This article first appeared on GuruFocus .
-
GMV:Reached $5.7 billion in Q2 2026, representing 18% year-over-year growth in US dollars and 7% on an FX-neutral basis.
-
Subscription Revenue:Reached $63.8 million, growing 11% in US dollars and 1.3% on an FX-neutral basis.
-
Non-GAAP Subscription Gross Margin:Reached 81.8%, an improvement of approximately 2 percentage points year-over-year.
-
Total Non-GAAP Gross Margin:Reached 80.4%, compared to 77.4% in Q2 2025, an improvement of 3 percentage points year-over-year.
-
Non-GAAP Operating Expenses:Totaled $38.0 million in Q2, broadly flat sequentially and growing well below revenue year-over-year.
-
Non-GAAP Income from Operations:Reached $13.8 million, growing 62% year-over-year, with a margin of 21.4%.
-
Free Cash Flow:Reached $12.7 million for the quarter, growing 79% year-over-year and representing a free cash flow margin of 19.8%.
-
Share Repurchases:Repurchased 6.2 million Class A common shares at an average price of $3.76 per share, for a total cost of $23.2 million.
-
Growth Drivers Performance:Global expansion, B2B, ads, and AI initiatives grew 20% on an FX-neutral basis in Q2 and represented approximately 18% of subscription revenue.
Release Date: August 06, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Growth drivers (global expansion, B2B, ads, AI) grew 20% on an FX-neutral basis in Q2, outperforming the overall business.
-
Non-GAAP operating income grew 62% year-over-year, with margin expansion of approximately 7 percentage points to 21.4%.
-
Free cash flow grew 79% year-over-year, reaching a margin of 19.8%.
-
Non-GAAP subscription gross margin improved to 81.8%, up 2 percentage points year-over-year, driven by AI-powered automation and cost discipline.
-
The VTEX CX platform showed strong adoption, with sales cycles down over 50% and implementation time reduced from 30 days to one week.
Negative Points
-
Subscription revenue growth was weak, with FX-neutral growth of only 1.3% in Q2, below internal expectations.
-
The macro environment in Brazil and Argentina remains challenging, with high interest rates and softer consumer demand pressuring near-term growth.
-
The core B2C commerce business in Brazil and Latin America declined modestly on an FX-neutral basis, impacted by volume and customer mix shifts.
-
The company lowered its full-year 2026 guidance to low single-digit FX-neutral subscription revenue growth, reflecting weaker consumption trends.
-
Sales cycles for enterprise customers are lengthening, as AI-related discussions and decision-making processes delay commitments.
Q & A Highlights
Q: Can you break down the revenue deceleration between existing clients selling less versus churn or lower new customer acquisition, and how much do the growth drivers represent of overall revenues? Can the core business excluding growth drivers re-accelerate in the short to mid-term? A: Ricardo Sodre (CFO) explained that growth drivers represent roughly 18% of subscription revenue and grew 20% on an FX-neutral basis, while the non-growth driver portion declined modestly by roughly 2%. The revenue deceleration is driven by two dynamics in the existing customer base: a faster-than-expected shift in customer mix toward larger accounts (which carry lower take rates but similar gross margins and lower churn) and a weaker consumption environment in Brazil, particularly in June and July. Competitive win rates and churn remain stable, indicating the headwinds are macroeconomic and mix-related rather than competitive.
Q: To what extent are the current revenue challenges related to a more difficult competitive environment, and are AI-related discussions delaying client decisions and extending sales cycles? A: Mariano de Faria (Co-CEO) stated that competition has not meaningfully changed, with competitors' AI capabilities appearing as incremental features layered onto legacy architectures rather than transformative. Win rates, churn, and customer engagement all remain stable, indicating no competitiveness issue. However, customers are taking longer to make long-term decisions, extending sales cycles. The high interest rate environment continues to pressure consumer demand, with large marketplaces remaining highly promotional, reinforcing the need for an AI-native unified commerce platform.
Q: If reacceleration comes, what kind of costs would be pressured and what kind of costs would scale? A: Ricardo Sodre (CFO) detailed that gross margin improvements are durable, driven by hosting optimizations and AI-powered automation over the past three years. G&A has scaled down from roughly 20% of revenue in 2020-2021 to roughly 10% now. R&D is the line receiving incremental investment to accelerate the AI-native transformation. Sales and marketing investments are adjusted based on demand signals and ROI, with efficiencies gained through AI. The consolidated P&L is far from margin limits, suggesting potential for continued margin expansion, as evidenced by the Q3 guidance for non-GAAP operating margins in the low 20s.
Q: Can you provide more color on the new go-to-market strategy for B2B and your expectations, and are you seeing higher-than-usual levels of client bankruptcies or financial distress in Brazil? A: Mariano de Faria (Co-CEO) noted that while not yet seeing Chapter 11 or bankruptcy movements, it is a very tough moment for retailers in Brazil, and the scenario could worsen. On B2B, the company is encouraged by global momentum, having built a comprehensive platform for complex omnichannel workflows. B2B represents a meaningful share of the enterprise pipeline, particularly in the US and Europe, with growing interest in Latin America. The next evolution focuses on AI-powered sales capabilities for field reps, with a unified AI-native stack covering the entire B2B commercial workflow as a near-term priority.
Q: How should we think about the durability of high margins in a reacceleration environment, and what cost lines would be pressured versus those that would scale? A: Ricardo Sodre (CFO) reiterated that the roughly 3-percentage-point gross margin gain is durable, driven by AI-powered automation and support cost reductions. G&A has been stable for five years, decreasing from 20% to roughly 10% of revenue. R&D is the primary investment area for the AI transformation, increasing marginally as a percentage of revenue. Sales and marketing is adjusted based on demand and ROI, with AI-driven efficiencies. If revenue reaccelerates, the company could invest more where returns are visible, but the consolidated P&L is far from margin limits, indicating continued positive margin trajectory.
Q: What is driving the revenue deceleration, and how much is due to existing clients selling less versus churn or lower new customer acquisition? A: Ricardo Sodre (CFO) clarified that the deceleration stems from the existing customer base, with two underlying dynamics: customer mix shifting toward larger accounts (which carry lower take rates) and a weaker consumption environment in Brazil. FX-neutral GMV growth was broadly stable sequentially, but smaller and mid-sized customers were more affected. Same-store sales weakened in June and July, leading to lower GMV assumptions for Q3 and Q4. New customer acquisition remained stable with no substantial changes.
Q: Can you provide more color on the revenue deceleration breakdown and the outlook for the core business excluding growth drivers? A: Ricardo Sodre (CFO) explained that growth drivers represent 18% of subscription revenue and grew 20% FX-neutral, while the remainder declined modestly by roughly 2%. The deceleration is driven by customer mix shifts toward larger accounts and weaker consumption in Brazil. The company guided Q3 subscription revenue growth to approximately flat FX-neutral, with full-year guidance revised to low single-digit FX-neutral growth. Competitive position remains healthy with stable win rates and churn, reinforcing that headwinds are macroeconomic and mix-related.
Q: How is the competitive environment evolving with marketplaces in Brazil and other regions, and are AI discussions delaying client decisions? A: Mariano de Faria (Co-CEO) described two structural dynamics: commerce fragmentation across social channels, WhatsApp, and AI interfaces, where VTEX's orchestration layer is structurally advantaged, and the high interest rate environment pressuring consumer demand with promotional marketplaces. Competitors' AI announcements have not translated into changes in commercial performance, with win rates and churn stable. Customers are taking longer to make decisions, extending sales cycles, but the AI-native architecture and comprehensive product suite continue to strengthen competitive positioning.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
