TOTS3

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 born from the initiative of Ernesto Mário Haberkorn and Laércio Cosentino, who began activities focused on software for personal computers and then steered the business toward integrated management systems aimed mainly at small and medium-sized enterprises. Throughout the 1990s, the company structured a growth model based on exclusive franchises for the distribution of its solutions, which contributed to its nationwide expansion. In 2005, it adopted the name TOTVS S.A. and, in the following year, went public on the then BOVESPA, now B3 S.A. – Brasil, Bolsa, Balcão, joining the Novo Mercado corporate governance segment and having its common shares traded under the ticker TOTS3.

TOTVS’ 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. From 2011 onward, it began organizing its software offerings by economic segments, deepening sector verticalization. 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 recurring revenue. Executive leadership succession took place in 2018, with the arrival of Dennis Herszkowicz as CEO and the transition of Laércio Cosentino to Chairman of the Board of Directors, in a move to ensure continuity of 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 represents the core of the model, concentrating enterprise resource planning (ERP) systems, human resources solutions and specialized vertical software for 12 economic sectors, in addition to specific solutions for micro and small businesses. The RD Station unit was consolidated through 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 B2B financial services integrated into management systems, including credit products, cash management and payments aimed mainly at small and medium-sized enterprises, with origins in acquisitions such as Supplier and in the creation of TOTVS Techfin S.A.

TOTVS’ business model is based on software and technology services aimed at the digitalization of business processes, with a strong emphasis on recurring revenues from subscriptions, support and technological evolution. In fiscal year 2024, the Management unit accounted for most of the consolidated net revenue, totaling approximately R$ 4.7 billion, while RD Station and Techfin contributed smaller, albeit 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 monitor the operating performance of its different units, reflecting the relevance of long-term contracts and its installed client base in revenue generation.

The Management portfolio of TOTVS covers a broad set of solutions across five main layers. The first includes back-office ERPs, which integrate functions such as finance, contracts, inventory, sales and human resources, meeting Brazilian tax and regulatory requirements. The second encompasses verticalized software for 12 economic sectors, such as agribusiness, manufacturing, logistics, services and others, designed to handle the specific processes of each value chain—for example, student control in educational institutions, inventory management in manufacturing 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 provides associated services for implementation, cloud, corporate education and consulting, complementing its software offerings.

In the business performance segment, the RD Station unit concentrates solutions geared toward 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’ entry into a broader set of B2B technologies focused on commercial performance. In 2022, the acquisition of Tallos strengthened its presence in conversational channels, and in 2023 the acquisitions of Lexos and Exact Sales expanded its capabilities in integrating physical and digital retail and in sales engagement. The company also established a strategic partnership with Shopify for the distribution of 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 originated at Supplier and at TOTVS Techfin itself. In 2023, the joint venture with Itaú Unibanco S.A. was concluded, combining access to large-scale banking funding with the management data and processes of TOTVS’ clients. 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 a broad geographic footprint, with a predominant focus on Brazil and complementary international operations. The company operates 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 enterprises, the public sector and healthcare, as well as 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, the 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 relevant 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 the protection of personal data. To market certain tax applications and solutions related to the Electronic Consumer Invoice (Nota Fiscal ao Consumidor Eletrônica), the company needs approvals from state Finance Departments (Secretarias da Fazenda), following acts issued by the Permanent Technical Council (COTEPE) and local rules on equipment certification and application approval. In parallel, the company operates under the framework of 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 created a Data and Artificial Intelligence Governance area, with the goal of strengthening data controls, mitigating incident risks and reinforcing regulatory compliance.

In terms of environmental, social and governance (ESG) practices, TOTVS has sought to recognize and highlight its policies through indexes and certifications. TOTS3 shares have been included in B3’s Great Place to Work index, reflecting policies related to the work environment and people management, and the company was added to 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 of its ESG rating by MSCI from “A” to “AA”. In parallel, rating agencies such as Fitch Ratings assigned long-term national scale credit ratings at high levels, with a positive outlook, indicating a consistent financial profile for a software company with shares traded on B3 and a significant presence in the Latin American technology market.