Sejam bem-vindos ao.
Good morning and welcome to the Fourth Quarter and 2024 Results Video Conference. I'm Sergio Sério, Head of IR, and I am pleased to be here today not only with Dennis but with all the company's VPs. As always, we'll present the main highlights of the last quarter and the year, and at the end, we'll open the floor for questions and answers with the participation of all executives. Should you wish to ask a question, just click on the raise your hand button at the bottom of the Zoom platform, or if you prefer, send your question in writing using the Q&A button, and subsequently, the IR team will respond to it.
Before we proceed, we would like to clarify that projections and expectations presented in the video conference for TOTVS' future performance are based on current beliefs and assumptions, as well as on the information currently available at this time. Several factors can impact the company's results, leading to significant changes regarding the expectations presented here. I will now give the floor to Dennis.
Good morning, and before anything, I'd like to wish you a healthy and successful 2025, and also thank you for a fantastic 2024 for TOTVS. The company has continued its history of pioneering, innovation, and boldness, which, combined with a resilient business model and execution discipline, has allowed it to navigate the most diverse political and technological changes, with these always coming out better than it went in.
In this scenario of new changes, this is exactly the behavior we are looking for: a unique capacity for reinvention, turning risks into opportunities, the ability to know what's going on around us, but always looking for our own angle without fearing adaptation, taking unusual paths, of course, controlling our own destiny. In other words, being the same while always being different. In my message, I focused on two important messages: that the fourth quarter represented a definitive turning point in TOTVS' profitability scenario, as well as in all of the business units, and secondly, that 2024 was confirmation that the addressable market for management is a long way from maturity, as Gustavo and Marcelo will demonstrate through the BU management. At the end, I will be back to speak further about this message. Point number one is shown in the graph on slide three.
The sequential acceleration of revenue in the fourth quarter to 18%, particularly recurring revenue, came with significant margin gains, as EBITDA grew 37% year on year, well above the growth of revenue. Adjusted profit grew 42%, which is more than EBITDA, and the free cash flow grew 75%, much higher than the adjusted profit. Throughout this video conference, we will show you that the same has happened in all of our business units. We are accelerating simultaneously in all of our avenues, and this is the result of a combination of strategy and execution. Now, I'll hand the floor to Gustavo Bastos, who will comment on the results of the management business on slide number four. I'll be back for my final message. Gustavo, the floor is yours.
Well, good morning, everyone. Management BU results continue to show strong growth.
We organically added BRL 172 million of ARR in the fourth quarter and more than BRL 600 million in the year, which is to say that we added more from recurrence than most of our competitors earned in total revenue in the year. This level of ARR addition, combined with a retention rate of almost 99%, resulted in 21% growth in recurrent revenue, reaching BRL 1.1 billion highs in the quarter, with a highlight for SaaS and cloud growing 32% over the fourth quarter 2023. As in the previous quarter, the strong growth in revenue was accompanied by an increase in profitability. EBITDA grew 26% in the fourth quarter, and margin was 102 basis points above the same period in 2023.
Now, the advance in the integration of recent acquisitions and the conversion of IGPM to the IPCA are factors that should continue to contribute to profitability going forward, especially when considering that recurring revenue represents 89% of the total revenue of the Management BU, which ended the year practically with BRL 5 billion in ARR. I'll now hand over the presentation to Marcelo to speak more about the growth potential for management.
Well, thank you, Gustavo, and good morning, everyone. Throughout its history, TOTVS has built a business model that we showed you on slide three that combines three main factors in a unique way that is very difficult to replicate. First, Brazil's software market, especially for SMBs, which is still poorly digitized, with investment per employee more than 10 times lower than in OECD countries. It has grown two times more than Brazil's GDP in the last 10 years.
We don't see this pace of market growth changing in the coming years. And so, with the arrival of new technologies such as cloud, AI, and others, this will continue. Second is the increase in our relevance to our clients because of our broad portfolio that continues to develop both organically and through M&A and partnerships. We are in 12 segments of the economy, and with different levels of technological maturity, this diversification grants our client base a strong and differentiated resilience, helping us to get through times of greater market volatility and exploit opportunities. And the third is our coverage through a distribution and delivery model that puts us close to the customers throughout the country, being a sales machine that continues to expand. And we're working close to owned units and franchises, especially in SMB.
These characteristics mean the ability to attract new customers and exploit a powerful cross-sell and upsell potential. In 2023, we got to 100%; in 2024, to 133%. This is a formula for 23 consecutive quarters of double-digit growth. And I now hand the floor over to Avelar, who will speak about the RD Station.
Now, before speaking about the results, what was called B usiness Performance has now become RD Station. This is due to particular advances in portfolio integration, distribution, and brand awareness. RD Station continued to demonstrate the power of this BU unit economy. We achieved the highest quarterly EBITDA margin recorded by RD. To give you an idea, the fourth quarter EBITDA alone was higher than the entire year of 2023. The integration process of the newly acquired companies and scalability will show margin gains over time.
This quarter, we saw good recovery in the sales, but the retention rate was lower vis-à-vis the average of recent quarters. Now, the retention rate will recover. On the left, slide seven, we have RD Station, its acquisition by TOTVS, a mono channel operation with inbound sales and support of the ecosystem. Now, when we think about the present and future, we have a business unit that is and will continue to move forward. We are multi-channel. We have a sales machine. We have multi-products. We have several acquisitions and partnerships and a broad management portfolio. And we're just imagining what we can do together in terms of integration. And we are bringing ever larger customers. Now, this journey of integrated work will be an additional engine for growth for the customers in coming months. Now, the stickiness with our customers is good.
We work with customers that are ever more diversified and increasingly larger in terms of ICPs. I give the floor to Maia.
Good morning, everybody. Credit production grew 19% in the year and 7% quarter on quarter, surpassing BRL 11.7 billion for 2024, despite an adverse scenario in agribusiness. This performance was driven by progress in other sectors of the economy, contributing to greater portfolio diversification and consequently to the dilution of agribusiness share of total credit production. As a result of this production performance, net revenue from funding grew 32% vis-à-vis the fourth quarter 2023 and 23% over the third quarter this year. This advance in revenue, along with delinquencies that are historically below average market levels and operating leverage, led EBITDA to end the quarter at BRL 24.3 million, representing a threefold the EBITDA of the third quarter and 11 times that of the fourth quarter 2023.
A little over a year after the formal start of the joint venture, we see this upward inflection point in that J- curve that we had mentioned at the beginning, a profitability curve that continues to advance in integration with the supplier and Techfin operations, allowing for greater fluidity and gains in operational efficiency in investments to build the first ERP banking in Brazil. I will now turn the presentation over to Vivian, who will speak about people and highlights for 2024 on the next slide.
Thank you, Maia. Good day to all of you. In 2024, we remain committed to the sustainable development of business and economy. Sustainability for us means resilience, efficiency, ethics, and responsible growth.
By making TOTVS a sustainable company and encouraging its ecosystem to follow suit, we guarantee the longevity of the companies we serve and contribute in a more structured and balanced market. In this sense, we made progress in several fields. In ethical and responsible governance, Fitch reaffirmed our AA plus rating, revising the outlook to positive. In addition, we remain in the leadership quadrant in risk and opportunities at MSCI with an AA score, and we have maintained our ISS classification at the lowest risk level. In people, for the fifth time in a row, we were recognized as one of the best companies to work for, for the Great Place to Work, in the 18th ranking among large companies, and once again, we are part of the B3 IGPTW B3 indices.
In reputation and image, we are among the 150 most innovative companies in Valor Inovação award, and we remain among the 50 most valuable brands in Brazil, according to Kantar BrandZ. Finally, I would like to highlight Social Opportunity Institue , which continues to be a great ally in training future talent for the technology market. Throughout the years, the institute has trained more than 47,000 young people in situations of socio-economic vulnerability. In recognition for our dedication, IOS was among the best 200 social organizations of the thedot ranking. I would like to return the floor to Dennis for his final comment.
In the beginning of the conference, I focused on the quarter's results, and now I will talk about a longer view since the developments are not one-off. They can also be observed when we look at the last three years.
As shown in the graphs on the slide, the sequential acceleration of revenue to 17% in 2024 was followed by excellent gains in profitability, as EBITDA grew by 18%, adjusted profit by 20%, and free cash flow by 35%. Also, the left graph shows that in 2024, our new levers, represented by SaaS Gestão, RD, and Techfin, were responsible for 78% of TOTVS growth, compared to 59% in 2022. This is another clear demonstration of my point that we have a huge addressable market that is far from mature in all our business units. I would like to wrap up by returning to the second message in my release. When the cloud emerged along with SaaS, a frequent assessment was that they would increase the power of disruption as they reduced the cost of new entry for new competitors. This indeed happened in software market, in corporate software markets.
However, specifically in management software, this did not happen. The reason is simple. The functional dimension of ERP is very difficult for new entrants to replicate, and it has greater relevance than the technological and architectural dimension where the cloud and the SaaS billing model fit in. This simple question has led to a lack of understanding on the impact of the cloud on TOTVS business and that of its competitors. In practice, the cloud represented yet another gigantic increase in addressable market, which is still a long way from being fully captured by ERP providers. The traditional concepts of market share and market penetration were originally created for consumer packaged goods, where the addressable market hardly changes over time. As I've said, toothpaste has remained essentially the same product for the last 100 years. This is not the case with management software.
Over the past few years, all the changes in companies' business scenarios have been directly reflected in an increase in the functional scope of ERP, which means an automatic increase in the addressable market. The arrival of the cloud has represented the biggest change. In short, TOTVS was able to capture for itself the customer's take rate on the entire environment in which their applications run. These costs are, in most cases, greater than the cost of the application itself. This has happened over the past decade and is far from being done. It is therefore wrong to consider TOTVS market share, as well as the high percentage of companies using management software as synonymous with a penetrated market. The practical conclusion is exactly the opposite. As the addressable market grows rapidly, TOTVS market share means a huge competitive advantage.
Now I turn over to Sérgio to start the Q&A session.
Well, thank you very much, and I would just like to remind you about the instructions given at the beginning of the conference: to ask a live question, keep your hand raised, press the button at the bottom of Zoom, and I will announce the name and release the audio, so to start the session, we will start with UBS and Leo Olmos. Olmos, the floor is yours.
Hello everyone. Good morning. Congratulations for the results. It's really nice to see everyone on the table. My first question is more about sales and management. What Dennis mentioned in the letter and now is very interesting. Could you please talk a little bit about sales by volume, new sales? We calculated more or less that there was a decrease year- over- year in the fourth quarter.
Could you please comment on what you expect in sales and growth according to volume, gross figures? And since Avelar is participating in the call, the go-to-market discussion was very nice. I'm curious to know why the name went back to RD. And I would like you to talk a little bit about the breakdown today by clients according to their size and also how you see this breakdown in the future. I wanted to better understand the fit of these clients with management since we are discussing cross-sell between the two units.
Thank you, Leo. Thank you for your comment. [Foreign language] The discussion about volume in the fourth quarter, the fourth quarter was very strong in sales. We did really well throughout the year.
This makes us confident for 2025. I believe we have all of the elements in place for us to have another important year, not only in terms of volume, but volume as well. Our portfolio continues growing. Our work to reduce the cost of proprietary in TCO is still very effective, which enables us to achieve new clients. Our sales platform has an amazing coverage. This week, for example, we inaugurated a new office in São José do Rio Preto, a wonderful office, really amazing for you to have an idea. I gave 12 interviews to all of the media in the region. This makes a lot of difference in terms of sales for new clients and retention of new clients. One day, you might be able to participate in such an inauguration.
This is something that we can consider for the future, and you will have an idea of the impact this gives our ecosystem and how this affects different regions in the country. And now, if you want to add anything about sales.
Good morning. Thank you for your question. We believe that there is room for us to grow. The market is greater than what we can price apply. We still have a lot of cloud available in the Brazilian market as we expand our capacity to meet the needs of the different regions. This is ongoing, and we can move on for a while.
Regarding the questions about RD and business performance of all of the products and then having RD's brand inside generated some confusion with our client base.
Because RD Station is such a strong brand, we thought it would be simpler for us not to communicate two things, just do something for RD Station. Acquisitions for RD, which is something different when we look at management because the products are very integrated. To extract value, we brought the product inside, and we now have a single product suite for RD. So RD Station is the single brand for the whole umbrella, makes it very easy for us to communicate with clients. Regarding your second question, I can't talk about share, but I can tell you that in the past years, RD Station has had more advanced versions of its own products. For example, RCM, Marketing all have evolved over time, and these are the ones that have the best performance. Their share grows over time.
In RD's normal client journey, they usually go through the entry level with lower or less expensive plans, and then they evolve to more advanced plans. But in this case, clients are better prepared, possibly because of the sales process or maybe because of the size of the client. So they already start with a better plan, and that contributes to a better performance. As we become multi-product, for them to extract value, they must have more advanced plans. With that, our average ticket is increasingly higher.
Really nice. Thank you very much. [Foreign language] In this inauguration in São José do Rio Preto, we actually wrote about it in Daily this week. We would like to be invited. Let us know next time.
Thank you, Leo.
The next question is by Thiago Capucci, Itaú. Thiago , your audio is open. [Foreign language]
[Foreign language] Thiago, your audio is open.
Well, thank you very much. I have two questions. The first one is a follow-up of Leo's question and perhaps a little bit higher level. We had changes with Avelar taking. [Foreign language] . I would like to know how the strategy changes and how the transition is going to be. [Foreign language]. Could you please talk to us a little bit about it? And the second question is about Techfin, which was the main surprise, at least from our point of view. This growth in credit production. [Foreign language] And also the question we ask is about the sustainability, which is at very different levels when compared to previous quarters. [Foreign language].
I would like to have your input about this.
Bom dia para você. Well, thank you, Thiago. I wish you a good day as well. Once again, I will start talking about the first strategy and then Avelar, if needed, can complement. This change is absolutely natural. Indeed, in TOTVS, is like different gears of an automobile. You start with a lower one and you accelerate and change the gear throughout the process. This change is just another gear, which means we're moving, we're advancing, and from day one, this was made clear. Convergence is what we are looking at. We want to be the opposite of a holding. We are developing a single product journey with offers to our clients because we see the value in integration and conversion. The role we want to play, the strategy we're following to expand our relevance for our clients.
This is something that can only be achieved by means of convergence. Avelar, would you like to add anything?
Well, in my previous role, I was already in charge of this. A good part of what we had already considered in terms of convergence, and we talked a lot about subscription. So it is, like Dennis mentioned, it's a continuation of work that was already being done last year with the synergies with TOTVS. And now I'm playing both roles. Well, regarding Techfin, Thiago, yes, we see it as something absolutely sustainable. Once again, from the very beginning, we clearly mentioned that the creation of JV would have this J- curve from a point of view of profitability. And in addition to this curve, Techfin, especially in terms of credit, has a bit more to do with transaction.
It fluctuates a little bit more when we compare it to the management business or the RD business, which in the past couple of years, fortunately or unfortunately, did in fact fluctuate a bit. But looking ahead in the longer term and for 2025, we are very confident that this is absolutely sustainable. Perhaps mentioned what I had remarked upon before, that RD has had very good performance and the agribusiness did have a favorable year, which shows that the operation has had a very good performance and that this situation will end up becoming normalized through our operations throughout the year.
Thank you very much for your answers.
Thank you, Thiago, for your questions.
Next question, Marcelo Santos from JPMorgan. Marcelo, your audio has been unmuted.
Good morning, everybody. Dennis, Maia, everybody sitting around the table. My first question refers to the profitability of the RD Station.
We're facing a new level of profitability in the company, and perhaps this should be considered the base for future periods. My second question, if you could speak more about the RD retention rate, what has led to it, and which are the assets in the company that you would have to improve, or if this is simply a macro issue and you're working as usual?
Well, Marcelo, let's begin with profitability and the margin of RD Station. This is the second quarter where the margin has been double-digit. Even in a fourth quarter, I would like to remind you that is normally more chastised in terms of price, and naturally, of course, this has a significant weight on the costs and changes in the fourth quarter. Now, despite that event, we have a two-digit margin, which shows that, of course, this is a very sound business.
On the other hand, I truly don't want you to have a fixed expectation that the unit will be delivering two-digit margins going forward. This is sound because of the profile. Do recall that RD Station is in a market. It is a newer product. It is under construction. We have been able to capture several of the opportunities, of course. And of course, it is more than natural that because we're capturing these development waves in the market, we will have a speed up, perhaps, and this could, of course, compromise the margins that we will be able to deliver in the short term. Now, from the structural viewpoint, the company is looking upon this operation as something that, yes, will change its profitability. Now, to address the question on retention, I would like to add to what I said at the beginning.
We have the ideal profile of clients that we have reached with RD since it has become part of the company. Now, as Avelar mentioned, they had a tradition of working with mono- products, mono- distribution. Of course, it is natural that this will create a very high and structural retention rate as we diversify this to multi-product, offering more solutions to the clients. We also enhance our capacity of working with much larger companies, management, clients of average sizes. This facilitates our approach to those clients, and we will tend to enhance the retention rate, the permanence of these clients, which precisely that. It's not something macro. There's a great deal we can do to improve this. We are not fully satisfied, and this is not business as usual. We have to deal with some points here.
And the solution, the strategy that has been set forth, is to differentiate ourselves more in the product that we're offering and also in terms of value integrated with the management portfolio with RD Station, gaining relevance in this process. We're working to enhance this indicator during the coming months. It's also important, Marcelo, to recall if you think about that institutional slide that we have, where we reinforce the different characteristics among the units. In RD, we're working with a discretionary budget, such that that is more volatile. So the client can contract or has more or less. Of course, everything is linked to marketing and sales. And at certain points in time, the company believes that if it invests more in sales, it can change the situation and enhance the investments. But once again, that budget is predominantly discretionary, and it's a characteristic we're working with.
It's possible that we will not have the retention level that we have in Management. Perhaps on the other hand, I would say that there's elasticity when it comes to increasing the budget for IT, for the administrative areas. The reaction tends to be slower because of the market behavior. It does bring us a higher and more foreseeable retention rate because of its characteristics. As Avelar says, this does not mean we're fully satisfied. We're trying to work as closely as we can to that retention rate, making it as similar as possible to what we have in Management. These are different market profiles, of course, and different solutions.
Thank you for the answers. If I could gain a better understanding of the following, there's an increase perhaps of churn vis-à-vis other periods.
It's because culturally you're seeking gains in your retention rate, which is truly amazing. But specifically at this point in time, there is a certain decrease in retention. This movement about our companies beginning to think they shouldn't invest more in marketing to have a better return, or is it due to the changes,
Well, Avelar mentioned this in his presentation. This has nothing to do with the market per se. It's something that we control, something that we have assessed, which of course is assessment is not fully precise. The main factor is what we included in the release, that RD Station has undergone significant changes when you enter a new channel, field sales, or a new client profile.
Avelar mentioned that RD has a channel that they're very used to, that they work magnificently with clients that come in at entry level, and during their discovery journeys, they gain more sophistication. Now, in field sales, our clients tended to be larger for a series of reasons, and they come in with more advanced products usually. Now, all of these are operating changes, which are not minor changes, of course. And as Maia mentioned, if you have a characteristic that is somewhat more discretionary, which is the case of the RD products, if you don't have customer success, if you don't have the client onboarding process fully adjusted, yes, you will have oscillations in the retention rate. This is something that is expected, normal when you undergo these changes. Now, the net balance of this change is positive, incredibly positive, promising significant growth and significant and sustainable gains.
We have inaugurated completely new avenues, as we mentioned in the release. As I underscore here, I have no doubts whatsoever that as we progress and knowledge and the capacity of working with this new challenge, putting together new products, integrating them into a frictionless journey, I have no doubt whatsoever that this will give us the capacity, the skill to recover that retention rate. Who knows, as Maia mentioned, get closer to the retention rate that we have in management, which is absolutely amazing.
Thank you. That was very clear. Thank you.
Thank you for the question, Marcelo.
Next question from Vitor Tomita from Goldman Sachs. Your audio has been unmuted. You may proceed.
[Foreign language]. Oh, thank you for taking our questions. We have two questions at our end. One, to think about management.
You spoke about geographic location, new units. Let's think about a long-term strategy. How much more capillarity can TOTVS have in terms of units in the hinterland of the country? How far will you go? How worthwhile are these expansions? If you could give us your opinion on this. And the second question is about the Techfin. You had a very strong semester. Could you expand more on if you had other segments besides agribusiness, or if there are other drivers for this positive performance and the Techfin work that you're carrying out alongside with Itaú? Thank you.
Vitor, thank you for the question, and a good day to you. Let's speak about capillarity. This is a question we receive frequently, and this comes from different sources. This process we initiated in 2019. It was a process to keep up competition.
We carried out a geographic design of Brazil, and this enabled us to understand this expansion to the hinterland driven by the agribusiness as by other businesses. We have several cities. We do have a specific goal based on geography for our expansion, and alongside this, we worked with the consolidation process of our franchises to make them ever more sophisticated, ensuring they will be able to inaugurate offices in new locations or expand the offices, like the office of São José do Rio Preto. Marcelo and myself will be in Timbó the coming week to inaugurate another office. This is a continuum, a very positive process, and it will continue. It will not stop at this point because we follow up on areas using that profile, following up on clients for the expansion.
There are states in Brazil that are receiving heavy private investments, and around these segments, of course, we have an enhancement of economy. It's a process of revitalizing offices, of inaugurating new offices, and going to more remote locations. The logistics situation in Brazil is not easy to be close to the clients. This is a serious discussion when we speak about expansion. It will not stop. It will not come to a standstill. As our software product portfolio is very broad, we are able to capture the different journeys. In the industry, we will have an audit by agribusiness and the whole economic cycle. This makes sense because we can capture the new regions.
Vitor, regarding Techfin. Yes. We had all of the other segments of the economy that contributed for Techfin to do so well.
New clients, new affiliates were brought in. New products were launched. And so we closed the year with projects such as Capital de Giro, Long Credit, at levels that are very interesting, with growth rates that are significant. And so this end of the year was very solid across the board in Techfin, which makes us confident that we will have at least a very nice beginning of 2025 in this business unit. Anyhow, for us, it is absolutely essential to do what we have called ERP banking. It's important that it takes off. And in terms of product and what we deliver as a journey, I would say that it advanced a lot throughout 2024.
Very clear. Thank you very much.
Next question, Silvio Dória from Safra. Silvio, your audio is open. [Foreign language] Silvio, can you hear us? [Foreign language]
[Foreing Language] Thank you for taking my question. This is a Techfin question. So how do you see the dependence on agribusiness? Diversifying your portfolio, is it going to be important for you? And another question I'd like to ask regarding CapEx. How much actually does TOTVS allocate for the cloud? And I know that it's unfair to ask this question, but we've seen companies overseas increase their investments significantly. But for the company, how much are you going to allocate in terms of financial investment to AI?
Well, I will talk about it a little bit. [Foreign language] In the past year, we've had something in the order of 20%. And yes, we do try to diversify. 20% is a significant amount.
But it is not a huge amount in the third and fourth quarters. It is related to the harvest cycles by Techfin. And so we have tried to diversify. We've tried to expand our possibilities so that over time we're as close as possible to what we have for TOTVS. We have the advantage of having a very good diversification of our client base. And this makes our business more resilient, and it's easier to anticipate what is going to happen. It is recommendable that we do diversify not only of the companies, but of the companies that work with us in Techfin.
Silvio, and regarding AI and the cloud in general, investments, and not only financial investments, but also time and attention and care, I would like to say that these systems have used a relevant part of our time, all of those here on this table, but not just us, and so we've evaluated the angles we're going to use, the space TOTVS is going to use, and we're definitely going to play a very important role. We are moving fast so that we can have a clear view of what we want, what we don't want, and what we're going to be and what we're not going to be in terms of AI. But I have no concerns. We know that I am absolutely certain that the cloud is a very important enabler for AI.
In other words, cloud is a business in itself, and it has enabled so many other things, but definitely, in regards to AI, cloud is essential, and I don't know whether Claudio and Marcelo would like to add anything here.
Well, I would like to comment that regarding numbers and CapEx, I would like to remind you that a lot of the topics of these agendas involve CapEx and OPEX, not just CapEx. And so we have a significant part, including people, licensing of software, and so on and so forth, so that it's not limited to CapEx only. Of course, cloud plays a very important role. We have the equipment, the technical assets, infrastructure. And what is really interesting for us to take into account is that here at TOTVS, we always try to apply technology to something which will be made available to the business and the client.
You will always see us discussing it more and more, and we're going to embed these technologies for the value proposal of each one of the projects, the segments, and the business units, rather than being a provider of technology only. So as we show you, as Dennis commented, that we're working hard to work with all of these solutions, you will see it clearer.
Also, in response to another part of the question, of course, it takes up a lot of time, especially for those who are working closely with the project. Those here on the stage, myself, Avelar, Marcelo, spend significant time dealing with these topics.
I would like to complement something here. For those who were in the universe of TOTVS last year, you will have seen how AI has taken significant time in the company.
So this is a relevant topic and has used a lot of time from all of us.
Well, thank you very much.
Thank you, Silvio.
Okay, so. [crosstalk] from Bernardo XP.
[Foreign language] Thank you for the opportunity. I have two questions. The first is a follow-up of the discussions on Techfin and perhaps on a macro scenario, trying to understand your appetite. BC's data and the results which have been reported by banks show a strong and resilient credit expansion with controlled default. But we also have a very challenging scenario with high interest rates, which will lead to higher default values later on.
Within this context, how do you see this and the appetite to accelerate this a little bit further? And my question here is on commerce. I wanted an update, trying to understand how your ecosystem is working. Do you think that you are accessing all different layers, or do you see any other niche that might be eventually explored by any other partnership or M&A? Do you have any interesting solutions for you in this segment?
Good morning, Bernardo. Thank you for your questions. I will start with Techfin. I would say that the appetite is good, especially because we have a long-standing history of success in risk management. We've been through many cycles, and the results we've achieved were always very solid in terms of default. I would say that we are careful and paying attention, as we always do, but we are confident.
From day one, when we started working with this business, I clearly stated that if we have to choose between growing and preserving this good track record, we will always choose to preserve our track record. But as we advanced with credit models based on RP data or by using different information that we had no access to in the past, we will use this differential. It may prove to be best for us. And once again, I would say that the level of confidence is good right now. But of course, we're always careful. We always pay attention. And our priority is to guarantee that we will have no surprises in terms of losses. [Foreign language] . Start with the end of your question, and Avelar will complement it. We do not have any comments on Linx right now.
Basically, everything we have to say today, we've been saying by means of our releases or relevant facts, and therefore there's nothing to add here. [Foreign language] . About eventual M&As, we are always very attentive to everything. But it doesn't necessarily mean that this will solve our lives totally. We're very happy with Shopify. They are a wonderful partner, world-class. You know them really well. But we always keep our eye open. This is true for e-commerce and anything else. Avelar, if you want to complement anything.
Well, we have expectations with a Shopify partnership. We've had this expectation from day one regarding B2B. And Shopify, we're doing really well. Indeed, really well. So the demand is there. And this is a business that grows at amazing rates.
Avelar, if I'm not mistaken, and perhaps you can confirm it, but the main Shopify Plus clients, for example, which is a more advanced Shopify solution, they came through our partnership.
Yes, this partnership in Brazil represents the largest part for the largest share for Shopify. We have an additional percentage from Shopify Plus, a very relevant percentage, which means the client comes in beginning with Shopify Plus without being a client from RD, and then we work with cross-sell. We've had truly impressive levels of new clients in the e-commerce portfolio and in the purchase of management products.
Very clear. Thank you, Dennis Avelar, and congratulations for your year results.
Thank you, Bernardo.
To end the question and answer session, I return the floor to Dennis.
Thank you, Sergio.
For 2025, we foresee the significant challenges that Brazil sees coming up, but we consider them as great opportunities for the technology market and, of course, for TOTVS. Our strategy meeting that we held at the beginning of the year had as a motto, a single destination with multiple opportunities. It is with our clients and our people that we open up the year. We have a team that is very clear about what they are going to do and what we deliver. 25% of Brazilian GDP goes through our systems. Recall this. We guarantee to the clients that if we don't grow and evolve their clients, this is our motivation. Once again, thank you so much for participating. We hope to see you in the next quarter, and thank the team for participating once again.