TOTVS (TOTS3) Q3 2025 earnings summary

Executive summary

• Achieved robust growth across all business units, with consolidated net revenue up 18% year-over-year in Q3 2025 and recurring revenue representing over 91% of total revenue.

• Adjusted EBITDA grew 23% year-over-year, with margin expansion to 26% and recurring revenue up 20% year-over-year.

• TechFin's ERP Banking pillars validated, with a 3.3x increase in applied limits, ~3x increase in PIX average ticket, and default rates 67% below market average.

• Strategic focus on contextualized ERP and TechFin, leveraging ERP data for superior credit modeling and lower delinquency.

• Continued innovation and integration, especially in SaaS, cloud, and AI-driven solutions.

Financial highlights

• Consolidated net revenue reached R$1.6 billion in 3Q25 (+18% y/y), with recurring revenue up 21% y/y and non-recurring revenue down 5.1% y/y.

• 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.

• ROIC (LTM) improved to 20%, up 250bp y/y.

Outlook and guidance

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

• 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.

• Management expects the strong foundation built in 2025 to support continued growth and high client retention into 2026.