Totvs
Investor Relations

Why TOTVS?

#
1. Leadership Position and Brand

We are a Brazilian multinational standing as Brazil’s leading ERP company with over 50 percent market share. In Latin America, we have a 30-percent share in the ERP market, according to a survey conducted by Gartner. We estimate that our clients’ aggregate revenues in 2019 represented approximately R$1.6 trillion.

We are the 25th most valuable brand in Brazil in the Interbrand ranking for 2020, and ours is the only technology brand in that ranking, which we believe is a valuable asset that contributes to attracting new clients, as well as the best and most innovative tech professionals in the software industry. TOTVS was the only Brazilian IT company ranked in “The 2018 Global Innovation 1000 Study”, which is published annually by the consulting firm Strategy&, associated with PwC.

Our leadership position affords us broad access to the various market segments we serve and enables us to offer several products in a verticalized manner for both new and existing clients of all sizes, including cross-selling opportunities. We also believe that because of our solid reputation, we can bring outstanding professionals, partners and clients to our open ecosystem, keeping pace with and integrating evolving demands while anticipating future trends.

2. Distribution Platform

TOTVS is present all over the Brazilian territory and has clients in 41 countries. This great capillarity is the fruit of our strategy of expanding through branches and exclusive channels and franchises, which was rolled out in the 1990’s and allows us to be close to our clients at all times, to better learn about their business and the specificities of areas where they operate, and to earn their trust.

We believe our distribution platform is a strong edge that, with a local and digital presence, can serve companies of all sizes.

In the large corporation segment, we have a specialized division with skilled professionals trained in each industry served to provide not only a specialized service, but also support and advisory.

In the small and medium-sized business segment, we have five owned units and 52 franchised territories. We believe that this capillarity of our sales force makes for unique knowledge of our clients’ needs, as well as for optimized sales and implementation costs. Our franchisees operate on an exclusive basis and are compensated not only based on sales made, but also according to recurring revenues from software, which we believe motivates them to keep a high degree of alignment with our interests, particularly in maintaining long-term relationships with our clients.

To serve microbusinesses, we operate a multi-channel system through partners, retailers and resellers, with enables us to reach all regions and large urban centers in Brazil.

Lastly, TOTVS Store enables us to set up a digital channel to interact with our clients, particularly for cloud computing applications.

3. A broad, diverse and flexible portfolio

Our portfolio covers a complete horizontal offering, with Management solutions, including ERP, HR, Vertical, and Innovation Platforms; Techfin; and Business Performance, including CRM and Analytics. We believe our solutions are broad, diverse and flexible, handling and meeting the needs of all our clients in the most varied of verticals in 12 business segments (agribusiness, building and construction, distribution, education, financial services, travel and hospitality, legal, logistics, manufacturing, health care, services, and retail).

We supply companies of all sizes with cloud or on-premises solutions. Our solutions are scalable and modular and can be easily configured to enable specific functionalities for different business segments and sizes with consistent integration.

Furthermore, the rejuvenation and expansion of TOTVS’s portfolio have led clients to SaaS and cloud models. This model is lighter, exponential, accessible and standardized. This means less need for implementation and customization services.

4. Business model with a track record of growth and profitability

Our core business model consists of offering and developing, in a constantly innovative way, ERP systems that are reliable and efficient to securely process corporate information, making them a tool of paramount importance to our clients in managing their business, where we believe we have deep expertise.

Our business model takes a client-focused approach, comprising a broad product portfolio, an aftersales team that includes experts in promoting cross-selling and upselling, and centralized implementation and maintenance teams. We make it more simple and easier for our clients to contract and use our solutions through a variety of sales methods that adjust to each client’s reality according to their stage of maturity. This enables us to support our clients’ evolution, positioning ourselves as a long-term partner and expanding our services and cross-selling efforts throughout the life cycle of our partnership.

This business flexibility allows us to grow along with our clients, supporting long-term relationships. Over the past eight years, our gross revenues increased by more than 2.10 times, with a renewal rate of 98.5 percent as of December 31, 2020. We believe these factors, combined with a recurring relationship model (monthly payments with automatic annual renewal of contracts), confer predictability and profitability to our business.

5. Acquisition Track Record

We believe we have solid capacity and track record to identify, negotiate and integrate acquisitions over more than 20 years, creating value for the Company by bringing about significant synergies.

Since 2006, we have acquired more than 25 companies that have strengthen our core business and our ability to break into new business segments. Our executives are experienced in the process of both acquiring and integrating new companies into our business, which boosts potential synergies to be achieved with a focus on increasing cross-selling, reducing churn, expanding services and solutions offered, cutting costs, improving governance and expanding sales using the TOTVS brand. Significant examples of our ability to integrate are the RM and Datasul acquisitions, which were both transformational to the Company due to their size at the time of acquisition.

 

6. An experienced and skilled executive team and strong corporate governance

We believe the extensive experience and in-depth knowledge of our executive team has given us a decisive competitive edge in the dynamic market where we operate. Our Management currently consists of an engaged, young team boasting 18 years’ business experience, on average, in the tech sector, approximately 9 years of which, on average, have been exclusively dedicated to the Company. These highly qualified professionals play a key role in growing our business, creating a culture of operational excellence, transparency and efficiency, and setting high standards of governance and ethics.

We successfully completed in 2019 the challenging succession process at one of the world’s largest management software companies, preserving the legacy of the company’s founder, who remains supporting the Company as the Chairman of the Board. We will keep the same premise that guided us since the very beginning: innovation, entrepreneurship and determination; relying on technology as the driver of competitiveness and productivity in the country; and working daily to offer the best solutions and increasingly more digital experiences to our clients.

The expertise and skills of our executives will be key to spotting growth opportunities, making acquisitions, successfully integrating acquired assets and implementing the strategy of M&A and partnerships.

In addition to being listed at the highest governance level of B3, the special segment known as Novo Mercado (“New Market”), we are a true corporation, with six out of the seven members of our board of directors being independent and highly qualified. Our audit committee consists solely of independent members of our board of directors, to which our internal audit team reports directly. Our Audit Committee is composed of independent members of our Board of Directors and an external member, to whom our internal audit team reports directly.

On January 2, 2020, TOTVS was included in the Ibovespa index. Its pioneering spirit continues as it now becomes the first software company to be included in the most important stock index in Brazil. In addition, being admitted to the Ibovespa index in early 2020 and to the MSCI indices in December 2020, and B3’s IBrX 50 starting in 2021, the achievement of the awards “Institutional Investor”, “Best of the Stock Exchange 2020” from Infomoney, and “Best technology companies to work” at Great Place to Work (GPTW) are important acknowledgments of our work, of TOTVS ‘leadership position, as a result of its strategy, operational execution and the highest standards of excellence in corporate governance.