UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2023
 
Commission File Number 001-40626
 
VTEX
(Exact name of registrant as specified in its charter)
 
N/A
(Translation of registrant’s name into English)
 
125 Kingsway, WC2B 6NH
 London, United Kingdom
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
 
Form 20-F ☒ Form 40-F ☐
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Table of Contents
 
PART I - FINANCIAL INFORMATION
3
 

 		Item 1 - Financial Statements
3
 

 		Condensed consolidated interim balance sheets
4
 

 		Condensed consolidated interim statements of profit or loss
6


Condensed consolidated interim statements of changes in shareholder’s equity
7
 

 		Condensed consolidated interim statements of cash flows
8
 

 		Notes to condensed consolidated interim financial statements
9
 

 		Item 2 - Management’s discussion and analysis of financial condition and results of operations
29
 

 		PART II - OTHER INFORMATION
42
 

 		Item 1 - Signatures
42
 
2
PART I - FINANCIAL INFORMATION
 
Item 1 -     Financial Statements
 
 
Index to Financial Statements
 
VTEX
 
 
Condensed consolidated interim financial statements
 
Condensed consolidated interim balance sheets
 
Condensed consolidated interim statements of profit or loss
 
Condensed consolidated interim statements of changes in shareholder’s equity
 
Condensed consolidated interim statements of cash flows
 
Notes to the condensed consolidated interim financial statements

3
VTEX 
Condensed consolidated interim balance sheet
(Unaudited)
In thousands of U.S. dollars, unless otherwise indicated

   
June 30, 2023
    
December 31, 2022
  
ASSETS
            
Current assets
            
Cash and cash equivalents
    
100,504
      
24,394
  
Restricted cash
    
-
      
1,608
  
Short-term investments
    
122,002
      
214,164
  
Trade receivables
    
43,432
      
36,844
  
Recoverable taxes
    
4,525
      
5,122
  
Deferred commissions
    
831
      
663
  
Prepaid expenses
    
4,166
      
4,152
  
Derivative financial instruments
    
-
      
117
  
Other current assets
    
45
      
93
  
Total current assets
    
275,505
      
287,157
  
                 
Non-current assets
                
Trade receivables
    
6,437
      
5,432
  
Deferred tax assets
    
21,836
      
17,710
  
Prepaid expenses
    
145
      
204
  
Recoverable taxes
    
4,151
      
3,334
  
Deferred commissions
    
2,495
      
1,790
  
Other non-current assets
    
987
      
957
  
Right-of-use assets
    
4,169
      
4,818
  
Property and equipment, net
    
3,474
      
3,909
  
Intangible assets, net
    
31,397
      
31,210
  
Investments in joint venture
    
825
      
1,152
  
Total non-current assets
    
75,916
      
70,516
  
Total assets
    
351,421
      
357,673
  

The above condensed consolidated interim balance sheet should be read in conjunction with the accompanying notes.

4
VTEX 
Condensed consolidated interim balance sheet
(Unaudited)
In thousands of U.S. dollars, unless otherwise indicated

   
June 30, 2023
    
December 31, 2022
  
LIABILITIES
            
Current liabilities
            
Accounts payable and accrued expenses
    
35,372
      
34,136
  
Loans and financing
    
-
      
1,153
  
Taxes payable
    
4,989
      
4,128
  
Lease liabilities
    
2,002
      
1,898
  
Deferred revenue
    
24,516
      
20,332
  
Derivative financial instruments
    
35
      
-
  
Accounts payable from acquisition of subsidiaries
    
-
      
299
  
Other current liabilities
    
17
      
70
  
Total current liabilities
    
66,931
      
62,016
  
                 
Non-current liabilities
                
Accounts payable and accrued expenses
    
1,013
      
511
  
Taxes payable
    
160
      
160
  
Lease liabilities
    
3,301
      
3,737
  
Deferred revenue
    
18,473
      
13,923
  
Deferred tax liabilities
    
2,745
      
2,464
  
Other non-current liabilities
    
224
      
185
  
Total non-current liabilities
    
25,916
      
20,980
  
                 
EQUITY
                
Issued Capital
    
19
      
19
  
Capital reserve
    
385,015
      
390,885
  
Other reserves
    
4,389
      
127
  
Accumulated losses
    
(130,912
)
    
(116,373
 )
Equity attributable to VTEX’s shareholders
    
258,511
      
274,658
  
Non-controlling interests
    
63
      
19
  
Total shareholders’ equity
    
258,574
      
274,677
  
Total liabilities and equity
    
351,421
      
357,673
  

The above condensed consolidated interim balance sheet should be read in conjunction with the accompanying notes.

5
VTEX 
Condensed consolidated interim statements of profit or loss
(Unaudited)
In thousands of U.S. dollars, unless otherwise indicated

   
Three months ended
   
Six months ended
  
   
June 30, 2023
    
June 30, 2022
    
June 30, 2023
    
June 30, 2022
  
                         
Subscription revenue
    
44,772
      
36,649
      
84,534
      
69,230
  
Services revenue
    
3,114
      
2,065
      
5,634
      
4,151
  
Total revenue
    
47,886
      
38,714
      
90,168
      
73,381
  
                                 
Subscription cost
    
(11,153
)
    
(10,166
)
    
(21,553
)
    
(20,162
)
Services cost
    
(4,353
)
    
(2,842
)
    
(8,519
)
    
(5,449
)
Total cost
    
(15,506
)
    
(13,008
)
    
(30,072
)
    
(25,611
)
Gross profit 
    
32,380
      
25,706
      
60,096
      
47,770
  
                                 
Operating expenses
                                
General and administrative
    
(8,242
)
    
(7,431
)
    
(16,167
)
    
(14,352
)
Sales and marketing
    
(14,449
)
    
(21,318
)
    
(29,231
)
    
(39,218
)
Research and development
    
(16,305
)
    
(15,409
)
    
(30,264
)
    
(29,334
)
Other losses
    
(511
)
    
(474
)
    
(1,265
)
    
(465
)
Loss from operations
    
(7,127
)
    
(18,926
)
    
(16,831
)
    
(35,599
)
                                 
Financial income
    
9,240
      
4,696
      
16,599
      
8,988
  
Financial expense
    
(9,126
)
    
(10,122
)
    
(15,029
)
    
(19,135
)
Financial result, net
    
114
      
(5,426
)
    
1,570
      
(10,147
)
                                 
Equity results
    
367
      
268
      
708
      
487
  
                                 
Loss before income tax
    
(6,646
)
    
(24,084
)
    
(14,553
)
    
(45,259
)
                                 
Income tax
                                
Current
    
(1,697
)
    
(574
)
    
(2,267
)
    
(1,001
)
Deferred
    
1,733
      
3,193
      
2,282
      
5,705
  
Total income tax
    
36
      
2,619
      
15
      
4,704
  
                                 
Net loss for the period
    
(6,610
)
    
(21,465
)
    
(14,538
)
    
(40,555
)
                                 
Attributable to controlling shareholders
    
(6,611
)
    
(21,464
)
    
(14,539
)
    
(40,553
)
Non-controlling interest
    
1
      
(100
)
    
1
      
(2
)
                                 
Loss per share
                                
Basic loss per share
    
(0.035
)
    
(0.112
)
    
(0.077
)
    
(0.212
)
Diluted loss per share
    
(0.035
)
    
(0.112
)
    
(0.077
)
    
(0.212
)

The above condensed consolidated interim statements of profit or loss should be read in conjunction with the accompanying notes
6
VTEX
Condensed consolidated interim statements of changes in shareholders’ equity
(Unaudited)
In thousands of U.S. dollars, unless otherwise indicated

   
Issued capital
    
Capital reserve
    
Other
reserves
    
Accumulated
losses
    
Equity
attributable to
VTEX’s
shareholders
    
Non-controlling
interests
    
Total
shareholders’
equity
  
At January 1, 2022
    
19
      
390,466
      
652
      
(63,955
)
    
327,182
      
7
      
327,189
  
Net loss for the period
    
-
      
-
      
-
      
(40,553
)
    
(40,553
)
    
(2
)
    
(40,555
 )
Other comprehensive income (loss)
    
-
      
-
      
(48
)
    
-
      
(48
)
    
-
      
(48
 )
Total comprehensive loss for the period
    
-
      
-
      
(48
)
    
(40,553
)
    
(40,601
)
    
(2
)
    
(40,603
 )
Transactions with owners of the Company
                                                        
Exercise of stock options
    
-
      
28
      
-
      
-
      
28
      
-
      
28
  
Issue of ordinary shares as consideration for a business combination
    
-
      
3
      
-
      
-
      
3
      
-
      
3
  
Share-based compensation
    
-
      
4,537
      
-
      
-
      
4,537
      
-
      
4,537
  
Transactions with non-controlling interests
    
-
      
-
      
-
      
-
      
-
      
5
      
5
  
Total transactions with owners of the Company
    
-
      
4,568
      
-
      
-
      
4,568
      
5
      
4,573
  
At June 30, 2022
    
19
      
395,034
      
604
      
(104,508
)
    
291,149
      
10
      
291,159
  
                                                         
                                                         
At January 1, 2023
    
19
      
390,885
      
127
      
(116,373
)
    
274,658
      
19
      
274,677
  
Net loss for the period
    
-
      
-
      
-
      
(14,539
)
    
(14,539
)
    
1
      
(14,538
 )
Other comprehensive income (loss)
    
-
      
-
      
4,262
      
-
      
4,262
      
-
      
4,262
  
Total comprehensive loss for the period
    
-
      
-
      
4,262
      
(14,539
)
    
(10,277
)
    
1
      
(10,276
 )
Transactions with owners of the Company
                                                        
Exercise of stock options
    
-
      
88
      
-
      
-
      
88
      
-
      
88
  
Share repurchase program
    
-
      
(13,841
)
    
-
      
-
      
(13,841
)
    
-
      
(13,841
 )
Share-based compensation
    
-
      
7,883
      
-
      
-
      
7,883
      
-
      
7,883
  
Transactions with non-controlling interests
    
-
      
-
      
-
      
-
      
-
      
43
      
43
  
Total transactions with owners of the Company
    
-
      
(5,870
)
    
-
      
-
      
(5,870
)
    
43
      
(5,827
 )
At June 30, 2023
    
19
      
385,015
      
4,389
      
(130,912
)
    
258,511
      
63
      
258,574
  

The above condensed consolidated interim statements of changes in shareholders’ equity should be read in conjunction with the accompanying notes
7
VTEX 
Condensed consolidated interim statements of cash flows
(Unaudited)
In thousands of U.S. dollars, unless otherwise indicated

 
  
June 30, 2023
    
June 30, 2022
  
             
Net loss for the period
    
(14,538
)
    
(40,555
 )
Adjustments for:
                
Depreciation and amortization
    
2,494
      
2,205
  
Deferred income tax
    
(2,282
)
    
(5,705
 )
Loss on disposal of rights of use, property, equipment, and intangible assets
    
612
      
(126
 )
Expected credit losses from trade receivables
    
737
      
509
  
Share-based compensation
    
7,621
      
4,537
  
Provision for payroll taxes (share-based compensation)
    
1,320
      
(2,147
 )
Adjustment of hyperinflation
    
4,860
      
2,079
  
Equity results
    
(708
)
    
(487
 )
Fair value (gains) losses
    
(5,450
)
    
7,970
  
Others and foreign exchange, net
    
(2,616
)
    
(487
 )
Change in operating assets and liabilities
                
Trade receivables
    
(6,609
)
    
2,042
  
Recoverable taxes
    
(119
)
    
(162
 )
Prepaid expenses
    
488
      
3,204
  
Other assets
    
(64
)
    
(164
 )
Accounts payable and accrued expenses
    
(1,388
)
    
1,086
  
Taxes payable
    
1,108
      
(645
 )
Deferred revenue
    
6,170
      
(1,541
 )
Other liabilities
    
227
      
368
  
Cash used in operating activities
    
(8,137
)
    
(28,019
 )
Income tax paid
    
(37
)
    
(603
 )
Net cash used in operating activities
    
(8,174
)
    
(28,622
 )
Cash flows from investing activities
                
Dividends received from joint venture
    
1,138
      
146
  
Purchase of short-term investment
    
(21,273
)
    
(110,991
 )
Redemption of short-term investment
    
118,311
      
53,057
  
Interest and dividend received from short-term investments
    
1,233
      
297
  
Payment of business acquired
    
-
      
(1,512
 )
Acquisitions of property and equipment
    
(178
)
    
(166
 )
Derivative financial instruments
    
(45
)
    
-
  
Net cash provided by (used in) investing activities
    
99,186
      
(59,169
 )
Cash flows from financing activities
                
Derivative financial instruments
    
-
      
(718
 )
Changes in restricted cash
    
1,660
      
575
  
Proceeds from the exercise of stock options
    
88
      
28
  
Net-settlement of share-based payment
    
(932
)
    
(783
 )
Buyback of shares
    
(13,841
)
    
-
  
Payment of loans and financing
    
(1,238
)
    
(1,327
 )
Interest paid
    
(5
)
    
(36
 )
Principal elements of lease payments
    
(751
)
    
(574
 )
Lease interest paid
    
(302
)
    
(351
 )
Net cash used in financing activities
    
(15,321
)
    
(3,186
 )
Net increase (decrease) in cash and cash equivalents
    
75,691
      
(90,977
 )
Cash and cash equivalents, beginning of the period
    
24,394
      
121,006
  
Effect of exchange rate changes
    
419
      
(362
 )
Cash and cash equivalents, end of the period
    
100,504
      
29,667
  
                 
Non-cash transactions:
                
Lease liabilities arising from obtaining right-of-use assets
    
85
      
1,020
  
Issue of ordinary shares as consideration for a business combination
    
-
      
3
  
Dividends from joint venture used to pay accounts from acquisition of subsidiaries
    
-
      
448
  
Transactions with non-controlling interests
    
43
      
5
  

The above condensed consolidated interim statements of cash flows should be read in conjunction with the accompanying notes.
8

VTEX
Notes to the condensed consolidated interim financial statements
(Unaudited)
In thousands of U.S. dollars, unless otherwise indicated

1
General information
VTEX (“VTEX” or the “Company”) and its subsidiaries, or collectively referred to as the “Group”, provide a software-as-a-service digital commerce platform for enterprise brands and retailers. VTEX’s services enable its customers to execute their commerce strategy, including building online stores, integrating and managing orders across channels, and creating marketplaces to sell products from third-party vendors. The platform is also designed to be the operating system for the commerce ecosystem, enabling enterprise brands and retailers to orchestrate their network of consumers, business partners, suppliers, and fulfillment providers in one place with a complete Commerce, Marketplace, and OMS solution. VTEX assists global companies build, manage, and deliver native and advanced business-to-business (B2B), business-to-consumer (B2C), and Marketplace commerce experiences with competitive time-to-market. The Company's shares, under the symbol “VTEX”, are listed on the New York Stock Exchange (“NYSE”).
The following entities are part of the Group and are being consolidated in these unaudited condensed interim financial statements:
  

         
Interest held by the Group (%)
 
Company
Place of business /
country of
incorporation
Relationship
Principal
business
activity
June
30,
2023
December
31, 2022
June 30,
2022
 
VTEX (“VTEX”)
Cayman
Holding
Technology Services
      
 
VTEX Argentina S.A. (“VTEX ARG”)
Argentina
Subsidiary
Technology Services
100
100
100
 
VTEX Brasil Tecnologia para E-commerce LTDA. (“VTEX Brazil”)
Brazil
Subsidiary
Technology Services
100
100
100
 
VTEX Day Eventos LTDA (“VTEX DAY”)
Brazil
Subsidiary
Production of events
100
100
100
 
Loja Integrada Tecnologia Para Softwares S.A. (“Loja Integrada”)
Brazil
Subsidiary
Technology Services
98.87
99.58
99.76
 
VTEX Chile SPA (“VTEX CHI”)
Chile
Subsidiary
Technology Services
100
100
100
 
VTEX Colombia Tecnologia para Ecommerce S.A.S. (“VTEX COL”) 
Colombia
Subsidiary
Technology Services
100
100
100
 
VTEX Commerce Cloud Solutions LLC (“VTEX USA”)
USA
Subsidiary
Technology Services
100
100
100
 
VTEX Ecommerce Platform Limited (“VTEX UK”) 
UK
Subsidiary
Technology Services
100
100
100
 
VTEX Mexico Soluciones en Ecommerce S.R.L. de C.V. (“VTEX MEX”)
Mexico
Subsidiary
Technology Services
100
100
99.99
 
EICOM Business School S.A.P.I De C.V. (“Escuela”) 
Mexico
Subsidiary
Technology Services
100
100
100
 
Peru Tecnologia para ECOMMERCE S.A.C. (“VTEX PERU”)
Peru
Subsidiary
Technology Services
100
100
100
 
VTEX Platform España, S.L. ("VTEX ESP")
Spain
Subsidiary
Technology Services
100
100
100
 
Vtex Ecommerce Platform Limited - Sede Secondaria (“VTEX ITA”) 
Italy
Branch
Technology Services
100
100
100
 
Vtex Ecommerce Platform Limited London - Sucursala Bucuresti (“VTEX ROM”)
Romania
Branch
Technology Services
100
100
100
 
Vtex Ecommerce Platform Limited – Sucursal em Portugal (“VTEX PORT”)
Portugal
Branch
Technology Services
100
100
100


  The Group also holds VT Comercio, a joint venture (“JV”) established in July 2019 with a participation of 50%.
    
9
VTEX
Notes to the condensed consolidated interim financial statements
(Unaudited)
In thousands of U.S. dollars, unless otherwise indicated

2
Basis of presentation and consolidation

The accounting policies described in detail below have been consistently applied to all periods presented in these unaudited condensed consolidated interim financial statements, unless otherwise stated. The financial statements are applicable for the group consisting of VTEX and its subsidiaries. The accounting policies have been consistently applied by the Group.
 
 
a. Basis for preparation of the unaudited condensed consolidated interim financial statements
 
The unaudited condensed consolidated interim financial statements of VTEX Group for the six-month period ended June 30, 2023, have been prepared in accordance with IAS 34 – Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”).
The unaudited interim condensed consolidated financial statements do not include all the information and disclosures required in an annual consolidated financial statement. Accordingly, this report is to be read in conjunction with the Group’s annual consolidated financial statements for the year ended December 31, 2022, and any public announcements made by the Group during the interim reporting period.
The accounting policies adopted are consistent with those of the previous financial year, except for the income tax estimation (see note 6) and the adoption of new and amended standards as set out below.
The unaudited condensed consolidated interim financial statements are presented in U.S. dollars (“USD” or “US$”), which is the Company’s functional and presentation currency. All amounts are rounded to the nearest thousands, except when otherwise indicated.
b. New standards, interpretations, and amendments adopted by the Group
A number of amended standards became applicable for the current reporting period. The Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these amended standards.

 
c. Critical estimates and accounting judgments

Management has made judgments and estimates that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income, and expenses. Actual results may differ from these estimates. Accounting estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are recognized prospectively.
In preparing these unaudited condensed consolidated interim financial statements, the significant judgments and estimates made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those set at the consolidated financial statements for the year ended December 31, 2022. No retrospective adjustments were made.

10
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

3.
Cash and cash equivalents

The breakdown of cash and cash equivalents is as follows:

     
June 30, 2023
    
December 31, 2022
 
Cash and cash bank deposits
    
20,133
      
18,930
 
US treasuries
    
72,965
      
-
 
Time deposits, investment funds and others
    
7,406
      
5,464
 
Total
    
100,504
      
24,394

4
 		Short-term investments

     
June 30, 2023
    
December 31, 2022
 
Investments funds 
    
105,629
      
204,045
 
Time deposits and others 
    
16,373
      
10,119
 
Short-term investments
    
122,002
      
214,164


 
4.1 Investment funds

The following table shows the changes in the balances:


     
2023
    
 
Opening balance on January 1
    
204,045
    
 
Additions
    
4,111
    
 
Redemption
    
(107,235
 )  
 
Fair value gains, net
    
5,374
    
 
Exchange differences
    
(666
 )  
 
Closing balance on June 30
    
105,629
    



 
4.2 Time deposits and others
The following table shows the changes in the balances:


     
2023
    
 
Opening balance on January 1
    
10,119
    
 
Additions
    
17,162
    
 
Redemption
    
(11,076
 )
 
 
Accrued interest
    
3,822
    
 
Exchange differences
    
(3,654
 )  
 
Closing balance on June 30
    
16,373
    

11
VTEX
Notes to the condensed consolidated interim financial statements
(Unaudited)
In thousands of U.S. dollars, unless otherwise indicated

5
Trade receivables

Trade receivables are as follows:

     
June 30, 2023
    
December 31, 2022
 
Trade receivables 
    
50,826
      
43,084 
 
Expected credit losses 
    
(957
)
    
(808)
 
Total trade receivables
    
49,869
      
42,276 
                 
 
Current
    
43,432
      
36,844 
 
Non-current
    
6,437
      
5,432 

  The changes in expected credit losses for trade receivables are as follows:

       
2023
        
 
Opening balance on January 1
    
(808
 )
 
    
 
Addition, net 
    
(737
 )
   
 
Write-off 
    
634
     
 
Exchange differences 
    
(46
 )
   
 
Closing balance on June 30
    
(957
 )
   

 
The trade receivables by maturity are distributed as follows:

     
June 30, 2023
    
December 31, 2022
 
Current 
    
47,107
      
39,188
 
Overdue:
              
 
From 1 to 30 days 
    
1,920
      
2,087
 
From 31 to 60 days 
    
589
      
454
 
From 61 to 90 days 
    
196
      
359
 
From 91 to 120 days 
    
240
      
295
 
From 121 to 300 days 
    
774
      
701
 
Total
    
50,826
      
43,084

6
Current and deferred tax
6.1 Deferred tax assets
The balance comprises temporary differences attributable to:
 
     
June 30, 2023
    
December 31, 2022
 
Loss allowances for financial assets
    
314
      
270
 
Bonus provision
    
1,089
      
1,712
 
Lease
    
423
      
392
 
Share-based compensation
    
3,913
      
3,130
 
Hyperinflationary adjustments
    
21
      
37
 
Tax loss (i)
    
13,864
      
10,513
 
Others (ii)
    
2,212
      
1,656
 
Total deferred tax assets 
    
21,836
      
17,710

 
(i) Tax losses increase is driven mainly by the current investment position of the Brazilian operations. These amounts are expected to be offset in the foreseeable future.
(ii) This amount refers mainly to temporary differences over accrued expenses.

12
VTEX
Notes to the condensed consolidated interim financial statements
(Unaudited)
In thousands of U.S. dollars, unless otherwise indicated

 
6.2 Deferred tax liabilities

The balance comprises temporary differences attributable to:
 
     
June 30, 2023
    
December 31, 2022
 
Acquisition of subsidiaries
    
1,281
      
1,409
 
Temporary differences
    
1,210
      
827
 
Others
    
254
      
228
 
Total deferred tax liabilities
    
2,745
      
2,464

 
6.3 Income Tax expense

Income tax expense is recognized based on Management’s estimate of the weighted average effective annual income tax rate expected for the full financial year.

     
Three months ended
   
Six months ended
     
June 30,
2023
    
June 30,
2022
    
June 30,
2023
    
June 30,
2022
 
Current tax
                      
 
Current tax on profits for the period 
    
(1,697
)
    
(574
)
    
(2,267
)
    
(1,001)
       
(1,697
)
    
(574
)
    
(2,267
)
    
(1,001)
 
Deferred income tax
                              
 
Decrease in deferred tax
    
1,733
      
3,193
      
2,282
      
5,705 
       
1,733
      
3,193
      
2,282
      
5,705 
                                 
 
Income tax
    
36
      
2,619
      
15
      
4,704 

13
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

7
Leases
   
  7.1 Amounts recognized in the balance sheet
   
  The balance sheet shows the following amounts related to leases:

         June 30, 2023        December 31, 2022  
  Right-of-use assets
               
 
Office buildings 
    
4,169
      
4,818
  
 
Total
    
4,169
      
4,818
  

         June 30, 2023        December 31, 2022  
  Lease liabilities
               
 
Current
    
2,002
      
1,898
  
 
Non-current
    
3,301
      
3,737
  
 
Total
    
5,303
      
5,635
  

  The following table shows the changes in the right-of-use asset and lease liabilities:
       
           
     
2023
    
 
Right-of-use assets
        
 
Opening balance on January 1
    
4,818
    
 
New lease agreements
    
85
    
 
Depreciation
    
(746
)
  
 
Write-off
    
(324
)
  
 
Hyperinflation adjustment
    
5
    
 
Exchange differences
    
331
    
 
Closing balance on June 30
    
4,169
    
             
       
2023
    
 
Lease liabilities
          
 
Opening balance on January 1
    
5,635
    
 
New lease agreements
    
85
    
 
Interest added
    
302
    
 
Principal elements of lease payments
    
(751
)
  
 
Interest payment
    
(302
)
  
 
Write-off
    
(94
)
  
 
Exchange differences
    
428
    
 
Closing balance on June 30
    
5,303
    

  7.2 Amounts recognized in the Statement of profit or loss
   
  The Statement of profit or loss presents the following amounts related to leases:

   
Three months ended
 
Six months ended
  
   
June 30,
2023
  
June 30,
2022
  
June 30,
2023
  
June 30,
2022
  
 
Depreciation charge of office buildings 
    
375
      
317
      
746
      
620
  
 
Interest expense (included in financial expense) 
    
153
      
175
      
302
      
351
  
 
Total
    
528
      
492
      
1,048
      
971
  

14
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

8  Property and equipment, net
   
  Details of the Group’s property and equipment balance are presented below: 
 
               
     
June 30, 2023
    
December 31, 2022
  
 
Leasehold improvements
    
2,757
      
2,811 
 
 
Machinery and equipment
    
248
      
307 
 
 
Furniture and fixture
    
656
      
836 
 
 
Computer and peripherals
    
4,387
      
4,346 
 
 
Accumulated depreciation
    
(4,574
)
    
(4,391)
  
 
Property and equipment, net
    
3,474
      
3,909 
 

9  Intangible assets, net
   
  Details of the Group’s intangible assets balance are presented below:

               
     
June 30, 2023
    
December 31, 2022
  
 
Software
    
4,685
      
4,291 
 
 
Trademark
    
240
      
218 
 
 
Intellectual property
    
2,968
      
2,675 
 
 
Customer contracts
    
9,499
      
9,394 
 
 
Goodwill
    
21,919
      
20,965 
 
 
Others
    
570
      
519 
 
 
Accumulated amortization
    
(8,484
)
    
(6,852)
  
 
Intangible assets, net
    
31,397
      
31,210 
 

10  Accounts payable and accrued expenses
   
  The breakdown of accounts payable and accrued expenses is as follows:

     
June 30, 2023
    
December 31, 2022
  
 
Trade payables
    
15,671
      
14,064
  
 
Social charges
    
6,217
      
5,537
  
 
Profit-sharing
    
6,824
      
9,484
  
 
Provision for vacation and benefits
    
7,633
      
5,506
  
 
Others
    
40
      
56
  
 
Total
    
36,385
      
34,647
  
                   
 
Current
    
35,372
      
34,136
  
 
Non-current
    
1,013
      
511
  

15
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

11  Loans and financing
   
  11.1 Breakdown of loans and financing
   
  As of June 30, 2023, the Group no longer has loans to be paid as both Itaú and BNDES contracts were fully paid during the first semester of 2023. More details on each loan are described in the table and footnotes below:

 
 
Interest rate
  
Country
  
Maturity
  
June 30, 2023
    
December 31, 2022
  
 
BNDES (i)
  
6.5% p.a
(Brazilian Reais)
  
Brazil
  
Mar/23
  
-
    
189
  
 
Itaú (ii)
  
100% CDI + 2.5% p.a
(Brazilian Reais)
  
Brazil
  
May/23
  
-
    
964
  
 
Total
              
-
    
1,153
  

  (i) In March 2017, the Group raised R$15,577 corresponding to US$5,014 from Brazilian National Bank for Economic and Social Development (BNDES) to finance the development of new ecommerce technologies. The last installment matured in March 2023.
  (ii) In June 2019, the Group raised €6,909, corresponding to US$7,782 for working capital purposes. On the same date, a swap was contracted to hedge the amount against foreign exchange rate, designating the financial instrument as a fair value hedge. The last installment matured in May 2023.

  11.2 Changes in loans and financing

     
2023
    
 
Opening balance on January 1
    
1,153
    
 
Payment of loans
    
(1,238
)
  
 
Interest charged
    
4
    
 
Interest paid
    
(5
)
  
 
Basis adjustment on the fair value hedge (i)
    
42
    
 
Exchange differences
    
44
    
 
Closing balance on June 30
    
-
    










  (i) Losses on the financial instrument designated as a fair value hedge referring to the loan in Euros with Itaú described above have been recognized as a financial expense. Refer to note 19.1(ii) for additional detail.
 
12
Taxes payable
   
  The breakdown of taxes payable is as follows:

     
June 30, 2023
    
December 31, 2022
  
 
Income tax payable 
    
2,249
      
673
  
 
Other taxes payable 
    
2,900
      
3,615
  
 
Total
    
5,149
      
4,288
  
                   
 
Current
    
4,989
      
4,128
  
 
Non-current (i)
    
160
      
160
  

  (i) The balance refers to sales taxes related to the WorkArea acquisition.

16
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

13  Contingencies
 
 
 The Group is party to civil and labor lawsuits involving loss risks. Provisions for losses resulting from lawsuits are estimated and updated by the Group, based on analysis from the Group’s legal advisors.
   
  The breakdown of existing contingencies classified as probable losses by the Group, based on the evaluation of its legal advisors, which are recognized as a liability, is as follows:
 
     
June 30, 2023
    
December 31, 2022
  
 
Civil
    
14
      
6
  
 
Labor
    
47
      
95
  
 
Tax
    
163
      
84
  
 
Total
    
224
      
185
  

 
 The breakdown of existing contingencies classified as possible losses by the Group, based on the evaluation of its legal advisors, for which no provision was recognized, is as follows:

     
June 30, 2023
    
December 31, 2022
  
 
Civil 
    
126
      
118
  
 
Labor 
    
68
      
-
  
 
Tax 
    
1,025
      
878
  
 
Total
    
1,219
      
996
  

 
 On October 9, 2020, Mirakl, Incorporated, filed a complaint for unspecified damages and preliminary and permanent injunctive relief in the United States District Court for the District of Massachusetts against our subsidiary VTEX Commerce Cloud Solutions LLC, or VTEX USA, and certain of its employees that were formerly employed by the plaintiff.
   
  On April 14, 2021, the court denied the motion to dismiss. On October 4, 2021, the court granted VTEX's motion to appoint an independent expert to manage forensic discovery. On December 31, 2021, the court approved a forensic protocol to be employed by the independent expert. As of June 30, 2023, the parties are conducting discovery. Although VTEX plans to defend itself against such lawsuit, the Company is not able to predict the outcomes of such lawsuit at this current early stage. On June 30, 2023 and December 31, 2022, this contingency was classified as possible, however at the end of the reporting period it was not possible to estimate the future cash outflows at this stage of the lawsuit, and, therefore, it was not included in the table above.

17
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

14  Shareholders’ equity
 
 
 14.1 Issued capital
   
  The total share capital is as follows:

     
June 30, 2023
    
December 31, 2022
  
 
Number of ordinary nominative shares
    
186,748,157
      
188,992,529
  
 
Par value
    
0.0001
      
0.0001
  
 
Total issued capital
    
19
      
19
  

15  Revenue from services provided
 
  The Group revenue derives mainly from the transfer of services rendered and fees charged as services are provided, therefore, mostly recognized over time. Disaggregation of revenue by major product lines are as follows:

     
Three months ended
    
Six months ended
  
     
June 30,
2023
    
June 30,
2022
    
June 30,
2023
    
June 30,
2022
  
 
Subscriptions
    
49,323
      
40,025
      
92,853
      
75,700
  
 
Taxes on subscriptions
    
(4,551
)
    
(3,376
)
    
(8,319
)
    
(6,470
 )
 
Subscription revenue
    
44,772
      
36,649
      
84,534
      
69,230
  
                                   
 
Services provided
    
3,253
      
2,257
      
5,898
      
4,510
  
 
Taxes on services
    
(139
)
    
(192
)
    
(264
)
    
(359
 )
 
Services revenue
    
3,114
      
2,065
      
5,634
      
4,151
  
                                   
 
Total revenue
    
47,886
      
38,714
      
90,168
      
73,381
  

16
Earnings (loss) per share
   
  Basic earnings (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the year.
   
  Diluted earnings per share are computed by affecting all potential weighted average dilutive common stock, including options and restricted stock units.
   
  The following table contains the loss per share of the Group for the three and six-month periods ended June 30, 2023 and 2022:

           Three months ended     Six months ended  
  Basic loss per share


June 30,
2023
 
June 30,
2022		  

June 30,
2023
 
June 30,
2022
  
 
Loss attributable to the stockholders of the Group
    
(6,611
)
    
(21,464
)
    
(14,539
)
    
(40,553
 )
 
Weighted average number of outstanding common shares (thousands)
    
187,054
     
191,281
     
187,688
     
191,223
  
 
Basic loss per share
    
(0.035
)
    
(0.112
)
    
(0.077
)
    
(0.212
 )

    Three months ended      
          Six months ended  
  Diluted loss per share
   
June 30,
2023
      
June 30,
2022
      
June 30,
2023
      
June 30,
2022
  
 
Loss attributable to the stockholders of the Group
    
(6,611
)
    
(21,464
)
    
(14,539
)
    
(40,553
 )
 
Weighted average number of outstanding common shares (thousands)
    
187,054
     
191,281
     
187,688
     
191,223
 
 
Diluted loss per share
    
(0.035
)
    
(0.112
)
    
(0.077
)
    
(0.212
 )

 
As of June 30, 2023 and 2022, the number of shares used to calculate diluted net loss per share of common stock attributable to common stockholders is the same as the number of shares used to calculate basic net loss per share of common stock attributable to common stockholders for the period presented because the potentially dilutive shares would have been anti-dilutive if included in the calculation. The number of the potentially dilutive shares that would have been anti-dilutive is disclosed in note 18.

18
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

17
Financial result, net

     
Three months ended
    
Six months ended
  
     
June 30,
2023
    
June 30,
2022
    
June 30,
2023
    
June 30,
2022
  
 
Interest and dividend earned on bank deposits and financial investments
    
3,287
      
168
      
5,055
      
297
  
 
Foreign exchange gains
    
3,241
      
2,095
      
4,174
      
3,812
  
 
Gains from fair value of financial instruments (i)
    
399
      
1,504
      
729
      
3,276
  
 
Short-term investments gains
    
2,241
      
824
      
6,549
      
1,414
  
 
Other financial income
    
72
      
105
      
92
      
189
  
 
Financial income
    
9,240
      
4,696
      
16,599
      
8,988
  
                                   
 
Foreign exchange losses
    
(4,859
)
    
(2,008
)
    
(7,740
)
    
(3,580
 )
 
Losses from fair value of financial instruments (i)
    
(392
)
    
(269
)
    
(645
)
    
(2,121
 )
 
Interest on loans
    
-
      
(15
)
    
(4
)
    
(36
 )
 
Interest on lease liabilities
    
(153
)
    
(175
)
    
(302
)
    
(351
 )
 
Short-term investments losses
    
(171
)
    
(6,176
)
    
(1,175
)
    
(10,561
 )
 
Adjustment of hyperinflation
    
(3,440
)
    
(1,362
)
    
(4,860
)
    
(2,079
 )
 
Other financial expenses
    
(111
)
    
(117
)
    
(303
)
    
(407
 )
 
Financial expense
    
(9,126
)
    
(10,122
)
    
(15,029
)
    
(19,135
 )
                                   
 
Financial result, net
    
114
      
(5,426
)
    
1,570
      
(10,147
 )

 
(i) Refers to gain and losses on change in the fair value of hedge instruments (Refer to note 19.1)

19
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

18
Share-based compensation
   
 
18.1 Share-based compensation: VTEX
   
  VTEX provides share-based compensation to selected directors and employees as a stock-option plan.
   
  Both stock options and Restricted Stock Units instruments (“RSUs”) are exercisable as long as the director or employee fulfills the worked periods after the options are granted.
   
  Set out below are summaries of stock options granted under the plan:

     
Number of
options
(thousands)
    
Weighted
average
exercise price
    
Remaining
contractual
terms in years
    
Weighted
average grant
date fair value
  
 
At January 1, 2023
    
9,714
      
4.18
      
4.37
      
1.41
  
 
Granted
    
229
      
3.91
      
-
      
0.60
  
 
Forfeit
    
(441
)
    
6.28
      
-
      
3.76
  
 
Exercised (i)
    
(535
)
    
0.17
      
-
      
0.44
  
 
At June 30, 2023
    
8,967
      
4.32
      
4.04
      
1.22
  
 
Stock options exercisable as of June 30, 2023 
    
4,502
      
4.45
      
3.88
      
1.07
  

 
(i) The number of stock-options withheld for tax purposes was 0.2 thousand shares.
   
  The fair value of the stock options granted is calculated based on the Binomial Options Pricing Model considering the average contract term. The model inputs for options included:

●
Strike Price - Average price weighted by the quantity granted;
●
Target Asset Price - The trading price closest to the granting date of the options or the trading price derived from an independent valuation report;
●
Risk-Free Interest Rate - US Treasury interest rate, according to the contractual term;
●
Volatility - According to comparable peer entities listed on the stock exchange.

 
The weighted average inputs used in the six-month period ended June 30, 2023:

●
Target Asset Price - US$3.91 per share (December 31, 2022 - US$4.40 per share)
●
Risk-Free Interest Rate – 3.73% (December 31, 2022: 3.83%)
●
Volatility – 57.38% (December 31, 2022: 55.68%)
●
Expected dividend: None

20
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

 
The following table summarizes the RSU options granted under the plan:

     
Number of
RSUs
(thousands)
    
Weighted
average grant
date fair value
  
 
At January 1, 2023
    
3,509
      
6.94
  
 
Granted
    
804
      
3.62
  
 
Forfeit
    
(206
)
    
6.49
  
 
Settled (i)
    
(1,042
)
    
5.89
  
 
At June 30, 2023
    
3,065
      
6.45
  

 
(i) The number of RSUs withheld for tax purposes was 301 thousand shares.
   
  The fair value of the restricted stock units granted was calculated using the same Target Asset Price used in the Stock Options appraisal model.
   
  In June 2023, the Group modified some stock option instruments, changing the exercise price. The total incremental fair value of US$131 will be recognized as an expense over the period from the modification date to the end of the vesting period. The expense for the original option granted will continue to be recognized as if the terms had not been modified. The fair value of the modified options was determined using the same models and principles of the original contract.
   
  For the six-month period ended June 30, 2023, there was US$ 11,626 of remaining unamortized compensation costs, including social charges, related to unvested stock options and RSUs granted to the Group’s employees. This cost will be recognized over an estimated weighted average remaining period of 1.67 years. Total unamortized compensation costs will be adjusted for future changes in estimated forfeitures.
   
  The total expense, including taxes and social charges related to the share-based compensation plan for the six-month period ended June 30, 2023, was US$7,589 (the six-month period ended June 30, 2022: US$3,313). For the period ended June 30, 2023, the Group recorded in the capital reserve the amount of US$7,786 (the six-month period ended June 30, 2022: US$4,324).
   
  The Company must withhold an amount for an employee's tax obligation associated with a share-based payment and transfer that amount to the tax authority on the employee's behalf. The Company is settling the share-based compensation on a net basis by withholding the number of shares with a fair value equal to the monetary value of the employee's tax obligation and only issuing the remaining shares on completion of the vesting period. If all of the shares outstanding as at June 30, 2023 were subsequently vested, the Group would be required to pay taxes of approximately US$5,892 considering the stock price as of June 30, 2023.
   
  18.2 Share-based compensation: Loja Integrada
   
  On April 29, 2021, VTEX introduced a new share-based compensation plan to selected directors and employees as a stock-option and RSU plan in Loja Integrada, a subsidiary wholly owned. This share-based compensation plan also has RSU and Stock Options. Under both stock-option plan and RSUs, the options have a term of 7 years as of the grant date. They are exercisable as long as the director or employee fulfills the worked periods after the options are granted.

21
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

 
Set out below are summaries of stock options granted under the plan:

     
Number of
options
(thousands)
    
Weighted
average
exercise price
    
Remaining
contractual
terms in years
    
Weighted
average grant
date fair value
  
 
At January 1, 2023
    
8.42
      
13.48
      
5.35
      
5.66
  
 
Granted
    
-
      
-
      
-
      
-
  
 
Forfeit
    
-
      
-
      
-
      
-
  
 
Exercised
    
-
      
-
      
-
      
-
  
 
At June 30, 2023
    
8.42
      
14.81
      
4.86
      
6.22
  
 
Stock options exercisable as of June 30, 2023
    
8.42
      
14.81
      
4.86
      
6.22
  

 
The fair value of the stock options granted is calculated based on the Binomial Options Pricing Model considering the average contract term. The model inputs for options included:

●
Strike Price - Average price weighted by the quantity granted;
●
Target Asset Price - The trading price closest to the granting date of the options or the trading price derived from an independent valuation report;
●
Risk-Free Interest Rate - Future CDI, according to the contractual term;
●
Volatility - According to comparable peer entities listed on the stock exchange.

 
The following table summarizes the RSU options granted under the plan:

     
Number of
RSUs
(thousands)
    
Weighted
average grant
date fair value
  
 
At January 1, 2023
    
285.28
      
6.42
  
 
Granted
    
115.00
      
4.68
  
 
Forfeit
    
(39.67
)
    
5.73
  
 
Settled (i)
    
(63.58
)
    
6.91
  
 
At June 30, 2023
    
297.03
      
6.53
  
                   
  (i) The number of RSUs withheld for tax purposes was 0.1 thousand shares.
               

 
For the six-month period ended June 30, 2023, there was US$1,433 of remaining unamortized compensation cost, including social charges, related to unvested stock options and RSUs granted to the Group’s employees. This cost will be recognized over an estimated weighted-average remaining period of 1.8 years. Total unamortized compensation costs will be adjusted for future changes in estimated forfeitures.
   
  The total expense, including taxes and social charges related to the Loja Integrada share-based compensation plan for the six-month period ended June 30, 2023, was US$2,217 (the six-month period ended June 30, 2022: US$85). For the period ended June 30, 2023, the Group recorded in the capital reserve the amount of US$97 (the six-month period ended June 30, 2022: US$213).

 
The Company must withhold an amount for an employee's tax obligation associated with a share-based payment and transfer that amount to the tax authority on the employee's behalf. The Company is settling the share-based compensation on a net basis by withholding the number of shares with a fair value equal to the monetary value of the employee's tax obligation and only issuing the remaining shares on completion of the vesting period. If all of the shares outstanding as at June 30, 2023 were subsequently vested, the Group would be required to pay taxes of approximately US$309 considering the stock price as of June 30, 2023.

22
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

  18.3 Amounts recognized in the statement of profit or loss
   
  The following table illustrates the classification of stock-based compensation in the consolidated statements of profit and loss which includes both stock-based compensation of VTEX and Loja Integrada:

     
Three months ended
   
Six months ended
  
     
June 30,
2023
    
June 30,
2022
    
June 30,
2023
    
June 30,
2022
  
 
Subscription cost
    
(85
)
    
(80
)
    
(106
)
    
(167
)
 
Services cost
    
(99
)
    
6
      
(244
)
    
(20
)
 
General and administrative
    
(1,708
)
    
(639
)
    
(3,422
)
    
(1,628
)
 
Sales and marketing
    
(1,050
)
    
247
      
(2,369
)
    
(482
)
 
Research and development
    
(1,793
)
    
(458
)
    
(3,664
)
    
(1,101
)
 
Total
    
(4,735
)
    
(924
)
    
(9,805
)
    
(3,398
)

23
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

19   Financial Instruments
19.1 Financial instruments by category
 
The Company classifies its financial assets and liabilities under the following categories: amortized cost, fair value through other comprehensive income and fair value through profit or loss. The classification by category and the corresponding accounting policies of each financial instrument in these condensed consolidated interim financial statements are consistent with those applied and disclosed in the Company’s audited consolidated financial statements for the year ended on December 31, 2022.
(i) Financial instruments valued at amortized cost
The Group has the following financial instruments valued at amortized cost:
     
June 30, 2023
    
December 31, 2022
  
 
Financial assets:
            
 
Cash and cash equivalents 
    
100,504
      
24,394
  
 
Restricted cash
    
-
      
1,608
  
 
Short-term investments
    
16,373
      
10,119
  
 
Trade receivables
    
49,869
      
42,276
  
 
Total
    
166,746
      
78,397
  
                   
 
Financial liabilities:
                
 
Trade payables
    
15,671
      
14,064
  
 
Lease liabilities
    
5,303
      
5,635
  
 
Loans and financing
    
-
      
1,153
  
 
Total
    
20,974
      
20,852
  

24
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

(ii) Financial instruments valued at fair value through profit or loss
 
The Group has the following financial instruments valued at fair value through profit or loss:

     
Carrying amount
  
     
June 30, 2023
    
December 31, 2022
  
 
Financial assets:
            
 
Short-term investments 
    
105,629
      
204,045
  
 
Derivative financial instruments (i) 
    
-
      
117
  
 
Total
    
105,629
      
204,162
  
                   
                   
     
Carrying amount
  
     
June 30, 2023
    
December 31, 2022
  
 
Financial liabilities:
                
 
Derivative financial instruments (i)
    
35
      
-
  
 
Accounts payable from acquisition of subsidiary ("earn out")
    
-
      
299
  
 
Total
    
35
      
299
  

(i) In 2022, VTEX ARG had positions in future derivative financial instruments raised through Matba Rofex designated as a protection from hyperinflation and exchange rate devaluation in Argentina. The notional value is US$5,000 and the last maturity date is in July 2023.
For the six-month period ended on June 30, 2023, the Group had positions in future derivative financial instruments designed as a hedge of foreign currency risk in Argentina. The hedge contracts had maturity dates equal to those of the principal, which was raised through Matba Rofex. The last hedge contract is due July 2023. Additionally, the Group no longer had positions in Swap derivative financial instruments designated as hedge of foreign currency debt raised through Itaú Bank, as these hedge contracts had maturity dates equal to those of the loans raised in foreign currency (note 11), also raised through Itaú Bank, and both instruments last matured in May 2023.

The following amounts were recognized in profit or loss in relation to financial instruments:
     
Three months ended
    
Six months ended
  
     
June 30,
2023
    
June 30,
2022
    
June 30,
2023
    
June 30,
2022
  
 
Net gain on financial instruments
    
7
      
1,234
      
84
      
1,155
  

The following amounts were recognized in profit or loss in relation to short-term investments:
     
Three months ended
   
Six months ended
  
     
June 30,
2023
    
June 30,
2022
    
June 30,
2023
    
June 30,
2022
  
 
Net gain (loss) on short-term investments
    
2,070
      
(5,352
)
    
5,374
      
(9,147
)

25
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

a. Fair value hierarchy
This section provides details about the judgments and estimates made for determining the fair values of the financial instruments recognized and measured at fair value in the financial statements. The Group has classified its financial instruments into the three levels prescribed under the accounting standards to indicate the reliability of the inputs used in determining fair value.
     
June 30, 2023
  
     
Level 1
    
Level 2
    
Level 3
  
 
Assets
                  
 
Short-term investments
    
105,629
      
-
      
-
  
                           
 
Liabilities
                        
 
Derivative financial instruments
    
-
      
35
      
-
  


     
December 31, 2022
  
     
Level 1
    
Level 2
    
Level 3
  
 
Assets
                  
 
Short-term investments
    
204,045
      
-
      
-
  
 
Derivative financial instruments
    
-
      
117
      
-
  
                           
 
Liabilities
                        
 
Accounts payable from acquisition of subsidiary ("earn-out")
    
-
      
-
      
299
  

There were no transfers between levels 1, 2, and 3 for recurring fair value measurements during the first semester of 2023.
Fair value measurements using significant unobservable inputs (level 3)
The fair value of the earn-out classified as level 3 is calculated based on the judgment of the Group and the probability of meeting the goals of each acquisition made during the year. The Sale and Purchase agreement of each acquisition is established if the clients of the acquired entities migrate to the Groups platform and reach an agreed amount, the seller will be entitled to an earn-out. As at June 30, 2023, the fair value of the earn-out was nil (December 31, 2022 - US$299 ).
The following table presents changes in level 3 items for the six-months period ended on June 30, 2023:
     
2023
  
 
Opening balance on January 1
    
299
  
 
Earn-out adjustment
    
(299
)
 
Exchange differences
    
-
  
 
Closing balance on June 30
    
-
  

26
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

b. Fair values of other financial instruments (unrecognized)
The Group also has several financial instruments which are not measured at fair value in the balance sheet. As at June 30, 2023, these instruments’ fair values are not different from their carrying amounts since the interest receivable/payable is either close to current market rates or the instruments are short-term in nature. Differences were identified for the following instruments at June 30, 2023:
     
Carrying amount
    
Fair value
  
 
Financial assets:
            
 
Short-term investments
    
8,725
      
9,038
  
 
Total
    
8,725
      
9,038
  

19.2 Financial risk management
 
The risk management of the Group is predominantly controlled by a central treasury department (Group treasury) under policies approved by the board of directors. Group treasury identifies, evaluates, and hedges financial risks in close co-operation with the Group’s operating units. The board provides written principles for overall risk management and policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, the use of derivatives and non-derivative financial instruments, and investment of excess liquidity.

27
VTEX 
Notes to the condensed consolidated interim financial statements 
(Unaudited) 
In thousands of U.S. dollars, unless otherwise indicated

20   Subsequent events

Subsequent share repurchase and canceling

During July and August of 2023, the Company canceled 252,472 Class A common shares, of which 19,459 shares were held in treasury as of June 30, 2023, and 233,013 were repurchased after June 30, 2023 under the repurchase share program. Refer to note 20.2 (c) for additional details.

Renewal of share repurchase program

On August 3, 2023, the Board of Directors of VTEX authorized the Company to repurchase Class A common shares of the Company, par value US$0.0001 per share, for an aggregate consideration of up to US$20.0 million. This authorization is scheduled to begin on August 11, 2023, and to expire on August 10, 2024.

Repurchases under the Company's program may be made from time to time in open market or privately negotiated transactions in accordance with applicable laws, including the Securities and Exchange Commission Rule 10b-18. The timing of repurchases will depend on factors including market conditions and prices, the Company’s liquidity requirements and alternative uses of capital.
The share repurchase program could be suspended from time to time or discontinued, and there is no assurance as to the number of shares that will be repurchased under the program or that there will be any repurchases.

The timing and amount of shares repurchased (if any) will be determined by the Company’s management based on its evaluation of market conditions, applicable legal requirements and other factors. Repurchases may also be made under a Rule 10b5-1 plan. Any repurchased shares may be canceled or remain available for use in connection with its equity incentive plans and for other corporate purposes.

28
Item 2 – Management’s discussion and analysis of financial condition and results of operations
 
This Management's Discussion and Analysis of Financial Condition and Results of Operations section may contain certain forward-looking statements that involve risks and uncertainties. Our actual results and the timing of events may differ significantly from those expressed or implied in such forward-looking statements for several reasons, including those described in our prior filings with the U.S. Securities and Exchange Commission.
 
The following analysis and discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated interim financial statements as of June 30, 2023 and 2022 included elsewhere in this document.
 
Overview
 
VTEX is the global enterprise digital commerce platform where brands and retailers run their world of commerce. Our platform is designed to be the operating system for the commerce ecosystem, enabling enterprise brands and retailers to orchestrate their complex network of consumers, business partners, suppliers, and fulfillment providers in one place. VTEX puts its customers’ business on a fast path to growth with a complete Commerce, Marketplace, and OMS solution. We help global companies build, manage and deliver native and advanced B2B, B2C, and marketplace commerce experiences with unprecedented time to market and without complexity.
 
We are redefining the boundaries between digital and physical commerce, empowering personal shoppers, and fostering seamless interactions across both realms. Our aim is to boost our customers' conversion and efficiency rates in their commerce operations. Through VTEX, enterprises can easily build online stores, integrate and manage orders across multiple channels, create marketplaces to sell third-party vendors' products, and optimize their product delivery process, among many other capabilities.
 
With over 20 years of experience in digital commerce, VTEX has been a leader in accelerating the digital commerce transformation in Latin America and is expanding globally. Our platform is engineered to enterprise-level standards and functionality with approximately 85% of our GMV coming from large, blue-chip companies (i.e. customers with more than US$10 million of GMV per year). We are trusted by more than 2,600 customers with over 3,400 active online stores across 38 countries to connect with their consumers in a meaningful way.
 
We benefit from the acceleration of digitalization globally, and in particular in Latin America, where ecommerce is still underpenetrated. Accelerating ecommerce growth, evolving consumer expectations and the proliferation of digital shopping alternatives are raising the bar for brands and retailers to stay relevant. Legacy structures developed over years force enterprises to choose between deep customization and speed to market. Our technology combined with our ecosystem of partners solves this problem. We deliver flexibility and simplicity to complex, mission critical commerce operations. We were named a leader in the IDC MarketScape: Worldwide B2C Digital Commerce Platforms 2020 Vendor Assessment, and a “Strong Performer” in the Gartner Peer Insights ‘Voice of the Customer’: Digital Commerce, January 2022 report. We were also recognized as Visionary in the Gartner® Magic Quadrant™ for Digital Commerce, August 2022 report. Additionally, we were named a “Contender” in The Forrester Wave™: B2C Commerce Solutions and VTEX was awarded medals in each one of the 12 categories evaluated in the “Paradigm B2B Combine 2022 Digital Commerce Solutions for B2B, Midmarket edition”.
 
We offer access to our platform on a subscription basis, which accounted for 93.5% of our revenue for the three-month period ended June 30, 2023, compared to 94.7% of our revenue in the same period of 2022. Our subscription revenue is based on a fixed subscription fee and a transaction-based fee. The transaction-based fee accounts for most of our subscription revenues and is primarily structured as a take rate or percentage of the total value of the orders processed through our platform, including value added taxes and shipping, which we refer to as our GMV. Our transaction-based fee model aligns our success with our customers’ success and our revenue grows as our customers’ GMV grows. In the three-month period ended June 30, 2023, our GMV increased to US$3.8 billion from US$3.1 billion in the same period of 2022, representing an increase of 23.4% in USD and 21.2% on an FX neutral basis. In the same period, our revenue increased to US$47.9 million from US$38.7 million, representing an increase of 23.7% in USD and 22.9% on an FX neutral basis.

29
 Key metric— Gross merchandise value
 
The key metric we use to measure our performance, identify trends affecting our business, formulate our business plan projections and support our strategic decisions is GMV. Due to the seasonality of ecommerce and the foreign exchange effects resulting from the volatility of the currencies of the jurisdictions where we operate (particularly Latin America countries) vis-à-vis the U.S. Dollar (which is our functional currency), our management compares GMV on a year-over-year and foreign exchange neutral basis. The foreign exchange neutral measures are calculated by using the average monthly exchange rates for each month during the previous year, adjusted by inflation in countries with hyper-inflation, and applying them to the corresponding months of the current year, so as to calculate what our results would have been had exchange rates remained stable from one year to the next.
 
GMV is the total value of customer orders processed through our platform, including value added taxes and shipping. Our GMV does not include the value of orders processed by our SMB customers or B2B transactions. Due to our transaction-based subscription model, we believe that GMV growth is linked with our revenue growth and we track GMV as an indicator of the success of our customers, the performance of the platform and our market share.
 
   
Three months ended
    
Six months ended
  
   
June 30,
2023
    
June 30,
2022
    
June 30,
2023
    
June 30,
2022
  
(in millions of U.S. Dollars, unless otherwise indicated)
  
GMV
    
3,838.5
      
3,111.9
      
7,142.2
      
5,826.4
  
GMV growth FX neutral (%)
    
21.2
%
    
21.0
%
    
20.9
%
    
24.1
%

30
Seasonality and quarterly operations results 
 
Our transaction-based subscription model, similar to most retail businesses, experiences seasonal fluctuations. Historically, we have generated higher net sales in the fourth quarter, as a consequence of the concentration of special dates during that quarter.
 
The following table sets forth our quarterly condensed consolidated interim statements of profit or loss data for each of the last historical nine quarters. The condensed consolidated interim statements of profit or loss data below has been prepared on the same basis as the unaudited consolidated financial statements included elsewhere in this document and, in our opinion, reflects all necessary adjustments, consisting only of ordinary course recurring adjustments, necessary to present this information fairly and accurately. These historical quarterly results of operations are not necessarily indicative of the results of operations for any future period. The pandemic's macroeconomic impact led to fluctuations in seasonal patterns, resulting in certain levels of volatility. Nevertheless, we foresee these effects gradually normalizing as the macroeconomic conditions ease.
 
   
For the three months ended
(unaudited)
  
(in US$ millions)
  
June
30, 2021
    
September
30, 2021
    
December
31, 2021
    
March
31, 2022
    
June
30, 2022
    
September
30, 2022
    
December
31, 2022
    
March
31, 2023
    
June
30, 2023
  
                                                       
Subscription revenue
    
29.7
      
29.6
      
34.5
      
32.6
      
36.6
      
36.5
      
42.7
      
39.8
      
44.8
  
Services revenue
    
1.2
      
2.2
      
2.6
      
2.1
      
2.1
      
2.2
      
2.8
      
2.5
      
3.1
  
Total revenue 
    
30.9
      
31.9
      
37.1
      
34.7
      
38.7
      
38.8
      
45.5
      
42.3
      
47.9
  
Subscription cost 
    
(9.5
)
    
(9.7
)
    
(10.5
)
    
(10.0
)
    
(10.2
)
    
(9.8
)
    
(11.5
)
    
(10.4
)
    
(11.2
)
Services cost 
    
(2.8
)
    
(3.1
)
    
(3.3
)
    
(2.6
)
    
(2.8
)
    
(2.9
)
    
(3.1
)
    
(4.2
)
    
(4.4
)
Total cost 
    
(12.2
)
    
(12.8
)
    
(13.8
)
    
(12.6
)
    
(13.0
)
    
(12.6
)
    
(14.6
)
    
(14.6
)
    
(15.5
)
Gross profit 
    
18.7
      
19.1
      
23.4
      
22.1
      
25.7
      
26.1
      
30.9
      
27.7
      
32.4
  
Operating expenses
                                                                        
General and administrative 
    
(7.8
)
    
(9.9
)
    
(6.9
)
    
(6.9
)
    
(7.4
)
    
(6.9
)
    
(7.1
)
    
(7.9
)
    
(8.2
)
Sales and marketing 
    
(15.7
)
    
(19.3
)
    
(17.5
)
    
(17.9
)
    
(21.3
)
    
(16.2
)
    
(12.4
)
    
(14.8
)
    
(14.4
)
Research and development 
    
(10.7
)
    
(14.2
)
    
(11.9
)
    
(13.9
)
    
(15.4
)
    
(13.8
)
    
(14.1
)
    
(14.0
)
    
(16.3
)
Other income (losses)
    
(0.9
)
    
0.0
      
(0.2
)
    
0.0
      
(0.5
)
    
(0.5
)
    
(0.4
)
    
(0.8
)
    
(0.5
)
Loss from operation
    
(16.4
)
    
(24.4
)
    
(13.1
)
    
(16.7
)
    
(18.9
)
    
(11.3
)
    
(3.0
)
    
(9.7
)
    
(7.1
)
Financial result, net 
    
(1.4
)
    
(0.6
)
    
(1.4
)
    
(4.7
)
    
(5.4
)
    
(0.2
)
    
2.7
      
1.5
      
0.1
  
Equity results 
    
0.1
      
0.2
      
0.2
      
0.2
      
0.3
      
0.3
      
0.3
      
0.3
      
0.4
  
Income (loss) before income tax
    
(17.6
)
    
(24.8
)
    
(14.3
)
    
(21.2
)
    
(24.1
)
    
(11.2
)
    
0.0
      
(7.9
)
    
(6.6
)
Income tax 
    
2.1
      
2.8
      
3.7
      
2.1
      
2.6
      
(0.3
)
    
(0.3
)
    
(0.0
)
    
0.0
  
Net loss for the period
    
(15.5
)
    
(22.0
)
    
(10.6
)
    
(19.1
)
    
(21.5
)
    
(11.5
)
    
(0.3
)
    
(7.9
)
    
(6.6
)
Earnings (loss) per share
                                                                        
Basic and diluted earnings
(loss) per share (US$)
    
(0.09
)
    
(0.12
)
    
(0.06
)
    
(0.10
)
    
(0.11
)
    
(0.06
)
    
(0.00
)
    
(0.04
)
    
(0.04
)
 
The following table sets forth selected condensed consolidated interim profit (loss) statements data for each of the periods indicated as a percentage of total revenue.
   
For the three months ended
(unaudited)
  
   
June
30, 2021
    
September
30, 2021
    
December
31, 2021
    
March
31, 2022
    
June
30, 2022
    
September
30, 2022
    
December
31, 2022
    
March
31, 2023
    
June
30, 2023
  
                                                       
Total revenue 
    
100.0
%
    
100.0
%
    
100.0
%
    
100.0
%
    
100.0
%
    
100.0
%
    
100.0
%
    
100.0
%
    
100.0
%
Subscription cost 
    
(30.6
)%
    
(30.6
)%
    
(28.2
)%
    
(28.8
)%
    
(26.3
)%
    
(25.2
)%
    
(25.3
)%
    
(24.6
)%
    
(23.3
)%
Services cost 
    
(8.9
)%
    
(9.6
)%
    
(8.9
)%
    
(7.5
)%
    
(7.3
)%
    
(7.4
)%
    
(6.8
)%
    
(9.9
)%
    
(9.1
)%
Total cost 
    
(39.6
)%
    
(40.1
)%
    
(37.1
)%
    
(36.3
)%
    
(33.6
)%
    
(32.6
)%
    
(32.1
)%
    
(34.4
)%
    
(32.4
)%
Gross profit 
    
60.4
%
    
59.9
%
    
62.9
%
    
63.7
%
    
66.4
%
    
67.4
%
    
67.9
%
    
65.6
%
    
67.6
%
Operating expenses
                                                                        
General and administrative 
    
(25.3
)%
    
(31.2
)%
    
(18.6
)%
    
(19.9
)%
    
(19.2
)%
    
(17.9
)%
    
(15.5
)%
    
(18.7
)%
    
(17.2
)%
Sales and marketing 
    
(50.9
)%
    
(60.7
)%
    
(47.0
)%
    
(51.6
)%
    
(55.1
)%
    
(41.7
)%
    
(27.3
)%
    
(35.0
)%
    
(30.2
)%
Research and development 
    
(34.6
)%
    
(44.5
)%
    
(32.1
)%
    
(40.1
)%
    
(39.8
)%
    
(35.6
)%
    
(30.9
)%
    
(33.0
)%
    
(34.0
)%
Other income (losses)
    
(2.8
)%
    
0.0
%
    
(0.6
)%
    
0.0
%
    
(1.2
)%
    
(1.3
)%
    
(0.9
)%
    
(1.8
)%
    
(1.1
)%
Loss from operation
    
(53.1
)%
    
(76.5
)%
    
(35.4
)%
    
(48.1
)%
    
(48.9
)%
    
(29.1
)%
    
(6.7
)%
    
(23.0
)%
    
(14.9
)%
Financial result, net 
    
(4.4
)%
    
(1.8
)%
    
(3.7
)%
    
(13.5
)%
    
(14.0
)%
    
(0.5
)%
    
5.9
%
    
3.4
%
    
0.2
%
Equity results 
    
0.5
%
    
0.5
%
    
0.5
%
    
0.6
%
    
0.7
%
    
0.7
%
    
0.8
%
    
0.8
%
    
0.8
%
Income (loss) before income tax
    
(57.0
)%
    
(77.7
)%
    
(38.6
)%
    
(61.1
)%
    
(62.2
)%
    
(28.9
)%
    
0.1
%
    
(18.7
)%
    
(13.9
)%
Income tax 
    
6.9
%
    
8.8
%
    
10.0
%
    
6.1
%
    
6.8
%
    
(0.9
)%
    
(0.8
)%
    
(0
)%
    
0.1
%
Net loss for the period
    
(50.1
)%
    
(68.9
)%
    
(28.6
)%
    
(55.0
)%
    
(55.4
)%
    
(29.8
)%
    
(0.7
)%
    
(18.8
)%
    
(13.8
)%

31
The following table sets forth our Non-GAAP income (loss) from operations for each of the periods indicated:
 
   
For the three months ended
(unaudited)
  
   
June
30, 2021
    
September
30, 2021
    
December
31, 2021
    
March
31, 2022
    
June
30, 2022
    
September
30, 2022
    
December
31, 2022
    
March
31, 2023
    
June
30, 2023
  
                                                       
Loss from operation
    
(16.4
)
    
(24.4
)
    
(13.1
)
    
(16.7
)
    
(18.9
)
    
(11.3
)
    
(3.0
)
    
(9.7
)
    
(7.1
)
Share-based compensation expense
    
5.5
      
9.3
      
1.6
      
2.5
      
0.9
      
4.8
      
4.6
      
5.1
      
4.7
  
Amortization and adjustment
related to acquisitions
    
0.5
      
0.5
      
0.8
      
0.5
      
0.6
      
0.5
      
0.5
      
0.5
      
0.8
  
Offering expenses ("IPO") (i)
    
-
      
1.3
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Non-GAAP Income (loss)
from operation
    
(10.4
)
    
(13.3
)
    
(10.9
)
    
(13.7
)
    
(17.5
)
    
(6.0
)
    
2.1
      
(4.1
)
    
(1.5
)
(i) Offering expenses ("IPO") are related to shares offered by the selling shareholders and other one-off IPO expenses.
 
Components of our results of operations
 
The following is a summary of the principal line items comprising condensed consolidated interim income of profit and loss.
 
Total revenue
 
Our total revenue consists of (1) subscription and support revenue, arising from a multichannel cloud and SaaS-based platform focused on ecommerce; and (2) revenue from professional services and other, arising substantially from consulting services.
 
Subscription revenue
 
Subscription revenue consists of revenue derived from (1) a mix of transaction-based fees and fixed subscription fees, in each case derived from customers using our platform; (2) our SMB business; and (3) other business units that generate recurring revenue to us.
 
Transaction-based fees comprise (a) commission fees charged to customers based on a percentage of the GMV or a fee per order processed on our platform; and (b) commission fees charged to marketplace partners, payment providers, and any other services provided through our app store.
 
Fixed subscription fees comprise (a) yearly or multi-year upfront fees paid by merchants to reduce future variable fees; and (b) fixed monthly fee for using our platform in any given month. Fixed fees are paid to us at the beginning of the applicable subscription period, regardless of the length of the subscription period. As subscription fees are received in advance of providing the related services, we record deferred revenue on our consolidated balance sheet for the unearned revenue and recognize revenue ratably over the related subscription period.
 
Services revenue
 
Services revenue consists primarily of revenue derived from consulting services which are recognized over time during the period that services are performed. Services revenue accounted for 6.5% of our revenue for the three-month period ended June 30, 2023, compared to 5.3% in the same period of 2022. For the six-month period ended on June 30, 2023, the consulting services revenue accounted for 6.2% of our revenue, compared to 5.7% in the same period of 2022.
 
32
Cost of revenue
 
Our total cost consists of (1) subscription cost; and (2) services cost.
 
Subscription cost of revenue
 
Subscription cost consists mainly of costs related to hosting and customer support costs. The hosting related costs include third-party providers, software related platform operating costs, and compensation for our infrastructure team. Support costs are mostly driven by personnel cost, and represent expenses related to the support we provide to our customers.
 
Services cost of revenue
 
Services cost consist mainly of personnel costs and/or third-party expenses to provide the professional services advisory for a specific project of a customer project.
 
Operating expenses
 
Our operating expenses consist of general and administrative expenses, sales and marketing expenses, and research and development expenses.
 
General and administrative expenses consist primarily of (1) personnel-related expenses (including stock-based compensation) for our finance, support operation departments, legal and compliance teams; (2) corporate expenses; and (3) corporate overhead allocation. General and administrative expenses also include costs related to business acquisitions, legal and other professional services fees and depreciation and amortization. 
 
Sales and marketing expenses consist primarily of (1) personnel-related expenses (including stock-based compensation) and commissions paid to the direct sales team, the success team, partnership sales team and sales enablement team; (2) travel-related expenses; (3) marketing and events expenses; (4) finder fee commissions; and (5) the allocation of corporate overhead. We plan to continue to incur sales and marketing expenses in the regions that we currently have a presence as well as in new regions over time in order to continue to enhance our brand awareness and our capabilities to attract new customers.
 
Research and development expenses consist primarily of (1) personnel-related expenses (including stock-based compensation) for product development, product management and product design; (2) software subscription costs related to the product; and (3) the allocation of corporate overhead. We expect to increase the research and development expenses to continue investing in product innovation, and in the development of new products.
 
Financial results
 
Financial results consist of financial income and financial expenses. Financial income consists of interest earned on bank deposits, foreign exchange gains, short-term investment gains and other financial income. Financial expense consists mostly of foreign exchange losses, short-term investment losses, losses from fair value of financial instruments, interest on lease liabilities and adjustment of hyperinflation in Argentina.
 
Income tax
 
Provision for income taxes consists primarily of income taxes, current and deferred, in certain foreign jurisdictions in which we conduct business. The current and deferred income taxes are calculated based on the tax laws enacted or substantively enacted at the end of the reporting period in the countries in which we operate and generate taxable income.
 
Currently we are running losses in most of our subsidiaries, and to that extent and considering the profitability expected in the foreseeable future our most relevant operation has been booking the related tax losses as part of our deferred tax assets.
 
33
Historical operations results
 
Comparison of results of operations for the three and six-month periods ended June 30, 2023 and 2022 
 
The following table sets forth our condensed consolidated interim income statements for the three and six-month periods ended June 30, 2023 and 2022. The period-to-period comparison of financial results is not necessarily indicative of future results.
 
   
Three months ended
    
Six months ended
  
(in US$ thousands)
  
June
30, 2023
    
June
30, 2022
    
June
30, 2023
    
June
30, 2022
  
Subscription revenue
    
44,772
      
36,649
      
84,534
      
69,230
  
Services revenue
    
3,114
      
2,065
      
5,634
      
4,151
  
Total revenue
    
47,886
      
38,714
      
90,168
      
73,381
  
Subscription cost (1)
    
(11,153
)
    
(10,166
)
    
(21,553
)
    
(20,162
)
Services cost (1)
    
(4,353
)
    
(2,842
)
    
(8,519
)
    
(5,449
)
Total cost
    
(15,506
)
    
(13,008
)
    
(30,072
)
    
(25,611
)
Gross profit 
    
32,380
      
25,706
      
60,096
      
47,770
  
Operating expenses
                                
General and administrative (1)
    
(8,242
)
    
(7,431
)
    
(16,167
)
    
(14,352
)
Sales and marketing (1)
    
(14,449
)
    
(21,318
)
    
(29,231
)
    
(39,218
)
Research and development (1)
    
(16,305
)
    
(15,409
)
    
(30,264
)
    
(29,334
)
Other losses
    
(511
)
    
(474
)
    
(1,265
)
    
(465
)
Loss from operations
    
(7,127
)
    
(18,926
)
    
(16,831
)
    
(35,599
)
Financial result, net
    
114
      
(5,426
)
    
1,570
      
(10,147
)
Equity results
    
367
      
268
      
708
      
487
  
Loss before income tax
    
(6,646
)
    
(24,084
)
    
(14,553
)
    
(45,259
)
Total income tax
    
36
      
2,619
      
15
      
4,704
  
Net loss for the period
    
(6,610
)
    
(21,465
)
    
(14,538
)
    
(40,555
)

(1) Includes stock-based compensation expenses as follows:
   
Three months ended
    
Six months ended
  
(in US$ thousands)
  
June
30, 2023
    
June
30, 2022
    
June
30, 2023
    
June
30, 2022
  
Subscription cost
    
(85
)
    
(80
)
    
(106
)
    
(167
)
Services cost
    
(99
)
    
6
      
(244
)
    
(20
)
General and administrative
    
(1,708
)
    
(639
)
    
(3,422
)
    
(1,628
)
Sales and marketing
    
(1,050
)
    
247
      
(2,369
)
    
(482
)
Research and development
    
(1,793
)
    
(458
)
    
(3,664
)
    
(1,101
)
Total
    
(4,735
)
    
(924
)
    
(9,805
)
    
(3,398
)

Total revenue
 
The components of our total revenue during the three and six-month periods ended on June 30, 2023 and 2022 were as follows:
 
   
Three months ended
    
Six months ended
  
(in US$ thousands, except percentages)
  
June
30, 2023
    
June
30, 2022
    
Variation
    
June
30, 2023
    
June
30, 2022
    
Variation
  
Subscription revenue
    
44,772
      
36,649
      
22.2
%
    
84,534
      
69,230
      
22.1
%
Services revenue
    
3,114
      
2,065
      
50.8
%
    
5,634
      
4,151
      
35.7
%
Total revenue
    
47,886
      
38,714
      
23.7
%
    
90,168
      
73,381
      
22.9
%

Total revenue for the three-month period ended June 30, 2023 was US$47.9 million, an increase of US$9.2 million, or 23.7% in US$ or 22.9% on an FX neutral basis, from US$38.7 million in the same period of 2022. The increase in total revenue was primarily driven by: an increase in GMV of 23.4% in US$ or 21.2% on an FX neutral basis to US$3.8 billion for the three-month period ended June 30, 2023, from US$3.1 billion in the same period of 2022, which also led to higher revenues from transaction-based fees as percentage of total subscription revenues and the expansion of our operations outside of Brazil.
 
Total revenue for the six-month period ended June 30, 2023 was US$90.2 million, an increase of  US$16.8  million, or 22.9% in US$ or 22.5% on an FX neutral basis, from US$73.4 million in the same period of 2022. The increase in total revenue was primarily driven by: an increase in GMV of 22.6% in US$ or 20.9% on an FX neutral basis to US$7.1 billion for the six-month period ended June 30, 2023, from US$5.8 billion in the same period of 2022, which also led to higher revenues from transaction-based fees as percentage of total subscription revenues and the expansion of our operations outside of Brazil.

34
Total cost
 
The components of our total cost during the three and six-month periods ended on June 30, 2023 and 2022 were as follows:
 
   
Three months ended
   
Six months ended
  
(in US$ thousands, except percentages)
  
June 30,
2023
    
June 30,
2022
    
Variation
    
June 30,
2023
    
June 30,
2022
    
Variation
  
Subscription cost
    
(11,153
)
    
(10,166
)
    
9.7
%
    
(21,553
)
    
(20,162
)
    
6.9
%
Services cost
    
(4,353
)
    
(2,842
)
    
53.2
%
    
(8,519
)
    
(5,449
)
    
56.3
%
Total cost
    
(15,506
)
    
(13,008
)
    
19.2
%
    
(30,072
)
    
(25,611
)
    
17.4
%
                                                 
Total cost for the three-month period ended June 30, 2023 increased by US$2.5 million, or 19.2%, to US$15.5 million from US$13.0 million in the same period of 2022, principally due to an increase in total cost of services by US$1.5 million.
 
Total cost for the six-month period ended June 30, 2023 increased by US$4.5 million, or 17.4%, to US$30.1 million from US$25.6 million in the same period of 2022, principally due to an increase in total cost of services by US$ 3.0 million.
 
Gross profit
 
As a result of the above, our gross profit increased by US$6.7 million, or 26.0% to US$32.4 million for the three-month period ended June 30, 2023 from US$25.7 million in the same period of 2022. As a percentage of our total revenue, our gross profit increased to 67.6% in the three-month period ended June 30, 2023 from 66.4% in the same period of 2022, mainly due to operational hosting cost efficiencies.
 
Our gross profit increased by US$12.3 million, or 25.8% to US$60.1 million for the six-month period ended June 30, 2023 from US$47.8 million in the same period of 2022. As a percentage of our total revenue, our gross profit increased to 66.6% in the six-month period ended June 30, 2023 from 65.1% in the same period of 2022, mainly due to operational hosting cost efficiencies.
 
35
Operating expenses
 
General and administrative
 
General and administrative expenses during the three and six-month periods ended on June 30, 2023 and 2022 were as follows:
 
   
Three months ended
   
Six months ended
  
(in US$ thousands, except percentages)
  
June 30,
2023
    
June 30,
2022
    
Variation
    
June 30,
2023
    
June 30,
2022
    
Variation
  
General and administrative
    
(8,242
)
    
(7,431
)
    
10.9
%
    
(16,167
)
    
(14,352
)
    
12.6
%
Percentage of total revenue
    
(17.2
)%
    
(19.2
)%
    
-
      
(17.9
)%
    
(19.6
)%
    
-
  

Our general and administrative expenses increased by US$0.8 million, or 10.9%, to US$8.2 million for the three-month period ended June 30, 2023 from US$7.4 million in the same period of 2022, primarily due to the increase in expenses related to share-based compensation.
 
For the six-month period ended June 30, 2023, our general and administrative expenses increased by US$1.8 million, or 12.6%, to US$16.2 million from US$14.3 million in the same period of 2022, primarily due to the increase in expenses related to share-based compensation.
 
Sales and marketing
 
Sales and marketing expenses during the three and six-month periods ended June 30, 2023 and 2022 were as follows:
 
   
Three months ended
   
Six months ended
  
(in US$ thousands, except percentages)
  
June 30,
2023
    
June 30,
2022
    
Variation
    
June 30,
2023
    
June 30,
2022
    
Variation
  
Sales and marketing
    
(14,449
)
    
(21,318
)
    
(32.2
%)
    
(29,231
)
    
(39,218
)
    
(25.5
)%
Percentage of total revenue
    
(30.2
)%
    
(55.1
)%
    
-
      
(32.4
)%
    
(53.4
)%
    
-
  

Our sales and marketing expenses decreased by US$6.9 million, or 32.2%, to US$14.4 million for the three-month period ended June 30, 2023 from US$21.3 million in the same period of 2022, primarily due to (1) the decrease in expenses related to compensation due to the reduction in our sales and marketing workforce as a result of the Company’s efforts to optimize its structure, (2) the decrease in marketing and events expenses and (3) the decrease in outsourcing expenses.
 
For the six-month period ended June 30, 2023, our sales and marketing expenses decreased by US$10.0 million, or 25.5%, to US$29.2 million from US$39.2 million for the same period of 2022, primarily due to (1) the decrease in expenses related to compensation due to the reduction in our sales and marketing workforce as a result of the Company’s efforts to optimize its structure, (2) the decrease in marketing and events expenses and (3) the decrease in outsourcing expenses.
36
Research and development
 
Research and development expenses during the three and six-month periods ended on June 30, 2023 and 2022 were as follows:
 
   
Three months ended
   
Six months ended
  
(in US$ thousands, except percentages)
  
June 30,
2023
    
June 30,
2022
    
Variation
    
June 30,
2023
    
June 30,
2022
    
Variation
  
Research and development
    
(16,305
)
    
(15,409
)
    
5.8
%
    
(30,264
)
    
(29,334
)
    
3.2
%
Percentage of total revenue
    
(34.0
)%
    
(39.8
)%
    
-
      
(33.6
)%
    
(40.0
)%
    
-
  

Our research and development expenses increased by US$0.9 million, or 5.8% to US$16.3 million for the three-month period ended June 30, 2023 from US$15.4 million in the same period of 2022, primarily due to an increase in expenses related to share-based compensation, which was partially offset by the decrease in other expenses related to compensation as a result of the Company’s efforts to optimize its structure.
 
For the six-month period ended June 30, 2023, our research and development expenses increased by US$0.9 million, or 3.2%, to US$30.3 million from US$29.3 million in the same period of 2022, primarily due to an increase in expenses related to share-based compensation, which was partially offset by the decrease in other expenses related to compensation as a result of the Company’s efforts to optimize its structure.
 
Financial results
 
The components of our financial results during the three and six-month periods ended June 30, 2023 and 2022 were as follows:
 
   
Three months ended
   
Six months ended
  
(in US$ thousands, except percentages)
  
June 30,
2023
    
June 30,
2022
    
Variation
    
June 30,
2023
    
June 30,
2022
    
Variation
  
Financial income
    
9,240
      
4,696
      
96.8
%
    
16,599
      
8,988
      
84.7
%
Financial expense
    
(9,126
)
    
(10,122
)
    
(9.8
)%
    
(15,029
)
    
(19,135
)
    
(21.5
)%
Financial result, net
    
114
      
(5,426
)
    
(102.1
)%
    
1,570
      
(10,147
)
    
(115.5
)%

Our financial result amounted to a revenue of US$0.1 million for the three-month period ended June 30, 2023, compared to an expense of US$5.4 million in the same period of 2022
 
Our financial result amounted to a revenue of US$1.6 million for the six-month period ended June 30, 2023, compared to an expense of US$10.1 million in the same period of 2022
 
Explanations for the variations in the above referred period are set forth below: 
 
Financial income
 
Financial income increased by US$4.5 million, or 96.8%, to US$9.2 million for the three-month period ended June 30, 2023 from US$4.7 million in the same period of 2022, mainly due to (1) an increase in interest and dividends earned on bank deposits and financial investments to US$3.3 million in June 30, 2023 from US$0.2 million in June 30, 2022 and; (2) an increase in short term investments gains to US$2.2 million in June 30, 2023 from US$0.8 million in June 30, 2022.
 
Financial income increased by US$7.6 million, or 84.7%, to US$16.6 million for the six-month period ended June 30, 2023 from US$9.0 million in the same period of 2022, mainly due to (1) an increase in interest and dividends earned on bank deposits and financial investments to US$5.1 million in June 30, 2023 from US$0.3 million in June 30, 2022 and, (2) an increase in short term investments gains to US$6.5 million in June 30, 2023 from US$1.4 million in June 30, 2022, which was partially offset by (3) a decrease in gains from fair value of financial instruments to US$0.7 million in June 30, 2023 from US$3.3 million in June 30, 2022.
 
37
Financial expense
 
Financial expense decreased by US$1.0 million, or 9.8%, to US$9.1 million for the three-month period ended June 30, 2023 from US$10.1 million in the same period of 2022, mainly due to (1) the decrease in short-term investment losses to US$0.2 million in June 30, 2023 from US$6.2 million in June 30, 2022; partially offset by (2) an increase in foreign exchange losses to US$4.9 million in June 30, 2023 from US$2.0 million in June 30, 2022 and, (3) an increase in adjustment of hyperinflation to US$3.4 million in June 30, 2023 from US$1.4 million in June 30, 2022.
 
Financial expense decreased by US$4.1 million, or 21.5%, to US$15.0 million for the six-month period ended June 30, 2023 from US$19.1 million in the same period of 2022, mainly due to (1) the decrease in short-term investment losses to US$1.2 million in June 30, 2023 from US$10.6 million in June 30, 2022; partially offset by (2) an increase in foreign exchange losses to US$7.7 million in June 30, 2023 from US$3.6 million in June 30, 2022, and; (3) an increase in adjustment of hyperinflation to US$4.9 million in June 30, 2023 from US$2.1 million in June 30, 2022.
 
The following tables show the unrealized gain and loss position recorded in our Balance Sheet as at June 30, 2023 and December 31, 2022:
 
   
As at June 30, 2023
 
   
Amortized cost
    
Gross
unrealized gain
    
Gross
unrealized loss
    
Fair value
  
Short-term investments
    
100,601
      
5,028
      
-
      
105,629
  


   
As at December 31, 2022
 
   
Amortized cost
    
Gross
unrealized gain
    
Gross
unrealized loss
    
Fair value
  
Short-term investments
    
208,177
      
1,013
      
(5,145
)
    
204,045
  

Net loss for the period
 
As a result of the above, our net loss amounted to US$6.6 million for the three-month ended June 30, 2023, compared to US$21.5 million in the same period of 2022.
 
As a result of the above, our net loss amounted to US$14.5 million for the six-month period ended June 30, 2023, compared to US$40.6 million in the same period of 2022.
 
Condensed consolidated interim statements of cash flows
 
The following table sets forth certain condensed consolidated interim cash flow information for the periods indicated:
 
   
For the six months ended
  
(in US$ thousands)
  
June
30, 2023
    
June
30, 2022
  
Net cash used in operating activities
    
(8,174
)
    
(28,622
)
Net cash provided by (used in) investing activities
    
99,186
      
(59,169
)
Net cash used in financing activities
    
(15,321
)
    
(3,186
)
Net increase (decrease) in cash and cash equivalents
    
75,691
      
(90,977
)

38
Net cash used in operating activities
 
For the six months ended June 30, 2023, net cash used in operating activities decreased by US$20.5 million to US$8.2 million, from US$28.6 in the same period of 2022, primarily as a result of:
 
•
 
(1) a decrease in net loss of the period to US$14.5 million for the six-month period ended June 30, 2023, compared to a net loss of US$40.6 in the same period of 2022
•
 
(2) working capital adjustments which consisted mainly of an increase in deferred revenue in the amount of US$6.2 million for the six-month period ended June 30, 2023, compared to a decrease of US$1.5 million in the same period of 2022. This was partially offset by: 
•
 
(3) working capital adjustments which consisted mainly of an increase in trade receivables in the amount of US$6.6 million for the six-month period ended June 30, 2023, compared to a decrease of US$2.0 million in the same period of 2022.
 Net cash provided by (used) in investing activities
 
For the six-month period ended June 30, 2023, net cash provided by (used in) investing activities increased by US$158.4 million to US$99.2 million of net cash provided by investing activities from US$59.2 million of net cash used in investing activities in the same period of 2022, primarily as a result of (1) an increase in the redemption of short-term investments to US$118.3 million for the six-month period ended June 30, 2023, from US$53.1 million in the same period of 2022 and (2) a decrease in the purchase of short-term investments to US$21.3 million for the six-month period ended June 30, 2023, from US$111.0 million in the same period of 2022.
Net cash used in financing activities
 
For the six-month period ended June 30, 2023, net cash used in financial activities increased by US$12.1 to US$15.3 million, from US$3.2 million in the same period of 2022, primarily as a result of the buyback of shares in the amount of US$13.8 million for the six-month period ended June 30, 2023, from nil in the same period of 2022
 
Capital expenditures
 
Our capital expenditures, consisting of purchase of property and equipment and intangible assets, for the six-month periods ended June 30, 2023 and 2022, amounted to US$0.2 million and US$0.2 million, respectively, representing 0.2% and 0.2% of our total revenue for the six-month periods ended June 30, 2023 and 2022, respectively.

We expect to slightly increase our capital expenditures to support the growth in our business and operations. For 2023, we have budgeted capital expenditures of US$2.0 million. We expect to meet our capital expenditure needs for at least the next 12 months from our net cash provided by operating activities and our existing cash and cash equivalents.
Off-balance sheet arrangements
 
As of June 30, 2023, we did not have any off-balance sheet arrangements.
 
Quantitative and qualitative disclosures about market risk
 
We are exposed to market risks in the ordinary course of our business, including the effects of foreign currency fluctuations, derivative financial instruments, credit risk and liquidity risk. Information relating to quantitative and qualitative disclosures about these market risks is described below:
 
39
Interest rate risk
 
The interest risk arises from the possibility of us incurring losses due to fluctuations in interest rates in respect of fair value of future cash flows of a financial instrument.
 
Our investments are made for capital preservation purposes and we do not enter into investments for trading or speculative purposes. Our trade receivables, accounts payable and other liabilities do not bear interest.
 
Our cash, cash equivalents, restricted cash, and short-term investments consist primarily of interest-bearing accounts held by our parent company in USD. Such interest-earning instruments carry a degree of interest rate risk. To minimize interest rate risk, we intend to maintain our portfolio of cash equivalents in a variety of investment-grade securities, which may include commercial papers, money market funds, and government and nongovernment debt securities. Because of the short-term maturities of our cash, cash equivalents, restricted cash, and short-term investments, as of June 30, 2023, we are not materially exposed to the risk of changes in market interest rates.
Foreign currency exchange risk
 
We have significant operations internationally that are denominated in foreign currencies. Our exposure to foreign exchange risk is primarily related to fluctuations between the U.S. Dollar and the currency of Latin American countries in which we operate (primarily the Brazilian real, Argentine peso, Colombian peso and Chilean peso). We transact business in various foreign currencies and have significant international revenues and costs. Our cash flows, results of operations and some of our intercompany balances are exposed to foreign exchange rate fluctuations that may differ materially from expectations. We may record significant gains or losses due to foreign currency fluctuations and related hedging activities.
 
Our subsidiaries generate revenues and incur most of their expenses in the respective local currencies of the countries in which they operate. As a result, our subsidiaries use their local currency as their functional currency. As of the six-month period ended June 30, 2023 and in the year ended December 31, 2022, 20.4% and 15.6% of our revenues were denominated in, or linked to, U.S. dollars, respectively. As of June 30, 2023 and in the year ended December 31, 2022, our assets were represented by 61.4% and 66.1% in U.S. dollars, 38.6% and 33.9% in other currencies. As of June 30, 2023 and in the year ended December 31, 2022, our liabilities, excluding our total shareholders’ equity, were represented by 14.2% and 13.2% in U.S. dollars, 85.8% and 86.8% in other currencies.
 
We are exposed to foreign exchange fluctuations on the revaluation of foreign currency assets and liabilities. We use foreign exchange derivative products to hedge intercompany loans, and debt for operational purposes. By their nature, derivative financial instruments involve risk, including the credit risk of non-performance by counterparties. We use derivatives for hedging purposes and not as speculative investments.
 
40
 
SIGNATURES
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
 
Date: August 8, 2023
 

 
VTEX
 
 
 
 
 
By: /s/ Ricardo Camatta Sodre 
 
Name: Ricardo Camatta Sodre
 
Title: Chief Financial Officer
 

41
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