TOTS3 TOTVS

TOTVS S.A., originally founded in 1983 under the name Microsiga Software S.A., is a Brazilian technology company focused on developing enterprise management software. The company was created by Ernesto Mário Haberkorn and Laércio Cosentino, who began with software for personal computers and then shifted the business toward integrated management systems aimed mainly at small and medium-sized companies. Over the 1990s, the company structured a growth model based on exclusive franchises for distributing its solutions, which supported its nationwide expansion. In 2005, it adopted the name TOTVS S.A. and, the following year, went public on the then BOVESPA, now B3 S.A. – Brasil, Bolsa, Balcão, joining the Novo Mercado corporate governance segment and listing its common shares under the ticker TOTS3.

TOTVS’s trajectory includes a continuous cycle of acquisitions and portfolio expansion. In 2006, it acquired RM Sistemas S.A. and structured its business consulting activities, followed by the acquisition of Datasul in 2008, a move that consolidated its presence in the Brazilian management systems market. Starting in 2011, it began organizing its software offerings by economic sector, deepening its verticalization by industry. In 2014, it launched TOTVS Cloud operations, incorporating cloud services into its business model, and in 2015 it launched the TOTVS Intera subscription commercial model, reinforcing revenue recurrence. Executive leadership succession occurred in 2018, with Dennis Herszkowicz becoming CEO and Laércio Cosentino moving to the chair of the Board of Directors, in a move that maintained continuity in the growth and diversification strategy.

In recent years, the company has structured a business ecosystem based on three main operating units: Management, RD Station and Techfin. The Management unit is the core of the model, concentrating enterprise resource planning (ERP) systems, human resources solutions and specialized vertical software for 12 economic sectors, as well as specific solutions for micro and small businesses. The RD Station unit was consolidated following the acquisition of RD Station in 2021, incorporating a platform for digital marketing automation, sales, e-commerce and conversational commerce. The Techfin unit concentrates initiatives in integrated B2B financial services embedded in management systems, including credit products, cash management and payments mainly targeted at small and medium-sized companies, with origins in acquisitions such as Supplier and the creation of TOTVS Techfin S.A.

TOTVS’s business model is based on software and technology services aimed at digitalizing business processes, with a strong emphasis on recurring revenue from subscriptions, support and technological evolution. In fiscal year 2024, the Management unit accounted for most of consolidated net revenue, totaling approximately R$ 4.7 billion, while RD Station and Techfin contributed smaller, though growing, amounts, reinforcing the predominance of the management software segment in the company’s economic profile. TOTVS also reports metrics such as ARR (Annual Recurring Revenue) and Adjusted EBITDA to track the operating performance of its different units, reflecting the relevance of long-term contracts and its installed customer base in revenue generation.

The TOTVS Management portfolio covers a broad set of solutions in five main layers. The first comprises back-office ERPs, which integrate functions such as finance, contracts, inventory, sales and human resources, meeting Brazilian tax and regulatory requirements. The second includes vertical software for 12 economic sectors, such as agribusiness, manufacturing, logistics, services and others, designed to address the specific processes of each value chain, for example, student management at educational institutions, inventory management in industrial companies and project management in construction. The third layer includes innovation platforms with open architecture and a focus on productivity, collaboration and data analytics. The fourth layer consists of solutions for micro and small businesses, with offerings tailored to smaller companies. Finally, the company offers associated services in implementation, cloud, corporate education and consulting, complementing its software offering.

In the business performance segment, the RD Station unit concentrates solutions focused on digital marketing, lead generation and nurturing, campaign automation, sales funnel management and integration with e-commerce platforms. The acquisition of RD Station in 2021 marked TOTVS’s entry into a broader set of B2B technologies focused on commercial performance. In 2022, the acquisition of Tallos strengthened operations in conversational channels, and in 2023 the acquisitions of Lexos and Exact Sales expanded capabilities in integrating physical and digital retail and in sales engagement. The company also established a strategic partnership with Shopify to distribute e-commerce software solutions in Brazil, connecting the management ecosystem to the operation of online stores and marketplaces.

In the Techfin unit, TOTVS operates a financial services platform integrated into its clients’ management systems, with a primary focus on small and medium-sized enterprises. The offering includes credit solutions, receivables anticipation, working capital, payroll-deductible loans, payment management and financial management tools, bringing together products originating from Supplier and from TOTVS Techfin itself. In 2023, the joint venture with Itaú Unibanco S.A. was completed, combining access to large-scale bank funding with the management data and processes of TOTVS customers. This structure aims to expand the addressable market in B2B financial services and reinforce the integration between management software and transactional financial products, although most of the company’s consolidated revenue remains tied to software and technology services.

TOTVS has broad geographic reach, with a predominant focus on Brazil and complementary international operations. The company operates with six regional branches in Brazil (São Paulo, Rio de Janeiro, Recife, Minas Gerais, Rio Grande do Sul and the Interior of São Paulo State), three units focused on large companies, the public sector and healthcare, and a network of 38 franchised territories, organized into 11 consolidating franchises. Its technology development structure includes nine development centers in Brazil, located in cities such as São Paulo, Belo Horizonte, Joinville, Porto Alegre, Florianópolis, Cascavel, Assis, Ribeirão Preto and Goiânia. Abroad, it maintains five branches (Argentina, Chile, Colombia, United States and Mexico) and two development centers in the United States and Mexico, serving a total base of around 70,000 clients in more than 40 countries, with a significant portion of this base made up of companies listed on B3.

On the regulatory front, TOTVS is mainly exposed to requirements related to tax software and personal data protection. To commercialize certain tax applications and solutions linked to the Electronic Consumer Invoice (Nota Fiscal ao Consumidor Eletrônica), the company needs approvals from state Treasury Departments (Secretarias da Fazenda), in line with resolutions of the Permanent Technical Committee (COTEPE) and local rules on equipment approval and application certification. In parallel, the company operates under the General Data Protection Law (LGPD), observing the guidelines of the National Data Protection Authority (ANPD). TOTVS has structured privacy policies, a service channel for data subjects, appointed a data protection officer (DPO) and, in 2023, implemented privacy management tools and set up a Data and Artificial Intelligence Governance area, aiming to strengthen data controls, mitigate incident risks and reinforce regulatory compliance.

In terms of environmental, social and governance (ESG) practices, TOTVS has sought to recognize and demonstrate its policies through indexes and certifications. TOTS3 shares were included in B3’s Great Place to Work index, reflecting policies related to workplace environment and people management, and the company was included in the iDIVERSA B3 index, linked to diversity and inclusion. In 2023, it also obtained the "Empresa Pró Ética" (Pro-Ethics Company) seal, associated with integrity and anti-corruption practices, and recorded an upgrade in its ESG rating by MSCI from “A” to “AA.” In parallel, rating agencies such as Fitch Ratings assigned a long-term national scale credit rating at high levels, with a positive outlook, indicating a consistent financial profile for a software company with shares traded on B3 and a relevant presence in the Latin American technology market.