TOTVS S.A. (TOTS3) Earnings Call Transcript & Summary

Hey, it's great pleasure to be here with all of you. I'm very glad to attend Investor Day today to kick off this Investor Day. This has been amazing together with Photos Universe. For those who are here in person, who had an opportunity to walk around, you saw that the event is bigger this year, you saw that the business energy is everywhere. And also with us during the next 2.5 hours, it won't be different. We prepared some very good content here for our Investor Day with all of our executives. I will you all a very good event. And at the end, I will come back for the Q&A session. And now I'll pass the floor to Dennis, our CEO, who will kick off our Investor Day.

All right, Sergio. I'm thinking if I -- I'm thinking here, should I -- should I take a selfie with investors and analysts here? I don't think I should. Should I? They will be happy, but instead of asking who is a TOTVS' fan, I'll ask who has TOTVS' shares. Good morning, everyone. As Sergio mentioned, I think that the nicest thing about Investor Day is the fact that it happens within the TOTVS universe event and also the fact that we also have open access to what I call the TOTVS kitchen. And we're talking about having access to product demos that are not doing for you, but for customers and having access to customers from different segments and from different locations in Brazil of different sizes and our different products. You are now guiding to see our customers and our units, you're also witnessing the interactions between the different dimensions of our strategy, operating together. So I am actually more than happy. I am delighted to see that TOTVS has the ability here to give you this transparency, this openness and this access to all of you, who are important stakeholders for us in our lives. Well, my presentation will be relatively fast. And basically, I will show you here why TOTVS exists and why TOTVS is as successful as it is. And obviously, I'll show you where we are going our next steps. We'll start following this order from left to right. Basically, I'll start by saying that our purpose as a company is to enhance the results of different companies and different customers. This is the reason why TOTVS exists. This is the reason why we open our stores every day. And when we have this focus, when we have this purpose of improving company's results and our customers' results, this in practice means that our strategy is based on increasing and enhancing our relevance within the client base. So if you ask me to summarize in one single phrase, the strategy of TOTVS, I would say that our strategy is to expand our relevance within the client base. For those who still don't know what we are pursuing. Once again, we are seeking to expand our relevance within the client base. So from a numerical point of view, this means roughly speaking, increasing the share of wallet. So when we create new dimensions, when we create new products, we are doing what I mentioned before, we want to increase the share of wallet within our client base. And of course, the way we found to increase our relevance to expand our relevance and increase the share of wallet of our clients was to become a trusted adviser. That's the way we found to fulfill our goal. Becoming the trusted adviser of a company is a major responsibility for us, and this is what explains the way we operate. And this also is a reflection of the profile of clients we work with. We should not adopt a strategy and a trusted adviser positioning if it didn't work with the profile of clients that we do. These things are directly interconnected. If we were to work with large enterprises only, meaning very large global clients, our client -- this client profile does not want a trusted adviser, but this mass of clients here within this universe, I can tell you, rest assured that all they want is trusted adviser, they want a company that they can trust on, they can tell them about AI, showing that this is not a threat. Our customers see that this is a threat, but we want to show them that's actually a business opportunity. They want someone they trust to use AI to improve the results. So if you want to understand TOTVS' assets and TOTVS' strategy. Just look at this slide. As I mentioned, in the last 5 years, this strategy has been translated into building a tridimensional ecosystem. On one hand, we have the so-called business dimension. We also have Techfin in financial services and we have the so-called business performance pillar. And all of that together is what at the end of the day, generate this position. This is what sustains and solidifies this position as a trusted adviser that we occupy. When we look at the management dimension, we developed a concept within TOTVS that I talked to you about recently. And this is a concept that has been considered our master key of our relationship with our clients. And what does it mean when we talk about master key? Well, this means that we have a type of product or in our case, a dimension, which is the dimension that will drive from a relevance point of view, the relationship with each type of client we have. The fact that we have a master key doesn't mean that we don't have the opportunity to sell other dimensions, but the dimension that drives this relationship is the master key. And when we talk about the SMB profile at TOTVS, the master key is management -- the management dimension. So when I'm asked, what will our sales mix and our revenue mix look like in the future. My answer is always, I have no idea. And honestly, I'm not really worried about that. Internally, we don't have any specific targets around the size of our management or the size of our Techfin dimension or business performance dimension, the market will be the one to determine that. But it is very clear to us that the master key of our relationship with SMB clients is management. When we look at a client that is at the basis of our pyramid, our master key in this case, is business performance. That's where the relationship starts normally and where there is a greatest adherence to the real need of our client. So that's why we're talking about a simple product, the Bemacash product in the past possibly didn't work within TOTVS because it was focused on a system where the value proposition did not have the same level of relevance as business performance. But within our SMB, we know that master key here is our management system. It is important to keep that in mind. When we delve into our management dimension, maybe the most important messages that can be shared here show that on one hand, our management market growth, roughly speaking, thrice more than our GDP. I'm not talking about something that is happening now. This is a long process that has been going on over the past 10 years. TOTVS has been increasing, has been growing 50% more than the market itself. And so of course, we have been gaining market share. And when I say that, we are gaining market share, we are doing so not only with new names, but also we're gaining the share of wallet of our clients. When we do cross-sell or upsell within our client base, what we're doing is we are expanding the management market faster than our competitors. So when we look -- and this is a point that I've been raising frequently. We know that a lot of people believe that the management market in Brazil is a mature market, but I am sure that this market is actually -- is very far from being mature. And this chart that we are sharing here showing software management expenses. This shows this -- this shows that Brazilian companies are spending much less than international companies with management software, which explains why our market is increasing so much faster than our GDP. This also shows why our market is growing and why our company is growing so much. The fact that we have still been spending. We haven't been spending as much as we should. And that's why at the end of the day, we have been delivering growth at 2 digits. And I remember that when we started delivering this kind of growth in recurring revenue. And this was back in 2019. I can remember that. There was always a side, which expected this growth not to be sustainable, but again, it's been 5 years in a row and we've seen that this growth has been accelerating from a real growth perspective. This is the largest growth that we have seen. And again, this is explained here on this graph. When we look at the market size, we see that we can multiply, we can grow this market threefold. And this is if we don't consider that constantly new solutions are being launched, expanding the scope of a management software. And TOTVS share, when we look at this expanded market, is actually much greater than the 50% that we normally hear of in the market. So just to finish talking about this management dimension. This is the dimension that combines growth with profitability when the world changed at the turn of 2021 to 2022. This has never been a dilemma. The management dimension has never had the privilege to choose growth at a detriment of profitability. We've always had to combine both things. And this is shown by the level of growth of our recurring revenue and also by the margin expansion that we had over this period. Roughly speaking, every time a software company accelerates the growth of its recurring revenue, this company will gain margin because the software business model is a very highly profitable model. When we talk about business performance, we see here a rate of growth of our market, which is much bigger than the growth of our nominal GDP. This is much simpler to understand because we know that business performance applications are still very recent, and the level of maturity of this market is also much lower, but again, we can see that TOTVS has a much greater performance than the market as a whole. This means that we are gaining market share. Today, this is a synonym to this -- to our category. When we look at the size of the market, we can see that we can still multiply this market by more than 10x. The American market is a major proxy some years ahead of us. This is a market with a level of maturity and penetration, which is much higher. Brazil will definitely get to this level of maturity. Business performance in this business performance dimension, the biggest name of the game is the transition of what we call a single product platform to a multi-product platform. So from a practical point of view, what we are building around business performance is exactly what we built in the past in the management dimension. Two decades ago, what we saw in management was precisely that, a platform with a single product with a single approach. And what we did in the management, I mentioned in a very successful way, was transforming this into a multi-product platform and this is precisely what we are building here too. So these subjects such as cross-sell, upsell, we are deeply familiar with them inside TOTVS and management systems, but they're increasingly present and concrete within the business performance around. And evidently within management, new names is also extremely important in business performance. New names is even more significant precisely due to a lower penetration of and size -- lower size of this market. When we head to the final corner here of our slide, we can see that the same dynamic that happened in the management division is also happening in business performance. In other words, we have successfully even [indiscernible] increased revenue with profitability. So when we look at our more mature products of the RD such as the digital marketing platform. These are products that have been running within a bit high-teens margin. We have carried out a lot of acquisitions and made a lot of organic launches within business performance. And this naturally lowers the margin of business performance. Regardless, it still has increased in an expedited manner. But when we have the main organic RD products, these products already have a high-teens margin. I am certain that the unit economics of business performance tends to be better than the management unit of economics. If business performance today instead of BRL 500 has BRL 3 billion as the management department has, it will be likely that the EBITDA margin of this dimension will be greater than the EBITDA margin of the management department. And so I think we're really making headway. When it comes to reaching business performance and having it at the same extent as management. And then the last slide, I'll talk about Techfin which in recent years, I've been hearing a lot of questions, which I didn't hear before. One of them in the Itaú Banco Conference a little over a month ago. It was an interesting question made by an international investor. So she basically asked me the following. You already have a remarkable management operation and system, you already have a remarkable business performance model, which is rapidly increasing and providing a lot of profitability. So why in the world did you choose to enter the realm of Techfins? Why do you still continue working in Techfin? And I actually thanked her for the question because as many of you already thought and of this question not necessarily made this question and she had the courage to make this question. So -- this slide was devised specifically with the answer that I gave her at that occasion. Generally speaking, the reason why we created a Techfin dimension and the reason why we invest to build the Techfin dimension is summarized here. So we're talking about an enormous market, much larger than management market. Even when we have -- we cut out certain segments focus, let's say, on the types of products we are building today, not necessarily on the final product that we'll have M&A short while. So TOTVS' market share in this market is insignificant. Nowadays, it's a huge market, but we have an insignificant share. In other words, any type of gains of shares that we attained in this business will be incredibly important for TOTVS. We have the opportunity with Techfin to build a significantly larger business than the combination of business performance and performance. On the other hand, why would I have a huge market and a small share if I didn't have a value proposition that was disruptive. And I am confident that we have this disruptive proposition. When we look at the financial market credit/cash management for companies at the SMB, I see a client -- a customer journey, journey and a credit modeling that is exactly the same as what I saw 10 or 20 years before. So the revolution that took place and the offer of financial products to individual persons did not happen to companies and much less when it comes to the SMB. And so it's exactly here that we are building this value proposition that which we call ERP Banking, which is the merge of a digital journey and management systems with the use of data of this management system, which are the most valuable data that is available for any type of credit modeling and not only for credit modeling, it also helps to recognize the right moment to offer the appropriate service at the right pricing. So this is the value proposition -- the disruptive proposition of value that we are offering with an enormous market where we have an insignificant market share. To add to this, we devised a business model, a JV upon which risk is extremely low. And as you're well aware, the credit card portfolio that we are working with. We have a model where the regulatory level is the lowest possible within the market. We are and will not be a bank. We are in SCD. Therefore, the weight of regulations and the cost thereof are extremely low for these operations and what is more, we don't have to invest BRL 0.01 of these highly profitable management and business performance operations to bet on this take place. Techfin is emerging supplier and the organic side -- organic side is absolutely self-sustaining. The supplier provides a result that is larger than the one in the organic side of Techfin. If that weren't enough with this merger of these operations, as I referred to, we further had an investment made by Banco Itaú and the creation of Itaú in the sum of BRL 200 million. In other words, what we have here, and this is the answer that I provided to that investor is that we have a free option of something that is enormous where we basically are not represented with a disruptive value proposition and a risk that is extremely low and without the need to add a single cent. The question should be the opposite. Why in the world didn't we start this investment before? And the answer is straightforward because it wasn't possible. So I would like to wrap up my talk exactly by showing you a bit of some of the figures of TOTVS, a operating cash flow that doubled in the last couple of years, a result of cash earnings that also grow in an expedited manner. And also because the people ask me what will we do with all this cash flow. So it will be a combination of all these elements. We find that the company has been and will be able to generate results to follow with the M&A strategy to continue providing repurchase programs and to continue paying our dividend. So Marcelo please, floor is yours. Thank you.

Good morning. So now, we'll talk a little bit about management, update you bit on some figures for those who are able to watch the last presentations. We will bolster some of those figures and expand on them and also provide an overview. We don't have the full content that we talked about, but you'll always have the opportunity to take advantage of the master throughout the event. So here, this seems a bit obvious, especially since management is the most mature dimension when it comes to existence of time. We wanted to provide an overview -- 1-page overview of what we are talking about when it comes to management. So throughout the conversations that you have with us regarding management, we will always talk about solutions tailored to a specific segment of business as well as solutions that can be applied to any industry. And we will also talk about subjects that are technology and the data and AI related in addition to cloud strategy because particularly within this management setting this is a very relevant subject. So as I said, if we were to have a 1-page overview of the main subjects and how they unfold when we double click on each segment. These are the subjects that we will be addressing. So the first double click here. Why has the cloud service been so important for us and a significant share of our efforts. Because in addition to the business itself denoting an interesting participation of results and revenue, it also helps to enable all those elements that we talked and touched upon, which also comprise the dimension itself as well as other business performance and Techfin dimensions. So the cloud strategy is to keep our vision of having a cloud focused on purpose. Here, we have a graph which acknowledges the fact that this approach of having a specific purpose cloud will be something frequent within companies, they won't use cloud solely as enabler of infrastructure data and will use cloud as means to leverage transformation and innovation. So to this end, we consider ourselves to be well prepared because we are constantly broadening the portfolio that our cloud has to offer in TOTVS projects. And more recently, we also allowed our clients to have certain generic capacities of clouds working together with the cloud that they work with in their portfolio. It's important to note that we are very careful when it comes to having a hybrid strategy. In other words, we have clouds that we are managing as well as public management and having a multi-cloud strategy, in which public providers also have relationships with us, and we take advantage of this approach to get to know more about what each one of them is doing? What are the specific traits that can benefit or not our strategy and how we will run this in our daily operations alongside our customers. So here are some important figures both when it comes to investors and customers, and these are figures that provide soundness and relevance when we talk about cloud with our customers. So the growth of the revenue here. We are enhancing our capacity to our customers through several availability zones. I already talked with some of you here another moment talking about how we changed from 2 to 3 zones of availability, whereas now we have already 10 zones in place and also the availability of the product to use the cloud. Many times, it's a client only procures the availability of the clouds. But here in turn, we are able to follow up on the end use of the customer and that solution, the gain of efficiency in which customers really cut down significantly on costs, and this is a broad overview, not only on direct cloud consumption, but also on the facilities and options that we offer to customers and managing the services regarding also everything that is collateral and outside to these services, and we are continuously expanding our portfolio and catalog with additional opportunities that we perceive when we talk to our customer. Another point that is important to mention as we quickly touched on the opening session, in which they showed a lot of AI examples. They didn't have visibility of so many things happen. But now you'll have the chance today in conversations with us and also with everything that we made available in the event to realize that in each presentation or track that you visit, if there is a seal there calling AR universe, you will have that application solution with AI solution offered. You can question the presenter host there or talk to our team that works with AI and is also here in the event, and you can clarify any more specific or technical doubts with them if you wish to do so. So what are the pillars that we use to ensure that we are approaching AI with intelligent safety and relevance for businesses. So at all times, we look at whether we will work with an application that relates to generating knowledge or know-how or in turn, an app that will enable an action plan on a business, which, in this case, would be live in action and furthermore, facilities to consume and build within our own products, the built and code. So having an assistance that, for instance, will help you to code product lines, gain productivity, not only for our own development teams, but also for customers that may wish to customize or enhance the features of our products by means of the tools that we provide to them. So all of this with the outlook of a platform. So here, I'll talk a lot about platforms, whereas Marcelo will site functional applications of these platforms. And so the main message that I would like to convey regarding platforms is that we are conducting an approach in our own way to ensure that if we eventually have to use technological assets or new launches, then we can mitigate the impact of these factors with our clients. So people ask me Gustavo are you working based on ChatGPt or Google or market models. And I reply that we are exploring all of these aforementioned models and seeing what each one brings to each specific situation as well as our own efforts. We have a platform that we devised. So the consumer isn't concerned whether that originated from a specific player A or player B, he will have the opportunity to use a framework that will help him to use all these specific traits. And here on the screen that you can see, this is a real example. We have a cogenerator and we focus on our proprietary technology with ADVPL with TL++, that's our AI assistant, and it would be no use for us to do that only for market technology. We have also been exploring for normal technologies, but we also wanted to experiment this with our proprietary language. There you can see an example of a code being generated based on a prompt, a developer entered a prompt, and that's how this code creator generated a code to be used. So this was, in summary, the guide that we have been used to evolve these platforms, and you will have the opportunity to learn more about this and learn more about different business cases that were mentioned here and some that are also available in our event. It's also important to mention that we have focused strongly on AI showing how we are approaching that. But there are also some other relevant topics that we'll have the opportunity to learn more about and see innovations. We have ERPs, segmented solutions, niche products that serve different segments, for example, planning products, the HR suite as well. We have a lot of different organic developments as well that are making our HR suite a little bit more robust and broader in many different organizational aspects and also the constant discussion, which is to evolve not only interfaces, but also usability, allowing products to be more user friendly and functional. All of these topics are still being discussed in many of the items of our portfolio. As I mentioned, we feel very happy to see this happening. And we wanted to use tracks and see demos for you to also understand how it all happens in practice and how our customers are consuming our products as well. All right, everyone. I know that you all like indicators. So every time you hear a bell, is because a client signed something. So every time you hear this bell going is because one of our customers, a new customer bought something. So I'll tell you a little bit about our products now. But before, I would like to start with an interesting topic. We look at the fiscal reform as an opportunity. This is a topic that a few of you ask me and Gustavo about, but the fiscal complexity in Brazil will continue for at least the next 5 to 7 years. These software companies will have to be better structured to maintain 2 fiscal models, working at the same time in compliance and also sharing insights with their customers as to what the next steps are. Keep in mind that the reform has different dates as well. So it might be a good idea for you to change your schedule as well. So when it comes to systems, this is a major change, and we are structuring ourselves to deliver a better experience to our customers. And this is a unique opportunity. Smaller software houses will have the challenge of spending more to be compliant, but they won't necessarily see what their customers need. So we believe that this is an opportunity for us to understand investments. We have been reviewing the management portfolio to make sure that we can be compliant and we also want to help our clients as well. Regarding products, these are the verticals that we have today, the secret of our management I mentioned each one of this -- each one of these pillars. If we, for example, work with a clinic, we want to make sure that all of the different aspects are being taken care of, logistics and other areas as well. These features they help us with our journey and also help us adhere to our clients' core. And the more we adhere to our clients' core, the more interested they are in our products. This has allowed us to create a very good strategy, which is we sell a first strategy, and then we sell other solutions. Normally, logistics companies and agro companies, they must have different areas integrated manufacturing and others. So our sales team has the opportunity of having doing this cross-sell and expanding our presence. And for us, this is crucial, and we try to take advantage of that, creating opportunities for us to sell different products that we have and improve our business performance. Now I just want to give you a brief overview of what we have been doing with AI. We're not just creating technology for the sake of it. And why is this important? We won't spend time, money and product road map just to do something just because it's a hype. Everything that we are doing, we are trying to find real applications with effective gains for our customers. For example, for OCR, we are talking about millions of reals that our customers will save by having fewer people doing work that doesn't generate value. This is a nice thing, of course. Of course, somebody needs to look to see if what has delivered should have been delivered that way or else you will be transporting merchandise without the appropriate documentation. We are talking about simple solutions. Here, we are talking about using ChatGPT with our native products to find effective solutions. Another good point is found within our logistical suite. We are creating -- we are using generative AI here to help our clients in their decision making. What is highlighted here is that this is a very simple example of a yard for loading and unloading merchandise. A good manager would know that, for example, okay, this carrier is constantly late and then you can just separate a dock specific for this carrier. And then the manager needs to make a decision maybe the manager wants to spend more time with that provider, so the system here is helping the manager by saying, listen, this carrier will get here late or that carrier can work onload and offload fast enough, so you might have problems with our operations. So this system shows how you can change your process. So the management system, the vertical, the HR system and others, they are all structured processes. And there's a lot of intelligence that we can take to our customers when we provoke them by showing what the next step should be and what they could change in their processes. We always give recommendations. We do not take on the risk, but we help our customers in their decision making, making sure that they can fix their operations. And we can also help them understand the processes and products that are not working well and that they should change things around to get better results. This is the AI for construction. So within the construction cycle where the project supervisor needs to ask a question to the engineer. So for example, here, he wants to know more about how to work the concrete. So let's say the supervisor wants to talk to the engineer and the engineer is not available and he starts wasting time. So how can we use the knowledge that we have in the market for the supervisor's contacts. So what is the difference between Googling it and asking the chat bot, okay, well, when Googling it, Google will not have contacts -- enough contacts about the project. But within our bot, there will be information about the project regarding the materials that are being used. So as we can see, the difference is that the recommendations being given within a context, our AI considered all of the information available. We have a lot of information to give more assertive recommendations to our users. Another thing that I want to show you is how our collection system is used. And this system will manage payments and charges as well. We can see an e-mail here. The e-mails as well. I am an employee, this is in that. And anyone could read this, but what we do is the bot reads the e-mail and recommends actions. This is nice because it allows you to create processes and how you will react. For example, there was a tragedy in Rio Grande do Sul, you must program -- you can program, okay, how do you want your customer service representatives to react here? So this allows you to control how your company will be seen by the market? Again, we are talking about things that are customer-centric solutions. And finally, one important thing for us to mention is how even though TOTVS is creating new dimensions for our future, we are still focusing a lot on our management dimension because this is the driver of our company. In the past 5 years, we had a 35% growth in the area of recurring revenue. SaaS has grown even more. We have seen our clients migrating to cloud and we've seen them use the infrastructure that we use. Our management EBITDA has grown quite a lot. So we have been growing with profitability so that we can leverage one the pillars of our company. Management for the new dimensions that we are creating. Well, thank you. Now let's call Tubino to the stage.

Good morning, everyone. How are you doing today. In the next 20 minutes, I will try to give you an overview of our strategy and what we are doing and what's behind the results we've had so far. And if all works out, we want to make sure that we will keep on growing. We named this presentation, the 3 turbines. My colleagues here are laughing because my last name is Tubino and I'm calling this turbines. But anyway, this is a way for us to show what is behind our business performance strategy. Our vision is to help our clients and our ecosystem to build the future of marketing and sales in terms of technology and productivity. And we have 3 different dynamics happening as we build the dimension. Each one of these businesses that compose our dimension, they are stand-alone and promising businesses. So we compose and we created a portfolio with -- in a platform with solutions that have as a common denominator, a direct impact on our clients' results. But the first filter is that we choose solutions that are good business. There are a lot of things going on in this scenario and many things that will have an impact on our clients' results. But they are not always -- not always are the solutions that are long-lasting or they might not lead to the results that we want. The second turbine shows how we are integrating this business. So within the business performance dimension, how do we do a math where we can grow exponentially. And obviously, we have a third turbine, which is how we understand that this dimension is part of the TOTVS group as a whole. And as such, it has incredible opportunities. It has the opportunity to continue on expanding through new models or through the soundness of the company. So when we look at what is happening in each one of these turbines, I mentioned the first one is building -- is about building a business portfolio with solutions that are robust enough and with solutions that can contribute individually to our result -- to the result of our dimension as a whole. And the results are measured based on 3 major metrics. The definition of success is a year in which we can increase our recurring revenue and also a year in which we are able to have a profit margin growth, but also a year in which we can increase our relevance within this market through our share. The share around number of clients or a share around influence and leadership. And when we look at this portfolio, today, we have reached the number -- actually, we exceeded the number of 50,000 clients. We are talking about 50,000 clients in Brazil that are using one of these solutions, maybe our marketing solutions or our CRM solutions, where we have more than 20,000 clients or our conversation solutions for any kind of services and sales through WhatsApp, our sales engagement solutions and more advanced CRM operations, our mentorship products as well. We made a choice of instead of having just stand-alone products, we also have a product that is an AI driver. Today we have different accounts with AI. We believe that we are the largest, the biggest AI player in the country with over 3,500 clients who are using this feature to improve their script, their business intelligence and/or for creating content in their marketing and sales journeys. We keep on being very successful with our partnership with Shopify. We have been able to exceed the number of transactions that we had last year. So we more than doubled this number. And also, we have been working really well with Agile, which has helped us foster B2B connections. And this is a market within our e-commerce that has been expanding a lot. So each one of these pieces allows us to grow even more and reach a number that we are very proud of. We have over 50,000 clients today. When you look at the second turbine, and here, we have a lot of lessons to be learned. It's very common for us to see global players or even our competitors or niche players. Many times, these players understand or promote a platform vision. We cannot forget that the segment we are connected to is primarily the S&B segment. And the speed at which we are growing makes us think as a company where we have a stack, which will serve each one of these units by helping them with new business models, billing models and contract models, but the combinations of these categories have led to a lot of lessons learned for us. It has been much more effective for us to combine conversations with e-commerce, CRM with marketing, e-commerce with artificial intelligence. This is much better than having a single go-to-marketing platform as a single solution. And all of that is working really well. Each one of these areas will have an AI experience, a channel program experience. Now we have a channel program experience where we can incentivize all of our different agencies in working with their clients, but segmented approaches account for our intra-dimensional growth. Today, we have reached a number of over 40% of our revenue coming with -- coming from clients that use more than one product. This shows that having different solutions has really helped our clients. And this has happened because of the creation of different cells in our products and also because of the way that we are doing go-to-marketing inbound, go-to marketing and also the way we are educating our clients. This is also because of the billing experience that we have offered to our different clients in our different products. So we have been able to make our products more robust and also increase our revenue. We have started to address today one of many basic views or rules of single product trades for people analyze growth revenue always with turn. So we are able to see growth revenue similarly to what we see in management where the customer only grows to the extent that we have this ability to add things that makes sense to our customers. So we will in shortly launch not only other partnerships, but also our first organic product which is exactly the merger of 2 portfolio products. We will have their soft launch this month, which is the RD Station and marketing station, which is a marketing solution focused on e-commerce sellers. So this will not only open and increase integration for us, but also new markets made available to us. Building on our journey, we also have the third turbine, which is the integration turbine between inter dimensions so that we have within TOTVS itself as a company, with the management dimension, with Techfin with 20% of our annual recurring revenue comes from new IPPs. In other words, we had in business performance, a very sound robust model with inbound, very solid channel with direct sales or through agents. And today, we see more than 20% of this revenue coming from larger customers, more complex sales taught us itself as a distribution and sales channels. We started having larger life cycles with larger tickets. So this larger level of sophistication is a new turbine that will keep fostering our growth. Here, we have a third item within this turbine which relates to scenarios where back office or front office are no longer accounted for, where we no longer need to discern between what is ERP or sales. These are 100% integrated scenarios. I don't know how many of you watched Marcelo's presentation this morning, but we started having AI in conversations with a new UX with access to corporate systems. So we start seeing and tomorrow, I'll expand on this, this entire integration by voice and WhatsApp. So we'll have changes in ERP and the fluig by means of WhatsApp. We already have a scenario where you can integrate by means of AI or chat through natural language and in WhatsApp. It could be directly through chats to ERP. But let's say you need to have a medical appointment, then you can schedule it, then you'll receive a token the same way that you would do as in WhatsApp chat. So the progress of technologies available to integrate these scenarios in conjunction with our go-to-market facilities will bring us a remarkable differential regarding any other niche player or horizontal players. So we are very excited about these new scenarios that are arising. So we are within an industry that is highly dynamic and has growth in any of these subcategories and the needs for customers to merge these categories and our need to delve into other markets. And we look at these players that we -- many years considered a benchmark and we saw how they expanded their products, and we can see an interesting combination and some of them with volume and absolute number of revenue, some with consistent revenue growth. And while others already have certain profitability. And so we are very proud and perhaps a conviction that the path we are heading on is the right path. When we look at the results that we at TOTVS have been attaining with regard to any of these main metrics. So I'm the last person to be optimistic here regardless of our growth being consistent. We have reaching -- been reaching a level of being able to integrate and deliver an important growth which is heard by all of these parts that comprise our Business Performance segment. So in brief, I would like to say that we are very well positioned in the dimension. If we think about the dimension in the 3 pillars where we're able to fit solutions, so marketing sales and e-commerce dimensions. Each one of these brings a very rich ecosystem that is still very open to expansion. We clearly have an opportunity and challenge within the sales pillar to consolidate the assets that we have, whether they are solution-based or as channels that we have with agencies that help customers. Within the marketing pillar, we have our leadership and the concern -- the continuous concern of providing relevance to marketing automation which is a key player in the growth of companies. And we also have a conversation, e-commerce pillar. We are really making a lot of headway in any comparation that we make with the performance that we have with these markets, these are very encouraging results that point that we are on the right path. That being said, I'd like to wrap up with an overview of our turbines. Thank you very much.

Good afternoon to everyone, thank you for your excellent presentation. So for a really brief overview on the Techfin dimension. So here talk about positioning, and I'll stress on what Dennis touched on of a territory that is really ours. So we are disrupting in an innovative manner in creating this ERP banking industry where we have communicated with other stakeholders, the press and our customers, which is precisely to optimize and enhance the results of companies save time. And in these operational routine activities of customers to help them save time, we'll go in depth into this tomorrow we really wanted to bring the voice of our customers to our presentation. So you'll be able to see this tomorrow with a lot of videos and statements made by our customers, verifying that this is the right path and this is the proposition value that really brings a lot of value to our customers. So here we have the supplier, which is also ERP banking, highly focused on fostering and promoting sales of its customers and Techfin working in the cycle as a whole from receivable to working and selling products and using cash flow of these clients and customers. So this is the positioning we have and will enhance for the market when we talk about our rivals. This is a territory that we are occupying in a disruptive and innovative manner. And it is worth noting that we intensified our asset-light model which is a low-risk model, low-regulatory model and which is self-sustaining when we see the combination of Techfin and supplier. Here, we will talk a bit about positioning versus market because we are in a customer outlook. So how have we positioned ourselves within the market. So it's increasingly clear that the game will be won by merging seamless journeys and intelligent use of data. We will double-click data here shortly afterwards. And this is what we had as an assumption. And upon hearing testimonies of customers, this becomes ever more clearer to us. So in terms of journey, we will surpass all others. Perhaps we won't have access to data or capillaries. So we have a view of the overall picture. This is how we see the market versus middle banks, fintechs and other rivals. And this provides us an overall view, which is our main differential and with these data that we have been examining and working on over the past year. So here, we have a close partnership between Marcelo and Gustavo's teams when it comes to using AI to co-create these insights, particularly cash flow insights because our customers -- for our customers, first, we have to create relevance for them to foster and encourage them to submit and send their data. We have the data that belongs to clients. So we divide in our double mandate, a focus on relevance. And this has different sides to it. So availability of being able to forecast different sides as well as the accounting side as Gustavo described. And so we use this as an encouragement and also to know what clients and customers need for credit. So these data are very significant for assessing what stage the customers are in and procuring credit. The other side to the double mandate, and we look at shareholders is our ability to be better even than banks when it comes to granting credit. Of course, banks have a very longstanding models in place. We do not presume to be better than banks because they are very confident in what they do, but the fact stands that even if this is a primary model, the ERP data allows us to confidently know that a rating will take place at least 6 months ahead of time compared to banks. So this really provides you a very strong differential to be able to forecast. Our team already did this in financial market with thousands of customers until having this level of confidence. So here, they had a level of confidence that was equal to or higher than other models because these are very rich models which work in the daily routines of companies. We still have a lot to work on this model, but this does provide you this edge of knowing 6 or 9 months ahead of time as opposed to the rest of the market when it comes to down rating and other aspects. So this will allow us to be much more efficient and confident in our measures. So this is what I refer to as an assumption in last year and now is actually a fact or a reality. So this is how -- we are in our execution. We are on the right path and what was expected. But these are the 3 macro priorities in Techfin regarding data extraction, which we want to scale up within that double mandate, we wish to expand the portfolio and also contextualize offers that of course, depend on the first 2 ones. I need to know what to offer as well as the right time and to whom I should make the offer. We have also evolved things that post-JV credit and with the expertise that we have from the team that we acquired from [indiscernible] market, we are pricing these markets and starting from July, we'll have new offers. So even if we have these efforts available, we are fine-tuning this machine. And of course, we have the pilots as we talked about in our last Investors Day, which we are piloting these efforts and gaining several insights here regarding pricing, credit modeling and this offered a preapproved credit. We also have something that we started in last year, which is the core of our supplier offer -- and thanks to the expertise of JV, we also have for longer terms and deadlines. And we have also fine-tuned significantly offers of these products. And so this is a new offer that benefits both organic Techfin as well as supplier. And we are also developing our digital account, which is a hybrid account that we call Bolepix, what I can say is the hybrid product as it is officially called and which will disrupt payslips, which is the prevailing payment method in B2B, particularly in the TOTVS world and outside of the retail bank slips are really prevalent in payments, and these are really outdated. So our solution will provide more liquidity and operating execution to our clients. So it's really superior to our traditional payslips. And so as Dennis said, the master key when we look at the customers and traction that we have in use, it is likely for this world of cash managed to have the master key for Techfin where we have more concerns regarding receivables, a more grinding operational activity also the back office of our customers. So we have also seen, especially in digital accounts, which will also account for Bolepix in the future. and which will probably be our killer application to massify the penetration of Techfin. And of course, as an enabler of credit and a cycle that feeds itself. And lastly, of course, we talk about suppliers, as Dennis pointed out in the beginning, our rentability or profitability. Turbine is above 30% of [indiscernible]. This is a winning company. It has a differential, which is recognized by its customers. So suppliers already have a successful record of over 20 years and now they further have leverage mechanisms through new channels and offers and also through new segments, and we will talk about starting piloting suppliers for agricultural clients. And now with the expertise and credit modeling of competitivity, we will also explore these 3 pathways to make suppliers even more profitable and the dimension as a whole more sub-sustainable. So that's it. Now I'll hand the word to F&G. Thank you very much for having me here. It's a pleasure.

Good afternoon. It's past midday, I'm competing here with your lunch. I promise I will [indiscernible] but I'm very happy whenever I hear the bell ringing at the back. These bells mean that we are closing contracts here. So every time you hear a bell, it means that sales are being done. Well, so thank you so much, Sergio, for inviting me to speak with me. Today, I'm here to tell you that our sales area at TOTVS, the so-called AR, which focuses on relationship and customer service. A lot of people ask me why, why we do that? Well, this is in line with our idea of becoming trusted advisers to our customers, to our clients. And that's why we call our sales area as the relationship and customer service area. This is part of our [indiscernible] our model. This is part of our goals. This is an asset that we have within TOTVS, and this is an asset that focuses on these 3 dimensions. When Tubino said that we are talking about conversations via WhatsApp. Today, this is one of the products that has been growing and expanding quite a lot within TOTVS. We are delivering business performance products to clients who are outside of these major urban centers and who traditionally don't have access to these solutions. What I wanted to bring here to you is a little bit of what we have been doing over the past 6 years. We have been distributing finstack solutions, business performance solutions and also management -- traditional management solutions. So when we start working with a net new client because we are looking at this new client from a business performance point of view and also from a management point of view so we open these 2 fronts. When we go to the installed basis, we look at this installed basis from these 3 dimensions perspectives, thinking of management, business performance and Techfin offers. So there's a difference here. A lot of people ask me, what do you distribute within the AR? Yes, we distribute a lot of things, and we have been building a journey. What is a major differentiator for us. Well, can you imagine a competitor today trying to build this journey of this new 3 dimensions. Let's say if somebody copies this. Well, we have been testing this with our clients for much, much longer. It's not easy for you to transform a distribution channel, a salesperson. It's not easy to create a new expertise. And we have been doing this for a long time. So we have a competitive edge. When we look at the consolidation of franchises, for example, why did we consolidate that because we understood that they needed to be more sophisticated to distribute these 3 dimensions. So there is a purpose behind this, and we built this. This doesn't mean that we are not opening new franchises. We actually have many different new offices opening up and new centers opening up throughout the country. We have been building a series of portfolios. During the last Investor Day, we presented the innovations that we are making with Improdata and Data Science. We have involved in our data science, EMG, which is the ability for clients to look, add their technology uptake, and we have been evolving on many different fronts. So these are the mandates that we have in the distribution area of TOTVS. We must focus on these 3 dimensions and also dive deep into finding sure solutions and business performance solutions. So when we look at the growth of AR, we look at the growth of TOTVS as a whole. So what is the essence of our AR team? We always talk about the distribution teams at TOTVS, and we want to talk about our essence. We want to be the trust adviser of our clients. We have a lot of major clients, which grew with TOTVS, but our major portfolio, our ideal fit is SMEs, small companies, manufacturing companies, logistics, distribution, our assets within our area is to become a trust adviser to SME clients. Earlier today, I was [indiscernible] with the prospect. And it was a company that uses the system of a national competitor. They are going -- they are moving towards making BRL 1 million a year, and now they are adopting a management solution created by TOTVS after they adopted our business performance solution. Our business performance solution allows us to open new doors within other companies. So this format that we have with regional offices, this format of having offices on the ground is very important. I met with these prospects together with one of our customer representatives -- our customer service representatives. We also focus on our multichannel approach. We do have this idea of promoting multichannels, which is very relevant, partners, sales teams representing TOTVS. So everyone is TOTVS at the end of the day. So this client didn't see TOTVS representatives as franchisees, which makes -- made him feel more secure and more confident. Affiliates, digital marketing, we are now building a digital marketing for our clients to adopt TOTVS solutions. You know that within the B2B world, digital sales are not assembled, but we believe that there is space for -- there is room for digital sales in this arena too. So as I mentioned, we have 75 offices in Brazil and we plan to open 10 more offices in the next 12 months. We are opening offices in small towns across the country, in towns that have import and influence in our country, and we are expanding our local presence. This is very important when it comes to a big country like Brazil. We opened a new office in the city of Rio Branco, a new office in [indiscernible] as well. So this local flavor for us is very important. It does make a difference when it comes to SMEs. In our journey now, my team has talked about this. And I will just share a point which was not mentioned, which is our NPS level. Our NPS is at the highest level ever. We had never had an NPS at this level within TOTVS. We know of some competitors, especially global competitors that have NPS as a public target. But I can tell you openly that ours is much better, and it makes a world of a difference when we are working in a country where they buy based on referrals and NPS is at the highest level over the past few years. We also have seen that our NPS is the result of the joint work of different areas within TOTVS. This leads to happier clients and also more referrals. And I'm very happy to show that. We also see that our recurring revenue is growing really fast when compared to 2018. Actually, we don't even use our 2018 numbers to compare, or else teams take advantage of that and say, look at where we were and look at where we are now, but we are also going to look at the potential that we have to explore in our market. It's a big, big potential ahead of us, and we believe that we can maintain this rhythm within this market potential that we see. And also on volume. As Dennis mentioned, we are not talking about inflation. We are not talking about prices. A lot of what has been done over the past few years was around volumes of sales. So there is a commercial process around this growth, showing that we have happy customers, happy clients, good referrals and our sales seen with TOTVS is much more -- it's in line with that. And you can see that happening today. This event is not just an event for us to show innovations and novelties. There is a room right outside this room full of professionals to sign contracts. So our clients come here also to buy products. We see a lot of trade shows in our company happening. And now we are creating a trade show that focuses on sales as well. This is something that we've been doing over the 6, 7 years. We created this event to promote business with TOTVS and not only for customers and for clients to see what's new. All right. Let's now focus a little bit more on our future. I think that Sergio talked about recurring revenue before and year after year and recently our inflation was low. However, our growth scorecard since 2018 have been growing and this is just magical to us. Our challenge is to bring in new clients. When I have a client within our company, the numbers help me show that our capacity to stack up revenue to benefit from this client is great. And here, we are not even showing Techfin. We are just talking about recurring revenue. So when I bring this client home, the capacity of our sales team to do cross-sell with this client is very, very high. We can see that our cohort is growing year after year and the pressure the cohort the more growth. And as we mentioned as well, this is despite inflation, not really helping us. But we know that we have to transfer the cost of inflation to our clients. And this is automatic here in Brazil. And this also -- it can help us grow. And here, we are looking at a scenario where inflation hasn't really helped us. We didn't have this component playing in our favor but we did have a very strong component of sales here. And as I mentioned, to conclude, the distribution area at TOTVS, the sales area, the service area at TOTVS is a multi-dimension area, working with these 3 dimensions -- working on these 3 dimensions. We have been working on these 3 dimensions for a long time. We have been doing pilots and tests with these 3 dimensions for a lot of time and that's why we have learned quite a lot. We will keep on working -- it's not as simple as it looks. And this is a journey that we have been building over the past few years. Our mission is to expand our management dimension with our clients. We can now direct the actions of our salespeople based on our data science. We can adopt cross-sell solutions based on that. So the intra-dimension depth capacity that we have is amazing. And this is a process that we are evolving. We will continue working on our wide space process. We have a very large portfolio in this area. And with new offices -- with our new offices, we are expanding the number of new names. There are a lot of new names to be reached here. Brazil is fantastic. We have a lot of opportunities in smaller companies as well. Entrepreneurship is something that is very present in Brazil. And TOTVS has been following this closely as we are present in every segment. We can work with whatever company, no matter the size. So our new name process is a process which we have been focusing on because we can see that once we bring the client home, our cross-sell and upsell capacity is great. Now I will pass the floor to Avelar. Thank you, everyone.

Good afternoon, everyone. It's my first Investors Day. I'll try to explain a little bit more about my area and what I do here at TOTVS. I'm glad I was -- I'm going to present after Apendino because what I'm going to talk about today is basically a continuation of what he started talking about. As many of my colleagues presented the 3-dimension strategy in the expansion of portfolio done by TOTVS over the past few years, with the creation of Techfin and also with the creation of the business performance dimension. And besides all of the different acquisitions that we had, today, we have quite an extensive operational portfolio. And this is -- this plays a fundamental role in our goal of becoming trusted advisers. It's very important for us to keep offering new products to our clients. It's almost impossible for us to leave a meeting with a company in Brazil without a list of products and softwares that can be presented and sold to this client. But we must also be able to guide our clients through the sea of offers that we have in the software industry in Brazil. And even TOTVS, this is not -- this is no different. So the responsibility that I have is to move on from the drawing in the left to the drawing to the right guiding our clients. We must understand the context of our millions of clients. Especially in the next 2 years, we will focus on starting with our management clients and identifying the right time for us to present new solutions to our clients so that they can start using also different products. We also want to help our sales team navigate our clients through our products. Well, I'll share a case of ours now. [indiscernible] recognized as a trust adviser by our client, this is what happened. Within less than 5 years, we can multiply and expand the number of solutions to our clients. This means that the revenue generated by this client also increases. This is a 2D client of ours. He was about to become a 3D client and we can see that he went through many different cores of products within the management dimension. And right after he also adopted business performance in Techfin. Our greatest challenge here is to scale up clients such as this one. We have many different clients, and we must apply a similar formula for us to keep on growing. Moving on, this slide explains a little bit exactly what we must do. At the top, we have the client journey and here I will just divide the journey of this client into 2 areas. I'm going to talk about the product journey and also the consumption journey. The major focus of my area now is not the [indiscernible] journey, but the consumption, the purchase actually journey of this client. And that's why I said I'm going to have to work very closely with all of the sales teams that we have within these different dimensions. To view all the points of contact that TOTVS clients have in this journey with us. Here, we have the value chain of our commercial team, starting at the top of the funnel, where there's still a prospect to the stage where we close with them. And even when there are clients, we need to cater to their needs. There are a lot of opportunities and initiatives here. We hear the bell of another sale closed. Some of these projects were conducted before my arrival to impact this entire value chain. So just to mention some of them, we are working to digitalize our upsell experience today and important products for us, also to help free time for our commercial team to help them focus on new sales and new dimensions. At the top corner, you can see that we're working steadily to centralize all our interfaces between TOTVS and our customer. And these are several portals and ways of accessing. So we need to centralize this to help our contact with our clients and then take this to a 3-dimensional view. And we can further see several other objects. The goal here isn't to go into depth into each of them. But the fact stands that making this commercial funnel the most frictionless possible both for a commercial team and for our customers is a cornerstone of the mission of my area, particularly for the next 2 years. So this is our starting point. And in my last slide, I think -- and I'll use Mercado Livre here to explain our vision in the future where we can reach because even Mercado Livre being a B2C market, it still has a lot to teach us with regard to what I refer to as sales platforms regarding Mercado Livre. So you probably are aware of Mercado Livre. And you'll recall that right at the beginning of building of this enormous marketplace platform. It didn't even have a unified checkout. View payment was confusing, so it really evolved over time the Mercado Livre platform. And so here, I presume 3 steps. So now it's really easy to find any offers in their catalogs. We have a similar outlook on TOTVS to centralize information of products as well as delivering it to our sales teams to know what to offer to the clients and at the right time and also concerns payment and pricing. So changing pricing in companies such as TOTVS with hundreds of clients with the possibility of delivering these options to a customer is a challenging process, and there are ways that we can simplify this in line with what happened in the B2C market. And also, if comes to payment, we also have these centralized, decentralized and intra-dimensional side. So we have a lot of opportunities that we can delve into here to make headway in these 3 pillars. And just to wrap up, this is the vision of our future. So they are important areas of democratizing access to TOTVS clients. So with thousands of salesmen that we have, you can imagine how today, we have this competition inside our company with customers. We can help them with technology, with processes, the product catalog, as I mentioned, the transformation of pricing as what Mercado Livre did, and there are a lot of opportunities as well as merging the entire track record of TOTVS clients, no matter the dimension they operate in and deliver this in a more simplified way and that is easier to access and also to feedback our cycle and start this journey with the customers. So this is the focus for the following years. And next year, I'll bring more information on how we evolved in this journey with all these projects that I discussed. Thank you.

Good afternoon to everyone. It's a pleasure to be with you here in my first Investor Day. People are at the center, the focus of our business and not only people but also experience of having marketing, bringing the outlooks of our customers together with the outlook of our staff and how this is connected to an ESG multi-stakeholder standpoint. Okay. So let's begin. First of all, we believe that everyone can grow. And it is with us that we will foster the growth of our staff, the businesses of our customers and our own business. Our sustainability is based on us having this 3D strategy in addition to a lot of in-house talent that we have, very passionate people and ethical staff members that work passionately and very hard to achieve sustainable results over time. Based on these values, but also evolving as our strategy evolves to the extent that our collaborators criticism. And I must say that in the last year, in 2023, we hired approximately 2,000 new staff members. And our engagement index after onboarding is 98%. So bringing qualified professionals to our ecosystem is at the very core of our own business. But we also believe that a good company is a company that is good for everyone without leaving anybody behind. And with this vision, we carried out deep work of evolving our materiality matrix. We had already conducted this work previously, but we had a public consultation with our stakeholders, including our collaborators. And added to this consultation, we also crossed our material subjects with our risks, which we called double materiality matrix. So when we look at the social pillar and with people at the center, attracting and retaining people is our cornerstone. So we reduced our attrition significantly in 10 percentage points in the last years. And so we reached a historical rate of engagement with our collaborators. And also on engagement, at the fifth back-to-back year, we are present at the Great Place to Work certification, both [indiscernible] and TOTVS ranked among the best companies to work within medium and large companies. We are also in the ranking of our telecommunications sector, one of the best companies to work in. And thinking about diversity and inclusion, we have made a lot of headway with regard to this agenda. Recently, we endeavored and subscribed to the United Nations Global Pact and also Atos Integrity Anticorruption Pact. And recently, we subscribed to the Educa '23 movement, which regards -- with education, particularly in the role. And our key role that we can have in helping to further the careers of women in science and technology. So we have tailored institute dedicated to educating young people in general in Brazil. We have important work with our affinity groups regarding building countless material for us to have increasingly environments free of discrimination and more equitable and fair environments. When we look at health and security, which is very important for us. I'd like to point to our more healthy or increasingly healthy program, which is recognized by the Brazilian Quality of Life Association for the third year in a row as one of the most robust programs. And also received the Human Being Award actually given by AGA. In addition to refining this materiality matrix, we further conducted the third year in a row, our inventory on greenhouse gas emissions. And we also improved our score in the CDP from C- to C showcasing not only our commitment to identifying our sources of emissions but also for putting in place plans to mitigate and reduce CO2 emissions. And with these plans, having helped us to remain in the B3 index, we further ranked among the IDIVERSA B3's ranking as one of the main companies in ESG and diversity inclusion. Yesterday, we were happy to receive the news that we are the technology world that is recognized by Atos as in the first place -- we received first place in diversity and inclusion. And still in the environmental matter, our commitment to our events, you probably noticed that we were really concerned throughout this event to reduce our impact. Everything that can be reused and recycled here will be used to that end. So that this event is also an event close to Net Zero emissions and with lowered carbon footprints. Our governance in which we are highly recognized since we're the first IBOVESPA-listed company following market practices, and we're also acknowledged by Atos in governance. And by the 360 annually of the [ Apica ] magazine as one of the best companies in governance. We have the entire Department of compliance, internal control risks, which reports straight to our CEO. We have a committee of 100% independent members and all our commissions and committees regarding governance regularly report to our Board of Directors. It's also important to note that governance is conducted on a daily basis and work on ethics, diversity and inclusion is an ongoing effort within our education department. If you wish to learn more about our indicators and our efforts, please feel free to access our care code here to read our impact report, and I also invite you to learn more about the more and better program. And finally, I'd like to talk a bit about our main part of the S of the ESG, which is the Social Opportunity Institute, which for 26 years now, has been working with capacity building young Brazilians. Our country now has 49 million young people that need to work and study as well as study to work. So we need to offer opportunities for our youngsters is also ensuring a more prosperous future for Brazil. And so -- and we've also always believed in integrated and open network. We are the main providers of iOS Institute. And we want to increasingly add efforts together with other companies to help educate and train more young people. Last year, we trained 2,000 people, which came from social vulnerable conditions, and most of them are also women actually 56%. Most of them are black or mixed race as well as persons with disabilities. And over these 26 years, over 45,000 students were assisted by us, and these students seek to have an opportunity in the first job. We also have deep impact at each time we're able to have inductive inclusion, a youngster that finds his first job rose family income by 63%. And finally, I'd like to say that in a country where transparency and credibility are so important for us to be able to leverage culture of donations as well as ESG. We are one of the top-ranked NGOs by the ranking of the Dot organization. And yesterday, I learned that we are among the top 150 companies in the world. We believe in human rights. We believe in diversity. We are increasingly acknowledged with accolades and seals received. We also believe that our own staff members can be excellent students, but also teachers and a lot of them dedicate a lot of time to volunteering at the iOS Social Opportunity Institute. We also believe that said institute can reach even higher strides and that more companies can learn more about our work through this institute and join our efforts. So I think it's important for us to hear a young person assisted by iOS and the impact that it brought to her life. And a client that made this TOTVS ecosystem a very sound system also for diversity inclusion and for productive inclusion. Let's hear [indiscernible] is a partner of TOTVS for almost 30 years working in HR personal department and even operational reaches. But today I came in to tell my story. My name is Ingrid. I'm 19 years old. I currently work at Jamef Transportes. When I was 16 during the pandemic, my cousin is taking a business management course. And shortly after she started working at TOTVS. It was through her that I was able to learn and get acquainted with the iOS Institute. I started making a business management course. And after completing the course, about a year or 2, I met [ Jeneth ] through the Institute and at that time, I fell in love with the math and even learned more about the TOTVS world. I started working as an intern and a trainee at TOTVS. It was a very good experience for me, both as an apprentice and now as an assistant. I'm excited as I didn't realize what it takes to join such a big company. Ingrid is an amazing professional. He arrived at [indiscernible] in December 2022 and with a lot of sound technical abilities, we noticed that she had good understanding and knowledge of Microsoft Office and of [ presales ], which is the system we use. And this was key with for hiring her as well as for development in our company. And I believe there is a true wave of kindness to this and this institute trains and transforms the lives of young people. They are also able to transform a bit of our reality in making [indiscernible] a better company. The iOS Institute really surprised me because it provided me with an opportunity to grow professionally specifically, but also personally. So as soon as I joined the company, I grew in terms of maturity, expanded my professional experience, and I started sharing a bit of my know-how with other people, and they also shared their expertise with me. And consequently, I grew with the company and also on a personal level. We believe in the power of education to transform the future of our company, the future of companies that are customers and clients, but above all the future of our country, and therefore customers believe in us. Then this also relates to us having one of the most valuable brands in the country, namely the top 18 position. And this year, we also made important headway in bringing an important advertising campaign that was very unique because I believe few companies in our country could do this, which is to put the faces of our clients themselves printed on this advertising campaign. So we're very proud to have these campaigns. It shows that Brazil that takes action takes action together with TOTVS. It's also worth noting that this brand that has over 1.5 million followers in social media is also being run in several of our social networks. And to wrap up my presentation, we had a special video on this campaign for you to watch a bit about our value proposal for this company. So please watch the video. [Presentation]

TOTVS is notice on everywhere photos in the market education finance soccer. TOTVS is the largest technology company in Brazil. It is no coincidence. In this studio, we also have TOTVS. How about in your company? Is TOTVS there? Brazil lives with TOTVS. Brazil thrives with TOTVS. TOTVS is everywhere. TOTVS is here, too. And now I will finish by inviting my colleagues to come to the stage to start our Q&A.

Just remember that after our presentations here, make sure that you go to our tracks. For those who will be joining us online tomorrow morning, we will have 3 presentations at our plenary. We have [indiscernible] Turbino and we'll also have a presentation by Laercio. So please make sure you stay tuned. Now let's start our Q&A. First question, you must keep a Marcelo. No, go ahead. I saw you first.

I'm Leonardo Olmos representing UBS. Can I ask 2 questions? Okay. I will ask 2 questions in business performance. Regarding collection, and business performance, how are you evolving? Now we have more complex sales? Should we expect a longer cycle? And the second question is for Apendino. We see that total sales team is expanding, you are opening new offices, and we see new share of wallet opportunities and new franchises. So how can we project and expect your commercial expenses for the next months?

Well, regarding collections and business performance, well, I think that the clearer answer would be that we still have the same profile, the same profile of really fast cycles and cycles, which are faster compared to other types of solutions. Where we have a triad, which is a very important triad. The pain that we are fixing the ICP decision-maker. And normally, the ticket -- the average ticket is in line with our ICP. So when we are mindful of this scope, we have faster sales cycles. And these cycles keep on happening even when we go from an inbound marketing where the client gets to the end of the funnel with an intention to buy, but the same sales within the AR, which is more of a consultative sales where we try and guide our clients. We -- even so we see very fast cycles. We use Agile and other solutions, and we see the same behavior as we move towards higher tickets and as we have more complex solutions, which we have more decision-makers and where the budget requires more people to be approved. Naturally, we have longer cycles but it's not the main thing. It's still an exception to what we have. For billing, we have the opportunity here to keep on creating possibilities for us that will become avenues for growth. All of these solutions have a very strong component around SaaS but we also see the capacity for us to have additional monetization, not mandatory, but additional. For e-commerce, we have the possibility of the e-commerce platform with SaaS and an additional percentage as we improve the GMV performance. We have this behavior and these possibilities open in different categories. So when we have the leads generated by our customers leading to an upsell and to a higher volume of sales, it also happens for a conversational in numbers of conversation, in B2B portals. So we are always trying to find ways to have more than one avenue for billing and modernization.

Thank you for your question. I will give you an example of our franchises. We have been talking about this for the past 6 to 7 years. And we are just now concluding this process. When we look at what we are seeing for distribution and for the future, we won't share everything because many of the things that we are doing are strategic in the Brazilian market. We are leaders in the market, and we have a lot of internal discussions but what we revealed here is exactly what Avelar showed today, our digital journey, the customer having a digital journey to adopt different strategies. We also have this link with distribution and the capacity of our customers consuming our offers through a different type of billing. So at some point you must rearrange the sales team within TOTVS and create the possibility of customers adopting our technologies following a digital journey. So we do have a design of a future journey, and we want to be disruptive in our sales but we don't want to change it completely. We have a leadership capacity. We have many different fronts open. We have been able to open these digital fronts and the billing fronts, but we do have a series of different strategies. We want to have also future journeys that will change our traditional sales journey. Our field sales journey. So we have a lot to learn still, and a lot to gain as we open new offices as well. We have a lot to gain from traditional sales processes where we penetrate into different dimensions as well. But we do have planning and long-term strategies for the next 6 or 7 years, which will disrupt our traditional means. And these are just pilots and tests that we do.

Well, just to add specifically on expenses. We don't see our commercial expense as a percentage of the revenue growing in the next few years, a good part of what we see as an opportunity involves new processes, digital, more efficient processes upsell. When we look at everything that we generate coming from upsell, for example, today, the percentage of penetration of the digital within this is basically 0. And certainly, this percentage will grow and it will grow really fast. For new names, obviously, digital channels will not be as relevant in the management dimension as others. But for upsell and for cross-sell, these digital sales will become more relevant which, again, at the end of the day, means that we don't see this commercial expense growing compared to our revenue.

All right. My question so net adds. So Tubino, you said that 20% of new names for business performance were actually, the new business performance dimension comes from some other clients. Does it have to do with the Masterkey mentioned saying that management, the management dimension would open the door to new business? So can you talk a little bit about what products are bringing in these new clients?

20% come from what we call new NCPs. And this doesn't mean that we are talking about bigger clients or bigger tickets. The foundation of what we have been doing within our CRM and which has allowed us to expand our market is a go-to-market marketing that's go-to-market that's based on inbound lead. So for this case, we nurture our clients, our customers through education. We train them and we execute things and during this discovery moment, clients will show their interest, and that's when we closed the deal. With the integration of TOTVS and with our AR team, we are able to reach these clients before they raised their hand, before they have this level of maturity. We combined then 2 challenges into opportunities. The challenge is how to find clients with the right level of maturity and how we can help clients develop the right level of maturity. And at the same time, how can we make things happen. And obviously, this will normally happen with clients that have higher tickets. Well, this is nothing new. For those who have been following us, when we started our e-commerce pillar, we started this pillar within the management dimension in AR. In a very short time, we changed this dynamic within the market where we would just focus on clients with a higher level of maturity. And for a long time, we helped our clients so that after 2 years, it would reach a level of maturity, which would be enough for us. So these 20% represent segments that we didn't reach before our clients with a level of maturity that we couldn't reach before. Obviously, some big clients. Now to answer the second part of your question, solutions. Before we had average tickets that were not as expensive, but now we have clients that have dozens of millions available. With Shopify, the 5 largest clients Shopify in Latin America came from TOTVS. So it is a combination of market challenges and the only solution needs to address these points at the end of the day.

Great. Who else?

Congratulations. I'm Daniel representing Bradesco. Well, the first question to explore the theme of AI. I understand that when you start discussing AI companies start trying to invest more in AI. But if you can remind us of the monetization mechanisms and how should we go about this? And you've always talked about this margin, both. You've always talked about both sides, but we see that for management seems to be in an all-time high. Should we just focus on something else? Accelerating growth? Or will you always have this ambition of growing on both ends?

I will start with AI, with your AI question, and then I'll see if Marcelo and anyone else or anyone else wants to talk about this. And then I'll talk about growth versus margin. Well, on artificial intelligence, at this point, we don't have a specific revenue generation coming from AI. Obviously, this doesn't mean that we won't have it in the future. Some offers are charged separately, not only in management but also in business performance. But at this point the largest application for AI that we see is within the product, and generating more value and increasing the relevance of the product. And then leading to better results to our clients. This doesn't mean that we won't have in the future, in the near future, maybe in a further future the specific revenue coming from AI. But for now, this is not our main concern. At the end of the day, AI needs data and to access data, if you need APIs in our products. So we prepared APIs in our products for us to control and enable whenever the AI requires information. The example that I showed in health care, the answers that we saw are based on an API. It is similar to a user. It has value. And the work that we did in our products was to prepare them for these APIs to be charged in a different way according to their context and also to the value they have. This goes for dimensions, integration and also for AI. I think that our cloud business can benefit in a more concrete way. This is a collateral effect of the interest that we have in AI. This can be a collateral benefit. And what we have observed is that likewise similar to other functionalities that we have in our portfolio, we see that eventually, we will have some capabilities that will be part of the natural scope of the products and other more advanced capabilities that will lead us to monetize on them. But for now, we're just talking about improving customers' experience and also improving our products. Some of our products require different standards and customization. And if our clients can count on a copilot to set things up easier that sometimes clients take -- need to take a lot of time to customize our products. But if I make -- I can make this setting up product a little bit faster and easier, our clients will be able to start using our products faster.

Well, just to add regarding growth versus profitability. Well, to be honest, I don't see today at least. I don't think that we are leaving money on the table when it comes to management, for example, our nominal growth, for example, for it to increase now, we would need to have an additional inflation component, which will happen during the second semester since we will have taxes change. So I don't see growth in management increasing even more rapidly. On the other hand, I see our capacity to sustain the level of growth that we have for a much longer period than anyone else than you can even imagine in any one of the models that we see or have today. So for us to sustain this growth for a much longer period in management, particularly, I don't think that we need to sacrifice or I don't think that we must discontinue the growth of our margin. I think when it comes to business performance, it's a similar story with certain twists. We're already growing in business performance in a rate that is equivalent to start-up growth levels, almost 50% growth rates at years of growth in the operation. So this is a significant amount. So I can't say we have the possibility of further enhancing this because this is a market that is extremely dynamic. If you perhaps had ask 1 year ago, if you thought it would be possible to enhance this growth, I would say that we wouldn't be able to Tubino I believe, would also say the same because there's no way for me to say today. If maybe in 6 months' time or 1 year, there won't be another killer application in place, which will potentially even expedite this growth. But this isn't the baseline scenario, which again, leads me to believe that we don't need to sacrifice the margin profitability that we have. And in another sense in Techfin, we have on one hand, the supplier, which is extremely profitable. And with JV addressing certain important strategic issues with regard to operations, but it still does not have to waive its margin of profitability, and we are making heavy and sound investments. So the organic side takes in great share of all the profitability and revenue that the supplier generates. So here, we will certainly see opportunity to be able to keep investing and direct the profitability that suppliers generates to render perhaps remarkable growth of businesses that today still have a relative small share, especially given that there's a huge market and which can be something transformational for us.

Excellent. We have a couple of more questions on the side, please from Itau.

Itau. We have 2 questions. At the start, you talked a lot about AI. So how are you doing this to benefit TOTVS from the inside, are you applying this to perhaps make it more efficient system? And how can this translate to gains of efficiency ahead of time in the future. And with regards to cloud, today, cloud has nearly 40% of clients in cloud. So how do you see this migration over time? If it will be something that you think needs to be fostered and encouraged because other companies have the strategy? Or how do you see this as it currently stands?

Well, I'll start off the same way that we are exploring AI initiatives for the use and solutions to our customers. It's important to note that, first of all, TOTVS is a client of its own solutions. So several processes we have our ERPs, et cetera. What we do is we automatically do with these products also generates benefits for us internally. Another thing is that tools, as I stated, such as code and code optimization. Our teams will also benefit. And actually, first, before our customers because we'll try to offer very solid framework for our team to effectively increase their profitability and mainly the quality of what is rendered because in software, we have an ongoing life cycle and always amending and making changes and evolving. You spend a lot of time in documentation and trial runs that we expect to evolve when we apply AI. Another field that we also have explored significantly is support team generating documentation for clients and providing material for our commercial teams and our internal teams. We also have projects underway. We still haven't priced and quantified this in terms of direct gains, specifically to this end. But what we are doing is trying to optimize processes and leverage funds and everything that we've achieved. We're already targeting these 2 efforts that in some way will be replicated in marginal gains and efficiency that you can see in these figures. So what I say is the teams that are focused in our company and dealing with AI, they have 2 main guidelines what -- which can be taken to the products to clients or what we will only apply within TOTVS. So these things aren't being carried out separately. And so we try to take advantage mostly of models that make sense. When we talk about cloud and even the growth and penetration at the baseline levels, there are certain things that we should account for because we still believe in a lot of potential because what we presented to you takes into consideration that we still do not have the entire TOTVS portfolio in the cloud. So part of our solutions are still -- they are still not explored. They're still targeted towards cloud. So let's say, in regards to specific line of products. So there's a lot to be explored when it comes to cloud and with products that we already have, we see that the differentials that we can offer because of the specific cloud proposals has been very attractive to our clients regardless of whether they are concerned or not with the AI journey or with other specific trades. And so the main takeaway here is that in practical terms, the answer is yes, we are encouraging our clients and customers to keep investing and using cloud. Little by little, we've been removing objections or concerns that these clients have with regard to certain offers. We've allowed them to use in moderate terms infrastructures together with us. So we take a little from each of these things. But in practical terms, customers gain a lot in terms of productivity, safety, specifically, when we talk about small- and medium-sized clients. This also provides a lot of comfort for them with regards to providing safety, which we can work together with our clients. So we will effectively see a capacity to grow and generate value to these clients regardless of whether they still think or not about AI. So it's easier for us to work this. And as I said, there is this collateral effect. But even if we didn't take into this account, we believe there are a lot of opportunities to work this in the portfolio that is already available as well as in the other portfolios we will make available in the future.

Just to add to what Gustavo said. I think in human resources itself, we have several AI-related measures. One of them relates to efforts we've been conducting to prevent risk of exits of our talents. And in our several engagement research that we conduct throughout the year. And most of all, we have efforts in education, which I consider extremely important, which is our data and AI Academy, which we are encouraging all our staff members to learn more about this too as a consequence adhere to it and therefore, help us find solutions, both inside and outside of TOTVS.

Okay, we're in the final stretch. Another question of Luca. Unfortunately, we can use all. Taking all the questions, but we can use them afterwards in the chat.

Congratulations for your event. Two questions here. First, in this realm of share of wallet and management, what are the main drivers for this increase in vertical products? And looking ahead, where do you see the most potential penetration regarding which products have space to grow? And also, are there still solutions that are not in cloud? And how much being in cloud actually facilitates this process?

I would just kindly ask you to repeat the second question because I unfortunately didn't hear it.

Second question regards cloud. And within this process of cross-selling, how much it is already made easier by having the solution of cloud?

Okay, I'll start off. And afterwards, if someone wants to add, please feel free to join in. What we see in practical terms is a very interesting process because there isn't necessarily a single or sole journey for our clients. This is something that is interesting and important for us to acknowledge. Each client and customer has for many specific internal reasons, potentially different journey. So as a matter of fact, right now, before starting Investor Day, I was speaking with a client from the midwest part of Brazil. And said clients started with a supermarket, then migrated and added, sorry, distribution migrated to wholesale and retail. And so this client story changes in accordance to the approach that we need to apply it to each one of them. So a significant share of the success that TOTVS achieves relates to acknowledging, recognizing and understanding. And finally, adapting to all these different stories and journeys of clients that really differ a lot amongst themselves. With that being said, cloud is definitely a driver of sales. We are aware of this. Whether the cloud is for new clients, as part of the first sales or as a migration of that client that was on-premise or upselling to clients that already use our cloud services. So the entire HR switch has also expanded a lot with its sales and solutions that are specialized. What we call core solutions for each segment in which Marcelo's team handles are also extremely important in our abilities to improve cross-sell. And also recalling that cross-sell has the advantage of increasing our revenue, but it also has the advantage of significantly increasing retainer of clients. So the more we are able to be close to our clients and have this share of wallet, the more we will be able to retain these clients because as a consequence, we'll be generating more value to these clients. And here, I'm just talking about my dimension. So today, we don't have a single meeting with our clients where we don't talk about the opportunities to start with business performance products. This meeting I was having before session we were talking about. And so when clients have relevant distribution operations, the Agile, which is the B2B product fits like a glove. And so is -- I really shimmered and lighted up when we proposed that solution. So these are some of the advantages of having a broad portfolio because we have several drivers in our life. I don't know if you would like to add to this?

Dennis, I think we already talked a bit about this before we show in our meetings that we have the capacity to visualize white space digitally in a tool that is specific to that. So we're able to gather a lot of data for clients for these solutions. So in addition to these solutions, it depends on the region and the geography, the profile and the size of the client. Today, we're able to design and devise this journey. So to date, there are pros solutions. But on the other hand, we also have a lot of data to help us with this process. And just to wrap up, whether the cloud is a facilitator? Of course, evidently, the cloud is a great enabler of additional sales that we conduct. So clients being on our cloud services and as we show there are different levels of cloud services. But in all of them, we are able to provide a lot more facility when it comes to upselling and cross-selling. We make it much easier to...

Unfortunately, we're running out of time. We need to close our event. I'd like to thank everyone who is watching us here on site and online. I'd like to thank the attendance of everyone and the trust you deposited in us. I hope that you were able to take advantage and see a little bit of what we've been working on and creating. And to the extent possible interacting with our clients and other stakeholders in the event because the purpose of this event is exactly this, is to provide freedom and grant access for everyone to learn and discover about everything that we've been developing. So thank you very much. See you next time. [Statements in English on this transcript were spoken by an interpreter present on the live call.]