Thanks, Julia. Welcome, everyone, and thanks for joining us today for our 2021 second quarter earnings results, our first earnings call ever. Before jumping into our quarterly performance, I would like to address 2 topics. First, I want to thank all VTEXers for their hard work and commitment which enabled us to complete our initial public offering; our customers who trust us every day to deliver their mission-critical commerce infrastructure; our ecosystem of partners, who build new solutions every day, adding value to our customers to the VTEX platform; and to both our long time and our new investors and partners that share our vision. This was an important milestone for VTEX, but it is just the beginning of what we believe will be a transformational journey ahead of us. Second, as it's the first time I'm doing this and some of you may not know us that well, I would like to take this opportunity to give you a quick overview on what we do, why we do it and where we are going. Last year, society was disrupted by a pandemic that challenged us on a personal and professional level. COVID-19 impacted everyone's lives in so many ways, and one thing that the pandemic demonstrated is that the way of doing business needed to change to accommodate transacting online as well as in person. The digital economy is here to stay and all players need to develop a strong and integrated online presence in order to capture the new possibilities technology enables. Consumers now expect brands to make shopping experiences as convenient and seamless as possible, from product discovery to purchasing, across all channels. As such, retailers need a scalable and flexible platform that lets them test multiple strategies to better serve their consumers. Brands need to be…

Thank you, Geraldo. Hello, everyone. It's a pleasure to be here updating you on our financial performance for the second quarter of 2021. Before moving to the quarterly update, I would like to take a couple of minutes to refresh you all on our revenue model as well as recap our recent performance. Our revenue model is very simple, we charge our customers a mix of fixed fee and variable take rate for full access to our digital commerce platform. The variable take rate component represents approximately 2/3 of our revenue and is charged as a percentage of our customers' GMV. So as our customers grow their GMV, we grow our revenue with them. This model creates strong alignment between us and our customers. It is important to note that we don't sell modules. Our customers pay to receive broad access to the VTEX platform in an all-you-can-eat model. We upsell by helping our customers through their digital evolution, for instance, from a plain vanilla e-commerce website, to an omnichannel operation, to setting up their own marketplace. We upsell by helping our customers increase their GMV, clearly aligning our incentives with our customers. To finalize on our revenue model, we have a tiered pricing model and the fixed versus variable fee is mostly a risk allocation decision made by our customers. If they feel confident in the GMV they will generate, they can choose to pay a higher fixed fee and lower take rate. If they are earlier in their digital journey, they can take less risk by paying a lower fixed fee and higher take rate. Naturally, as our current customers grow and gain confidence in their digital strategy, they tend to take more risk by paying a higher fixed fee and lower take rate. As our customers grow,…

I want to take this opportunity to thank you all again for joining our first earnings conference call ever.

Apologies for my interruption. [Operator Instructions] The first question comes from the line of Sterling Auty with JPMorgan.

Welcome to the public markets. And to get us started, I want to ask on one of the last comments, you talked about the strength of the pipeline for additional new stores. I'm wondering if you can give us a sense of the mix of how many of those stores or what percentage of those stores do you expect to come from brand-new brands that you haven't worked before versus existing customers.

Sterling, Ricardo Sodre here from VTEX. Thanks a lot for the question and joining the call. Before going to your question, I think it's important to explain also to everyone that we see a very interesting mix of new stores between greenfield e-commerce operations and migrations from other e-commerce platforms, right? It's roughly half and half. And our current customers, they can have more than one store, as you know, right? And as Geraldo mentioned on the prepared remarks, we have customers like Whirlpool or Motorola that are opening stores in various geographies and even adding more stores in the same country to serve the brands that they have in their portfolio. So this is an interesting trend. And it's not just cherry-picking a few customers. If we look at our top 100 customers, we can see that they increased a lot their number of stores per customer, right? So it's an interesting trend. Now this is very much in the early innings. Only 8% of our customers have 2 or more stores with us. So it's not a huge driver of new stores overall. But it's an interesting trend to see. So I would say answering your question now, the vast majority of the new stores that we are seeing and the revenue coming from these new stores are driven by net new customers and either greenfield or migrations and it's only early innings for the same customers opening more stores, but it's an attractive and interesting trend that we are seeing already.

No. That's great. And that makes a lot of sense. Maybe one quick follow-up. How are your existing customers now that the economies are starting to open up and we're seeing more in-store shopping, what are they doing in terms of their marketing and advertising to continue to drive their e-commerce efforts?

Yes. Sterling, great question. So our existing customers, we have to segment them by the ones that have relevant physical operations, physical store operations and the ones that are more digitally native, right? And as mentioned by Geraldo in the prepared remarks, the ones that are, they don't have relevant physical store operations are growing roughly 50% their GMV on a year-over-year basis. And it's life as usual for them, right, because they're mostly a digital commerce, right? So the reopening of the stores is not impacting them materially. Now the customers that have relevant physical stores operations, now these stores are open, and they are bringing customers back to the stores. Now the interesting thing is that a lot of them started omnichannel operations during the pandemic or invested a lot in their digital channel during the pandemic. And now that they have these already done and working, they are doing more ship from store or buy online pickup in store. So we are seeing this trend picking up now that they invested in the digital transformation, right? So they are bringing customers back to their stores, but they are also attracted in investing in their omnichannel operations. And even facing the tough comps where most of these customers had their physical stores closed last year, so almost all their volume was online, our GMV with these customers is still growing, right? I mean, even looking at the existing stores, so removing the net new stores, just existing stores, it's still positive, right? So that tells you how they are investing in their digital transformation and in the acceleration of their digital commerce.

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

And my congratulations as well as the new life, at least in the public markets. I wanted to ask a little bit about that question around Q4 seasonality. Obviously, we in prior years pre-COVID, there was certainly some cadence and some normalcy to the seasonality. Obviously, this year with varying paces of reopening and shifting consumer habits, it's probably a little perhaps different. So just curious about what you baked in with respect to Q4 and how we should be thinking about that seasonality.

Yes. Great. Josh, great to connect with you here. No, great question. So I think it's important to mention to everyone that, as we mentioned, right, roughly 2/3 of our revenue is driven by GMV. We have a take rate on the GMV of our customers. So we have a seasonality that's aligned with the retail seasonality in Latin America. And as you all know, Q4 is a very strong quarter for the retail industry. And we are taking that into consideration in our projections in our guidance. And I think if we look at 2020 because of the pandemic, that impacted the seasonality of the year. So it's not a great year to look at seasonality between quarters, among quarters. But 2019 is a good year for you guys to have a sense of the seasonality of each quarter. So 2021 should be more aligned with the historical seasonality. And 2019, I believe, is a good proxy for this seasonality.

Very helpful. And then maybe just a follow-up product question. You obviously have a number of really quality enhancements that you walked through relative to Intelligent Search, some local differentiation, market features. Just curious what is the reception to these types of enhancements from the customer conversations that you've been having?

Josh, this is Geraldo speaking. Thank you for the question. The heuristic for us to define where we're going to do enhancements in our product is very aligned with our customers. This is us having the strategical milestones about where we're going to get the product to, and this is about us being the single control panel for every order, being the developer platform of choice for commerce and also allowing zero friction collaboration between the ecosystem and its peers. So this is the milestone, strategical milestone. But actually, the day-to-day improvements that we do to our product is the request that our main customers do on that direction. So all these capabilities that we announced here and all the capabilities that we do to our software, all the improvement that we do to our software are related to direct request from the leaders of the industry. And you might feel that this is not usual, but let's remember, we work for enterprise companies. They're strategical. They have strong areas. They have strategical views of where the product should go. So most of the time, it has a lot of traction because we're so close to them. Ricardo wants to do some adds to that. Ricardo?

Yes. Yes. No, Geraldo. And I think an important point on the Intelligent Search and some of the updates that we announced to the market in this quarter that we believe a lot of these commerce capabilities they are local, right? And the ecosystem is also very local. So some of the developments announced, development should help the local commerce capabilities for our customers to will help them differentiate in the marketplace. So that's, I think, an important point to mention as well.

The next question comes from the line of Daniel Bartus with Bank of America.

I wanted to ask about what you see for 3Q a little bit. Clearly, with revenue growth of roughly 13%, you talked about some headwinds in there and some tough comps. Maybe you can just walk a little bit country-by-country where you're seeing the most reopening headwinds or risk in 3Q?

Yes. Dan, thanks for the question. So I think Latin America had a later impact and a later reopening of the market given the COVID vaccinations and all that, right? And 94% of our revenue comes from Latin America. So I would say the dynamics of the reopening is very similar in Brazil and Lat Am excluding Brazil, right? Obviously, the U.S. and Europe have experienced reopening sooner, but it's only 6% of the overall revenue. So it's not a relevant impact for the overall business. Now between the geographies, right, I mean, obviously, as announced in the F-1, we are seeing Brazil growing slower than Lat Am excluding Brazil and the rest of the world given the stage of development of the country. But still in Q2, Brazil grew double digits, right, in revenue. So it's still attractive growth even with the tough comps. Now for Q3, we expect a similar type of dynamics, right? It's a tougher comp quarter as we mentioned in the prepared remarks. But among geographies, there shouldn't be a huge difference. It's more about the stage of development of each country or each region than a more reopening type of dynamics, I would say.

This is Andre Spolidoro. Just to complete that, and if you look at last year in the second quarter, we had April. April was the first month of the quarter. And the shutdown of the stores started in April. And it was starting from April to May. Because of that the comps from the second quarter does not affect third quarter. That explain the mix of the company.

Okay. Okay. Got it. And just a follow-up. It's a bit of a clarification. I was wondering if you guys could just talk a little bit about marketplaces and how you guys work with them. And theoretically, if one of your customers sells through like MercadoLibre, I'm curious if you can talk about how much value you guys would get from that and if that would be potentially counted in your GMV as well?

Perfect. So this is how us connecting to marketplaces is aligned with the goal of being the single control panel for every order for our customers, right? We want to be the point of contact of the relationship between our customers, the brand and its consumers. So yes, the marketplace orders and traffic should be routed to our platform as well. That's our vision. And we are making consistent and strong steps towards that direction. We currently have not most of the revenue coming from orders that are generated from marketplace but like to digital orders like more than 10%, less than 20%. This is something that we believe we need to provide to our customers for them to have this single control panel. And we provide first-party integrations for this strategy connecting big marketplaces. And we provide connections for a third party or for the marketplace to integrate to our system as well. I think you talked about the revenue that we get from that. We still get a take rate that is a little bit smaller than the take rate that we get when we are providing orders from the first-party proprietary sales channel of our customers. We are going to get more value there. And yes, and it's also aggregating to our GMV. And as I said, it's something between 10% to 20% of our aggregated GMV today.

The next question comes from the line of Diego Aragão with Goldman Sachs. Diego Aragão: My question is regarding the development of this ecosystem in each country where VTEX operates. I understand that even though this ecosystem is not mandatory for you to grow your business abroad, having an ecosystem in place makes your platform be in a much better, let's say, competitive position, right, and improves the value proposition for your customers as well. So that being said, I'm just curious to understand what can you do to promote this ecosystem in a new market? And how long it should take for a new country, let's say, to be on the same position as of Brazil?

Thank you, Diego. Yes. When we get to a country and there's no ecosystem, we're just a very good software, right? As you know, like from IDC and Gartner, they think highly of us as a product. But this is not the endgame for us. I repeat that a lot. The era of stand-alone software is gone. A software is as solid as the network it empowers. So we do need a ecosystem in place for us to exercise the full power of our value proposition. And this is done in different ways depending on the phase that we are in the country. When we're starting the country, nobody wants to look at us. Nobody cares about us. And they only care about us if we are with customers, with referable customers. So when we get into a country, the only thing that we can do to be successful there is to get referable customers to our platform. As we get them, we create cases, then we start to get the attention of the customers, of the ecosystem around us in the country. So for us to get the first customers, we usually call some local ecosystem players and provide the help of the ecosystem player, the system integrators. There are other countries that we are already mature. So they help. They transmit knowledge. They kind of accelerate the system integrator knowledge about our platform. Eventually, we create some cases, eventually got some attention, and then we start the flywheel. It takes a while, especially to get the referable customers. And it's a very dynamic market. It's changing a lot, as you know, like the e-commerce market. But I can give you some data points, right? When we started in Brazil, we were like, maybe there was no ecosystem available…

That concludes the conference call. Thank you for your participation and enjoy the rest of your day.