EARNINGS RELEASE
1Q23
VIDEO CONFERENCE - May 9th, 2023 at 11am (Brasília)
- PORTUGUESE:
Live transmission: click here.Phone numbers list click here(access - webinar ID: 819 6063 9113) or on our website ri.totvs.com
- ENGLISH (Simultaneous Translation):
Live transmission: click here.Phone numbers list click here(access - webinar ID: 819 6063 9113) or on our website ri.totvs.com/en
1Q23 EARNINGS RELEASE.
São Paulo, May, 8th, 2023 - TOTVS S.A. (B3: TOTS3), the leader in the development of business solutions in Brazil, announces its results for the First Quarter of 2023 (1Q23).
MANAGEMENT AND BUSINESS PERFORMANCE EBITDA MARGIN REACHES
26%, WITH SAAS CONSOLIDATED REVENUE GROWING 32% YoY
- Net Revenue(1) exceeded R$1.1 billion in the quarter,
driven mainly by Management and Business Performance Recurring Revenues
- Consolidated ARR reached R$4.2 billion, which is 25% higher than 1Q22, with an organic Net Addition of R$185 million
- EBITDA Margin of 25.1%, 150 basis points over 1Q22 and 210 basis points over 4Q22
NET REVENUE(1) | CONSOLIDATED ARR | ADJUSTED EBITDA | ADJUSTED EBITDA MARGIN | |
+R$1.1 billion | R$4.2 billion | R$281 million | 25.1% | |
+18% vs 1Q22 | +25% vs 1Q22 | +26% vs 1Q22 | +150bp vs 1Q22 | |
Management SaaS Revenue (R$ million) | Management ARR (R$ million) | Adjusted Management | ||
Contribution Margin | ||||
54.7% | ||||
Highest level | ||||
of the last years | ||||
Volume vs. Price | ||||
ARR LTM | ||||
82% | ||||
Volume | ||||
excl. Corporate Model | ||||
Biz Performance Recurring Rev. (R$ million) | Biz Performance ARR (R$ million) | GMV of | ||
Digital Commerce | ||||
R$137million | ||||
+85% vs 1Q22 | ||||
Biz Performance | ||||
Renewal Rate | ||||
97.2% | ||||
1Q23 | ||||
Credit Production (R$ million) | Credit Portfolio (R$ million) | Delinquency over 90 days | ||
1.7% |
190 basis points below
Brazilian Average(2)
Provision for Expected
Credit Losses
R$8.3million
-19% vs 1Q22 -48% vs 4Q22
-
(1) Net revenue (Non-GAAP), incorporates the concept of Techfn Revenue, net of funding cost, in the consolidation of the Company's revenues.
(2) Source: Brazilian Central Bank (www.bcb.gov.br/estatisticas/estatisticasmonetariascredito) > tabelas.xls > Tabela 23 > MPMe
This document is a TOTVS' property. All rights reserved ©
1Q23 Earnings Release
2
RECENT EVENTS
2023 Annual and Extraordinary General Meetings
Held on April 19th, it was attended by over 80% of the Company's voting capital and had all the proposed matters approved. Among them, the following ones are worth highlighting: capital budgeting, the annual Management's global compensation, and amendment to the Company's Share-Based Incentive Plan.
For further information, please click here
Share Buyback Program
The share buyback program, approved by the Board of Directors on February 16th, was fully completed in March 2023, when it reached its limit of 4 million shares repurchased. This program aimed to support the Company's Share-Based Incentive Plan and maximize long-term value creation for shareholders through an effcient management of capital structure.
For further information, please click here
Maintenance of TOTVS' AA+ rating
According to the Fitch rating agency, the maintenance of the rating refects the Company's leadership in the Software Solutions sector because of its wide distribution network, with the diversity of the portfolio of solutions increasingly integrated and better rated by its customers, leading to a reduction in churn and a lower refusal rate of contractual adjustments, as well as the history of low leverage and the Company's cash generation ability, with margins consistent in volatile macroeconomic scenarios.
For further information, please click here, only in Portuguese
Business Consolidation at RD Station
In March, we took a signifcant stride towards implementing the 3D ecosystem strategy, with the formalization of RD Station as the centerpiece of TOTVS' Business Performance dimension. Hence, the digital commerce operations, Tail, and all other offers were consolidated into the RD Station structure. Ever since we purchased RD Station, this action has been plotted and refects not only a greater integration in Business Performance but also among the other dimensions.
To lead this new stage, Juliano Tubino, Vice President of New Business at TOTVS, who handles the entire Business Performance Dimension, also became the CEO of RD Station. In this way, Eric Santos, founder of RD Station, took the position of Executive Chairman of RD Station's Board of Directors, with special attention to strategic projects and the evolution of the ecosystem for partners and customers.
This document is a TOTVS' property. All rights reserved ©
1Q23 Earnings Release
3
FINANCIAL AND OPERATING RESULTS
Message from the CEO
We started 2023 with the same focus and determination that we ended 2022: to become our clients' trusted advisor, delivering an extended value proposition to improve companies' results through innovation and technology. Every quarter we take more steps in this direction and 1Q23 was no different. Once again, we delivered important advances and new records, with positive highlights throughout the operation, maintaining the rare balance of our dual mandate: revenue growth, yes, but also proftability.
Analyzing the fnancial and operating results for the quarter, we see this balance. If, on the one hand, the 33% growth in SaaS Management Revenue, 32% in Business Performance Revenue and 16% in Techfn Revenue Net of Funding led us to an increase of 18% in year-over-year Net Revenue, on the other hand, the highlight of the quarter was the increase in the quarter-over-quarter and year-over-year Adjusted Consolidated EBITDA Margin, leading TOTVS to surpass the R$1 billion mark in Consolidated EBITDA in the last 12 months. This expressive result was mainly driven by the Management and Business Performance Adjusted EBITDA Margin which reached 26%, 170 basis points above 1Q22 and 310 basis points above 4Q22.
In the Management dimension, our sales machine once again showed its strength, with organic net addition of ARR of R$164 million in the quarter and with the Volume component now representing 82% of the gross addition (in the last 12 months and excluding the Corporate Model). Therefore, signings for new customers, in addition to cross and up-sell for existing customers, continue at a healthy pace, especially considering the weaker seasonality of the frst quarter and the normal short-term fuctuations, such as in the renewal rate and in an operation focused on large accounts such as Dimensa. We started the second quarter with signs of acceleration, leveraged by continuous advances in factors such as: (i) record-breaking NPS rate; (ii) expansion of the solutions portfolio; (iii) cloud migrations;
- continuous evolution of productivity and effciency of the commercial distribution; (v) reduction of TCO - Total Cost of Ownership for the customer, among others.
In Business Performance, Juliano Tubino, our VP of New Businesses, assumed the position of CEO of RD Station, succeeding its founder, Eric Santos, who took the Board Executive Chairman role. This movement, combined with other previously planned changes, reinforces RD Station's role as a central pillar of the Business Performance strategy and it means a step towards integration.
In Techfn, we continue to prepare for the approval of the JV with Itaú. This is a transaction with transformational potential that will bring a much broader, sustainable and competitive portfolio of solutions to our client. In this regard, we launched a pilot working capital product in April, that will complement Techfn's portfolio. Meanwhile, the frst quarter showed a scenario of greater credit restrictions and economic slowdown in some important segments, which affected Supplier's credit production, reduced its Revenue Net of Funding and also its proftability. In view of this, Supplier's focus continued on its most valuable asset, the preservation of low delinquency levels, which fell sharply this quarter and ended the period with over 90 days delinquency 190 basis points below the Brazilian average.
We have a clear purpose: to improve the companies' results, believing that everyone can grow and work together for this, that is, believing in Brazil that makes it happen! Regardless of the challenging macro scenario that may arise this year, our vision has not changed. We will continue advancing on the journey to build the 3D ecosystem, an innovative and pioneering strategy, which provides clients with new journeys and TOTVS with new markets. We see ourselves ready and in a privileged position to take advantage of current and future opportunities, whether organically, through strategic partnerships and, with no doubt, also through M&A.
Dennis Herszkowicz - CEO
This document is a TOTVS' property. All rights reserved ©
1Q23 Earnings Release
4
Financial and Operating Highlights
1Q23 | 1Q22 | ∆ | 4Q22 | ∆ | |
Growth (in R$ million) | |||||
Net Revenue (Non-GAAP)⁽¹⁾ | 1,118.6 | 945.6 | 18.3% | 1,080.5 | 3.5% |
Consolidated Recurring Revenue | 907.5 | 746.9 | 21.5% | 878.4 | 3.3% |
% Consolidated Recurring Revenue | 81.1% | 79.0% | 210 bp | 81.3% | -20 bp |
% Biz Perform. + Techfin Revenue | 13.1% | 12.4% | 70 bp | 15.2% | -210 bp |
Consolidated ARR | 4,190.0 | 3,351.0 | 25.0% | 4,004.6 | 4.6% |
Consolidated ARR Net Addition ⁽²⁾ | 185.4 | 262.6 | (29.4%) | 191.3 | (3.0%) |
Consolidated SaaS Revenue | 437.9 | 331.1 | 32.3% | 420.0 | 4.3% |
Biz Performance Recurring Revenue | 90.5 | 68.9 | 31.3% | 87.0 | 4.1% |
Credit Production | 2,524.8 | 2,562.6 | (1.5%) | 2,702.6 | (6.6%) |
Profitability (in R$ million) | |||||
Adjusted EBITDA Margin ⁽³⁾ | 25.1% | 23.6% | 150 bp | 23.0% | 210 bp |
Adjusted EBITDA ⁽⁴⁾ | 281.0 | 223.3 | 25.8% | 248.4 | 13.1% |
Cash Earnings ⁽⁵⁾ | 133.7 | 122.1 | 9.4% | 178.9 | (25.3%) |
Cash Earnings Margin | 12.0% | 12.9% | -90 bp | 16.6% | -460 bp |
Operating Cash Generation | 247.1 | 270.4 | (8.6%) | 238.5 | 3.6% |
Op. Cash Generation / Adjusted EBITDA | 88.0% | 121.1% | -3310 bp | 96.0% | -800 bp |
Stock Market | |||||
TOTS3 (in R$) | 28.16 | 36.38 | (22.6%) | 27.62 | 2.0% |
ADTV 30 (in R$ million) | 141.7 | 155.8 | (9.1%) | 138.7 | 2.1% |
IBOV (thousands pts) | 101.9 | 120.0 | (15.1%) | 109.7 | (7.2%) |
IBrX 50 (thousands pts) | 17.1 | 20.2 | (15.6%) | 18.5 | (7.8%) |
⁽¹⁾ Non-GAAP Revenue net of Funding , represents the Techfin Revenue net of Funding Cost consolidated in the Total Company's Revenue. ⁽²⁾ Organic ARR Net Addition from Management + Business Performance.
⁽³⁾ Adjusted EBITDA over the Non GAAP Revenue net of Funding. ⁽⁴⁾ EBITDA adjusted by extraordinary items.
⁽⁵⁾ Net Income without the effects of expenses with amortization of intangibles arising from acquisitions.
As mentioned in the past quarters, the commitment to create a Joint Venture (JV) with Itaú meets the criteria for assets held for sale in compliance with IFRS-5 and, accordingly, the reviewed quarterly fnancial information ("GAAP") presents the consolidated result of the Techfn operations on the line "Net Income (Loss) from Techfn Dimension".
In order to preserve the analysis of the contribution margins of the 3 business dimensions and consolidated EBITDA, we kept in this release the presentation standard already used in previous quarters, which we call the "Non-GAAP"standard, that is, without reclassifying this Techfn's revenue, costs, and expenses lines to the line "Net Income (Loss) of the Techfn Dimension". Moreover, depreciation and amortization expenses and provision for expected credit losses on specifc lines of the Income Statement were maintained, besides using the concept of Revenue Net of
Funding in the Techfn dimension, including the consolidation of the Company's Net Revenue (Non-GAAP), which is the basis for the calculation of gross, contribution, EBITDA, and net margins.
Finally, the reconciliation between the "GAAP" standard and the "Non-GAAP" standard for the Income Statement of the quarterly fnancial information is provided in Appendix IIof this document.
This document is a TOTVS' property. All rights reserved ©
1Q23 Earnings Release
5
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
TOTVS SA published this content on 08 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 May 2023 07:49:06 UTC.