2024 Earnings Release

2024 Earnings Release

Campinas, SP, March 25, 2025. Padtec Holding S.A. (B3: PDTC3) (and together with its subsidiaries, in particular Padtec S.A., "Company" or "Padtec") presents its results for the fiscal year ended December 31, 2024 (and the fourth quarter of 2024, "4Q24"), following accounting practices adopted in Brazil and with the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB").

• • 2024 Highlights

• ➢ Products and services that connect and bring people together contribute to the development of society and the economy and foster the design of new futures in an increasingly globalized and sustainable world.

• ➢ Portfolio of Equipment, Services, Software, and Platforms complemented by strategic partnerships for 5G, solutions for submarine/sub-fluvial networks, for the data center market (whose rapid growth is driven by the increasing adoption of AI), and focused on IP networks (routers and switches) maximizing the potential to reach customers in Brazil and abroad.

• ➢ The software tools offered by Padtec enable the integration of cyber security resources from partners into your network solutions.

• ➢ LightPad Max demonstrates Padtec's ability to develop and launch innovative and technologically advanced products in an industry characterized by obsolescence.

• ➢ Global demand for high-capacity transmission equipment has grown significantly in the last months of 2024, and the outlook for the near future remains positive.

• ➢ Padtec reported growth in its quarterly results throughout 2024.

• ➢ Total net revenue of R$298.8 million in 2024: growth in all four quarters.

• ➢ In 4Q24, total net revenue of R$96 million: +26.4% over 3Q24 and +7.7% compared to 4Q23.

• ➢ Operational efficiency: gross margin of 31.8% in 2024, reaching 35.7% in 4Q24.

• ➢ EBITDA of R$17.5 million in 2024 (EBITDA margin of 5.9%).

• ➢ In 4Q24, EBITDA totaled R$10.7 million (EBITDA margin of 11.1%).

• ➢ The average cost of raising funds of 8.4% per year in 2024, 78% of loans and financing are long-term and 22% are short-term.

• ➢ For yet another year, Padtec is ranked 1st in the DWDM item of the survey "Outstanding Brands in Internet Providers" by RTI Magazine.

Padtec offers products and services that bring people together and connect them, contributing to the development of society, the economy, and an increasingly sustainable world. About to complete 24 years of existence, the Company plays an important role in developing advanced solutions for high-capacity data transmission.

Padtec Holding S.A.

2024 Earnings Release

March 25, 2025

There is plenty of evidence that data traffic continues to grow exponentially - a consequence of the increasingly intense use of applications such as high-definition video streaming, augmented reality, 5G, and AI, among others. However, the last two years have been very challenging for all companies operating in the telecommunications ecosystem. The market and the equipment value chain showed signs of saturation due to adjustments in stocks and installed capacities. The signs of saturation reached the infrastructure of high-capacity networks at the heart of the networks (optical backbones), reflecting the contraction of sales (and revenues) of the participants in this production chain. In some cases, telecommunications networks ended up being used to their maximum limit, due to capital optimization by operators and internet providers. Macroeconomic and geopolitical challenges resulted in high levels of uncertainty in Brazil and abroad and added to this challenging scenario, impacting the results of players in 2023 and 2024. And for Padtec, the effects were no different.

Seeking ways to minimize risks from the effects of the situation described above, Padtec has been making efforts to increase the diversification of revenue sources in its two business units: Equipment/DWDM and Services, Software, and Platforms. Some initiatives have already been implemented by the Company over the last few months.

The deployment of 5G networks in Brazil requires investments on multiple fronts, such as the construction of communication networks to meet the infrastructure required for the next generation of applications and new broadband services. These new high-capacity optical networks will increase demand for solutions that deliver greater connectivity and better-quality data services. Aiming to boost its performance in 5G, Padtec announced in February 2024 the development of joint efforts with Parallel Wireless to offer solutions to mobile network operators in Brazil and Latin America.

The Company announced its return to the subsea systems market, after five years in a non-compete period imposed on the sale of a business unit in 2019. The return is through a partnership with the Peruvian company Satelital, designed to offer a complete solution (turn-key) in the construction and maintenance of submarine and sub-fluvial networks in Latin America.

Padtec has also strengthened partnerships with different commercial channels in several regions of Brazil to offer solutions focused on IP networks (switches and routers). Aiming to complement its portfolio and reach new market segments, in 2Q24, it announced a partnership with the North American company Arrcus, enabling UfiSpace's solutions (a Padtec partner since 2023) to reach the hyperscale data center and core/edge network markets.

Also, in 2Q24, a partnership was signed with Trusted Data to offer a complete solution for data centers, including a remote and real-time management platform for the entire network environment. This model includes the combination of Trusted Data's Smart EDGE solution with the Smart Site platform, launched in 2022 by Padtec. The partnership has already yielded results, with the first integrated sale of Smart EDGE, Smart Site, and Video Wall in the "As a Service" model.

In June, in line with the strategy designed for growth in the photonics core, the Company launched LightPad Max, its new generation of transponders for DWDM networks with extremely high data transmission capacity. Its main advantage over previous generations of transponders is the lower cost per bit transmitted in coherent optical systems, with high energy efficiency. LightPad Max proves Padtec's ability to develop and launch innovative and technologically advanced products in an industry that has obsolescence as one of its characteristics. The version of the LightPad Max platform with AC power supply is in the final stages of development, which will adapt it to Data Center environments with high growth potential.

Aiming to expand its area of operation, Padtec has launched a new line of coherent pluggable transceivers with low power consumption and 400 Gb/s capacity, which can be used in transponders and IP routers from different suppliers, increasing the Company's presence in metropolitan networks, large-scale Data Centers and EDGE Data Centers. These pluggable transceivers can be managed by the NMS+ network management system, from Padtec's DWDM platform, even when equipping IP routers. This innovation brought by Padtec strengthens its vision of an integrated IP + DWDM solution.

Through the ASON Control Plan, Padtec provides greater agility, automation, and efficiency in the management of optical networks. Developed based on the SDN (software-defined networks) architecture, the product launched at the end of 2024 is the result of the evolution of the traditional NMS (Network Management System), being a solution aligned with the Company's position of contributing to the construction of autonomous, intelligent and scalable networks.

With a focus on its international expansion, Padtec announced in 1H24 commercial partnerships in Peru and Colombia to provide competitive telecommunications and technology infrastructure solutions as a distribution channel for all products in its portfolio. The implementation of the Premium Services unit in Colombia is also part of the strategy to increase its presence in more geographies.

Through its Services, Software, and Platforms business unit, Padtec's goal is to increase the delivery of more consultative solutions, increasing efficiency and optimizing network operations through software-based solutions, automation, strategic and rational outsourcing, and remote support with AI technology. Partnerships in cybersecurity solutions also help make customers' networks safer and more adapted to new demands and current legislation. For the years 2025 to 2027, Padtec already has approximately R$156 million in monthly recurring revenues (MRRs).

In this sense, the Company has launched two new solutions for internet and telecommunications providers, seeking to keep up with the needs presented by ISPs and the technological evolution that emerges all the time. Smart Workspot is an online platform for integrated management of fieldwork teams (Workforce Management or WFM) that work in the operation and maintenance of networks. This software was developed internally by Padtec and can be customized for each operation, in addition to offering an application for offline access. This solution, together with Smart Site, is part of a suite of integrated digital solutions that has been developed called Smart Operations, which, with the support of Artificial Intelligence, aims to make the management of operations more autonomous and profitable. InovaTec is an innovation consultancy dedicated to the telecommunications market that uses methodology tested and approved by Padtec over the years. The service is provided by a multidisciplinary team that works in four main areas: identification of opportunities, feasibility testing (with prototype development, fast code, and lean-agile), continuous delivery approach, and impact assessment, with the implementation of data collection and analysis methods. InovaTec has already provided customers with intelligent and creative solutions, integrating different suppliers and processes in the design of new solutions and products.

In 2025, Padtec will continue to add new equipment and solutions to meet the needs of the telecommunications sector, seeking to also reach other segments of the economy. The development of the international market, with the addition of new products, new services, and the reach of new geographies is also part of the organic growth strategy.

The Company is attentive to growth opportunities on inorganic fronts that can add skills and technologies, both in Brazil and in other regions of the world.

In addition to the combination of organic and inorganic growth, Padtec is developing new financing models to support its sales growth in various markets. The Company already has several customer financing instruments, uses the FINEP Aquisição Inovadora Telecom line, and has its own FIDC (with support from BNDES Participações S.A., the FIDC Funttel Padtec). In March 2025, it announced the contracting of the FUST- Commercialization credit line with BNDES in the amount of up to R$30 million. These resources will be used to finance the sale of machinery and equipment and released according to proof of each project/sale.

Operating Revenue

In 2024, Padtec recorded gross operating revenue (excluding returns and cancellations) of R$364.5 million, a reduction of 19.9% compared to the previous year, R$455.2 million. Net revenue was R$298.8 million, 19.0% lower than in 2023. The Company recorded growth in its revenues throughout all four quarters of 2024 and ended 4Q24 with net revenue of R$96 million - an increase of 26.4% over 3Q24 and 7.7% over 4Q23.

Although global demand for high-capacity transmission equipment has not yet recovered to the levels seen during the COVID-19 pandemic, there has been significant growth in the last few months of 2024, and this growth is expected to continue in the near future. One reason for this growth is that data traffic continues to show robust growth rates, as seen in access to video streaming, online gaming, and the use of artificial intelligence tools.

Padtec's business model is divided into two business units (or business units - "BUs"). The Equipment/DWDM BU encompasses projects developed for each client, considering their realities and needs. The sales cycle for these projects is relatively long and any changes in "sales" may take more than 45 days to be accounted for in the Company's revenue. Since 2023, this BU has also been offering switches and routers. The other BU offers a diverse range of Services, Software, and Platforms.

Revenues obtained in Brazil from the Equipment business unit grew throughout 2024 and totaled R$170.7 million in 2024. In 4Q24, these revenues were R$55.8 million, an increase of 7.9% compared to 4Q23. Revenues obtained in the foreign market from Equipment also grew during the year, reaching R$73.3 million (R$24.6 million in 4Q24, +17.4% over 4Q23). In the Services, Software, and Platforms segment, net revenues in 2024, R$54.8 million, were 10.3% below that recorded in the previous year. Padtec has approximately R$156 million in monthly recurring revenues (MRRs) already generated for the fiscal years 2025-2027.

Gross Profit

The Company is permanently focused on controlling its production costs and benefits from producing and developing many of its products locally, in Campinas/SP. Gross profit in 2024 was R$95 million, with a gross margin of 31.8% (gross margin increased throughout the quarters of the year), compared to R$131.3 million in 2023 and a gross margin of 35.6%.

Operating Expenses/Revenues

Administrative, commercial, and research and development expenses totaled R$95.2 million in 2024, a reduction of 8.6% compared to 2023, R$104.2 million.

Changes in the classifications of provisions for tax, labor, and civil contingencies provisions for amounts receivable from customers, and payments of compensation in labor claims contributed to other operating expenses being R$5.6 million in 2024.

Financial Result

In 2024, the net financial result was negative by R$21.6 million, compared to losses of R$14.7 million in 2023.

Period Result

The Company recorded a loss of R$27.8 million in 2024.

EBITDA

The Company considers EBITDA, which corresponds to net profit, plus income tax and social contribution, depreciation and amortization expenses, and financial result, an important parameter for investors, as it provides relevant information about its operating results, profitability, and operating cash generation.

EBITDA

From EBITDA to Net Income

The restructuring carried out in 1Q24, which resulted in a reduction in the Company's workforce and significant one-off disbursements in that quarter, contributed to the negative result recorded in that quarter and, consequently, to EBITDA for 2024.

EBITDA was R$17.5 million in 2024 (EBITDA margin of 5.9%), compared to R$56 million in 2023 (EBITDA margin of 15.2%).

Debt, Cash, and Capital Structure

In the first half of 2024, Padtec carried out a restructuring of its debt to ensure greater cash liquidity, support its organic growth, and explore inorganic opportunities.

Among the measures taken, an export credit note obtained from Banco Votorantim in 2023 was settled and another NCE was obtained from this same financial institution, enabling the debt to be extended and financial costs to be reduced. Two other loans were taken out: a forfaiting arrangement from Banco do Brasil and an import financing line (FINIMP) from Banco Votorantim, in addition to R$150 million being raised from BNDES in the EXIM modality for the production of equipment intended for sale in new geographies in the international market.

In 4Q24, the Company obtained the release of R$3.4 million related to a financing agreement entered into with FINEP between 2020 and 2022, the funds of which are credited according to the disbursement and proof of expenses for the execution of the strategic plan of the subsidiary Padtec S.A. Throughout 2024, FINEP released the sum of R$24.7 million related to these agreements.

Thus, at the end of 2024, loans and financing totaled R$339.9 million, 78% of which were long-term obligations and 22% short-term. In 2024, the average cost of raising funds was 8.4% per year, compared to 5.7% per year in 2023.

104.218 150.697 254.915

101.328 150.390 251.718

95.501 150.375 245.876

80.928 - 80.928

81.284 - 81.284

In December 2024, the amounts available in cash and cash equivalents totaled R$158.1 million (R$50.5 million at the end of 2023), and financial investments as collateral, R$32.6 million (R$1.8 million in December 2023), totaling R$190.7 million.

Net debt was R$149.2 million, with a net debt/LTM EBITDA ratio1 of 8.51 and a net debt/equity ratio of 1.22. The Company's leverage ratio throughout 2024 was strongly impacted by the negative EBITDA recorded in 1Q24, culminating in the net debt/EBITDA ratio exceeding 8 times at the end of the year.

The current capital structure allows the Company to accelerate the expansion of its portfolio of products and solutions to more efficiently meet the demands of the telecommunications sector, reach new regions, and make financing viable for its customers.

Coobligations

To facilitate the acquisition of its products and implementation services by customers who do not have direct access to the financing lines available on the market, Padtec carries out financial operations based on the principle of credit assignment and receivables discounts. Among these lines, FINEP Aquisição Inovadora Telecom stands out, which allows customers to benefit from very favorable conditions for the acquisition of Padtec equipment.

Since 2017, approximately 65 clients have obtained credit using these transactions. To mitigate the credit risk of its counterparties, adequately manage financial risk, and maintain a default rate close to zero, the Company carries out detailed monitoring of each of these clients.

In 2024, Padtec had operations of this nature in its balance sheet worth R$88.1 million, given as collateral for financing taken out by some of its customers. Approximately 52% of these obligations are long-term (48% short-term) and the counterpart of these entries appears in current assets and non-current assets.

1 LTM EBITDA corresponds to the sum of EBITDA recorded in the last twelve months.

FIDC Funttel Padtec

In addition to the instruments mentioned above, Padtec also has a credit rights investment fund, in partnership with BNDES Participações S.A. - BNDESPAR (BNDESPAR). The operations of the FIDC Funttel Padtec, which began in 2Q22, have BNDESPAR as the senior shareholder (with an 80% stake) and the subsidiary Padtec S.A. as the subordinate shareholder (20%). The fund's objective is, through the granting of credit to Padtec's clients, to stimulate technological innovation, encourage the training of human resources, foster job creation, and promote access of small and medium-sized companies to capital resources, to increase the competitiveness of the Brazilian telecommunications industry.

By the end of December, the fund's shareholders had made R$50 million available, with R$61.4 million in credits granted to 30 Padtec clients. Around 81% of the amount remains outstanding.

The FIDC Funttel Padtec is consolidated in the Company following the rules of Technical Pronouncement CPC 36 (R3) Consolidated Financial Statements, correlated with International Financial Reporting Standards - IFRS 10 (IASB - BV 2012). However, for this Earnings Release, the amounts of the FIDC Funttel Padtec are not considered for the calculations and analyses presented in the section "Indebtedness, cash, and capital structure".

Investments

Padtec focuses on the continuous improvement of its solutions and is always attentive to the needs presented by the telecommunications and technology segments. The Company offers high-quality products, services, and solutions that add value to its customers' businesses. Padtec's products and services, developed internally or in partnership with other companies, stand out for their high technological content, great flexibility, and high standards of robustness, quality, and reliability.

In 2024, investments in research and development ("R&D") totaled R$43.1 million (14.4% of net revenue),

compared to R$41.5 million in the previous year (11.2% of net revenue). Since the amount recorded in the Income Statement presents the effect of deferrals, in that report these expenses total R$34.3 million in 2024 and R$37.5 million in 2023.

By the end of 2024, Padtec had already registered twelve invention patents with the National Institute of Intellectual Property - INPI and was awaiting approval of six other applications filed. Through partnerships with universities and research centers, the Company seeks to increase and diversify technological innovations that support the incessant development of new solutions offered to the telecommunications ecosystem.

• • ESG (Environmental, Social, and Governance) agenda at Padtec - retrospective 2024

Padtec is ESG at its core. Since 2001, its purpose has been to make connectivity, an important tool for socioeconomic integration, viable and accessible to all people anywhere in the world. The Company's commitment to ESG issues is achieved by offering solutions that enable the provision of essential services and digital inclusion with production practices that are committed to the environment, the preservation of resources, the safety of its employees and customers, and that generate value for all its stakeholders.

The highlights of the year 2024 in each of the three pillars - Environmental, Social, and Governance were:

• • NPS reached +75, the same level as the record set in 2023, positioning the Company in the Quality Zone of the Net Promoter Score methodology (the index that measures customer loyalty to Padtec).

  The survey was conducted internally with representatives of the Company's customers and indicated that the overall level of satisfaction with Padtec grew for the 7th consecutive year.

• • For the 3rd consecutive year, Padtec won 1st place in the DWDM item of the survey "The Outstanding Brands in Internet Providers" conducted by RTI magazine.

• • 117 specialized technical training courses in optical communication networks were offered (compared to 101 training courses in 2023) to 1,398 people, a 35% increase in the number of students reached in 2023. The opening of Padtec's new distance learning studio (EAD) in early 2024 contributed to this milestone.

• • As a way of always being close to its customers, Padtec was present at 48 fairs and conferences in Brazil, Latin America (Peru, Colombia, Argentina, Puerto Rico, Chile, Venezuela, Ecuador, Bolivia),

  Mexico, and the USA and promoted 24 of its events (Pad Technology Days, Padtec Talks and co-branding events with customers, in person and virtually) to discuss market trends and present its portfolio of products and services.

• • Launch of Padcast, a podcast focused on trends and innovations in the telecom market.

• • Implementation of technical and functional skills development programs for all employees and leadership skills for the Company's management team.

• • Recognized four times in 2024 with the "Company that gives Feedback" seal granted by the human resources platform Gupy.

• • Formation of the 2nd class of the Technical Mentoring Program, which develops professionals through mentoring provided by more experienced employees.

• • Implementation of the internal campaign "Nossa Cultura a Gente que Faz", aimed at strengthening the dissemination of corporate culture among employees.

• • Padtec S.A. obtained the AEO (Authorized Economic Operator) Certification, granted by the WCO - World Customs Organization, in the Compliance modality.

• • Quality Management System (QMS) certified by ISO 9001 since 2004 and Environmental Management System (EMS) certified by ISO 14001:2015 since 2022.

• • Implementation of new corporate policies, including the Policy for the Prevention and Combat of Moral Harassment, Sexual Harassment, Discrimination, and Other Forms of Violence, and review of existing documents, aiming to improve Padtec's guidelines to best management and corporate governance practices.

• • Holding the 4th edition of Compliance Week, aimed at all employees of the Company.

• • Promotion of an internal campaign for donations to victims of the rains in Rio Grande do Sul (in partnership with the City of Campinas) and a virtual event to raise funds for providers in Rio Grande do Sul, held in partnership with other companies in that state.

• • Conducting internal communication campaigns and on social networks to raise awareness about diversity and inclusion and volunteering actions.

• • Income Statement - Consolidated

CONSOLIDATED

(in thousand of Brazilian Reais)

Administrative expenses Commercial expenses

(7.373) (9.007) (9.724)

Financial income Financial expenses

(6.713) 5.821 -

Income tax and social contribution Current

Deferred

- -

(8.213) (8.924) (9.339) (1.852)

(8.965) 3.193

15

• • Balance Sheet - Consolidated

Following a review of its financial statements for the fiscal year ended December 31, 2023, the Company identified the need to reclassify expenses totaling R$ 1.9 million. Previously recorded under 'Inventories,' these expenses have been reallocated to 'Intangible Assets' as they pertain to the development, acquisition, or enhancement of product-related know-how. This reclassification aligns with established accounting principles, accurately reflecting the investment's nature as an intangible asset that contributes to future economic benefit.

(in thousand of Brazilian Reais)

• 50.456 Loans and financing

• 9.920 Derivative Financial Instruments

• 125.809 Commercial leasing operations

• 102.196 Suppliers

• 30.141 Related parties

• 39.008 Payable taxes and contributions

• 6.909 Payable taxes and contributions in installment Social contributions

Dividends payable General provisions

3.674 2.411

40.359

• 4.766 Advances from customers

  2.327 1.447

  Restricted financial investments Derivative Financial Instruments Sales financing operation Judicial deposits

  32.599

• 1.754 Other accounts payable

3.168 1.208

971

-

46.156

1.293

23

Non-current General provisions

263.405

• 40.422 Provisions for labor and tax risks

  619 16.058

• 51.060 Loans and financing

  12.283 99.081

  Suppliers

• 675

393 13.866

13.071 1.299

Sales financing operation Liabilities - FIDC Senior Shares Other accounts payable

46.156 41.609 147

52.891 21.109

-