TOTVS (TOTS3) Investor Day 2024 summary

Strategic direction, vision, and business model

• Focus on expanding relevance within the client base, increasing share of wallet, and acting as a trusted advisor, especially for SMBs.

• Tri-dimensional/three-dimensional strategy: Management, Business Performance, and Techfin, each with tailored growth drivers and solutions for different client profiles.

• Integration across dimensions and industry-specific solutions drive cross-sell, up-sell, and new client acquisition.

• Emphasis on long-term relationships, technology investment, and sustainable results.

• No fixed targets for revenue mix; market demand dictates growth.

Financial performance and growth outlook

• Management recurring revenue more than doubled from 2019 to 2023, with 20 consecutive quarters of double-digit growth and margin expansion.

• Management SaaS revenue CAGR (2018-23) at 66%, EBITDA CAGR at 61%, and overall management revenue CAGR at 38%.

• Business Performance market share increased by 480 bps since 2020, with 32.9% CAGR (2019-23); market offers potential to multiply tenfold.

• Techfin targets a vast, underpenetrated market with a disruptive, low-risk, asset-light, self-sustaining business model leveraging ERP data.

• Strong cash generation, with operating cash and cash earnings growing at 21% and 33% CAGR (2021-23), supporting M&A, share buybacks, and dividends.

Product and technology innovation

• Cloud revenue CAGR of 41% (2021-23), with over 40% of clients on TOTVS Cloud and up to 42% cost reduction for migrations.

• AI is embedded across platforms, with proprietary and market models, focusing on real business applications like OCR, logistics, and HR, driving customer productivity.

• RD Station transformation into a platform, with 40% of Business Performance revenue from multi-product clients.

• Digital sales channels and automation are being developed to enhance upsell and cross-sell efficiency, reducing commercial expenses as a percentage of revenue.

• Ongoing investments in data science, APIs, and future AI monetization prepare the portfolio for advanced client solutions.