VEF (VEFL SDB) Q2 2024 earnings summary

Executive summary

• NAV at quarter-end was USD 436.6 million, down 2–2.5% quarter-on-quarter due to FX headwinds, but up 14% from 4Q22 lows, with share price growth outpacing NAV per share and the discount narrowing.

• Over 90% of the portfolio is break-even or profitable, with key assets like Creditas, Konfío, and Juspay achieving profitability and re-accelerating growth; expected next twelve-month revenue/gross profit growth is ~30%/60%.

• Creditas achieved its first profitable quarter, posting USD 90 million in revenue and a 42.5% gross profit margin, with renewed IPO intentions.

• Portfolio companies are well-capitalized, with recent up-rounds for TransferGo and Gringo.

• The investment environment is improving, with more opportunities for new investments emerging in core and select new geographies.

Financial highlights

• NAV decreased from USD 448 million to USD 436.6–437 million during the quarter, mainly due to USD 32 million in FX headwinds and negative comps, partially offset by USD 41 million in portfolio performance.

• NAV per share decreased 1% to USD 0.42 but increased 4% in SEK to 4.45 during 1H24.

• Net result for 2Q24 was USD -11.2 million (2Q23: 68.7 million); EPS was USD -0.01 (2Q23: 0.07).

• Cash and liquidity investments totaled USD 15.8–16 million at end-1H24.

• Portfolio fair value at 2Q24 was USD 458.6 million, with top holdings in Creditas (USD 215.9 million), Konfío (USD 75.5 million), and Juspay (USD 70.1 million).

Outlook and guidance

• Management expects continued NAV compounding, supported by portfolio companies' sustainable growth and potential exits.

• Forecasted next twelve-month portfolio revenue growth is ~30%, with gross profit growth at ~60%, slightly down from 65% due to slower margin expansion.

• Several portfolio companies are expected to raise capital in the coming year, which could validate NAV and create exit opportunities.

• Strategic priorities include strengthening the balance sheet and narrowing the traded discount to NAV.

• 96% of the active portfolio is at or near break-even, with sufficient liquidity to support the portfolio over the next 12 months.