Hello, everyone, and welcome to VTEX's Earnings Conference Call for the Third Quarter of 2025. I'm Julia Vater Fernandez, VP of Investor Relations. Joining me are Geraldo Thomaz Jr., Founder and Co-CEO; Ricardo Camatta Sodre, CFO; and for the Q&A, our Founder and Co-CEO, Mariano Gomide de Faria; and Chief Strategy Officer, Andre Spolidoro, will also join us. Before we begin, please note that today's remarks may include forward-looking statements. Actual results may differ due to risks and uncertainties described in our Form 20-F for the year ended December 31, 2024, and other SEC filings available on our IR website. We will also reference certain non-GAAP measures. Reconciliations to GAAP are included in our Q3 2025 earnings press release in our IR website. With that, I will turn the call over to Geraldo. Geraldo, the floor is all yours.

Thank you, Julia. Good afternoon, and thanks for joining our third quarter 2025 earnings conference call. This quarter played out in line with the expectations we shared after Q2. Our business continues to show the hallmarks of a durable profit growth model, consistent execution, expanding margin and the gradual ramp-up of high potential revenue streams. Focusing on our consistent execution and expanding margins, profitability improved meaningfully this quarter. AI-powered support automations continue to deliver sustainable efficiency gains, driving our non-GAAP subscription gross margins above 80% for the first time. We also achieved a 16% non-GAAP operating margin. And in a seasonally neutral quarter, our non-GAAP net income reached $10.6 million, a 41% growth year-over-year. Our margin expansion reflects a deeper AI-driven transformation in how we operate. The most tangible outcome so far is in customer support, where automation has structurally reduced costs while enhancing service quality. The vast majority of the recent [ rep count ] optimization stems from these AI productivity gains in support, while the remainder reflects normal commercial adjustments to market demand levels. At the same time, we're partially reinvesting these savings into R&D, fueling innovation and future growth. Now expanding on our gradual ramp-up of high potential revenue streams, we're doubling down our 4 growth pillars: global expansion, B2B use case customers, retail media and Agentic commerce. Our global expansion continues to make solid progress. We are seeing rising demand for enterprise-grade composable commerce solutions, especially in B2B as global brands modernize complex operations and migrate from legacy systems. A highlight this quarter is continued progress with a multibillion-dollar U.S. enterprise implementation, a strong validation of our ability to serve large sophisticated customers globally. In Brazil, we expanded our enterprise footprint with wins such as H&M, Itau and Picpay, reinforcing our competitive strength even in more…

Thank you, Geraldo. Hi, everyone. I'm pleased to share with you VTEX's financial results. In Q3 2025, GMV reached $5.0 billion, up 13% in U.S. dollars and 12% FX neutral. Subscription revenue was $58.4 million versus $53.9 million in Q3 2024, an increase of 8% in U.S. dollars and 7% FX neutral. Given our Q2 performance, we had already adjusted expectations for Argentina. The country faced additional challenges in Q3, so performance was worse than expected with no signs of short-term recovery amid weak consumer sentiment. Moving north, Brazil performed in line with expectations, showing a modest deceleration of a couple of percentage points quarter-over-quarter. Within this context, in Q3, our non-GAAP subscription gross margin reached 80%, underscoring the success of the efficiency initiatives we've been highlighting over the past several quarters, particularly the continued deployment of AI-powered automation and customer support. These initiatives are consistently delivering structural gains in customer support productivity and cost reduction, reinforcing the last durability of our margin improvement and the scalability of our business model. Our total gross margin, including services, reached 77.5%, an expansion of 270 basis points year-over-year. This continued improvement reflects not only the steady gains in subscription gross margin, but also the ongoing shift of services in our revenue mix as our global ecosystem of partners increasingly takes the lead in complex implementation projects. Our expense management continues to reflect our discipline and alignment with long-term growth priorities. Total non-GAAP operating expenses in the third quarter were $36.7 million, up 7% year-over-year and down 1% quarter-over-quarter, even though LatAm currency depreciation drove most of our expenses up in U.S. dollars terms. We delivered savings in S&M and G&A, and we chose to reinvest through R&D in innovation, product development and AI capabilities that strengthen our competitive position. In other words,…

[Operator Instructions] Our first question today comes from the line of Marcelo Santos with JPMorgan.

I have 2. The first, I wanted to explore a bit the sequential increase in R&D expenditures. At the same time, I think the number of employees declined around 49 employees. So just wanted to get a bit more color on what you're doing, if you hire more people or not and why did employees decline? Just want to connect these 2 things. And the second thing -- second question is, could you discuss qualitatively how your churn is trending? Has the weakness in the market -- in the LatAm market also reflected in a somewhat higher client disconnection? Or is it more linked to GMV and maybe a longer cycle to close new deals?

Marcelo, this is Geraldo. I'll talk a little bit about the R&D investment. So we are continuing to invest heavily in R&D because we see this as a powerful moment for the company, for the whole world actually, one where technology and especially AI is redefining the entire commerce landscape. In 2026, we expect our R&D investment to continue to increase, reflecting our conviction that now is the time to build the VTEX platform of the future. Our priorities are clear and centered on 4 strategic pillars: AI transformation, the biggest one, B2B commerce that will grow us outside of LatAm and inside of LatAm, retail media that will make our customers viable and profitable and will give a lot of revenue to us as well. And we will also strengthen our commerce -- core commerce foundation [ formed ] by AI. First, the AI transformation is at the center of everything we're doing. We're rethinking both how we build software and what software we build. That means that evolving from static admin tools to a fully AI-driven workspace powered by autonomous agents that automate commerce workflows from onboarding products to launching promotions or optimizing searching and pricing. So this is how we will become the AI native backbone for connected commerce. Second, B2B is an investment that we are accelerating, which we see as a massive global opportunity. We're developing a comprehensive B2B platform, including AI-assisted sales interfaces that connect buyers and reps in a single digital experience. Third, retail media is becoming an increasingly strategic part of our road map. We're helping retailers monetize their traffic and data by creating one of the largest retail media networks in Latin America, combining on-site, off-site, off-line media with AI powering personalization, recommendations and attribution. And finally, we continue to strengthen our core commerce and omnichannel platform, advancing in areas like semantic search, product recommendations, delivery promise, physical store integrations to make the overall experience more intelligent and connected. Across all this, the common thread is AI, not as a buzzword, but as an enabler for efficiency, growth and differentiation. We're investing to lead this transition just as we did when we became a cloud-native company a decade ago. So in short, our R&D focus is about building the next generation of VTEX, one that is AI native, outcome-driven and ready to power the future of global commerce. So you're going to see us going -- continue investing in R&D, Marcelo. On the churn, the churn -- no, the churn is stable. It's not -- what we're seeing is less momentum in sales, and we can elaborate this more if the other audience wants to.

Marcelo, I can elaborate a little bit more on the sales. And on churn, as Geraldo said, it's Mariano here. So on churn, as Geraldo said, is stable. We are seeing more in the Tier 3, but the overall number of the company stays the same, not a point of attention here. In demand, we can elaborate a little bit more. The demand environment remained mixed, soft in Latin America, but resilient in U.S. and EMEA. In Brazil and across Latin America, high interest rates are lowering the consumer spending and continue to weight on activity. So we are seeing sales cycles are longer and overall bookings remain below last year record levels. That said, we are not losing deals to competitors. Decisions are simply taking more time and sometimes being postponed. Importantly, our customers remain engaged and retention is strong, and we help them to navigate this very, very challenged macro backdrop. At the same time, we are gaining share through new growth levers. B2B solution adoption in the region is picking up. And also our retail media platform and our AI support platform offering is helping retailers to monetize and make more margin. Their initiatives reinforce customer economics and deep longer-term relationship between VTEX and our customers. Outside Latin America, demand remains resilient. The U.S. and EMEA continue to grow roughly twice as fast as the company overall, driven by our focused go-to-market strategy and the migration of large enterprises from outdate and high-cost legacy platforms. Roughly half of our new deals in the U.S. and EMEA are now B2B, validating both our position and product strategy. Competitively, our position remains strong. Our comprehensive product offers a unique advantage, B2C and B2B in a single platform. Against legacy providers, we win on modernization and cost efficiency. Against the market-moving competitors, we win on depth, composability and high-touch enterprise service. Our public company's credibility and consistent execution are helping us to secure large strategic deals with global brands. So while in the macro environment in Latin America is still a headwind, pretty uncertain, our sales momentum and competitiveness remains solid. We see attractive opportunities in our global expansion, the B2B solutions use case customers, the retail media and the Agentic commerce. The foundations are intact. Our pipeline is healthy, and we are confident that we're building the right base for reacceleration as continues improve.

And our next question comes from the line of Maria Clara Infantozzi with Itau.

The first one is related to Argentina. Now that the elections are behind us and you're seeing more signs of macro stabilization, does this change anything on your outlook for the region? Can you comment briefly on how you perceive things evolving there, please? And the second question, more structural and qualitative one. If you could please develop on how you see AI investments leveraging the way you monetize your clients going forward?

Okay. I'm going to take the first one about Argentina. So Argentina continues to be a tough market, the toughest we operate in. The macroeconomic environment remains extremely challenging with a very high interest rates. close to 50% nominal against a roughly 25% inflation. So it's a pretty tough environment. Credit systems are largely paralyzed. In Argentina, retailers effectively operate as banks. The Tier 1 retailers operate as banks. And what's breaking today is not retail itself, but the banking capacity to fund inventory and the financing of consumption, the famous [ quotas ] in Argentina, right? So that's mainly what's driving the weakness we are seeing in GMV and ultimately in revenue. After the sharp reversal we saw early in the year, Q3 underperformed our expectations. And while we recent elections -- the recent elections were received positively by the market, on the ground, consumption haven't improved yet. Visibility remains limited. So we continue to model Argentina with very cautious for the rest of the year. We are staying very close to our customers there. Our teams are on the ground having tough conversations with them on a weekly basis. What is clear is that the issue isn't lack of will. it's credit. The entire system runs on financing and without access to affordable credit consumption simply stalls. In the end, for better for the worse, we don't provide financing ourselves. We need to rely on our ecosystem and the macro to do so. In parallel, we're helping customers protecting their margin and strengthen their competitiveness. We are showing them how AI can cut operational costs. For example, our AI customer support platform can automate call centers and save a lot of money. We can save up to 1% of the revenue or more also in monetizing their traffic through retail media. So it's us delivering on the ground operational efficiency for them and preparing them to the bounce back of the market. One interesting point here is what we are seeing an entire new set of players like Chinese brand appearing, popping up in all Latin America. In Brazil, we've already secured some of those relationships, brands like Midea, and we are working to replicate that success in Argentina as well. So overall, while Argentina remains as a headwind for us, it's also a market where we understand really deep. We close -- we are really close to our customers and help them to go through this moment. We are positioning ourselves and themselves to capture the upside when the conditions finally stabilize.

Thank you, Mariano. And Maria I will take this AI question about the monetization. So monetization is a matter of product positioning and also we need to benchmark with the competition. So monetization is kind of a separate topic that we don't like couple exactly with the AI. AI for us is much bigger than a source of monetization, although it can create some new services that we eventually can monetize through our company. So AI for us is not just a technology or monetization tool, but it's like a once in a-decade transformation. Similar to the move to the cloud more than 10 years ago. Back then, rebuilding our platform natively for the cloud allow us to leapfrog incumbents and become the e-commerce leader in Latin America. Today, we're approaching AI with the same urgency, ambition and clarity. AI is reshaping enterprise software and especially the commerce value chain. So we believe that it will strengthen decentralized brand-owned channels where VTEX is structurally advantaged. Unlike marketplace aggregators, we power first-party channels, helping brands own the transactions, the data and the customer relationship. This new -- as new Agentic model emerged, routing demand back to this proprietary channel, VTEX becomes even more essential as the orchestration layers that connect price, promotion, fulfillment, loyalty and services across all digital touch points. So we have a product road map that reflects this conviction. We're building autonomous agents and AI copilots that automate key commerce workflows from onboarding products and launching promotions to analyzing data and managing logistics. These agents integrate natively into our ecosystem to accelerate time to value, improve outcomes and free users to focus on strategy. So key things that we are doing just to illustrate. So we're doing the data insights agents for performance diagnostic and action. We're doing…

And our next question comes from the line of Vitor Tomita with Goldman Sachs.

Since the topic is already addressed, I would like to ask a few questions more about the free cash flow side specifically. Looking at what 9 months results and your Q4 guidance implied for the full year, am I correct in understanding that you remain confident on the prior expectation of high teens margin in income from operations, but have become a bit more conservative on the free cash flow side where you were anticipating high teens margin as well? And my second question also related to this, how are your initiatives related to working capital optimization or other cash flow drivers progressing, if there were any surprises on that area this quarter? And if we should especially, for example, expect CapEx to remain a bit higher than usual in Q4.

Ricardo here. So on the free cash flow, I'll take the opportunity to take a step back and talk about the Q4 guidance and 2025 guidance more broadly, and I'll go into the profitability metrics as well. So for Q4, our guidance reflects a balanced and realistic view. Although subscription revenue in October grew faster than in Q3, we continue to see persistent GMV volatility. For example, the Cyber Monday event in Argentina, which started this week was softer than expected. So given this volatility and the uncertainty around the holiday season GMV performance, we are providing a wider range for our Q4 guidance. When we look forward, we remain confident in our ability to reaccelerate our growth over the coming quarters and years. Our key levers to do that, as we mentioned in the earnings call prepared remarks, is the commercial expansion into the U.S. and Europe and our product innovation in B2B, retail media and AI-powered solutions. For instance, each one of these 4 levers is currently running above double-digit growth rate and with a long runway ahead. Now on profitability and free cash flow, we expect another solid quarter with non-GAAP operating margin in the mid-20s and free cash flow margin in the high teens. That reflects both the natural seasonality of Q4 and the structural efficiencies we built through the AI-powered support automation on the cost side as well as continued discipline on G&A and S&M on the expense side. Now on free cash flow, as we discussed in prior earnings calls, our model is structurally front-loaded, meaning for the fixed fee portion of our contracts, we typically bill customers upfront when new contracts are signed. And as a result, cash flow can fluctuate depending on the pace and timing of new bookings, especially with decision-making…

And our next question comes from the line of Cesar Davanco from Santander.

I have one here regarding Brazil. [indiscernible] mentioned that the total GMV FX-neutral growth in Brazil was in low 20s, but that you had a mix shift towards new and large enterprise, which, of course, lowered the implied take rate. What you can comment about these numbers for the third quarter and what you have been expecting this to evolve towards the fourth quarter and so on?

Yes. Happy to take the question, specifically on Brazil. So as I mentioned on the prepared remarks of the call, Brazil performed largely in line with expectations. Q3 unfolded largely in line with expectations, right? If you look at the number, we came slightly below the midpoint of the guidance in FX neutral and slightly above the midpoint in U.S. dollars terms. And Argentina performance was weaker than expected with no tangible signs of short-term recovery and Brazil was largely aligned with expectations and with a modest deceleration of a couple of percentage points quarter-over-quarter. So we were in the low 20s last quarter. This quarter, we were in the high teens. And all other countries were mostly aligned with expectations. So I think that covers it. If we look at Q4 for Brazil, we continue to see a high interest rate environment. So we would expect Brazil to be stable to slightly decelerating Q4 versus Q3.

And our next question comes from the line of Lucca Brendim with Bank of America.

I disconnected for a little bit. So I'm sorry if any of those have already been answered. So first, if you could give us an update on the U.S. operations, if everything is still on track or if there have been any delays with the larger customers that you're expecting at the start of the year? And then second, for the past few months, we have seen Nelly and Shopee announcing the launch of several official stores for some enterprise customers. Have you seen this having any impact on your operations? Have you seen GMV migrating for some of those official stores or something that has not impacted your operations?

Okay. So we continue to see -- I'm going to answer -- Mariano here. I'm going to answer first the U.S. and EMEA momentum, and then I will comment on the marketplaces. We continue to see a strong traction in the U.S. and EMEA. In the U.S., our go-to-market strategy is pretty focused and clearly paying off. We are executing a well-defined playbook targeting large enterprise, especially those migrating from legacy B2B platforms. This segment represent our largest growth opportunity in U.S. and EMEA, and it is providing to be the right bet. Our competitive differentiation is resonating. We combine the sophistication needed to replace complex legacy systems with the agility and composability to modern enterprise that -- to execute. Today, roughly half of our deals in U.S. and EMEA are B2B, underscoring how our strategy to lead the enterprise commerce is taking shape. We are also making encouraging progress on both the commercial and execution fronts. We continue to advance the multibillion-dollar enterprise migration in the U.S., which remain a major validation milestone for our capabilities. Global CIOs and CTOs are choosing VTEX for its comprehensive functionalities. Recent wins such as KitchenAid e-commerce launch and the expansion of a U.S. electrical service with 2 new stores highlight both new logo wins and deeper adoption with existing customers. In EMEA, progress remains steady. This quarter, [ a leader ] DIY operation expand cross country and opened Austria as a new go live. Another client that we can quote is Etihad Arena that opened and went live in United Arab Emirates, reinforcing our scalability across diverse regions and business models. So overall, our global pipeline is robust and contract momentum continues to build. While we've made meaningful progress, we are still in the early stage of what we believe is a…

And our next question comes from the line of Maddie Schrage with KeyBanc Capital Markets.

I was just wondering, where does B2B sit in terms of your new logo pipeline today? And maybe what unique features is getting you guys to win those deals?

I can take. Could you repeat the question, please?

Yes. I was saying in your new logo pipeline, how much of those would be B2B customers versus a B2C customer? And then what's helping you guys build those deals?

Yes. Most of all, I believe the B2B is the B2B offering and the solution that we offer in the same platform. So it's the same product commerce platform that we offer B2C and B2B. And that's resonating as a comprehensive solution when companies want to migrate from their legacy systems to the new platform, they are now choosing for the platform that provides the most comprehensive solution where they can explore multiple channels. So this is our main differentiator. We don't disclaim on overall pipeline, how much is the B2B. What we are disclaiming is that on the United States and EMEA, B2B roughly represents 50% of the deals that we are landing, including a multibillion operation that we are migrating from legacy systems. So as we established, we only disclaim new clients when they go live, and I invite you to wait for the quarters to come where we can disclaim more on the customers that we are putting live on B2B in those regions.

Perfect. And then my second question for you is you guys obviously called out the customer support line utilizing AI to cut costs. I'm wondering how much costs are left to be taken out of that line item or if there's other areas that you guys think you'll implement AI to replace heads?

Thanks, Maddie. Happy to start on this one, and I want Ricardo feel free to chime in as well. So on the customer support, we started this in Q4 of last year, and we rolled it out over time, and we continue to do so. Most of the savings have been captured. We still could capture additional savings. But for very large Tier 1 customers, they still expect some level of personal engagement, not just through AI. And there is also complex support problems that usually a person needs to get involved and not fully AI. So there could be additional savings, but they need to go through these true challenges, let's say. But most of the savings have been captured at this moment from what we see.

Yes. And I would like -- just adding up here, the focus now is to increase quality and how to orchestrate multiple agents to keep our support level in the high as we are really recognized in the market as one of the best companies that provide customer support. This is a Gartner recognition. So we want to keep in the high level of support recognition with a very efficient layer of operations. So this is the goal is now that we reached the efficiency now is to really focus on the quality.

Perfect. On R&D, I should add that, yes, as I said before, like we are working very hard on not only on what to build, what software should look like after the AI revolution, but on how we should build software after the AI revolution. And we, like everybody else, think that this should be much more efficient building software informed by the AI revolution. But our choice, at least right now, is to leverage this gain of efficiency to have more throughput, not less expenses. So that's where we're going with our R&D. We -- our customers, they need and they claim for a very comprehensive platform. There's always a lot of things that they ask us and we cannot do because of the lack of throughput and now we hope that we're expecting that this revolution will help us a lot to serve them even better.

And our final question today comes from the line of Gustavo Farias at UBS.

I've got 2. So the first one on B2B, and of course, if you can disclose that, how does the LatAm B2B momentum compared to U.S. and Europe if those new B2B contracts are usually from existing or new clients? And the second one, maybe a follow-up on Mariano's answer to an AI question that was -- that was the previous question. I was wondering the role of VTEX in this new agentic commerce. And I'm specifically talking about the new OpenAI commerce protocol. So if you could provide any color on the challenges as well as the opportunities you see coming from this new way of commerce, of doing commerce, it would be very helpful.

Okay. Let's see the B2B progress. So our B2B solution is based in the same commerce platform product that we do have. And that's a big strength of our operation. We allow customers to operate multiple channels in a very, very lean way. So -- our product is -- the B2B solution is the most exciting and strategic growth drivers for VTEX today. It enables brands already using VTEX for their B2C channels to increase their operations to the B2B or B2B2C operators, to distributors, service networks and all with the same platform. This is a natural extension of our value proposition and opens a market opportunity roughly the same size as the B2C market. We are starting to crack the B2B market in LatAm. That's a little bit behind of what we are seeing in U.S. and EMEA. In U.S. and EMEA, we are disclaiming that roughly 50% of our pipeline is coming from B2B solutions. Globally, B2B is becoming a major differentiator for VTEX. Complex migrations like multibillion-dollar U.S. enterprise are moving away from legacy systems to VTEX. The value proposition is clear. Many, many enterprises are still on the 20 years old system costly rigid not built for AI era. And VTEX helps them to cut 3% to 5% of GMV in operating costs while gaining speed and innovation capacity. So our B2B solution is AI native with agents that simplify catalog management, automating onboarding, accelerating, implementing scale, orchestrating orders through multiple channels. It is still early, but the momentum is notable. We see B2B as a transformational opportunity that can significantly accelerate growth, strengthen our global footprint and effectively double our addressable market over time. Gerald, do you want to?

Yes. Yes, yes. So about the agentic commerce and the rise of the potential new aggregator, right, OpenAI or ChatGPT. So we see the rise of agentic commerce and OpenAI in general as a major opportunity to our customers and hence to us because in our view, it represents the next evolution of digital commerce, and it actually seems to strengthen the model VTEX was built for. OpenAI approach looks more like Google and Meta acting as an aggregator --aggregation layers that direct leads and traffic back to brands and retailers rather than like Amazon, Mercado Libre, which own the full transaction and the opt-in of the customer -- of the consumer. That's critical because it reinforces the importance of proprietary brand-owned channels where VTEX is structurally advantaged. Our goal is clear. We're the backbone for connected commerce, the one that powers those channels. So we provide everything that happens after that. AI agents send the customers to the brand from pricing and catalog management, checkout, fulfillment services, loyalty, you mentioned. So even if AI becomes the new front door, the new aggregator that will expand in the next phase of e-commerce, VTEX will remain the operating system that runs everything behind it. So we are already preparing for this future. We're building AI agents and integrations that connect directly to new protocols like that one that you mentioned, just as we did in the past with marketplaces, social commerce and other sales channels. And because our platform is multi-tenant and data rich, we have this unique advantage in training commerce-specific models that can predict, personalize and optimize at scale. So we see agent commerce as a catalyst, one that makes VTEX even more relevant. It plays to our strength, aligned perfectly with our vision of being the AI native backbone for connected commerce and expands the ecosystem where our customers can win and where we can win with them. So it's -- we're very excited with this new channel.

And that does conclude our Q&A session today. So I will now turn the call back over to Geraldo Thomaz for closing remarks. Geraldo?

Thank you for the great questions. As we look ahead, our conviction remains strong. VTEX is operating from a position of strength, a differentiated, scalable product architecture, a focused and experienced team and a strong balance sheet. We're confident in our ability to navigate short-term uncertainty while delivering long-term value through innovation, execution and disciplined growth. We remain focused on what we can control united by a clear vision. VTEX has proven its resilience not only by delivering consistent margin expansion and strong cash generation, but also by staying deeply committed to the long-term levers that will shape the next era of enterprise commerce. We're making tangible progress on those levers from our expanding international footprint where the U.S. and Europe represent an enormous opportunity to the ramp-up of new revenue streams like retail media and B2B and ongoing transformation shift as our transition to an AI-driven company. We believe that AI and agentic commerce are rewriting the rules of enterprise software. And at VTEX, we're not watching it happen. We're actively designing our platform, our organization and our future in the light of this paradigm. With a multi-tenant architecture, outcome-based model and a massive aggregated data set, we are uniquely positioned to lead in this next chapter. We're building a platform that not only powers commerce but increasingly executes. And we're doing it in a way that drives measurable outcomes for our customers and enduring value for our shareholders. We have the strategy, we have the technology, and we have the team. The opportunity ahead of us is exciting, and we are here to seize it. Thank you for your continued trust and partnership. We look forward to sharing the next milestones of our journey in the quarter to come. Have a great rest of the day. You might now disconnect.