Release Date: July 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Creditas, a key asset for VEF AB (VEFFF, Financial), reported its first profitable quarter and is starting to reaccelerate growth.
- Over 90% of the portfolio is now breakeven and growing on a self-sustaining basis, including top names like Creditas, KonfĂo, and Juspay.
- The company forecasts a 30% revenue growth and 60% gross profit growth in the next 12 months for its portfolio.
- VEF AB (VEFFF) successfully rolled over its sustainability bonds to Q4 2026, indicating strong financial management.
- The share price has been growing faster than the NAV per share year-to-date, indicating positive investor sentiment and a narrowing discount to NAV.
Negative Points
- The company's NAV performance was flat year-to-date, with some negative impact from currency headwinds.
- Rupeek, a portfolio company, experienced a down round, impacting its valuation negatively.
- The gross profit growth expectation was revised down from 65% to 60%, indicating a slowdown in margin expansion.
- There is ongoing FX volatility, particularly with the Brazilian real and Mexican peso, affecting financial results.
- The market environment remains challenging with interest rate sensitivities and weak public comps affecting valuations.
Q & A Highlights
Q: Could you elaborate on the change in your expectation of 60% gross profit growth, down from 65% last quarter?
A: Alexis Koumoudos, Chief Investment Officer, explained that the slight decrease is due to margin expansion reaching a steady state, making it incrementally harder to achieve gross margin expansion quarter on quarter. It is not a reflection on the growth or quality of the businesses.
Q: Beyond potential exits, what are you looking at for new investments, and where in the world?
A: David Francis Nangle, CEO, stated that VEF is continuously looking for fintech assets in emerging markets. The focus remains on core markets like Brazil, India, Mexico, and Indonesia. They are seeing opportunities in growth-stage companies and are interested in companies that were previously priced too high but are now more realistically valued.
Q: How many of your portfolio companies do you expect to be raising capital in the next 12 months?
A: David Francis Nangle mentioned that three to six companies might be active in the market, with at least two more transactions expected by year-end. The companies are cash flow positive and may seek capital for growth opportunities.
Q: Can you provide more details on Rupeek's recent down round and its impact on your NAV?
A: Alexis Koumoudos explained that Rupeek raised a sizable amount from a large investor earlier this year, but a subsequent round involved a down round due to negotiations. The decision was made to take the capital in the company's best interest, affecting the NAV mark.
Q: Are there specific segments or themes within fintech that you are particularly interested in currently?
A: Alexis Koumoudos highlighted interest in payments, embedded finance, and cross-border financing themes. They are focusing on opportunities in core markets and helping portfolio companies expand into new markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
