INSTITUTIONAL PRESENTATION

Transcription

1 INSTITUTIONAL PRESENTATION March T O T V S - A l l R i g h t s R e s e r v e d 2018

2 DISCLAIMER The information contained in this presentation and any forward-looking statements that may be made, related to business outlook, operational and financial projections of TOTVS are based on beliefs and assumptions of the Company s management, as well as information currently available. Forward-looking statements are not guarantee of future performance. They involve risks, uncertainties and assumptions as they refer to future events and, hence, depend on circumstances that may or may not occur. Investors must understand that general economic conditions, industry conditions and other operational factors could affect future performance of TOTVS and could lead to results that differ materially from those mentioned in these forward-looking statements.

3 WE ARE TOTVS OVERVIEW WHO WE ARE The ERP leader in Brazil, with ~50% market share 20th most valuable brand in Brazil, according to Interbrand ranking SIMPLIFYING THE BUSINESS WORLD TOTVS supports its clients in their journey into the digital world, offering the best solutions and knowledge necessary for companies of all sizes and industries to take advantage of digital opportunities People Things TOTVS Store Highest level of Corporate Governance (Novo Mercado) Platforms Productivity & Collaboration APPS Data & Intelligence Specialized business solutions for 10 Industry Sectors ~12,000 TOTVERS, including franchisees TOTVS ERP TOTVS HR TOTVS by Industry The only IT Brazilian player present in the Global Innovation 1000 ranking, according to Strategy& (PwC)

4 WE ARE TOTVS TRAJECTORY START UP WARM UP DNA NUMBER 1 BRAZIL THINK TOGETHER PEOPLE, THINGS & BUSINESS Solutions for the SMB Market Biggest ERP Player in Brazil 1 st IT Company to go public Revenues of R$1.0 billion in Fluig Intera 2117* 13.6% TOTVS 1957 Digital 16.4% Model 20.2%* % % % % % Microsiga Franchisees Proprietary Technology Argentina 63 Results Management 8.9% % % % Mexico % % % 18.4% 10.5% 11.0% 9.4% ICMM Specialization by industry sector Company of the Year by Exame Magazine Fluid Technology Essentiality Agile ERP GROSS REVENUES AND ADJUSTED EBITDA MARGIN (R$ Million and %)

5 Software WE ARE TOTVS CORPORATE GOVERNANCE Pedro Passos Chairman Independent member Co-founder and member of Natura s Board of Directors Germán Quiroga Vice-Chairman Independent member Member Founder and CEO of TOTVS Independent Member Former CEO of the Brazilian Stock Exchange Independent Member Vice President of NC Group Independent Member Partner of Prada Business Consulting Independent Member CFO of Petros (Petrobras Pension Fund) Independent Member Co-founder of Bematech S.A. Independent Member President of AMEC (Associação dos Investidores do Mercado de Capitais) ADVISORY COMMITTEES Audit Committee monitors the procedures for compliance with legal provisions, evaluates risk management policies and recommends improvements to internal policies Personnel and Compensation Committee is responsible for advising the Board of Directors in establishing the terms of compensation and other benefits Strategy and Technology Committee studies, debates, evaluates, proposes and monitors the main guidelines of the corporate and technological strategy of TOTVS Governance and Nomination Committee promotes the development of the Company s corporate governance, evaluates the adoption of good practices and selects members to the Board of Directors and Executive Board 8 out of 9 members of the Board are independent

6 Software WE ARE TOTVS A TRUE CORPORATION 98.5% of the free-float held by institutional investors 88.6% of the free-float held by foreign investors

7 Software WE ARE TOTVS PRESENCE TOTVS HAS PRESENCE IN THE MAIN BUSINESS CENTERS OF BRAZIL AND LATIN AMERICA TO BE ALWAYS CLOSE TO YOU AND YOUR COMPANY 1 Joint Venture 1 Branch 1 Tech Lab (CA) 1 Branch (NY) 1 Channel (FL) PORTUGAL 1 Branch 3 Channels 1 Development Center 5 Branches: Argentina, Colombia, Mexico 50 Channels 1 Development Center - Mexico ANGOLA 2 Channel Headquarter São Paulo 11 Branches 52 Franchised Territories 10 Development Centers ~5,000 resellers *Brazil accounts for ~96% of TOTVS Net Revenue

8 WE ARE TOTVS BUSINESS MODEL INNOVATION COMMUNITY Tech startups Software players App Developers TOTVS Store TOTVS Market Place TOTVS Channels DISTRIBUTION Sales & Deployment APPs Solutions Franchisees Resellers Services Platforms TOTVS by Industry SOLUTIONS Specialized by Industry Agroindustry Construction & Projects Education Financial Services Manufacturing Healthcare Retail Legal Distribution & Logistics Services PLATFORMS Cross-industry TOTVS ERP TOTVS HR TOOLS Technological stack TOTVS Language TOTVS-Tec TOTVS Technology & Software Life cycle TL++ T-Face TOTVS HTML Framework TOTVS Cloud T-Cloud T-Talk TOTVS APIs

9 BUSINESS MODEL PLATFORMS Data Platform & Intelligence Interpret data and recommend actions and behaviors TOTVS ANALYTICS by GoodData Data Analysis Platform Present data in a structured way Productivity and collaboration Platform Unify systems, digitalize / simplify processes, and exponentially grow productivity and businesses TOTVS ERP TOTVS HR TOTVS by Industry TOTVS IOTs and their management Capture and deliver information through devices ERP and Industry Platform (back office and industry) Ensure the processing of corporate information and comply with business rules, legislation and security HR Platform -> TOTVS Human Resources Platform Ensure the management of human resources

10 BUSINESS MODEL BY INDUSTRY SPECIALIZED BUSINESS SOLUTIONS FOR COMPANIES OF ALL SIZES IN 10 MARKET INDUSTRIES Agribusiness Construction and Projects Legal Educational Financial Services Distribution & Logistics Manufacturing Healthcare Services Retail

11 BUSINESS MODEL DISTRIBUTION HOW WE SEL IN BRAZIL # Employees # Employees # Companies in Brazil* Large Companies Private +500 ~10 thousand Small and Medium (SMB) 58 channels 52 franchisees 5 branches From 10 to 499 ~638 thousand Micro Companies ~5k resellers Up to 9 ~4.5 million *Source: IBGE - Table 992

12 FINANCIAL PERFORMANCE 4Q17

13 NET REVENUE (R$ MM) THE RECURRING REVENUES INCREASED 8.7% AND REPRESENTED 65.8% OF NET REVENUE, 4 PERCENTAGE POINTS OVER

14 NET REVENUE (R$ MM)... MAINLY DUE TO THE PROGRESS OF SOFTWARE REVENUE, WICH ENDED 2017 WITH 6.2% GROWTH...

15 SOFTWARE REVENUE (R$ MM)... BOOSTED BY SUBSCRIPTION REVENUE, WICH GREW 34.3% AND ALREADY CORRESPONDED TO 20.7% OF THE SOFTWARE REVENUE...

16 SOFTWARE REVENUE (R$ MM)... AND WHEN ANNUALIZED, THE EXISTING SUBSCRIPTIONS AT THE END OF 4Q17 AMOUNTED R$368 MILLION, 19.5% ABOVE THE REVENUE OF R$307.9 MILLION REGISTERED IN 2017 SOFTWARE REVENUE SUBSCRIPTION ARR

17 SOFTWARE (R$ MM) THE INCREASE IN SOFTWARE REVENUE WAS THE MAIN FACTOR FOR THE GROWTH OF ADJUSTED MARGIN AT 140 BASIS POINTS OVER 4Q16 3Q17 4Q17 Δ 4Q/3QT 4Q16 Δ 4Q/4Q Δ 17/16 SOFTWARE REVENUE % % % COST OF SOFTWARE (21.6) (22.5) 3.8% (19.3) 16.2% (77.3) (86.6) 12.0% COST OF SUPPORT (33.4) (33.7) 0.8% (33.8) -0.5% (130.5) (132.1) 1.2% R&D (88.2) (88.5) 0.4% (88.6) -0.1% (315.3) (343.4) 8.9% SOFTWARE RESULT % % % CONTRIBUTION MARGIN 61.4% 61.2% -20bp 59.9% 130bp 62.6% 62.1% -50bp NON-RECURRING ITEMS ADDITIONAL COSTS WITH LAYOFFS % % ADJUSTED SOFTWARE RESULT % % % ADJUSTED CONTRIBUTION MARGIN 61.4% 61.6% 20bp 60.2% 140bp 62.6% 62.2% -40bp

18 SERVICES (R$ MM) ADJUSTED SERVICE CONTRIBUTION MARGIN INCREASED 170 BASIS POINTS WHEN COMPARED TO 4Q16 3Q17 4Q17 Δ 4Q/3Q 4Q16 Δ 4Q/4Q Δ 17/16 SEVICE REVENUE % % % COSTS OF SERVICES (124.3) (124.9) 0.5% (128.8) -3.1% (506.5) (496.8) -1.9% SERVICE RESULT 8.6 0,2-98.0% (0,2) % % CONTRIBUTION MARGIN 6.4% 0.1% 630bp -0.1% 20bp 6.5% 2.3% -420bp NON-RECURRING ITEMS ADDITIONAL COSTS WITH LAYOFFS % % ADJUSTED SERVICE RESULT % % % ADJUSTED CONTRIBUTION MARGIN 6.4% 3.2% -320bp 1.5% 170bp 6.9% 3.1% -380bp

19 HARDWARE (R$ MM) THE SLOWER SALES PACE IN HARDWARE HAS NEGATIVELY IMPACTED THE CONTRIBUTION MARGIN WHEN COMPARED TO THE PREVIOUS PERIODS 3Q17 4Q17 Δ 4Q/3Q 4Q16 Δ 4Q/4Q Δ 17/16 HARDWARE REVENUE % % % COST OF HARDWARE (37.4) (36.3) -2.9% (42.6) % (162.4) (148.0) -8.9% GROSS RESULT % % % GROSS MARGIN 36.5% 35.7% -80bp 37.5% -180bp 33.5% 36.9% 340bp R&D (4.1) (4.4) 5.5% (3.3) 30.9% (11.2) (13.7) 22.2% GOV. SUBSIDIES % % HARDWARE RESULT % % % CONTRIBUTION MARGIN 29.4% 31.0% 160bp 37.5% -650bp 33.2% 33.7% 50bp NON-RECURRING ITEMS INVENTORY ADJUSTMENTS % ADJ. HARDWARE RESULT % % % ADJUSTED CONTRIBUTION MARGIN 29.4% 31.0% 160bp 37.5% -650bp 34.2% 33.7% -50bp

20 ADJUSTED COMMERCIAL AND ADM. EXPENSES (%NR) (1) (2) (3) (1) Excluding extraordinary expenses with layoffs in 4Q15 and 4Q16 (2) Excluding extraordinary revenue/ expenses from sale of controlled and net property, layoffs and additional prov. for contingencies in 4Q16 and 4Q17 (3) Excluding additional Provision of R$17.2M in 3Q16

21 ADJUSTED EBITDA (R$ MM)

22 ADJUSTED NET INCOME (R$ MM)

23 CASH FLOW AND DEBT (R$ MM) 3Q17 4Q17 Δ 4Q/3Q 4Q16 Δ 4Q/4Q Δ 17/16 EBT % % % NON-CASH ITEMS % % % CHANGE IN WORKING CAPITAL (0.2) (20.9) - (123.9) (9.6) -92.3% INTEREST PAID (12.0) (8.7) -27.5% (9.3) -5.9% (53.1) (43.7) -17.7% TAXES PAID (0.5) (1.9) 282.4% (2.3) -17.3% (17.1) (18.1) 5.6% NET CASH FROM OPERATIONAL ACTIVITIES % % % NET CASH USED IN INVESTING ACTIVITIES (9.5) (8.6) -9.6% (22.1) -61.0% (98.7) (50.3) -49.1% NET CASH USED IN FINANCING ACTIVITIES (79.2) % (46.8) 69.2% (373.4) (107.1) -71.3% INCREASE (DECREASE) IN CASH % (1.3) - (211.6) GROSS CASH IN THE BEGINNING OF THE PERIOD % % % GROSS CASH IN THE END OF THE PERIOD % % % GROSS DEBT % % % NET DEBT % % % NETDEBT/ LTM ADJUSTED EBITDA 1.2x 1.1x -0.1x 1.3x -0.2x 1.3x 1.1x -0.2x FREE CASH FLOW % % %

24 Investor Relations +55 (11) (11) (11) (11) Technology + Knowledge are our DNA The success of our client is our success We value competent people who are nice people totvs.com company/totvs #WEARE fluig.com