TOTVS (TOTS3) Q2 2024 earnings summary

Executive summary

• Net revenue grew 20% year-over-year in Q2 2024, reaching R$1.3 billion, driven by SaaS, business performance, and TechFin, with recurring revenue at 88% of total and cloud revenue up 31% year-over-year.

• SaaS revenue increased 33% year-over-year, and Management recurring revenue surpassed R$1 billion.

• Business Performance recurring revenue rose 40% year-over-year, and TechFin revenue net of funding increased 47% year-over-year.

• Adjusted EBITDA reached R$296 million, up 15% year-over-year, with a margin of 22.2%.

• Major events included Universo TOTVS 2024 and Investor Day, significant AI integration, and recognition as "Most Honored Company" in the TMT sector.

Financial highlights

• Non-GAAP net revenue was R$1,330.1 million (+19.6% YoY); GAAP net revenue was R$1,295.1 million (+19.0% YoY).

• Adjusted EBITDA: R$295.9 million (+14.8% YoY), margin 22.2% (-100 bps YoY).

• Management adjusted EBITDA was R$288 million (+13% YoY), margin 24.9% (-90 bps YoY).

• Business Performance adjusted EBITDA was R$7.7 million (+107.8% YoY), margin 5.6% (+180 bps YoY).

• TechFin adjusted EBITDA turned positive at R$0.3 million, margin 0.5% (+700 bps YoY).

Outlook and guidance

• Management expects improved profitability in 2H24 as the IGP-M inflation index turns positive, supporting price adjustments in recurring revenue.

• TechFin is anticipated to benefit from normalized market conditions and seasonality, with higher profitability expected in the second half.

• Sustained ARR growth is expected, supported by a robust sales pipeline and positive market trends.