Intangible assets, net

12 Months Ended

Dec. 31, 2022

Disclosure of detailed information about intangible assets [abstract]

14	Intangible assets, net

Details of intangible assets and changes in the Group’s intangible assets balances are presented below:


	Software			Trademark			Intellectual Property			Customer relationship			Goodwill			Other			Total
At December 31, 2020		1,154			—			2,475			1,579			9,885			—			15,093

Acquisitions (i)		—			—			—			—			—			368			368
Acquisitions of subsidiary (note 3)		1,519			220			—			6,781			12,535			145			21,200
Amortization		(463	)		(12	)		(394	)		(1,100	)		—			(37	)		(2,006	)
Exchange differences		(426	)		(13	)		(134	)		404			(822	)		(20	)		(1,011	)

At December 31, 2021		1,784			195			1,947			7,664			21,598			456			33,644

Cost		4,091			207			2,540			9,336			21,598			493			38,265
Accumulated amortization		(2,307	)		(12	)		(593	)		(1,672	)		—			(37	)		(4,621	)

Net book amount		1,784			195			1,947			7,664			21,598			456			33,644

Amortization		(438	)		(22	)		(346	)		(1,177	)		—			(93	)		(2,076	)
Others (ii)		—			—			—			—			(1,141	)		—			(1,141	)
Exchange differences		92			11			104			42			508			26			783

At December 31, 2022		1,438			184			1,705			6,529			20,965			389			31,210

Cost		4,291			218			2,675			9,394			20,965			519			38,062
Accumulated amortization		(2,853	)		(34	)		(970	)		(2,865	)		—			(130	)		(6,852	)

Net book amount		1,438			184			1,705			6,529			20,965			389			31,210

(i)

On August 04, 2021, the Group signed a share purchase agreement to acquire Guava Desenvolvimento De Software LTDA. -

(“Guava”), which was merged into VTEX BRA on December 15, 2021. The agreement has the primary purpose of obtaining access to Guava’s key employees for the VTEX design and software teams. The value attributed to the assembled workforce intangible asset should include the value of that workforce’s skills.

(ii)

Includes a earn-out adjustment of US$897 related to the Workarea acquisition. In January 2022 the Company carried out an assessment of the Purchase Price Consideration of Workarea’s acquisition, having identified an immaterial adjustment. The Purchase Price Consideration recognized on December 31, 2021, financial statements were based on a provisional assessment. In January 2022, the valuation sought by an independent valuation and assessment were completed. Also includes a fixed installment immaterial adjustment of

US$244 related to the Ciashop acquisition

There were no events or changes in circumstances that indicate that the carrying amount of intangible assets with finite useful life may not be recoverable and therefore no impairment charges were recorded for the years 2022 and 2021.

14.1	Impairment tests for goodwill

In identifying its cash-generating units (“CGUs”), the Group considered the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets (or groups of assets). The group operates in many countries, however, all its operation is centralized in technological platforms where the group provides its services. Changes in the aggregation of assets into CGUs may occur due to a review of investment, strategic or operational factors, which could result in changes in the interdependencies between those assets and, consequently, alter the aggregation or breakdown of assets into CGUs or individual assets. Those technological platforms are segregated in 2 CGUs and the group manages those platforms as follows:

•

SMB platform: it is a platform for ecommerce which allows clients to create integrated stores to sell their products and manage their sales process with a focus on small and medium businesses. This platform has been managed and operated for a segregated team into the company, with dedicated developers and sales teams.

•

VTEX platform: it is a platform for ecommerce which allows clients to create integrated stores to sell their products and manage their sales process. This platform is segregated from SMB platform and focuses on large businesses and or accounts. This platform has also been managed and operated for a segregated team into the company, with dedicated developers and sales teams.

The

Indeva platform, which was an independent CGU in the year ended in 2021, is now tested with VTEX platform CGU as Indeva now benefits itself from this infrastructure after concluding the integration with VTEX in 2022.

The Group tests whether goodwill has suffered any impairment on an annual basis. For the 2022 and 2021 reporting years goodwill is monitored by management at the level of CGU.

The recoverable amount of the Group’s CGU is determined based on a value in use calculation using cash flow projections from financial budgets approved by senior management. The discount rate applied to cash flow projections is 15.8% (2021 - 7.8% p.a.), and the growth rate applied to perpetuity cash flow is 7.5 % (2021 - 2.5% p.a.)

The key assumptions used in determining the value in use calculation are as follows:

•

Average free cash flow to firm over the forecasted period; based on past performance and management’s expectations of market development and current industry trends and including long-term inflation forecasts for each territory.

•

Average annual growth rate applied over the forecasted period; based on past performance and management’s expectations of market development and current industry trends and including long-term inflation forecasts for each territory.

•

The discount rate applied to cash flow of 15.8% (2021 - 7.8% p.a.), was determined based on the risk-free interest rate, the equity risk premium, and industry beta.

•

The perpetuity growth rate of 7.5 % (2021

2.5% p.a.) was determined based on the weighted average growth rate used to extrapolate cash flows beyond the budget period. The rates are consistent with forecasts included in industry reports.

The Group performed its annual impairment test as of December 31, 2022, and 2021, which did not result in the need to recognize impairment losses on the carrying amount of goodwill.