Q3 2022 Vitru Ltd Earnings Call

Good evening, ladies and gentlemen, and welcome to <unk> third quarter 2022 earnings Conference call.

All participants are in a listen only mode. Now later on we will conduct the question and answer session and instructions will follow at that time.

As a reminder, this call is being recorded and will be available on Victress IR web site.

Now I would like to introduce the host for today's conference call Mr. Carlos Brito.

Vito CFO he law.

He began.

Thank you operator.

Good evening, everyone and thanks for joining that again is a real pleasure to be here with you all for the release of our third quarter of 2022 numbers here.

Here with me I have a bit of Odessa and with a lot of our two co Ceos.

Regarding that going forward the head of Investor Relations.

Rockdale for Lucky and allograft with Juno from our Investor Relations team.

A slide presentation as you know will be part of today's webcast, which is also available in our IR website at investors <unk>.

Dot Com BR.

So I Trust you all have the transition in front of you.

Before I begin I'd like to make no debt as detailed in phase two of the presentation Safe Harbor. This in effect first of all.

So now I'd like to invite you all to go to page four of this presentation.

Yeah.

So here we show some important highlights.

The last months.

First one is as you remember, we announced a investment agreement with Crisil capital for an amount of 300 and being.

Fully primary kept in Greece.

Which by the way was closed today.

Today was the closing of the <unk>.

Primary kept inquiries are going to see that into vitro for a total consideration of <unk>.

$58 million to around 300 million Reais.

Which was close to date so as of today, Chris There is already a shareholder of vitro so another referenced shareholder.

Capital table.

We also announced.

A few weeks ago that we were going to launch a rights offering that we indeed launched a few weeks ago in October 24, allowing our current shareholders to subscribe for new vitro common shares at the same price facility was the price.

Paid by Christina So 16.0 $2.

So this process is still ongoing.

The deadline for them for shareholders to accept this.

Subscribed for the new shares.

Next week 17th.

In closing the transaction will be in the following week on the 23rd.

And I do expect the <unk>.

Additional kept increase between 100 and 150 million Reais. So now in November we're going to receive around the hub of our 400 150 million reais of new capital.

It's going to be used.

Fully or basically 44.

The repayment of debt.

Aligned to our plan when we financed the business combination with <unk>.

On the right part of slide.

Also had another very solid.

Intake cycle for 2020 to June the <unk>.

Semester of this year, we grew around 38, 31%.

Combined between <unk> and <unk>.

Around 23% for <unk> and around 60% four points of the Mod and I'm going to give you more details on that a bit later.

And also we had this quarter.

There were the acquisition of <unk>, which is a leading educational platform.

Our focus on.

Secondary education students for our.

Niche clients, especially those preparing for an example, so it's a nice uptake distribution channel for us as well to generate leads and to get closer to our future clients.

On page five.

I have heard that.

The main financial indicators for this quarter.

Both the organic numbers I mean without the consolidation of onto the mud.

Can you give your comparisons.

And also on a consolidated basis, meaning with the contribution of the elements of the market results.

With the closing of the business combination on May 20 <unk>.

I mean with for more than half of the month.

So throughout this presentation.

In the release material as a whole we are going to provide information on organic basis and on a consolidated basis to be as transparent as possible. So that you can make your appropriate analysis.

So he operate five.

We highlighted the increase in net revenue in our core business, which is displayed the patients under graduate segment.

Which was up 124% this quarter.

Compared to the third quarter of last year.

The consolidated net revenue was up 170% is even higher than the net revenue growth in the stores on the Grad segment.

Most of the as you know the stronger business specialty medicine with.

With the influence of the month.

We also grew our adjusted EBITDA by 271% this quarter so.

We reached a very strong growth.

Not only on organic basis in which we grew by 28%.

But under the law, we grew 207% and our adjusted EBITDA margin is now at 35, 8%.

In the third quarter of this year, just as a reminder, on a pro forma basis.

When you looked at last year numbers.

We had.

Around 34, 5% of EBITDA margin it was around 29% for vitro X when for the month.

39% for some of our so the pro forma average was $34 five for a full year of last year.

Now this quarter, we had $35 eight so we are already seen.

The FERC is.

<unk>.

Our sooner.

And function of our integrations that we announced.

A few months ago.

You have some levers.

Forbes synergies arising from the integration.

The FERC one the most important one is personnel cost.

And part of our increase in margins now.

Part of it is already coming from dis synergies.

Adjusted cash flow from operations increased.

Even more 290%.

In the third quarter, our cash flow conversion of 110%.

And they're just net income.

We're up 386%.

This this quarter so it is clear.

All of these accretive transactions the best combination with onto the model.

On page six I'm going to go quite quickly here on the slide, but I always like to to highlight what we are delivering and what we had before the IPO. So as you know we had for our growth avenues for teams for growth there.

<unk> of current hubs the opening of new hubs the increase in cost offering and inorganic growth and we are delivering.

But before growth avenues.

Now we have.

Around 745.

<unk> thousand students.

Including the one for all of them are on an organic basis. We grew by around 100000 students between the sale of the second quarter of <unk> and third quarter 10-Q with immunotherapy.

We went from 600 hubs to now more than 2100 hubs.

Being more or less a 1000 in yourself and 1100 immune to the mud.

And we have now a strong.

A breath in the southeast with Morgan 700 hubs in the southeast.

We start to offer nursing less last year as you know we are going to start offering psychology in short.

Short term work it is finally.

Approved.

And we went to the one we are now the number one player in digital education in Brazil.

The two brands <unk> and <unk>.

On page seven just to give us some more details about some of this.

Growth avenues.

Here we show.

The growth in the maturation curve.

Our hubs. This is in itself the most important driver for growth in revenues.

As the maturation of the help that we had already in place. So here we showed this.

The same old curve.

In comparison within <unk>.

Each brand.

With differentiation from one year to the other in each of the.

Each of the of the Euro four hubs that we have.

So here, we have a 41% maturation index, meaning that we could grow our student base in one five times to reach 100% with a single it'll have to date. So it is important growth with limited execution risk.

Page eight.

The breakdown the distribution of our digital education under graduate students.

Throughout the country, so important growth in all regions, especially at <unk> in the southeast southwest now has.

182000 students there is already the second most important region in the country with a 340% growth year on year and on the right part of slide.

The breakdown of the geographic presence of hubs.

Again, the southeast now as being the most important one with 700 hubs, meaning 200% increase from what we had within one.

One year ago.

On page nine.

The growth in the cost of cost offering.

It is also important to choose to show here that.

Recently, we increased.

The number of allowed six in nursing.

So this is what here on this slide we show that now within the market and ourselves we are able to offer even more.

Pete.

And can prove intake and auto head.

As a part of even the best but this is an important growth Avenue for us.

And in the future.

Hopefully soon we'll be able to offer law psychology in the short term reason event dental care.

On page 10.

A number of.

In the theaters and upstate Kpis that we monitor.

As a way to to show and to measure the satisfaction.

Of our clients.

In terms of technology, our focus in terms of succession with our.

Support for them.

Within <unk>, we have the two top brands.

<unk> location in Brazil, a Wednesday for example, the great four hour at on the left part of the slides.

All of the Columbia key grades on the right part of life. So.

To show the.

Hawaii and why we are growing fast and our competition why we are having a better performance than the underlying reasons for that.

Our focus on our clients or our focus on technology, our attention to details within the operations of Youtube as a whole.

And on page 11.

Just to finish the sport.

Again, the huge geographic complementarity.

All of our hubs throughout Brazil.

As you know there are a nice fit between the seven for the month and we have today.

Unimportant.

<unk>, which is the penetration the faster penetration of hubs.

In cities in which only one brand is present.

So in the field, who had already a partner that knows the local reality downburst understands the local markets. So we'll have to be around 750.

Smaller bidding cities, which has only one of our two brands.

So the financial hopefully as well.

Here, we show that we have reached a increase of 130% in our student base in digital education undergrad students.

Year on year organically was around 20% within one year from now we have 672000 students in diesel applications Undergrad segment.

And as I said, a strong growth in intake this year.

23% for it when you have <unk>, 51% or 27 one.

As a reminder, France's somewhat grew 55% in the first half of this year.

Was that for a number of reasons.

None of that is that all.

<unk> used to grow in steps installments and expansion of hubs.

Differentially from only <unk>, which.

Usually have been opening a number of hubs give a number a whole 150 more or less on average per year.

Only to the market.

A lot of hopes installed in 18, and now again in <unk> and 'twenty one beginning of 'twenty two opened again another huge.

Round of new hubs.

So and so they had a huge increase in.

In and taking the first half of this year.

And now we have.

Again, this performance with 50% increase in intake.

This year.

On the right part bottom right of the slide you have the average ticket.

For this segment for the our core business, which is digital education on the graduation.

For only a salve.

We are increasing by 7%.

The same trend that we have seen.

Seen in the last year there are some effort.

We have a unique hybrid model.

<unk>.

The differentiation aspect is the academic model, so we have been able to more or less.

Increased ticket aligned to inflation, sometimes slightly higher slightly lower but more or less over time in line with inflation.

For it when you said the muck there was a decrease of 7% year on year and that was basically because of the huge.

Peak this year as you remember in the first half of this year the decrease for only save the model was 2%.

Now it is 7% because of this.

Second semester or a huge increase the first and now the second semester of this year.

<unk> basically as a matter of mix as you know the average ticket of a new students is lower than the average ticket of a senior person in the.

In the fourth year of graduation for example has a higher ticket than the one that has just joined the company.

And why is that because we.

Through all of the course.

We increased ticket.

Above inflation.

Now as of now the person in the eighth semester off until tomorrow on yourselves.

The higher ticket than the one who has just joined.

Our courses.

So this is a matter of mix and going forward going forward. We have a number of best practice that we are already starting to implement in both brands.

For only a salary.

It is the pricing.

Management as a whole.

With regard to be.

For the market going forward for over the medium term, we expect to have.

I would say a nice pro forma figure as well onto the market.

On page 13.

Net revenue gross profit and EBITDA. So again, however, a 70% increase in net revenue, 190% increase in gross profit and 271% increase in adjusted EBITDA. So our margin.

Went from 26% last year to milk 35, eight on organic basis. This went from 26% to 27%. So there was already.

Organic growth within <unk>.

As we had been saying in the past through the maturation of hub through the gains of scale et cetera, and now with winter demand huge.

Jump in margin to $35 eight now.

On page 14, and 15, we have here the numbers that the contribution of each segment.

We want to go through the day without in the slides I'm going to jump now to page 16 to show.

The breakdown and the contribution of <unk> one.

So here you can see that in this quarter.

More than half of our net revenues.

It's coming from one to the market.

And within onto the muck.

You can see here the breakdown as well, so it's more or less 55 or 60%.

In digital application being 57 digital gives us under graduation, and FIFA SaaS coughing locations, mostly Vista for 16 diesel and 40% in all caps being 25 medical and <unk>.

On campus ex medical so those are the big numbers for the breakdown of the revenue of <unk> to the market.

On page 17, we have the breakdown.

Some more details about our core business.

Here on the right the breakdown of our current student base.

It is important to highlight that.

Already today, we have more or less 25% of health.

Courses within <unk>.

Which is higher than what we have within onto the water.

Only 21%.

So there are some there are some some quarters that are just now starting to be offered within onto the model in health.

So going forward, we expect as well the weight of premium courses, which have a higher ticket.

To gain.

Weight within the overall portfolio of owned to the model and with that to sustain the average ticket.

Page 18 medical business are growing.

Within them to the law, reaching.

55 million Reais.

In the third quarter.

Around.

60% of the overall net revenue of the company.

With a premium of course with average ticket up of more than 10000 Reais.

Yes.

For four months.

Am I still in maturation, because there are some fixed both in Martin and Cordoba that are maturing.

On page 19.

The other two segments on campus <unk> medical.

And continuing education.

Okay.

Medical.

Huge increase with the consolidation of onto the muck.

Given that the weight and the size of this business within onto the market.

But with a slight decline.

<unk> Silva from from $9 8 million with one that is aligned to our vision.

Going forward the market trend is the continued increase in.

The relevancy of digital application the country you all have seen the latest census numbers that were released last week that basically confirmed what we all knew that.

The additional obligations was growing last year.

So.

It grew at slightly more than 20% last year already coming from a very high base, which was 2020.

While the on campus segment.

Lost steam so we do believe that going forward. This trend will continue.

It is a terrific. It is a secular trend of deceleration of the whole economy, and the digitalization of preferences of customers.

<unk>.

On the right part of the slides continue indications.

Our our casino is a different business in the last quarters.

Has been negatively impacted by the reduction in the average duration of some quarters.

This is a market trend.

Explain the best which impacted us and all.

Other players.

Anyway. It is important to highlight that multiple 60 over but when you see the organic numbers for <unk> net revenues. This quarter are already higher than what we had a list.

In the third quarter of last year.

For page 20, just to show here too.

Two numbers as I said.

The margin organic margin of victory went from 26% to 27, 7%.

This quarter.

$35 800 homes in the money.

Regarding cost and expenses on page 22.

Cost of service.

And on.

During the quarter and nine month basis.

There was a gain here as well.

In margin.

Intubated clearly given assets.

The data on yourselves.

The quarter margin.

Gross margin went down.

Good.

And the debate amongst.

<unk> of the weight of the on campus business up onto the Buck biggest.

This more than compensated by the G&A and by reduction in PD and sales and expenses for G&A here on the right. You can see that we went down from eight 4% of net revenue to five 7% in the quarter and.

And from $7 eight to $6 four.

In the nine months of this year with.

And a half months only of the month. So this is to show that we.

<unk> had a quite lean structure. This part of our DNA to maintain this.

Jai a structure aimed to be to have a very let's say lean mentality.

Our phase III <unk> III some expenses.

Going down as well from $16 three to $13 98 in the quarter with one already.

On organic basis.

There are also.

A slightly lower tax.

This year.

Now more than 3% this year.

So this is also an important measure to support margins overtime. It is the contribution of them to them.

Our <unk> expenses the same <unk> four PD on the right.

PD.

When we see the organic numbers.

<unk> is slightly lower.

In the in the nine months of this year slightly higher in the third quarter of this year.

But when do we see wanting to set them up.

Contribution this is down from 16% to sampling 4% on a consolidated basis this quarter.

So going down a lot.

Because of the the way that into the model.

And then just <unk>.

Collection over time and bad debt.

But it is also as I said for one year and onto the month. There are some best practice to the exchange.

As of March.

Going to benefit from the pricing management.

Expertise on yourself.

He is going to benefit from the bad debt.

I would say drop ultimate event of intermodal.

Finally.

On page 24.

Net income and cash flow from operations.

So important is growth in adjusted net income.

So just net margin.

Going up in.

In the quarter from 9% to 16%.

And so this is just to show that even with the debt that we raised for this combination.

Overall, it is a <unk> accretive.

Transaction you can see these numbers in the quarter.

And so going forward, we expect in the following quarter of important growth in the next earnings of only of vitro as a whole and finally on the right part of the slide.

Cash flow from operations offer with a huge huge increase.

In the corner of 290% 147, mineralized in one quarter of cash flow from operations.

And.

It is important to highlight that this is cash flow from operations.

Which is before Capex of course.

<unk>.

But when you look at for Capex.

Our cost Capex this quarter amounted to only six 5% of net revenue down.

Down from $11 six in the third quarter of last year, so even with capex into account and the cash flow.

This is an important gain of scale here with winter demand.

So that was it from my side and I would like to open for questions.

Yes.

Thank you the floor is now open for questions. If you have a question. Please press star one on your Touchstone start at this or any time.

At any point to your question is answered you may remove yourself from the queue by pressing the star.

Questions will be taken in the order they are received.

Ask that when you pose your question that you pick up your handset to provide optimal sound quality. Please hold while we poll for questions.

Our first question comes from look Mike Cassini lease it'll be begin. Please go ahead.

Hey, good evening, everyone and thank you for taking our questions guys couple of questions regarding your average ticket so first.

Yes, yes.

Secret increased 7% on that.

Education and graduate segment. So can you. Please comment on the competitive landscape and what we should expect in terms of ticket dynamics going forward, especially considering the deterioration in the macro economic scenario and then secondly, <unk> serve a declining into the March average ticket in the quarter can you. Please provide more detail on the strategy.

The company will implement in order to increase the ticket going forward. Thank you.

Hello, Thanks for your questions.

So the.

The dynamics of the market and then what we're going to do about it.

Basically the market is as competitive as we all know it was competitive and is.

Steal competitor to date it is not.

To date more competitive than what it was in the past.

It is a very I would say.

Competitive market there are some players more rapidly than others, but it is.

Our market areas.

I would say.

Consolidating with fewer names fewer and stronger earnings.

So the trend is that smaller players are being wiped out.

While the growth has been concentrated with them.

Five or six months so.

So this is a trend that we have today we have.

Last year, and I expect as well too to have.

Next year so.

So when we look forward to.

Particular dynamics of <unk>.

Yeah.

The big reason for our update.

Differentiation.

Ticket is that we'll have a very granular approach to it you think it will have.

A lot of inputs from our local partners.

And who have systems here in the in the house.

<unk> incentives as well to two minutes tickets.

Appropriately.

So this is something that we have been doing it for a full year, including yourselves.

And with that we have been able to show a sustained increase tickets overtime.

The first reaction is.

Because of our model, which is also true with our model, while it's already a differentiator in the past.

As it is today the reason why we have been able over time as well to improve tickets is that we'll have.

Our methods and skew the knowledge.

In house.

For that which we are going to apply for our only seven months.

And so we have already.

Start to change now for the current intake cycle that are just starting now in November .

We are making a few changes in the pricing methodology and the price incentives and.

The granularity of pricing for only for the market as a whole.

That we expect to have a positive outcome next year for only for the month.

That's very clear Carlos Thank you.

Take a look at.

Our next question comes from the download you beta with Bank of America. Please go ahead.

Hi, Carlos Thank you for taking my question.

There are two questions here from my side also.

So this quarter, we saw an increase on dropout ratio for Bolton loses money on yourself Im just trying to understand here.

Could you give any sense of many regions Uruguay Jeremy.

Did you say new trend.

We should start seeing from now on and the second one if you guys could comment a little bit on the performance of these new region for you guys.

<unk>.

It has been a different pricing strategy.

We should expect any impact from that going forward.

Can you. Please repeat your first question.

Hardly hear you on the first question.

Yes, sure can you hear me better now.

Yes.

Okay. So the first question is about the dropout ratio we saw that both.

For when he says modern linear Salve dropout ratio has an increase Jeff just trying to understand here.

And in fact helps in your regions.

This is a new trend.

Starting from now on.

Okay. So starting.

Your first question indeed, the dropout increased in both brands, but for different reasons.

The first four.

What do you see the muck.

It is clearly a matter of mix.

As you know most of the bulk is concentrated within newcomers.

So we had a 55% increase in intake for only pick them up in the first half of the year. So.

So because most of the drop out east with newcomers. This is translated in the overall.

Higher average surplus ratio four only.

Now in the third quarter.

When they have to renew.

Their enrollment now.

In the middle of the year. So this is for only seven one.

For <unk> seven days, a slight increase in either or both.

No, but just at a very slight increase in dropouts.

Which.

Basically due to the macroeconomic environment.

So it is that's why now in the third quarter of this year, our PPA number for yourself is slightly higher than what we had in the third quarter of last year, but for the full year. It was slightly better but it is true that for.

We thought it was a slightly increase slight increase in the dropout ratio.

<unk>.

Our sales team.

So in the end.

The price dynamics for the new regions as an expense.

It is we don't have a.

A.

Overall.

I would say trend here because there are different expansion I think different regions performance of the market.

So it is increasing a lot.

Outside of <unk>.

We are celebrating love in the southeast we always.

And more aggressive pricing when we enter a new.

The region, especially not not even feedback.

<unk>.

And then once we do the penalty to pay the price to pay to to have your first step into a new region.

And so after.

Two or three semesters when we are already more known in the region at once we have our recommendations working in our favor and word of mouth working in our favor and then it will start to slightly.

<unk> price it overtime, we have done this.

In a lot of regions.

We have done before example in minions the rise in the past when we entered not there in 2018.

So now is normal price right.

Right.

So the new regions that we are I think we were slightly.

Select a more aggressive down to average prices that we have because areas the price to pay to enter aneurysm. It as part of the game.

Also part of the game that week.

Overtime.

In this region for once we have more mess modest March appeal and more brand recognition in this in this region.

We price normally.

Okay perfect. Thank you Carlos.

Think of it at all.

Our next question comes from Victor.

Louise Goldman Sachs. Please go ahead.

Good evening, all and thanks for taking our questions two questions from our side. The first one is related to the.

A bit of a follow up on some of the previous flash channels, which is <unk>.

First how much of an effect.

Current macroeconomic scenario away or any macroeconomic pressures actually been happening on the <unk> drop ultra ATM out there matrix are you assuming in these macroeconomic trends and the macroeconomic pressure it become morale at lines at all and are you seeing any different trends for students so far.

In the fourth quarter or is macro Mara each of an issue, but not a main driver far anything that you've seen and the second question.

Would be EBITDA longer term one if barry.

Assuming that there is any announcements of expansions bias or any new government programs targeting specifically on campus dedication.

How could that change.

Back to our strategy of farm the on campus segment EPS FX at all thank you.

Hi, Victor Thanks for your questions.

I mean the macro.

I mean coming back to the question.

Our morale about dropout ratios.

When we started the dropdowns ratio of only ask that with for example, and here we have.

Difficult, which will have an hour a spreadsheet that we.

Included in our sites.

A couple of articles we have.

Our retention rate of only <unk> <unk>, which is always much higher in the second in the quarter in the fourth quarter and lower in the fourth and in the third quarter because of the renewal of the enrollment in the third quarter of 2000.

'twenty two.

Our retention rate is down <unk>, 3%.

0.2%, comparing the third quarter of 2021 to the third quarter of 22.

So.

And I think that we all agree that curve.

The situation the macro situation.

Yes.

Given the high interest rate to high inflation et cetera.

Neither one and even in the scenario.

Retention rates of <unk> compare apples to apples because they're one of only seven months is not comparable.

Much higher weight of newcomers.

When we look for only a silver which has more or less the same performance had last year. It ramped down 0.3 points. So macro of course it is.

Importance.

But we have been able to.

To update you to surface leaf into into pro form.

Nicely of course, if the macro conditions improve.

Good for the whole sector for the whole economy and of course for future.

Which.

During each of the second question about <unk>, yes.

Sure.

I mean, we have no clue about whether there'll be a new version of <unk>.

Before Mr obligation students are only for on campus et cetera.

What what we do believe that now.

These certification it's much more uptake.

Present, a much more base case solutions.

And then it wasn't the best one CFO have created.

So.

If there is a new source of financing for education.

We do believe here in the company and that it will be for the hope.

As a whole because it is now most of the students. They are enrolled in this application for us. So it is this location is.

The way to two two.

To maximize penetration of higher education in Brazil going forward. So if the government wants to foster this penetration with <unk> for example.

Vision. It makes sense to include the whole sector on campus and visa.

And.

The consequences of yes for us.

We see this as as.

Positive because.

Yes.

We've got one.

What we saw.

When fifth was was.

They changed in the last years.

We saw a increase in project financing with a reduction in prices as a whole. So if there is a new version of yes.

For the whole sector, there will be in my vision.

More sustainability for practice as a whole in the sector.

For practice.

For the on campus and for digital as a consequence.

Because today as you know there are.

<unk>.

Overall price pressure for the whole sector as a whole set of different in our case with for a second on hold there is a price pressure that with shift could I would say be lighter.

And then with Lcs.

Very clear thank you very much.

Thank you Peter.

Our next question comes from Joe <unk> with Morgan Stanley . Please go ahead.

Hi, good evening.

Have two questions on our side. The first one is related to slide 11, you showed the number of cities with only one or two brands and the question is if you were able to start opening hubs in cities with only one brand and how is the reception from the current partners.

The second question is related to <unk> you can take.

There was a deceleration this quarter too.

<unk> is a little bit behind the industry levels.

Could you comment and from what I understand.

You haven't changed the pricing strategy as of the third quarter, yet so could you comment on what could hasnt affected.

This metric.

Thank you Lucas.

So on page 11 data, we've shown the number of cities with only one brand.

And we have.

Our already.

Opening hub.

Hubs.

In Cds.

You got to have a partner for example also into the more.

That is now.

Opening our opex.

The opening of hubs.

So it is already.

Corey.

So part of our synergies first.

Faster acceleration of the faster opening sorry.

<unk>.

Your hopes opening especially in this type of cities. So this is already happening.

So we are.

Opening hubs in the cities, but we are also opening hoping in smaller cities and which none of the branch.

<unk>.

So so but you are right. It is now one of the most important lever that we have for expansion.

Which they offer only one brand now.

Now offered a second brand in <unk>.

Location.

Different story, if I may call the hub store.

Sure.

But already knowing the local market.

And the extended the dynamics of the local community.

For the intake according to the law.

You are right we didnt.

The changes in the pricing.

This is starting now in November so that the pricing that was followed for the second.

Mr. <unk> was the same one that.

Whilst already starting when we closed the view so in may when we close the fiscal nation.

The second intake cycle, what's already starting.

Hi.

And because of.

<unk> jumping provisions.

Discussing.

I'd say commercial issues.

Sales into the month before the closing of the deal.

So going forward there will be.

Some changes.

In the pricing, but not what we see now in the second semester of this year. So the performance.

Of the intake of ownership.

The most important driver plus.

The huge.

<unk> in the number of hubs that we have into the market now compared to what we had one year ago.

Perfect. Thank you.

So you can look at.

Once again, a few ways you ask a question. Please press star one.

Our next question comes from.

Please proceed data <unk> Suisse.

Via webcast.

Thank you for disclosing when Easter is from Mike <unk> Standalone, what were the main reasons for that Clinton tickets and retention rates year over ear.

Under great there.

Hi, Mauricio.

Yes.

Those questions.

The one that I just answered the reason for decline in tickets.

Our retention rate.

It is basically the huge.

Intake so the average ticket.

As a matter of the weight of newcomers and seniors. So now have a huge increase in the weight of newcomers new students within the whole suite of these of the muck.

Which end newcomers have lower ticket than seniors.

And most of the drop off is concentrated within new students. So.

The main reason for the reduction in prices and the retention rate so going forward for prices as I said, we are starting to choose to work on the new pricing using the methodology and the skills of silver.

And for.

But with pension.

The remaining two itself is.

Better than the refinish itself.

Only.

A salesman.

So when you look for the previous years number.

So going forward.

The mix of students will be also important driver for this overall weighted average calculation.

Thank you.

Once again to ask a question please press star.

Why.

Please hold.

Thank you Lee.

To ask a question please press star one.

Thank you.

To ask a question please.

Why.

This concludes today's question and answer session I would like to invite Mr. Carlos Today does to proceed with his closing remarks. Please go ahead Sir.

So once again, thank you all for your interest in vitro and now I would like to invite you all for our first <unk>, we are organizing our FERC <unk> today, it would take place in Marina.

Next year in January to be on the 19th of January in Marine.

Loyalty program, so far save the date for our first <unk>.

Thanks, a lot and good evening.

That does conclude today's conference call. Thank you very much for your participation and have a great.

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