Q2 2021 Vasta Platform Ltd Earnings Call
[music].
Good day, ladies and gentlemen, and welcome to the Investor platform second quarter 2021 earnings conference call.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance. During the conference. Please press Star then zero on your Touchtone telephone as a reminder, this conference call is being <unk>.
Recorded.
I'd now like to turn the conference over to your host Mr. Bruno Giardino CFO.
Good morning, everyone and thank you for joining me in this conference call to discuss second quarter 2021 results with me on the call today.
The seal and Gilead.
During today's presentation.
He will make forward looking forward looking statements forward looking statements generally relate to future events or future financial operating 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.
Patients for future periods, our expectations regarding our strategic product initiatives and their related benefits and our expectations regarding the market forward looking statements are days, a number of management's beliefs and assumptions and on information currently available to our management.
These risks include those set forth in the press release issued yesterday as well as Jos Mara Fudo described in our filings with the Securities and Exchange Commission.
The forward looking statements in this presentation are based on information available to us as the date hereof, 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 management may reference genome.
S financial.
Measures on this call.
No I as far as financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with <unk>.
Yes.
Let me now give the call over to you to make his opening statements.
Thank you Bruno Thank you all for participating in our earnings release I would like to start on slide number three with some highlights of the quarter net revenue expanded 17% in the second quarter that could buy the grille E. D. A C D and also in the non subscription products into 2020 one.
In commercial year to date superscription revenue export increased by 18% wildfire, our hybrids superscription profit was down 15%.
We frankly previously commented the textbook chain was created due to the higher reuse of textbooks affecting both part and our non subscription businesses.
<unk> been with all the challenges that the second wave of Covid caused it to the business, we expect to record the high single digit organic growth in the subscription revenue this year and a double digit organic growth excluding par complementary solutions has been the highlight of this cycle with.
It's a 51% growth to date and whichever basis there the high potential of this segment offers.
Adjusted EBITDA was negative 17 million reais in the second quarter due to the unfavorable revenue seasonality of the second quarter also helped by the higher provision for doubtful accounts and by being hanging cement in our corporate structure. Following the IPO, we noted that.
The second quarters, typically I know I'm, not representative and the composition of our operating results.
We posted a net loss of 24 million.
As of the quarter, but not adjusted net profit of 125 million Reais in this cycle, 31% up.
That said I spent the first two hours tearful Bluestar, Dino who will detail our financial results.
Thank you you.
As it did last quarter, we will start in the slides number for analyzing the performance of our revenue in this cycle from fourth quarter 'twenty 'twenty two the second quarter 2021.
Our net revenue declining 13% year over year as you can see in the left.
However, when we break this information into subscription and non subscription we noted that our subscription revenue increased 10% year over year, representing 84% of total revenue.
Going further into this breakdown, we split subscription revenue into traditional learning systems and complementary solutions in the upper right side of this slide.
We call ex par subscription ex parte.
Excluding par subscription revenue grew 18%.
Sent.
Below that 23% growth in D. C V. We reported in the fourth quarter 'twenty 'twenty 'twenty.
This GAAP has to do with the lower enrollment registered at partner schools, when compared to schools' expectations at the ACD formation.
In the chart below and the same slide you see that bar declining 15% in the peers at the lower number of students is complemented by their higher reuse of textbooks.
That phenomena that we observe it in the past during recessionary times.
Finally in the bottom off the chart no subscription revenue tumbled, 558% for effective and frankly, not only the weakness in textbook sales, but also our commercial with Fox to bring no subscription clients to our subscription products there.
Therefore, as you can see this is slide the pandemic effects has hit our business lines in different ways with the growth in subscription products to preserve it particularly in the export lines via non subscription revenue have suffered the most.
In the slide five.
We detailed the net revenue performance in the quarter net revenue grew 17% driven by traditional learning systems and also by no subscription products.
Volumes of complementary products and par were not meaningful as these products are typically believers in the first two quarters of the cycle.
Same happened with no subscription products.
Moving to slide six let's comment on our financial performance.
The second quarter is usually a weak quarter due to the due to the reduce it level off revenue.
And this quarter, particularly.
Particularly was further heat by higher higher provisions for doubtful accounts that I would comment on the next slide.
Also the yearly comparison.
Is affected by the heavier corporate structure following the IPO and by the savings captured in the second quarter of last year with the provisional measure 90.935.
Amounting to nearly 5 million Reais iPhone pre meeting react.
In the cycle I, just said they'd be down it's down 25% on the back of that 13% lower revenue and effects previously mentioned.
On the right as a consequence of negative operating results. We had an adjusted net loss of 25 million Reais, but we reported an adjusted net profit of a 124 million reais in the cycles, 29% higher year over year.
Yeah.
Next slide seven.
I'll give you more details on the provisions.
The beginning of the pandemic our approach has been to support our school partners by extending payment terms instead of granting discounts.
Recently, the textbook distribution channel had suffered with the sudden decrease in textbook sales, causing some of our quality of some of our clients to fall back and payments as.
As we extend payment terms the aging of our accounts receivable that you have to recognize higher provisions for credit losses.
We estimate that the effects related to the current situation heat our.
Second quarter by $8.6 million.
And 15 million in the cycle as you can see in the chart.
We then normalization of school activities ahead of US we expect a normalization in the payment cycle off our clients in 2022, when provisions could potentially come back to historical levels, which is 1% of net revenue.
The acceleration in the migration through the digital platforms should also help as we reduce our exposure to the book distributional channels.
Lastly, in there right I would like to highlight the conservative and it has a far provision standards as even with the aging of the portfolio. We maintain a days off receivables is stable versus last year at 119 days.
To wrap up the financial session I would like to share details about the fastest first market issuance that.
On slide nine.
We raise it.
Rising known convertible debentures with a three year term with a remuneration rate of CDI, plus two 3% per year.
Following this transaction our average debt maturity stands at 29 months.
And our cash position remains quite strong for new M&A and expansion activities.
That said I now pass the floor back to our CLO.
Yeah.
Thank you Bruno moving.
Moving on to slide nine I will comment on both our 2000 and sales cycle.
She has been progressing well as we see increased activity at school.
This is the month Allen that represent solid platform and it gets richer every month with new launches partnerships and M&A on.
On the following these lines I will comment about.
Our focus on digital our new learning system people are not your view.
The ones on Pudong store cloud trough food, all adaptor, and Newport office and digital student acquisition platform.
I think there's like Pam.
I did tell you all of our strategy to the B to B Corp.
Cycle, we have intensified our efforts to stimulate sales of digital products as well as to migrate clients to our platform solution.
Which has textbooks and all the other men Dallas services and products embedded when is this.
This product or for more revenue resiliency higher average tickets and higher margins benefiting not only the company, but also our helpers.
So if you want me to be poor on July 11, we are proud to announce a new brand to our learning system portfolio people and actually learning system.
This is a premium product designed in partnership with the top ranking collage of people not true, but then in Brazil's High school test pending for 10 years.
Top one ranking.
<unk> S. A fast in 2011 and 2019.
We have already started sales of people not to learning system with the third year of high school for 2022, and gradually we will progress to third tiers.
Moving to slide 12, let's switch to the complementary solutions.
Our fluoro store a marketplace with FX from all over the World is going live for this sales cycle.
The portfolio offer solutions in different areas.
Contents recently added where had not so much from you.
Our SEC review services and welcoming them focusing on sports, which have the largest for the rest of the market in the morning, among all complimentary shields.
Next on slide 13, let's.
Let's comment on food all mill profit and put out adopter, both servicer solutions available one portal platform.
Put all new profit means burrell might feature.
He is an online platform for private two three where students can reach our network features for private classes booking and paying online.
Put all adapter is a subsidiary of that platform for academic enhancements.
Our full digital services B to B to C model billing families directly reserving rebates for the parking to schools and open new markets for us.
Finally on slide 14, our service platform focusing on student acquisition fix shakes.
With the acquisition of cell and Ami and the launch of Sol moving pattern.
So almost integra as a lead generator for our partner schools. The service connect kindergarten families to partner schools provider offer broader services of K 12.
Amy is a digital marketing company focuses student enrollment it is our newest acquisition announced today.
So a company specializes in portal management and digital content provider for K 12 schools.
With these students acquisition to establish at Fosterville directly contributes to the partner schools commercial fronts.
Turning back to Gill.
Moving onto the slide 15.
15 in late July we welcome <unk> to the board of directors as an independent member and chairwoman of the audit committee filling the vacancy left by some physical Fernandez do it.
Due to his passing now our board of directors is complete again, bringing together some of the that could gives with the complementary skews the composition of our board of directors and audit Committee is short.
This is why I would like to highlight that according to our high standards of corporate governance, you audit committees formed by the same three independent directors and the and that's all transactions involving related parties must be only approved by the audit Committee.
Talking about governance, I would like to take the opportunity to show how strong is our commitment with ECG ESG I invite you to move to slide 16.
On the environmental side, the vast as certified by the F T and requires that all its suppliers us certifiers levels. We also buy energy from renewable sources and 100% of the waste generated in our distribution center.
<unk> tweaked the oldest.
Oh, the social sites, maybe the most important area.
In fact, the for US we highlight the activities offset almost institute.
We support six flip out the cost is for low income students and Somos, which has grants at the high school is.
All our ships and full support to more than 500 low income students in 98 cities.
In our country.
And more than 6000 hours of mentally were offered to this group all the students by.
So most employees volunteered for this approach and finally on the governance side in Boston has three independent members on the board.
That could meet the only format by independent members also as we have two woman named aboard we earn it the women on board certification.
Diversity also goes down in the organization.
49% of the leadership position in buses are okay.
Okay.
Women.
Moving onto this Mac the Max's lives.
As we progress to the end of our presentation I would like to comment on the M&A. In addition to the organic growth.
Analysis today, the acquisition of our seafood acquisitions since the IPO and as told by again, a key piece to the formation of our digital services arm.
The acquisition of a level learning system. The most relevant one so far is being analyzed it by the Brazilian currency.
This body and we expect it to have the approval until the end of this year.
Our M&A pipeline remains rich and we are engaged in several other transactions, which are that's a different stage of smell alcohol Bruno to our closing remarks.
Thank you Hugh and our last slide today is also a new announcements.
We will launch early next week, our first share buyback program through which we plan to acquire.
One gift shares.
Up to six months, a relatively short period of time.
Having said that I finish our presentation and now open for Q&A session. Thank you very much.
Thank you, Sir ladies and gentlemen, if you have a question at this time. Please press. The Star then the number one key on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
Yeah.
First question, we have Andres coello from Scotiabank. Your line is open.
Thank you very much for taking the question I kept reading them in the coconut press release.
With approximately 50% of the 2020 to be in the cycle completed we are very optimistic about the organic growth for ACD in 2022, that's what that what the coconut press release SEC about Baxter.
So I was wondering if you can get to sell into the corner about what very optimistic if you can't if you're expecting if youre expecting double digit growth for ACD in 2022.
And I guess, if you can give us any color on what your team for the next school cycle Frank.
Hi, Andre This is Glenn let me. Thank you for your question and yes, Let me give you some color of both our campaign. We are definitely optimistic about the campaign, we are keeping the same trends.
We have been keeping the latest yours.
Where we target double digit growth for HCV.
And we are seeing a similar trend.
But with better mix, we are targeting on.
Digital products and.
We also.
Pursuing.
<unk> in paper based products to the power platform for learning systems, which gave us a better resiliency in our revenues and better margins. So we see the same trend of growth in HCV.
Markets that he's getting heated.
When we talked with our school partners. They are actually more optimistic about their enrollments and on top of that we are pursuing a better mix.
Okay. Thank you very much this is gil.
If I may just a complete blood Malaga first let's remember that the ACD is comprised of not only by the new conflict, but also the renewal.
The renewal contract with our partner schools right. So we are also seeing a low on excellent churn I mean, a lower churn right. So the two the.
Two factors are pointing to a good HCV beauty right. That's why we are so optimistic but so far we are so optimistic with this commercial cycle.
Thank you very much.
Okay.
Yeah.
Sure.
Again, if you have a question at this time. Please press the Star then the number one key on your Touchtone telephone.
Oh.
Yes.
I am showing no further questions at this time with Henry I would now like to turn the conference back to Mr. Meier Guyot CFO CEO policies.
Thank you all for participating in our earnings release, we hope you all stay safe and to see you and see you in our next call Bye Bye.
Thank you very much presenters, ladies and gentlemen. This concludes our conference for today. Thank you for your participation and have a wonderful day you may all disconnect.
Yes.
[music].
Sure.
[music].
[music].
Good day, ladies and gentlemen, and welcome to the Investor platform second quarter 2021 earnings conference call.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance. During the conference. Please press Star then zero on your Touchtone telephone as a reminder, this conference call is being written.
I would now like to turn the conference over to your host Mr. Bruno Giardino CFO.
Good morning, everyone and thank you for joining me in this conference call to discuss disaster platform second quarter 2021 results.
With me on the call today, we have modeled your fastest seal and gilead any malaga roster CLO.
During today's presentation, our executives will make forward looking forward looking statements forward looking statements generally relate to future events or future financial or operating 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 for future periods, our expectations regarding our strategic product initiatives and their related benefits and our expectations regarding the <unk>.
Forward looking statements are days are down there are management's beliefs and assumptions and on information currently available to our management.
These risks include those set forth in the press release issued yesterday as well as those more fuel to describe it in our filings with the Securities and Exchange Commission.
The forward looking statements in this presentation are based on information available to us as the date hereof, 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 innovation management make management may reference genome.
S financial.
Measures on this call that no ifr as financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with <unk>.
Let me now give the call over to <unk> to make his opening statements.
Thank you Bruno Thank you all for participating in our earnings release I would like to start on slide number three with some highlights of the quarter net revenue expanded 17% in the second quarter backed by the growth in the ACB and also the non subscription products in the 2020 one.
Commercial year to date subscription revenue ex bar increased by 18% wildfire, our hybrid suite disgrace film product was down 15% ASP.
We frankly previously commented the textbook chain was created due to the higher reuse of textbooks affecting both bar and our non subscription businesses you have.
Even with all the challenges that the second wave of Covid caused it to the business, we expected to record the high single digit organic growth in the subscription revenue this year and a double digit organic growth excluding par complementary solutions has been the highlight of this cycle with.
51% growth to date, and which are advances there the high potential of this segment offers.
Adjusted EBITDA was negative 17 million reais in the second quarter due to the unfavorable revenue seasonality of the second quarter also helped by the higher provision for doubtful accounts and by being hanging cementing our corporate structure. Following the IPO, we note that the.
Second quarters, typically I know are not representative of what the composition of our operating results. Finally, we posted a net loss of 34 amino we guys in the quarter, but not adjusted net profit of 125 million Reais in this cycle, 31% up.
Sure.
That said I pass the floor to our CFO.
Who will detail our financial results.
Thank you <unk>.
As it did last quarter, we will start in the slides number for analyzing the performance of our revenue in this cycle from fourth quarter 'twenty 'twenty two the second quarter 2021.
Our net revenue declining 13% year over year as you can see in the left.
However, when we break this information into subscription and non subscription we noted that our subscription revenue increased 10% year over year, representing 84% of total revenue.
Going further into this breakdown with fleet subscription revenue into traditional learning systems and complementary solutions.
The upper right side of this slide.
Ex par subscription ex parte.
Splitting par subscription revenue grew at.
80% slightly below the 23% growth in the SUV, we reported in the fourth quarter 'twenty 2020.
This GAAP has to do with the lower enrollment registered at partner schools, when compared to schools' expectations at the ACB formation.
In the chart below and the same slide you see that bar declining 15% and appeared at the lower number of students is complemented by their higher reuse of textbooks a phenomenon that phenomena that we observe it in the past during recessionary times.
Finally in the bought off the chart non subscription revenue tumbled.
<unk> 58 per cent for effects and frankly, not only the weakness in textbook sales, but also our commercial with Fox to bring Nelson description client to our subscription products.
Therefore, as you can see in this slide the pandemic effects has hit our business lines in different ways with the growth in subscription products to preserve it particularly in the export lines via non subscription revenue have suffered the most.
In the slide five.
We did pay of the net revenue performance in the quarter.
Revenue grew 17% driven by traditional learning systems and also by no subscription products.
Volumes of complementary products and par were not meaningful as these products are typically delivered in the first two quarters of the cycle.
The same happened with known subscription products.
Moving to slide six.
Let's comment on our financial performance.
The second quarter is usually a weak quarter due to the due to the reduce it a lateral off revenue.
And this quarter, particularly.
<unk> was 400 heat by higher higher provisions for doubtful accounts that I would comment on the next slide.
Also the yearly comparison is affected by the heavier corporate structure following the IPO and by the savings captured in the second quarter of last year with the provisional measure 90.935.
Wanting to nearly 5 million reais $5.3 million Reais.
And the cycle adjusted they'd be down it's down 25% on the back of that 13% lower revenue and effects previously mentioned.
On the right as a consequence of negative operating results. We had an adjusted net loss of 25 million Reais, but we reported an adjusted net profit of a 124 million reais in the cycle of 29% higher year over year.
Next slide.
<unk> seven I'll give you more details on the provisions since the beginning of the pandemic. Our approach has been to support our school partners by extending payment terms instead of granting discounts. Additionally, the textbook distribution channel had suffered with the sudden decrease in textbook sales, causing some of our Collins of some.
Our clients to fall back in platelets.
As we extend payment terms the aging of our accounts receivable that you have to recognize higher provisions for credit losses, we estimate that the effects related to the current situation heat our ASP.
Second quarter by $8.6 million in <unk> and.
And 15 million in the cycle as you can see in the chart.
We then normalization of school activities ahead of US we expect a normalization in the payment cycle off our clients in 2022, when provisions could potentially come back to historical levels, which is 1% of net revenue.
The acceleration in the migration through the digital platform should also help as we reduce our exposure to the book distributional channels.
Lastly, in there right I would like to highlight the conservative and as a far provision standards as even with the aging of the portfolio. We maintain a days off receivables is stable versus last year at 119 days.
To wrap up the financial session I would like to share details about the fastest first market issuance debt on.
On slide nine.
We raised 500 million realizing no convertible debentures with a three year term with a remuneration rate of CDI plus two 3% per year.
Following this transaction our average debt maturity stands at 29 months.
And our cash position remains quite strong for new M&A and expansion activities.
That said I now pass the floor back to our CLO.
Yeah.
Thank you Bruno.
Moving on to slide nine I will comment on both our 2022 sales cycle.
She has been progressing well as we see increased activity at school.
This is Amanda alum that represents our platform and it gets richer every month with new launches partnerships and M&A on.
On the following these lines I will comment about.
Our focus on digital our new learning system people and Archie.
On crude all store voucher of food, all adaptor and no processes and digital student acquisition platform.
And there's like Pam.
The tail of our strategy to the beat to be core.
Through this cycle, we have intensified our efforts to stimulate sales of digital products as well as to migrate clients to our platform solution.
Which has textbooks and all other men Dallas services and products embedded one is this.
These products offer more revenue resiliency higher average tickets and higher margins benefiting not only the company, but also our helpers.
So if you want me to be core on July 11, we are proud to announce a new brand to our learning system portfolio people and Archie learning system.
This is a premium product design to the partnership with the top ranking collage of people and Archie top fan and Brazil's High School test anything for 10 years.
Top one ranking.
SA fast in 2011 and 2019.
We have already started sales of people not sure learning system with the third year of high school for 2022 and gradually we will progress.
Yes.
Moving to slide 12, let's switch to the complementary solutions.
Our fluoro store a marketplace with FX from all over the World is going live for this sales cycle there.
Portfolio offer solutions in different areas.
<unk> recently added were hitting us so nothing new.
Our SEC review services and welcome me focusing on sports, which have the largest for the rest of the market in the morning, among all complement our shows.
Next on slide 13.
Let's comment on Pudong mill profit and put out adaptor, both servicer solutions available one portal platform.
Through it all no profit means burrell might feature.
He is an online platform for private two three where students can reach our network features for private classes booking and paying online.
Put all adapter is a subsidiary of that platform for academic enhancements.
Our full digital services B to B to C model billing families directly reserving rebates for the partner schools and open new markets for us.
Finally on slide 14, our digital service platform focuses on student acquisition takes shape.
With the acquisition of cell and Ami and the launch of Sol moving pattern.
Almost integra as a lead generator for our partner schools. The service connect kindergarten families to partner schools provider of broader services of K 12.
Amy is a digital marketing company focuses student enrollment it is our newest acquisition announced today.
So a company specializes in portal management and digital content provider for K 12 schools.
With the students acquisition to establish at Fosterville directly contribute to the partner schools commercial fronts.
Turning back to Gill.
Moving onto the slide 15 in late July we welcome <unk> to the board of directors as an independent member and chairwoman of the audit committee filling the vacancy left by some physical Fernandez due due to his passing now.
Our board of directors is complete again, bringing together some of the executives with complementary skews the composition of our board of Directors and audit Committee is shown in this slide I would like to highlight that according to our high standards of corporate governance, you audit committees formed by the same.
Three independent directors and the and that's all transactions involving related parties must be only approved by the audit Committee.
Talking about governance, I would like to take the opportunity to show how strong is our commitment with ECG ESG I invite you to move to slide 16.
On the environmental side, the vast as certified by the S. S. T and requires that all suppliers are certified as well. We also buy energy from renewable sources and 100% of the waste generated in our distribution center used correctly.
Oh, the social sites, maybe the most important area of impact for US we highlight the results almost institute, which supports six preparatory courses for low income students and Somos, which has granted high school scholarship.
And full support to more than 500 low income students in 98 cities.
In our country.
And more than 6000 hours of mentally were offered to this group of students by.
So most employees volunteered for abuse.
The approach and finally on the governance side in Boston has three independent members in the board and audit Committee only format by independent members also as we have two woman in the board we earn that their women onboard certification.
Diversity also goes down in the organization.
90% of the leadership position in Boston.
<unk> local peers, but women.
Moving onto the next the next slides.
As we progress towards the end of our presentation I would like to comment on the M&A. In addition to the organic growth vast analysis to date the acquisition of <unk>, Our fifth acquisition since the IPO and as told by again, a key piece to the formation of our digital services.
Sure.
The acquisition of a level learning system. The most relevant one so far is being analyzed it by the Brazilian antitrust body and we expect it to have the approval until the end of this year, our M&A pipeline remains rich and we are engaged in several other transactions, which are that's a different state.
Smell alcohol Bruno to our closing remarks.
Thank you and our last slide today is also a new announcement.
We will launch early next week, our first share buyback program through which we plan to acquire.
Sure.
Up to six months, a relatively short period of time.
Having said that I finish our presentation and now open for Q&A session. Thank you very much.
Thank you, Sir ladies and gentlemen, if you have a question at this time please press the <unk>.
Star then the number one key on your touch tone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
Okay.
First question, we have Andres coello from Scotiabank.
Scotiabank Your line is open.
Thank you very much for taking the question I kept greeting them in the coconut press release it.
Yes.
It might be 50% of the 2020 to be in the cycle completed we are very optimistic about the organic growth for ICF in 2022, that's what that's what the government press releases about Baxter.
So I was wondering if you can give some color about what very optimistic CPU.
If you are expecting double digit growth for ACD in 2022.
Or just if you can give us any color on what their team for the next day schools HEICO Craig.
Hi, Andre this is Glenn.
Thank you for your question and yes, let me give you some color of both our campaign. We are definitely optimistic about the campaign, we are keeping the same trends.
We have been keeping in the latest years.
Where we target double digit growth for HCV.
And we are seeing a similar trend.
But with better mix, we are targeting on.
Digital products and.
We also.
Pursuing.
Change in paper based products to the power platform or learning systems, which give us a better resiliency in our revenues and better margins. So we see the same trend of growth we may see V.
Markets that he's getting heated.
We talked with our school partners. They are they're actually more optimism about their enrollments and on top of that we are pursuing a better mix.
Okay. Thank you very much.
If I may just a complete blood Malaga said, let's remember that the ACD is comprised at not only by the new contracts, but also the renewal.
The renewal contract with our partner schools right. So we are also seeing a low on excellent churn I mean, a lower churn right. So the two of them.
Two factors are pointing to a good HCV beauty right. That's why we are so optimistic with the so far we are so optimistic with this commercial cycle.
Thank you very much.
Okay.
Hey, Dan if you have a question at this time. Please press the Star then the number one key on your Touchtone telephone.
Uh huh.
I am showing no further questions at this time presenters I would now like to turn the conference back to Mr. Mario Guyot CFO CEO apologies.
Thank you all for participating in our earnings release, we hope you all stay safe and to see you and see you in our next call Bye Bye.
Thank you very much presenters, ladies and gentlemen. This concludes our conference for today. Thank you for your participation and have a wonderful day you may all disconnect.