Marcelo Santos

Marcelo Santos inquired about the drivers behind the accelerating growth and penetration of MercadoLibre's advertising business, asking about the main products, regions, or specific factors contributing to this acceleration.

Answer

Ariel Szarfsztejn, President of Commerce, expressed satisfaction with the 67% FX-neutral ad revenue acceleration, driven by broad-based improvements in their tech stack (auction, bidding, placement optimization, demand generation) and an easy-to-use platform. He cited specific AI-powered initiatives like the Budget Orchestrator and budget boost for seasonal campaigns, noting significant potential for further growth as ad revenue as a percentage of GMV is still small.

Marcelo Santos asked about the drivers behind MercadoLibre's accelerating advertising growth and penetration, seeking insights into the main products, regions, or specific initiatives contributing to this performance.

Answer

President of Commerce Ariel Szarfsztejn attributed the 67% FX-neutral advertising revenue acceleration to broad-based improvements in the tech stack, including auction, bidding, placement optimization, and demand generation initiatives. He highlighted tools like the Budget Orchestrator, budget boost for seasonal campaigns, performance-driven recommendations, and AI agents supporting advisors, noting significant potential for further penetration.

Marcelo Santos inquired about the strong metrics (GMV, revenues, TPV, margins) observed in MercadoLibre's 'other countries' segment, asking about the specific initiatives driving this performance, whether they were MercadoLibre-led or market-led, and future expectations.

Answer

MercadoLibre Incoming CEO Ariel Szarfsztejn expressed satisfaction with the performance of other countries, noting accelerated GMV growth in Chile (third consecutive quarter) and Colombia (over 10 percentage points Q-o-Q), driven by successful items and market share gains, particularly in Chile. He attributed this to a combination of improved fulfillment, better logistics, selection, demand generation, and promotional activities, resulting in higher NPS. President of FinTech Osvaldo Gimenez added that focused fintech investments in Chile over the past two years have led to a 75% YoY user base growth, increased yielding account usage, and accelerated product adoption, with more products still to launch.

Marcelo Santos asked about the initiatives driving strong metrics (GMV, revenues, TPV, margins) in Mercado Libre's 'other countries' (Chile, Colombia), whether these were MELI-led or market-led, and what to expect going forward.

Answer

Incoming CEO Ariel Szarfsztejn highlighted accelerated GMV growth in Chile (third consecutive quarter) and Colombia (10%+ QoQ pickup), driven by successful items and increasing market share. He attributed this to a combination of improved fulfillment, logistics, selection, demand generation, and promotional activity, leading to higher NPS. President of FinTech Osvaldo Gimenez added that in fintech, Chile has been a focus, showing 75% YoY monthly user base growth, yielding account growth, and acceleration in product usage.

Marcelo Peev Santos from JPMorgan Chase & Co asked about the feasibility of applying Brazil's new, aggressive shipping strategy to other key markets like Argentina and Mexico.

Answer

Commerce President Ariel Szarfsztejn responded that each market is unique, with different policies, loyalty programs, and fulfillment penetration levels. For instance, Mexico has the highest fulfillment penetration. While the company will learn from the Brazilian experience and evaluate opportunities elsewhere, Szarfsztejn made no firm commitment to replicate the exact policy in other countries.

Marcelo Santos requested an update on MercadoLibre's logistics plan, with a particular focus on Brazil and any new developments regarding the deployment of distribution centers.

Answer

Ariel Szarfsztejn, EVP of Commerce, clarified that there were no significant changes to the previously announced logistics plan. He affirmed the company's commitment to expanding its fulfillment footprint to meet demand but noted no major new deployments were announced this quarter. Osvaldo Giménez, EVP of Fintech, added that logistics CapEx as a percentage of revenue remained consistent with the prior year.

Marcelo Santos followed up on the balance between growth and profitability, asking for further discussion on how MercadoLibre views this trade-off going forward.

Answer

Martin de Los Santos (CFO) reiterated the company's long-term strategy, emphasizing the vast opportunities in Commerce and FinTech. He stated that MercadoLibre will continue to make strategic investments, such as in logistics and credit cards, which may cause short-term margin pressure. He stressed that the business is not managed for quarterly margin targets but for long-term value, expecting margins to improve over time with scale.

Marcelo Santos requested a comparison of the credit card business experience in Brazil versus Mexico, asking about differences in NIMAL, NPLs, and customer frequency.

Answer

Executive Osvaldo Giménez detailed key differences, noting that the Mexico launch benefited from lessons learned in Brazil, leading to a faster ramp-up. He highlighted that Brazil has higher credit card penetration, while Mexico has less public credit scoring data, requiring more reliance on internal models. He also pointed out structural differences in working capital requirements, with Mexico's next-day settlement demanding more capital than Brazil's 30-day cycle.

Marcelo Santos inquired about the CapEx outlook for 2026, including the puts and takes influencing investment decisions. He also asked for an assessment of the competitive environment, particularly in mobile, and the company's strategy for implementing price increases this year.

Answer

Christian Gebara, CEO of Telefônica Brasil, stated that while no specific CapEx guidance was provided, the company is focused on optimization, evidenced by a reduction in the CapEx to revenues ratio from 16.4% to 15.6%. He highlighted the growing contribution of services that do not require CapEx and strong operating cash flow growth. Regarding competition, he outlined different strategies for various segments, noting improved prepaid performance and planned price increases for postpaid and hybrid segments in March and April, FTTH in January and June, and Vivo Total in April, with back book adjustments in April and August.

Marcelo Santos from JPMorgan Chase & Co. inquired about Vivo's CapEx outlook for 2026, asking for a discussion on the key factors influencing it. He also sought insights into the current competitive environment in the mobile sector and the company's strategy for implementing price increases during the year.

Answer

Christian Gebara, CEO of Telefônica Brasil, addressed CapEx, stating that while no specific guidance was given, Vivo is focused on optimization, reducing the CapEx to revenue ratio from 16.4% to 15.6%. He highlighted the growth of services not requiring CapEx (over 12% of revenues) and strong operating cash flow expansion. Gebara confirmed continued 5G and fiber deployment, aiming for infrastructure improvement while maintaining leadership. Regarding competition, he noted strong performance in prepaid and outlined planned price increases: March for postpaid/hybrid front book, April for postpaid/hybrid customer base, January and June for FTTH, and April for Vivo Total, aligning with inflation and convergence strategy.

Marcelo Peev Santos from JPMorgan Chase & Co. asked about the recent trend in fiber-to-the-home (FTTH) ARPU and the current competitive environment in the mobile segment.

Answer

CEO Christian Gebara attributed the slight FTTH ARPU dilution to the rapid growth of the Vivo Total convergent plan, which surged 63.5% year-over-year. He emphasized that while this impacts ARPU, it significantly lowers churn to 1.46%. Regarding the mobile market, Gebara described it as competitive but rational, stating Vivo's strategy remains focused on upselling, 5G quality, and disciplined monetization, which has resulted in 11% postpaid revenue growth and stable, low churn.

Marcelo Santos asked for more color on back-book price increases implemented during the year compared to prior years and questioned Vivo's current stance on M&A, specifically if deals in the broadband area were being considered.

Answer

Executive Christian Gebara provided a detailed breakdown of recent price increases for postpaid (5.7%), hybrid (7.2%), and fiber (4.5%) plans, noting that some key adjustments occurred in April, after the close of Q1. On M&A, he confirmed Vivo is actively pursuing small digital service acquisitions and remains open to fiber consolidation, but has not yet found a target that meets its strict criteria regarding network quality, customer base overlap, and valuation.

Marcelo Santos from JPMorgan Chase & Co. asked about the potential margin profile for the 1.2 million copper customers after migration and what new tools the company has to accelerate this process.

Answer

Executive Christian Gebara explained that the key change is that Vivo now has a legal mandate to migrate customers, enabling a much faster process than the previous optional approach. Executive David Sanchez-Friera added that since many customers are already in the fiber footprint, their margins could become similar to a traditional telco customer once they are off the expensive, highly regulated copper network, which will immediately impact OpEx and CapEx positively.

Marcelo Santos questioned the drivers behind the accelerated pace of broadband net additions and the reasons for the recent pickup in FTTH ARPU, asking whether it was due to competitive dynamics or internal factors.

Answer

Executive Christian Gebara attributed the strong broadband performance to a well-executed strategy, resulting in the highest net additions in six quarters. He emphasized that this was driven by both higher gross adds and lower churn, with the Vivo Total convergent offer being a key factor. Gebara explained that the FTTH ARPU increase is a result of strong demand for higher speeds and bundled services, which Vivo's premium brand and superior customer experience enable it to provide effectively.

Marcelo Santos asked for clarification on the implied deceleration in FX-neutral revenue growth for 2026 compared to 2025, seeking insights into the contributing factors. He also inquired about the competitive landscape and pricing discipline in Peru's expanding distance learning market.

Answer

CFO Rick Buskirk attributed the slight deceleration to softer macroeconomic conditions in Mexico impacting the 2025 primary intake, with potential benefits from USMCA renegotiations expected later in 2026. In Peru, he noted capacity constraints in face-to-face operations, which are being addressed by new campus launches. CEO Eilif Serck-Hanssen added that Peru's online learning is accelerating robustly, targeting working adults with minimal cannibalization of traditional programs. He mentioned a cautious approach to pricing increases in the online segment to favor rapid growth, resulting in flattish pricing but strong volume growth.

Marcelo Santos asked for clarification on the implied deceleration in FX-neutral revenue growth for 2026 compared to 2025, seeking the underlying factors. He also inquired about the market dynamics for distance learning expansion in Peru, specifically regarding pricing discipline and competitive aggression.

Answer

Rick Buskirk (CFO) attributed the slight deceleration in FX-neutral revenue growth for 2026 to softer macroeconomic conditions in Mexico impacting primary intake volume for much of the year, and capacity constraints in Peru being addressed by new campus launches in 2027. He noted that the 50 basis point margin expansion for 2026 includes absorbing 25 basis points of new campus investment costs. Eilif Serck-Hanssen (CEO) stated that online learning in Peru is accelerating robustly, targeting working adults with minimal cannibalization of face-to-face programs. He added that pricing in the online segment has been cautious to prioritize rapid growth, resulting in flattish average prices but strong volume.

Marcelo Santos from JPMorgan Chase & Co. asked for clarification on the drivers behind the strong number portability trends in Brazil, specifically whether it was primarily due to the NuCel MVNO or América Móvil's postpaid operations.

Answer

CEO Daniel Hajj confirmed that both NuCel and América Móvil's postpaid operations contribute to the strong number portability in Brazil. He noted that while NuCel helps, the overall positive trend also reflects gains in higher ARPU subscribers and typical fourth-quarter market dynamics driven by new handsets and promotions.

Marcelo Santos followed up on Brazilian number portability trends, asking if the recent strong performance was primarily driven by NuCel (América Móvil's MVNO) or Claro's postpaid operations, and the specific factors behind the jump in Q4.

Answer

Daniel Hajj (CEO) confirmed that both NuCel and Claro's postpaid operations contribute to the strong number portability, with NuCel playing a role but not being the sole driver. He noted that Claro is attracting high ARPU subscribers and that Q4 typically sees increased customer changes due to new handsets and promotions.

Marcelo Peev Santos inquired about the key drivers behind the strong revenue performance in Brazil's mobile market and asked for commentary on the recently approved regulatory changes in Mexico's telecommunications framework. He also followed up on prepaid trends in Brazil.

Answer

CEO Daniel Hajj Aboumrad attributed Brazil's postpaid success to a high-quality network, an expanded sales force, successful programs like ClaroFlex, improved customer care, and a beneficial partnership with Nubank. Regarding Mexico's new telecom law, he highlighted increased fines, potential spectrum payment discounts for coverage obligations, new user identity requirements, and the creation of two new regulatory bodies. He noted that the shift from prepaid to postpaid is a broad trend in Brazil and emphasized that revenue growth is a more important metric than subscriber counts for the prepaid segment.

Marcelo Peev Santos asked about the drivers behind the strong revenue acceleration in Brazil's mobile market and for commentary on the recently approved regulatory changes in Mexico's telecommunications framework. He also followed up on prepaid trends in Brazil.

Answer

CEO Daniel Hajj Aboumrad attributed Brazil's postpaid success to a high-quality network, an expanded sales force, successful plans like ClaroFlex, improved customer care, and a beneficial partnership with Nu bank. Regarding the new Mexican telecom law, he highlighted increased fines, potential spectrum payment discounts for coverage obligations, and new user identity requirements. For Brazil's prepaid market, he noted a migration trend to postpaid and emphasized that revenue growth, which exceeded 10%, is a more important metric than subscriber counts.

Marcelo Santos questioned the drivers of weakness in Mexican prepaid, specifically the competitive angle from MVNOs, and inquired about América Móvil's appetite for M&A in the region. He also asked for clarification on the new CapEx guidance.

Answer

CEO Daniel Hajj Aboumrad attributed the prepaid weakness to both the economic slowdown and aggressive promotions from MVNOs with much lower ARPUs (MXN 38 vs. Telcel's MXN 177). He announced a reduced CapEx guidance of MXN 6.7 billion for the year, citing the economic environment and the completion of major investment cycles. Regarding M&A, he confirmed the company is open to opportunities that fit its strategy, acknowledging Telefónica's potential asset sales.

Marcelo Santos asked about the pricing environment for Mexican broadband and whether price increases are planned for the year. He also inquired about the company's appetite for potential M&A opportunities in Argentina.

Answer

Executive Oscar Von Hauske Solís stated there are no immediate plans to increase broadband prices in Mexico; instead, the focus is on adding value through new service bundles. CEO Daniel Hajj Aboumrad addressed the Argentina M&A rumors, confirming he had only read about them in the news and that while the company is always open to synergistic opportunities, no discussions have taken place.

Marcelo Santos of JPMorgan Chase & Co. questioned the broadband dynamics in Mexico, specifically the reason for lower net additions compared to Q2, and asked for an update on the competitive landscape in Brazilian broadband.

Answer

Executive Carlos Jose Garcia Moreno Elizondo attributed higher churn in Mexico to economic factors. Executive Daniel Hajj Aboumrad provided context with quarterly net adds, showing a peak of 325,000 in Q1 '24 followed by 148,000 in Q2 and 116,000 in Q3. For Brazil, Elizondo stated they are the market leader in high-speed internet, have upgraded their network to support 1-gigabit speeds, and are focused on convergence bundles and a new entertainment hub product to maintain their position against ISPs.

Marcelo Santos asked for clarification on the personal expenses related to tax over overtime hours, specifically whether there was any retroactive recognition of gains in Q4 and the sustainability of these gains. He also inquired if the improvement in broadband ARPU indicated a more rational market or was primarily a TIM-specific effect.

Answer

CFO Andrea Viegas confirmed that the Q4 impact from overtime pay taxation included retroactive gains from past years, making the Q4 effect higher, but future impacts would be smaller. CEO Alberto Griselli attributed the broadband ARPU expansion primarily to TIM's internal efforts, including optimizing commercial distribution towards more pull channels and effective customer base management, rather than broader market rationality.

Marcelo Santos inquired about the personal expenses related to the tax over overtime hours, specifically asking if there was any retroactive recognition in Q4 and the sustainability of these gains. He also asked if the improvement in broadband ARPU signaled a more rational market or was primarily a TIM-specific effect.

Answer

Alberto Griselli, CEO of TIM S.A., attributed the broadband ARPU expansion primarily to TIM's internal efforts, including optimizing commercial distribution towards 'pull' channels for better customer quality and lower costs, and effective customer management activities. Andrea Viegas, CFO, clarified that the overtime pay tax impact in Q4 was higher due to the concentration of past years' effects, with future impacts being smaller and not significantly sizable in overall OpEx.

Marcelo Santos asked for an overview of the competitive environment in mobile and whether there is room to increase pure postpaid prices, potentially in the next year.

Answer

CEO Alberto Griselli stated that the mobile competitive environment remains positive, with price adjustments implemented successfully. He noted that while smaller players are aggressive, they are not disrupting national market dynamics. For pure postpaid prices, he confirmed an opportunity for adjustment, likely in early next year, as current promotional campaigns for Black Friday make immediate changes unlikely.

Marcelo Santos asked for insights into the competitive environment on mobile and whether there is room to increase pure postpaid prices, potentially in the next year.

Answer

CEO Alberto Griselli described the mobile competitive environment as positive and rational, with successful price adjustments this year. He confirmed that TIM is assessing an opportunity to adjust pure postpaid prices for early next year, following current promotional campaigns.

Marcelo Peev Santos of JPMorgan Chase & Co. inquired about the outlook for lease line costs for the remainder of the year and sought an update on management's strategic thinking regarding the fixed broadband business.

Answer

CEO Alberto Griselli and CFO Andrea Palma Marques addressed the questions. Regarding leases, the CFO stated the goal is to keep cost growth aligned with inflation through tough negotiations. The CEO added that for uncooperative tower companies, TIMB will decommission towers with above-market prices as contracts expire. On the fixed business, Mr. Griselli noted there were no new inorganic developments to announce and that the company is focused on 'balanced opportunities' between a full divestment and a large-scale deal.

Marcelo Santos requested clarification on mobile service revenue growth, asking for details on the impact of advancing the postpaid price increase into Q1 and specifics about its implementation, such as timing and the portion of the customer base affected.

Answer

CEO Alberto Griselli explained that strong postpaid growth resulted from three factors: back-book price adjustments, prepaid-to-control migration, and control-to-postpaid migration. He confirmed that an earlier price hike seasonality contributed to Q1's strength but clarified that it was applied to a subset of the customer base, not the entirety, and that growth will likely moderate in subsequent quarters as is typical.

Marcelo Santos inquired about the key macroeconomic assumptions, particularly for inflation and foreign exchange, embedded in the new 2025-2027 guidance, and asked for the outlook and strategic initiatives for the prepaid segment.

Answer

CEO Alberto Griselli explained that the guidance was updated to reflect current, volatile inflation trends. Regarding the prepaid segment, he noted that performance is affected by strategic migrations to postpaid plans and a shrinking overall recharge market. Griselli highlighted a tough Q4 comparative base due to a prior year price increase and confirmed that the company is actively revamping its prepaid offer, communication, and channel strategy to improve future performance.

Marcelo Santos of JPMorgan Chase & Co. questioned the decision to maintain the service revenue growth guidance despite two consecutive quarters of outperformance and inquired about the future outlook for lease payments and tower renegotiations.

Answer

CEO Alberto Griselli explained that the guidance is maintained due to expectations of a tougher comparison base in the second half, the less intense effect of postpaid price increases compared to last year, and evolving prepaid dynamics. CFO Andrea Viegas added that lease payments are expected to increase slightly in the second half due to inflation adjustments, though some benefits from decommissioning and ongoing tower renegotiations persist.

Marcelo Santos inquired about Grupo Televisa's CAPEX outlook for 2026 and sought clarification on an insurance claim received, specifically if it was related to Hurricane Otis and if any further payments are expected.

Answer

Francisco Valim, CEO of izzi y Sky, stated that 2026 CAPEX guidance is not yet available, with the focus remaining on the 2025 budget of around $600 million. He confirmed that the insurance claim was the final portion related to Hurricane Otis, with no further receipts anticipated from that event. Alfonso de Angoitia Noriega, Co-CEO of Grupo Televisa, reiterated the focus on completing 2025 before discussing 2026 CAPEX.

Marcelo Santos inquired about Grupo Televisa's CAPEX outlook for 2026 and sought clarification on any remaining insurance claims related to Hurricane Otis.

Answer

Francisco Valim, CEO of izzi y Sky, stated that 2026 CAPEX guidance is not yet available, with the focus remaining on the 2025 budget of $600 million. He confirmed that the recent insurance claim was the final portion related to Hurricane Otis. Alfonso de Angoitia Noriega, Co-CEO of Grupo Televisa, reiterated the focus on completing 2025 CAPEX before discussing 2026.

Marcelo Santos inquired about the outlook for broadband price increases in Mexico, noting a competitor's view that there is little scope for them. He also requested confirmation and further detail on the 2% monthly churn rate and its recent behavior.

Answer

Executive Francisco Valim Filho confirmed that they do not anticipate broad, inflation-based price increases in Mexico. Instead, ARPU growth is expected to come from upselling customers to higher speeds, more content, and new products. Regarding churn, he clarified the blended rate is below 2%, with a very low rate among the established base and a higher rate among newer, promotion-based acquisitions. He stated this dynamic is now well under control.

Marcelo Santos of JPMorgan Chase & Co. asked about the competitive landscape, specifically whether Telmex's decision not to increase prices could negatively affect future net additions. He also sought clarification on the drivers behind the CapEx reductions for Sky and corporate segments.

Answer

Francisco Valim Filho, CEO of Cable and Sky, responded that their customer offer remains competitive against Telmex's pricing when the value of the bundled ViX service is included. Regarding CapEx, he clarified that the reduction is driven by synergy realization from the Sky integration, such as eliminating redundant software licenses and reducing headcount, rather than cutting back on essential network deployment. Alfonso de Angoitia Noriega, Executive Chairman, added that the company is targeting a CapEx-to-sales ratio of around 20% going forward.

Marcelo Santos from JPMorgan Chase & Co. asked about the medical business, focusing on the competitive landscape for the second-half student intake and the reasons for medical ticket growth being slightly below inflation.

Answer

CEO Virgilio Gibbon acknowledged that competition was higher for the second-half intake, leading to a lower candidate-to-seat ratio, but confirmed Afya maintained 100% occupancy without offering additional discounts. He explained that net ticket growth was impacted by a higher mix of students using Fies government financing, which carries a discount, even though gross tuition fees were increased above inflation.

Marcelo Santos asked for an update on the Continuing Education segment, noting its revenue trend was improving but still in the single digits, and inquired about the full-year expectation. He also asked about the performance and seasonality of the B2B business within Medical Practice Solutions.

Answer

CEO Virgilio Deloy Gibbon explained that Continuing Education saw strong intake in high-ticket graduate programs but faced tough competition in lower-ticket residency prep, resulting in growth near 10%, which is expected to persist for the year. CFO Luis Andre Blanco addressed the B2B question by noting seasonality in pharmaceutical contracts, with Q4 being stronger than Q1. He highlighted the 16% growth in Q1 2025 as a strong start, especially compared to a decrease in the prior-year period, and expressed confidence in the business.

Marcelo Santos inquired about the current M&A environment, particularly how the increased supply of approved medical seats is affecting negotiations, and about the competitive landscape for student intake and tuition pricing.

Answer

CFO Luis Andre Blanco addressed M&A, stating that the larger pool of potential targets is creating an environment where future acquisitions may be secured at lower multiples than recent deals. CEO Virgilio Deloy Gibbon discussed the competitive environment, noting that Afya continues to increase tuition at least by inflation and is seeing significantly stronger candidate demand and enrollment rates for the 2025 intake compared to the prior year.

Asked for clarification on margin performance, specifically why consolidated margins declined quarter-over-quarter despite revenue growth, and what factors drove the significant margin improvement in the Paraguay operation.

Answer

The company explained that the consolidated margin decline was due to a mix of factors, including seasonality and the significant drop in inflation, which affects margins differently quarter-to-quarter. They also highlighted that modernization projects are improving efficiency and reducing costs. The strong margin improvement in Paraguay is driven by the growth of the new broadband business, which has achieved a 35% market share, and cost compression on the mobile side.

Marcelo Peev Santos of JPMorgan Chase & Co. inquired about the drivers behind Telecom Argentina's margin performance, questioning the strong year-over-year expansion versus the slight quarter-over-quarter decline, and also asked for the factors contributing to the significant margin improvement in the Paraguay operation.

Answer

CFO Gabriel Blasi explained that the consolidated margin movement was due to a mix of seasonality and the significant drop in inflation, which positively impacted results in Q1 more than Q2. CEO Roberto Nobile added that structural improvements from backend modernization and digitalization are boosting margins, while monthly price hikes are smoothing out historical seasonality. For the Paraguay segment, Mr. Nobile attributed the strong margin growth to the expansion of the new FTTH broadband business and effective cost compression on the mobile side.

Marcelo Peev Santos of JPMorgan Chase & Co. inquired about the drivers behind VTEX's revised guidance, seeking a breakdown between the GMV performance of existing clients and the pace of new contract sales. He also asked for details on which expense lines are driving the increased margin outlook.

Answer

CFO Ricardo Camatta Sodré explained the guidance revision was primarily due to weaker GMV from existing customers, particularly a trend reversal in Argentina and a mix shift to lower take-rate enterprise clients in Brazil. A smaller factor was softer market migrations and a few isolated contract cancellations. For margins, Sodré highlighted gains from AI in customer support, ecosystem maturity, and disciplined G&A and Sales & Marketing spending, which allowed for reinvestment in R&D while still raising the full-year profitability outlook.

Marcelo Santos inquired about the sustainability of the recent subscription gross margin improvement, which approached the company's target, and asked about the primary areas of headcount reduction.

Answer

Chief Financial Officer Ricardo Sodre explained that the gross margin gains are sustainable, driven by AI-powered optimizations in customer support and a strategic shift of implementation services to partners. Co-Founder and Co-CEO Mariano Gomide de Faria added that headcount has been stable, with the only minor change occurring in the support area, which does not represent a broader trend.

Marcelo Santos inquired about the key drivers behind the 2025 subscription revenue guidance, particularly the regional breakdown, and the long-term P&L impact of VTEX's transition to a multi-product commerce suite.

Answer

CFO Ricardo Sodre explained that the 2025 guidance balances consumption headwinds in Brazil with operational strength, including a recovery in Argentina and the go-live of new enterprise customers. Regarding the product suite, Sodre and Co-CEO Mariano Gomide de Faria stated that the transition's primary long-term P&L benefit is increased customer stickiness and lifetime value, rather than a significant short-term margin shift, as investments are already underway.

Marcelo Santos from JPMorgan Chase & Co. inquired about the drivers of subscription revenue growth by region, particularly the impact from Argentina, and asked about the sustainability of current margin levels.

Answer

Ricardo Sodre, Chief Financial Officer, explained that Q3 subscription revenue grew 22% on an FX-neutral basis, even with a multi-percentage point headwind from Argentina's pre-devaluation consumption behavior in the prior year. He noted this headwind should ease by December. Sodre affirmed that current margin levels are sustainable, highlighting progress towards their target models for both subscription gross margin (78.5% vs. 80% target) and operating margin (14% vs. 20% target), with future gains expected from scale and revenue leverage.

Marcelo Peev Santos inquired about the drivers behind the improved performance in Guatemala and the company's outlook on CapEx for the coming years.

Answer

CEO Marcelo Benitez attributed Guatemala's growth to a strategy of migrating prepaid customers to postpaid, increasing ARPU, and expanding the network with 350 new sites. For CapEx, he stated the company targets an annual spend of $650 million to $700 million, which equates to 11-12% of revenues, emphasizing a granular, return-focused allocation rather than a simple percentage target.

Marcelo Santos inquired about the competitive landscape in the Central American fixed business, specifically regarding pressure from América Móvil, churn trends, and the approximate mix of fiber connections in the home customer base.

Answer

CEO Marcelo Benitez explained the company's node-by-node strategy, which focuses on quality and has led to consistent positive net adds. He stated that while competitors are investing, the company does not see an adverse impact on its market share and expects the fixed business to return to positive revenue growth soon.

Marcelo Santos inquired about Millicom's key priority of accelerating growth in 2025, asking for specifics on which markets and segments would drive improvement and the potential impact on OpEx, CapEx, and margins.

Answer

CEO Marcelo Benitez explained that growth will be driven by the mobile business, particularly through postpaid migration and monetizing prepaid data traffic, alongside a recovery in the home segment and steady B2B performance. He stated that CapEx levels would be sustained through a granular, demand-based investment approach, preventing pressure on margins. Benitez identified Costa Rica and Bolivia as the most challenging markets for 2025.

Marcelo Santos from JPMorgan Chase & Co. inquired about the 2025 CapEx outlook, asking for the key moving parts and whether it includes an acceleration in home business deployment. He also requested a deeper analysis of the challenges and opportunities within the Colombian fixed-line (home) business.

Answer

Executive Marcelo Benitez detailed the 2025 CapEx strategy, stating it prioritizes network capacity based on granular demand analysis and includes commercial CapEx to support net-add growth. For the Colombia home business, he explained that strong gross adds are driven by an expanded network footprint and a simplified commercial approach. He noted that revenue recovery is slower due to the lower ARPU of FMC bundles and a shift towards broadband-only customers, which have better margins but lack TV revenue.

Marcelo Peev Santos from JPMorgan Chase & Co. inquired about the current commercial cycle's competitive environment for both core and complementary solutions. He also asked for an outlook on B2G (business-to-government) contracts and whether the upcoming election year is typically favorable or unfavorable for securing such deals.

Answer

CEO Guilherme Alves Mélega responded, stating that the commercial cycle for 2026 has a positive outlook, with strong demand for complementary products like bilingual and social-emotional learning, which are growing over 20%. He noted that the B2G strategy is performing well, with 10 new municipal customers added. Regarding the election year, Mélega suggested that since their services are important, it likely wouldn't be a problem and could even create new opportunities with incoming officials.

Marcelo Santos of JPMorgan Chase & Co. requested the 2025 outlook for Annual Contract Value (ACV) growth and adjusted EBITDA margins, following a flat margin performance in 2024.

Answer

Guilherme Melega (Executive) projected 2025 ACV growth to be similar to 2024's 14%, driven by price increases and strong complementary product sales. He also stated that the company targets a 30% adjusted EBITDA margin and anticipates slight improvements from scale and sales mix.

Marcelo Santos asked about the competitive environment, specifically if any changes occurred after a main competitor went private. He also requested directional indicators on how the Annual Contract Value (ACV) is shaping up for the next sales cycle.

Answer

CEO Guilherme Melega responded that Vasta has not seen any significant change in the competitive environment. He emphasized the strength of Vasta's premium brand portfolio and the leverage from its new Plurall AI technology, which is being priced into the next ACV. Melega stated that for the 2025 cycle, the company 'definitely expect[s] a higher growth from the previous cycle,' forecasting 'higher double digit' growth on top of the 12.5% just reported.

Marcelo Santos asked about the key macroeconomic assumptions, particularly for inflation, embedded in the new guidance and the outlook for the prepaid business, including any initiatives to improve its performance.

Answer

CEO Alberto Griselli explained that the guidance was updated to reflect current inflation trends. Regarding prepaid, he noted that performance is affected by strategic migrations to postpaid and a shrinking overall recharge market. He mentioned a tougher Q4 comparative base due to a price update in the prior year and confirmed the company is working on a revamp of its prepaid offer, communication, and channel strategy.

Marcelo Santos from JPMorgan Chase & Co. asked why TIM is not increasing its service revenue growth guidance despite two consecutive quarters of outperformance, and requested an update on the status of tower renegotiations and the outlook for the lease payment line.

Answer

CEO Alberto Griselli explained that the guidance remains unchanged due to expectations of a tougher comparison base in the second half, less intense postpaid price increases compared to last year, and evolving prepaid dynamics. CFO Andrea Viegas stated that while decommissioning benefits are fading, inflation adjustments will cause lease payments to increase slightly in the second half of the year.