TOTVS (TOTS3) Q3 2025 earnings summary

Executive summary

• Achieved strong growth across all business units, with consolidated net revenue up 18% year-over-year in 3Q25 and recurring revenue representing over 91% of total revenue.

• Adjusted EBITDA surpassed R$400 million for the first time in a quarter, up 23% year-over-year, with margin expansion of 100 basis points to 26%.

• Adjusted net income was R$249 million in 3Q25, up 10% year-over-year; LTM EPS rose 35%.

• Techfin's ERP Banking solution for SMBs continues to outperform industry benchmarks, with default rates 67% below market average and credit limits 3.3x higher due to ERP data integration.

• Continued innovation and integration, especially in SaaS, cloud, and AI-driven solutions, with AI investments accelerating and impacting products and processes.

Financial highlights

• Consolidated net revenue reached R$1.6 billion in 3Q25 (+18% y/y), with recurring revenue up 21% y/y and exceeding 91% of total revenue.

• Adjusted EBITDA hit R$405 million (+23% y/y), with EBITDA margin expanding 100bp to 26.0%.

• Adjusted net income was R$249 million (+10% y/y), and EPS (LTM) rose 35% y/y.

• Free cash flow reached R$280 million (+54% y/y), driven by higher EBT and stable tax payments.

• ARR net addition up 12% quarter-over-quarter and 14% for the nine-month period.

Outlook and guidance

• Expectation of continued ARR and SaaS revenue growth, driven by new pricing models, product launches, and high client retention.

• TechFin to launch more credit products and expand cash management solutions into 2026.

• Confident in further margin improvements as integration and scale increase across business units.

• Recurring revenue model and SaaS expansion are expected to sustain growth and profitability.

• Operational efficiency and high renewal rates support margin resilience despite cost pressures.