Neogrid Participações S A : Dados Econômico-Financeiros

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Management

Report

December 31, 2021

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Message from the Management

Another year full of challenges, evolution, and learning, but above all, a lot of work! In 2021 we completed our first year as a public Company, and during this period Neogrid's transformation was impressive. We have held our commitment and focus on people, with special attention to the safety and well-being of our team, which is undoubtedly the fundamental component of our success.

Amidst the uncertainties and developments of the COVID-19 pandemic, inevitably impact B2B business relationships due to changes in consumption, inflation and product availability, Neogrid continued to be a high- value partner for customers and other participants in the extensive network of connected companies that we were able to build, the use of cutting-edge technology reaffirmed itself as a perfect ally for the performance of operations, enabling increased sales, inventory reduction, optimization of working capital, other various benefits that users and participants of the Neogrid ecosystem obtains by making faster and more assertive decisions, through the solutions offered from the immensity of data that are generated and transacted between the connected companies that, with the client in the focus of business, collaboration, integration and intelligence, manage to enter the pace of consumption.

In this past year, even with a scenario full of challenges, we have already achieved results from our expansion strategy, recorded record revenue and profitability and our ARR grew 21.3%, showing the effectiveness of the go- to-market strategy and reorganization of the commercial structure for acquiring new customers, together with our continuous advances in Customer Success, to add proven value to our clients, which resulted in good expansion numbers within the current base, with cross and up-sell, and maintaining our high retention levels with 96.4% revenue recurrence, maintaining healthy margins and cash generation even amidst the acceleration we employ in investments, to drive our avenues of growth. We have seen expansion both in Brazil and internationally, where our operations grow at an equal or greater pace, driven by the performance of offices in the U.S. and Europe, partners in more than 20 countries, and a satisfactory "free-ride" that we took with our global clients who find in Neogrid a group of B2B solutions best in class and wish to take our technology to their operations worldwide, resulting in users of our platform in more than 140 different countries.

Another important front that we prioritized and accelerated in 2021 was innovation, our R&D investments grew 32.5% and with this we advanced in the continuous improvement of the platform support structure, quality and data governance, development of new solutions and application of new technologies. These investments are mandatory and foster the continuity and acceleration of future growth for Neogrid, generating new revenues and gains in operational efficiency.

Our family's grown up! We are very happy about the acquisitions and investments in M&A that we brought to the Neogrid ecosystem in 2021. With the entry of Smarket, Horus, Arker, Lett and Predify into our business network, we expanded our potentials at all ends and, in addition to bringing to the Neogrid family companies that already did a great job, we explored and favored the exploitation of the high potential for accelerated growth of the acquired business, the complementarity of portfolio among all the new members of our family is something extraordinary and greatly expands our field of activity and partnership with customers, we have a portfolio of B2B solutions to continue helping an increasing number of companies worldwide.

We have maintained the focus on sustainability, in addition to promoting a more efficient operation from the reduction of waste throughout the value chain of our customers, we invest in initiatives within Neogrid and for the community, we reaffirm our employer brand and the focus on our team with the renewal of the Great Place to Work label, which even gave us entry into B3's IGPTW index, and we promoted social actions ranging from education improvement programs such as TOC for education to the distribution of inputs and food to the community.

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Finally, in 2021 we started a process of transition from my role at Neogrid, I am returning to Mexico not only with joy to see what the team I led was able to build in recent years, but with the certainty that I take a little of each with me, this experience undoubtedly marked my story, and I am sure that the next chapters of Neogrid will be magical, I am very happy to have participated in the succession process and I believe that I leave the Company in great hands, Jean Klaumann is an experienced professional and perfectly qualified to lead Neogrid exploring the immense potential that she has, comes much more around!

My sincere thanks to all employees, family, customers, investors, and partners who were with us in 2021, stay well and safe.

Eduardo Ragasol

CEO in 2021

It is with great enthusiasm and gratitude that I face this new challenge, the opportunity to lead Neogrid is, in addition to a great responsibility, a fuel to seek more and more and create incredible chapters for the Company, leaving a very important legacy. I bring my experience and energy to contribute to this journey, I found in Neogrid a unique structure and team, in which I trust to explore the immense potential we have, I see in Neogrid a pioneer company in understanding the strength of the ecosystem of collaboration and integration of the supply chain, which delivers this in an extremely competent way including internationally. We will be tireless in building an ever-growing data, connections, and solutions platform, innovating and bringing Neogrid's expertise to higher and broader levels, we will build history and help more customers optimize their business management, driving the Neogrid brand in together with the success of customers.

I thank the trust of the Board of Directors, the Neogrid team, the customers, and the market, I am sure that with the participation and collaboration of all, added to a lot of hard work, we will add value to Neogrid and all stakeholders, thank you!

Jean Carlo Klaumann

CEO elected in 2022

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1.0 Key Indicators

1.1 Results Indicators

Amounts in thousands of reais, except percentages. Consolidated Results.
	2020	2021	%
Net Revenue	212.581	245.604	15,5%
Recurring Net Revenue	201.650	236.667	17,4%
Net Revenue from Services	10.931	8.937	-18,2%
% Recurring Revenue	94,9%	96,4%	1,5 p.p.
Net income	12.359	14.610	18,2%
Net Margin (%)	5,8%	5,9%	0,1 p.p.
Ebitda	50.665	44.021	-13,1%
Ebitda Margin (%)	23,8%	17,9%	(5,9 p.p.)

Net revenue recorded R$ 245.6 million (+15.5% vs. 2020), with 96.4% recurrence of SaaS contracts, an increase of 1.5 p.p. compared to the same period in 2020. The revenue growth followed the Company's expansion dynamics, which maintains an average period of 90 months related to active contracts with customers and explores expansion opportunities both with acquisition of new customers, as well as in cross and up-sell operations in the network of connected companies.

Breakdown of revenue, by solution group:

38.3%		39.4%	42.4%
35.4%
							22.3%	22.2%
Integration	Demand Activation	Replenishment
				2020		2021

Integration, Demand Activation and Replenishment solutions accounted for 35.4%, 42.4% and 22.2%, respectively, of total net revenue for 2021.

Compared to 2020, the Demand Activation solution showed a representativeness increase of 3.0 p.p. and the Replenishment solution remained similar to the previous period.

The Integration solution showed a greater reduction of 2.9p.p. in representativeness, due to the gain of participation of other offerings, which have a higher level of sophistication, average ticket and retention.

Neogrid has an international presence, through its own offices and business partners delivers solutions for customer operations in more than 140 countries.

In 2021, the share of international business in the Company's consolidated revenue was 19.8%.

Foreign currency billing continues to expand, with new customer acquisition and project expansion, such as Best Buy's connectivity with its suppliers in the United States.

19.8%

80.1%

Brazil

International

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1.1.1 Profitability

The Company's net income dynamics have non-cash effects, mainly related to investment and business acquisition activities, operations that make up Neogrid's growth and expansion strategy. In addition to non-cash accounting effects, the execution of M&A processes also incurs extraordinary expenses, see item 1.4.5.

The Company recorded net income of R$ 14.6 million (+18.2% vs. 2020) and net margin of 5.9% (+0.1 p.p. vs. 2020). By excluding the items mentioned in the paragraph above, such as amortization of capital gains and the Adjustment to Present Value of investments, net cash income of R$ 29.9 million (+55.2% vs. 2020) and net cash margin of 12.2% (+3.1 p.p. vs. 2020) were estimated.

EBITDA has the effect of accelerating R&D investments (see item 1.4.3), non-recurring expenses related to M&A and consolidation of results of acquired, in 2021 totaled R$ 44.0 million (-13.1% vs. 2020) and the EBITDA margin was 17.9% (- 5.9 p.p.).

1.2 Net Annual Recurring Revenue (ARR) - in millions of reais

ARR totaled R$ 262.0 million in December 2021, an increase of 21.3% over the same period last year. The expansion is the result of organic increments with new customers, cross/up-sell and revenue from those acquired, minus cancellations in the period.

The Company adopts strategies to accelerate the business from its current base and with the acquisition of new customers, in addition to continuously investing in the customer success fronts to maintain a high level of satisfaction and retention of contracts. The cancellations of the period are mainly due to impacts on commercial relations between the links of the supply chain, in which the flow between buyers and sellers is subject to variations generated by consumption levels and other macroeconomic and/or strategic factors.

	Revenue journey
262.0		17.6
17.6
	56.2
	27.6
244.4	215.9	262.0
215.9

Dec/20		Dec/21	dec/20	Churn /	Organic	Inorganic dec/21
		Neogrid		Inorganic		Down-sell	Increment	Increment

1.3 Gross Profit

Amounts in thousands of reais, except percentages. Consolidated Results.

	2020	2021	%
(+) Net sales revenue	212,581	245,604	15.5%
(-) COGS	(73,638)	(82,199)	11.6%
(=) Gross profit	138,943	163,405	17.6%
Gross Margin (%)	65.4%	66.5%	1.2 p.p.

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