Valid Soluções S A : Press Release 2Q22

EARNINGS RELEASE 2Q22

PORTUGUESE CONFERENCE CALL

(WITH SIMULTANEOUS TRANSLATION INTO ENGLISH) Wednesday, August 10, 2022 - 10:00 a.m. (BRT) Webcast Access:click here

HIGHLIGHTS	EARNINGS RELEASE
2Q22

VALID's Net Revenue reaches R$602M in 2Q22 and EBITDA R$138M.

São Paulo, August 09, 2022 - Valid (B³: VLID3 - ON) announces today its results for the second quarter of 2022 (2Q22) and the first half of 2022 (1H22). The following financial and operating information is presented on a consolidated basis, in accordance with International Financial Reporting Standards (IFRS).

• As per the Notice to the Market issued on June 30, 2022, Valid entered into a Sale and Purchase agreement with the German

group G+D involving the ID and Pay assets in the USA. Valid's consolidated figures presented herein include data referring to these business units so that comparisons with previous periods can be made directly. However, we will not open the individual analysis of these assets.

Net Revenue¹

• We posted Net Revenue of R$602 million in the quarter, the highest quarterly revenue in the Company's history, representing an 11% growth over 2Q21. Year to date, we reached R$1,181 million in Net Revenue, which represents a 15% growth when compared to 6M21. This increase was due to the evolution in all of the Company's verticals.

EBITDA¹

• In 2Q22, Valid reached an EBITDA of R$138 million, a growth of 88% YoY and 34% QoQ. The EBITDA reached is the best quarterly result achieved by the Company so far and for the 4th consecutive quarter, Valid breaks the record for this indicator. In the year, we totaled R$241 million in EBITDA (margin of 20.4%), a 79% increase on 6M21. The result was impacted by the following factors:
• 1. continuous rebound of the Identification fronts (Valid ID), mainly in the issuance of documents, having reached 6.3 million documents issued in the 2nd quarter;
  2. significant expansion in margins from the Payments vertical (Valid Pay), with emphasis on the better product mix and increased sales in Argentina; and
  3. maintenance of consistent results from Valid Mobile, with better product and customer mix management even in a scenario of global chip shortage;

Subsequent Events

• During July, Valid concluded the raising of a working capital line of R$30,000,000.00 with Banco do Brasil, maturing in 2026. This debt had been approved at a Board of Director's Meeting on June 21, 2022

MESSAGE FROM MANAGEMENT	EARNINGS RELEASE
	2Q22

Dear sirs,

Today we release the results for the 2nd quarter of 2022. Just as 2021 and 1Q22, the second quarter of 2022 is now marked as another period of important achievements for Valid. At the end of June, we held our Valid Investor Day (link), where our executive body presented more details about the initiatives developed by Valid, our main achievements in the last 18 months, our vision of the future, and how we will disclose our verticals from this quarter on, dividing the results into 3 divisions: ID, Pay and Mobile. In each of these divisions, we have Digital Solutions that help the Company to reinvent itself and propose new solutions to our customers and partners.

We successfully concluded the 9th Debenture Issue in June, raising a volume of R$250 million. Practically all creditors that had already participated in the 8th Issue back in 2021 engaged in this operation and in fact, demand exceeded supply by 1.6x, enabling a spread reduction by 125bps when compared to the 2021 Issue. All funds raised were used for the partial prepayment of the 8th debenture issue. The debenture issue, together with other bilateral agreements, ensured the extension of Valid's liabilities, the reduction of the debt spread, and will enable a more stable flow of amortizations over the next few years.

It is worth remembering that since 1Q21, when Valid's leverage (Net Debt / EBITDA) was 3.5x, management has focused on balancing liabilities. At the end of 2Q22, we registered this ratio at 1.2x, the lowest since 2014, as well as a comfortable cash position of R$515 million.

On June 30, 2022, we announced the sale of the ID and Pay assets in the USA to Giesecke+Devrient (G&D). The sale of these segments in the United States is part of the portfolio review previously disclosed to the market. We will continue to concentrate our efforts on developing investment opportunities in the Brazilian Identification, Banking & Payment Methods verticals, as well as in the global Mobile operation. We expect that the transaction will close by the end of 2022. During the 1st half of 2022, the units involved in this transaction were responsible for R$261 million in Revenue and R$22 million in EBITDA.

On June 30, 2022, we also announced the launch of Valid Ventures, the Corporate Venture Capital investment branch, and the purchase of a minority interest in IDTech Vsoft. Vsoft operates in the digital segment, which allows us not only to complement our geographic footprint but also to ensure the expansion of the product and technology portfolio.

In financial terms, we had considerable accomplishments. Net Revenue in 2Q22, considering USA data, came to R$602 million, an increase of 11% over the year-ago period and 3.8% above that achieved in the previous quarter. It is the first time in Valid's history that we have surpassed R$600 million in quarterly revenue. In 6M22, revenue reached R$1,181 million, up 15% on 6M21.

In terms of EBITDA, we ended the period with R$138 million, higher by 88% in relation to the comparable quarter of the previous year and 34% over 1Q22. Valid has now posted record-level EBITDA for the 4th consecutive quarter. Year to date and considering data from the USA, EBITDA reached R$241 million, up by 79% versus 2Q21. In terms of margin, we reached 22.9%, which represents an increase of 9.4% p.p. vs. 2Q21 and 5.2% p.p. vs. 1Q22. In the first half, margin stood at 20.4% (+7.3 p.p. YoY). In Net Income, we had a loss of R$22 million, compared to a loss of R$23 million in 6M21. The negative effect was mainly due to i) the devaluation of the Brazilian real in 1Q22, which affected the intercompany loan line for prepayments of foreign debt, and ii) the sale of US assets. It should be mentioned that these effects did not impact the company's cash position.

The next paragraphs will present the key events of 2Q22 broken down by our main business lines. As mentioned earlier, the products and services that were part of the Valid Digital Solutions (VDS) vertical, as of this quarter, will be presented within the ID and Pay fronts, as we disclosed during our Valid Investor Day.

In the Identification (ID) segment, 6.3 million documents were issued in 2Q22, a 42% growth when comparing to the volume issued in 2Q21, the period affected by the second wave of COVID-19. This number of issues represented the highest volume in the last 15 quarters. In 6M22, the volume of issued documents reached 12.1 million units, 52% more than the volume recorded in the same quarter last year. In financial terms, in the first half, we registered growth of 27% in Revenue and 125% in EBITDA, with margin reaching 30.2%, 13.1 p.p. above 2Q21. In this quarter, we started the production of ID Cards in the State of Minas Gerais, an important market in which we won the bid at the end of 2021.

Following the changes that have been taking place in the identification segment, in partnership with the State Government of Rio Grande do Sul, Valid issued the first national ID Cards based on Decree 10,977 of 2022. In addition to Rio Grande do Sul,

MESSAGE FROM MANAGEMENT	EARNINGS RELEASE
2Q22

other states and the Federal District are involved in the Pilot Project for the Issuance of New Brazilian ID Cards. The fact that we are the leading company issuing polycarbonate documents in Brazil is an advantage and can boost document sales over the next few years.

In the Payments (Pay) segment, we posted revenue growth of 14% when compared to that achieved in 6M21. We highlight the 143% increase in EBITDA and the 16.8% margin achieved, above the margins observed in recent periods. We will continue to work on optimizing costs and improving contractual terms with our customers throughout 2022, in addition to our ongoing efforts to increase production of bank cards for our customers. It is worth mentioning the result achieved in our operation in Argentina which, after the weak results in 2021, observed a strong recovery in terms of volumes.

To strengthen our presence in the Payments market, on July 1st, 2022, we announced Cristina Bonafé as our Banking and Solutions Officer. Ms. Bonafé has more than 20 years' experience at the Itaú Unibanco Group, where she has worked in different segments, bringing a thorough view of the business. She worked in the Itaú card area for almost three years, leading private label portfolios with important clients (Hipercard, Marisa, Ipiranga).

The Mobile segment continues to deliver good results in terms of Revenue and EBITDA due to the favorable dynamics that have benefited sales. Year to date, Revenues grew 19% versus the same period in 2021, with EBITDA increasing 20% compared to 6M21. EBITDA Margin stood above 25% both in the quarter and in the first half. This segment's EBITDA margin ranged between 20%-30% for the 8th consecutive quarter now. Valid's focus has been to operate in more developed markets that demand higher revenue and added value products.

In the 3rd quarter, we may have the conclusion of the 2nd stage of Valid's private capital increase process, which started in 2021 and could bring a cash boost of up to R$110 million. An eventual inflow of these funds will be used for an additional payment of the 8th debenture issue, further reducing the Company's cost of capital.

In August, we will hold the Valid Day One event, which will be attended by all of the Company's employees with the purpose of strengthening our values, aligning the next steps and celebrating the Company's achievements. It is important to stress that none of what we have delivered over the last few quarters would have been possible without the full support of our worldwide team of employees.

We are pleased to end another quarter with many achievements and will remain dedicated, counting on the support of all our employees to deliver higher and even better results.

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

CONSOLIDATED RESULTS	EARNINGS RELEASE
2Q22

	Consolidated Results (R$ million)
		2Q21			2Q22				Var. %			6M21			6M22			Var. %
Net Revenues	402.2			463.9				15.3%			777.8			919.9			18.3%
Costs of goods and/or service sold	(271.2)			(293.9)				8.4%			(544.5)			(598.1)			9.8%
Gross Profit	131.0			170.0				29.8%			233.3			321.8			37.9%
Gross margin	32.6%			36.6%							30.0%			35.0%
Operating Revenues (Expenses)
Selling expenses	(61.4)			(49.8)				-18.9%			(98.4)			(93.9)			-4.6%
General and Administrative expenses	(27.9)			(25.4)				-9.0%			(47.3)			(57.1)			20.7%
Other operating income (expenses)	(32.0)			(4.6)				-85.6%			(42.4)			(13.0)			-69.3%
Equity pickup	(0.4)			(0.9)				125.0%			(0.4)			(1.2)			200.0%
Income before finance income (costs)	9.3			89.3				860.2%			44.8			156.6			249.6%
Finance Result
Financial Revenues	52.4			73.2				39.7%			69.7			106.7			53.1%
Financial Expenses	(84.1)			(89.9)				6.9%			(120.0)			(208.1)			73.4%
																		n.a.
Income (loss) before income taxes	(22.4)			72.6				n.a.			(5.5)			55.2			n.a.
Income and social contribution taxes
Current income and social contribution	(1.7)			(18.9)				1011.8%			(10.7)			(25.9)			142.1%
Deferred income and social contribution	6.1			(7.2)				n.a.			10.9			7.7			-29.4%
Net income (loss) for the period after taxes	(18.0)			46.5				n.a.			(5.3)			37.0			n.a.
Net income from discontinued operations	(0.3)			(50.8)				16833.3%			(15.8)			(57.8)			265.8%
Net income (loss) for the period	(18.3)	(4.3)				-76.5%		(21.1)		(20.8)		-1.4%
Income (loss) attributable to:
Controlling interest	(17.6)	(4.3)				-75.6%		(22.6)		(22.4)			n.a.
Noncontrolling interest	(0.7)	0.0				-100.0%		1.5		1.6			n.a.
	Consolidated Results (R$ million)
		2Q21			2Q22				Var. %			6M21			6M22			Var. %
Net Revenues	541.1		601.5				11.2%			1,030.9			1,181.2			14.6%
Costs of goods and/or service sold	(399.4)			(413.7)				3.6%			(791.5)			(839.7)			6.1%
Gross Profit	141.7		187.8				32.5%			239.5			341.5			42.6%
Gross margin	26.2%			31.2%							23.2%			28.9%
Operating Revenues (Expenses)
Selling expenses	(64.5)		(52.4)				-18.8%			(105.0)			(98.9)			-5.8%
General and Administrative expenses	(35.9)		(31.7)				-11.8%			(62.6)			(69.7)			11.2%
Other operating income (expenses)	(32.0)		(72.2)				125.6%			(42.4)			(80.6)			90.0%
Equity pickup	(0.4)		(0.8)				100.0%			(0.4)			(1.2)			200.0%
Income before finance income (costs)	8.9		30.8				245.9%			29.0			91.2			214.6%
Finance Result
Financial Revenues	52.4		73.3				39.9%			69.7			106.7			53.1%
Financial Expenses	(84.0)		(89.9)				7.0%			(120.0)			(208.1)			73.4%
																		n.a.
Income (loss) before income taxes	(22.7)		14.2				n.a.			(21.3)			(10.2)			-52.1%
Income and social contribution taxes
Current income and social contribution	(1.7)		(18.9)				1011.8%			(10.7)			(25.9)			142.1%
Deferred income and social contribution	6.1		0.4				-93.9%			10.9			15.3			40.1%
Net income (loss) for the period after taxes	(18.3)		(4.3)				-76.3%			(21.1)			(20.8)			-1.3%
Income (loss) attributable to:
Controlling interest	(17.6)		(4.3)				-75.6%			(22.6)			(22.4)			-0.9%
Noncontrolling interest	(0.7)		0.0				-100.0%			1.5			1.6			6.7%