Rafael Forte Says Vtex Is No Longer a Unicorn, Prefers Good Quarterly Results

In quarterly results, the company reported GMV and revenue growth. But not even the lower loss reflected on the company’s market cap

Vtex's office.
August 15, 2022 | 12:33 PM

Bloomberg Línea — Brazil’s e-commerce provider VTEX (VTEX) released its Q2 2022 results last week and pleased investors with gross merchandise value (GMV) expansion of 21% year over year, up 28% from the first quarter.

We see this growth as quite positive given that GMV for e-commerce in Brazil overall was down 4% year over year in the second quarter,” Credit Suisse analysts Daniel Federle and Victor Ricciuti said in a report.

According to the latest eMarketer/Insider Intelligence Latin America retail and e-commerce study, consumer spending on e-commerce retail in Latin America will slow this year after two years of record growth due to the Covid-19 pandemic.

Still, 3 of the top 10 fastest-growing e-commerce markets in the world are in Latin America this year: Argentina, Mexico, and Brazil. Singapore, Indonesia, the Philippines, and India lead the list for fastest growth, according to eMarketer. Yet, the study projects that the Latin American e-commerce market will nearly double in size from 2021 to 2026.


Vtex had net revenue of $38.7 million, up 25% year over year, above the guidance given by the company and beating Credit Suisse’s estimate, helped by the exchange rate, according to analysts.

“A large part of our revenue comes from Brazil. A lower exchange rate means that our revenue in dollars is also higher. In another country where the currency has strong variations, such as Argentina, we bring the result already with the dollar effect,” Rafael Forte, co-founder and president of Vtex in Brazil, Rafael Forte, told Bloomberg Línea.

Considering exchange rate neutral, Vtex’s net revenue grew 19.5% year-on-year, in line with the guidance of 20%.


Vtex maintained its guidance of revenue growth between 24% to 27% in a neutral exchange rate in 2022, “which is very positive amid a challenging macro environment and weak e-commerce expansion”, consider the analysts.

Winter Has Arrived in the South: LatAm Unicorns Vtex and Bitso Make Layoffs

For the third quarter, VTEX expects to grow between 18% and 20% at a neutral exchange rate, below the analysts’ estimate. To meet its growth guidance for the year, Vtex will now need to grow approximately 30% year-on-year in Q4.

To do this, Vtex intends to bet on initiatives such as unified e-commerce. “Vtex was born as an e-commerce platform, but it hasn’t been that for a long time. It is a solution that makes our customers sell from any channel, anywhere. Our vision has always been to unify our clients’ transactional capacity in a single solution. We believe this is a new level in this vision”, said Forte.

The company also plans to hold its second major in-person event of the year - after Vtex day in April which brought Lewis Hamilton to São Paulo - the Live Shopping Night. In the second quarter, live shopping represented a growth of 80%. Therefore, on September 15, the company intends to invite its clients to sell by live shopping.


In the second quarter, Vtex had a loss of $18 million, impacted by non-recurring expenses of $5 million. “On a recurring basis, the operating result was fairly in line with our number,” Credit Suisse analysts considered.

Even with negative EBITDA, Vtex’s recurring margin improved to -32% (versus -39% in Q1). Vtex laid off 10% of its staff in May.

Vtex expects to reach breakeven by mid-2023. “Second quarter results indicate resilient growth and improving profitability,” analysts said. But even with good results, Vtex has not been able to return to the valuation it had before becoming a public company. After a Series D of $255 million from Tiger Global and Lond Pine, Vtex reached a valuation of $1.7 billion in September 2020. Today, the company has a market cap of $735 million.

Source: New York Stock Exchangedfd

As a possibility to calibrate prices in a moment of depreciation for technology, the board of Vtex approved the analysis, within a year, of a share buyback program. Vtex has $255 million in cash and is considering investing in the company itself.

See below the interview with Rafael Forte, president of Vtex in Brazil, edited for conciseness and clarity:

Bloomberg Línea: You had GMV growth at the opposite of the e-commerce market in Brazil. What do you attribute that to?

Rafael Forte: This growth is mainly due to the solutions that we have been providing to our clients. For a while now we have been researching and developing things that go beyond the products we had. We started to research sales via WhatsApp, we had a lot of success with live shopping, with the personal shopper, and we brought many to the omnichannel. We saw this in the case of Decathlon, a brand that invested heavily in integrating the physical shop with the online shop. We grew more than the retail market average because of these surveys and these deliveries.


Bloomberg Línea: To be able to grow revenue up to 27% in the year, you will need to run in the fourth quarter, since you have lowered the guidance for the third quarter, right?

Rafael Forte: The third quarter is the result of the first and second quarters. The market is not built in a single quarter and I think it has been suffering the effect throughout the year. Even with the first and second quarters at a bad moment, we managed to maintain our guidance. Revising expectations for the third quarter a little below, I do not see it as a bad indicator.

What we think for the third quarter is a result of what we have seen in these two months. A small revision in Q3 is within the normal range.


In the same way that the third quarter guidance does not reflect only the third quarter but throughout the year, we are not going to run in the fourth quarter. We have already started to make adjustments and review the strategy that will reflect in Q4. We have a degree of confidence that we will achieve the guidance for the year.

Many of these efficient actions have already been made public. We focused on more chief products, leaving a little bit of research aside, and with this, we managed to reduce a little bit of cost, what we call “high-efficiency mode”.

We are leaving aside these discoveries and focusing on what we know is working well to allow our clients to surf new sales channels.


Bloomberg Línea - Within these cost cuts, on the call with investors it was said that the layoffs would translate into just over $1 million in savings per month. Is that right?

Rafael Forte: With the layoffs and other cost-cutting initiatives we expect savings of around 10% by the end of the year. The layoffs were a reduction of these derivative initiatives that we had, such as research, which did not necessarily die but are frozen so that we can focus on our core business.

Bloomberg Línea - Were the layoffs also aimed at fulfilling the promise of breakeven in 2023?


Rafael Forte: The layoffs were a consequence of this learning and the focus search. There were more people in these areas and by learning, we brought people from these areas to our focus, others were laid off. There is an economy about it, but the big focus was to create this search for efficiency, reducing the expenditure of mental bandwidth with things that are not effectively our business.

Bloomberg Línea - You believe this breakeven in the middle of next year for which reasons?

Rafael Forte: We are very optimistic and we are even working to achieve this before the middle of next year.


During Vtex’s 22 years, 18 of them were Ebitda positive. We had negative Ebitda in two years when we were expanding in Latin America and two years of expansion in Europe and the United States.

Despite profitability still being negative this quarter, we are closing the gap. And this shows how much we have a hand in the company. We like to play the positive EBITDA game.

We expected to have a little more time spending money, spending money on these research and discoveries that we are doing, after all, we have plenty of cash. But we decided to anticipate the game we have always played, now that we understand what is more worthwhile, we have cut back and now we are back to bring results. I am confident that we will break even a little before the middle of 2023.

Whoever looks at the long term, not only at the result but also at the path that the result has taken in the last quarters, can have a vision of what we will be in the next quarters.

Bloomberg Línea - Do you have a share buyback program?

Rafael Forte: We have a very robust cash position and a very depreciated market, below what we believe is fair. This is a possibility. We believe so much in the company that in addition to our planned investments, and M&As (mergers and acquisitions) that we are studying, this is a possibility [of using cash]. If we are willing to buy other companies in the market that make sense to us, our company also makes a lot of sense to us. Why not invest even more in ourselves?

So, it is a possibility.

Bloomberg Línea - And these possible acquisitions would be outside Brazil?

Rafael Forte: We look for solutions that make sense, that have a great synergy with our desired future, unified commerce is a vision we have defended for a long time. We also consider other factors, such as the quality of the team. At a time when good people are employed, we also look at that, as well as complementing the portfolio, accelerating the strategy of reinforcing the team with high-performance people.

We cannot close our eyes to local solutions because I believe and defend that in terms of digital commerce in the world, Latin America is the best-prepared region.

Bloomberg Linea - Looking at Brazil, do you see Vtex as a leader?

Rafael Forte: I believe that today in the segment in which we propose to operate, which is for large companies, we are number one in Brazil. We have a large market share in this category. We see retailers switching from large international platforms to Vtex (Hering migrated from Oracle and Pernambucanas migrated from Magento to Vtex). In the last few years, we have brought several clients from the so-called global platforms here.

Unicorn no more

Bloomberg Línea - With the fall of the market cap of technology companies, you are no longer a unicorn. What is that like for you?

Rafael Forte: Natural. In the same way, we did not expect to become a unicorn, we are a company that has always prepared to take advantage of opportunities. We did not run after the IPO, it was the window that appeared.

The title of unicorn is not something that draws attention to us. It did not change our way of working. It hasn’t changed our focus. We understand that this is not something related to Vtex, but the market.

Market cap curves of all tech companies are practically the same. It is a market reaction. The only thing we can do is work to give the market the right signals that we are playing the game the market is now seeing.

We hope that, with this, things will come back. I don’t think we will see tech companies with valuations with multiples of 100, 110, and 150. But we will not see tech companies with the multiples they have today. It is way below that.

We said this in our IPO speech: we propose to make our clients grow more than the market. The numbers showed that this quarter. And if we accomplish this kind of thing, the rest is a consequence and maybe we will go back to being a unicorn or even a little bit more.

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--Note: The headline was amended to reflect the co-founder’s right last name