Q2 2024 Vasta Platform Ltd Earnings Call

August 7, 2024

Operator: Hello, and thank you for standing by. At this time, I would like to welcome you to the Vasta Platform 2nd Quarter 2024 Financial Results Call. All lines have been placed on mute to prevent any background noise.

Operator: Hello and thank you for standing by.

Operator: Rachel Rizmet, Thank you, ma'am. I'll join you now. [Music] Hello, and thank you for standing by. At this time, I would like to welcome you to the Vasta Platform 2nd Quarter 2024 Financial Results Call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again.

Operator: At this time, I would like to welcome you to the Vasta Platform second quarter, 24 financial results call. All lines have been placed on mute to prevent any background noise. After a speaker remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.

Speaker Change: Hello and thank you for standing by. At this time I would like to welcome you to the Vasta Platform 2nd Quarter 2024 Financial Results Call.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. As a beginner, I would like to read a forward-looking statement. During today's presentation, our executives will make forward-looking statements. Forward-looking statements generally relate to future events. Future Financial, for operating performance in both known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those contemplated by these forward-looking stakeholders.

Speaker Change: All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question and answer section. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again.

Operator: Before we begin, I would like to read a forward-looking statement. During today's presentation, our executives will make forward-looking statements. Forward-looking statements generally relate to future events, 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, expectation for future periods, our expectations regarding our strategic product initiatives and their related benefit, and our expectations regarding the market. Forward-looking statements are based on our management beliefs and assumptions, and on information currently available to our management.

Operator: Before we begin, I would like to read a forward-looking statement, Future Financial, for operating performance at both known and unknown risks. Estimates for future periods, our expectations regarding our strategic product initiatives and their related benefits, and our expectations regarding the market. We should not rely on them as predictions of future events, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, management made reference to non-IFRS financial measures on this call. However, the non-IFRS financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with IFRS.

Speaker Change: For a beginner, I would like to read a forward-looking statement.

Speaker Change: During today's presentation, our executives will make forward-looking statements.

Forward-looking statements generally relate to future events, future financial.

Speaker Change: Poor operating performance involved 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.

Operator: Forward-looking statements in this presentation include, but are not limited to, statements related to our business and financial performance and 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 are issuing today, as well as those more fully described in our filings with the Securities and Exchange Commission.

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.

Forward-looking statements are based on the management's beliefs and assumptions and on information currently available to our management.

Operator: These risks include those support in the press release that we are issuing today, as well as those more fully described in our filings for the Securities and Exchange Commission. The forward-looking statements in this presentation are based on the information available to us as of today. We should not rely on them as predictions of future events, and we display any obligation to update any forward-looking statements, except as required by law.

These risks include those set forth in the press release that we are issuing today as well as those more fully described in our filings with the Securities and Exchange Commission.

Operator: The forward-looking statements in this presentation are based on the information available to us as of today, and we should not rely on them as predictions of future events, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, management made reference to non-IFRS financial measures on this call. However, the non-IFRS financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with IFRS. With that being said, I would now like to turn the conference over to Cesar Silva, Vasta's CFO. Please, go ahead.

Speaker Change: The forward-looking statements in this presentation are based on the information available to us as of today.

Speaker Change: we should not rely on them as predictions of future events and we disclaim any obligation to update any forward-looking statements except as required by law

Operator: In addition, management made reference non-IFRS financial measures on this call. The non-IFRS financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with IFRS.

Speaker Change: In addition,

Speaker Change: Management Bay Reference

Speaker Change: none ifrs financial measures on this call the nonir s financial measures are not intended to be considered in isolation or is substitute for assoltss prepared in accord ed spid frs

César Silva: With that being said, I would now like to turn the conference over to CES Ela Silva, Vasta Silva. Please, go ahead.

Speaker Change: With that being said, I would now like to turn the conference over to César Silva, Vasta CFO . Please, go ahead.

César Silva: Good evening, everyone, and thank you for joining us on this conference call to discuss Vasta Platform's second quarter of 2024 results. I'm Cesar Silva, Vasta CFO, and today we have the presence of Guilherme Melega, Vasta CEO, who will be joining me on the call. Let me now hand over the floor to Guilherme Melega, our CEO, to make his opening statement. Thank you. Thank you, Cesar

César Silva: Good evening everyone and thank you for joining us in this conference call to discuss Vasta Platform's second quarter of 2024 results.

Operator: I'm Cesar Silva, Vasta's CFO, and today we have the presence of Guilherme Melega, Vasta's CEO, who will be joining me on the call. Let me now hand over the floor to Guilherme Melega, our CEO, to make his opening statement.

Cesar Silva: I'm Cesar Silva, Vasta CFO , and today we have the presence of Guilherme Melega, Vasta CEO , who will be joining me on the call. Let me now hand over the floor to Guilherme Melega, our CEO , to make his opening statements.

Guilherme Melega: Let's start on slide number three. As we approach the end of the current cycle, we are pleased to report that in the 2024 cycle to date, our subscription net revenue has achieved a growth of 14% to reach $1,152,000,000. Vasta concluded the 2024 cycle to date with 11% net revenue growth over the same period of the last sales cycle, mostly due to the conversion of ACV into revenue and the performance of the B2G business.

César Silva: Thank you. Thank you, Sather.

César Silva: Let's start on slide number three. As we approach the end of the current cycle, we are pleased to report that in 2024, cycle-to-date, our subscription net revenue has achieved a growth of 14% to reach 1,152 million. Vasta concluded the 2024 cycle-to-date with 11% net revenue growth over the same period of last day of cycle, mostly due to conversion of ACV into revenue and to the performance of the B2G of the second quarter of 2024 to 180 billion reais, a 32% increase compared to the second quarter of 2023 due to the previously disclosed shift in product deliveries, which were deferred to this quarter.

Guilherme Melega: Vasta's subscription revenue achieved in the second quarter of 2024 was R$ 280 million, a 32% increase compared to the second quarter of 2023 due to the previously disclosed shift in product delivery, which was deferred to this quarter. As a result of this significant second quarter revenue number, Vasta's subscription revenue has reached $1,152,000,000.

Speaker Change: As we approach the end of the current cycle, we are pleased to report that in the 2024 cycle to date, our subscription net revenue has achieved a growth of 14% to reach $1,152,000,000.

Speaker Change: Vasta concluded the 2024 cycle to date with 11% net revenue growth over the same period of last sales cycle, mostly due to conversion of ACV into revenue and to the performance of the B2G business.

Guilherme Melega: Vasta subscription revenue achieved in the second quarter of 2024 R$ 280 million, a 32% increase compared to the second quarter of 2023 due to the previously disclosed shift in product delivery. Moving to the company's profitability, in the 2024 cycle to date, our adjusted EBITDA experienced a growth of 15%, reaching $428 million, while increasing an adjusted EBITDA margin to 32.7%. As you can see, free cash flow increased by 4% from R$ 87 million in 2020 as a result of Vasta's growth and implementation of efficiency measures.

Speaker Change: busaster to presdescription revenue achieved in the second quarter of two thousand and twenty four two hundred and eighty million reise a thirty two percent increase compared to the second quarter of two thousand and twenty three due to the previously dis discloed shift in product deliveries

César Silva: As a result of this significant second quarter revenue number, the subscription revenue has reached 1,152 million. A 14% increase compared to 2023. This accumulated figure represents an 85% of the annual contract value, estimated for 2024 commercial cycle in 1,350 million reais. We can represent 12% organic growth compared to the previous sales cycle. Blementary solutions continue to present the highest growth rate among our B2B segment, with a 20% expansion in the cycle to date compared to the same period last year.

Speaker Change: which were deferred to this quarter.

Speaker Change: As a result of this significant second quarter revenue number, the subscription revenue has reached $1,152,000,000.

Guilherme Melega: A 14% increase compared to 2023. This accumulated figure represents 85% of the annual contract value estimated for the 2024 commercial cycle at R$ 1,350,000,000, which represents 12% organic growth compared to the previous sales. Complementary solutions continue to present the highest growth rate among our B2B segment, with a 20% expansion in the cycle to date compared to the same period last year.

Speaker Change: our fourteen percent increase compared to two thousand and twenty three is accumulated figure represents an eighty-five percent of the annual contract value estimated for two thousand and twenty four commercial cycle in one billion three hundred and fifteen million reas

César Silva: which represents 12% organic growth compared to the previous sales cycle.

César Silva: Implementary solutions continue to present the highest growth rate among our B2B segment, with a 20% expansion in the cycle to date compared to the same period last year.

César Silva: Moving to the company's profitability, in 2024 cycle to date, our adjusted ABTDA experienced a growth of 15%, reaching 428 million. While increasing an adjusted ABTDA margin to 32.7%. This increase was mainly driven by improvement gross margin, benefiting from better margin products, a reduction in the product cost, and operating efficiencies.

Guilherme Melega: Moving to the company's profitability, in the 2024 cycle to date, our adjusted EBITDA experienced a growth of 15%, reaching $428 million, while increasing its adjusted EBITDA margin to 32.7%. This increase was mainly driven by improvement in gross margin, benefiting from better margin products, a reduction in product cost, and operating efficiency. Finally, we continue to see improvement in our cash flow. In the 2024 cycle to date, free cash flow totaled 90 million reais.

Speaker Change: Moving to the company's profitability, in 2024 cycle to date, our adjusted EBITDA experienced a growth of 15%, reaching $428 million, while increasing an adjusted EBITDA margin to 32.7%.

Speaker Change: This increase was mainly driven by improvement gross margin, benefiting from better margin products, a reduction in the product cost and operating efficiencies.

César Silva: Finally, we continue to see improvement in our cash flow. In 2024 cycle to date, free cash flow total 90 million reais. As you can see, free cash flow increased by 4% from 87 million reais in 2023. And the last 12 months, free cash flow and adjusted ABTDA conversion rate improved from 26% to 32%. As a result of vast growth and implementation of efficiency numbers.

Speaker Change: Finally, we continue to see improvement in our cash flow. In 2024 cycle to date, free cash flow totaled 90 million reais.

Guilherme Melega: As you can see, free cash flow increased by 4% from R$ 87 million in 2022. And in the last 12 months, free cash flow and adjusted EBITDA conversion rates improved from 26% to 32%, as a result of Vasta's growth and implementation of efficiency measures. I will now turn back to Cesar Silva, who will talk about the financial results of the quarter in the 2024 cycle today. Thank you, Melega.

Speaker Change: As you can see, free cash flow increased by 4% from R$87 million in 2023.

Speaker Change: and the last ounth freecash flow in adjusted bitd conversional rate improve it from twenty-six percent to thirty-two percent as a result of vaster growth and implementation of efficiency imp

César Silva: I will now turn back to Sousa Silva, who talked about the financial results of the quarter in the 2024 cycle to date. Thank you, Malagan.

César Silva: I will now turn back to Cesar Silva, who will talk about the financial results of the quarter in the 2024 cycle to date.

César Silva: In this slide, we present the composition of Vasta's net revenue. On the left side, you can observe the organic year-on-year growth in total net revenue for the second quarter, which increased by 8.5%, reaching 294 million reais. Total Subscription Revenue achieved in this quarter is $208 million, mainly due to the seasonality effect mentioned before. This number represents a 32% growth compared to 2023. Non-subscription, which now represents only 7% of total revenue, dropped 26% to R$ 15 million.

César Silva: Thank you, Melega. In this slide, we present the composition of Vasta's net revenue. On the left side, you can observe the organic year-on-year growth in total net revenue for the second quarter, which increased by 8.5%, reaching 294 million reais. Say your PSYCHO to them!

César Silva: In Jesus' light, we present the composition of fastest net revenue. On the left side, you can observe the organic year-no-year growth in total net revenue for the second quarter, which increased by 8.5%. We are reaching 290.4 million reais. Total sub-exclusion revenue achieved in this quarter: 280.8 million. Many due to seasonality, seasonality, effectiveness mentioned before. This number represents a 32% growth compared to 2023. Non-sub-exclusion, which now represents only 7% of the total revenue, dropped 26% to 15 million. And in the government sector, in this quarter, we did not generate new revenue. As you can see in Jesus' light, it represented 4 million in the second quarter of the last year.

Speaker Change: which increased by 8.5%, reaching R$ 294 million.

Speaker Change: Total Subscription Revenue achieved in this quarter, 208 million on revenues, mainly due to seasonality effect mentioned before. This number represents a 32% growth compared to 2023.

Speaker Change: non description p which now represents only sevenving percentage of the total revenue drop it twenty-six percent to fifteen media

César Silva: And in the government sector, in this quarter, we did not generate new revenue, and as you can see in this slide, it represented $4 million in the second quarter of last year. However, in this sales cycle to date, considering the revenue achieved in the first quarter of this year, we have already achieved a 71% growth in this line of business. Moving to the right side of the slide, we analyze the net revenue for 2024. Speak your PSYCHO today!

Speaker Change: And in the government sector, in this quarter, we did not generate new revenue. And as you can see in this slide, it represented 4 million in the second quarter of the last year.

César Silva: However, in this sales cycle to date, considering the revenue performance in the first quarter of the year, we already achieved a 71% growth in this line of bid.

Speaker Change: However, in this sales cycle to date, considering the revenue.

Speaker Change: performing in the first quarter of the year, we already achieved a 71% growth in this line of business.

César Silva: Williams. Moving to the right side of the slide, we analyze the net revenue for the 2024 sales cycle to date. We activate an organic net revenue growth of 11% in the sales cycle to date, amounting to 1,390 million reais. The main factor should be the exceptional performance of this war. Firstly, the subscription revenue has increased 14%, reaching 1,150.2 million and continues to be the major contributor to our total revenue, representing 8.8% of the revenue share. No subscription revenue has expected drop at 3% to 8.8 million. And the overall revenue in the sales cycle to date.

Speaker Change: Moving to the right side of the slide, we analyzed the net revenue for the 2024...

César Silva: We achieved an organic net revenue growth of 11% in the sales cycle to date, amounting to $1.3 billion. The main factors to this exceptional performance were, firstly, subscription revenue increased 14%, reaching R$1,152,000,000, and continues to be the major contributor to our total revenue, representing 88% of the revenue share. Non-subscription revenue, as expected, dropped 30% to 8%.

Speaker Change: say your psyclcle shouldoliage

Speaker Change: we achieved an an organic organic net revenue growth of allevenving percent in the sales cycle to date amounting q when b ond three hundred

Speaker Change: 90 million reais. The main factors to this exceptional performance were firstly the subscription revenue has increased 14 percent reaching 1 billion 152 million and continues to be the major contributor to our total revenue.

Speaker Change: representing 88% of the revenue share. Non-subscription revenue, as expected, dropped 30% to 8%.

César Silva: And the net revenue of B2G achieved $69 million and represents 5% of our overall revenue in the Seiko sales cycle to date. In this line of business, there has been an increase of 71% compared to last year. Moving to slide number five.

Speaker Change: and the net revenue of B2G achieves 69 million and represents 5% of our overall revenue in the CEQOS sales cycle to date. In this line of business there has been an increase of 71% compared to last year.

César Silva: In design of business, there has been an increase of 71% compared to last year.

César Silva: Moving to slide number 5, we can talk about adjusted BDA. In this quarter, our adjusted BDA amounted to 26 million, a decrease of 36% from the 41 million the second quarter of 2023. Mainly due to a higher commercial cost and no recurring positive effects in the second quarter of 2023, of our version, of our provision for doubtful accounts related to a large retail customer. On the right side, we see that adjusted BDA in 2024 sales cycle to date increased by 15%, and reached 428 million, with a margin of 32.7% or 1.1 percentage points above the 2023 cycle to date.

César Silva: We can talk about adjusted BTA. In this quarter, our adjusted BTA amounted to $26 million, a decrease of 36% from the amount of 1,000,000 in the second quarter of 2023, mainly due to a higher commercial cost and non-recurrent positive effects in the second quarter of 2023 of a reversion of a provision for doubtful accounts related to a large retail customer. On the right side, we see that adjusted BTA in the 2024 sales cycle to date increased by 15% and reached $428 million, with a margin of 32.7% or 1.1 percentage points above the 2023 cycle today. Let's now move on to the next slide and explain the breakdown of the adjusted VGA margin.

Speaker Change: moving to ly number five

Speaker Change: We can talk about Adjusted BTA. In this quarter, our Adjusted BTA amounted to $26 million, a decrease of 36% from the...

César Silva: mainly due to a higher commercial cost and non-recurrent positive effects in the second quarter of 2023 of a reversion of a provision for doubtful accounts related to a large retail customer, the 2023 cycle today. In slide number 6, we observe that the BTDA margin achieved 32.7% of 2024 sales, site-to-date, and there has been an increase of 1.1 percentage points. Provision for doubtful accounts was stable between the years in line with a revised credit landscape in the fourth quarter of 2023, and adjusted G&A expenses improved by 1.7 percentage points, mainly driven by workforce optimization and budgetary discipline measures.

Speaker Change: For 1 million, the second quarter of 2023.

Speaker Change: mainly due to a higher commercial cost and non-recurrent positive effects in the second quarter of 2023 of a reversion of a provision for doubtful accounts related to a large retail customer.

Speaker Change: On the right side, we see that adjusted BTA in 2024 sales cycle to date increased by 15% and reached $428 million with a margin of 32.7% or 1.1 percentage points above

César Silva: Let's now move on to the next slide and explain the breakdown of the adjusted BDA margin. In design number 6, we observed that the average day margin achieved 32.7% in 2024 sales cycle to date, and there has been an increase of 1.1 percentage points from 31.6% in 2023. Firstly, our gross margin has increased to 2.3 percentage points, benefiting from better product mix and reducing parts of product costs. As 2023 was a year that the industry faced higher inventory costs caused by global inflation on paper and production costs.

Speaker Change: the two thousand and twenty three cycle to that

Speaker Change: Let's now move on to the next slide and explain the breakdown of the adjusted VGA margin.

César Silva: In slide number 6, we observe that the BTDA margin achieved 32.7% in 2024 sales, site-to-date, and there was an increase of 1.1 percentage points from 31.6% in 2023. Firstly, our gross margin increased 2.3 percentage points, benefiting from a better product mix and reducing the impact of product costs, as 2023 was a year that the industry faced higher inventory costs caused by global inflation on paper and production costs. Provision for Doubtful Accounts was stable between the years in line with the revised credit landscape in the fourth quarter of 2023.

Speaker Change: In slide number 6, we observe that the EBITDA margin achieved 32.7% in 2024 sales cited to date and there has been an increase of 1.1 percentage points.

Speaker Change: from third one point six percent two thousand and twenty three

Speaker Change: Firstly, our gross margin has increased 2.3 percentage points, benefiting from better product mix and reducing impact of product costs, as 2023 was a year that the industry faced higher inventory costs caused by global inflation on paper and production costs.

César Silva: Provisional for doubtful accounts was table between the years in line with a revised credit landscape on the 4th quarter of 2023. As a percentage of net revenue, our commercial expenses increased by 2.3 percentage points, driven by higher expense related to business pension and marketing investments. Adjusted G&E expenses improved by 1.7 percentage points, mainly driven by workforce optimization and budgetary discipline measures.

Speaker Change: Provision for doubtful accounts was stable between the years in line with a revised credit landscape on the fourth quarter of 2023.

César Silva: As a percentage of net revenue, our commercial expense increased by 2.3 percentage points, driven by higher expenses related to business pension and marketing investment. Adjusted G&A expenses improved by 1.7 percentage points, mainly driven by workforce optimization and budgetary discipline measures. Moving to slide 7, we show the adjusted net profit. In this second quarter of 2024, adjusted net losses totaled 37 million, a 14 percent decrease compared to adjusted net losses of 32 million in 2023.

Speaker Change: As a percentage of net revenue, our commercial expense is increased by 2.3% points, driven by higher expense related to business pension and marketing investments.

Speaker Change: and adjusted G&A expenses improved by 1.7 percentage points, mainly driven by workforce optimization and budgetary discipline measures.

César Silva: Moving to the slide 7, we show the adjusted net profit.

César Silva: Moving to slide 7, we show the adjusted net profit. There has been an increase of 66% from just a net profit of $66 million in the 2023 sales cycle today. Moving to slide 8, we show the free cash flow evolution. You can see that in the second quarter of 2024, the free cash flow totaled... 380 million, representing a decrease of 59% compared to 94 million in 2020. This quarter was negatively impacted by two main effects, the anticipation of market expenses and increased payments related to 2023 production costs, owing to a seasonal effect on paper and print printing purchases.

Speaker Change: Moving to the slide 7, we show the adjusted net profit.

Speaker Change: In this second quarter of 2024, adjusted net losses totaled 37 million, a 14 percent decrease compared to adjusted net losses of 32 million in 2023.

César Silva: In 15% percent, the increase compared to adjusted net losses of 32,000,000 in 2022. 23. On the right side of this slide, in the 2024 sales cycle to date, adjusted net profits reached 110 million. There has been an increase of 66% for a 100% net profit of 66 million in 2023 sales cycle to date.

César Silva: On the right side of the slide, in the 2024 sales cycle to date, adjusted net profits reached $110 million. There has been an increase of 66% from just a net profit of R$66 million in 2023 sales sold to date. Moving to slide 8, we show the free cash flow evolution. You can see that in the second quarter of 2024, the free cash flow total... 380 million, representing a decrease of 59% compared to 94 million in 2022. This quarter was negatively impacted by two main effects, the anticipation of market expenses and increased payments related to 2023 production costs, owing to a seasonal effect on paper and print printing purchases.

Speaker Change: On the right side of the slide, in the 2024 sales cycle to date, adjusted net profits reached $110 million.

Speaker Change: There has been an increase of 66% from just a net profit of $66,000,000 in 2023 sales up to date.

César Silva: Moving to slide 8, we show the free cash flow evolution. You can see that in the second quarter of 2024, the free cash flow totaled 30 million, representing a decrease of 50% and 90% compared to 94 million in 2023.

Speaker Change: Moving to slide 8, we show the free cash flow evolution.

Speaker Change: You can see that in the second quarter of 2024, the free cash flow totaled...

Speaker Change: 380 million, representing a decrease of 59% compared to 94 million in 2023.

César Silva: This quarter for negatively impacted by too many effects. The anticipation of market expenses and increased payments related to 2023 production costs, all in tune to a seasonal effect of paper and print printing purchase. Considering these effects, we foresee a lower volume of production-related payments in the following quarters and, consequently, we expect to maintain improving the free cash flow for the year end.

Speaker Change: This quarter was negatively impacted by two main effects. The anticipation of marketing expenses and increased payments related to 2023 production costs owing to a seasonal effect of paper and print printing purchases.

César Silva: Considering these effects, we foresee a lower volume of production-related payments in the following quarters and, consequently, we expect to maintain and improve the free cash flow for the year-end. On the right side of the slide, in the 2024 sales cycle to date, our free cash flow reached 90 million, an increase of 3 million from 8 million in 2023. On another important metric, our last 12-month free cash flow to adjusted bit-day conversion rate improved from 26% to 32%, reinforcing the message that cash generation continues to be a key focus area of our business.

César Silva: Considering these effects, we foresee a lower volume of production-related payments in the following quarters and, consequently, we expect to maintain and improve the free cash flow for the year-end. On the right side of the slide, in the 2024 sales cycle to date, our free cash flow reached 90 million, an increase of $3 million from $8 million in 2020. Moving to slide 9, we show the provision for doubtful accounts and Total Expenses with PDA in the second quarter of 2024.

Speaker Change: consider in effects we first see a lower volume of production related payments in the following quarters and consequently respect to maintained and improving the free cash flow for the year end

César Silva: On the right side of this slide, in the 2024 sales cycle to date, our free cash flow reached 90 million, an increase of 3 million from the 8 million in 2023. On another important metric, our last 12 month free cash flow to adjusted bidday conversion rate improved from 26% to 32%. We are enforcing the measures that cash generation continues to be here focus areas of our business.

Speaker Change: On the right side of the slide, in the 2024 sales cycle to date, our free cash flow reached 90 million.

Speaker Change: An increase of 3 million from the 8 million in 2023.

Speaker Change: On another important metric, our last 12-month free cash flow to adjusted bid-day conversion rate improved from 26% to 32%, reinforcing the message that cash generation continues to be a key focus areas of our business.

César Silva: Moving to slide 9, we show the provision for doubtful accounts and total expense with PDA in the second quarter of 2024. The total $10 million represented 3.4% of net revenue, compared to an expense of $1 million in the comparable quarter.

Speaker Change: Moving to slide 9, we show the provision for doubtful accounts.

Speaker Change: and total expense with PDA in the second quarter of 2024. Total 10 million represented 3.4% of net revenue, compared to an expense of 1 million in the comparable quarter.

César Silva: The second quarter of 2023 was positively impacted by a non-recognitive effect of reversion of a provision for doubt for accounts related to a larger retail. And if we normalize this effect in order to calculate the compare with PDA for the 2nd quarter, we achieve it at 2.5% and compare it to 3.4% of this quarter. We had an increase of 0.9% as points. Moving to the right side of this slide, the PDA for 2024 cycle to date amounted 52 million compared to 4 million in the 2023. The provision for doubt for accounts represents a 4% of net revenue and compared to 2023 sales cycle, there has been an increase of 0.6% as points.

César Silva: The second quarter of 2023 was positively impacted by a non-recurring factor of a reversion of a provision for doubtful accounts related to a large retail business. And if we normalize this effect in order to calculate a comparative PDA for the two second quarters, we achieve it at 2.5%. And compared to 3.54% of this quarter, we had an increase of 0.9 percentage points. Moving to the right side of this slide, the PDA for the 2024 cycle to date amounted to $52 million, compared to $4 million in the 2020 cycle.

Speaker Change: The second quarter of 2023 was positively impacted by a non-recurring factor of a reversion of a provision for doubtful accounts related to a larger retail.

Speaker Change: And if we normalize this effect in order to calculate a comparative PDA for the 2nd quarter, we achieved a 2.5% and compared to 3.54% of this quarter we had an increase of 0.9% points.

Speaker Change: Moving to the right side of the slide, the PDA for 2024 cycle to date amounted to 52 million.

César Silva: The provision for doubtful accounts represents 4% of net revenue, and compared to the 2023 sales cycle, there has been an increase of 0.6 percentage points. This increase in the provision for doubtful accounts is related to a more restrictive credit landscape, and, as we explained before, we keep our strategy focusing on contracts in premium brands.

César Silva: The provision for Doubtful Accounts represents 4% of net revenue, and compared to the 2023 sales cycle, there has been an increase of 0.6%. This increase in the provision for DAOs for accounts is related to a more restrictive credit landscape, and, as we explained before, we keep our strategy focusing on contracts in premium brands.

Speaker Change: compar to farign medillion in the two thousand and twenty three

Speaker Change: The provision for doubtful accounts represents a 4% of the net revenue and compared to 2023 sales cycle, there has been an increase of 0.6 percentage points.

César Silva: This is increasing the provision for doubt for accounts is related to a more restrictive credit landscape, and as we explained before, we keep our strategy focusing on contracts in premium brands.

Speaker Change: This increase in the provision for Delta4Accounts is related to a more restrictive credit landscape and as we explained before, we keep our strategy focusing on contracts in premium brands.

César Silva: Moving to the next slide, we observed the average payment terms of vast of accounts receivable portfolio was 152 days in the 2nd quarter of 2015. which is three days higher than the compare-quarting line with the seasonability of our business model.

César Silva: Moving to the next slide, we observe that the average payment terms of Vasta's account receivable portfolio was 152 days in the second quarter of 2004, which is three days higher than the comparable quarter in line with the seasonability of our business model. So moving to slide 11, let's take a closer look at the net-net movement. As of the second quarter of 2024, Vasta had a net debt position of $1,063,000, a $6,000,000 decrease from the previous quarter in financial interest costs and the free cash flow incurred in the quarter, amounting to almost the same in broad stability for the total net debt in this quarter.

César Silva: Moving to the next slide, we observe that the average payment terms of Vasta's accounts receivable portfolio were 152 days in the second quarter of 2016, which is three days higher than the comparable quarter in line with the seasonality of our business model. In comparison to the third quarter of 2023, the beginning of the 2024 sales cycle, the net debt position increased $65 million from $98 million, driven also by the financial interest costs of the second repurchase program, which were partially offset by a positive free cash flow of $90 million in the period.

Speaker Change: Moving to the next slide, we observed that the average payment terms of Vasta's account receivable portfolio was 152 days in second quarter of 2004, which is three days higher than the compared quarter in line with the seasonability of our business model.

César Silva: So moving to slide 11, let's take a closer look on the net that movement. As of the second quarter of 2024, Vasta had a net that position of $1.63 million, a $6 million decrease from the previous quarter and the financial interest costs and the free cash flow incurring the quarter.

Speaker Change: so moving to a l havingving let's take a closer look on the net movement

Speaker Change: As of the second quarter of 2024, Vasta had a net debt position of $1 billion.

Marcelo Werneck: and Marcelo Werneck.

César Silva: Among the most the same in broad stability for the total net that in this quarter. In comparison to the third quarter of 2023, the beginning of 2024 sales cycle, the net that position increased $65 million from $998 million, driven also by the financial interest costs and the second repatriate program, which were partial of such by the positive free cash flow of $90 million in the period.

César Silva: In comparison to the third quarter of 2023, the beginning of the 2024 sales cycle, the net debt position increased $65 million from $98 million, driven also by the financial interest costs in the second repurchase program, which were partially offset by a positive free cash flow of $90 million in the period. And I will conclude my part of this presentation with slide 12, explaining some more detail about our NetApp business, which represents $1,063,000,000 at the end of this quarter.

Speaker Change: but

Speaker Change: In comparison to the third quarter of 2023, the beginning of 2024 sales cycle, the net debt position increased 65 million.

Speaker Change: from R$ 9.98 million, driven also by the financial interest costs.

Speaker Change: and the second report race program, which were partially offset by a depository free cash flow of 90 million in the period.

César Silva: And I will conclude my part of this presentation with slide 12, explaining some more the day about our net debt composition, which represents $1.63 million at the end of this quarter. The amount is composed by the venture issue in the amount of $70, $68 million and accounts payables for business combinations with total $60 million, $60, $18 million, $60, $618 million, reduced by our cash flow availability, which represented $324 million. In the lower left part of this slide, we can see that in the second quarter of 2024, the net debt to last 12 months adjusted with the ratio has increased, increased just 0.06 times from the last quarter, showing stability after having four consecutive quarters of decrease, and now it stands at 2.28 times.

César Silva: And I will conclude my part of this presentation with slide 12, explaining some more detail about our NetApp composition. In the lower left part of this slide, we can see that in the second quarter of 2024, the Net Debt to Last 12 Months Adjusted BTD ratio has increased just 0.06 times from the last quarter, showing stability after having four consecutive quarters of decrease and now stands at 2.28 times. And compared to the second quarter of 2023, the indicator has improved by 2.57 times, a decrease of 0.29 times.

Speaker Change: And I will conclude my part of this presentation with the slide 12, explaining some more detail about our NetApp composition, which represents $1,063,000,000 at the end of this quarter.

César Silva: The amount is composed of venture capital issued in the amount of R$ 70.68 million in accounts payable for business combinations with a total of R$ 60.18 million, reduced by our cash flow availability, which represents R$ 324 million. In the lower left part of this slide, we can see that in the second quarter of 2024, the net debt to last 12 months adjusted for the ratio has increased just 0.06 times from the last quarter, showing stability after having four consecutive quarters of decrease and now stands at 2.28 times.

Speaker Change: The amount is composed by the ventures issued in the amount of $70-$68 million in accounts payable for business combinations with total.

Speaker Change: 60,000,000, 618,000,000, 618,000,000 reduced by our cash flow availability which represented 324,000,000.

Speaker Change: In the lower left part of this slide, we can see that in the second quarter of 2024, the net debt to last 12 months adjusted with the ratio has increased just 0.06 times.

Speaker Change: from the last quarter, showing stability after having four consecutive quarters of decrease and now stands at 2.28 times.

César Silva: And compared to the second quarter of 2023, the indicator has improved from 2.57 times, at the increase of 0.29 times.

César Silva: And compared to the second quarter of 2023, the indicator has improved from 2.57 times, a decrease of 0.29 times. Moving to the right side of the slide represents the net debt that matures for the coming years, substantially related to the accounts payable in the Acquisition of Eleva to be carried out over the next three years and our debentures with related parties, which will take place in 2025. 27th and 28th of August.

Speaker Change: In comparison to the second quarter of 2023, the indicator has improved from 2.57 times, a decrease of 0.29 times.

César Silva: Moving to the right side of this slide, we present the net debt that's matured for the coming years, substantially related to the accounts payables in the acquisition of $11, to be carried out over the next three years. And our debentures with our later parties, which will take place in 2025, 27, and 28 on. Additionally, on June, we can mention that we issued new debentures not convertible into shares, with the amount of $500 million. According to the rest, rate equal to 100% of CDI plus a spread of 1.46% per annum, average for the two sales of these debentures.

César Silva: Moving to the right side of the slide, represents the net debt that matures for the coming year, which substantially relates to the accounts payable for the acquisition of Eleva to be carried out over the next three years and our debentures with related parties which will take place in 2025. 27th and 28th of August. Additionally, in June, we can mention that we issued a new debenture not convertible into shares for an amount of 500 million.

Speaker Change: Moving to the right side of the slide, we present the net debt that matures for the coming years.

Speaker Change: substantially relate to the accounts payables in the acquisition of 11 to be carried out over the next three years and our debentures with related parties which will take place in 2025

Speaker Change: 24 August 2007 to 28 August 2008

César Silva: Additionally, in June, we can mention that we issued a new debenture, not convertible into shares, for an amount of 500 million, and acquired interest at a rate equal to 100% of CDI, plus a spread of 1.46% per annum. Average for the two salaries of this debenture. The defenders aim to strengthen the company's capital structure through the prepayment of certain existing debts and extension of the company's debt maturity profile. The debenture's final payment date is currently set at 59 months from June.

Speaker Change: additionally on june recomion that we issued a new the bankuresps not convertible each shares with mouch of five -curt medium

César Silva: Acquired interest at a rate equal to 100% of CDI plus a spread of 1.46% per annum, the average for the two salaries of this debenture. The defenders aim to strengthen the company's capital structure through the prepayment of certain existing debts and extension of the company's debt maturity profile. The debenture's final payment date is currently set at 59 months from June. In action, we can manage to reduce the total average interest rate of our net debt by 50 base points.

Speaker Change: according the rest ata great equal to one hundred percent of cdii plas i spread of one point forty six percent perod raised for the two ces of these bventoes

César Silva: The debentures are interest-trend and interest-trending. The company's capital is structured through the prepayment of certain existing debts and exchange of the company's debt matured profile. The debentures final payment date is currently set at 59 months from June.

Speaker Change: The dependents aim to strengthen the company's capital structure through the prepayment of certain existing debts and extension of the company's debt maturity profile.

Operator: Hello and thank you for standing by. At this time, I would like to welcome you to the Vasta Platform second quarter, 24 financial results call. All lines has been placed on mute to prevent any background noise. After a speaker remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.

Speaker Change: The debenture's final payment date is currently set at 59 months from June . It is worth to highlight that this...

César Silva: It's for to highlight that this action we can manage to reduce the total average interest rate of our net that by 50 base points.

César Silva: Vortio Highlights, that's the... Actually, we can manage to reduce the total interest rate of our net debt by 50 base points. With that being said, I pass the word to our CEO, Guilherme Melega. Thank you, Cesar. Let's move to the final slide, slide 13.

Speaker Change: Actually, we can manage to reduce the total interest rate of our net debt by 50 base points.

Guilherme Melega: With that being said, I pass the word to our CEO, Guilherme Melega.

Speaker Change: With that being said, I pass the word to our CEO , Guilherme Melega.

Guilherme Melega: Thank you, Cesar.

Guilherme Melega: Let's move to the final slides, slide 13. Let me provide you with an exciting update on our significant avenue of growth of Vasta. As mentioned in the last quarter, the launch of start angle franchise, combining by linguism with academic excellence, continues to ramp up and signify the strategic expansion in our new revenue strengths. Since the last earnings release, we have signed 10 new contracts, and we now have 30 contracts as of this date. Security distributed across 11 states in Brazil and over 300 prospects in negotiation. This broad geographic presence and strong pipeline underscored the robust potential for future growth and market penetration of Start Angle.

César Silva: Thank you, Cesar. Let's move to the final slide, slide 13.

Guilherme Melega: Thank you, Cesar. Let's move to the final slide, slide 13. Let me provide you with an exciting update on our significant avenue of growth of Vasta.

Guilherme Melega: Let me provide you with an exciting update on our significant avenue of growth for VASTA. As mentioned in the last quarter, the launch of the StartAngro franchise, combining bilingualism with academic excellence, continues to ramp up and signifies a strategic expansion in our new revenue streams. Since the last earnings release, we have signed 10 new contracts, and we now have 30 contracts, as of this day, securely distributed across 11 states in Brazil and over 300 prospects in negotiation.

Guilherme Melega: Let me provide you with an exciting update on our significant avenue of growth for VASTA. As mentioned in the last quarter, the launch of the Start Anglo franchise, combining bilingualism with academic excellence, continues to ramp up and signifies a strategic expansion in our new revenue stream. In this quarter, we launched the revitalization project of the Liceu Complex, which will be our start-angle flagship in So Paulo. Besides creating an operating unit with 1,000 students' capacity, the entire historical architecture design will be preserved, and also on this date, we will be launching our enrollment campaign for 2025. Having said that, I will finish our presentation and invite you all to the Q&A session.

Operator: Before we begin, I would like to read a forward-looking statement. During today's presentation, our executives will make forward-looking statements, forward-looking statements generally relate to future events, 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, expectation for future periods, our expectations regarding our strategic product initiatives and their related benefit, and our expectations regarding the market.

Guilherme Melega: As mentioned in the last quarter, the launch of the StartAnglo franchise, combining bilingualism with academic excellence, continues to ramp up and signifies a strategic expansion in our new revenue streams.

Guilherme Melega: Since the last earnings release we have signed 10 new contracts and we now have 30 contracts as of this date.

Speaker Change: securely distributed across 11 states in Brazil and over 300 prospects in negotiation.

Guilherme Melega: This broad geographic presence and strong pipeline underscore the robust potential for future growth and market penetration of startups. In this quarter, we launched the revitalization project of the Liceu Complex, which will be our start-angle flagship in So Paulo. Besides creating an operating unit with 1,000 students' capacity, the entire historical architecture design will be preserved.

Speaker Change: This broad geographic presence and strong pipeline underscore the robust potential for future growth and market penetration of StartAngle.

Operator: Forward-looking statements are based on our management beliefs and assumptions and on information currently available to our management. These risks include those support in the press release that we are issuing today, as well as those more fully described in our filings for the securities and exchange permission. The forward-looking statements in this presentation are based on the information available to us as of today. We should not rely on them as predictions of future events, and we display any obligation to update any forward-looking statements, except as required by law.

Guilherme Melega: In this quarter, we launched the revitalization project of the Lucille Complex, which will be our start angle flagship in São Paulo. Besides creating an operating unit with 1000 students capacity, the entire historical architecture design will be preserved. We are pleased to inform the inauguration event will take place on August 27th. And also, on this date, we will be launching our enrollment campaign for 2025.

Speaker Change: In this quarter, we launched the revitalization project of the Liceu complex, which will be our start angle flagship in São Paulo.

Speaker Change: Besides creating an operating unit with 1,000 students capacity, the entire historical architecture design will be preserved. We are pleased to inform the inauguration event will take place on August 27th.

Guilherme Melega: We are pleased to inform you that the inauguration event will take place on August 27, and also on that date, we'll be launching our enrollment campaign for 2025. Having said that, I will finish our presentation and invite you all to the Q&A session. Thank you, the floor is now open to your questions, so to ask a question this time, please press star then the number 1 on your telephone keypad. We are going to pause for just a moment to compile the Q&A list. Our first question comes from Lucca Marquezini from ITAU. Good evening, everyone, and thank you for taking our question. I would notice that the BQG business unit did not contribute to the consolidated revenue in the quarter.

Speaker Change: oh

Speaker Change: and also on this date we'll be launching our enrollment campaign for 2025.

Operator: In addition, management-made reference non-IFRS financial measures on this call. The non-IFRS financial measures are not intended to be considered in isolation or as substitute for results prepared in accordance with IFRS.

Guilherme Melega: Having said that, I finish our presentation and write you all to the Q&A session. Thank you. The floor is now open for your question.

Speaker Change: Having said that, I finish our presentation and invite you all to the Q&A session.

Operator: So to ask the questions this time, please press start at the number 100 telephone keypad. We are going to pause for just a moment to go buy the Q&A roster.

Speaker Change: Thank you. The floor is now open for your questions. So to ask a question this time, please press star then the number 1 on your telephone keypad.

Operator: We are going to pause for just a moment to compile the Q&A list.

César Silva: With that being said, I would now like to turn the conference over to CES Ela Silva, Vasta Silva. Please, go ahead. Thank you. Thank you, Sather.

Speaker Change: We are going to pause for just a moment to compile the Q&A roster.

Lucca Marquezini: Our first question comes from Luca Marquezine from IPA. Good evening, everyone, and thank you for taking our question. We noticed that the B2G business unit did not contribute to the consolidated revenue in the quarter. So can you please provide more color on the seasonality of the segment and what we should expect for the second semester of this year for this vertical. Thank you.

Guilherme Melega: So can you please provide more color on the seasonality of the segment and what we should expect for the second semester of this year for this vertical? Thank you. Thank you, Lucca.

Speaker Change: Our first question comes from Luca Marchegni from ITAU.

Luca Marchegni: Good evening, everyone, and thank you for taking our questions.

Guilherme Melega: Thank you, Luca. Thanks for your question. Yes, we did not record any new contracts of B2G. As we mentioned before, we prospect only large public schools network, so those contracts take time. And I would like to reinforce that we have a heated pipeline for B2G, and we maintain a very positive view for this business. Last year we recorded 80 million reais in revenue for B2G. We do expect growth for this year, and we are expecting new contracts to come up in Q3 and Q4. That's the update for B2G.

Guilherme Melega: Thank you, Luca. Thanks for your question. Yes, we did not record any new contracts for B2G. As we mentioned before, we prospect only large public school networks, so those contracts take time. I would like to reinforce that we have a heated pipeline for B2G and we maintain a very positive view of this business. Last year, we recorded R$80 million in revenue for B2G. We do expect growth for this year.

Guilherme Melega: Thanks for your question. Yes, we did not record any new contracts for B2G, as we mentioned before. We prospect only large public school networks, so those contracts take time. And I would like to reinforce that we have a heated pipeline for B2G, and we maintain a very positive view of this business. Last year, we recorded 80 million reais in revenue for B2G. We do expect growth for this year. And we are expecting new contracts to come up in Q3 and Q4. That's the update for B2G.

Speaker Change: thank you look thanks for your question yes we did not record anya new contract of btwog as we mentioned before

Speaker Change: We prospect only large public schools network, so those contracts take time.

Speaker Change: I would like to reinforce that we have a heated pipeline for B2G and we maintain a very positive

Speaker Change: view for this business. Last year we recorded R$80 million in revenue for B2G. We do expect growth for this year.

Speaker Change: and we are expecting new contracts to come up in Q3 and Q4. That's the update for B2G.

Lucca Marquezini: That's very cool. Thank you.

Operator: It's very clear. Thank you. Our next question comes from Mirela Oliveira, from Bank of America, with me, everyone, a question on my side. You guys give us... Guilherme Marquezini, Lucas Nagano, [inaudible] and also on the ACV for next year.

Speaker Change: to

Speaker Change: that's very clearly thankiny

Mirela Oliveira: Our next question comes from Mirela Oliveira from Bank of America.

Speaker Change: Our next question comes from Mirela Oliveira.

Mirela Oliveira: Good evening, everyone. Quick question on my side on the commercial expenses. Could you guys give us some clue here on why this has been increasing? And also on the ACV for next year, I know it's still soon to have a feeling around that. But if there's anything you could comment on the commercial cycle, that would be great. Thank you.

Mirela Oliveira: Good evening, everyone. A quick question on my side on the commercial expenses.

Mirela Oliveira: Could you guys give us some clue here on why this has been increasing?

Guilherme Melega: I know it's still too soon to have any specifics, but if there's anything you can think of, comment on the commercial cycle. Thank you very much, Mirela, for your questions. Let me give you some color about our sales cycle. We are very excited about our first semester. We are definitely growing significantly from the same season last year. But, as you all know, the first semester normally represents between 35% and 40% of the total sales cycle.

Speaker Change: and also on the acvfor next year i know it's still soon to have a feeling around that that if there is anything you could comment on the commercial cycle that will be great thank you

Guilherme Melega: Thank you very much, Mirela, for your questions.

Guilherme Melega: Let me give you some caller about our sales cycle. We are very excited with our first semester. We are definitely growing significantly from the same season last year.

Speaker Change: Thank you very much, Mirela, for your questions.

Speaker Change: Let me give you some color about our sales cycle. We are very excited with our first semester we are

Guilherme Melega: But, as you all know, the first semester normally represents between 35 and 40% of the total sales cycle. So far, we are really excited. We are growing rapidly.

Speaker Change: But, as you all know, the first semester normally represents between 35% and 40% of the total sales cycle.

Guilherme Melega: So, so far, we are really excited. We are growing rapidly, but we'll give the guidance for the 2025 sales cycle at this year end. So far, so good.

Speaker Change: So, so far, we are really excited, we are growing rapidly, but we will give the guidance for 2025 sales cycle at this year end. So far, so good.

Guilherme Melega: But we'll give the guidance for 2025 sales cycle at this year end. So far, so good.

Guilherme Melega: And going to your question about commercial expenses, we definitely are investing more this season. We have a new GTM for 2025. We are investing in key accounts and in regional expenses to grow fast in learning systems and complementary products. So we are investing to gain market share in learning systems and keep the good momentum of complementary products. So you can expect higher commercial expenses for 2024 since we are harvesting the 2025 sales cycle.

Guilherme Melega: And going to your question about commercial expenses, we definitely are investing more on this season. We have a new GTM for 2025. We are investing in key accounts in regional expenses to grow fast in learning systems and complementary products. So we are investing in gain market sharing learning systems and keep the good momentum of the complementary products. So you can expect higher commercial expenses for 2024 since we are harvesting the 2025 sales cycle. We do expect a significant growth for 2025. And we are investing in 2024.

Speaker Change: and

Speaker Change: Going to your question about commercial expenses.

Speaker Change: we definitely are investing more on this season we have a new gm

César Silva: I will now turn back to Sousa Silva, who talked about the financial results of the quarter in the 2024 cycle to date. Thank you, Malagan.

Speaker Change: For 2025, we are investing in key accounts.

Speaker Change: in regional expenses to grow fast in learning systems and complementary products. So we are investing in gain market share in learning systems and keep the good momentum of the complementary products.

César Silva: In Jesus' light, we present the composition of fastest net revenue. On the left side, you can observe the organic year-no-year growth in total net revenue for the second quarter, which increased by 8.5%. We are reaching 290.4 million reais. Total sub-exclusion revenue achieved in this quarter, 280.8 million. Many due to seasonality, seasonality, effectiveness mentioned before. This number represents a 32% growth compared to 2023. Non-sub-exclusion, which now represents only 7% of the total revenue dropped 26% to 15 million.

Speaker Change: So you can expect higher commercial expenses.

Speaker Change: for 2024 since we are harvesting the 2025 sales cycle. We do expect a significant growth for 2025 and we are investing in 2024.

Guilherme Melega: We do expect significant growth for 2025, and we are investing in 2024. Our next question comes from Lucas Nagano from Morgan Stanley. Hey, good evening, Melega, Cesar, thanks for taking our questions. I have two questions.

Mirela Oliveira: That's perfect. Thank you.

Speaker Change: a perfect thank you

Lucas Nagano: Our next question comes from Lucas Nagano, from Morgan's name. Hey, good evening, Malaga. Thanks for taking our questions.

Speaker Change: Our next question comes from Lucas Nagano from Morgan Stanley .

César Silva: And in the government sector, in this quarter, we did not generate new revenue. As you can see in Jesus' light, it represented 4 million in the second quarter of the last year. However, in this sales cycle to date, considering the revenue performance in the first quarter of the year, we already achieved a 71% growth in this line of bid.

Lucas Nagano: Good evening, Melega, Cedr, thanks for taking our questions.

Lucas Nagano: I have two questions. The first is a follow-up on the SP for the next year. If you could break down on what is driving this better growth, how competition is behaving. If it's the same as last year's or if it's more behaved now. Because we are reaching, like we know that we're like a penetration of learning is increasing. And what is what's driving this faster growth for this year.

Guilherme Melega: The first is a follow-up on the ECB's interest rates for next year. If you could break it down on what is driving this factor growth, how competition is behaving, if it's the same as last year's or if it's... more behaved now because we are reaching, we know that we're like the penetration of learning is increasing, and what is driving this faster growth for this year. And the second question is related to start and glue you. Your main competitor announced a similar investment, and we wanted to get Thank you. Thank you very much.

César Silva: I have two questions. The first is a follow-up on the ECB for next year. If you could break it down on what is driving this factor growth, how competition is behaving, if it's the same as last year or if it's...

Lucas Nagano: I have two questions. The first is a follow-up on the ACB for next year. If you could break it down on what is driving this fatter growth, how competition is behaving, if it's the same of last year's or if it's...

Speaker Change: oh

César Silva: Williams. Moving to right side of the slide, we analyze the net revenue for the 2024 sales cycle to date. We activate an organic net revenue growth of 11% in the sales cycle to date, amounting to 1,390 million reais. The main factor should be the exceptional performance of this war. Firstly, the subscription revenue has increased 14% reaching 1,150,2 million and continues to be the major contributor to our total revenue, representing 8.8% of the revenue share. No subscription revenue has expected drop at 3% to 8.8 million. And the overall revenue in the sales cycle to date. In design of business, there has been an increase of 71% compared to last year.

Speaker Change: It's more behaved now because we are reaching like we know that we're like the penetration of learning is increasing and what is

Lucas Nagano: And second question is related to start angle. You, your main competitor, announced a similar investments. And we wanted to get some perspectives on how this interferes in your business plan. And where do you see your competitive advantages. Thank you.

Speaker Change: what driving this faster growth for this year and the second question is related to start ang le you remain competitor announ similar investments

Speaker Change: and we wanted to get some perspective on how this interferes in your business plan and where you see your competitive advantages. Thank you.

Guilherme Melega: Thank you very much. Let me give you a little bit more color about ACV growth. Our growth is based on regional focus. We are focusing on very heavily on regions that we do not have the average market share of Vasta, so we do focus on where we can grow and we are investing on that.

Guilherme Melega: Let me give you a little bit more color about ACV growth. Our growth is based on regional focus. We are focusing very heavily on regions that we do not have the average market share of Vasta. So we do focus on where we can grow, and we are investing in that. And for competitive reasons, I cannot give you more color about that, but we do have a strategy to grow market share, thinking about regional opportunities. And complementary products keep having very good momentum. Schools need to differentiate themselves, and complementary has been shown as a very good way for schools to enhance their offer to their community.

Speaker Change: Thank you very much.

Speaker Change: let me give you a little bit more core about basv growth

Speaker Change: Our growth is based on regional focus, we are focusing on

Speaker Change: very heavily on regions that we do not have.

Speaker Change: the average market share of Vasta, so we do focus on where we can grow and we are investing on that.

César Silva: Moving to slide number 5, we can talk about adjusted BDA. In this quarter, our adjusted BDA amounted to 26 million, a decrease of 36% from the 41 million the second quarter of 2023.

Guilherme Melega: And for competitive reasons, I cannot give you more color about that, but we do have a strategy to grow market share, thinking about regional opportunities and complementary products. Keep having a very good momentum. Schools need to differentiate themselves, and complementary has been shown as a very good way for the schools to enhance their offer to their community. So I would say that in the past, complementary products used to be across sale on our base, but now it has its own market. We sell to new schools that does not belong to our base, so the growth comes from regain market share and from complementary products on ACV.

Speaker Change: And for competitive reasons, I cannot give you more color about that, but we do have a strategy to grow market share, thinking about regionals.

César Silva: Mainly due to a higher commercial cost and no recurring positive effects in the second quarter of 2023, of our version, of our provision for doubtful accounts related to a large retail customer. On the right side, we see that adjusted BDA in 2024 sales cycle to date increased by 15%, and reached 428 million, with a margin of 32.7% or 1.1 percentage points above the 2023 cycle to date. Let's now move on to the next slide and explain the breakdown of the adjusted BDA margin.

Speaker Change: opportunities and complementary products keep having a very good momentum. Schools need

Speaker Change: to differentiate themselves and complementary has been shown as a very good way for the schools to enhance their offer to their community.

Guilherme Melega: So I would say that in the past, complementary products used to be a cross sale on our base, but now it has its own market. We sell to new schools that do not belong to our base. So the growth comes from regaining market share and from complementary products on ACV. Regarding Start, we are very confident about our business model; we launched it last year, and we have been investing in it for two years. So we do believe that we have a very strong base to keep growing. Our competitive advantage definitely comes from our brands. It's based on the Anglo brand, which has very strong academic results.

Speaker Change: so i would say that in the past complementary products used to be a across sale on our base

Speaker Change: But now it has its own market. We sell to new schools that does not belong to our base. So the growth comes from regaining market share and from complementary products on ACV.

César Silva: In design number 6, we observed that the average day margin achieved 32.7% in 2024 sales cycle to date, and there has been an increase of 1.1 percentage points from 31.6% in 2023. Firstly, our gross margin has increased to 2.3 percentage points, benefiting from better product mix and reducing parts of product costs.

Guilherme Melega: Regarding start, we are very confident about our business model. We launched it last year, and we have been investing on it for two years. So we do believe that we have a very strong base to keep growing. Our competitive advantage definitely comes from our brands. It's based on the Anglo brand. We have had a very strong academic results, and the building was that we developed with Macmillan that has shown exceptional results on our partner schools. So we have a very strong belief that we have all the way to grow on the start.

Guilherme Melega: And the billing that we developed with Macmillan has shown exceptional results in our partner schools. So we are very, we strongly believe that we have all the way to grow from the start. And additionally, we are investing in a very sound flagship here in Sao Paulo, Liceu, which is a very traditional school, more than 100 years old, that is switching to Start and will be launching it this month of August. So we do believe that Start has a very..., a great future in our business and is a growth avenue for Vasta. Very clear, Melega.

Speaker Change: Regarding Start, we are very confident about our business model.

Guilherme Melega: Thank you very much last year, and we have been investing in it for two years. So we do believe that we have a very strong base to keep growing. Our competitive advantage definitely comes from our brands. It's based on the Anglo brand, which has very strong academic results. And the billing that we developed with Macmillan has shown exceptional results for our partners. So we do, we are very, we strongly believe that we have all the way to grow from the start.

Speaker Change: last year and we have been investing on it for two years

Speaker Change: So we do believe that we have a very strong base to keep growing. Our competitive advantage definitely comes from...

César Silva: As 2023 was a year that the industry faced higher inventory costs caused by global inflation on paper and production costs. Provisional for doubtful accounts was table between the years in line with a revised credit landscape on the 4th quarter of 2023. As a percentage of net revenue, our commercial expenses increased by 2.3 percentage points, driven by higher expense related to business pension and marketing investments.

Speaker Change: our brand it's basic on the

Speaker Change: Anglo brand which has a very strong academic result.

Speaker Change: and the billing with that we developed with with mcmillan that has shown exceptional results on our partner schools

Speaker Change: So we do, we are very, we strongly believe that we have all the way to grow on start.

Guilherme Melega: And additionally, we are investing in a very sound flagship here in Sao Paulo, Liceu, which is a very traditional school, more than 100 years old, that is switching to Start and will be launching it this month of August. So we do believe that Start has a very..., a great future in our business and is a growth avenue for Vasta.

Guilherme Melega: And additionally, we are investing on a very sound flagship here in Sao Paulo, which is a very traditional school, more than 100 years old, that are switching to start and will be launching it this month of August. So we do believe that start has a very great future in our business and is a growth avenue for Vasta.

Speaker Change: and...

Speaker Change: Additionally, we are investing on a very sound flagship here in São Paulo, Liceu, which is a very traditional school, more than 100 years old, that are switching to start and will be launching it this month of August .

César Silva: Adjusted G&E expenses improved by 1.7 percentage points, mainly driven by workforce optimization and budgetary discipline measures.

César Silva: Moving to the slide 7, we show the adjusted net profit. In 15% percent, the increase compared to adjusted net losses of 32,000,000 in 2022. 23.

Speaker Change: weare we do believe that start has a very

Speaker Change: A great future in our business and is a growth avenue for Vasta.

Lucas Nagano: Very clear, Melica. Thank you. I don't know further questions this time.

César Silva: Very clear, Melega. Thank you.

Speaker Change: Very clear, Melega. Thank you.

César Silva: On the right side of this slide, in the 2024 sales cycle to date, adjusted net profits reached 110 million. There has been an increase of 66% for a 100% net profit of 66 million in 2023 sales cycle to date.

Guilherme Melega: Thank you. There are no further questions at this time, so I'll turn the call back over to Guilherme Melega, Vasta's CEO. Thank you all for participating in the Vasta Q2 conference call. Let me reemphasize that in our B2B business, we are very pleased with the sales campaign for 2025. Our GTM strategy has shown great results. We'll give more color at the year end about that. And both of our growth opportunities, B2G, we have a hot pipeline, and we do expect to have new contracts very soon.

Guilherme Melega: So I'll turn the call back over to Guillermo Melica, Vasta CEO. Thank you all to participate on Vasta Q2 conference call. Let me reenphasize that in our B2B business. We are very pleased with the sales campaign for 2025. Our GTM strategy has showing great results.

Speaker Change: There are no further questions at this time, so I'll turn the call back over to Guilherme Melega, Vasta CEO .

Guilherme Melega: Thank you all for participating in the Vasta Q2 conference call. Let me reemphasize that in our B2B business, we are very pleased with the sales campaign for 2025. Our GTM strategy has shown great results. We'll give more color at the year end about that. And both of our growth opportunities, B2G, we have a heated pipeline, and we do expect to have new contracts very soon. And we start, and keep growing ahead on our expected curve.

Speaker Change: what

Guilherme Melega: Thank you all to participate on Vasta Q2 conference call. Let me re-emphasize that

Speaker Change: in our B2B business.

Speaker Change: we are very pleased with the saes campaign for two thousand and twenty five our gtm strategy has

Guilherme Melega: So we'll give more caller at the end of all that. Both our growth opportunities, B2G; we have a heated pipeline expect to have new contracts very soon. And we start, keeps growing ahead on our expected curve. And we also have great expectations on that. So our core business is doing good, and our both growth strategy avenues are also doing growth and performing ahead of our curve.

Speaker Change: showing great results. We'll give more color at the year-end about that. And both our growth opportunities, B2G, we have a heated pipeline and we do expect to...

César Silva: This quarter for negatively impacted by too many effects. The anticipation of market expenses and increased payments related to 2023 production costs, all in tune to a seasonal effect of paper and print printing purchase. Considering these effects, we foresee a lower volume of production related payments in the following quarters and, consequently, we expect to maintain improving the free cash flow for the year end.

Guilherme Melega: And we start, and keep growing ahead of our expected curve. We also have great expectations for that. So our core business is doing well, and our both growth strategy avenues are also growing and performing ahead of our curve. So that's for Q2. Looking forward to seeing you all on the Q3 conference call. Thank you all. The meeting is now concluded.

Speaker Change: to have new contracts very soon, and UNDO Start keeps growing ahead on our expected curve.

Guilherme Melega: We also have great expectations for that. So our core business is doing well, and both growth strategy avenues are also growing and performing ahead of our curve. So that's for Q2. Looking forward to seeing you all on the Q3 conference call.

Speaker Change: We also have great expectations on that, so our core business is doing good and our both growth strategy avenues are also doing growth and performing ahead of our curves.

César Silva: On the right side of this slide, in the 2024 sales cycle to date, our free cash flow reached 90 million, an increase of 3 million from the 8 million in 2023. On another important metric, our last 12 month free cash flow to adjusted bidday conversion rate improved from 26% to 32% were enforcing the measures that cash generation continues to be here focus areas of our business.

Guilherme Melega: So that's for Q2. Looking forward to see you all in Q3 conference call. Thank you all.

Speaker Change: So that's for Q2. Looking forward to see you all in Q3 conference call.

Operator: The meeting is now concluded. The webinar is connected.

Speaker Change: Thank you all.

César Silva: Moving to slide 9, we show the provision for doubt for the accounts. Total expense with PDA in the second quarter of 2024, total 10 million represented 3.4% of net revenue compared to an expense of 1 million in the comparable quarter. The second quarter of 2023 was positively impacted by a non-recognitive effect of reversion of a provision for doubt for accounts related to a larger retail.

César Silva: And if we normalize this effect in order to calculate the compare with PDA for the 2nd quarter, we achieve it at 2.5% and compare it to 3.4% of this quarter we had an increase of 0.9% as points. Moving to the right side of this slide, the PDA for 2024 cycle to date amounted 52 million compared to 4 million in the 2023. The provision for doubt for accounts represents a 4% of net revenue and compared to 2023 sales cycle, there has been an increase of 0.6% as points. This is increasing the provision for doubt for accounts is related to a more restrictive credit landscape and as we explained before, we keep our strategy focusing on contracts in premium brands.

César Silva: Moving to the next slide, we observed the average payment terms of vast of accounts receivable portfolio was 152 days in the 2nd quarter of 2015, which is three days higher than the compare-quarting line with the seasonability of our business model.

César Silva: In comparison to the third quarter of 2023, the beginning of 2024 sales cycle, the net that position increased $65 million from $998 million, driven also by the financial interest costs and the second repatriate program, which were partial of such by the positive free cash flow of $90 million in the period. And I will conclude my part of this presentation with the slide 12, explaining some more the day about our net debt composition, which represents $1.63 million at the end of this quarter.

César Silva: The amount is composed by the venture issue in the amount of $70, $68 million and accounts payables for business combinations with total $60 million, $60, $18 million, $60, $618 million, reduced by our cash flow availability, which represented $324 million. In the lower left part of this slide, we can see that in the second quarter of 2024, the net debt to last 12 months adjusted with the ratio has increased, increased just 0.06 times from the last quarter, showing stability after having four consecutive quarters of decrease, and now it stands at 2.28 times.

César Silva: And compared to the second quarter of 2023, the indicator has improved from 2.57 times, at the increase of 0.29 times. Moving to the right side of this slide, we present the net debt that's matured for the coming years, substantially related to the accounts payables in the acquisition of $11, to be carried out over the next three years. And our debentures with our later parties, which will take place in 2025, 27 and 28 on.

César Silva: Additionally, on June, we can mention that we issued a new debentures not convertible into shares, with the amount of $500 million. According to the rest, rate equal to 100% of CDI plus a spread of 1.46% per annum, average for the two sales of these debentures. The debentures are interest-trend and interest-trending. The company's capital is structured through the prepayment of certain existing debts and exchange of the company's debt matured profile. The debentures final payment date is currently set at 59 months from June. It's for to highlight that this action we can manage to reduce the total average interest rate of our net that by 50 base points.

Guilherme Melega: With that being said, I pass the word to our CEO Guilherme Melega. Thank you, Cesar. Let's move to the final slides, slide 13. Let me provide you with an exciting update on our significant avenue of growth of Vasta. As mentioned in the last quarter, the launch of start angle franchise, combining by linguism with academic excellence, continues to ramp up and signify the strategic expansion in our new revenue strengths. Since the last earnings release, we have signed 10 new contracts and we now have 30 contracts as of this date.

Guilherme Melega: Security distributed across 11 states in Brazil and over 300 prospects in negotiation. This broad geographic presence and strong pipeline underscored the robust potential for future growth and market penetration of start angle. In this quarter, we launched the revitalization project of the Lucille Complex, which will be our start angle flagship in São Paulo. Besides creating an operating unit with 1000 students capacity, the entire historical architecture design will be preserved.

Guilherme Melega: We are pleased to inform the inauguration event will take place on August 27th. And also in this date, we will be launching our enrollment campaign for 2025.

Guilherme Melega: Having said that, I finish our presentation and write you all to the Q&A session. Thank you.

Operator: The floor is now open for your question. So to ask the questions this time, please press start at the number 100 telephone keypad.

Operator: We are going to pause for just a moment to go buy the Q&A roster.

Lucca Marquezini: Our first question comes from Luca Marquezine from IPA. Good evening everyone and thank you for taking our question. We noticed that the B2G business unit did not contribute to the consolidated revenue in the quarter.

César Silva: So can you please provide more color on the seasonality of the segment and what we should expect for the second semester of this year for this vertical. Thank you. Thank you Luca. Thanks for your question. Yes, we did not record any new contracts of B2G. As we mentioned before, we prospect only large public schools network, so those contracts take time. And I would like to reinforce that we have a heated pipeline for B2G and we maintain a very positive view for this business.

César Silva: Last year we recorded 80 million reais in revenue for B2G. We do expect growth for this year and we are expecting new contracts to come up in Q3 and Q4. That's the update for B2G. That's very cool. Thank you.

Mirela Oliveira: Our next question comes from Mirela Oliveira from Bank of America.

César Silva: Good evening everyone. Quick question on my side on the commercial expenses. Could you guys give us some clue here on why this has been increasing? And also on the ACV for next year, I know it's still soon to have a feeling around that. But if there's anything you could comment on the commercial cycle, that would be great.

César Silva: Thank you. Thank you very much, Mirela, for your questions. Let me give you some caller about our sales cycle. We are very excited with our first semester. We are definitely growing significantly from the same season last year. But as you all know, the first semester normally represents between 35 and 40% of the total sales cycle. So far, we are really excited. We are growing rapidly.

César Silva: But we'll give the guidance for 2025 sales cycle at this year end. So far, so good. And going to your question about commercial expenses, we definitely are investing more on this season. We have a new GTM for 2025. We are investing in key accounts in regional expenses to grow fast in learning systems and complementary products. So we are investing in gain market sharing learning systems and keep the good momentum of the complementary products. So you can expect higher commercial expenses for 2024 since we are harvesting the 2025 sales cycle. We do expect a significant growth for 2025. And we are investing in 2024.

César Silva: That's perfect. Thank you.

Lucas Nagano: Our next question comes from Lucas Nagano, from Morgan's name. Hey, good evening, Malaga. Thanks for taking our questions.

César Silva: I have two questions. The first is a follow up on the SP for the next year. If you could break down on what is driving this better growth, how competition is behaving. If it's the same of last year's or if it's more behaved now. Because we are reaching, like we know that we're like a penetration of learning is increasing. And what is what's driving this faster growth for this year.

César Silva: And second question is related to start angle. You your main competitor announced a similar investments. And we wanted to get some perspectives on how this interferes in your business plan. And where you see your competitive advantages. Thank you. Thank you very much.

César Silva: Let me give you a little bit more color about ACV growth. Our growth is based on regional focus. We are focusing on very heavily on regions that we do not have the average market share of Vasta, so we do focus on where we can grow and we are investing on that. And for competitive reasons, I cannot give you more color about that, but we do have a strategy to grow market share thinking about regional opportunities and complementary products.

César Silva: Keep having a very good momentum. Schools need to differentiate themselves and complementary has been shown as a very good way for the schools to enhance their offer to their community. So I would say that in the past complementary products used to be across sale on our base, but now it has its own market. We sell to new schools that does not belong to our base, so the growth comes from regain market share and from complementary products on ACV.

César Silva: Regarding start, we are very confident about our business model. We launched it last year, and we have been investing on it for two years. So we do believe that we have a very strong base to keep growing. Our competitive advantage definitely comes from our brands. It's based on the Anglo brand. We have had a very strong academic results and the building was that we developed with Macmillan that has shown exceptional results on our partner schools.

César Silva: So we have very strong belief that we have all the way to grow on the start. And additionally, we are investing on a very sound flagship here in Sao Paulo, which is a very traditional school, more than 100 years old, that are switching to start and will be launching it this month of August. So we do believe that start has a very great future in our business and is a growth avenue for Vasta.

Lucas Nagano: Very clear, Melica, thank you. I don't know further questions this time.

Guilherme Melega: So I'll turn the call back over to Guillermo Melica, Vasta CEO.

Guilherme Melega: Thank you all to participate on Vasta Q2 conference call. Let me reenphasize that in our B2B business. We are very pleased with the sales campaign for 2025. Our GTM strategy has showing great results. So we'll give more caller at the end of all that. Both our growth opportunities, B2G, we have a heated pipeline expect to have new contracts very soon. And we start, keeps growing ahead on our expected curve. And we also have great expectations on that. So our core business is doing good and our both growth strategy avenues are also doing growth and performing ahead of our curve.

Guilherme Melega: So that's for Q2.

Guilherme Melega: Looking forward to see you all in Q3 conference call.

Guilherme Melega: Thank you all.

Q2 2024 Vasta Platform Ltd Earnings Call

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