Q4 2020 Arco Platform Ltd Earnings Call
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Good afternoon, everyone.
Thank you for standing by the welcome to Arco platform fourth quarter 'twenty 'twenty earnings call.
This event is being recorded and all participants will be in a listen only mode. During the companys presentation.
After <unk> remarks, there will be a question and answer session.
At that time further instructions will be given.
Should any participant need assistance during this call. This breast you started your true reach of the operator.
This event is also being broadcast live via webcast and the be access through Arcos website at Investor Day Arco.
Platform Dot com or the presentation is also available.
Now I will turn the conference over to getting OCA Heder Oracles IR director.
Dana you may begin your presentation.
Thank you I am pleased to.
To Arco's fourth quarter and full year 2020 conference call with me on the call today, we have Arco CEO added the soccer of of Internet and Arco Zero day together.
During today's presentation, our executives will make forward looking statements.
Forward looking statements generally relate to future events or future financial or.
The rating performance and involve known and unknown risks uncertainties and other factors that may cause our actual results to differ materially from those contemplated by these forward looking statements.
Forward looking statements. In this presentation include but are not limited to statements related to our business and financial performance expectations.
Welcome to the guidance for future periods, our expectations regarding the strategic product initiatives and the related benefits and expectations regarding the market.
These risks include those set forth in the documents that we issued earlier today as of all of those more fully described in our filings with the Securities and Exchange Commission.
<unk> forward looking statements in this presentation of days on the information available to US as of the day tear off you should not rely on them as predictions of future events and we disclaim any obligation to update any forward looking statements, except as required by law.
In addition management may reference non I ever of financial measures on this call.
All of the non I FRS financial measures are not intended to be considering isolation or as a substitute for results prepared in accordance with that for US. We have provided a reconciliation of these non of air France financial measures to the most directly comparable I FRS financial measure in our press release. Please note that except from revenue growth.
The team selling expenses G&A and cash flow from operations all other financial measures. We discuss here are non I FRS and the growth rates are compared to the prior year comparable period, unless otherwise stated. We also note that year over year comparisons are affected by acquisition that were not included in.
<unk> thousand of 19 financials, let me now I'll turn the call over to pick the GAAP Arco CLO.
Yeah.
Thank you.
Thanks, everyone for joining today's conference call.
You and your families are all healthy and safe.
You'd like to discuss four topics today are strong in flight free.
First.
Our two of our financial results for the quarter and part of 2020 fiscal year.
Despite the challenging scenario, we delivered solid revenue of 1 billion of ice and an adjusted EBITDA margin of 38 per cent of.
Both of the guidance provided for the fiscal year.
Second the confirmation of our ACP force thanks for anyone.
Of 1 billion of hundreds and six 3 million eggs.
Representing a 21% growth versus the 2020 school year.
The number is already net of 19, six medium price of floor space UV due to Covid impact.
The number of students in our partner schools.
Yeah.
One of providing our guidance for the 20th from one fiscal year adjusted EBITDA margin of $35 five to 37, 5%, reflecting our commitment to continuous strengthening of winning sectors, while sustaining a healthy margin.
Third an update on our recent acquisitions with additional debt.
We're also when the current actions and met the works in the two sports you'll see the law school.
Our ex calling for the drinks huh.
Finally, our three priorities for 2021.
Leverage stronger when he factors to continue growing in the large and accept the market.
Drive case itself does utilization.
And further pursue ESG impact.
Moving now to slide number four.
Net revenue for the fourth quarter of 2020 were $296 5 million, representing 20% growth year over year.
Our net revenues for 2000 21 billion.
$1 7 million of ice 75% above 2019.
Gross margin was 77, 6% for the fourth quarter in line with the same period in 2019.
For 2020, the gross margin was 77, 9%.
Down one six percentage points year on year with the small difference differences in the cost structure of course, the people acquired in the final quarter of 2019.
Adjusted EBITDA was $135 9 million is for the fourth quarter of 2020.
From.
$106 3 million in the fourth quarter of 2019 with similar adjusted EBITDA margin for these periods.
Adjusted EBITDA for the full year 2020 was 381 million of ice.
With the margin expansion to 38% from 36%.
In between the 19 and of both of the guidance provided for the year.
Finally, adjusted net income was 67 4 million higher for the fourth quarter of 2020 from 77 million in the fourth quarter of 2019.
When looking at full year results net income increased 30%.
So with 223 million of ice in 2020 from $169 5 million in 2019.
The lower adjusted net margin in 2020 is mainly explained by two factors first higher net financial expenses driven by our lower cash position 20 2020.
Generating less financial income and debt generating higher financial expenses in <unk>.
Second higher taxes due to the migration of some of our solutions to actual profit message from the deemed profit in 2019.
Important to note that we have already started to benefit from positive.
Was goodwill tax benefits in 2020.
And we still have 92 per cent of the total tax benefit to be captured in upcoming years.
Turning now to slide number five our ACD bookings for the school year of 2021, amongst two 1 billion 163.
3 million of ice representing a 21% increase compared to 2020 cycle.
The core segment grew by 16% year over year to 913 million of housing SUV and 1.27 million students.
Despite the shorter sales cycle.
The Queen Twenty's Fannie when schools are closed for almost six months and the challenging environment due to COVID-19.
The S. N S. C grew at the same pace of the previous cycle.
Of course, the Tivo accelerated growth from change of Fannie and Gucci are full of dish. The only of Crystal <unk> solution was the major Wiener.
With relevant growth acceleration.
These results highlight the strength of our business model the Brent the accuracy of our solutions the high quality offerings and our constantly evolving the ability to distribute those of our solutions.
Our supplemental segment comprised of International School M. P S.
The brands in the English in the second language quality intelligence in play in the social motion of learning.
And not just their line.
M maker grew by 45% considering the acquisition of spilling into the shape, reaching a <unk> of 251 immediate highs and 515 thousands of students.
Students.
Organic growth for the segment was impacted by Covid as schools opted to postpone the decision to adopt the new supplemental solutions.
We believe the structural trends for the segment will continue driving stronger organic growth for years to come.
Educators parents and students demand the 21st.
The century skills stake of leading role alongside traditional clothing from cognitive development and the migration from out of school Twin school lowers the cost of medication and delivers more convenience to parents and students.
Moving now to slide number six articles growth relies on our ability to rethink of our clients improve.
Our value proposition driving price increases upsell of our solutions and attract new partner schools.
We retained 92% of our customer base in 2020, while adjusting prices on average by 7%.
Even in such a challenging year, we were able to deliver our retention rates in line with the previous cycle.
And a healthy price increase.
Highlight that'd be safety revenue reduction of 44 million highs due to the student drop halting 'twenty 'twenty and additional 52 million high impact in the fine tuning of any few V. As we believe schools were conservative in the number of students recorded in the contract due to Covid uncertainties.
These factors resulted in the 96 million highs COVID-19 related impact equivalent to 10 percentage points of revenue growth potential.
Our base case scenario reflects the conservative zero recovery of the Covid impact and the gradual improvement of the pandemic.
With the evolution.
Illusion of the vaccination and consequence normalization of New school activities, we expect to recover it is the impact over the coming cycles.
Important to mention the despite all the conservative approach to the 2021 of the T V.
Covid scenario is too uncertain and schools could be ordering.
Ordering impacted and prevented from operating for a longer period of time.
I will now turn the call of 24, an update on recent M&A transactions and priorities part of the year. Eddie. Please go ahead.
Thank you Pedro and good evening everyone.
Thank you for your time and I also hope that you and your relative.
These are all safe and healthy.
Moving now to slide seven to start discussing the recent evolutions of all of our latest acquisitions.
First the acquisition of <unk> and the more SKU two of the main core of learning systems in Brazil that have built solid and nationally known brands over.
Over the 50 plus years of history.
We see clear value creation opportunities arising from the transaction.
It reinforces our leadership position and of course solutions for the private K 12 segment by complementing all of our portfolio with the brands that have.
The different price positioning.
Geographic footprint.
And for the Guy who call approaches, allowing all of our platform to better serve the overall market.
We believe that by implementing oracles expertise in high quality content relevant technology reliable customer service.
And the effective distribution, we will positively impact the students' learning experience strengthen our relationship with the partner schools and deliver attractive growth.
And we believe that by adding CEOC in the most crude to oracles platform, we can leverage.
Average their strong relationship with the partner schools to capture the current and future cross sell opportunities.
We already have an integration team in place to define the strategies related to brand proud the go to market M people. So when we closed the acquisition.
Acquisition expected for the second half of the year, we are ready to apply articles winning factors and start unlocking value.
Does the acquisition will be paid using our current cash position.
According to our initial assessments, we expect the amortization.
Of the intangible assets and goodwill to generate a tax benefit with the net present value.
Of 214 million reais of relevant value creation lever.
Moving now to slide eight Arco pro form of business profile.
2021.
The acquisition of CEOC in the law school results in the company that will serve almost 2 million students in the 6900 partner schools with the ATV of one 3 billion Reais.
The scale allow us to increase the investments.
You mean for seller of winning factors.
<unk> two long term value creation of <unk>.
The best talent and offer a phenomenon of venue to distribute additional solutions in line with our vision to become a one stop shop to K 12 schools.
Moving now.
The <unk> line nine.
To discuss another recently announced the acquisition.
The acquisition of me Silva of <unk>, two entered the exciting test prep and tutoring supplemental vertical.
A fragmented and still mostly offline 5 billion of Hey, EIS market with the high growth.
With high quality company.
Additionally, it complements arcos portfolio with a fully digital b to C solution and allows our company to start delivering high quality education to public sector of students.
We expect to accelerate the resolve of growth.
In its core interest the market by providing resources talent and advanced technology features.
Additionally, resolve of will strengthen our b to b to C value proposition by offering specific test prep courses to partner schools.
The.
The acquisition of new sulfur has already closed and the company will be operated as an independent unit focused on expanding its base of active users and profitably growing its revenue.
We are already ramping up team and marketing strategy to accelerate growth in 2021.
Growth moving now to slide 10.
Our final highlight on the M&A front is a quick update on the scale of the utilization the new.
National leader in social emotional learning.
Since our last earnings call in November we have received the antitrust approval and close the acquisition in December per.
The back office integration, which is now almost complete.
We have also design of new go to market strategy already being executed for the 'twenty 'twenty two commercial cycle with the revised.
Frontline incentives training and structure and have rolled out of new model.
Of client relationship by farmers.
Together with reinforced cross selling with the expected changes to start accelerating ex called the introduce James share growth already in 2021.
Moving to slide 11, we have a lack of three main priorities for 2021.
Leverage the stronger winning factors to continue growing in the large and untapped market.
Drive key to 12 digitalization by continuously evolving our tech platform intensifying the use of data and ramping up fully digital b to C offerings.
Finally.
Show and pursue ESG by expanding our disclosure and increasing our impact.
Moving on to the next slide of.
The details of our first priority leverage strong winning factors to continue growing from the large and untapped market.
Arco emerge stronger from 'twenty 'twenty with the revamped go to market strategy that relies on a fully digital lead generation and hybrid online offline negotiation process.
We have also significantly vote of dollar solutions by launching several days during.
Events, such as one of 100 per cent of our content available in video tools for live classes embedded in our platforms assay correction online adaptive assessment and personalized learning tracks.
Finally, our brands also emerged stronger from 2020.
The following record levels of customer satisfaction.
Together with an improving COVID-19 outlook for the education sector in Brazil, and the suppressed demand we carried in 2020 in our base case, we have the necessary ingredients to deliver robust growth for 2000.
The two HCV.
We are already seeing positive early signs for 2022, HCV build up with over five times stronger new SKU intake for the first three months of the ear when compared to the first three months of 2020 M 2019.
20 of the positive outlook is further reinforced by the fact that we are still in the early days of our journey as we can see in the next slide.
Currently we only have a 5% share in a huge and fragmented market are of course solutions the largest.
<unk> per business serve only 16% of its addressable market.
Additionally, we have an upsell potential of around 480, thousands of students with our partner schools and the cross sell of a function of around 1.1 millions of students as.
Part of our 90% of our core partner schools students. They do not yet used any of Arco's supplemental solutions.
Specifically on cross sell we have structured several initiatives for the 2021 of the commercial cycle, including the fully dedicated team stronger.
Alamo related incentives attractive bundle conditions and from client trading.
Finally on M&A.
We are in the winner takes most market and the vision demands of new to brand portfolio to be executed.
We are currently engaged in talks.
Stronger 10, M&A Argus on three pillars core with the goal of gaining scale and continue to reinforce our leadership supplemental to strengthen our portfolio in the verticals you already have presence and enter new verticals and tech to improve our value proposition to clients.
<unk> went through additional services and tools.
Moving to slide 14, the digitalization of the key to 12 education sector has accelerated post COVID-19 and continue to capture this trend will be a priority for our company.
In 2020 one.
First we will continue to use our scale to develop an exceptional backbone deliver advanced tech features and supply of high quality content to our clients.
In 2021 we will focus on engaging and gave me five.
Any average content.
The use of technology to personalize the learning experience of each student features to reduce teacher workload, such as automated assay correction and choose the bring parents closer to the education life of their kids.
Second.
On the use of data has also become increasingly relevant to our business and to our partner schools.
Schools are eager to benefit from student data analysis, and innovative market mapping tools have the potential to reduce customer acquisition costs by better targeting new schools.
Most of them and cross selling opportunities.
Finally, the third part of his agenda for Arco is to consistently track and disclose data on the material ESG topics, allowing our company to share with the shareholders community and team the impact that we.
School student outcome and workforce development for example, why creating the basis for a continuous improvement of relevant topics.
Finally resolve of acquisition is the first step to start exploring fully digital <unk>.
Half of those models the <unk>.
This does have the potential to offer high quality affordable education at scale directly to students an urgent need in a country with Florida discrepancies of education quality.
Our third priority for the ear relates.
The two ESG a relevant topic that has proven to drive long term value and business resiliency.
All industries.
We have hired this year of consultancy firm to assist us in expanding the disclosure of results and met opportunities to increase our.
<unk> and further improve the system the ability of our business.
We will define our materials teams and indicators in the first half of 2021 and we will disclose results to stakeholders in the second half of the ear.
After the initial cycle, we will focus of long term continuous ESG.
Impac movement.
To showcase the importance of the theme to Arco I'm happy to announce that we have appointed Julianna Gregory is Arco's ESG leader.
Julianna is a highly talented leader with the global experience in education as system, the ability and I wish her success.
Jim preceding the theme.
From the next slide I'm happy to welcome to our board two new members.
We have 352 in college shipments begging to exceptional professionals that will bring diversity of expertise and background to our board.
Yeah.
In these ex has a remarkable knowledge of technology and the education investing while Carla brings to the table for a remarkable experience in brand development and global operations.
Together with the other members of our board Colleen Vips will sharpen our decision, making and accelerate our mission to deliver.
Three if all of the education at scale.
I think our partner investors for your support and guidance our sell side analysts for their dedication arcos team for the results hardworking and of long term focus and our client schools for all of their trust. Thank.
Thank you very much for your time opera.
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Please hold while we poll for questions.
Our first question comes from.
In the CBD with UBS.
Hi, Greg.
Hope everyone in spine and thanks for taking all of the question first.
Just talk on the lots of comments.
If you guys could price.
The reconcile your in depth of is now the level after the the pizza and assets are payments.
By the end of 2021 with your M&A pipeline should we expect considerably lower a smaller target or should.
No margin for.
The hot debate operations or something like that my second question I'm asking the question would be on the debt.
Incremental solutions you guys have any specific of strategy are the tide M&A. So are we completely understand the COVID-19 was really bring a drag down for the sector are.
The segment of the whole, but assuming that we don't have any kind of visibility at the two X two vaccinations by the second half of all of them pretty one do you guys have any kind of all of the broker strategy to try to offset it.
The banks with new sales be it.
Through some kind of commercial per approved for price.
The debt.
There'll be the first thanks, Chris.
Hello, Vinicius from here. Thank you for your questions.
Regarding the M&A pipeline you mentioned you have 10 target of around 10 targets today, you know the M&A across core supplemental like companies.
The company like we do expect the M&A you can be sure to be smaller.
Therefore, both for our current sellers' notes and other smaller and the needs of the future we will take care of the payments using our cash position and eventually debt.
Without the need to go to the market for additional kept Brazos.
One of your second.
Question on the supplemental.
First there is a component of portfolio, we still see space to continue complementing our supplemental portfolio with additional brands in the segments, we already serve and enter new verticals and segments and we don't yet sort of such a school day and robotics, we can do that through M&A.
That's true New house projects, you have pursued both of the past and we're also going to do that through the partnerships that we've entered into an agreement with Pearson.
Tributes specific supplemental products that complement our current offering.
The year for supplemental has started strong.
The two core.
We can be are already seen supplemental the much larger and stronger intake of new students compared to the been the yourself. The 'twenty 'twenty M. C 19, that's the reason why we believe it shares the same.
The year ingredients with the core to have us from your repressed demand from 2020, but it was not executed a.
We've proven outlook situations book will be in Brazil with schools expecting train train two to approach the normality.
Stronger brands and companies from a go to market perspective, and technology adoption, even those factors our base case, both of our core and supplemental to have strong organic growth.
Great.
For the items.
Our next question comes from G would I go with Goldman Sachs.
Yes, hi thinks that he theater and the team. Thank you for taking my question.
Actually I just want to follow up on the question regarding your M&A strategy.
I mean now that you have acquired net the tree traditional learning systems, such as per the Tivo CMC and book both school, how do you see your position your business position and what exactly are you looking to acquire in the course.
Questions from the segment.
Almost half of your revenue in the core segments seem to come from more traditional legacy lots of forms that apparently are growing out of every little piece right. So I am wondering what type of growth for US you should be able to achieve in the segment of you until you can really ramped up those businesses.
So the kind of business you were looking for in the core segment and maybe just the final question. If I may Oh now that the person in the lab of are basically out of the core content business in Brazil is there any order of player outside of U M buffer that we should be aware of thank you.
And what the Hallo Diego Thanks for the question good to hear from you.
Regarding the core.
We have engaged in the many of the past growth from acquiring exceptional brands, but we believe we could ramp up growth, but also acquiring smaller companies that would be rolled up into one of free because we've seen businesses.
We expect to continue the strategy, we'll continue looking for exceptional brands and they're quite of there's two of free in Brazil that would love to new business with but also pursuing smaller brands that were already.
Fried july's pre pandemic of due to the lower scale smaller scale independent it with the additional need for escapes me investing technology.
We had the king for the fragile life.
Regarding the growth for those companies, we believe that there there are two categories here from the Tivo being one one side. It's it's the market leader, it's like part of the largest company in the sector and although we already saw an acceleration of the growth of the company.
It is our expectation that we will have somewhat lower growth rate compared to S. C. S. M. S. The you have had in the past given the size of the company. However for the smaller brands such as <unk>.
You'll see in geeky, we see a lot of potential for those companies to continue growing at attractive rates compare comparable.
Any set those of seals up so of the of S. C. S. M. S C. In the past few years.
Regarding.
The second question could you. Please repeat the second question Diego, if you don't mind.
Yeah I guess.
The second question was more related to you know the competitive landscape.
It's about the just curious to hear from you know the booths appear some of them of alpha the basic.
So there are kind of the business rightful from K 12 in Brazil is there any order of player and all the kind of off the debt.
We should be of railroad.
Perfect.
No none of our estimate.
The core segment.
Foster and article have around 30 per cent of the students in the K 12 private sector in Brazil. So there is around 70 per cent of the market that is comprised of weaker of smaller learning systems and the textbooks in the learning system space.
There's two quite of few regional or even brands that of belonged to international groups. We Havent brands from Cynthia I know, we have a regional brands such as <unk> group of newly.
Okay, she who adopt.
And it's it continues to be quite a fragmented market that offers opportunities in the many both from.
Exceptional brand standpoint that we believe could grow at a faster pace within Arco, but also smaller brands that we believe we could the rollout it's one of her brands.
Okay.
Okay that makes sense. Thank you Pedro.
Our next question.
Question.
It comes from Javier Martinez with Morgan Stanley.
I think.
And I wanted to ask three questions from me.
As long as from the bookings what the Cabela's Chick the ease.
The guidance.
Direct.
And youre, bringing on the table or not.
Correct.
By the by the fact that many prime at the schools may be losing.
Moving to the public schools. This year no maybe maybe it's corrected and if not you.
You have some visibility on what maybe debt figure.
That will be the first one maybe if you'd be willing to go.
One by one.
Sure Javier I can start here with this one so regarding bookings.
We have 96 million rise around the 10 percentage points of lost revenue due to COVID-19, Deborah not considering to be recovered in the 2021 guidance of 4 billion of 163.
The million houses.
We expect debt as our base case scenario. We expect these almost 100 medium has the present to be recovered in the upcoming cycles of the dropouts is recovered by the private sector of schools, we don't see the moment schools in the private sector of losing students to schools in the public sector.
You should take the numbers for some fall of for example, the increase has been absolutely immaterial. What are you seeing it's mostly parents, taking their young kids out of school because they don't benefit as much from technology as the older Kids. So we expect those kids to return to school once the Covid.
Situation improves.
So these this booking the.
You mentioned today to the 1% growth so really the taking into consideration those as tutors that are already on the road to be there.
At least from the first half of the year of meeting took US one of 21.
You're correct that that considers our base case of those students not.
Returning to school in 2020, one so we might have some upside. The for example, bucks of nation happens at a faster pace than the basically the flows.
Scientists.
The so we would that be months of booking to the lean put the to do up of entities the chips would figure though.
We expect to see some operating day with age.
The company the deliberate.
The 38, saying of the game out here, yes, it will be the money into the sort of 'twenty. So what was the guidance.
Below the margins of this year. So the guidance is 35 five to from $10 five should we expect some operating day religion and yes because.
Because you have really top line.
Margins expanded.
Maybe this year.
Like the perfect plug there you're right we have strong operational leverage as we grow we generate more more eat them bad we have traditionally chosen to re investing for a business we continue to see.
So I guess from going away from investing citizen of marketing.
And from increasing the quality of our solutions from a sales and marketing perspective, our team yet doesn't touch on most of the schools every year in the country. So we take quite a few years to talk so every screen the country, we expect it to continue increasing our capability to.
<unk> <unk>.
Supply those schools with our solutions and this will require additional investments on the content and solutions side, we continue to see a lot of space to deliver additional technology features to our clients and they tend to reward us with high retention rates better price increases upselling.
And your screen take that comes from stronger.
Solutions. So our guidance considers this factor that of we'll reinvest most of our operational leverage into those sectors of the business.
And keep the margins in line with the best margins. It's important to note that 20 to any of those especially.
Actual year, where most of our sales team didn't travel for most part of the year schools were closed for six months and of our sales team wasn't able to travel traveling being a large growth cost components for our company.
As the Covid situation improves in Brazil, we expect to resume traveling we expect to resume in person visits and.
We tend to increase our costs. So those are the factors that we believe will drive margin to $35 five states, having five part of <unk>.
'twenty one fiscal year.
The city.
Sure of that sort of thank you very much of it but I was wondering if maybe.
The pricing dynamics.
Yes or no.
The changing a because of COVID-19, but also because with the.
Precision should the deed.
In the last few years, obviously now you're coding of broader end.
Market no.
Obviously the size maybe more of the FNC, but you'll have some sort of all the brands that are quoting our market that may be more.
And focus on price as well.
Is the pricing dynamics have changed through a continued to be the same debt. We had in the past where price is not the <unk>.
Factoring in potential sales.
Yeah from most of it from our perspective price, it's continuing not to be the.
The season criteria for schools schools the side based on brand based on the quality of the solution based on the trust they have.
Commercial teams.
And that is especially true.
In the situation, where learning systems represent the only a fraction of the expenditures of the parents of indication and of our schools are effectively distributors of our solution.
Solutions, so they tend to like better solutions that have stronger brands, because it's easier to result of parents.
You should take a look at in 2020, we had price increases even considering for the achievable, but it's too it's.
The initial years of of the turnaround.
We already had price increases that were.
The above those of 2019, so even the very challenging year, where schools were facing difficulties. We are able to increase our price is at healthy levels and that comes on the back not only of the the first factors that I mentioned, but also because our price increases are usually related to more value created for the schools either improving.
Moving the learning processes help schools subtract the more students or reducing costs seem schools, therefore, upsetting the price increases.
So if I may ask the funding of one.
One of the station grades M P H M I.
I'm not sure if maybe the way of the semantic of the way we forget about the ultimate.
Net mi.
The change or maybe because of mix and all of the new brands that may have impacted the the calculation with the absolute figure, but the price.
Well you did the IPO times and retention rates, we're talking about 90 590 saving on the NPS of 86% to 90% of malware.
With the gave us any maybe two maybe three or so.
Hi.
He gets the most of our strength with the day children with M. P H, but below the historical levels.
The east.
Is this true or maybe its desk, the printers because of mix or maybe because of COVID-19 with.
Something has changed there.
Perfect Javier your perceptions correct, there's a mix factor, but there's also a COVID-19 factor on the mix front. The most discrepancy comes from positive of brands was the Tivo had a strong evolution in retention and customer satisfaction with their brands still lag those arco legacy brands in those two metrics we expect.
To close the has got over the next two to three years.
Many of the Covid impact, we saw where the somewhat lower retention items.
Sure, but had generally higher with the and record retention levels, but I'm supplemental the.
Cliff for your per supplemental and that also resulted in a bit forward retention rates for the supplemental solutions.
Thank you very much but it will stay the case.
Thank you.
This concludes the Q&A session.
As there are no further questions Arco's conference call has concluded for today. Thank you very much for your participation and have a nice evening.
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