TOTVS (TOTS3) Q3 2024 earnings summary

Executive summary

• Achieved 22 consecutive quarters of double-digit recurring revenue growth, with Q3 2024 net revenue at R$1.4 billion, up 15% year-over-year and 4.2% sequentially, and strong operational leverage across all business units.

• SaaS Management, Business Performance, and Techfin segments drove over half of consolidated revenue and nearly 80% of year-over-year growth, with SaaS revenue up 31% year-over-year.

• Adjusted EBITDA for 3Q24 reached R$335 million, up 13% sequentially, with margin up 200 bps; adjusted net income and free cash flow both grew 55% sequentially.

• Significant acquisitions (IP, Quiver, Ahgora, Varejo Online) in 2024 strengthened Management and Retail segments, contributing to revenue and profit.

• Confidence in continued top-line growth and operational leverage into 2025, supported by innovation and disciplined execution.

Financial highlights

• Consolidated net revenue for 9M24 was R$3.84 billion, up 17.7% year-over-year; 3Q24 net revenue was R$1.4 billion, up 15% year-over-year.

• Adjusted EBITDA for 3Q24 reached R$335 million (margin 24.8%), up 13% sequentially; net income for 3Q24 was R$295.8 million, up 145% sequentially.

• Free cash flow was R$183 million in 3Q24, up 16% sequentially and 55% year-over-year.

• Recurring revenue represented 89% of Management segment revenue in 3Q24, with SaaS revenue up 31% year-over-year.

• Cash and equivalents at 3Q24 stood at R$2.15 billion, with net debt position of -R$821 million.

Outlook and guidance

• Management expects continued top-line growth, operational leverage, and margin expansion in all business units for the remainder of 2024 and into 2025.

• No changes to previously disclosed financial projections for the remainder of 2024; OPEX projection for Techfin reaffirmed.