Technology Sector Panel, TC Matrix Event

Last Thursday, May 27, the equity research team at TC Matrix held another day of sector board event. This time, with the technology sector.

The event consists of bringing in relevant votes from the market. In this case, it is the executives and managers of companies included in the sector who present their theses, how they affect the sector through their actions and, primarily, their views and expectations of the performance of the sector.

From an investor’s point of view, the event is very enriching to get acquainted with some of the theses of market players. In addition to getting their insights during the event, both in person and online, clarifying doubts directly with company officials and even restructuring expectations in their personal assessments.

In this text, you can check out the companies that participated in the event and some of their highlights.

WDC Networks (LVTC3)

WDC Networks, founded in 2004 by Vanderlei Júnior (the company’s CEO), is a company focused on improving people’s quality of life through technology.

Its business is conducted in 3 different sectors of technology: telecommunications, solar energy and corporate (corporate sector). In addition, its business model is based on TaaS – technology as a service method.

This model was able to allow telecom companies to grow even faster. The scenario at the time was a boom in the sector, and companies did not have the capital to finance the capital expenditures needed to meet the excess demand from customers.

Thus, WDC keeps the capital expenditures to itself from purchasing the product to assembling it, so that it can lease these assets to companies requested by, in this case, telecom companies.

Apart from that, there is also the advantage of taxes to be paid as the contract is for rent and not for purchase, which is an essential saving for technology companies, which, due to their high growth, need a low cost of capital.

WDC . Technology

Another sector that still has a path to growth is solar power generation, with Brazil having a strong generation capacity.

Vanderlei Junior explains that Curitiba is the worst city in Brazil to generate solar energy due to its low level of insolation.

However, it is still more viable in power generation than any German city, which has the third largest solar park in the world.

Speaking of 5G, a topic that will be the focus of an upcoming sectoral committee, the batteries regulated for use in this type of transport are lithium. However, there are many players in the telecom market who have lead acid batteries in their facilities.

Similarly, service providers in the telecom sector do not use lithium batteries.

Note that there is always a pattern of breaking patterns within the technology sector, given the potential the sector has in terms of technological advancement.

Finally, today’s overall goal for WDC Networks, whose stock is traded on B3 by the symbol LVTC3, is the cross-selling of TaaS between the telecoms, solar and corporate sectors.

This is with the knowledge that the demands of the players in these sectors end up offering a correlation between them, which can be exploited by the WDC to benefit its business.

TOTVS (TOTS3)

TOTVS was born in 1983 as a Brazilian company focused on management software, especially Enterprise Resource Planning (ERP).

Currently, in addition to management, which still accounts for 85% of the company’s revenue, TOTVS also operates in the areas of TECHFIN and Business Performance.

Building on these three “gears” and verticalizing your business, as the management area captures the activities of the back office and middle office of clients, the business performance area includes the activities of the front office, handling of leads and clients and TECHFIN which provides financial services tailored to its client base.

Thus, TOTVS has been able to add longevity to its business through contract continuity and value to its customers through management solutions, across the 12 sectors it covers.

TOTVS Technology

Although ERP and management are the leaders of TOTVS, if we want to analyze more developed markets such as the American market, CRM solutions have a much greater performance and market than ERP solutions, while in Brazil, we still have The CRM market is small if compared to ERP, it shows how this dynamism in the Brazilian market is still able to achieve growth and paradigm shifts within the sector.

Naturally, TOTVS is a technology company, which, building on its ecosystem of providing management solutions and expertise in immersing its clients’ data and goals, has only entered the financial services market for its clients. So much so that TOTVS recently announced a joint venture with Itaú to expand into this market.

This is because, according to Gilsumar Maya, TOTVS’s current CFO, the company still lacks a strong presence in the financial sector due to its roots in management solutions.

Thus, this joint venture comes with the mission to benefit from the company’s TECHFIN business, as there will be more synergies and traction of operations in financial solutions, together with a traditional and consolidated player in the market.

Dotz (DOTZ3)

Dotz was born in the 2000s with a mission to democratize access to loyalty programs and benefits. The company believes that it has provided Brazil with a broader concept of loyalty, in addition to credit cards and airline miles, expanding into many other sectors of the economy and thus increasing its ecosystem of operations and partnerships.

Although Dotz looks like a financial services company, it is actually recognized as a technology company due to the pillars of its business model.

One of these pillars is based on the processing of customer consumption/research data in partner companies, so that Dotz can determine which directions new partners’ choices can take, and which products to offer, equalize their choices.

Another interesting point is that even as a technology company, Dotz’s operations have a different dynamic than what is expected for the sector.

In the case of Dotz, in addition to the point made in the previous paragraph, the company has the relevant exposure to service partnerships as a driver of value and business continuity.

DOTZ Technology

Allies (ALLR3)

Allied was created with the aim of bringing the digital world to everyone in Brazil, through three main lines of business: physical retail, digital retail and distribution.

Allied is currently seeking to display the company’s profitability further on the retail business. From the point of view of competition in retail, the chain of partnerships Allied has protected from negative externalities of losses in competitiveness, as well as from competitive gains among partners.

The company is already integrated into the first-tier technology market (mobile phones and the like), now it’s time to look at the second sector (niche markets) and start strategies for entering this market.

In addition, another avenue for growth is sales in B2B and in services (within the distribution process), as well as the creation of comprehensive channel strategies and the expansion of the ecosystem of digital products / services offered in partner stores.

allied technology

Positive (POSI3)

In addition to its consolidated track in the consumer sector, today Positivo is diversifying its portfolio into financial services operations, solutions in the corporate sphere, special projects and education technology.

But the expectation is to reduce exposure to consumption and direct operations of the corporate sector and the public sector.

Below we can see a part of Positivo’s business model, among them, we can highlight a part of the servers that in the second quarter of 2022 will add to Positivo revenue of R$ 270 million, due to the contract to sell a server to Petrobras.

positive technology

In general, with the advent of 5G, growth opportunities arose for Positivo, especially in terms of high-end products (servers and the like).

The HaaS segment is also a highlight of the company, according to Positivo’s chief financial officer, Caio Moraes, because despite their focus on shorter contracts, as devices are returned more frequently, their results could be boosted by reselling those in the secondary market.

In terms of guidance, the R$5 billion forecast is already partly secured due to public contracts negotiating an approximate volume of R$3 billion, strong demand for HaaS, services with good growth prospects, payment solutions expanding the buyer base and a new Infinix brand driven by the resumption of Consumption.

Intelbras (INTB3)

Intelbras is a technology company focused on the hardware sector, which transitions between security, communications and energy products. Its products reach end consumers from retail partners (a small part through their own channels), who have more than 490 distributors and more than 80,000 resellers.

The company was generating results from funds raised in its initial public offering, either organically from financing its e-commerce expansion, commercial team, CRM and exploring avenues for 5G growth, capacity expansion and development of HaaS and SaaS strategies. Also, inorganically from the purchase of Khomp and Renovigi.

In terms of growth opportunities, in addition to this significant bias towards acquisition/mergers for small businesses to expand, Intelbras sees: vertical projects to explore new technologies, ability to adapt to new markets and retail processing of increasing demands; And other avenues of growth that other companies have already mentioned: 5G, solar, and access technology.

Intelbrace

Getninjas (NINJ3)

Getninjas is a service platform that connects clients with professionals who provide the required services.

The overall goal of the platform is not only to make it easier for customers to search for the services they seek to hire, but also to help these service providers leverage their career path, based on the market built on top of their service.

According to Lucas Arruda, Director of Strategy at Getninjas, two strategies are currently set to boost the company’s business: increasing density and increasing the number of active professionals in the base.

Density is nothing more than the number of service orders per 1,000 residents of a federal unit, which, in UFs in RJ, MG, and BH, grew by 100% or more from 2019 to 2021. Analysis of company data shows that there is a strong correlation between increased density and increased order profitability. , Hence this search for density expansion.

An increase in active professionals does not necessarily mean an increase in the number of these professionals, but rather the frequency with which they use the platform.

The service providers, on average, have a busy schedule so they cannot afford the requirements that arise in the application at all times, but the ideal option for Getninjas is to frequently engage these professionals in purchasing coin packages that attract potential customers to their own bases.

gitningas

What do you expect from the technology sector in Brazil?

Finally, the overall research team of TC Matrix conducted a study on the technology sector in order to experimentally prove the potential of the Brazilian technology sector.

Among the highlights of the study, we can highlight:

  • The scenario is a demand for services from technology companies;
  • The labor market (the supply of labor) remains challenging;
  • Brazil needs to push reforms to achieve productivity gains.

To access the full report, simply access the Primary Contributors platform, and in the Reports tab, find the report below:

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