VTEX VTEX

 

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 November 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

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or 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): ☐

Condensed consolidated interim statements of profit or loss

6

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

30

PART II - OTHER INFORMATION

42

Item 1 - Signatures

42

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

						Interest held by the Group (%)
	Company		Place of business/ country of incorporation	Relationship	Principal business activity	September 30, 2023	December 31, 2022	September 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	98.86	99.58	99.73
	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	100
	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

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 nine-month period ended September 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.

 

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:

●	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.

●	Target Asset Price - US$4.74 per share (December 31, 2022 - US$4.40 per share)

●	Risk-Free Interest Rate – 4.14% (December 31, 2022: 3.83%)

●	Volatility – 58.63% (December 31, 2022: 55.68%)

●	Expected dividend: None

●	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 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 September 30, 2023 were subsequently vested, the Group would be required to pay taxes of approximately US$104 considering the stock price as of September 30, 2023.

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 September 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 September 30, 2023:

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 September 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. We were also recognized as Visionary in the 2023 Gartner Magic Quadrant™ for Digital Commerce for VTEX’s Ability to Execute and Completeness of Vision, August 2023 report, and top-rated digital commerce platform at Gartner Peer Insights ‘Voice of the Customer’: Digital Commerce. Additionally, we were named a “Contender” in The Forrester Wave™: B2C Commerce Solutions and VTEX was awarded medals in all 24 categories of the “2023 Paradigm B2B Combine: Enterprise and Midmarket Editions”.

 

We offer access to our platform on a subscription basis, which accounted for 93.9% of our revenue for the three-month period ended September 30, 2023, compared to 94.2% 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 September 30, 2023, our GMV increased to US$4.0 billion from US$3.0 billion in the same period of 2022, representing an increase of 35.2% in USD and 27.8% on an FX neutral basis. In the same period, our revenue increased to US$50.6 million from US$38.8 million, representing an increase of 30.6% in USD and 24.5% on an FX neutral basis.

 

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.

 

 

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)	September 30, 2021		December 31, 2021		March 31, 2022		June 30, 2022		September 30, 2022		December 31, 2022		March 31, 2023		June 30, 2023		September 30, 2023
Subscription revenue	29.6		34.5		32.6		36.6		36.5		42.7		39.8		44.8		47.5
Services revenue	2.2		2.6		2.1		2.1		2.2		2.8		2.5		3.1		3.1
Total revenue	31.9		37.1		34.7		38.7		38.8		45.5		42.3		47.9		50.6
Subscription cost	(9.7)		(10.5)		(10.0)		(10.2)		(9.8)		(11.5)		(10.4)		(11.2)		(11.4)
Services cost	(3.1)		(3.3)		(2.6)		(2.8)		(2.9)		(3.1)		(4.2)		(4.4)		(3.6)
Total cost	(12.8)		(13.8)		(12.6)		(13.0)		(12.6)		(14.6)		(14.6)		(15.5)		(15.0)
Gross profit	19.1		23.4		22.1		25.7		26.1		30.9		27.7		32.4		35.6
Operating expenses
General and administrative	(9.9)		(6.9)		(6.9)		(7.4)		(6.9)		(7.1)		(7.9)		(8.2)		(8.4)
Sales and marketing	(19.3)		(17.5)		(17.9)		(21.3)		(16.2)		(12.4)		(14.8)		(14.4)		(15.1)
Research and development	(14.2)		(11.9)		(13.9)		(15.4)		(13.8)		(14.1)		(14.0)		(16.3)		(15.5)
Other income (losses)	0.0		(0.2)		0.0		(0.5)		(0.5)		(0.4)		(0.8)		(0.5)		(0.1)
Loss from operation	(24.4)		(13.1)		(16.7)		(18.9)		(11.3)		(3.0)		(9.7)		(7.1)		(3.5)
Financial result, net	(0.6)		(1.4)		(4.7)		(5.4)		(0.2)		2.7		1.5		0.1		1.1
Equity results	0.2		0.2		0.2		0.3		0.3		0.3		0.3		0.4		0.3
Income (loss) before income tax	(24.8)		(14.3)		(21.2)		(24.1)		(11.2)		0.0		(7.9)		(6.6)		(2.1)
Income tax	2.8		3.7		2.1		2.6		(0.3)		(0.3)		(0.0)		0.0		(0.3)
Net loss for the period	(22.0)		(10.6)		(19.1)		(21.5)		(11.5)		(0.3)		(7.9)		(6.6)		(2.4)
Earnings (loss) per share
Basic and diluted earnings (loss) per share (US$)	(0.12)		(0.06)		(0.10)		(0.11)		(0.06)		(0.00)		(0.04)		(0.04)		(0.01)

	For the three months ended (unaudited)
	September 30, 2021		December 31, 2021		March 31, 2022		June 30, 2022		September 30, 2022		December 31, 2022		March 31, 2023		June 30, 2023		September 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)%		(28.2)%		(28.8)%		(26.3)%		(25.2)%		(25.3)%		(24.6)%		(23.3)%		(22.5)%
Services cost	(9.6)%		(8.9)%		(7.5)%		(7.3)%		(7.4)%		(6.8)%		(9.9)%		(9.1)%		(7.2)%
Total cost	(40.1)%		(37.1)%		(36.3)%		(33.6)%		(32.6)%		(32.1)%		(34.4)%		(32.4)%		(29.7)%
Gross profit	59.9%		62.9%		63.7%		66.4%		67.4%		67.9%		65.6%		67.6%		70.3%
Operating expenses
General and administrative	(31.2)%		(18.6)%		(19.9)%		(19.2)%		(17.9)%		(15.5)%		(18.7)%		(17.2)%		(16.5)%
Sales and marketing	(60.7)%		(47.0)%		(51.6)%		(55.1)%		(41.7)%		(27.3)%		(35.0)%		(30.2)%		(29.8)%
Research and development	(44.5)%		(32.1)%		(40.1)%		(39.8)%		(35.6)%		(30.9)%		(33.0)%		(34.0)%		(30.6)%
Other income (losses)	0.0%		(0.6)%		0.0%		(1.2)%		(1.3)%		(0.9)%		(1.8)%		(1.1)%		(0.2)%
Loss from operation	(76.5)%		(35.4)%		(48.1)%		(48.9)%		(29.1)%		(6.7)%		(23.0)%		(14.9)%		(6.9)%
Financial result, net	(1.8)%		(3.7)%		(13.5)%		(14.0)%		(0.5)%		5.9%		3.4%		0.2%		2.1%
Equity results	0.5%		0.5%		0.6%		0.7%		0.7%		0.8%		0.8%		0.8%		0.6%
Income (loss) before income tax	(77.7)%		(38.6)%		(61.1)%		(62.2)%		(28.9)%		0.1%		(18.7)%		(13.9)%		(4.2)%
Income tax	8.8%		10.0%		6.1%		6.8%		(0.9)%		(0.8)%		(0)%		0.1%		(0.5)%
Net loss for the period	(68.9)%		(28.6)%		(55.0)%		(55.4)%		(29.8)%		(0.7)%		(18.8)%		(13.8)%		(4.7)%

	For the three months ended (unaudited)
		September 30, 2021		December 31, 2021		March 31, 2022		June 30, 2022		September 30, 2022		December 31, 2022		March 31, 2023		June 30, 2023		September 30, 2023
Loss from operation		(24.4)		(13.1)		(16.7)		(18.9)		(11.3)		(3.0)		(9.7)		(7.1)		(3.5)
Share-based compensation expense		9.3		1.6		2.5		0.9		4.8		4.6		5.1		4.7		4.6
Amortization and adjustment related to acquisitions		0.5		0.8		0.5		0.6		0.5		0.5		0.5		0.8		0.6
Offering expenses ("IPO") (i)		1.3		-		-		-		-		-		-		-		-
Non-GAAP Income (loss) from operation		(13.3)		(10.9)		(13.7)		(17.5)		(6.0)		2.1		(4.1)		(1.5)		1.7

	Three months ended				Nine months ended
(in US$ thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Subscription revenue	47,544		36,513		132,078		105,743
Services revenue	3,084		2,241		8,718		6,392
Total revenue	50,628		38,754		140,796		112,135
Subscription cost (1)	(11,395)		(9,755)		(32,948)		(29,917)
Service cost (1)	(3,625)		(2,872)		(12,144)		(8,321)
Total cost	(15,020)		(12,627)		(45,092)		(38,238)
Gross profit	35,608		26,127		95,704		73,897
Operating expenses
General and administrative (1)	(8,374)		(6,944)		(24,541)		(21,296)
Sales and marketing (1)	(15,101)		(16,176)		(44,332)		(55,394)
Research and development (1)	(15,508)		(13,812)		(45,772)		(43,146)
Other losses	(99)		(489)		(1,364)		(954)
Loss from operations	(3,474)		(11,294)		(20,305)		(46,893)
Financial result, net	1,078		(190)		2,648		(10,337)
Equity results	281		272		989		759
Loss before income tax	(2,115)		(11,212)		(16,668)		(56,471)
Total income tax	(264)		(330)		(249)		4,374
Net loss for the period	(2,379)		(11,542)		(16,917)		(52,097)

	Three months ended				Nine months ended
(in US$ thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Subscription cost	(90)		(171)		(196)		(338)
Service cost	(105)		(47)		(349)		(67)
General and administrative	(1,497)		(1,262)		(4,919)		(2,890)
Sales and marketing	(967)		(1,261)		(3,336)		(1,743)
Research and development	(1,934)		(2,027)		(5,598)		(3,128)
Total	(4,593)		(4,768)		(14,398)		(8,166)

	Three months ended				Nine months ended
(in US$ thousands, except percentages)	September 30, 2023	September 30, 2022	Variation		September 30, 2023	September 30, 2022	Variation
Subscription revenue	47,544	36,513	30.2%		132,078	105,743	24.9%
Services revenue	3,084	2,241	37.6%		8,718	6,392	36.4%
Total revenue	50,628	38,754	30.6%		140,796	112,135	25.6%

	Three months ended				Nine months ended
(in US$ thousands,  except percentages)	September 30, 2023	September 30, 2022	Variation		September 30, 2023	September 30, 2022	Variation
Subscription cost	(11,395)	(9,755)	16.8%		(32,948)	(29,917)	10.1%
Services cost	(3,625)	(2,872)	26.2%		(12,144)	(8,321)	45.9%
Total cost	(15,020)	(12,627)	19.0%		(45,092)	(38,238)	17.9%

	Three months ended				Nine months ended
(in US$ thousands, except percentages)	September 30, 2023	September 30, 2022	Variation		September 30, 2023	September 30, 2022	Variation
General and administrative	(8,374)	(6,944)	20.6%		(24,541)	(21,296)	15.2%
Percentage of total revenue	(16.5)%	(17.9)%	-		(17.4)%	(19.0)%	-

	Three months ended				Nine months ended
(in US$ thousands, except percentages)	September 30, 2023	September 30, 2022	Variation		September 30, 2023	September 30, 2022	Variation
Sales and marketing	(15,101)	(16,176)	(6.6%)		(44,332)	(55,394)	(20.0)%
Percentage of total revenue	(29.8)%	(41.7)%	-		(31.5)%	(49.4)%	-

	Three months ended				Nine months ended
(in US$ thousands, except percentages)	September 30, 2023	September 30, 2022	Variation		September 30, 2023	September 30, 2022	Variation
Research and development	(15,508)	(13,812)	12.3%		(45,772)	(43,146)	6.1%
Percentage of total revenue	(30.6)%	(35.6)%	-		(32.5)%	(38.5)%	-

	Three months ended				Nine months ended
(in US$ thousands, except percentages)	September 30, 2023	September 30, 2022	Variation		September 30, 2023	September 30, 2022	Variation
Financial income	8,974	7,137	25.7%		25,573	16,125	58.6%
Financial expense	(7,896)	(7,327)	7.8%		(22,925)	(26,462)	(13.4)%
Financial result, net	1,078	(190)	(667.4)%		2,648	(10,337)	(125.6)%

		As at September 30, 2023
		Amortized cost		Gross unrealized gain		Gross unrealized loss		Fair value
Short-term investments		91,597		3,862		-		95,459

		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

	For the nine months ended
(in US$ thousands)	September 30, 2023		September 30, 2022
Net cash used in operating activities	(5,422)		(31,808)
Net cash provided by (used in) investing activities	30,294		(46,102)
Net cash used in financing activities	(27,214)		(10,456)
Net decrease in cash and cash equivalents	(2,342)		(88,366)