Q4 2022 Vitru Ltd Earnings Call
Speaker 1: And good afternoon, everyone. Thanks for joining us here. Again, it's a pleasure to be here with you all for the release of our fourth quarter reloads of last year, as well as the full year reloads.
Speaker 1: Here with me I have Pedro Grazta and Guido Matos.
Speaker 1: co-CEOs of Vitru, Guillem Infernico, our VP of Marketing and Sales.
Speaker 1: My dear Carlina, the head of IR and Raquel Soudaki and we sleep in the studio from our IR department.
Speaker 1: A slide presentation will be part of today's webcast, which is available at our website at investors.vitro.com.br.
Speaker 1: I trust you all have in front of you this presentation.
Speaker 1: for those that are not following our webcast here live with Zoom.
Speaker 1: So before I begin, just as a quick reminder, Safe Harbor is in effect for the scope. So now I invite you all to...
Speaker 1: Follow me here for this presentation.
Speaker 1: in page 4.
Speaker 1: which is here, which brings the main highlights of the last month.
Speaker 1: that was executed throughout October and November of last year. So with that we reinforced our capital structure. Second key highlight was the price adjustment in our business combination with UNCEDEMAR, which resulted in a reduction in the price of around 73 million REI. That was part of the share purchase agreement with UNCEDEMAR. It was part of the deal that we would evaluate.
Speaker 1: changes in the balance sheet of SEVEMAR between the reference balance sheet and the closing balance sheet, which was in May of last year. So with that we reduced the amount to be paid in around 73 million REIFs.
Speaker 1: And the third key highlight is clearly the advancement of the integration plan.
Speaker 1: between Vitro and Sezumart which is being executed ahead, in fact, of schedule with over delivery of the promised signatures that we expected and that we guided the market when we released this information in May of last year.
Speaker 1: On the following page we have the key highlights from a financial perspective.
Speaker 1: both the organic numbers, I mean without the consolidation of one to the more into vitro and also on a constant basis.
Speaker 1: I mean, which of the tenomars since the closing of the combination which, as I said, took place in May of last year?
Speaker 1: So roughly, wait seven months, I'll say the numbers.
Speaker 1: Throughout this presentation and as we did in the last quarter, we are going to provide information on an organic basis and also on a fully consolidated basis.
Speaker 1: to be as clear and as clear as possible to you.
Speaker 1: So here the first key highlight was the 88% increase in net revenue in our core business, which is digital education undergraduates, between 2022 and 2021, while the overall consolidated net revenue. The next key highlight was the 88% increase in net revenue in our core business, between 2022 and 2021.
Speaker 1: increased around 109%. It is a huge increase, a huge jump in our net revenue in our core business. So more than doubling when it takes the full package of considered data inverse.
Speaker 1: And on an organic basis we are showing an increase of around 29%
Speaker 1: in the case of only a selfie, digital education, undergrad business, and the 23% organic increases of only a selfie with the three business we have, including on campus and graduate business.
Speaker 1: So a clear advancement in our numbers here as expected with the model.
Speaker 1: When we see the adjusted cash flow from operations, we increase in 161% in 2022.
Speaker 1: with an improvement in cash conversion from operations from 83% more or less to 96% last year. It is an important pillar in our financing strategy. The fact that we do generate cash, we are a net.
Speaker 1: positive cash flow provider and generator.
Speaker 1: So this was an important improvement not only from organic perspective but also and most importantly because of the strong cash flow position and cash flow strength of Setomer.
Speaker 1: On the right part of the slide we have the adjusted BDA which increased 145% last year with adjusted margin reaching 33.9% from 28.9% so a 5 point increase in margin last year.
Speaker 1: Organically, it was an increase of around 22% with a 28.6% margin. So it just confirms the resilience and the strength of UNCE-LUMAR is bringing to be true.
Speaker 1: And finally, on a JustNet income perspective, it increased 124%, more or less, reaching a bit more than 200 million REI.
Speaker 1: So even with the debt financing that was raised...
Speaker 1: for the business combination with TADEMAR, we improved substantially our net income.
Speaker 1: Before we go deeper onto the financial numbers and performance of last year, just a quick reminder of a few slides. And the first one, the one that I love the most here in the presentation, which is a follow-up of what we said that we were going to do and what we did.
Speaker 1: So basically we said that we were going to grow in four growth avenues, the ramp up of current hubs, the openings of new hubs throughout the country, the increase in the course offering and inorganic growth through M&A.
Speaker 1: So we basically ticked the box in the four growth avenues.
Speaker 1: So now, as of end of last year, we had 91% of hubs still ramping up, with around 73% of all digital education students in those expansion hubs.
Speaker 1: So the the the major hubs now represent around 1-4 only of the
Speaker 1: of student base and three-fourths are in those hubs are still maturing. So this is by itself the most important driver of growth is the maturation of our existing hubs.
Speaker 1: We now have around 750,000 students.
Speaker 1: and organically within UNYASELVI almost 400,000 coming from 287,000 a year and a half ago.
More or less we have about 75% of our net revenue in the graduate education courses.
More or less around.
5%.
In casino location, which is basically.
The stone as well so we have.
Most 80% of our revenues coming from the digital segment.
And on top of that we have around 13% of our net revenue.
Okay.
Coming from a very resilient medical business.
And going now deeper about the segments on page <unk>.
Interesting.
The.
The net revenue as I said grow it grew a lot to eight 8% in the Beast of Acacia undergrad segment.
<unk>.
Both on organic and inorganic basis and this was.
It was not because of any major shift in mix of products.
When you see the numbers between 'twenty, two and 'twenty three sorry 2000.
'twenty one 'twenty two.
The two brands.
What sort of a steadily improving in house, but not much.
There's still a lot of space for only seven months.
To improve and to increase the percentage of health course as well. So this is also going to be a important lever for tickets overtime, but basically we have a very well distributed portfolio of courses.
In the two brands.
On page 17.
Our medical business with their own somewhat branch.
Pierre.
A number of highlights.
Again it is.
The fifth best private medical school in Brazil.
Those who codes.
And our first signature day, there in Miami that.
That we held in January of this year.
<unk> see that because let's see the quantity.
And the differentiated approach with <unk> two to this business.
It is a different.
Our segment is the largest medical school in the South of Brazil, which brings the scale very much with our own almost 200 fits with every ticket of more than 10000 reais.
So this is a business that's on a annualized basis.
We have a net revenue of roughly 220 minnery ice a barrier.
But tickets are increasing above inflation.
And the fleets are still maturing so we do expect promising results from our medical business. This year.
On page 18.
On campus and continuing education.
So first on campus on organic basis, I mean, when you Sylvia alone.
There was a reduction in net revenue in the segment, mostly due to a shrinking base, which is aligned to our long term view, Florida location sector in Brazil. However, there was an important contribution of owning Susan water to the contrary the numbers given the resilience and the high quality.
Of the house related one camp with quarters of Cinemark.
By the way.
These are quarters.
Corpus on campus represent more than half of the on campus revenues also tomorrow excluding medicine.
So it is a very resilient business with high tickets.
Yeah.
And on that front I'd like to highlight that.
In the current intake cycle up to today, we are seeing increase in intake of slightly more than 20%.
Even the ones that are more on campus business with the right I think Jacobs.
So.
I'd say a knife.
Complement to our <unk> application our focus regarding continued occasion.
On the right part of slide.
In the last quarters.
Where we fall.
A continuous reduction in the average duration of the graduate courses.
But this shift was basically over now so we saw in the last two quarters.
Organic increase already aimed the continued location net revenue of one yourself and now which are the more.
We are growing around 30%.
Yeah.
So now going to the EBITDA.
Now jump to page 20.
Yeah.
The cost of service and Ginnie so cost of service.
Was increased organic growth of 20%. So there was a.
Clear gain of scale.
Silvan.
But the overall.
Number when you thought the percentage of net revenue was higher.
And basically.
As I said because of the lower growth margin of the on campus segment of lymphoma.
And when they start DNA on the right part of slide.
There was a decrease both on our organic and inorganic debaters.
Organically.
We increased only by 7% within the vitro X linked to the murder.
Confirming our lean structure and our lean approach to management.
And when for the.
Overall, our consolidated number there was a reduction from eight point want to five 9% only.
That's revenue.
Confirming the gains of scale and the synergies.
So the the key.
Driver for synergies last year was in G&A.
Especially with them for the modern era.
I'm going to show a bit later.
On page 21.
So the experience is MPD.
So phenix Smith on organic basis, there was.
A.
The increase of 24%.
We hired them.
The increase of net revenue as a whole, but at lower cost given the important intake that we had left here so the overall.
Kicked off specifically true whilst the one 5% lower than what we had in 'twenty one.
And regardless of the war.
The hubs are more active than indicated silver in this overall stable process.
So that's why when you thought the overall picture of the overall number there was a reduction from $17, 7% to 60% of the overall net revenue in Phoenix.
The same happened in PD.
EBITDA overall BD, meaning that the.
The provision for doubtful accounts.
<unk> was down from $17 five to $14 two.
Last year, but there was an increase in the P. D of AV on yourselves. So organically. The most important reason was the deterioration in the macro and overall credit scenario in the fourth quarter of last year and that we would fall and it was clear for the whole economy.
And we're not immune to that.
Would you think that the more when yourselves given the students of nice doesn't have a lower average income than students out for tomorrow.
But we thought that.
Deterioration in the third and fourth quarter of last year. Nevertheless, it's worth more than what state of the buy instead of one.
And going forward.
When we look to 2023, Idaho.
We expect the overall consolidated P D level to remain more or less at this level of 14%.
I mean.
Six months ago.
If you're asking this question I was expecting a <unk>.
<unk> P D amount for 'twenty, three and even if I wanted to know.
Now see what we see today with.
We do expect that for 2023, we show expect more or less the same.
Therefore, FPGA of around 14% of net revenue.
Yeah.
On page 22.
Cash flow and net income the first net income and increasing margin for around 14, five to 15, 6%.
Driven by the physical Venetian.
Uh huh.
And we have a.
And sorry, I didn't hear if a high a slightly higher net margin.
I like the higher margin.
Given the even knowing that we have a higher leverage in this in this quarter, we raised funds for the combination with cinema.
And even with this debt level that we today you have a net debt of around $2 4 billion Reais.
We managed to increase net income overall.
<unk> seen and because of the.
The number to offset them.
By the way above that.
We when we see the overall.
The numbers that we have.
For last year, I mean, if we take the full year of vitro excellence of Nomura.
If we take the.
Normal life, and then the annualized number of owing to the mud for a full year. Our adjusted the number for last year was more or less around 600 million reais.
So we had net debt $2 4 billion.
Timber divided by 600, so we had a net debt over EBITDA of around four times.
Which is lower than our covenants.
And going down so we do expect that this ratio for the end of this year.
Probably reached around three because of the growth of the business at a home and because as I said before we are a net.
Positive cash generator.
And this kitchen recently hit here.
On the right part of the slide.
We increased the cash flow generation from operations.
806, 2%.
Between 'twenty, one 'twenty two and.
And the cash conversion from 83% to 96%.
So this is a very important pillar our financing strategy.
We manage that you've just raised debt and to have the position for tomorrow.
Because the both companies together are important cash flow generator.
And by the way is important to highlight that these numbers are before capex.
But our Capex for last year was only seven 4% of net revenue.
Down from nine 2% in 2021.
So even though.
With Capex, we are generating cash on a net net.
Perspective for.
So finally.
On page 23.
The integration plan as soon as this so far.
So the whole plan was designed before the closing of the business combination and the west the payloads and implemented after the combination.
Taking into account a seven.
For perspective, and with a lot of care.
And in consideration for our people.
But the plan is being executed ahead of schedule.
We are.
That's around today around 100 throw the country running at full steam each of them with a next one plan with an older with Lear, both with deadlines.
Well the timetable. So this is being implemented and it is the key priority of the company today.
We would that we over delivered.
In the synergies expected for Goodyear so on the on the right part of slide.
We see in yellow.
That evolution.
Of synergies that we communicated to the market in May 22.
So as you will certainly remember at that time, we mentioned that we expected an increase in the EBITDA margin.
Six points.
Between 2021 and 'twenty five.
Yeah.
For now.
The synergies that we delivered the 32 million Reais Morris in costs and expenses.
Represented in increase in our EBITDA.
EBITDA margin.
Around two four points.
I mean without definitive our margin would have been 31, five instead of $33 nine.
And on top of that we started to have synergies as well on commercial fronts.
Also over delivering.
Instead of $5 six we delivered a 10.7 so the main lever from a commercial perspective.
Uh huh.
It will be for these ear, the better pricing and so tomorrow.
Again, the new offerings of course and products.
And the faster expansion of hubs throughout Brazil. So.
<unk> already announced the market that we this year, we are going to open it.
Around 500 hubs, which is more than the rate that we used to open and on the Opex perspective, the main lever.
Was and will be personnel optimization.
But now.
With more important us and gave us scale in contracts and also better with things. Some practice when you Sylvie we already had a number of quite of the bricks implemented and tested within.
Within when you Tobey.
Using the intelligence and the procedures of the water for Onboarding for retention.
For collection.
We have shown already promising results and now we are starting to deploy this.
Throughout <unk>.
So we're very confident in our capacity to deliver the expected synergies and the gains in margins.
So well that's a I finished the presentation and electro open for questions.
We will now begin the Q&A session remember that dress question, you must click on the Q&A icon at the bottom of the screen to join the queue. If you prefer to write your questions. Please follow the same steps and you'll be joining the queue as well.
Upon being announced a request to activate your microphone will appear on the screen and then you must activate your microphone trask questions. We kindly request that all questions be asked at once.
Let's now move on to our first question.
We have Luca <unk> sell side analyst from <unk> BBA.
Uh huh.
We will open your audio so that you can ask your question. Please proceed.
Good evening, everyone and thanks for taking our questions I have two questions from our side. The first one would be regarding the integration plan and the initial synergies. So the company has mentioned that it has executed the plan ahead of the schedule. So can you. Please provide some more detail on what has caused this over achievement.
And then secondly, what are the new expectations foresee injuries in 2023 that will be our first question and then the second one would be regarding the average ticket. So we saw an 8% increase in the average ticket when you S. Lv digital business. So can you. Please provide some more detail on what has driven.
This increase and then besides the higher contribution of courses such as nursing what are what is the company also able to readjust prices in other courses.
Thank you Luca for your questions so regarding the integration.
The the reason for the over to into here on patient in 'twenty three.
[laughter].
I mean, the most important the reason afforded us over achievement.
Was that we were.
Able to integrate areas faster than what you thought.
So we had a plan.
Our area.
Poor sector.
With different timetables.
This sector that we were going to integrate lesieur sector that we're not going to integrate and we had an idea.
A plan.
This integration of areas.
And what we saw is that in detailing the plan after me.
We were able to accelerate this this integration and now we have already had several areas of the company operating as one area.
And this was the key driver for the over delivery.
Synergies.
So it looks so going forward I mean 44 23.
What we expect is what we have here on the screen.
Eight immuno Reais EBITDA impact.
Coming from synergies.
The 31 that we had delivered plus 50. So this is the guidance for synergies.
That we expect a <unk> <unk> coming from synergies of eight immuno raised more than 23 being.
Being the 30 that we had already plus 50 more or less.
For FY 'twenty, three so with that.
We shall expect coming for synergies.
A continued improvement in margins.
Overall and within future.
The second question about tickets.
So again I don't want to go back there on page 12.
In fact, the ticket of yourselves in the semester in the second semester grew eight 4% which is above inflation.
This was.
Not.
Really because of mix of nursing because nursing it started to be offered in August of 'twenty one.
So there was an increase in the <unk> last year.
When we showed the second half of 'twenty. One we thought we saw an increase compared to 'twenty because of nursing are not the case now.
We are already offering nursing since August 2021, so they are the reason for the increase here.
Twofold.
The first one is.
Is that we were able to increase prices.
In the intake.
Michael.
Because of the resilience of our model and the differentiated aspect of our product, but we were able.
On average increased prices throughout the country in some areas more in some areas less if.
Some products more than in others, but on average we were able to increase intake tickets.
Last year and a second.
Three of them.
Is that we generally and we have been doing this for the left here we offer brief ticket for the seniors.
Above inflation.
So so we.
We for example.
The busier just it took to be the one real example.
We in January of this year, we increased the senior tickets in 8.8%.
Which is more than inflation.
So.
And and then a third one if at all.
Throw the course, we also increase the density.
The.
On the core so that's why when we saw a ticket of a senior for example in the eighth semester.
The ticket of those.
People is high.
Higher than the ticketing off somewhat in the second semester because of the higher density we add more.
Uh huh.
Vince.
A more cautious.
And with that we charge a bit more so those are the three.
Let's say reasons being the first one the most important one the capacity to two.
Two to increase prices, given our pricing discipline and a differentiated aspects of our verdict.
What has been.
Has made it possible to increase prices above inflation when you stop it and this <unk>.
Pricing intelligence. This gritten granularity that we have the first reaction to changes in our markets.
That we have been implementing within we've got stuff in the last four or five years. We are now also starting to implement.
Within onto the water and Thats why we have seen already an increase in the intake.
Tickets of cinema.
These last two months.
That's very clear thank you Carlos Thank you Luca.
Thank you. The next question now comes from.
<unk> and then there's the sell side analysts from Morgan Stanley .
Open your audio.
Lucas So that you can ask a question. Please proceed.
Hey, good evening, thanks for taking our questions.
First question is regarding the intake cycle, you mentioned that your combined volume growth is 17%.
But we were wondering if you could give a bit more color on the mix between both brands to get a sense on how the ticket repositioning.
At Munis and tomorrow is impacting the demand.
And the second question is regarding the delay of the law.
Distance learning loss of pension.
In our view it doesn't seem to be a priority for Mac right now, but it could be an important catalyst for the sector.
Could you give some.
Your comments and perspectives on the outcomes of these.
Group.
Hi, Lucas perfect. So the first one that we got the intake.
So today as of March.
13, I mean Monday.
We have on average or are the two brands combined 17, 4% slightly more than that with ammonia silver.
Lesson that within southern water, so more or less.
<unk> 14 to the waterborne F 'twenty a bit more of a 21% that when you are selling more or less.
So this is a not only a impact of the tickets, but most importantly, the high comparable basis.
I guess this is more important.
In this case now when you see the two different brands.
Brent.
You thought that.
There was a very important increase in intake.
For the month.
Not only the second half of last year, which is here on the screen keeps 1%, but also in the first semester and.
The first method.
There wasn't even a higher increase in intake within for the month.
Why is that number of only ourselves well, that's more or less aligned to the more or less between 20 and 30% growth that we have been showing in the last year.
So the comparable basis, the bar of <unk> is higher than the bar of our sales is that why it is metro now that only tomorrow Ah shall grow less.
Furthermore, in this currently at peak cycle.
Yeah.
I'm, sorry, and the second question about the what law and psychology.
Yes, you're fully right. There was a committee created by the Minister of Education.
In September of last year for six months with the possibility to be renewed for more than six months.
So now what was done there was that this term was extended to a 17 day so nine months.
With the possibility to be extended again.
So I mean, we we are.
Expecting.
Solutions for on that front, so far or nothing that we can commit here.
We are we are still positive about the intrinsic.
The capacity.
Capacity of being able to store for law and psychology in dislocation there is no.
Underlying our rhythm.
For us or for the sector not to be allowed to offer law and psychology through a hybrids.
Quality digital location solution.
But it is something that we would take some time. So some mean for with this committee we do not expect this to be a possibility. This year that's clear farnell.
But we are still optimistic that in the medium term it will be a possibility.
Yeah.
Very clear thanks, Thank you Lucas.
Moving on we're going to go to the next question.
From Fred Mendes.
Sell side analyst from Bank of America, Brad we're going to open your audio so that you can ask a question. Please proceed.
Hello, Good afternoon to everyone I have two questions here as well I mean, the first one Carlos if you can just comment a little bit more on the strategy about entering into the southeast.
How is that working out and even with that you're able to raise prices and decrease the curricular expecting cninsure expanding to somehow Udo said new region by region, where market share is lower there.
Probably be b any back in CAC.
This is the first one and then and then the second is more like a strategic question.
Windows.
Your market share is starts to become a I wouldn't say concern, but something that you start to think okay. Maybe that's is getting too much going to be harder to grow from now on maybe I need to expand my addressable market, maybe I need to come out of some English course, I don't know.
But at which level.
You start to make sense.
We have not only in our groundwater strategy of gaining market share, but also may be trying to expand this market through your platform. Thank you.
Thank you Fred.
Very good questions.
So the first one about focused here on the screen on page eight.
I mean not only.
Not only within the southeast.
Throughout the country in any new.
Region or macro region that we enter.
Uh huh.
We we have to start offering.
A slightly lower tickets, that's a price to be paid that's natural.
After we have more brand recognition and locally with starts to normalize fighters that to what we have.
In the past now the original said with even the best in in miniaturized that.
What we are starting to introduce you to do now in some areas of Rio and Sao Paulo, but clearly when you see the southeast it is the <unk>.
The last frontier, especially the reading from Poland.
From from for them from a from the perspective of ONEOK Lv.
Because it saves them money.
There was already a poor comparisons there but overall.
It is still the the reason, which will have the the lower presence. So the when see the fact that with tickets.
That we offer in some pollen review today.
They are on their average smaller than the ones that we offer in your other regions.
Yeah.
Uh huh.
The other states.
This part of the overall commercial approach to anther, a new original following the first one to three semesters.
To pay the price and then once we have more brand recognition locally.
We have word of mouth as well working in our favor what we have as well the partner.
Going through a learning curve.
To operate and to sell locally with our support folks.
Once we paid it initial I'd say.
Rice.
We start to normalize if you could stand up to what we have been doing in the last year and net debt is <unk>.
Working on already so so for the southeast.
Is it the reason that we are growing a lot that we are growing the most effect.
Throughout the country, both organic and inorganic basis.
And we're very confident that we are keep are going to keep growing there.
For the.
The overall market share to be a concern or not.
We are.
Steve Farr.
From the level in which we'll be concerned with being too big.
Today, you will have.
In the last census, we had around 23% of the market.
As long as it's done in 'twenty one.
Probably now is a bit higher than that.
Maybe 25%.
We're still not in a position in which we we don't have space to grow there are several regions in which.
We're not the present.
Either with both brands are with one of two brands and as I said they attract different people.
The hybrid <unk>.
<unk> of <unk>.
<unk> a different person than than the model of only seven months.
So our our market if not the same and we are present in some areas with only one brand in some areas with no Brent.
So theres still a lot of space to be occupied.
The issue so.
So there's no single answer to your question, but.
On average we are not a concern for us from a market share perspective.
But in any way.
The most important.
A single driver.
For growth in student the beef is not going to be gaining market share.
Because of the overall market is.
He is going to keep growing.
This is not a whole by Monty.
In Portuguese.
Again.
This is a sector that has been growing a lot.
<unk>, even faster during the pandemic.
Busier, we do believe that will grow slightly lower than the upstate normalized number because of the high comparable base of last year, but for several years, which will keep growing because of the lower penetration of higher education in Brazil.
So the overall.
When we see the overall.
Both grads sector in Brazil, with 7 million people in the private sector in Brazil above starting Jan one.
This is not the total addressable market that we can tip.
The more we have hubs from vitro or other players been open throughout the country the bigger the market will be.
So the increase in supply it drives demand.
So we're not concerned about being a two two big here.
No but anyway.
But which does not prevent us from.
Exploring other.
Avenues for growth.
I mean, when we IPO of the company.
We we said that we had.
A number of M&A possibilities.
And in most of them by the way or not in our core business. Most of an award not in undergrad business in dislocation, we had discussions going on in other players that offer a graduate courses that offer.
Courses.
For part of our cost for the first jobs.
And.
We are now already offering we already have this quarters in our portfolio from when we see our continuing education segment.
It is a bunch of things, mostly granted Cortes with not only but we are.
We are looking for future growth not now in the very short term, but more in the medium term.
With other growth avenues.
Parks from our core business of undergrad ways business, because we do believe that we have the two leading brands.
On the organic basis when you have.
Until tomorrow, we will keep growing and we will keep gaining market share, but the key driver for growth.
In our revenues.
Is the expansion of the market at all.
Not only gain market share.
Perfect. It makes a lot of SaaS Carlos very clear thank you.
The next question now comes from Modi issue, a sell side analyst from credit Suisse.
Obviously, we're going to open your auto so that you can ask your question.
You May proceed.
Thank you Jason Carlos disappear.
From credit Suisse.
The E books reported yesterday results. So I think there are things that we ask them that.
We should ask you because the first of all congratulations on the results and the clarity of the presentation.
One of the things that was discussed with them and I think it's a fair point to ask you as well.
Ah both oldest commercial dynamics to attract first year's children sold all the commercial dynamics to have more intakes.
So I'll ask you a little bit about the necessity to.
Certain way subsidize this first year students. So that you can have intake.
And then let's say try to retain then even without the subsidies throughout time.
You have mentioned that <unk> had a period, where the tickets, whereas two we're a little bit lower and although it has been a recovery of tickets and says Omar.
So my question would be okay.
If you.
Keep this kind of policy, which kind of policy how aggressive is the marketing in terms of prices.
So that you can open <unk> more or less growth in this first year.
And the second question would be about.
Yes, I know, it's a it's kind of a tricky discussion because there is.
There is nothing concrete about that.
But what is the sector of discussing with the with the working group there.
About inclusion of distance learning in our future program design. Thank you.
Okay.
I think altogether.
So.
Regarding the market.
And in prices Ain't take et cetera.
Yeah.
What we are seeing in this current Olympic cycle, which was already.
So oh for a certain extent left here.
Was a more is and what's a more rational.
Market.
I mean competition.
<unk> here is fierce.
It has always been.
We are operating in a competitive environment.
It is as tough as it was last year as it wasn't as anyone.
It is a tough market in which you have to have a <unk>.
Differentiation will have to have high quality.
You must have delivery.
So.
But anyway.
What we are seeing the last D.
Do you think that in the last year I mean, the last 12 months more or less.
He is a more rational.
Environment I mean, originally if a strange words.
Absolutely.
Lets players with more with two other retrofit.
So.
And a sector that is a play.
Operating in a very competitive environment, but in a more let's see disciplined approach.
With some differences sport region, where products are it is in some cases.
We've.
Some changes over time with some players start to be a.
Let me reference the more aggressive at the end of it changed from payer to payer from region to region.
But overall.
It is a competitive environment in which we keep gaining market share with a disciplined tickets.
So we don't want to grow for the sake of growing we are.
Growing our operating in a market that is growing and we are delivering a what we believe to be a.
High quality product.
And we keep gaining market share.
So this is not we don't see today, a more competitive market than what we saw in 'twenty two or 'twenty one.
Our 'twenty.
Enforce yes, I mean, that's the.
Million dollar question or billion dollar question.
We.
Our opinion is the following when Seattle was created a distant learning or dislocation was the exception.
Now it is the norm.
So now when we see that.
More than two thirds of the new students are deciding to enroll in diversification quarters. Instead of on campus for one third of the newcomer is a glitch on campus to torture digital the norm.
Yes.
The the standard decision the base case decision now they used to go to dislocation.
In our opinion.
Potential new version off yes, or any other name.
We.
We include different learning.
For sure we do not believe in the possibility of only four okay. It is not impossible. We do believe it is unlikely.
We.
And also from a purely economic perspective, when we see the the I'll say the.
Efficiency of capital allocation.
It is more efficiently also to allocate capital.
Two to impact more people, especially people that need education and our <unk>.
I'll also are part of the overall.
Base.
<unk>.
The current administration with.
We do believe that in case they have nucleus. It will include on campus and destroyed the kitchen and also because today there are some more.
Gray areas than the best is today education is becoming more and more hybrid.
Then what we saw 10 years ago.
So.
The short answer is that we don't know.
But we do believe that if there is something it will be for the overall sector.
Very clear thank you Carlos Thanks, operator.
The Q&A session is closed and now we would like to turn to floral virtual companies closing remark.
So Mr. Carlos latest please.
Your final remarks, and close the call.
Well thank you all.
Thanks for following this where things for your trust and we keep open for any final question that you may have.
Thank you Goodnight.
The video conference our results with furniture visuals fourth quarter and full year 2020 is closed the Investor Relations Department is available to answer other questions and concerns.
Thanks, so much to the participants and have a good evening.