TOTVS S A : 2023 Integrated Report

2023

Integrated

Report

Table of contents

About

this Report

1 About

TOTVS

Who we are

Three business dimensions, one single destination

Information Security,

Data Protection

and Privacy

Sustainability management

Materiality

2	We build	3	People who make
	relationships of trust		a difference

Corporate governance	People management
Risk management	Attraction and retention
Ethics and compliance	Development and training
	Diversity and Inclusion
	Health, wellness and safety

4 Collaboration that

makes us stronger

Relationship with stakeholders

Customers

Suppliers and outsourced partners

Shareholders / Investors

Community

Institutional and public sector relationship

Institutional and sectoral associations

Technology Ecosystem

5	Environmental	6	Financial
	management		results

Environmental	Economic and financial
management guidelines	management
Water	How we generated
Energy	value in 2023
Business landscape
Waste
and outlook for 2024

Emissions

Quality and safety in the management of data centers

Certifications

Appendix

[GRI 2-14]

About this Report [GRI 2-2,2-3,2-14,2-29]

Welcome to TOTVS's Integrated Report

Standards and references we use

The preparation of this Integrated Report adheres to the guidelines set forth by:

International Integrated

Reporting Council (IIRC)

As part of our commitment to transparent accountability and the continuous fostering of dialogue mechanisms with our stakeholders, we present TOTVS's Integrated Report (the "Integrated Report") for 2023.

The release of this document represents a continuation of the process started in 2015, with the aim of offering our stakeholders a holistic view of the Company and the ways in which we have made progress in business and generated shared value through the development of our Sustainability and ESG Agenda.

Released annually, the Report is a multistakeholder document aimed at our strategic audiences, such as customers, shareholders/investors, employees, the community, associations and the public sector, the technology ecosystem, business partners, suppliers and contractors.

This Integrated Report was produced under the coordination of the Investor Relations and ESG Board and results from the engagement of several areas of the Company that are responsible for managing GRI and SASB indicators and take part in the annual cycle of data collection and the construction of editorial content. Its approval process

encompasses the recommendation stage, involving the participation of the Statutory Audit Committee and the Governance and Nomination Committee, both of which are advisory bodies to the governance structure. The approval stage follows, in which the Board of Directors ratifies, reviews, and approves the document.

This document refers to the activities and operations from January 1 to December 31, 2023, in line with the same fiscal period adopted for the preparation of the consolidated financial statements and includes indicators and information concerning the TOTVS Group and its acquired companies.

The Integrated Report underwent external assurance by KPMG for the third consecutive year to assess adherence to GRI and SASB Standards aspects and guidelines, and Guideline CPC 09 - Integrated Reporting, correlated with the Basic Conceptual Framework of Integrated Reporting, prepared by the IIRC. TOTVS published on February 7, 2024 the financial statements for the year ended on December 31, 2023, also audited by KPMG.

Standards of the Global

Reporting Initiative (GRI)

SASB standard for technology companies, focusing specifically on the software and information technology industry.

Global Compact

UN initiative to engage companies and organizations in adopting ten principles in the areas of human rights, labor, the environment and anti-corruption.

United Nations (UN) Sustainable

Development Goals (SDGs)

The content of this report was shaped by the topics that were deemed material for the sustainability of our business, as a result of the materiality process that was completed in the second quarter of 2024. Additional details regarding the topic can be found

starting from page 21.

Should you wish to provide any comments, questions, suggestions, or contributions to our Integrated Report, please contact us via email at [e-mail].

3 TOTVS / INTEGRATED REPORT / 2023

ABOUT THIS

1

ABOUT

2

WE BUILD RELATIONSHIPS

3

PEOPLE WHO MAKE

4

COLLABORATION THAT

5

ENVIRONMENTAL

6

FINANCIAL

APPENDIX

REPORT

TOTVS

OF TRUST

A DIFFERENCE

MAKES US STRONGER

MANAGEMENT

RESULTS

Message from the Board [GRI 2-22]

2023 was another intense and demanding year that presented both challenges and opportunities. On one hand, economic, environmental and social issues were addressed and we even made progress, but on the other hand it does not seem credible that in the 21 st century we are still experiencing an escalation of wars and armed conflicts.

Here at TOTVS, we remained firm and nothing shook our confidence in Brazil's potential and in the resilience of Brazilian entrepreneurs. We remain an eternal unsatisfied team, working tirelessly

to deliver an expanded value proposition to our customers: improving companies results through innovation and technology. Amid this scenario of frequent economic, political and technological changes, it is natural to create an environment of constant challenges for the 12 strategic industry sectors that we attend, connecting to our vision of the future: being our client's trusted advisor, building long-term relationships so that he can always navigate with security and stability, always being able to rely on an accessible business partner who he can trust.

Throughout the year, we have made consistent progress in this direction. We started the year by launching our Diversity and Inclusion Policy, showing TOTVS' true way of being and acting with people. We were then recognized as one of the 500 companies in America with the highest revenue

growth between 2018 and 2021 by the ranking "The America's 500 fastest growing companies" from the Financial Times, we took the 6 th place in the Merco Responsibility ESG, Technology category - sector ranking and, for the 4 th consecutive year, we were in the GPTW ranking, which evaluates companies based on their work climate and culture. We carried out five acquisitions: we incorporated Lexos and Exact Sales in the Business Performance dimension, the TOTVS TRS Franchise, the IP Franchise and AHGORA in the Management dimension, in addition to the closing of the transaction of the Joint Venture (JV) with Itaú in the Techfin dimension.

From the first unicorn to the largest technology company in Brazil, TOTVS's history is intertwined with that of its customers. Since the beginning, I have had the privilege of witnessing the transformation of our company, the market and the maturity of business in Brazil. Our entrepreneurs are creative and innovative. They are used to dealing with challenging scenarios, constantly seeking new opportunities in an increasingly competitive market. We see technology as an essential factor in this equation. It is what has enabled our clients to leverage. The creation of the 3D ecosystem, TOTVS TECHFIN (JV with Itaú) for the development and distribution of financial services in the B2B market, solutions based on Artificial Intelligence, technological partnerships in ESG, evolution of the TOTVS Franchise System and data science in sales are some examples of the transformations and innovations that TOTVS has been promoting

to the market.

Laércio Cosentino,

Chairman of the Board

All these achievements reflect the essence of TOTVS, a company that challenges itself daily and surpasses itself at all times.

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ABOUT THIS

1

ABOUT

2

WE BUILD RELATIONSHIPS

3

PEOPLE WHO MAKE

4

COLLABORATION THAT

5

ENVIRONMENTAL

6

FINANCIAL

APPENDIX

REPORT

TOTVS

OF TRUST

A DIFFERENCE

MAKES US STRONGER

MANAGEMENT

RESULTS

In ESG (Environmental, Social and Governance), we continue on our journey with relevant deliveries and achievements. In pillar E, we carried out our second inventory of greenhouse gas emissions, advancing in the inclusion of international market, RD Station and Supplier operations and taking a first step in incorporating data related to scope 3. In pillar S, we continued consolidating our efforts on the education agenda, contributing to the training and employability of young people in situations of social vulnerability, through the Institute for Social Opportunity (IOS) and the Start Tech Program. We entered in iDIVERSA B3, the first index in Latin America focused on diversity,

we worked on implementing our Diversity and Inclusion Policy and launched a new edition of the Speed to Hero Program, focused on training people with disabilities to work in our commercial force. In pillar G, we highlight our efforts in information security, data protection and privacy initiatives; winning the " ANEFAC Transparency Trophy" for the third consecutive year, registering TOTVS among the companies that present the best financial disclosures; and the evolution of our MSCI score from "A" to "AA", positioning the Company among a select group of globally differentiated companies in the software sector. Finally, we sealed the period with the approval of TOTVS's Sustainability and ESG agenda for the three-year period

2024 - 2026. In this regard, it is worth special mention to obtain the "Pro-Ethics Company " seal, granted by the General Controllership of the Union (CGU). This recognition resulting from

a rigorous and independent evaluation process, highlights TOTVS as a reference in best practices for preventing corruption, fraud and bribery, ratifying the relevance and effectiveness of the Company's Integrity Program in all its pillars, and is a reflection of the our commitment to the ESG agenda as well as demonstrating in practice that ethics is a non-negotiable value for us.

All these achievements reflect the essence of TOTVS, a company that challenges itself daily and surpasses itself at all times, delivering with mastery, consistency and efficiency. I attribute all this success to the strong culture and the qualified and engaged team of TOTVERs we have, in tune with the Company's strategy and working towards the same objectives, with the freedom to dare, innovate, transform and be who they want to be. To all customers, partners and participants in our ecosystem who are with us on this journey, I would like to express our gratitude and hope that we have a great 2024, with more and more good stories from our customers' digitalization journey to tell and may they continue to serve as inspiration and fuel for the Brazilian economy. This is the Brazil we want, and this is the Brazil that makes it happen, that we believe in so much and that we will continue to invest in today, tomorrow and always. We are driven by results and will continue to work in this direction non-stop.

Laércio Cosentino, Chairman of the Board

5 TOTVS / INTEGRATED REPORT / 2023

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1

ABOUT

2

WE BUILD RELATIONSHIPS

3

PEOPLE WHO MAKE

4

COLLABORATION THAT

5

ENVIRONMENTAL

6

FINANCIAL

APPENDIX

REPORT

TOTVS

OF TRUST

A DIFFERENCE

MAKES US STRONGER

MANAGEMENT

RESULTS

Message from the CEO [GRI 2-22]

TOTVS ended 2023 with important advances. Our ecosystem has worked to expand our value proposition: to enhance companies' results, making them more competitive and relevant in their sectors and thus advancing our position as our customers' trusted advisor. We have made consistent progress in this direction, in all dimensions.

In Management, we maintained a healthy balance between revenue growth, close to 20%, despite a significant decrease in inflation (negative IGP-M for most of the year), and profitability, with an EBITDA margin of 26%, the highest level in recent years. These results were achieved through a record-breaking NPS, eNPS at excellence level, and investments in products.

In Business Performance, we had the successful succession at RD, the transition from a single to multi-product platform and acquisitions that complemented our portfolio. Revenue growth accelerated to over 40% and the EBITDA margin was close to 5%, even though the RD Summit doubled in size and was held in São Paulo for the first time.

In Techfin, the TOTVS TECHFIN joint venture was completed, enabling Supplier and the organic operation to have access to funding that is both broad, stable, and cost-competitive. A vast world of opportunities is open to be explored within the Management customer base.

In the corporate perspective, we created the new position of Vice President of Customer Journey, whose purpose is to identify and capitalize on opportunities for converging offers between dimensions, further accelerating cross-selling.

In this sense, at our strategic kick-off at the beginning in January 2024, the slogan was: "3 Dimensions, one destination".

Regarding the development of the sustainability and ESG agenda, for us, ESG is a business premise, that is, there is no separation between business and ESG, as ESG is the business; there are no barriers that separate them; it is intrinsic to everything we do. In this sense, I highlight our initiatives aimed at developing solutions for measuring and managing the socio- environmental impact on our clients' operations; working together with IOS that contributes to the productive inclusion of young people and people with disabilities in the labor market; applying the highest standards of governance in our operations and adhering since 2014 to the Ethos Institute's Business Pact for Compliance and Anti-corruption, besides the United Nations (UN) Global Compact, which reinforce our commitment to promoting sustainability. Through our responsible and sustainable approach, we have achieved everything we set out to accomplish; ethics, transparency, integrity, and compliance are non-negotiable values for us.

Dennis Herszkowicz

CEO

At TOTVS, our vision hasn't changed: To believe in a Brazil that makes it happen! With all this determination that we are working towards 2024.

6 TOTVS / INTEGRATED REPORT / 2023

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1

ABOUT

2

WE BUILD RELATIONSHIPS

3

PEOPLE WHO MAKE

4

COLLABORATION THAT

5

ENVIRONMENTAL

6

FINANCIAL

APPENDIX

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OF TRUST

A DIFFERENCE

MAKES US STRONGER

MANAGEMENT

RESULTS

Hence, 2023 was another year of achievements, in which we ended up in a competitive position and even stronger than when we began. Our differentials, combined with a recurring business model and high levels of renewal, which are a result of the relevance

and quality we offer our customers, makes Management an extremely solid dimension and, with the new dimensions, which have significantly increased our addressable market, giving us a real chance to further increase these differentials, making us even more relevant. In other words, becoming trusted advisors, especially for the SMB. This is a privileged position. TOTVS stands out as a one-of-a-kind company, difficult to replicate.

In a year in which we have had so many changes, greater volatility in quarterly results was to be expected than we are used to. The world is still adjusting to the effects of the pandemic and in our specific case, the creation of the

3D ecosystem and M&As have been introducing new and different dynamics. Despite this, our strategy remains quite simple: to make the business dimensions solid and self-sustaining, all the while constructing an integrated customer journey

The analysis of quarterly results and their variations holds great importance. As a publicly listed company, it is

our standard practice to do this on a

continuous basis. Nevertheless, there are instances when examining a longer time line can be more enlightening and can provide superior insights compared to focusing on a single quarter. We believe that it is the situation for the 4Q23. It is because we had several elements that reduced the short-term result. They totaled around R$34 million. In Management, we had: (i) impacts on Dimensa, which delivered a weak quarter, with an EBITDA Margin of less than 5%, (ii) one-off fluctuations in the contingency line and (iii) the healthy "problem" of increased ILP (Long-Term Incentive) costs because of the appreciation of shares. In Business Performance, we held the RD Summit with great success, with a structure twice as large as in 2022, and provided with a series of innovations for RD Station and for the entire ecosystem. In Techfin, we experienced: (i) the convergence of historical seasonal factors associated with agricultural crops, and (ii) the impacts of adjustments in the funding framework which are typically advantageous, although they may present oscillations during this phase of construction.

Let me wrap up this message by discussing a little more about Techfin. Despite this business unit presenting a modest contribution for the consolidated result, it has a huge potential for business and both business units (Supplier and "organic Techfin")

are currently undergoing structural changes. We have full confidence that we are establishing a strong business. We communicated to the market that this construction requires additional investments, generating a kind of "J curve" in the results. This is exactly what we are observing. At the Supplier, in addition to margins that are already around 40%, we have favorable winds, as the Selic rate falls and a more flexible, efficient, and affordable funding structure is put in place (although this may cause some fluctuations in the initial quarters) and organic Techfin is diligently adhering to Opex guidance.

At TOTVS, our vision hasn't changed: To believe in a Brazil that makes it happen! With all this determination that we are working towards 2024, committed to continuing to invest in the transformational movement of expanding our unique and innovative 3D ecosystem, which is changing the rules of the competitive game. We continue to believe that everyone can grow, and that investing in technology is essential to turning challenges into opportunities.

Wishing all stakeholders a year of

2024 filled with good health and great accomplishments. I extend my thanks to each one of you for making 2023 a successful year.

Dennis Herszkowicz

CEO

7 TOTVS / INTEGRATED REPORT / 2023

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WE BUILD RELATIONSHIPS

3

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FINANCIAL

APPENDIX

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OF TRUST

A DIFFERENCE

MAKES US STRONGER

MANAGEMENT

RESULTS

Highlights of the year

Record number of entries in the

2nd edition of the

Performance

• TOP 500 in the Financial Times ranking of companies on the continent with the highest growth between 2018 and 2021. Only 28 companies in this ranking
  are Brazilian.
• We are featured on LinkedIn's B2B
  Leaderboard list, which highlights the work of B2B brands.
• Featured in Bloomberg Línea's list of the
  15 best-performing CEOs in Latin America.

• Winner of the Aberje Awards in the Event category, with the TOTVS
  Universe
• The Company was elected "Most Honored Company" in the MidCap ranking of the Technology, Media and Telecommunications (TMT) industry according to the "The Latam Executive Team 2022" survey. It was recognized in all 8 categories of the General and
  MidCap rankings, with emphasis on the first place positions in the Combined, Sell Side, and Buy Side ranking in all MidCap TMT categories.

Technology

2nd place

in the Information Technology category and 35th in the overall ranking of the 150 most innovative companies according to the

"TOTVS Brasil que FAZ" Award.

+1 Million

followers on our LinkedIn profile.

We obtained approval from CADE to operate our joint venture with Itaú,

TOTVS TECHFIN.

ESG

• 6th place in the Technology category of the Merco ESG Responsibility ("Merco Responsabilidade ESG") ranking.
• Featured in the Telecom, Technology, and
  Media category in Exame magazine's 2023 Best of ESG ("Melhores do ESG 2023").
• We became part of IDIVERSA, the inaugural
  Latin American index focused on diversity. This index is made up of companies that are leading the way in the ESG agenda.
• 3rd place in ESG/Governance in the TI&Telecom category of the Época Negócios 360º Yearbook.
• Achievement of the Pro-Ethics Seal of the
  Office of the Comptroller General ("Selo Pró- Ética da Controladoria-Geralda União, CGU"),

granted to companies that demonstrate their commitment to practices of integrity, compliance, and transparency.

• The Great Place to Work award recognized us twice, highlighting us as one of the best
  IT companies to work for in the country and as one of the 150 Best Companies to Work for in Brazil.
• We were honored to receive the Human
  Rights and Diversity Seal for the third year in a row, an initiative by the City Hall of Sao Paulo. Our efforts in social investment through our Institute for Social Opportunity (IOS) earned us recognition in the Youth categories, while our commitment to empowering people with disabilities was acknowledged through the Speed to Hero Program.

2023 edition of the "Valor Inovação Brazil" Award.

8th place

in the IT&Telecom sector ranking, in the 23rd edition of Valor 1000.

10th place

in the IT&Telecom category of the 2023 Best and Largest ("Melhores e Maiores")

of Exame magazine.

8 TOTVS / INTEGRATED REPORT / 2023

ABOUT THIS

1

ABOUT

2

WE BUILD RELATIONSHIPS

3

PEOPLE WHO MAKE

4

COLLABORATION THAT

5

ENVIRONMENTAL

6

FINANCIAL

APPENDIX

REPORT

TOTVS

OF TRUST

A DIFFERENCE

MAKES US STRONGER

MANAGEMENT

RESULTS

About TOTVS

1 Who we are / Three business dimensions, one single destination / Information Security and Data Protection and Privacy / Sustainability management / Materiality

Who we are: technology from Brazil to the world

[GRI 2-1]

TOTVS is our name, derived from the Latin word for everything, everyone, and totality. Our company holds the title of the largest technology firm in Brazil and ranks among the top software developers worldwide. Going far beyond ERP, we offer a robust and complete ecosystem of products and services for the digitalization of business that includes management software, financial services, and business performance solutions. We aim to

leverage the results and growth of companies through technology to boost more productivity, efficiency, profitability, growth, and competitiveness in their operations.

TOTVS, renowned for its solid standing and reputation in the market, has expanded its operations and became a trusted strategic partner for companies both in Brazil and worldwide. As an originally Brazilian company, we believe in a "Brazil that gets things done" and support the growth and sustainability of thousands of businesses and entrepreneurs, across the entire country, through technology. We have a unique culture and an rich entrepreneurial tradition that allows us to serve companies of all profiles and maturity levels, as needed, be it small, medium, or large.

Undisputed leader in ERP with 55% market share

in Brazil (Gartner)

We operate in 12 market segments

70+ thousand

customers between micro, small, medium, and large companies

11 Consolidating Franchises spread

throughout Brazil to serve our customers

38 franchised territories

and 50+ offices

throughout Brazil and Latin America

Development centers in Brazil, Mexico, and the United States

10 TOTVS / INTEGRATED REPORT / 2023

ABOUT THIS

1

ABOUT

2

WE BUILD RELATIONSHIPS

3

PEOPLE WHO MAKE

4

COLLABORATION THAT

5

ENVIRONMENTAL

6

FINANCIAL

APPENDIX

REPORT

TOTVS

OF TRUST

A DIFFERENCE

MAKES US STRONGER

MANAGEMENT

RESULTS