Press Release 3Q21

EARNINGS RELEASE 3Q21

VIDEOCONFERENCE IN PORTUGUESE

(WITH SIMULTANEOUS INTERPRETATION INTO ENGLISH)

Thursday, November 11, 2021 - 10:00 AM (BRT) Webcast access:click here

HIGHLIGHTS	RESULTS
	3Q2021

VALID achieves 3Q21 R$583.4 million Net Revenue, R$98.5 million Normalized EBITDA and R$35.7 million Normalized Net Income.1

Rio de Janeiro, November 10, 2021 - Valid (B³: VLID3 - ON) announces today its results for the third quarter of 2021 (3Q21). The financial and operating information below is consolidated in compliance with international IFRS financial reporting standards.

Net Revenue

• At R$ 583.4 million, our Net Revenue was the best ever, showing an 11.8% increase on 3Q20 and 7.8% on 2Q21 thanks mainly to growth in VGS, VBS and VDS. Net Revenue for 2021 reached 1,614.3 million, showing 15.3% growth on 9M20 and indicating that 2021 will indeed be a recovery year after a challenging 2020.

Normalized EBITDA¹

• Valid's 3Q21 Normalized EBITDA was our best ever, amounting to R$98.5 million and showing 32.1% growth YoY and 39.5% QoQ. The year-to-date Normalized EBITDA now stands at R$230.2 million (14.3% EBITDA margin), an increase of 51.2% compared to 9M20. That result was affected by the following factors:
• 1. continuous recovery in government purchases (VGS), mainly in V/Doc (document issue), reaching a volume of 5.7 million documents issued in the quarter;
  2. expansion in business solution revenues (VBS), especially in V/Card (bank cards);
  3. greater digital initiative revenues (VDS); and
  4. better cost-efficiency on all fronts.

Non-recurring effects in 2021

• In 3Q21, as a result of the STF's decision not to recognize IRPJ/CSSL on the financial restatement of tax credits, we are recognizing in the result of September the adjustment of R$16.7m, in the tax line. Then, the accumulated result goes from R$13M to R$29.8M.
• We emphasize that in 6M21 adjustments were made totaling R$2.7M above EBITDA and R$2.1M below, while in 6M20 we had an adjustment of R$86.8M below EBITDA, as shown in the 2Q21 release.

Net Income

• Valid posted R$35.7 million Normalized Net Income for 3Q21, its first positive result after 5 consecutive quarters of losses. The year-to-date normalized Net Income stands at R$8.2 million.

1 Normalized EBITDA as per the non-recurring items described in the Highlights section.

HIGHLIGHTS	RESULTS
3Q2021

• We emphasize that the Net Income in the 3Q21, without adjustments for non-recurring items, was R$ 52.8 million, which represents the company's highest quarterly result.

3Q21 and Subsequent Quarter Events

• The sale of our Caju (Rio de Janeiro) property was approved in the Board Meeting of October 19. Our personnel was informed early on October 20 and Valid expects to have vacated the property by the 1st quarter of 2022. As occurred with the São Bernardo do Campo (SP) manufacturing unit, the transfer to Sorocaba (SP) of the operations currently performed in Caju will yield fresh operating synergies.
• The Company's new Share Buyback Program was also approved in the Board Meeting of October 19. It will involve up to 2,000,000 shares and will be open for 12 months. The purpose of the buyback program is to meet the obligations in the Long-Term Incentive Plan for Valid's and its subsidiaries' professionals. The Notice of Significant Fact published on October 19, 2021 (access in this link) provides further details.

MANAGEMENT'S COMMENTS	RESULTS
3Q2021

Ladies and Gentlemen,

The third quarter of 2021 saw important achievements for Valid: the highest quarterly Revenue and EBITDA ever for the Company. And our reported quarterly Net Income, without any non-recurrent adjustments, of R$52.8 million broke a sequence of 5 consecutive quarters with negative results and is also the highest level achieved for a 3-month period.

The recovery in sales and results allows us to continue improving our leverage ratios and to close the year at levels consistent with our past history.

In accordance with our divestment plan, we completed the transfer to Sorocaba of our São Bernardo do Campo operational unit and, as approved by the Board of Directors, we will initiate the same process with the Caju (RJ) manufacturing unit. In early October our São Paulo office was relocated to new Valid dedicated premises where up to 250 staff can work at the same time. Our new office was designed to satisfy current remote work needs.

In October, we also held the Valid Day One event where Valid's new values were presented to all company employees. It is important to emphasize that nothing we have been delivering over the past few months would be possible without the full support of our team around the world.

Similarly to our earnings release for the 2nd quarter of 2021, we will compare our results with 9-month consolidated figures for better understanding of the direct effects of the pandemic felt in 2020 and early 2021.

That said, Valid's Net Revenue totaled R$583.4 million in 3Q21 (+11.8% YoY and +7.8% QoQ). Net Revenue for 2021 reached R$1,614 million - the best nine-month figure ever for the Company -, with 15.3% growth YoY. Under that perspective, South American and International revenues represented respectively 49% and 51% of total. Division participation remains well- balanced: VGS, VBS and VDS respectively answered for 35%, 48% and 17% of South American revenues.

South American 3Q21 Net Revenue totaled R$301.3 million (+35.8% YoY and +13.8% QoQ; in 9M21: +33.2% YoY). All segments

showed significant YoY growth in the quarter: 59.9% for Government Solutions ("VGS"), 18.1% for Business Solutions ("VBS") and 39.7% for Digital Solutions ("VDS").

For Government Solutions (VGS), 3Q21 was the best quarter since 1Q20, with volume growing to more than 90% of pre- pandemic levels. Over the past few months, we obtained important strategic victories in this segment. Valid continues to conquer new markets and to expand its solutions verticals to provide Government Entities with products that improve the lives of citizens.

The smartcities and ID segments have grown strongly. New contracts were signed with state governments, for example, with Espírito Santo to modernize its civil identity system, including physical and digital cards and biometric databases (civil and criminal). In October we begin to issue professional identification cards with integrated digital certificates for physicians. Approximately 500,000 physicians will receive Valid cloud certificates that can be used to sign documents and medical prescriptions. This will enhance our portfolio of digital products that cater to societal and government needs.

Several other efforts now in progress, but whose details cannot as yet be disclosed for legal reasons, will offer greater digital interaction between governments and citizens and open new business opportunities for the company, enhancing its position at the cutting edge of security solutions and bolstering its market standing.

VGS Net Revenue totaled R$121.1 million in 3Q21 and R$278.5 million in 9M21, with 59.5% and 28.8% growth YoY, respectively.

The good prospects seen in early 2021 for our business products (VBS) continued in the 3rd quarter, causing our Sorocaba plant to continue operating in four shifts, at full capacity. Net Revenue for that segment was R$130.6 million in 3Q21 (+18.1% YoY) and R$382.6 million in 9M21 (+33.4% YoY).

MANAGEMENT'S COMMENTS	RESULTS
3Q2021

The VDS segment continues to show strong results, with R$49.6 million Revenue in 3Q21 (+39.7% YoY). VDS Net Revenue totaled R$136.4 million in 9M21 (+42.4% YoY), representing 17.1% of Valid's South American revenues. Thanks to positive operating margins, we see significant growth in the 4 verticals that make up VDS, namely ValidID, ValidPay, ValidLink and ValidCities.

Our international operations generated R$282.1 million in Net Revenue in 3Q21, 6.0% less than in 3Q20. The year-to-date total grew by 1.9% to R$816.7 million. The BRL/USD average exchange rate depreciated by 2% in the 3Q21, in contrast to a -3% variation in the 3Q20 average exchange rate.

Our US operations generated R$162.6 million in Net Revenue in 3Q21 with the slight 1.3% growth in Means of Payment offsetting the 10.6% drop in Identification products. US revenue grew 8.8% QoQ but the lagging 1Q21 means of payment performance caused a 6.7% YoY drop in 9M21.

The Telco Global segment continues to be affected by the chip shortage. Despite the higher average sale prices in 3Q21, the lower sales volume and lower average exchange rate in the quarter caused revenues to decrease by 12.4% YoY in BRL to R$119.5 million. At R$ 376.9 million, segment revenue showed 14.2% increase in 9M21 compared to 9M20 due to its strong performance in preceding quarters.

Valid's R$98.5 million Normalized EBITDA in 3Q21 showed 32.1% growth YoY and 39.5% QoQ and was our best quarterly result ever. Our Normalized EBITDA for the year grew 51.2% YoY to R$230.2 million. The Normalized EBITDA Margin was 16.9% for the quarter (+2.6 p.p. YoY and +3.8 p.p. QoQ) and 14.3% year-to-date (+3.4 p.p. YoY). The 3Q21 EBITDA margin is similar to that for the pre-pandemic 3Q19 (17.2%).

Finally, the Company's Normalized Net Income for 3Q21 was R$35.7 million in contrast to a R$2.4 million Normalized Net Loss for 3Q20. That variation was driven mainly by the harsher impact of the pandemic on 3Q20 EBITDA. Major bottom line impacts in 3Q21 were associated with Financial Revenues: exchange rate variation (no cash effect) and intercompany loans whose Expenses in the course of the year were all but eliminated in 2Q21. Normalized Net Income amounted to 8.2 million in 9M21 (vs. -R$ 70.0 million in 9M20), further pressured by poor 1Q21 results due to the second COVID-19 wave in Brazil.

Thank you very much and let's continue working!