TMR Capital: Zenvia ($ZENV) Investment Case
Introduction In their Q4 2024 investor letter, TMR Capital highlights Zenvia Inc. ($ZENV) as a compelling long position in their portfolio. The investment firm, which focuses on technology investments and SMID cap value-oriented special situations, presents Zenvia as a company undergoing strategic transformation with significant upside potential. TMR’s analysis emphasizes the valuation disconnect between Zenvia and its industry peers, positioning it as an overlooked opportunity in the market that aligns with their investment approach of identifying undervalued assets with potential catalysts for revaluation.
Investment Highlight: Long Zenvia ($ZENV)
Business Update
- Company announced strategic refocus and potential divestment of non-core assets
- Zenvia Customer Cloud (ZCC) officially launched in October 2024
- ZCC will become Zenvia’s core business moving forward
Product Focus
- Powered by AI-driven solutions and robust data analytics
- Designed to adapt to businesses of all sizes across diverse industries
- Current clients report enhanced customer engagement, increased sales, and reduced costs
Business Model Transformation
- Shifting to volume-based pricing model where clients pay based on interaction count
- Moves away from traditional per-seat SaaS model
- Approach enabled by extensive AI integration in software
- Minimizes reliance on human agents and enhances client efficiency
- Unlocks greater revenue generation potential with reduced complexity
Growth Outlook
- ZCC customer base includes both existing clients who transitioned and new customers
- ZCC expected to grow revenue 30% in 2025
- Projected 70% gross margins and positive EBITDA
- Non-core SaaS and CPaaS businesses may be divested in near future
Valuation Analysis
- Trades at 0.7x NTM Revenue vs. closest comparable Twilio at 3.4x
- Significant valuation gap compared to other SaaS companies like CRM (7.3x), NOW (14.2x), and HUBS (12.2x)
- TMR encouraging potential divestiture to force market revaluation
- Potential sale/carve-out could unlock value if parts sold at multiples closer to peers
TMR Capital views Zenvia as an attractive investment opportunity due to its strategic pivot to higher-margin AI-driven solutions, strong growth projections, and significant valuation discount compared to industry peers.
