3Q17 EARNINGS RESULTS

Transcription

1 3Q17 EARNINGS RESULTS

2 DISCLAIMER The information contained in this presentation and any forward-looking statements that may be made during the conference call, related to business outlook, operational and financial projections of TOTVS are based on beliefs and assumptions of the Company s management, as well as information currently available. Forward-looking statements are not guarantee of future performance. They involve risks, uncertainties and assumptions as they refer to future events and, hence, depend on circumstances that may or may not occur. Investors must understand that general economic conditions, industry conditions and other operational factors could affect future performance of TOTVS and could lead to results that differ materially from those mentioned in these forward-looking statements.

3 MAIN RECENT EVENTS idexo INSTITUTE FOR CO-INNOVATION BETWEEN STARTUPS Created as an open innovation platform, idexo is an institute whose mission is to connect startups, entrepreneurs and developers with large companies to create new business solutions. ISSUE OF NON-CONVERTIBLE DEBENTURES OF TOTVS ISSUE OF SIMPLE, NON-CONVERTIBLE DEBENTURES IN THEAMOUNT OF R$200 MILLION

4 NET REVENUE (R$ MM)* RECURRING REVENUE GREW DOUBLE DIGIT YEAR OVER YEAR AND ACCOUNTED FOR 65.5% OF NET REVENUES IN 3Q17

5 NET REVENUE (R$ MM)* GROWTH OF SOFTWARE REVENUE YEAR OVER YEAR ACCELERATED FOR THE 4TH CONSECUTIVE QUARTER

6 SOFTWARE (R$ MM)* THE SUBSCRIPTION GROWTH BOOSTED THE SOFTWARE REVENUE IN THE PAST 5 QUARTERS** ** Excluding incremental licenses from corporate model

7 SOFTWARE (R$ MM) THE SUBSCRIPTION ARR ADDED IN 3Q17 WAS R$30.1 MILLION, THE HIGHEST RECORDED SINCE THE LAUNCHING OF TOTVS INTERA IN JUNE 2015 workday salesforce The Annual Recurring Revenue (ARR) is a metric widely used in the SaaS model to measure the growth of recurring revenue for the next 12 months referring to contracts already signed up to the end of the current period, excluding cancellations already requested.

8 SOFTWARE (R$ MM)* THE CONTRIBUTION MARGIN DROP YEAR OVER YEAR WAS 70 BASIS POINTS LOWER THAN THE DROP IN THE LAST 12 MONTHS 2Q17 3Q17 3Q/2Q 3Q16 3Q/3Q LTM-3Q16 LTM-3Q17 LTM/LTM SOFTWARE REVENUE % % 1, , % COST OF SOFTWARE (21.6) (21.6) 0.0% (19.7) 9.7% (80.2) (83.5) 4.1% COST OF SUPPORT (32.6) (33.4) 2.4% (32.2) 3.6% (126.3) (132.3) 4.8% R&D (83.3) (88.2) 5.8% (79.0) 11.7% (306.6) (343.4) 12.0% SOFTWARE RESULT % % % CONTRIBUTION MARGIN 62.5% 61.4% -110bp 62.1% -70bp 63.2% 61.8% -140bp NON-RECURRING ITEMS ADDITIONAL COSTS WITH LAYOFFS % ADJ. SOFTWARE RESULT % % % ADJUSTED CONTRIBUTION MARGIN 62.5% 61.4% -110bp 62.1% -70bp 63.4% 61.9% -150bp

9 SERVICES (R$ MM)* THE SERVICE CONTRIBUTION MARGIN GREW 470 BASIS POINTS QUARTER ON QUARTER 2Q17 3Q17 3Q/2Q 3Q16 3Q/3Q LTM-3Q16 LTM-3Q17 LTM/LTM SERVICE REVENUE % % % COST OF SERVICES (119.9) (124.3) 3.7% (123.3) 0.8% (525.4) (500.7) -4.7% SERVICE RESULT % % % CONTRIBUTION MARGIN 1.7% 6.4% 470bp 6.4% 0bp 6.2% 2.2% -400bp NON-RECURRING ITEMS ADDITIONAL COSTS WITH LAYOFFS % ADJUSTED SERVICE RESULT % % % ADJUSTED CONTRIBUTION MARGIN 1.7% 6.4% 470bp 6.4% 0bp 6.9% 2.6% -430bp

10 HARDWARE (R$ MM)* WHEN COMPARED WITH 2Q17, THE HARDWARE CONTRIBUTION MARGIN REDUCED MAINLY DUE TO THE LACK OF TAX SUBSIDIES IN THE PERIOD 2Q17 3Q17 3Q/2Q 3Q16 3Q/3Q LTM-3Q16 LTM-3Q17 LTM/LTM HARDWARE REVENUE % % % COST OF HARDWARE (38.4) (37.4) -2.6% (41.6) -10.1% (169.3) (154.3) -8.9% GROSS RESULT % % % GROSS MARGIN 37.8% 36.5% -130bp 31.5% 500bp 32.5% 37.3% 480bp R&D (2.7) (4.1) 55.1% (3.3) 26.3% (10.1) (12.7) 25.7% GOV. SUBSIDIES % % % HARDWARE RESULT % % % CONTRIBUTION MARGIN 36.7% 29.4% -730bp 31.1% -170bp 31.8% 35.4% 360bp NON-RECURRING ITEMS ADDITIONAL COSTS WITH LAYOFFS % % INVENTORY ADJUSTMENTS % % PROVISION FOR INVENTORY LOSSES % % ADJ. HARDWARE RESULT % % % ADJUSTED CONTRIBUTION MARGIN 36.7% 29.4% -730bp 35.1% -570bp 33.7% 35.4% 170bp

11 ADJUSTED COMMERCIAL AND ADM. EXPENSES (%/NR)*

12 EBITDA ADJUSTED BY NON-RECURRING ITEMS (R$ MM)* THE QUARTER ON QUARTER DECLINE IN EBITDA WAS MAINLY DUE THE REDUCTION IN HARDWARE RESULT AND THE INCREASE IN COMMERCIAL EXPENSES AND PROVISION FOR CONTINGENCIES

13 NET INCOME ADJUSTED BY NON-RECURRING ITEMS (R$ MM)* THE DECREASE IN NET INCOME QUARTER ON QUARTER WAS MAINLY DUE TO THE DECLINE IN EBITDA ** Variation in Financial Result and Income Tax and Social Contribution excludes the effect of reversal of provisions for contingencies and monetary update booked in 2Q17

14 CASH FLOW AND DEBT (R$ MM)* 2Q17 3Q17 3Q/2Q 3Q16 3Q/3Q LTM-3Q16 LTM-3Q17 LTM/LTM EBT % % % NON-CASH ITEMS % % % CHANGE IN WORKING CAPITAL (10.9) (0.2) -98.0% (4.8) -95.5% (139.0) (40.6) -70.8% INTEREST AND TAXES PAID (12.4) (12.6) 1.4% (18.9) -33.3% (78.1) (62.7) -19.7% NET CASH FROM OPERATIONAL ACTIVITIES % % % NET CASH USED IN INVESTING ACTIVITIES (17.8) (9.5) -46.7% (26.3) -63.8% (581.0) (63.8) -89.0% NET CASH USED IN FINANCING ACTIVITIES (93.7) (139.0) - (352.9) (74.7) -78.8% INCREASE (DECREASE) IN CASH (24.2) (79.2) - (702.4) GROSS CASH IN THE BEGINNING OF THE PERIOD % % % GROSS CASH IN THE END OF THE PERIOD % % % GROSS DEBT % % % NET DEBT % % % NET DEBT/LTM ADJUSTED EBITDA 1.3x 1.2x 0.1x 1.2x - 1.2x 1.2x - FREE CASH FLOW % % (308.1)

15 3Q17 CLOSING REMARKS Subscription Revenue: +34.4% vs. 3Q % vs. LTM-3Q16 Annual Recurring Revenue from Subscription: +42.2% vs. 3Q % vs. 2Q17 Guidance of Subscription growth of at least 30% for 2017 maintained Adjusted EBITDA: -28.0% vs. 3Q % vs. LTM-3Q16 Adjusted Commercial Expenses: +15.5% vs. 3Q % vs. LTM-3Q16 Adjusted G&A: +32.6% vs. 3Q % vs. LTM-3Q16 Guidance of Adjusted EBITDA for 2017 removed Adequacy to SaaS: Cost reduction of ~R$30 million/year in 4Q17 Conclusion of the administrative integration of Bematech in 4Q17

16 Investor Relations +55 (11) (11) (11) (11) Technology + Knowledge are our DNA The success of our client is our success We value competent people who are nice people totvs.com company/totvs blog.totvs.com fluig.com