Institutional Presentation · TOTVS Customer Service and Relationship ... SPED, WC 2014, Olympics...
Transcript of Institutional Presentation · TOTVS Customer Service and Relationship ... SPED, WC 2014, Olympics...
Institutional Presentation
February 2010
10.6%
1983 1986 1989 1992 1995 1996 1997 1998 1999 2000 2001 2002
9.8%
10.0%
8.4%
6.5%
11010698
63
3524
17
CMMI 12.4%
IPO
13.9%
392
247
173
18.4%
490
21.9%
2004 2005 2006 2007 2008
33x EBITDA11x Revenue
2009
12.4%
126
2003
Growth:17x EBITDA
8.5x Revenue
Operating LeverageStrengthening / ExpansionFoundation
ProprietaryTechnology
Startup ofMicrosiga
Franchising System
ISO 9001
Argentina
ISO 9001: 2000(Franchises)
Mexico
Acquisition
Focus on management
and results
Growth inMargin
Midbyte and BCSAcquisitions
Acquisition
Gro
ss R
eve
nu
e (
R$
mill
ion
) an
d E
BIT
DA
Mar
gin
(%
) 1
(1) EBITDA Margin does not include extraordinary expenses.
Success Track Record
2
760
20,6%
25.2%
1,080
Cross-Selling
Structure of Business Model
(1) Does not include close to 4,000 employees of our franchises(2) Inclues Infrastructure, HR BPO, Education and Service Desk
CoreSynergies Synergies
TOTVS Customer Service and Relationship
Software – Base and New Clients ServicesExpanded Business
Technology
ERP CRMBusiness
Intelligence
VerticalModules
Consulting
Value-Added Service2
3
TOTVS
62 Full TOTVS Distribution Channels
+ 24,800 customers~ 5,000 direct employees¹
Flexible Technology
Digital TV
4
Macro/Marketchanges
… and in 2010!
Companies’ basicneed
Under-penetrated
market
Environment
Strong Fundmentals
Fundamentals
TOTVS Success Equation in 2009…
Eletricity, water, telephone and software
SPED, WC 2014, Olympics 2016, PAC (infra-structure)
Brazilian SMB marketis 7.0% penetrated
according to Gartner
Latin America
Technology and Product
Fundamentals and Business Model
Distribution
5
TOTVS’ Differentials
LICENÇALicences Services Maintenance
Market
Latin America – growth and TOTVS’ market share
Sou
rce:
Fo
reca
st:
Gar
tner
En
terp
rise
So
ftw
are
Mar
kets
, Wo
rld
wid
e, 2
00
8-2
013
, 1Q
09
Up
dat
e 11.9%
11.5%
10.5%
7.4%
5.0%
2.3%
Latin America
Asia/Pacific
Japan
N. America
Middle East
Europe
ERP 2008-2013 estimated growth
Brazil46%
Mexico 28%
Argentina 10%
Venezuela8%
Chile3%
Peru3%
Colombia 2%
Source: IDC Latin America Semiannual ERM Applications Tracker 1H09
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Market
Estimates
Latin America ERP spend
Market Share LA
A
B
C
D
38.8%40.9% 40.7%
38.8%
14.6%
16.0%18.1%
20.4%
15.4%
13.2% 12.2% 12.8%
8.4% 7.8% 7.9% 8.6%
3.7% 3.2% 2.9% 2.5%
2006 2007 2008 1H09
LatestUpdate
7th Worldwide and leadership in Brazil
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Source: IDC Latin America Semiannual ERM Applications Tracker 1H09
163
179
186
208
210
216
247
284
353
796
1313
1,313
1,696
2,719
Kenexa
IBM
Epicor
Cegid
Agresso
Concur
Exact
TOTVS
Lawson
Microsoft
Infor
Sage
Oracle
SAP
License and maintenance revenues, in USD million
Source: Gartner - ERP Software, Worldwide, 2008.
Market
2008 ERP Worldwide Ranking Market Share Brazil
32.9%34.4%
37.9%
41.7%
33.2% 34.1%32.0%
30.0%
10.5%8.8% 8.3% 8.5%
5.6%5.2% 4.9% 5.5%
3.9% 3.2% 2.9% 2.3%
2006 2007 2008 1H09
LatestUpdate
A
B
C
DE
Revenue/Business Model
New Customers
Base Customers
NewCustomers
BasicImplementation
Base Customers
New Licenses
New Modules
Consultingand
VAS+
Licences
Services
Maintenance
New Licenses
CorporateModel
TOTVS’ Business
8
Updates Upgrades(New version)
Help-desk
0.34 0.34 0.34 0.34 0.34 0.34 0.341.00
0.34
2.00
Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8
Traditional model Corporate model
No new licenses sold1 new licensesold per year
Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12… …
(1) IBGE estimates about the Brazilian market. (2) Source: Gartner “Dataquest Insight: TOTVS and the Brazilian SMB ERP Landscape”, mar’09
646
468,000
5,297,000
250 +
50 - 250
0 - 5
Large
Medium
Small
Micro
5 - 50(revenues of over
R$15 million/ year)
~ 24,800Active customers
64.2%Market Share
~ 38,700‘using’ ERP
468,000SMB market size
~ 8.2 %Penetrated
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Market
Positioning Users # Companies1
Penetration
Gartner Estimates2 7.0 %
Penetrated
Industrial 46%
Services 21%
Retail10%
Financial 11%
Other 12%
Diversified client base
Datasul and RM Sistemas contributed to diversify even more the company’s client base
(1) Based on TOTVS 2008 revenue.(2) Industrial sector includes: chemicals, food, plastic, rubber and metallurgy industries as well as others.
Client Breakdown by Sector 1 Revenue Concentration 1
11-100 Largest
12%
Others83%
10 Largest
5%
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TOTVS’ Business
Flexible middleware allows product integration
User View.
The language is responsible for communicating application commands, as ERP, to the next technological layer, the middleware.
The middleware acts as an interpreter and facilitator, “translating” and connecting the language commands with the framework. TOTVS Tec, the middleware developed by
TOTVS, translates and communicates the ADVPL and 4GL languages to a wide range of operating systems, working with any hardware. It provides platform independence and
access to the most advanced resources, such as SOA and Web Services.
The middlewares available in the market work based on a framework. TOTVS Tec’s framework is developed in C++ and is able to operate on any operating system, giving the
customer flexibility in the choice of the technology platform.
Middleware TOTVS Tecflexibility
O.S
.
Dat
abas
e
ERP
ADVPL 4GLProgress
ABL
Unix Windows OthersLinux
Oracle DB2
SQL Others
Framework
Languages
Har
dw
are
Intel OthersPowerPC
(Intel)
.NET
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Technology
Segment approach
Strategy
+700 Brazilian institutions, +1.5 million students, choice of 67% of the consolidating groups
50 out of 100 biggest Brazilian
and 20 international builders, 450engineering and design customers
22k portfolios, 4k funds,
120k/day consumer credit
transactions, R$1.5 tri assets under custody, LA Financial Market Top provider
+200 sugar cane producers =
50% national crop, 120 grain
producers = 1 million hectares
+1,110 extractive and processing
customers, +1,000 metal and
plastic, +1,400 capital goods
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Distribution Logistics
Financial Services
Agrobusiness
Manufacturing
Constructionand Projects
Services
Educational
Health
Legal
Small BusinessRetail
Specific offering : Vitrine, First, Personal Med and 4Transport+900 department stores, +140
supermarkets, +280 building materials distributors
7 out of 10 top law firms,
10,000 lawyers
+1,600 wholesaler distributors,
20% of shippers customers also have CRM
12 million lives, +9,700 beds,
medical registers to 35 specialties
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Distribution Logistics
Financial Services
Agrobusiness
Manufacturing
Constructionand Projects
Educational
Health
Legal
Small BusinessRetail
2,300 services providers, 400Utilities providers, 470 travel and
passengers transportation
Services
Segment approach
Strategy
International Market
Subsidiaries
Products only
Source: Forecast: Enterprise Software Markets, Worldwide, 2008-2013, 1Q09 Update
►Gartner: expected growth: 12% 2008-2013 CAGR
►IDC: TOTVS’ SMB Market Share: 31% in 2007 vs 27% in
2006 – 1st company!
► Products over 17 countries
►Excluding Brazil:
+600 clients,
+25 distribution channels,
+380 employees.Franchises
►1 subsidiary, Portugal
►1 franchisees, Angola
►+30 clients, over 6 countries
Latin America
Other geographies
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Distribution
15
2009 Abstract
Success equation
Consistent ResultsStrong
FundamentalsSegmentApproach
Main challenges
Brand Datasul integration Distribution channels
• Investments in several brands
• Strengthening of a unique brand
• Bigger acknowledgement
• Different processes and politicsbetween Companies
• Unique Corporate ERP• Processes unification
• Negociation with Datasul development franchisees
• Distinct models and politics to each product
• Alignment of 95% of theBrazilian channels
• Uniformization of thetotality of Latin America
channels
4Q
08
4Q
09
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Distribution channels
Evolution in TOTVS products distribution
2007
Channels divided by brand
77 direct channels
1H08
Multi-brand channels
39 TOTVS franchisees
2009
Unification concluded and newchannels in Latin America
62 Full TOTVS channels
2H08
New integration withDatasul
+47 new franchisees
4Q09 and 2009 Results
► Historical record in all revenue lines:
Net Revenue: organic growth of 14.6% compared to 4Q08, reaching R$267.427 million in 4Q09.
The year totaled R$ 988.7 million, 17% higher than 2008.
Licenses Revenue: R$65.954 million in 4Q09, 5.4% over 4Q08. Considering 2009, growth of
6,7% over last year, equivalent to R$249.4 million.
Services Revenue: growth of 8.7% (4Q09 vs. 4Q08), amounting to R$90.475 million. The
progress of 16.6% between 2009 e 2008 corresponds to R$332.1 million in 2009.
Maintenance Revenue: R$135.526 million. Growth of 18.7% in comparison to 4Q08. The year
amounted R$498.8 million or 18.1% superior to 2008.
► Costs and Expenses: lower than revenue’s growth between 4Q09 vs. 4Q08 and 2009 vs. 2008.
► EBITDA: R$64.199 million in 4Q09, 24.5% over 4Q08. 2009 Margin is 25.2%, 400 basis-point bigger
than 2008.
Financial Highlights
OperationalHighlights
► According to Gartner, TOTVS is already the 7th largest ERP Company in the world.
► Interest on Capital amouting to R$22.5 million.
► Acquisition of distribution channels, M2I and M2S in Salvador/BA.
RecentEvents
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► License sales to 4,823 clients (new + existing clients) in the quarter. 22.9% superior to 4Q08. In the
year, 17,754 clients bought new licenses, growth of 22.1% over 2008.
► 740 new clients in 4Q09, growth of 22.7% over 4Q08.
► Client base amounts approximately 24.8 thousand active clients.
4Q09 and 2009: Revenue record in all lines
143.8167.3
204.5
259.9
292.0
128.3151.7
184.9
233.4
267.4
4Q05 4Q06 4Q07 4Q08 4Q09
Gross Revenue Net Revenue
In 4Q09, new revenue record is reached...
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530.3611.9
734.0
940.8
1080.3
472.5549.1
662.3
844.9
988.7
2005 2006 2007 2008 2009
Gross Revenue Net Revenue
Gross and Net Revenue (R$ million) 1
(1) Values are pro forma as they include the numbers of RM Sistemas, acquired in April 2006 and Datasul, consolidated in September 2008 in the period analyzed.
Financial Performance
The gross and net revenues reached historical record in both 4Q09 and 2009.
2007 2008 2009
2,358
...with operational indicators improvement...
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2007 2008 2009
126.5 147.1170.8
233.7
249.4
2005 2006 2007 2008 2009
... Such as the mark of 2,591 new clients in the year...
Clients Served License Revenue (R$ million) 1
Financial Performance
New Clients Base Clients
(1) Values are pro forma as they include the numbers of RM Sistemas, acquired in April 2006 and Datasul, consolidated in September 2008 in the period analyzed.
The number of served clients reached historical record in both 4Q09 and 2009.
The licenses revenue reached historical record in both 4Q09 and 2009.
2,476
2,591
8,017
12,069
15,163
…and robust growth of services and maintenance.
273.4298.0
347.1
422.3
498.8
2005 2006 2007 2008 2009
130.5 166.8
216.1
284.8
332.1
2005 2006 2007 2008 2009
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Services Revenue (R$ million) 1 Maintenance Revenue (R$ million) 1
Financial Performance
(1) Values are pro forma as they include the numbers of RM Sistemas, acquired in April 2006 and Datasul, consolidated in September 2008 in the period analyzed.
The maintenance revenue reached historical record in both 4Q09 and 2009.
The services revenue reached historical record in both4Q09 and 2009.
EBITDA and margin grow leading to guidance review
EBITDA (R$ million) 1
88.0112.7
144.2
178.9
249.318.6%
20.5%
21.8%21.2%
25.2%
2005 2006 2007 2008 2009
Margem EBITDA
(1) Values are pro forma as they include the numbers of RM Sistemas, acquired in April 2006 and Datasul, consolidated in September 2008 in the period analyzed.(2) To complete information about the margin EBITDA guidance update. consult the 4Q09 Earnings Release.
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Integration gains
17.0%
15.9%
5.5%
7.3%
-15.3%
Net Revenue
Cost of Services (+) R&D
G&A (+) Management fees
Selling expenses
Licenses Costs
Growth 2009 x 2008
New guidance2: EBITDA margin from 27% to 30% between 2013 and 2016
Financial Performance
2005 2006 2007 2008 2009
530.3
940.8
734.0
611.9
23.8%
24.6%
51.6%
27.3%
24.0%
48.7%
23.3%
29.4%
47.3%44.9%
30.3%
24.8%
1080.3
23.1%
30.7%
46.2%
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Revenue Breakdown
Gross Revenue (R$ million) 1
Financial Performance
Licences Services Maintenance
(1) Values are pro forma as they include the numbers of RM Sistemas, acquired in April 2006 and Datasul, consolidated in September 2008 in the period analyzed.
90.7
118.410.7%
12.0%
2008 2009
(1) Values are pro forma as they include the numbers of RM Sistemas, acquired in April 2006 and Datasul, consolidated in September 2008 in the period analyzed.
(2) Excluding depreciation. amortization expenses and non-recurring expenses.
25.4 30.5
10.9%11.4%
4Q08 4Q09
19.2 19.3
8.2%7.2%
4Q08 4Q09
5.8
10.3 2.5%
3.8%
4Q08 4Q09
74.5 76.3
8.8%
7.7%
2008 2009
26.030.7
3.1% 3.1%
2008 2009
665.9 739.4
2008 2009
181.9 203.2
4Q08 4Q09
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R&D (R$ million) x R&D / NR Costs and Expenses2 (R$ million)
G&A (R$ million) x G&A / NR Marketing Expenses (R$ million) x Mkt. Exp. / NR
Financial Performance
Costs and Expenses Dashboard 1
Financial Dashboard 1
(1) Values are pro forma as they include the numbers of RM Sistemas, acquired in April 2006 and Datasul, consolidated in September 2008 in the period analyzed.
(2) Net income adjusted refers to net income excluding the effects of goodwill, amortization, net of tax. Hence, it can be understood as net income from the Company’s regular operations.
Financial and Operational Performances
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R$ million 4Q08 4Q09 Δ Q/Q 2008 2009 Δ Y/Y
Net Revenue 233.427 267.427 14.6% 844.854 988.679 17.0%
Gross Profit 152.594 176.757 15.8% 550.185 669.092 21.6%
EBITDA 51.545 64.199 24.5% 178.936 249.265 39.3%
EBITDA Margin 22.1% 24.0% 190 b.p. 21.2% 25.2% 400 b.p.
Net Income
Adjusted 2 32.552 45.495 39.8% 129.292 159.924 23.7%
(-) Cash: R$207.7 million
PROSOFT: 3Q08, BNDES
► Amount: R$ 209.8 million
► Current estimated cost: 8.5 ~ 9% p.a.
► Period: 2 + 5 years
Debt by the end of the period : R$427.2 million
Cash and Debt on 12/31/2009
Debentures: 3Q08, Debentures holders (BNDES and others)
► Amount: R$ 217.4 million
► Current estimated cost: 10% p.a.
► Period: 8 + 3 years
= Net debt by the end of the period: R$(11.5) million
Net Debt
25
(-) Short-term trade accounts receivable: R$231.0 million
= Net debt by the end of the period: R$219.5 million (0.9 x EBITDA 2009)
What it was like in 2009
Challenges
26
» REVENUE RECORD1
• Licenses: R$249.4 million, +7%• Services: R$332.1 million, +17%• Maintenance: R$498.8 million, +18%
» OPERATIONAL RECORD1
• New clients: 2,588, +5%• Base clients: 15,163, +26%
» EBITDA RECORD1
• R$249.3 million, +39%• Margin of 25.2% , +400 basis-point
2009 ResultsIn 4Q08
2010 Main drivers(1) Growth over 2008
Fundamentals + Execution
The material that follows is a presentation of general background information about TOTVS and Datasul activities as of the date of the
presentation in February 2010.
It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to potential
investors.
This presentation may contain statements that express management’s expectations and/or forecasts about future events.
These expectations and/or forecasts involve risks and uncertainties that could cause actual results to differ materially from those
projected in such forward-looking statements. Therefore, the future results of the company may differ from current expectations and
readers must not base their expectations exclusively on the information presented herein.
No representation or warranty, express or implied, is made concerning, and no reliance should be placed on the accuracy, fairness, or completeness of the information presented herein.
This document does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities.
Neither this document nor anything contained herein shall form the basis of any contract or commitment whatsoever.
Contacts
www.totvs.com/ir
QUESTIONS
Safe harbor
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