Brazil's ERP giant Totvs sees results of SaaS shift

The company reacts financially following the introduction of a cloud delivery model three years ago.

Brazilian enterprise resource planning (ERP) company Totvs reported third quarter revenue of 589.6 million reais ($122 million), up 4.8 percent on the same period in 2017.

The local vendor leads the the Brazilian market - according to a study from earlier this year, it has a 35 percent market share, followed by SAP with a 31 percent share and Oracle, who has 15 percent of Brazil's ERP business.

For Q3 2018, the company reported a 83.5 percent increase in adjusted net income at 39.5 million reais ($8.17 million). Since the adoption of a software-as-a-service delivery model in 2015, Totvs' cashflow had been suffering as a result of the transition but seems to be reversing that trend.

Third quarter subscriptions increased by 26.7 percent and the model now represents 25 percent of total software revenue at the company.

"Three years after the start of Totvs' migration process to the subscription model, the results presented show that the company has reached the inflection point," says Gilsomar Maia, chief financial officer at the company.

In the second quarter of 2018, Totvs posted its best quarterly performance of the last few years, which was also attributed to the surge in cloud subscriptions to its ERP systems.

Totvs had been suffering from dwindling sales over the last three years and has attributed it mainly to the SaaS shift - it reported its last income increase, at 6.2 percent, in 2015.

The company ended 2017 with only 2 percent growth, following consecutive quarters of poor financial performance.