Zenvia's Q2 2025 Earnings Call: Contradictions on Customer Cloud Revenue, CPaaS Margins, and AI Strategy

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: Up 24% YOY; CPaaS +33% YOY (72% of total); SaaS +3% YOY
• Gross Margin: 24%, stable vs Q1; down due to CPaaS lower-margin mix and carrier cost increases; SaaS GM 55% (+1pp YOY)

Guidance:

• Maintain 2025 Zenvia Customer Cloud targets: ~R$200m revenue, ~25% growth, ~70% gross margin.
• CPaaS gross margin expected to normalize to ~20% by Q4 as carrier cost pass-through completes.
• Profitability to gradually recover through H2; return to more normalized levels by year-end; normalized EBITDA to improve.
• Cash flow expected roughly break-even by year-end after debt service; evaluating selective divestitures to delever balance sheet.
• Franchise channel early but scaling; ~15% of new MRR with ~34 franchisees; expected to become main new MRR driver in coming quarters.

Business Commentary:

• Zenvia's Financial Performance and SaaS Growth:
• Zenvia reported a financial performance with 24% top-line growth in Q2, mainly driven by CPaaS, and highlighted by the continued rollout of Zenvia Customer Cloud.

• The growth was driven by the strategic focus on Zenvia Customer Cloud, which saw a 23% increase in revenues in the first half of the year, indicating strong adoption and value proposition.

• CPaaS Market Volatility and Margin Pressures:

• CPaaS revenues were up by 33%, but were impacted by strong volume from clients with lower margins, alongside cost increases from carriers.

• The volatility and margin pressures are attributed to market competitiveness and pricing pressure, a trend seen previously in late 2022.

• Operational Efficiency and Cost Management:

• G&A expenses decreased by R$9 million, or 27%, compared to the same period last year, resulting in a 9% G&A-to-revenues ratio for the quarter.

• This was achieved through strict expense management and a workforce reduction of approximately 15% in January, expected to result in R30-35 million in full-year cost savings.

• Divestiture Strategy and Cash Flow Management:

• Zenvia's trailing 12-month normalized EBITDA was approximately R100 million, with CapEx of around R35-40 million, resulting in approximately R60-65 million in cash flow to manage debt.
• The company plans to explore divestiture options for non-core assets, with the potential to optimize its balance sheet and improve its financial structure.

Sentiment Analysis:

• "Strong top-line growth of 24%" but "consolidated adjusted gross profit fell to R$69 million, with gross margin down to 24%." "Normalized EBITDA came in at R$11 million... below our expectations." Management expects margins to "gradually recover and return to a more normalized level by the end of the year," with CPaaS margins "normalizing closer to 20% by Q4."

Q&A:

• Question from Unknown Analyst (Webcast): Can you provide forward guidance for Zenvia Customer Cloud (Q3/Q4 bookings, franchise channel) and confirm the ~R$200m revenue and 65–70% gross margin targets for 2025?
  Response: They reaffirm ZCC 2025 outlook: ~R$200m revenue, ~25% growth, ~70% gross margin; adoption and franchise ramp support targets.

• Question from Unknown Analyst (Webcast): Are CPaaS tight margins the new level, or should we expect recovery?
  Response: Margins should recover as carrier cost pass-through completes; aiming for CPaaS margins near 20% by Q4 despite competitive pricing.

• Question from Unknown Analyst (Webcast): How are enterprise dynamics for Zenvia Customer Cloud and legacy SaaS?
  Response: Legacy enterprise SaaS remains competitive; ZCC, initially SMB-focused, is gaining enterprise adoption with longer cycles.

• Question from Unknown Analyst (Webcast): Provide color on cash flow and potential divestitures.
  Response: TTM normalized EBITDA ~R$100m; CapEx R$35–40m; ~R$60–65m cash flow to service debt, near break-even by year-end; evaluating opportunistic asset sales to delever.

• Question from Unknown Analyst (Webcast): How should we think about a potential CPaaS divestment and valuation (e.g., ~1x revenue)?
  Response: No specifics; any divestment would be opportunistic to delever, with valuation dependent on market conditions.

• Question from Unknown Analyst (Webcast): What will the business look like in 2–3 years?
  Response: Pivot to AI-driven CX SaaS core with higher recurring, higher-margin revenue and reduced reliance on volatile CPaaS.