Valid Soluções S A : Press Release 2Q21

EARNINGS RELEASE 2Q21

CONFERENCE CALL IN PORTUGUESE

(WITH SIMULTANEOUS TRANSLATION TO ENGLISH) Thursday, August 12, 2021 - 10:00 a.m. (BRT) Webcast Access:click here

HIGHLIGHTS	RESULTS
2Q21

VALID's Net Revenues1 reach R$541.1 million in 2Q21 and Normalized EBITDA of R$70.6 million.

Rio de Janeiro, August 11, 2021 - Valid (B³: VLID3 - ON) announces today the results for the second quarter of 2021 (2Q21). The following financial and operating information is presented on a consolidated basis, in accordance with International Financial Reporting Standards (IFRS).

Net Revenues

• We reported Net Revenues of R$541.1 million in the quarter, 30.5% higher than in 2Q20, mainly due to the growth in revenues from VBS, VGS and International. We reached R$1,030.8 million in Net Revenues - the best first half in the company's history - which represents a growth of 17.4% compared to 6M20 and shows that the experience obtained in this challenging period helped us to overcome the second wave of the pandemic with more resilience.

Standardized EBITDA¹

• Valid reached a Normalized EBITDA of R$70.6 million in 2Q21, representing growth of 301.7% Y/Y and 15.6% Y/Y. In the year, we totaled R$131.7 million of Normalized EBITDA (EBITDA Margin of 12.8%), up 69.4%, a result impacted by the following factors:
• 1. acceleration in the recovery of the governmental segments (VGS), mainly in V/Doc (documents issue);
  2. business solutions (VBS) revenue growth, especially for V/Card (bank cards);
  3. growth in revenues from digital initiatives (VDS), mainly V/Cert (digital certificates) and Valid Cities (Smart Cities);
  4. continued good results in the Global Telco business; and
  5. improved cost efficiency on all segments.

Non-recurring effects in the quarter

• Valid recognized non-recurring events in its Financial Statements.
• 1. Above EBITDA:
  2. • In 2Q21, totaling a Reported OPEX R$2.7 million lower than the Normalized: +R$21.6 million in OPEX referring to tax credits related to the exclusion of ICMS from the PIS/COFINS tax base; -R$17.1 million in OPEX related to the constitution of a provision (with no cash effect) for potential losses on accounts receivable from the ID segment (additional to the provisions recorded in 4Q20); and -R$1.7 million in OPEX related to other contingencies. These standardizations refer to the following business segments:

1Normalized EBITDA according to the non-recurring items described in the Highlights section.

HIGHLIGHTS		RESULTS
	2Q21

1. Below EBITDA:
2. • In 2Q21, totaling Other Operating Expenses, Net Financial Expenses and Income Tax/SC on Net income Reported R$2.1 million higher than Normalized: -R$20.4 million in Other Operating Expenses related to former lawsuit; -R$1.0 million in Other Operating Expenses related to legal fees related to the favorable results of the tax credits mentioned above; +R$26.1 million in Financial Revenues related to the monetary correction on the tax credits mentioned above; and -R$2.5 million in Income Tax/SC on Net income related to the balance of the normalizations above.
   • In 2Q20, totaling Other Operating Expenses and Income Tax/SC on Net income R$ 82.6 million higher than the Normalized: -R$125.2 million in Other Operating Expenses referring to the impairment write-off in the Data operation in the United States; +R$42.6 million in Income Tax/SC on Net income referring to the balance of the above normalization.
   • In 1Q20, totaling Other Operating Revenues and Income Tax/SC on Net Income R$4.2 million higher than the Normalized: +R$6.4 million in Other Operating Revenues referring to the sale of the plant in the United States and -R$2.2 million in Income Tax/SC on Net Income regarding the above normalization balance.
3. More detailed information about the impacts of the standardization on our reported results in the June 30, 2021 Financial Statements can be found in the exhibits to this material.
4. Thus, all analyses made in this document and referring to OPEX, EBITDA, Financial Result, Income Tax/SC on Net Income and Net Profit will consider the normalized bases for non-recurring effects.

Quarterly and Subsequent Events

• In June, we concluded our 8th debenture issue, which totaled R$531 million and represented the last stage of the Company's 2021 capital structure exercises - initiated with the successful R$99 million private capital increase performed in 1Q21.
• Also in June, Valid obtained a favorable decision in tax lawsuits related to the exclusion of ICMS from the calculation basis of PIS/COFINS, accounting for approximately R$47.6 million in recoverable taxes on its balance sheet.
• We closed the main operating activities of São Bernardo do Campo (SP), transferring them to our plant in Sorocaba (SP) in July 2021. The strategy is part of our divestment plan, which aims to bring greater synergy to the operations.
• In July, we began operating V/Park (Digital Parking) in two cities that have become the largest in the portfolio of cities we serve: Guarulhos and Vitória da Conquista.

MESSAGE FROM MANAGEMENT	RESULTS
2Q21

Dear shareholders,

Second quarter 2021 was another period of important achievements for Valid. At the end of April, we were proud to present to the market our new executive team and our strategic plan for the next three years at our Capital Markets Day (link). In June, we concluded our 8th debenture issue, which totaled R$531 million and represented the last stage of the Company's 2021 capital structure exercises - initiated with the successful R$99 million private capital increase performed in 1Q21. Through the issue and other bilateral agreements, we have ensured that no principal payments will be made until the beginning of 2022 - which increased the average maturity of our debt from 11 to 20 months - and increased the amount of debt in local currency to approximately 78% of the total balance, an important stage in aligning our debt with the markets where we generate the most cash and where we will have the strategic prioritization of our operations.

Also on the capital structure and debt control segment, it is important to note that, at the end of 2Q21, the numbers for 2Q20

• the most impacted by the first wave of the COVID-19 pandemic - are no longer part of the calculation of our leverage indicators using a twelve-month period. Thus, we were able to raise our Net Debt / Normalized EBITDA ratio to 2.5x at the end of 2Q21, below the main covenants defined with our creditors. Continuing the operational advances, Valid aims to reach the end of 2021 with leverage levels aligned with its history.

Furthermore, aiming at operational and cost efficiency, we have concluded the process of transfers of our operations from São Bernardo do Campo (SP) to our plant in Sorocaba (SP) in July 2021. The strategy is part of our divestment plan, which aims to bring greater synergy to the operations.

Our results continue to be impacted by the social confinement measures imposed by the COVID-19 pandemic. However, with the recent slowdown of these in Brazil - after the second wave, which was observed between the end of March and the beginning of April - and given the experience we have acquired since the beginning of the pandemic, we have had a quarter of significant advances in our numbers. Although the year-on-year comparative base, 2Q20 - a period in which we had the worst quarter since the start of the pandemic - change the Y/Y analyses, 2Q21 was characterized by a significant sequential evolution versus 1Q21. Due to this weak base of Y/Y comparison, we believe that a better view of the sequential evolution of the Company's results is through the comparison of the year-to-date results, since, from this point of view, 6M21 contrasts the impacts of the second wave with those of the first wave observed in 6M20.

Therefore, Net Revenues totaled R$541.1 million in 2Q21 (+30.5% Y/Y and +10.5% Q/Q). We reached R$1,030.8 million in Net Revenues - the strongest first half in the Company's history - which represents a 17.4% Y/Y growth. At the end of the first half, the ratio of revenue in South America and International was 48%/52%. In addition to the improved revenue balance between South America and International, the results through June 2021 also show a better balance between the 3 business divisions (VGS, VBS and VDS).

Net Revenues in South America totaled R$264.9 million in 2Q21 (+87.0% Y/Y and +14.5% Y/Y; in 6M21: +31.7% Y/Y) and had

expressive contribution from all segments: Government Solutions ("VGS"), Business Solutions ("VBS") and Digital Solutions ("VDS").

VGS has largely benefited from a further acceleration in document issuance and we already observe average daily issuances of approximately 80% of those seen in the pre-pandemic months, with some cities already exceeding 100%. Issuance volume in the month of June 2021 was the highest since the start of the pandemic. It is worth mentioning that, in general, we have have not yet observed a significant increase in the issuance of part of the retained documents, a process expected to intensify from 2H21, especially given the progress of vaccination. Even so, VGS' Net Revenues totaled R$157.4 million in 6M21, which represents a growth of 12.1% Y/Y.

VBS segment continues to have issuing cards as the main lever for growth and revenue generation. Demand from traditional banks, fintechs, and other digital platforms remains strong and our Sorocaba plant continues to operate in four shifts at full

MESSAGE FROM MANAGEMENT	RESULTS
2Q21

capacity. Thus, this segment reached Net Revenues of R$136.4 million in 2Q21 (+62.0% Y/Y) and R$252.0 million million in 6M21 (+43.0% Y/Y). Compared to 1Q21, the growth in 2Q21 was 18.0%.

Our last operating front in South America, the VDS, had another significant growth in 2Q21 (+39.2% Y/Y), totaling R$44.2 million. Our activities in solutions for digital certification, object tracking, and Smart Cities continue to expand and deliver good results. This result can be explained by the improvement in the certificate issuing processes, which can already be done in a 100% digital format, as well as the product having gained more awareness among users during the pandemic. In 6M21, VDS already totaled R$86.9 million in Net Revenues (+44.1% Y/Y), which represents 18% of Valid's South American revenues.

Our international businesses, meanwhile, presented a Net Revenues of R$276.3 million in 2Q21, which represents a slight expansion of 1.2% compared to 2Q20. In 2021, we accumulated a high of 6.6% and totaled R$534.6 million, or 52% of Valid's revenues. It is also worth mentioning that the international segments had no positive influence from the exchange rate in 2Q21 (BRL/USD: -1% Y/Y).

US operations had Net Revenues of R$149.4 million in 2Q21, with the results of the means of payment and ID segments remaining almost flat Y/Y. In the quarterly comparison, the increase in revenues in the country was 16.8%, while in 6M21, we observed a drop of 10.0% Y/Y (R$277.3 million in the period), reflecting a lower result in means of payment in 1Q21.

Meanwhile, the Global Telco segment continues to benefit from the strong demand for SIM cards and, despite the slightly lower volume sold in 2Q21 and the neutral exchange rate in the quarter, revenues advanced 4.4% Y/Y in the quarter, totaling R$126.9 million. In 6M21, the increase is 33.0% compared to 6M20 - totaling R$257.4 million - due to the strong result obtained in 1Q21, both operationally and in relation to the exchange rate. Compared to 1Q21, 2Q21 was negatively impacted by the exchange rate variation. However, in USD, the segment's Net Revenues increase was 0.6% Q/Q.

As a result, Valid's Normalized EBITDA totaled R$70.6 million in 2Q21, representing growth of 301.7% Y/Y and 15.6% Q/Q. In the year, Normalized EBITDA totaled R$131.7 million, up 69.4%. Normalized EBITDA Margin for the quarter was 13.0% (+8.8 p.p. Y/Y and +0.6 p.p. Q/Q), while the year-to-date margin reached 12.8% (+3.9 p.p. Y/Y)

Finally, the Company obtained a Normalized Net Loss of R$22.5 million in 2Q21 versus a Normalized Net Loss of R$65.5 million in 2Q20. This variation is mainly explained by an EBITDA more impacted by the pandemic in 2Q20. In 2Q21, the main drivers of the last item were Financial Expenses, due to the exchange rate variation of intercompany loans for prepayments of foreign debt during the quarter (with no cash effect). In 6M21, the Normalized Net Loss totaled 27.5 million (vs. -R$67.6 million in 6M20), further impacted by a 1Q21 weak result, impacted by the second wave of COVID-19 in Brazil.

Thank you very much, and Let's move forward!