Semantix, Inc.

Reported third-quarter 2023 net revenue was R$40 million, down 51% year over year and 17% versus the prior quarter. Proprietary SaaS revenue grew 41% year over year and represented 37% of total revenue, while third-party software revenue fell 67% year over year and represented 47% of total revenue. Gross margin was 62%, up 14 percentage points year over year, and adjusted EBITDA was a loss of R$17 million with a negative 43% margin. Non-GAAP SG&A expenses declined 5% year over year, and cash and cash equivalents were R$111 million as of September 30; the company also said it paid R$9 million in bank loans during the quarter. For the rest of 2023, management declined to give specific revenue guidance, but said it expects the third-party software run-rate to stay at a similar level and reiterated a focus on proprietary SaaS and operational cash generation in 2024.

Leonardo Santos framed the quarter as validation of Semantix’s AI-first strategy, highlighting growth in AI revenue across agro, finance and health and the launch of new applications such as a retail product and ChatPharma for pharma customers. He emphasized that the company is shifting toward proprietary products, expanding its GenAI Hub, and building multiple AI applications with clients while keeping costs under control. His tone was upbeat and confident, repeatedly pointing to the improving margin profile and saying the company is moving toward operational cash generation in 2024.

Adriano Alcalde focused on the financial impact of the restructuring and the deliberate reduction in low-margin third-party software. He said annual total costs and expenses were reduced by 30% versus the annualized June 2023 level excluding third-party software, non-GAAP SG&A fell 5% year over year, gross margin rose to 62%, and adjusted EBITDA was a R$17 million loss. He also noted R$111 million in cash and cash equivalents, R$9 million of bank loan repayments in the quarter, and said the company is still seeing restructuring-related termination costs but expects the full benefit of efficiency actions in coming quarters.

Analyst Rudy Kessinger pressed management on how much third-party software revenue remains, whether proprietary SaaS growth can be sustained sequentially, and whether the company’s cash breakeven target had slipped. Management said third-party revenue is expected to stay at a similar level, but declined to provide formal guidance for either third-party or proprietary SaaS revenue, citing product development capacity, investment priorities, and uncertainty in renewals. On cash breakeven, management clarified the goal is operational cash generation in full-year 2024 and said the shift away from low-margin contracts should improve working capital and support that target.