TOTVS (TOTS3) investor relations material

Executive summary

• Net revenue reached BRL 1.6 billion, up 16% year-over-year, with SaaS revenue accelerating to 24% growth and recurring revenue at BRL 1.5 billion (+19% y/y).

• Adjusted EBITDA rose 24% year-over-year to BRL 455 million, with a record margin of 28.5%.

• Adjusted net income was BRL 252 million, with EPS up over 21% year-over-year.

• Free cash flow increased 70% year-over-year to BRL 201 million, reflecting strong operational cash generation.

• Linx acquisition completed, with integration underway and expected to drive synergies and full consolidation from next quarter.

Financial highlights

• SaaS revenue grew 24% year-over-year, outpacing the previous quarter's 23%.

• Recurring revenue now represents over 91% of total revenue, up 230 bps year-over-year.

• Management segment EBITDA margin surpassed 30% for the first time, reaching 30.2%.

• RD Station ARR advanced 22% year-over-year, with SaaS revenue up 21% and EBITDA margin at 14.4%.

• Techfin credit production reached BRL 3.3 billion, with net funding revenue up 11% year-over-year, but EBITDA margin declined due to higher credit loss provisions.

Outlook and guidance

• Margin expansion is expected to continue, driven by recurring revenue growth, operational leverage, and AI integration.

• AI and cloud initiatives, including the launch of IaaS, are seen as significant TAM expansion opportunities, especially for larger customers.

• Linx is expected to converge towards management segment margins as integration progresses.

• Management expects robust demand and ongoing differentiation from broader SaaS trends.