31,067) |
(48,151) |
(57,793) |
Gross profit |
22,657 |
15,041 |
39,531 |
27,749 |
Operating expenses |
|
|
|
|
Sales and marketing expenses |
(12,952) |
(15,578) |
(27,204) |
(24,830) |
General and administrative expenses |
(40,111) |
(19,730) |
(76,303) |
(59,498) |
Research and development |
(8,626) |
(13,287) |
(21,322) |
(20,565) |
Operating loss |
(39,032) |
(33,554) |
(85,298) |
(77,144) |
|
|
|
|
|
Financial income |
9,487 |
2,335 |
19,850 |
6,630 |
Financial expenses |
(3,703) |
(12,715) |
(18,164) |
(19,208) |
Net financial results |
5,784 |
(10,380) |
1,686 |
(12,578) |
|
|
|
|
|
Loss before income tax |
(33,249) |
(43,934) |
(83,612) |
(89,722) |
Income tax |
(2,795) |
1,670 |
(246) |
3,572 |
Loss for the period |
(36,044) |
(42,264) |
(83,858) |
(86,150) |
|
Semantix,
Inc. Unaudited Revenue Mix(in BRL
thousands) |
|
|
Three Months Ended, Jun, 30 |
Six Months Ended, Jun, 30 |
|
2023 |
2022 |
2023 |
2022 |
Third-party software |
26,867 |
28,888 |
50,470 |
52,246 |
Deductions on third-party software |
(3,151) |
(2,996) |
(5,344) |
(4,943) |
Revenue from Third-party software |
23,716 |
25,892 |
45,126 |
47,303 |
|
|
|
|
|
AI & data analytics services |
9,393 |
10,524 |
17,831 |
19,076 |
Deductions on AI & data analytics services |
(631) |
(690) |
(1,194) |
(1,250) |
Revenue from AI & data analytics services |
8,762 |
9,834 |
16,637 |
17,826 |
|
|
|
|
|
Proprietary software as a service (SaaS) |
16,356 |
11,108 |
27,500 |
21,839 |
Deductions on proprietary software as a service (SaaS) |
(1,143) |
(726) |
(1,893) |
(1,429) |
Revenue from proprietary software as a service
(SaaS) |
15,213 |
10,382 |
25,607 |
20,410 |
|
|
|
|
|
Other revenue |
312 |
— |
312 |
3 |
|
|
|
|
|
Total revenue |
48,003 |
46,108 |
87,682 |
85,542 |
|
Semantix, Inc. Unaudited Consolidated Statement of Cash
Flows (in BRL thousands) |
|
|
Six months ended June 30 |
|
|
2023 |
|
2022 |
|
Loss for the period |
(83,858) |
|
(86,150) |
|
Adjustments to reconcile loss for the period |
|
|
|
Depreciation and amortization |
16,165 |
|
7,471 |
|
Deferred income tax |
333 |
|
(3,683) |
|
Onerous contract |
— |
|
(477) |
|
Fair value adjustment of derivatives financial instruments |
5,164 |
|
1,586 |
|
Stock option plan |
1,732 |
|
2,292 |
|
Trade and other receivables expected loss |
7,461 |
|
484 |
|
Accounts receivable write-off and Write-off of creditor
invoice |
(227) |
|
(4,590) |
|
Provision for contingencies |
443 |
|
774 |
|
Interest accrued |
4,208 |
|
14,979 |
|
Interest paid |
(1,954) |
|
(11,815) |
|
Change in operating assets and liabilities |
(92,777) |
|
(76,481) |
|
Net cash outflow from operating activities |
(94,731) |
|
(88,296) |
|
Purchase and development of intangible assets |
(19,389) |
|
(14,652) |
|
Acquisition of subsidiaries net of cash acquired |
(24,386) |
|
— |
|
Acquisitions of property and equipment |
(76) |
|
(319) |
|
Net cash outflow from investment activities |
(43,851) |
|
(14,971) |
|
Loans obtained |
— |
|
122,016 |
|
Proceeds from exercise of stock options |
511 |
|
276 |
|
Acquisition of non-controlling interest |
5,018 |
|
(148) |
|
Payment of loans |
(20,027) |
|
(21,210) |
|
Purchase of treasury shares |
(34,633) |
|
— |
|
Lease payments |
(794) |
|
(535) |
|
Net cash inflow (outflow) from financing
activities |
(49,925) |
|
100,399 |
|
Increase (decrease) in cash and cash
equivalents |
(188,507) |
|
(2,868) |
|
Cash and cash equivalents at the beginning of the year |
338,020 |
|
52,149 |
|
Cash and cash equivalents at the end of the year |
151,223 |
|
48,881 |
|
Effect of exchange rate changes |
1,710 |
|
(400) |
|
Increase (decrease) in cash and cash
equivalents |
(188,507) |
|
(2,868) |
|
|
|
|
|
Supplemental non-cash flow information |
|
|
|
Remeasurement of lease agreement |
199 |
|
— |
|
Unpaid amount related to business combination |
9,558 |
|
— |
|
Other receivables related to the sale of non-controlling
interest |
5,018 |
|
— |
|
|
Semantix, Inc. Unaudited Consolidated
Statement of Financial Position(in BRL thousands) |
|
|
June 30, 2023 |
December 31, 2022 |
ASSETS |
|
|
Cash and cash equivalents |
151,223 |
338,020 |
Trade receivables and other, net |
140,801 |
139,546 |
Tax receivables |
17,037 |
11,317 |
Prepaid expenses and other assets |
23,338 |
35,060 |
PP&E, Intangible and right of use asset |
165,770 |
156,110 |
Deferred tax asset |
21,818 |
22,488 |
Total current assets |
326,459 |
519,169 |
Total non-current assets |
193,528 |
183,372 |
Total assets |
519,987 |
702,541 |
|
|
|
LIABILITIES |
|
|
Loans and borrowings |
60,789 |
78,671 |
Trade and other payables |
68,756 |
107,695 |
Lease liabilities and other liabilities |
51,538 |
64,676 |
Taxes payable |
12,700 |
14,733 |
Derivatives financial instruments |
12,811 |
6,412 |
Deferred income tax |
8,592 |
8,929 |
Total current liabilities |
115,686 |
181,390 |
Total non-current liabilities |
99,500 |
99,726 |
Total liabilities |
215,186 |
281,116 |
|
|
|
EQUITY |
|
|
Share capital |
425 |
425 |
Additional paid-in capital |
872,771 |
872,771 |
Capital reserves |
22,543 |
20,300 |
Other comprehensive income |
(7,216) |
(6,840) |
Treasury shares |
(35,141) |
(508) |
Accumulated loss |
(552,224) |
(468,869) |
Non-controlling interests |
3,643 |
4,146 |
Total equity |
304,801 |
421,425 |
Total equity + liabilities |
519,987 |
702,541 |
|
Semantix
Inc. GAAP to Non-GAAP Adjusted EBITDA and Adjusted
EBITDA Margin Reconciliations(in BRL thousand) |
|
|
Three Months Ended,June 30, |
Six Months Ended,June 30, |
|
2023 |
2022 |
2023 |
2022 |
Loss for the period |
(36,044) |
(42,263) |
(83,858) |
(86,150) |
(+/-) Net interest income (expenses) |
(4,647) |
7,735 |
(10,476) |
11,736 |
(+/-) Income tax |
2,794 |
(1,675) |
246 |
(3,577) |
(+) Depreciation and amortization |
8,205 |
3,760 |
16,164 |
7,478 |
EBITDA |
(29,692) |
(32,444) |
(77,925) |
(70,512) |
(+) Share based plan expenses (1) |
1,086 |
1,342 |
2,173 |
2,907 |
(+) Transaction expenses (2) |
- |
9,645 |
- |
31,408 |
(+) D&O Expenses (3) |
4,391 |
- |
9,002 |
- |
(+/-) Fair Value of Derivative Financial Instruments (4) |
(3,617) |
- |
5,079 |
- |
(+) Earn-Outs (5) |
2,052 |
- |
3,552 |
- |
Adjusted
EBITDA |
(25,780) |
(21,458) |
(58,119) |
(36,198) |
Net Revenue |
48,003 |
45,918 |
87,682 |
85,353 |
Adjusted EBITDA Margin |
(54%) |
(47%) |
(66%) |
(42%) |
(1) Consists of expenses related to share based
compensation grants, including payroll expenses in the amounts of
R$0.2 million and R$0.3 million in the three-month periods ended
June 30, 2023 and 2022, respectively.(2) Consists of
concentrated expenses of an extraordinary nature related to
third-party advisory, support services, travelling and events
incurred in connection with our business combination with a SPAC
that are not expected to be ongoing.(3) Consists of
expenses related to D&O Insurance (directors’ and officers’
liability insurance).(4) Consists of gains from fair
value of Semantix Warrants.(5) Consists of expenses
related to earn-out payment to the former shareholders of Zetta and
Elemeno.
Investor
ContactAdriano AlcaldeChief Financial Officer &
IRir@semantix.ai
Press Contactsemantix@rpmacomunicacao.com.br
Source: Semantix, Inc.
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