Q1 2022 Vasta Platform Ltd Earnings Call
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Ladies and gentlemen, todays conference is scheduled to begin shortly.
Tina to standby and thank you for your patience I can ladies and gentlemen, todays conference is scheduled to begin shortly discontinue to standby and thank you for your patience.
[music].
Ladies and gentlemen, thank you for standing by and welcome to divest a platform first quarter 'twenty to 'twenty two conference call. At this time, all participants are in a listen only mode.
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 the Touchtone telephone.
I would now like to turn the conference over to your host Mr. Bruno <unk> CFO . Sir Please go ahead.
Good evening, everyone and thank you for joining me in this conference call to discuss the vast the platform's first quarter 2022 results with me on the call today, we have Mario you lost the CEO .
During today's presentation, our executives will make 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.
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 market.
Forward looking statements are based on our management's beliefs and assumptions and on information currently available to our management.
These risks include those set forth in the press release that we issued today as well as those more fully described in our filings with the Securities and Exchange Commission before looking statements. In this presentation are based on the information.
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.
As required by law. In addition management may reference non <unk> financial measures on this call that known.
Financial measures are not intended to be considered in isolation.
Or as a substitute for results prepared in accordance with Ias.
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 with.
On slide three with some highlights of this quarter that has a special meaning for us.
First quarter results confirmed the recovery trend on operational results after a longer period of results to be hit by the COVID-19 pandemic numbers Australia.
Business is back to the high growth.
230, <unk> school year, total 1 billion, which represents a growth of 35% over the full description revenue for the for the life cycle for the 2021 cycle and the 2022 ACD showed a richer mix in terms of revenue as we manage to it.
Growth in our premium brands tend to initiate to initiate their migration protects the book paper based that broad of par to digital subscription products.
The book as a service therefore, excluding par the ACB.
48% complementary solutions had the highest growth rate over 70% year over year amongst the business segments as we accelerated ramp up of these solutions in 2032 cycle from.
Fourth quarter 'twenty, one first quarter 32, the retro the net revenue grew 25% due to the recognition of 68% of Bact notes a description segment revenue as expected was stable compared to the previous cycle.
Our adjusted EBITDA grew more than 100% in the quarter and 41% in the 'twenty to 'twenty two CECO.
2022 cycle as a result of the net revenue growth operating leverage gains and cost savings with margins.
Inquiries adult 430.
Basis points for the second quarter 2022, we expect that the ATV quick recognition to range between 16, and 80% and 18% reiterating our belief that 2022, we'll be able to collect them.
What percent of the HCV.
Moving to the slide number four we detail the ACB growth composition.
Turning to ATV is less concentrated in the first two quarters than in the previous years due to the different.
Seasonality of new products, such as the labor market and text book as a service platform.
That means that although the first two quarters continue reduced during the largest part of the ACB revenue there was less revenue captured in the first.
First half of this cycle when compared to the previous view being 68% in the first half of 2022 cycle there.
721% in the same period of 2022 cycles.
In this first quarter.
Net revenue increased 36%, 36% year on year to 381 million exceeding the 307 million Reais guidance should description revenue totaled $334 million, an increase of 37% driven.
By 2022 weeks.
Ignition also exceeding the guidance and also.
Then also description came in line with our guidance.
For the following quarter as I mentioned, we expected the ACB recognition to range between 16 and 18%.
I will now pass the floor to Bruno Giardino, our CFO .
Thank you Andrew.
We present the compensation of <unk> net revenue in the first quarter of 2022.
You commented our total net revenue increased 36% year on year exceeding the $370 million guidance.
Moving from the center of the slide to the right. We see the component of revenue growth, excluding par subscription revenue increased 48 year on year, reflecting reflecting the superior quality of revenue mix in the 2022 ACB.
Our net revenue fell 12%, which is aligned with our strategy of shifting revenue from textbooks to learning systems and digital platforms.
Books in this first quarter represented 14% of total sales only.
Total subscription subscription revenue, 37% and continue to gain relevance in the mix, reaching 88% of total net.
Non subscription revenue increased 25% offsetting the decline in the fourth quarter 'twenty one.
Moving to slide six we analyze the net revenue for the 2022 cycle to date.
Fourth quarter, 'twenty, one plus first quarter 'twenty two.
Net revenue grew 25% in the spirit.
And again on the <unk>.
Center to the right, we see subscription ex parte revenue attempting 41% <unk> revenue fell 12.
In total subscription revenue grew 29%, making 68% of total 2020 to ATV Y amount subscription was stable in the period.
In the slide seven.
EBITDA margin doubled in the quarter, reaching $141 million not only due to the growth in net revenue.
As a result of operating leverage gains and cost savings.
Margin expanded from 24% to 37, one driven mostly by growth margin up 60.
660 Bips.
Also help it by commercial expenses and adjusted G&A expenses down 500, and 280 bps respectively.
The first quarter adjusted EBITDA margin of 37, one is the highest of our recent history.
In the first half of the 2022 cycle and the chartering the right adjusted EBITDA grew 41%, reaching $302 million with margin increase of 450 percentage points. This is definitely an evidence that fastest profitability is notwithstanding a much higher level than in 2021.
And it is closer to the company's potential.
In the slide eight.
On adjusted net profit, which in the first quarter increased to 51 million from 21 million in the first quarter of 2021 following the growth in operating profit in the 2022 cycle to date adjusted net profit increased 4% as the increase in operating profit was partly offset.
<unk> by the company's higher financial leverage and the higher interest rates in the country.
Moving to slide nine we show.
The operating cash flow evolution.
In the first quarter operating cash flow fourth quarter 2021 operating cash flow totaled.
$51 million benefited by the anticipation of accounts receivable amounting to $52 million.
In the first quarter 2022 operating cash flow to call.
$13 million.
Impacted by the early payment of royalties to content providers. Therefore on a normalized basis, the operating cash flow increases from zero in the first quarter 'twenty one.
33 million in fourth and first quarter 2022.
It is noteworthy that our operating cash flow generation would have been even higher if we excluded the upfront capex for the acquisition of Chromebooks that are part of our 100% digital solutions.
Likewise, the normalized operating cash flow was negative 45 million in the 2020 to cycle to date up from a negative $104 million. The same period of 2021, we observed that the operating cash flow generation is usually negative in the first half of the cycle as we invest in the production of materials.
In preparation for the school year, but we received payments from our customers in every year along the cycle.
Next in the slide 10, or even Martin phase one of the provisions in our accounts receivable.
As you know over the last part is we have recognized higher provision for doubtful accounts due to the challenging business environment for our school partners as well as our decision to support them by extending payment terms with increases the aging of the receivables portfolio.
While we have seen an improvement in the delinquency rate in the first quarter the higher provision standards adopted in the second half of 2021, having created the need for provisions in this quarter.
Why you have the BDA flat in terms of net revenue in the cycle to date.
Finally, the average days of accounts receivables was 198 days in the first quarter 'twenty to the same level as the first quarter of 'twenty one.
By adding <unk> last 12 months net revenue EBIT denominator. The average time off receivables decreased to 188 days 10 days left.
I will conclude my speech in the slide 11, with our net debt.
<unk> ended the fourth quarter, we know that net debt position of 939 million.
From the fourth quarter 2001, the increase was related to the acquisition of Fidelis and by the accrual of interest rates, which more than offset the operating cash flow generation in the period.
In the right chart, we see that our leverage magic.
Measured as net debt to last 12 month adjusted EBITDA has started to decline reaching 3636 to seven.
In the fourth quarter or $3 28, including 11th last month, the BDA in full in the denominator.
Expect this downward trend to continue over the coming quarters as our adjusted EBITDA base increase.
With that being said I'll pass the word back to you.
Thank you Bruno moving to slide 12, we are proud to say that bus brands maintained the leadership in numbers of approval in the most competitive of the mission testers in the Brazilian best universities.
Performance of our premium brands.
Particularly notable mix in the most competitive career in the country, our top of mind brand expanded its leadership in the new shows for Medicine Epic Universe of So Paulo, the best University in Latina America. According to the higher education blanking with an increase of $6 50.
4% beneath its students compare it to the last year.
Top performers that Brazil has been through the worst is amongst the key attributes schools either by the K 12 schools when choosing a content partner move.
Moving to slide 13, let's talk a little bit about ESG.
By the end of April .
So you should its first sustainability report available on our in our IR portal roster.
Report was elaborated according to the highest standards available. We hope that this report will help with the investor community to understand how serious we are about ESG standards at Boston, having said that I finish our presentation and now I open the Q&A session. Thank you very much.
Thank you ladies and gentlemen, if you have a question at this time. Please press the star and then the number one key I know touchtone telephone.
Question has been answered or you wish to remove yourself from the queue. Please press the pound key please standby, while we compile the Q&A roster.
We have the first question comes from the line of Marcelo Santos with Jpmorgan. Your line is now open you may ask your question.
Hi, good evening views our general.
Thanks for the opportunity for US good questions. The first question is if you could comment a bit on your b to B to C.
Initiatives you have flu at all.
I think my teacher might trough.
<unk>.
Also the recently launched without therapy. So if you could comment how these are going it would be interesting and the second question is more to shop June regarding the margin outlook for the calendar year 2022.
This call you said that you expected at least to recover the levels of 2020.
Could you could you make the same comment now or could you see.
<unk> outlook. Thank you.
Okay. Thank you. Thanks for your question Marcelo This is <unk> speaking.
Actually we call those initiatives you mentioned more b to C to be right because we offer.
Through it all my teacher pleural adopt <unk> therapy that we are in the pilot period now we are not for that offering.
For sales, but we consider that our b to C to b and by that I mean that we offer to the students the opportunity to connect with the future and then we get to the school a rebate of the class.
Just just to keep you know schools engage at with the process. We are we are happy with the first results in this in this first quarter of course the revenues.
Steel.
Doesn't that does not represent.
Present, they are they are not meaningful in the total revenues of the cycle right, but I can tell you that we are selling for instance, private classes everyday right enough daily basis, we are selling.
Thats classes all over the country the level of.
The NPS <unk> regarding this new service is very high and we are also selling adaptive programs in a daily basis foreign students.
From the secondary school on right, we are not offering.
Adaptive programs for Prime buoy, SKU or pre school so in.
In short we are considering that the pace of the the revenues we are generating with these new services in lined with our with our business plan. Right. Then we also know that this kind of product will be more important for our students.
Even more important in the second semester right one when many students they must recoup.
<unk> coover grades then and that.
That generates more demand for this kind of broader pin soon okay.
Marcelo regarding to your second question, Yes, we reiterate our reveal that the 2022 week fiscal year, we will have adjusted EBITDA margins closer to the 2020 level right.
Higher than what we had in 2021.
So this is this is a renewed outlook eventually we can surpass what we what we posted in 2020.
The thing is that as you know the inflationary environment in Brazil is.
Is getting vehicles. So we have some challenges ahead, nothing that will put that will compromise the delivery dates.
This higher level adjusted EBITDA, but it makes it it makes sense for us to make any kind of forecast.
More precise right now, but definitely we will be close to 2020, and eventually we will surpass that level in terms of adjusted EBITDA margin.
Perfect. Thanks, Gena and thanks for clarifying the Beecher situ be it makes it makes more sense to me. Thanks a lot.
Next.
Question do we have the line of Emiliano Flores of Scotiabank. Your line is now open you may ask your question.
Yes.
Hello, Thanks for taking my question.
Thank.
If you could share your thoughts on the outlook for me Tony Kenney T cycle.
How are you seeing the K 12 recovery.
In this period.
That will be thank you very much.
Great. Thanks, Thanks for the question.
We are we are in the beginning of the of the book of building for the next year right. So well. We just finished we have just finished by the end of April we finished the first commercial or the person marketing quarter for the next HCV right.
What I can share with you is that we are super motivated with the results of this first quarter right. So we are we finished the quarter above our target for debt fewer of the commercial right and.
And we are also expecting to see.
Keith.
Especially in the pre school, we are not seeing this year, the full potential of preschool and by that I mean that.
In the in the number of students. We are happy we are okay. We are positive with the two to deliver 100% of the ACG, but we will still see some gaps in number of students in the pre school right. So we are expecting that in this in this year.
Laurie students will come back to pre school and that means that for the next year. We can besides viewed in a good place to be we can see more returns in terms of students for pre school to these schools and dissect the two of them. They are not so important in terms of revenues because.
The price the cheaper prices, we have are regarding pre school, but they are super important in terms of the you know.
The lifecycle in a school right ice two and three in the pre school will stay.
In the school for at least 15 years right. So that's so important for us and for this market as a whole to bring all the kids back to school in the preschool. Okay. So we are positive with the first results in our marketing campaign for the next cycle and.
Maybe we can have this positive trend of keeps coming coming.
The pre school again coming for the schools.
It's important to remember here.
This is Dennis.
We have the first year of the lab I would add on the 'twenty to 'twenty three cycle and they go to market.
Mackenzie with us in the commercial process. So we will properly also people not to definitely people naturally.
We will be we know within brands incorporated into our go to market, which we think is that it's our greatest strength we have.
And we also have a lot of.
Cross sell opportunity within the base of 11, Mccain which are.
Two two.
The penetration of complementary services.
When it's small so I think we have we have a good good potential here to bring another very good sale cycle in 2023, okay.
Super Thank you.
Thank you.
Thank you. Your next question, we have the line of Luca <unk> of <unk>. Your line is now open you may ask your question.
Good evening here in doing what they can and for taking my question. So regarding DEA, we saw a strong increase which the company associated with the extended payment terms.
Although we should have a more normalized year in terms of ACD break while she beat the dynamics for the BDA throughout the year. Thank you.
Thank you for the question Luca Yeah, it's always difficult to predict the coming quarters, but we definitely expect some improvements ahead right.
See.
The beginning of a normalization in the payment cycle.
So gradually we should see we should see a more.
A recovery, let's say in the PD.
So that to the historical levels historically, we had.
The effective loss of 1% a little bit higher than 1% of our receivables portfolio and this is the lateral where the.
PDA should converge to so gradually we should come back to this level. This is very difficult to make predictions for the upcoming quarter.
But this is definitely the trend that we see ahead okay.
That's very clear thank you Bruno.
Thank you again, if anyone would like to ask a question you May Press Star then number one on the telephone touchtone.
Again that will be star wanted a telephone keypad.
We had the question comes from the line of Lukas <unk> of Morgan Stanley . Your line is now open you may ask your question.
Hi, everyone. Thanks for taking my question also about the.
2020 through cycle.
Could you comment a bit on the pricing considering this.
Extended inflation plus.
Facing.
Do you expect to price above inflation.
We closed the gap.
From last year.
Current year.
Great question Lukas.
We are we are going to pass through our price list.
The the gap of inflation, we left last year right when when we.
When we release our price list last year around if I'm not wrong was by the end of July or at the beginning of August because these schools need the press release prior to the enrollment period right. So when we release our price list last week last year the inflow.
<unk> in Brazil was around 6% and we decided to to increase our prices around seven 5%, 7% right and then we saw that is spike in terms of inflation here and we.
If I'm not wrong again.
And that last year with inflation around 10%. Okay. So now we are aware of these of this phenomenal. So we are expecting to pass to the prices.
But because of the inflation, we left on the table last year plus the inflation of this year right.
Which means that we are not planning to to pass above inflation, but we are planning to correct. The gap of inflation, we left last year and to pass the whole inflation for this year.
Thank you very clear.
Thank you again, if anyone would like to ask a question you May press star one on the telephone keypad.
I am showing no further question at this time I would now like to turn the conference back to Mr. Myalgia Sir.
Thank you all for participating in our earnings release, and I hope to see you all healthy and well in our next two quarters.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you all for participating you may now disconnect.
Okay.
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[music].
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Ladies and gentlemen, thank you for standing by and welcome to divest the platform first quarter 'twenty to 'twenty two 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.
This press Star then zero on the Touchstone telephone I.
I would now like to turn the conference over to your host Mr. Bruno Giardino CFO . Sir Please go ahead.
Good evening, everyone and thank you for joining in this conference call to discuss about the platforms first quarter 2022 results with me on the call today, we have Mario you.
Lots of CEO .
During today's presentation, our executives will make 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 market.
<unk> looking statements are based on our management's beliefs and assumptions and on information currently available to our management team.
Risks include those set forth in the press release that we issued today as well as those more fully described in our filings with the Securities and Exchange Commission. The forward looking statements. In this presentation are based on the information information available to us as the date hereof, you should not rely.
And then as predictions of future events, and we disclaim any obligation to update any forward looking statements, except as required by law.
Additionally, management May reference non <unk> financial measures on this call the known as.
S financial measures are not intended to be considered in isolation or.
As a substitute for results prepared in accordance with Ias.
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.
Earnings release, I would like to start on the left.
Slide three with some highlights of this quarter that has a special meaning for us.
Thus the first quarter results confirmed the recovery trend on operational results after a longer period of results being hit by the COVID-19 pandemic number to really attack that business is back to the high growth view.
232, ACD, if our school year total 1 billion, which represents a growth of 35% over the two description revenue for the for the life cycle for the 2021 cycle.
The 2022.
Showed a richer mix in terms of revenue as we manage to increase growth in our premium brands tend to initiate to initiate their migration from textbook paper visa product bar to digital subscription products.
The book as a service therefore, excluding par the AC.
48% complementary solutions had the highest growth rate over 70% year over year, among the business segments as we accelerated ramp up of these solutions in 2032 cycle from Florida.
Fourth quarter 'twenty, one first quarter 32.
The net revenue grew 25% due to the recognition of 68% of Bact notes a description segment revenue as expected was stable compared to the previous cycle.
Adjusted EBITDA grew more than 100% in the quarter and 41% in the 'twenty to 'twenty two CECO.
2022 cycle as a result of the net revenue growth operating leverage gains and cost savings with margins.
Inquiries adult 430 basis.
Basis points for the second quarter 2022, we expect that the HCV.
Indonesia to range between 16, and 80% and 18% reiterating our belief that 2022, we'll be able to collect 100% of the activity.
Moving to the slide number four we detail the ACB growth composition.
Turning to ATV is less concentrated in the first two quarters than in the previous years due to the different sizes.
IDT of new products, such as they'll ever Mark gave the text book as a service platform.
That means that they will go the first two quarters continue reduced during the largest part of the ACB revenue there was less revenue captured in the first.
First half of.
Of this cycle when compared to the previous view being 68% in the first half of 2022 cycle there.
71% in the same period of 2022 cycle.
In this first quarter, the net revenue increased to 36%, 36% year on year to 381 million exceeding the 307 million Reais guidance she'll description revenue totaled 334 million.
An increase of 37% driven by the 2022 ACD recognition also exceeding the guidance and Nordstrom.
And then also description came in line with the guidance.
For the following quarter as I mentioned, we expected the ACB recognition to range between 16 and 18%.
I will now pass the floor to Bruno.
CFO .
Here.
We present the compensation of <unk> net revenue in the first quarter of 2022.
You commented our total net revenue increased 36% year on year exceeding the $370 million guidance moving from the center of this slide to the right. We see the component of revenue growth, excluding par subscription revenue increased 48 year on year, reflecting reflecting that.
Peer quality of revenue mix in the 2022, ACB Barnett revenue fell 12%, which is aligned with our strategy of shifting revenue from textbooks to learning systems and digital platforms.
Textbooks in this first quarter represented 14% of total sales volume.
In total subscription subscription revenue generated 37% and continued to gain relevance in the mix, reaching 88% of total net.
Non subscription revenue increased 25% offsetting the decline in registered in the fourth quarter 'twenty one.
Moving to slide six we analyze the net revenue for the 2022 cycle to date from Florida, 21, plus first quarter 'twenty two.
Net revenue grew 25% in this spirit.
And again from the center to the right, we see subscription ex Barbara when you're jumping, 41% Y O Y revenue fell 12%.
In total subscription revenue grew 29% maintenance, 68% of total 2020 to ATV why announce subscription was stable and appear.
In the slide seven.
Adjusted EBITDA more than doubled in the quarter, reaching <unk> hundred $41 million not only due to the growth in that revenue what else as a result of operating leverage gains and cost savings and the margin expanded from 24% to 37, one driven mostly by growth margin.
60.
660 Bips.
Also helping by commercial expenses and adjusted G&A expenses down 500, and 280 bps respectively.
The first part adjusted EBITDA margin of 37.1 is the highest of our recent history.
In the first half of the 2022 cycle and the chart on the right adjusted EBITDA grew 41%, reaching $302 million with market increase of 450 percentage points. This is definitely an evidence that fastest profitability is notwithstanding a much higher level than in 2021.
And it is closer to the company's potential.
And then slide eight our comments on adjusted net profit, which in the first quarter increased to 51 million from 21 million in the first quarter 2021, following the growth in operating profit in the 2022 cycle to date adjusted net profit increased 4%.
As the increase in operating profit was partly offset by the company's higher financial leverage and the higher interest rate in the country.
Moving to slide nine we show the operating cash flow evolution.
In the first quarter operating cash flow fourth quarter 2021 operating cash flow totaled.
$51 million benefited by the anticipation of accounts receivable amounting to $52 million.
In the first quarter 2022 operating cash flow totaled.
The median.
Impacted by the early payment of royalties to content providers. Therefore on a normalized basis, the operating cash flow increase it from zero in the first quarter 'twenty $1 million to $33 million <unk> fourth quarter and first quarter 2022.
It is noteworthy that our operating cash flow generation would have been even higher if you excluded the upfront capex for the acquisition of Chromebooks that are part of our 100% digital solutions.
Likewise, the normalized operating cash flow was negative 45 million in the 2022 cycle to date.
On the negative 104 million ending the same period of 2021, we observed that the operating cash flow generation is usually negative in the first half of the cycle as we invest in the production of materials in preparation for the school year, but we received the payment from call centers in every year along the cycle.
Next in the slides I'll, even Martin payers on the provisions in our accounts receivable.
As you know over the last part is we have recognized that higher provision for doubtful accounts V. Eight due to the challenging business environment for our school partners as well as our decision to support them by extending payment terms with increases the aging of the receivables portfolio.
While we have seen an improvement in the delinquency rate in the first quarter the higher provision standards adopted in the second half of 2021, having created the need for provisions in this quarter.
Why you have the PDA flat in terms of net revenue in the cycle to date.
Finally, the average days of accounts receivables less 198 days in the first quarter 'twenty to the same level as the first quarter of 'twenty one.
By adding 11th last 12 months net revenue EBIT denominator. The average time off receivables decreased to 188 days 10 days left.
I will conclude my speech in the slide 11, with our net debt.
<unk> ended the first quarter, we know that net debt position of $939 million.
From the fourth quarter 'twenty, one the increase was related to the acquisition of Fidelis and by the accrual of the interest rate, which more than offset the operating cash flow generation in the period.
In the right chart, we see that our leverage magic trick measured as net debt to last 12 month. Adjusted EBITDA has started to decline reaching 3636 to seven.
In the fourth quarter or $3 28, including 11th last 12 months' EBITDA in full in the denominator. We expect this downward trend to continue over the coming quarters at our adjusted EBITDA base increase.
With that being said I'll pass the word back to you.
Thank you Bruno moving to slide 12, we are proud to say that the vast of brands maintained the leadership in numbers of approval in the most competitive of the mission testers in the Brazilian best universities.
Performance of our premium brands.
Particularly notice noticeably medicine, the most competitive career in the country, our top of mind brand expanded its leadership in the new shows for medicine at the University of So Paulo.
That's university in Latina America. According to the higher education ranking with an increase of 64% admitted students compare it to the last year.
Our performance that Brazil is best to reverse to some of the key attributes schools either by the K 12 schools when choosing a content partner moved.
Moving to slide 13, let's talk a little bit about ESG.
By the end of April .
<unk> issued its first sustainability report available on our in our IR portal roster.
Report was elaborated according to the highest standards available. We hope that this report will help with the investor community to understand how serious we are about ESG standards at Boston.
<unk> said that I finish our presentation and now I open the Q&A session. Thank you very much.
Thank you ladies and gentlemen, if you have a question at this time. Please press the star and then the number one key touchstone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key please standby, while we compile the Q&A roster.
We have the first question comes from the line of MS. Telesat does of Jpmorgan. Your line is now open you may ask your question.
Hi, good evening views our general.
Thanks for the opportunity for US. The question. The first question is if you could comment a bit on your b to B to C.
Initiatives you have flu at all.
I think my teacher my trough.
<unk> two <unk>.
Also the recently launched without therapy. So if you could comment how these are going it would be interesting and the second question is more to shop June regarding the margin outlook for the calendar year 2022.
This call you said that you expected at least to recover the levels of 2020.
Could you make the same comment now or could you see.
<unk> outlook. Thank you.
Okay. Thank you. Thanks for your question Marcelo This is <unk> speaking.
Actually we call those initiatives you mentioned more b to C to be right because we offer.
Florida, All my teacher pleural adopt <unk> therapy that we are in the pilot period now we are not offering you know for sales, but we consider that our b to C to b and by that I mean, that's a we offered to the students the opportunity to connect with the teacher and then we.
Gifts to the school a rebate.
Class, a just and just to keep you know schools engage it with the Bruce as we are we are happy with the first results in this in this first quarter of course the revenues.
Steel.
Doesn't that does not represent they are they are not meaningful in the total revenues of the cycle right, but I can tell you that we are selling for instance, private classes everyday right in a daily basis, we are selling a private classes all over the country the level off.
The NPS, helping students regarding this new service is very high and we are also selling adaptive programs in a daily basis as far as students.
From the secondary school on right, we are not offering.
Adaptive programs for primary school or pre school so we.
In short two months that we are considering that the base off of the.
The revenues, we are generating with these new services in lined with our with our business plan. Right. Then we also know that this kind of product will be more important for us students even.
Even more important in the second semester right one when many students they must.
We cover grades then and that.
Generates more demand for this kind of broader pin soon okay.
Marcelo regarding to your second question, Yes, we reiterate our view that the 2022 fiscal year, you'll have at <unk>.
The EBITDA margin.
The 2020 level right.
Higher than what we had in 2021.
So this is this is a renewed outlook eventually we can surpass what we what we posted in 2020.
The thing is that as you know the inflationary environment in Brazil is.
Is getting difficult. So we have some challenges I had not seen that we'll put that do will compromise the delivery of this.
This higher level, just the BDA, but it makes it it makes sense for.
For us to make any kind of forecast.
More precise right now, but definitely we will be close to 2020 and eventually we will surpass that level in terms of suggested the BDA module.
Perfect. Thanks, Joe and thanks, Gil for clarifying the Beecher C to B.
It makes more sense now to me thanks a lot.
Next.
Question do we have the line of Mariana, Florida Scotiabank. Your line is now open you may ask your question.
Yes.
Okay.
Hello, Thanks for taking my question, it's only one thank.
If you could share your thoughts on the outlook for me Tony Kenney key cycle.
Or are you seeing the K 12 recovery.
In this period.
That will be thank you very much.
Great. Thanks, Thanks for the question.
We are we are in the beginning of the of the book and building for the next year right. So well with just a finish we have just finished by the end of April we finished the first commercial or the person marketing quarter for the next HCV right, what I can share.
With you is that we are super motivated with the results of this first quarter right.
We finished the quarter above our targets for that fewer of the commercial you right and.
And we are also expecting to see.
Keith.
Especially in the pre school, we are not seeing this year, the full potential of preschool and by that I mean that.
In the number of students. We are happy we are okay. We are positive with the two to deliver 100% of the ACG, but we will still see some gaps in number of students in the pre school right. So we are expecting that didn't repeat in this year.
Laurie students will come back to pre school and that means that for the next year, we can besides beauty and a good basis, we can see more returns in terms of students for pre school to these schools and these factors should then they are not so important in terms of revenues because.
<unk>.
Price the cheaper prices, we have are regarding pre school, but they are super important in terms of the you know.
The lifecycle in a school right the ice two and three in the pre school will stay.
The school for at least 15 years right. So that's so important for us and for the market.
As a whole to bring all the kids back to school in the preschool. Okay. So we are positive with them.
The first results in our marketing campaign for the next cycle and maybe we can have this positive trend off keeps coming coming.
The British school again coming for the schools.
It's important to remember here.
This is <unk>.
That we have in the first year of the lab I would add on the 2023 cycle and the go to market.
Also Mackenzie, we did see that in the commercial process. So we will properly also people not to definitely people naturally will.
We will be within brands.
Incorporated into our go to market, which we think is that it is our greatest strength we have.
We also have a lot of.
Cross sell opportunities within the base of 11, Mccain which are.
Two two.
Which the penetration of complementary services.
When it's small so I think we have we have a good good potential here to bring another very good sales cycle and in 2023, okay.
Super Thank you.
Thank you.
Thank you and next question, we have the line of Luca Cassini of Mattel. Your line is now open you may ask your question.
Good evening here in Denver for taking my question. So regarding DEA, we saw a strong increase which the company associated with the extended payment terms.
Although we should have a more normalized year in terms of ACB, great why should it be the dynamics for the VA throughout the year. Thank you.
Thank you for the question Luca Yeah, it's always difficult to predict the coming quarters, but we definitely expect some improvements ahead right.
We see.
The beginning of a normalization in the payment cycle.
So gradually we should see we should see a more.
A recovery, let's say in the PD.
To the to the historical levels historically, we had unaffected laws of 1% a little bit higher than 1% of our receivables portfolio and this is the lab aware.
The BDA should converge to so gradually we should come back to this lack of it's very difficult to make predictions for the upcoming quarter.
But this is definitely the trend that we see ahead okay.
That's very clear thank you Bruno.
Thank you again, if anyone would like to ask a question you May Press Star then number one and your telephone touch points.
Again that will be star wanted a telephone keypad.
We had the question comes from the line of Lukas <unk> of Morgan Stanley . Your line is now open you may ask your question.
Hi, everyone. Thanks for taking my question also about the <unk>.
2020 through cycle.
Could you comment a bit on the pricing considering this.
Tended inflation, but we were facing do.
Do you expect to price above inflation.
We closed the gap.
From last year.
Yeah.
Great question Lukas.
We are we are going to pass through our price list.
The gap of inflation, we left last year right when when we.
When we release our price list last year around if I'm not wrong was by the end of July or at the beginning of August because the schools need the price release prior to the enrolment period right. So when we released our price this last week last year the.
Asia, and Brazil was around 6% and we decided to to increase our prices around seven 5%, 7% right and then we saw that despite in terms of inflation here and we.
If I'm not wrong again.
And that last year with inflation around 10%. Okay. So now we are aware of these of this phenomenal. So we are expecting to pass to the prices.
Yes.
Inflation, we left on the table last year, plus the inflation of our off days here right.
Which means that we are not planning to to pass above inflation, but we are planning to correct. The gap of inflation, we left last year and to pass the whole inflation for this year.
Thank you very clear.
Thank you again, if anyone would like to ask a question you May press star one on the telephone keypad.
I am showing no further question at this time I would now like to turn the conference back to Mr. Myalgia Sir.
Thank you all for participating in our earnings release, and I hope to see you all healthy and well in our next two quarters.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you all for participating you may now disconnect.