TOTVS S A : 3Q22 - Earnings Release

EARNINGS RELEASE

3Q22

VIDEO CONFERENCE - November 9th, 2022 at 11am (Brasília)

• PORTUGUESE:

Live transmission: click here.Phone numbers list click here(access - webinar ID: 851 2055 0211) or on our website ri.totvs.com

• ENGLISH (Simultaneous Translation):

Live transmission: click here.Phone numbers list click here(access - webinar ID: 851 2055 0211) or on our website ir.totvs.com

3Q22 EARNINGS RELEASE.

São Paulo, November 8th, 2022 - TOTVS S.A. (B3: TOTS3), leader in the development of business solutions in Brazil, announces its results for the Third Quarter of 2022 (3Q22).

NET REVENUE1 EXCEEDED R$1 BILLION IN 3Q22, +26% YoY

• • • Net Revenue reached R$1.047 billion in the period, being worth highlighting the 29% growth in Consolidated Recurring Revenue
  • 51% growth in Techfn Revenue and 33% growth in Business Performance Revenue, year over year
  • Net Operating Cash Generation grew 64% quarter over quarter, reaching R$303 million in the quarter
• Cash Earnings reached R$169 million in 3Q22, which means +52% year over year and +40% quarter over quarter

NET REVENUE1	MANAGEMENT	BIZ PERFORMANCE	TECHFIN REVENUE
R$1,047 billion	SAAS REVENUE	REVENUE	NET OF FUNDING
R$309 million	R$83 million	R$73 million
+26% vs 3Q21
+38% vs 3Q21	+33% vs 3Q21	+51% vs 3Q21

MESSAGE FROM THE MANAGEMENT

Net revenue of over one billion reais in a quarter! And almost one billion reais of Consolidated EBITDA in the last 12 months! We opened the second half of 2022 with important milestones, which refect the balance of TOTVS'S model.

Our history is marked by innovation and pioneering spirit. That is why we have a way of thinking that refects directly the TOTVS way: "equal, while being always different". Since the TOTVS Franchise System, through the frst technology IPO, the frst acquisitions, we have never stopped leading the way and taking advantage of the fact that our "global and intergalactic" headquarters are in Brazil, giving our touch of innovation.

In recent years, we have developed a whole variety of innovations. The 3D ecosystem is a unique strategy. As well as the value proposition to help SMB improve their results through technology, thus becoming trusted advisors to our clients. TOTVS is the world's frst management software company to develop it. We are very proud of this pioneering spirit. We will continue to be equal, while being always different.

The major highlights of this quarter again showed the balance of our operating and fnancial model. As for revenues, the 26% growth YoY in Net Revenues was driven by the increases of 38% in SaaS Revenue Management, 51% in Techfn Revenue, and 33% in Business Performance Revenue. As for proftability, our good performance of the Contribution Margin in all 3 dimensions led to an increase of over 100 basis points of the Consolidated EBITDA Margin QoQ and YoY. This combination allows us to generate the aforementioned balance and enabled a 52% growth in Cash Earnings, with a conversion of EBITDA into Operational Cash above 160%.

Brazil continues in its process of consolidating democracy and in the healthy alternation of power. Most importantly, counting with solid institutions and an engaged civil society. If we manage to direct everyone's energy towards balanced economic development, we can become an increasingly developed and thriving country. At TOTVS, we continue to be optimistic and confdent in Brazil and in Brazilian people. That is why, more than ever, TOTVS believes in a Brazil that makes it happen.

Having a loyal and satisfed customer base, an engaged and nonconformist team, an innovative strategy, and a winning culture are elements that provide us with the confdence to face and overcome any turbulences that may arise in the macro-environment. TOTVS is a distinguished company, with a solid balance sheet, cash generation, and plenty of resources available. Our balance puts us one step ahead to seize current and future market opportunities.

Dennis Herszkowicz - CEO

Recurring Revenue (R$ million)	Consolidated ARR
	R$3.8 billion
	Total Net Addition2
	R$216 million (3Q22)

	98.4%
	Consolidated
	Renewal Rate
Credit Production LTM (R$ billion)	Record-breaking Credit
	Production
	R$2.9 billion
	+10% vs 2Q22
	Techfn Contribution
	Margin
	67%
	+390bp vs 2Q22
Cash Earnings (R$ million)	Adjusted EBITDA Margin
	24.7%
	+100bp vs 2Q22
	Operating Cash
	Generation/Adjusted
	EBITDA
	163%

11 1Net revenue (Non-GAAP), incorporates the concept of Techfn Revenue, net of funding cost in the consolidation of the Company's revenues. 2Net Addition of ARR added to the Inorganic Addition of the Management and Business Performance dimensions.

This document is a TOTVS' property. All rights reserved ©	3Q22 Earnings Release	2

RECENT EVENTS

Acquisition: RD Station purchased Tallos

Tallos was born in 2017 to offer innovative solutions and uncomplicate digital service. With over 600 B2B customers and 12,000 users connected daily, it has been consolidated as one of the leading conversational commerce developers in Brazil.

By purchasing Tallos, RD Station takes an important step in conversational commerce and takes the lead in CX (Customer Experience), which, besides Marketing and Sales, is one of the 3 sub-segments of the dimension, expanding the Business Performance portfolio with solutions for customer relations, real time, in an automated and/or human way.

For further information, please click here

Acquisition of RBM by Dimensa

Founded in 2006, RBM has over 150 clients, offering 100% SaaS solutions in easy deployment core banking focused on the Fintech market, fnancial institutions, and receivables managers. The purchase of RBM reinforces Dimensa's autonomy and independence in strategic decision-making and in the allocation of its own resources.

For further information, please click here

Acquisition of Feedz

Founded in 2018, Feedz is a Brazilian HR Tech that has over 1,000 clients and approximately 140 employees and provides solutions of Engagement, Development and Organizational Climate, SaaS, with emphasis on OKR tools (Objectives and Key Results) tools, performance assessment, feedback, climate surveys, and engagement in pulses.

With Feedz, TOTVS Management Dimension expands its solutions focused on HXM and consolidates itself as a platform capable of meeting, in a digital and integrated way, the needs of its clients to manage the entire employee journey since onboarding.

For further information, please click here

Issue of Debentures

TOTVS carried out its 4th issue of simple and non-convertible debentures in the total amount of R$1.5 billion. The issuance aimed at optimizing the fnancial cost and lengthening the gross indebtedness profle, considering that the net resources raised were fully used for the early redemption of the Company's 3rd issue of debentures.

For further information, please click here

TOTVS Techfn - Approval by CADE

On October 14th, 2022, the General Superintendence of CADE (Brazilian Antitrust Agency) approved, with no restrictions, the JV in Techfn between TOTVS and Itaú bank, which became fnal on November 1st, 2022. It is worth emphasizing that the completion of this Transaction is subject to approval by the Central Bank and compliance with other precedent conditions.

For further information, please, click here

This document is a TOTVS' property. All rights reserved ©	3Q22 Earnings Release	3

RD Summit

Held on October 26th, 27th and 28th, the RD Summit, the largest Marketing and Sales event in Latin America according to Forbes, had over 130 speakers in content trails on marketing, sales, management, strategy, innovation, customer experience, customer success and much more. In a format of multiple stages and trails, the three days of this event provided amazing experiences to over 11 thousand participants, who could interact with art, music, technology and companies that are world references in their segments.

For further information, please, click here(portuguese only)

IOS is recognized as one of the best NGOs in the world

The "World 200 Top SGOs" ranking, prepared by the Swiss media organization thedotgood, brought the Institute of Social Opportunity (IOS), an organization founded by TOTVS, among the 200 best social organizations in the world, being also ranked as the 14th in Brazil for innovation, social impact, and governance practices.

For further information, please, click here

This document is a TOTVS' property. All rights reserved ©	3Q22 Earnings Release	4

FINANCIAL AND OPERATIONAL HIGHLIGHTS

	3Q22	3Q21	∆		2Q22	∆		9M22	9M21	∆
Rule of 40 (a+b)	51.0%	48.0%	300 bp	53.2%	-220 bp		53.7%	45.8%	790 bp
(a) Net Revenue Growth	26.3%	24.6%	170 bp	29.5%	-320 bp		29.7%	20.9%	880 bp
(b) Adjusted EBITDA Margin	24.7%	23.4%	130 bp	23.7%	100 bp		24.0%	24.9%	-90 bp
Growth (in R$ millions)
Non-GAAP Net Revenue ⁽¹⁾	1,047.5	829.4	26.3%	966.4	8.4%		2,959.5	2,282.4	29.7%
Consolidated Recurring Revenue	841.2	651.8	29.0%	789.0	6.6%		2,377.1	1,773.9	34.0%
% Consolidated Recurring Revenue	80.3%	78.6%	170 bp	81.6%	-130 bp		80.3%	77.7%	260 bp
% Biz Perform. + Techfin Revenue	14.9%	13.3%	160 bp	13.2%	170 bp		13.5%	9.8%	370 bp
Consolidated ARR	3,802.8	2,819.0	34.9%	3,586.7	6.0%		n/a	n/a	-
Consolidated ARR Net Addition ⁽²⁾	188.5	162.0	16.4%	207.1	(9.0%)		658.2	373.8	76.1%
Consolidated SaaS Revenue	389.9	284.7	36.9%	358.1	8.9%		1,079.0	713.3	51.3%
Biz Performance Recurring Revenue ⁽³⁾	81.7	61.0	33.9%	74.4	9.9%		225.0	169.0	33.1%
Credit Production	2,908.7	2,665.9	9.1%	2,646.5	9.9%		8,117.8	7,147.2	13.6%
Profitability (in R$ millions)
Adjusted EBITDA Margin ⁽⁴⁾	24.7%	23.4%	130 bp	23.7%	100 bp		24.0%	24.9%	-90 bp
Adjusted EBITDA ⁽⁵⁾	258.4	194.4	33.0%	229.4	12.7%		711.1	568.6	25.1%
Cash Earnings ⁽⁶⁾	169.1	111.2	52.0%	120.5	40.3%		406.2	299.1	35.8%
Cash Earnings Margin	16.1%	13.4%	270 bp	12.5%	360 bp		13.7%	13.1%	60 bp
Operating Cash Generation	421.0	272.9	54.3%	293.7	43.3%		985.1	557.8	76.6%
Op. Cash Generation / Adjusted EBITDA	162.9%	140.4%	2250 bp	128.0%	3490 bp		138.5%	98.1%	4040 bp
Stock Market
TOTS3 (in R$)	29.35	36.10	(18.7%)	23.26	26.2%		n/a	n/a	-
ADTV 30 (in R$ millions)	113.0	159.7	(29.3%)	132.9	(15.0%)		n/a	n/a	-
IBOV (thousands pts)	110.0	111.0	(0.8%)	98.5	11.7%		n/a	n/a	-
IBrX 50 (thousands pts)	18.4	18.3	0.6%	16.5	11.7%		n/a	n/a	-

⁽¹⁾ Non-GAAP Revenue net of Funding , represents the Techfin Revenue net of Funding Cost Consolidated in the Total Company's Revenue. ⁽²⁾ Organic ARR Net Addition from Management + Business Performance.

⁽³⁾ Includes unaudited results from jan-may/21 of RD Station, for comparative purposes only. ⁽⁴⁾ Adjusted EBITDA over the Non GAAP Revenue net of Funding.

⁽⁵⁾ EBITDA adjusted by extraordinary items.

⁽⁶⁾ Net Income without the effects of expenses with amortization of intangibles arising from acquisitions.

This document is a TOTVS' property. All rights reserved ©	3Q22 Earnings Release	5