Highlights of the period

Transcription

1 GROWTH IN REVENUES AND ADJUSTED EBITDA São Paulo, November 06, A Linx S.A. (B3: LINX3; Bloomberg: LINX3:BZ and Reuters: LINX3.SA), the leader in management software for retailers, announced its consolidated results for the third quarter of 2017 (). The Company s operating and financial information is presented based on consolidated figures, as per the Brazilian Corporations Law (Lei das S.A.) and accounting practices issued by the Accounting Pronouncements Committee (CPC) and International Financial Reporting Standards (IFRS). The comparisons refer to variations between to 3Q16, to 2Q17 and 9M17 to 9M16, except where otherwise noted. Highlights of the period Net revenues grew 17.2% over 3Q16. Recurring revenues grew 13.4% compared to 3Q16 and representing 82% of total gross revenues. Adjusted EBITDA grew 18.6% compared to 3Q16, with adjusted EBITDA margin of 25.2%, 20 bps higher than the same period of the previous year. Adjusted cash earnings of R$28.9 million in the, 27.9% higher than 3Q16. Client renewal rate of 98.8% in the quarter, 10 bps higher than in the 2Q17. About the shares Equity 165,110,342 shares Market cap (11/03/2017) R$3.5 billion Free float (09/30/2017) 135,905,702 shares (81.8%) Conference Calls Tuesday, November 07, 2017 Portuguese 10:00 am (BR), 07:00 am (EST) English 12:00 am (BR), 09:00 am (EST) Phone: or Code: LINX Table 1: Financial highlights (R$ '000) 3Q16 Δ% 2Q17 Δ% 9M17 9M16 Δ% Number of clients 45,157 40, % 44, % 45,157 40, % Recurring revenues 135, , % 132, % 397, , % Services revenues 30,109 21, % 22, % 76,701 65, % Gross operating revenues (GOR) 165, , % 154, % 474, , % Net operating revenues (NOR) 144, , % 135, % 414, , % Ajusted EBITDA 36,518 30, % 34, % 104,191 92, % Ajusted EBITDA margin 25.2% 25.0% 20 bps 25.2% 0 bps 25.1% 25.6% -50 bps Ajusted Net income 19,987 17, % 27, % 73,156 49, % Ajusted Cash earnings 28,890 22, % 37, % 100,678 67, % 1

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3 Recent events ShopBack acquisition On October 18, 2017, the Board of Directors of the Company approved the acquisition of 100% of the shares of ShopBack, leader in technologies for retention, reengagement and recapture through Big Data and Intelligence for engagement. We estimate that about 85% of the Brazilian e-commerce go monthly thru this cloud platform, turning Linx into the leader in this segment. The gross revenue of ShopBack in the last twelve months was R$15 million. For the acquisition, Linx will pay R$39.0 million in one installment. Additionally, subject to the achievement of financial and operating targets, Linx could pay up to R$17.6 million during the next three years. This acquisition is in line with the Company's strategic goal of acquiring technologies for retail. In this case, the focus is to strengthen our portfolio of solutions that increase the customers profitability, opening new markets and reaching new customer profiles. New CFO On October 16, Dennis Herszkowicz left the positions of Chief Financial Officer (CFO) and Investor Relations Officer (IRO) to become Vice President of the Company, focused on the expansion into new markets. As part of the new structure, the areas of M&A, TEF and Payments and Retail Intelligence will report directly to Dennis. On the same date, Linx's Board of Directors elected Pedro Moreira to the positions of CFO and IRO. Pedro has 23 years of professional experience in large companies such as Cnova, Wal-Mart, C&A and Ambev and has an extensive experience in Accounting, Controlling, Legal, Loss Prevention, Planning, Risk, Tax, and Treasury. 3

4 Operating and financial results Operating performance At the end of, Linx reached 45,157 clients, an organic addition of 272 clients. Graph 1: Number of Clients 39,060 39,777 40,202 40,723 43,966 44,467 44,885 45,157 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 The client renewal rate reached 98.8%, 10 bps higher than the 2Q17. Additionally, the Company s largest client represented 2.5% of revenues and the top 100 customers represented 28.1%. The high renewal rate and low customer concentration reflect the broad, diversified and loyal customer base of the Company. Graph 2: Clients concentration (% of total revenues) 2.5% Largest client 28.1% 100 largest 71.9% Others In, the average ticket of recurring revenues from new organic clients was R$ per month, 16.9% higher than the 3Q16. We remind that this metric may have some volality given the profile of new customers each quarter. 4

5 Operating revenue Table 2: Operating revenues (R$ '000) 3Q16 Δ% 2Q17 Δ% 9M17 9M16 Δ% Recurring revenues 135, , % 132, % 397, , % Revenues from services 30,109 21, % 22, % 76,701 65, % Gross operating revenues 165, , % 154, % 474, , % Sales tax (17,737) (13,923) 27.4% (16,315) 8.7% (49,475) (41,648) 18.8% Cancellations and rebates (3,391) (3,852) -12.0% (3,172) 6.9% (10,391) (13,203) -21.3% Net operating revenues 144, , % 135, % 414, , % In, recurring revenues reached R$135.7 million, a growth of 13.4% over 3Q16 and 2.6% compared to 2Q17, representing 82% of gross operating revenues. This result demonstrates the resiliency of the business model based on recurring revenues, cross-sell, lock-in with the client base and diversification in terms of verticals, geographies and portfolio, especially considering the sharp decrease in the IGPM index (the accumulated index has been negative during the last months). In this quarter we have already seen signs of improvement in the performance of our customers in general. Even though this still does not mean a revamp in the pace of store openings in the short-term, the business environment is more positive. Cross-sell continued to be the main driver of organic growth. In this regard, the new initiatives that Linx has been developing, in which it creates new markets and new types of clients, may, over the next quarters, contribute to sustain this growth. It is important to mention that we started to consolidate Synthesis results as of August. The new acquisitions, which have opened up new addressable markets, are also expected to start contributing to the organic growth of the recurring revenue in the coming quarters. Services revenues reached R$30.1 million, 40.2% higher than 3Q16. In comparison with the 2Q17, services revenues increased 32.9%. These accelerations came mainly from Synthesis, that besides its focus in very large accounts, has a faster growth rhithm, which generates a much higher proportion of project revenues (non-recurring) than Linx s average. In any case, we reinforce that Linx s strategy is to simplify and accelerate the processes of implementation, customization and training of its customers, thus reducing the need for services and making the solutions more affordable. The migration to the cloud remains a key factor in this movement. Currently, around 45% of recurring revenues already come from offers which are totally based on the cloud. In 2013, this percentage was 30%. Deferred revenues in the balance sheet (service revenues already invoiced, but not recognized, given that the service has net yet been delivered) were R$9.2 million by the end of. In the following months, as services are delivered, these revenues will be dully recognized. The average price of the recognized service hour in was R$ The combination of recurring and service revenues translate into the gross operating revenues (GOR). In, the GOR was R$165.8 million, an increase of 17.4% over 3Q16. 5

6 Graph 3: Gross Revenues (R$ 000) 141,146 21, ,766 30, ,912 22, ,766 30, , , , ,657 3Q16 2Q17 Recurring revenues Service revenues Net operating revenues (NOR) reached R$144.6 million in, representing an increase of 17.2% compared to the R$123.4 million in 3Q16. Graph 4: Net operating revenues (R$ 000) 123, , , ,638 3Q16 2Q17 Gross income, gross margin and cost of sold services Table 3: Cost of sold services (R$ '000) 3Q16 Δ% 2Q17 Δ% 9M17 9M16 Δ% Cost of sold service (42,335) (36,713) 15.3% (40,889) 3.5% (123,724) (107,194) 15.4% Gross profit 102,303 86, % 94, % 290, , % Gross margin 70.7% 70.2% 50 bps 69.8% 90 bps 70.1% 70.5% -40 bps The gross margin was 70.7% in, a growth of 90 bps versus 2Q17 and 50 bps in comparison with 3Q16, both as a result of Linx's increased operational efficiency in the period, despite recent acquisitions. 6

7 Operating expenses Table 4: Operating expenses (R$ '000) 3Q16 Δ% 2Q17 Δ% 9M17 9M16 Δ% Operating expenses (81,841) (69,858) 17.2% (82,539) -0.8% (238,623) (203,661) 17.2% General and administrative expenses (30,563) (23,527) 29.9% (28,544) 7.1% (87,378) (68,355) 27.8% Depreciation and amortization (15,726) (13,994) 12.4% (20,976) -25.0% (52,103) (41,037) 27.0% Selling expenses (18,264) (16,244) 12.4% (16,899) 8.1% (51,730) (45,914) 12.7% Research and development (16,855) (14,795) 13.9% (14,571) 15.7% (47,406) (44,396) 6.8% Other operating expenses, net (433) (1,298) -66.6% (1,549) -72.0% (6) (3,959) -99.8% Income before financial income (expenses) and taxes 20,462 16, % 11, % 51,806 52, % In the third quarter of 2017, operating expenses, which include administrative expenses, depreciation and amortization (non-cash), sales and marketing, research and development and other operating expenses, totaled R$81.8 million, 17.2% higher than 3Q16 and 0.8% below the 2Q17. It is important to highlight that we had adjustments in general and administrative expenses and, more significantly, in depreciation and amortization during the second and third quarters of 2017, related to the move to new locations in São Paulo and Recife. Excluding these non-recurrent expenses, which will be detailed below, total operating expenses reached R$81.5 million, 16.7% higher than 3Q16 and 6.8% higher than 2Q17. Graph 5: Operating expenses (R$ 000) 56.6% 56.6% 60.9% 56.6% 69,858 81,841 82,539 81,841 3Q16 Operating expenses 2Q17 % NOR General and administrative expenses, excluding depreciation and amortization, increased 200 bps, as a percentage of NOR, when compared to 3Q16. This increase is mainly explained by: (i) non-recurring expense related to the move of Linx s headquarters in São Paulo; (ii) provisioning of bonuses and employees profit sharing; and (iii) the acquisition of Synthesis in July When compared to 2Q17, general and administrative expenses remained stable as a percentage of NOR. Excluding the non-recurring expenses related to the move of Linx s headquarters in São Paulo in the, general and administrative expenses increased 180 bps over 3Q16 and were 70 bps lower in comparison with the previous quarter. 7

8 Graph 6: General and administrative expenses ex depreciation and amortization (R$ 000) 19.1% 21.1% 21.1% 21.1% 23,527 30,563 28,544 30,563 3Q16 2Q17 General and administrative expenses ex depreciation and amortization % NOR Depreciation and amortization expenses, non-cash impact, droped 40 bps between and 3Q16, as a result of the reduction in amortization of goodwill generated by two companies acquired in 2011 and Compared to the previous quarter, depreciation and amortization expenses were 460 bps lower, due to the normalization of this account, after the non-recurring write-off of fixed assets from the former headquarters in São Paulo, in the amount of R$5.1 million, in the 2Q17. Excluding this effect, depreciation and amortization expenses were 80 bps lower. The schedule of accounting goodwill amortization (PPA) is in the attachement V. Graph 7: Depreciation and amortization (R$ 000) 15.5% 11.3% 10.9% 10.9% 20,976 13,994 15,726 15,726 3Q16 2Q17 Depreciation and amortization % NOR In the, sales and marketing expenses as a percentage of NOR decreased 60 bps compared to 3Q16. This improvement is explained by the increase of operational efficiency in the Sales team. When compared to 2Q17, sales and marketing expenses remained relatively stable, increasing 10 bps as a percentage of NOR, despite the recent acquisiton ocurred in July

9 Graph 8: Sales and marketing expenses (R$ 000) 13.2% 12.6% 12.5% 12.6% 16,244 18,264 16,899 18,264 3Q16 Sales and marketing expenses 2Q17 % NOR Research and development expenses (R&D), as a percentage of NOR, decreased 30 bps compared to 3Q16, mainly explained by the increase of operational efficiency, arising from synergies generated by acquisitions made in the past. In the comparison with 2Q17, R&D expenses grew 90 bps, mainly due to the collective bargaining agreements at Linx s branches located in Minas Gerais, Pernambuco and Amazonas, where some R&D teams are concentrated. Graph 9: Research and development expenses (R$ 000) 12.0% 11.7% 10.8% 11.7% 14,795 16,855 14,571 16,855 3Q16 2Q17 Research and development expenses % NOR In the, R$8.1 million in research and development expenses were capitalized. Currently, in addition to the Omni Channel innovation, Linx has been investing to create new markets, reach new types of clients, taking advantage of opportunities generated by the cloud, big data and intelligence. An example of this is the beggining of the Retail Intelligence operation, which is already piloting with two major multinational in the consumer goods segment. 9

10 EBITDA and EBITDA margin Table 5.1 : EBITDA (R$ '000) 3Q16 Δ% 2Q17 Δ% 9M17 9M16 Δ% Net revenues 144, , % 135, % 414, , % Cost of sold services (42,335) (36,713) 15.3% (40,889) 3.5% (123,724) (107,194) 15.4% Gross profit 102,303 86, % 94, % 290, , % Operating expenses (81,841) (69,858) 17.2% (82,539) -0.8% (238,623) (203,661) 17.2% General and administrative expenses (46,289) (37,521) 23.4% (49,520) -6.5% (139,481) (109,392) 27.5% Selling expenses (18,264) (16,244) 12.4% (16,899) 8.1% (51,730) (45,914) 12.7% Research and development (16,855) (14,795) 13.9% (14,571) 15.7% (47,406) (44,396) 6.8% Other operating expenses, net (433) (1,298) -66.6% (1,549) -72.0% (6) (3,959) -99.8% EBIT 20,462 16, % 11, % 51,806 52, % Depreciation and amortization 15,726 13, % 20, % 52,103 41, % EBITDA 36,188 30, % 32, % 103,909 93, % EBITDA margin 25.0% 25.0% 0 bps 24.3% 70 bps 25.1% 25.8% -70 bps Table 5.2 : Adjusted EBITDA (R$ '000) 3Q16 Δ% 2Q17 Δ% 9M17 9M16 Δ% EBITDA 36,188 30, % 32, % 103,909 93, % Partial Earn-outs reversion - - n.a. - n.a. (2,109) (1,125) 87.5% Expenses with the move of SP and Recife branches n.a. 1, % 2,391 - n.a. Adjusted EBITDA 36,518 30, % 34, % 104,191 92, % Adjusted EBITDA margin 25.2% 25.0% 20 bps 25.2% 0 bps 25.1% 25.6% -50 bps EBITDA reached R$36.2 million in, an increase of 17.5% compared to R$30.8 million in the 3Q16. When compared to 2Q17, EBITDA was 9.8% higher. In, the EBITDA margin reached 25.0%, stable in comparison with 3Q16 and 70 bps higher than the 2Q17. In this quarter, there was a small non-recurring expense related to the move to new headquarters in São Paulo in the amount of R$0.3 million. As a result, adjusted EBITDA reached R$36.5 million in, 18.5% higher than 3Q16 and 7.2% above the 2Q17. The adjusted EBITDA margin was 25.2% in the quarter, 20 bps higher than the 3Q16, mainly explained by increased operational efficiency in the Sales and R&D structures. When compared to 2Q17, adjusted EBITDA margin remained stable. 10

11 Financial result Table 6: Net financial result (R$ '000) 3Q16 Δ% 2Q17 Δ% 9M17 9M16 Δ% Net financial result 2,525 3, % 13, % 30,968 7, % Financial income 8,452 9, % 18, % 48,217 26, % Financial expenses (5,927) (5,487) 8.0% (4,746) 24.9% (17,249) (19,251) -10.4% Income before taxes 22,987 20, % 25, % 82,774 60, % Net financial result was R$2.5 million in, a deceleration of 30.7% in comparison with 3Q16 and 81.8% over the 2Q17. This is the result of a reduction of the net cash, due to the payment of Synthesis and IOC in the period and the negative impact of the exchange rate variationover the cash used in the acquisition of Synthesis. Financial revenues is mainly comprised of short-term, high liquidity investments that are mainly bank certificates of deposit and fixed revenue funds, focused in the best-rated banks and that follow a very conservative formal policy of investments. 11

12 Income and social contribution tax Linx uses portions of goodwill amortization of acquired companies as a deduction of the base for calculating income and social contribution tax. The full schedule of goodwill amortization is in attachement VI. Among the tax incentives for technological innovation provided by Lei do Bem, the Company benefits from the deduction, for purposes of net income calculating, of the sum of expenditures made during the period in research and development, classified as operating expenses by legislation on Corporate Income Tax. Table 7 (R$ '000) 3Q16 2Q17 9M17 9M16 Income before income and social contribution taxes 22,987 20,446 25,881 82,774 60,533 Combined statutory rates 34% 34% 34% 34% 34% Income and social contribution taxes Calculated at combined statutory rate (7,816) (6,952) (8,800) (28,143) (20,581) Permanent differences Law 11,196/05 (Research and development subsidies) 2,028 1,749 2,138 6,211 5,192 Payment of interest on own capital 3, ,400 - Provision of interest on own capital payments (1,573) - 1, Difference of income and social contribution taxes (presumed profit regime) 1,245 2, ,232 5,385 Other net differences (614) (4) Deferred income ans social contribution taxes (2,909) 861 (5,222) (11,024) (1,598) Current income and social contribution taxes (421) (3,321) 752 (3,976) (8,411) Current income and social contribution rate 2% 16% -3% 5% 14% Total income and social contribution rate 14% 12% 17% 18% 17% The current spending on income and social contribution taxes, i.e. the ones that actually affected the Company s net cash position, amounted to R$0.1 thousand in and a current rate of 2%. The total current rate, which includes deferred and current taxes was 14%, slightly above the 3Q16. In addition, the decrease of the total current rate over 2Q17 is explained by the payment of interest on own capital in the period. Net income and cash earnings The adjusted net income in the was R$20.0 million, 11.1% higher than the R$18.0 million in the 3Q16 and a deceleration of 27.6% over 2Q17. Table 8: Cash earnings (R$ '000) 3Q16 Δ% 2Q17 Δ% 9M17 9M16 Δ% Net income 19,657 17, % 21, % 67,774 50, % Partial Earn-outs reversion - - n.a. - n.a. (2,109) (1,125) 87.5% Expenses with the move of SP and Recife branches n.a. 1,104 n.a. 2,391 - n.a. Write-off of fixed assets - - n.a. 5,099 n.a. 5,099 - n.a. Adjusted net income 19,987 17, % 27, % 73,156 49, % Acquisitions amortization 5,994 5, % 5, % 16,498 16, % Deferred income and social contribution taxes 2,909 (861) n.a. 5, % 11,024 1, % Adjusted Cash earnings 28,890 22, % 37, % 100,678 67, % 12

13 Given that there are tax benefits that affect the accounting results of Linx, but do not impact its cash position, the Company believes it is important to use the calculation of cash earnings, which in its case consists of adding back to net income, amortization of intangibles from acquisitions (brand, technology, client portfolio and non-compete agreements) which affect the Income Statement, but do not affect the cash position, in addition to the deferred income tax and social contribution taxes, which are a result of the goodwill amortization generated from acquisitions. In, the adjusted cash earnings reached R$28.9 million, an increase of 27.9% over 3Q16, mainly explained by the Company s organic growth, the two acquisitions of the period and gains in operational efficiency. When compared to 2Q17, adjusted cash earnings decelerated 23.9%, mainly because of the lower net financial result in the period. 13

14 Cash generation and net cash In, the Company decreased its cash position by R$47.0 million, ending the quarter with a cash balance of R$587.9 million, as a result of the acquisition of Synthesis and the payment of IOC. The average yield on the cash position in the quarter was % of CDI. The Company s gross debt at the end of the third quarter of 2017 was R$211.1 million, an increase of 18.4% versus 2Q17, being comprised of R$106.7 million in loans with the BNDES and R$104.4 million in accounts payable for the acquisition of assets and subsidiaries. It is important to highlight that Linx uses earn-outs in some acquisitions. They are always based on specific financial and operating targets and are fully booked to the maximum. The average debt cost in the quarter was 58% of CDI. The Company s net cash (cash balance minus gross debt) in was R$376.8 million. For a view of the total cash flow (cash and equivalents + financial investments), follows the statement of the total cash flow in the annex III. Graph 12: Cash flow (R$ 000) 179,071 34,032 35,518 18,961 10,000 16, , , , , ,769 Net Cash on 2Q17 Net Debt on 2Q17 Cash and equivalents on 2Q17 (1) Net cash provided by operating activities (2) Payments from acquisitions (3) CAPEX Dividends and IOC paid Net cash used in other financing and investment activities (4) Cash and equivalents on (1) Net Debt on Net Cash on Composition: (1) The sum of Cash and Financial Investments. (2) Income from the sale of fixed and intangible assets. (3) Acquisition of subsidiaries, net of cash acquired and payment of accounts payable of acquisitions from subsidiaries. (4) Payments from loans and capital increase, interest earnings from bank deposits and arise from interest earnings from bank deposits of the Balance Sheet. 14

15 Graph 12: 9M17 Cash flow (R$ 000) 119,535 52,757 53,462 30, ,205 60, , , , , ,769 Net Cash on 4Q16 Net Debt on 4Q16 Cash and equivalents on 4Q16 (1) Net cash provided by operating activities (2) Payments from acquisitions (3) CAPEX Dividends and IOC paid Net cash used in other financing and investment activities (4) Cash and equivalents on 9M17 (1) Net Debt on 9M17 Net Cash on 9M17 Composition: (1) The sum of Cash and Financial Investments. (2) Income from the sale of fixed and intangible assets. (3) Acquisition of subsidiaries, net of cash acquired and payment of accounts payable of acquisitions from subsidiaries. (4) Payments from loans and capital increase, interest earnings from bank deposits and arise from interest earnings from bank deposits of the Balance Sheet. 15

16 Capital Markets Graph 14: Share price performance since the IPO (02/07/2013 = 100) 240% LINX3: % 220% 200% 180% 160% 140% 120% 100% IBOV: % 80% 60% From the first day of trading, until the end of, Linx s shares (LINX3) have increased by 117.3%, excluding the dividends and interest on own capital paid, while the Ibovespa index increased 26.0% in the same period. The average daily trading volume, excluding the first day of trading, was R$7.9 million, with 797 daily trades. Year to date, the Company s shares have increased 13.9%, excluding dividends and interest on own capital paid, versus a +22.1% performance of the Ibovespa index in the same period. The average daily trading volume was R$10.4 million, with daily trades. 16

17 About Linx With more than 30 years of experience, Linx is a specialist in management software solutions (ERP and POS) and crosssell solutions for the retail industry in Brazil and 7 other countries in Latin America. According to IDC research, the Company is the leader in Brazil with a 40.2% of market share, offering innovative and scalable technology and deep knowledge of the value chain in each segment in which the Company operates. Linx is consolidated in the market and its expansion is sustained by a culture that welcomes new knowledge, identities, experiences and values. There are more than 3 thousand employees serving a wide and diversified base of 45 thousand retailers. With shares traded on the stock exchange since February 2013, to fully meet the current needs of the retail market, the Company also offers cloud solutions, connectivity, among other services. Linx is well positioned to capitalize on the great opportunity of software for the retail industry, not yet fully exploited. We understand that the market for retail management software has solid grounds for significant future growth, supported by (i) low level of sophistication in the use of management software for retail; (ii) growth of the middle class; and (iii) retail sector growth, leading to a increased number of new stores and shopping malls. This will significantly increase the management software expenditures in the coming years, as companies continue to invest in technology and automation with the software usage. The openning of new stores from Linx s customers allow the Company to increase its contracts of montly software maintenance. Likewise, the launching of new solutions in the Company's portfolio allows the implementation of cross-selling, increasing the share-of-wallet of the IT spending of its customers. Linx has focused efforts on the segments and retailers profiles that are the fastest growing in the market, in particular small and medium sized retailers, many based on the franchise model. 17

18 Contacts Investor Relations Pedro Moreira CFO and Investor Relations Officer Alexandre Kelemen Investor Relations (+55 11) Carolina Pontes Investor Relations (+55 11) Public Relations Jeffrey Group (+55 11) This report was prepared by Linx S.A. ( Linx or the Company ) and may include forward-looking statements about future events or results. These statements are based on certain assumptions and analyses made by the Company, in accordance with their experience and the economic environment, and on market conditions and expected future events, many of which are beyond the Company s control. Important factors that could lead to significant differences between actual results and forward-looking statements about future events or results include the business strategy of the Company, domestic and international economic conditions, technology, financial strategy, industry developments, financial market conditions, uncertainty regarding the results of future operations, plans, objectives, expectations and intentions and other factors. Because of these factors, the Company s actual results may significantly differ from those expressed or implied in the forward-looking statements about future events or results. The information and opinions contained herein should not be construed as a recommendation to potential investors and no investment decision should be based on the truthfulness, timeliness or completeness of such information or opinions. 18

19 Attachment I Income statement R$ '000 3Q16 Δ% 2Q17 Δ% 9M17 9M16 Δ% Recurring revenues 135, , % 132, % 397, , % Services revenues 30,109 21, % 22, % 76,701 65, % Gross operating revenues 165, , % 154, % 474, , % Sales taxes (17,737) (13,923) 27.4% (16,315) 8.7% (49,475) (41,648) 18.8% Cancellations ans rebates (3,391) (3,852) -12.0% (3,172) 6.9% (10,391) (13,203) -21.3% Net operating revenues 144, , % 135, % 414, , % Cost of sold services (42,335) (36,713) 15.3% (40,889) 3.5% (123,724) (107,194) 15.4% Gross profit 102,303 86, % 94, % 290, , % Operating expenses (81,841) (69,858) 17.2% (82,539) -0.8% (238,623) (203,661) 17.2% General and administrative expenses (46,289) (37,521) 23.4% (49,520) -6.5% (139,481) (109,392) 27.5% Selling expenses (18,264) (16,244) 12.4% (16,899) 8.1% (51,730) (45,914) 12.7% Research and development (16,855) (14,795) 13.9% (14,571) 15.7% (47,406) (44,396) 6.8% Other operating expenses, net (433) (1,298) -66.6% (1,549) -72.0% (6) (3,959) -99.8% Income before financial income (expenses) and taxes 20,462 16, % 11, % 51,806 52, % Net financial result 2,525 3, % 13, % 30,968 7, % Financial revenues 8,452 9, % 18, % 48,217 26, % Financial expenses (5,927) (5,487) 8.0% (4,746) 24.9% (17,249) (19,251) -10.4% Income before taxes 22,987 20, % 25, % 82,774 60, % Deferred income and social contribution taxes (2,909) 861 n.a. (5,222) -44.3% (11,024) (1,598) 589.9% Current income and social contribution taxes (421) (3,321) -87.3% 752 n.a. (3,976) (8,411) -52.7% Net income 19,657 17, % 21, % 67,774 50, % Acquisitions amortization 5,994 5, % 5, % 16,498 16, % Deferred income and social contribution taxes 2,909 (861) n.a. 5, % 11,024 1, % Cash earnings 28,560 22, % 31, % 95,296 68, % 19

20 Attachement II Balance sheet: 12/31/2016 and 09/30/2017 Assets 12/31/ /30/2017 Cash and cash equivalents 7,227 34,948 Short-term interest earnings bank deposits 639, ,291 Accounts receivable 107, ,767 Inventories Recoverable taxes 29,687 30,905 Other receivables 12,061 35,550 Current assets 795, ,608 Long-term interest earnings bank deposits 19,036 20,615 Other credits 10,875 1,577 Accounts receivable in the long term 1,774 3,618 Deffered fiscal assets 4,168 4,122 Long-term assets 35,853 29,932 Property, plant and equipament 51,258 64,320 Intangible assets 600, ,993 Non-current assets 687, ,245 Total Assets 1,483,372 1,520,853 Liabilities + Shareholders equity 12/31/ /30/2017 Suppliers 6,254 6,781 Loans and financing 34,499 34,135 Labor obligations 31,204 46,370 Taxes and contributions payable 6,368 8,563 Income and social contributions taxes 2, Accounts payable from acquisition of subsidiaries 23,508 53,580 Deferred revenue 7,176 9,195 Anticipation of dividends 1,125 - Other accounts payable 4,110 5,486 Current liabilities 117, ,149 Loans and financing 96,268 72,579 Accounts payable from acquisition of subsidiaries 57,086 49,373 Deferred tax liabilities 57,169 68,147 Other accounts payable 1,931 1,313 Provision for contingencies Non-current liabilities 212, ,103 Social capital 480, ,032 Capital reserve 512, ,504 Profit reserve 141, ,065 Proposed additional dividends 18,875 - Total Shareholders Equity 1,153,278 1,164,601 Total Liabilities + Shareholders equity 1,483,372 1,520,853 20

21 Attachement III Total cash flow (cash and equivalents + financial investments) (R$ '000) 3Q16 2Q17 9M17 9M16 Cash flows from operating activities Net income for the year 19,657 17,986 21,411 67,774 50,524 Adjustments to reconciliate net income to cash provided by operating activities Depreciation and amortization 15,726 13,994 20,976 52,103 41,037 Income (loss) from the sale of fixed and intangible assets Allowance for doubtful accounts (764) 1,144 (504) (1,532) 1,827 Provision for present value adjustment 2,140 - (90) 2,402 - Stock option plan ,502 2,396 Financial charges 4,100 3,261 1,263 9,022 12,831 Deferred taxes 2,909 (861) 5,222 11,024 1,598 Current taxes 421 3,321 (752) 3,976 8,411 Other (3,540) - Provision for Contingency Increase (decrease) in assets Trade accounts receivable (12,549) (3,797) (1,359) (13,107) (11,687) Inventories (2) - (9) Recoverable taxes 482 1,093 (3,748) (1,218) (860) Other credits and judicial deposits (2,582) (88) 7,138 (14,201) (13,462) Increase (decrease) in liabilities Supliers 3, (5,553) (2,949) 332 Labor obligations 3,234 1,005 2,331 15,166 11,225 Taxes and contributions payable 2,899 1,122 1,123 2,195 (778) Deferred income 428 (1,114) (3,929) 2,019 (2,412) Other accounts payable (5,391) (459) 86 (5,379) (2,286) Income and social contribution taxes paid (1,168) (2,735) (3,021) (6,815) (5,377) Net cash provided by (used in) operating activites 34,032 35,351 41, ,535 93,523 Cash flows from investing activities Acquisition of PP&E (6,222) (3,816) (11,759) (23,964) (10,538) Acquisition of intangible assets (12,739) (8,544) (8,523) (29,498) (25,897) Acquisition of subsidiaries, net of cash (37,498) - - (37,498) - Net cash (used in) provided by investing activities (56,459) (12,360) (20,282) (90,960) (36,435) Cash flows from investing activities Payments of principal from loans and financing (9,591) (4,026) (9,249) (24,257) (9,564) Financial charges paid (2,107) (725) (1,925) (7,576) (7,543) Payment of accounts payable from acquisitions of subsidiaries 1,980 (5,728) (12,816) (15,259) (20,201) Dividends and IOC paid (10,000) - (20,000) (30,000) (8,020) Capital increase 3, ,560-5, ,339 Capital reserve (7,527) - (21,765) (33,887) - Goodwill in subscription shares - 325, ,440 Anticipation of dividends paid - (16,000) - - (16,000) Expenses with issuance of shares (414) (15,481) - (414) (15,481) Net cash provided by (used in) financing activities (24,602) 402,040 (65,755) (106,169) 372,970 Increase (decrease) in cash and cash equivalents (47,029) 425,030 (44,784) (77,593) 430,058 Statement of increase (decrease) in cash and cash equivalents At the beginning of the period 634, , , , ,881 At the end of the period 587, , , , ,940 Increase (decrease) in cash and cash equivalents (47,029) 425,030 (44,784) (77,593) 430,058 21

22 Attachement IV - Cash flow (cash and equivalents) (R$ '000) 3Q16 2Q17 9M17 9M16 Cash flows from operating activities Net income for the year 19,657 17,986 21,411 67,774 50,524 Adjustments to reconciliate net income to cash provided by operating activities Depreciation and amortization 15,726 13,994 20,976 52,103 41,037 Income (loss) from the sale of fixed and intangible assets Allowance for doubtful accounts (764) 1,144 (504) (1,532) 1,827 Provision for present value adjustment 2,140 - (90) 2,402 - Stock option plan ,502 2,396 Financial charges 4,100 3,261 1,263 9,022 12,831 Deferred taxes 2,909 (861) 5,222 11,024 1,598 Current taxes 421 3,321 (752) 3,976 8,411 Interest earnings from bank deposits (12,328) (8,534) (14,867) (47,455) (24,406) Earnout (3,540) - Provision for Contingency Increase (decrease) in assets Trade accounts receivable (12,549) (3,797) (1,359) (13,107) (11,687) Inventories (2) - (9) Recoverable taxes 482 1,093 (3,748) (1,218) (860) Other credits and judicial deposits (2,582) (88) 7,138 (14,201) (13,462) Increase (decrease) in liabilities Supliers 3, (5,553) (2,949) 332 Labor obligations 3,234 1,005 2,331 15,166 11,225 Taxes and contributions payable 2,899 1,122 1,123 2,195 (778) Deferred income 428 (1,114) (3,929) 2,019 (2,412) Other accounts payable (5,391) (459) 86 (5,379) (2,286) Income and social contribution taxes paid (1,168) (2,735) (3,021) (6,815) (5,377) Net cash provided by (used in) operating activites 21,704 26,817 26,387 72,080 69,117 Cash flows from investing activities Acquisition of PP&E (6,222) (3,816) (11,759) (23,964) (10,538) Acquisition of intangible assets (12,739) (8,544) (8,523) (29,498) (25,897) Acquisition of subsidiaries, net of cash (37,498) - - (37,498) - Financial investments (104,997) (507,951) (162,530) (362,749) (626,964) Redemption of interest and financial investments 126,488 92, , , ,565 Net cash (used in) provided by investing activities (34,968) (427,900) 40,472 61,810 (451,834) Cash flows from investing activities Payments of principal from loans and financing (9,591) (4,026) (9,249) (24,257) (9,564) Financial charges paid (2,107) (725) (1,925) (7,576) (7,543) Payment of accounts payable from acquisitions of subsidiaries 1,980 (5,728) (12,816) (15,259) (20,201) Dividends and IOC paid (10,000) - (20,000) (30,000) (8,020) Capital increase 3, ,560-5, ,339 Goodwill in subscription shares - 325, ,440 Capital reserve (7,527) - (21,765) (33,887) - Anticipation of dividends paid - (16,000) - - (16,000) Expenses with issuance of shares (414) (15,481) - (414) (15,481) Net cash provided by (used in) financing activities (24,602) 402,040 (65,755) (106,169) 372,970 Increase (decrease) in cash and cash equivalents (37,866) 956 1,103 27,721 (9,747) Statement of increase (decrease) in cash and cash equivalents At the beginning of the period 72,814 4,087 71,711 7,227 14,790 At the end of the period 34,948 5,043 72,814 34,948 5,043 Increase (decrease) in cash and cash equivalents (37,866) 956 1,103 27,721 (9,747) 22

23 Attachment V Schedule of purchase price allocation (PPA) Quarter Amount (R$) 4Q17 (5,001,670) 1Q18 (4,894,784) 2Q18 (4,521,753) 3Q18 (4,431,753) 4Q18 (4,186,753) 1Q19 (3,678,033) 2Q19 (3,678,033) 3Q19 (3,610,105) 4Q19 (3,474,249) 1Q20 (3,028,521) 2Q20 (3,028,521) 3Q20 (2,847,001) 4Q20 (2,483,960) 1Q21 (2,287,406) 2Q21 (2,263,214) 3Q21 (2,112,805) 4Q21 (1,718,435) 1Q22 (1,399,857) 2Q22 (1,371,125) 3Q22 (1,313,660) 4Q22 (1,313,660) 1Q23 (1,008,796) 2Q23 (1,008,796) 3Q23 (928,413) 4Q23 (767,647) 1Q24 (767,647) 2Q24 (767,647) 3Q24 (767,647) 4Q24 (767,647) 1Q25 (721,764) 2Q25 (631,400) 3Q25 (631,400) 4Q25 (631,400) 23

24 Attachement VI Schedule of fiscal goodwill amortization Quarter Amount (R$) 4Q17 (14,893,314) 1Q18 (13,658,536) 2Q18 (13,594,364) 3Q18 (13,594,364) 4Q18 (13,594,364) 1Q19 (13,594,364) 2Q19 (13,594,364) 3Q19 (12,559,220) 4Q19 (11,209,133) 1Q20 (10,770,370) 2Q20 (10,268,846) 3Q20 (9,265,798) 4Q20 (9,265,798) 1Q21 (9,190,844) 2Q21 (8,498,344) 3Q21 (8,152,094) 4Q21 (8,152,094) 1Q22 (8,152,094) 2Q22 (8,152,094) 3Q22 (7,010,302) 4Q22 (7,010,302) 1Q23 (5,505,982) 2Q23 (4,165,531) 3Q23 (4,165,531) 4Q23 (4,165,531) 1Q24 (4,165,531) 2Q24 (4,165,531) 3Q24 (4,165,531) 4Q24 (2,386,916) 1Q25 (1,959,099) 2Q25 (1,103,466) 3Q25 (1,103,466) 4Q25 (367,822) 24