Q3 2025 Vasta Platform Ltd Earnings Call
Speaker #3: Thank you for standing by . My name is Kathleen , and I will be your conference operator today . At this time , I would like to welcome Vasta Platform third quarter , 2020 financial results .
Speaker #3: All lines have been placed everyone to the to prevent any background noise . After the speakers remarks , there will be a question on mute answer session .
Speaker #3: If you would like to ask a question during this time , simply press star , followed by the number one on your telephone keypad .
Speaker #3: And if you would like to withdraw your and question , press the star one again . Before we begin , I would like to read a forward looking statement during today's presentation .
Speaker #3: Our executives will make forward looking statements . Forward looking statements generally relate to future events or future financial or operating performance , and involve known and unknown risks , uncertainties and other factors that may cause our actual results to differ materially from those contemplated by these forward looking statements .
Speaker #3: 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 the related benefits and our expectations regarding the market .
Speaker #3: 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 .
Speaker #3: The forward looking statements in this presentation are based on the information available to us as of today . You should not rely on them as predictions of the future events .
Speaker #3: And we disclaim any obligation to update any forward looking statements except as required by law . In addition , the management may reference non-IFRS financial measures on this call .
Speaker #3: The non-IFRS Financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with IFRS . And now I would like to turn the call over to Cesar Silva , the CEO of the CFO and Guilherme Melega , the CEO .
Speaker #3: Please go ahead .
Speaker #4: Good evening , everyone , and thank you for joining us in this conference call to discuss Vasta Platform third quarter of 2025 results .
Speaker #4: I'm Cesar Silva CFO , and today we have the presence of Guilherme Melega CEO , who will be joining me on the call .
Speaker #4: Let me now hand over the floor to Guilherme Melega , our CEO , to make his opening statement . Thank you . Thank you all for participating in our earnings release call .
Speaker #4: Let's move to slide number three , which summarizes the key highlights of the 2025 sales cycle . We are closing the final quarter of this commercial cycle , and we are pleased with the results achieved .
Speaker #4: Once again , we delivered consistent growth in revenue and profitability while maintaining strong operational discipline . Cash flow performance and advancing our strategy , priorities .
Speaker #4: Starting with subscription revenue, we grew 14.3% compared to the previous cycle, supported by ACV bookings of $1,000,000,505, $52 million, and net revenue up 13.6%.
Speaker #4: This performance reflects the resilience of our core business and the successful execution of our commercial strategy . And we're and we have demonstrated the ability to sustain double digit growth in our core business for the fourth consecutive year .
Speaker #4: Our complementary solutions continued to expand at an accelerated pace , growing 25.3% year over year , reinforcing the strength of our ecosystem and the value we bring to schools with our complete portfolio , product portfolio in the big segment during this quarter alone , we recorded revenues of 17 million reais from several new customers and from the state of para contract totaling 67 million reais in the 2025 sales cycle .
Speaker #4: This demonstrates stability in this revenue stream . Compared to 2020 . For as a result , net revenue in 2025 sales cycle reached 1,737,000,000 reais , a 14% increase compared to the same period in 2020 .
Speaker #4: For . This growth was driven by the successful conversion of ACV bookings into revenue , along with a strong performance of our complementary solutions .
Speaker #4: As mentioned before , in profitability adjusted EBITDA reached 494 million reais , a 10% increase compared to 2024 . The margin was 28.4% , slightly below last year's 29.4% , mainly due to a different product mix and increased investments in marketing and growth initiatives .
Speaker #4: Despite these factors , we maintain a healthy profitability levels , demonstrating our ability to balance expansion with operational efficiencies . A major highlight of this cycle was free cash flow , which totaled 316 million reais .
Speaker #4: 117% higher than last cycle . Our last 12 months free cash flow to EBITDA conversion rate improved , improved significantly to 64% , up 31.5 percentage points from 2024 .
Speaker #4: This improvement was driven by efficiency measures and disciplined cash management , including early collections and automation , in financial process . We also continue to make progress in the leveraging with net debt to last 12 months .
Speaker #4: EBITDA at 1.75 times , down from 2.32 times in the Q3 2024 . Beyond this financial metrics , we continue to make progress in strategic areas in the B2C segment .
Speaker #4: We advanced our diversification strategy . Strategy , adding new municipalities to our portfolio . This reinforce our commitment to expand access to quality education through partnerships with public institutions in bilingual education .
Speaker #4: Our start franchise remains a key growth avenue . We now operate six units , which includes four schools implemented this year and have signed over 50 contracts .
Speaker #4: Besides a robust pipeline with more than 300 prospects , this positioned us well to capture demand from premium bilingual education in the coming cycles .
Speaker #4: It is worth mentioning we expect to launch eight new operational units for the upcoming year . Finally , as we look ahead to 2026 , innovation remains the center of our strategy .
Speaker #4: For AI will introduce new tools focusing on equity and personalized learning , including the individualized Educational Plan for EP , which will empower educators with tailored pedagogical recommendations and foster inclusive practice .
Speaker #4: In summary , these results confirm the resilience of our business model and the successful execution of our strategy . We are confident in our ability to sustain growth , enhance profitability and deliver value to all our shareholders .
Speaker #4: Shareholders . I will now turn back to Cesar Silva , who walk us through the financial results . Thank you . Malaga . Let's move on to number five .
Speaker #4: In this slide , we present the composition of Foster's net revenues . On the left side you can observe the organic growth for the third quarter .
Speaker #4: In total net revenues , which increased by 13.4% , reaching 250 million . S . Cost of revenue achieved in the third quarter of 2025 , 212 million , a 3% increase compared to the same quarter of 2024 .
Speaker #4: Non-subscription revenue increased 45% to 21 million , supported by higher enrollment in the start and flagship schools and Anglo-French courses . Moving to the right side , you have the numbers of net revenue for the 2025 sales cycle .
Speaker #4: We achieved an organic net revenue growth of 13.6% in the 2025 sales cycle , amounting to 1,737,000,000 . The main factors for this performance were firstly , the subscription revenue has increased 14.3% , which 1,552,000,000 and continues to be the major contributor to our total revenue , representing 89.3% of the net of the revenue share .
Speaker #4: As the number four of this presentation , Non-subscription revenue increased 16% to 119 million reais . This growth is mainly driven by two effects the new revenue from our our flagship start angle .
Speaker #4: The sale in Sao Paulo that did not exist in 2024 , and the growth in the number of students in the university course , which enrolled 21% more students than last cycle .
Speaker #4: Moving to slide number six , you can see that in this sales cycle , our adjusted EBITDA amounted to 494 million reais , with a margin of 28.4% .
Speaker #4: An increase of 9.9% from 449 million reais in which will break down in the next slides . So in this slide , the number seven we can observe that the adjusted EBITDA margin achieved 28.4% in this 20 2025 sales cycle , one percentage point lower than the same period of 2020 .
Speaker #4: For our gross margin reached 62.8% , a 1.4 percentage points from 64% in 2020 . For sales cycle , mainly due to a different product mix , is it worth mentioning complementary solutions have grown at a faster pace , quite higher payments to product owners of certain products .
Speaker #4: Provisions for doubtful accounts , PDA achieved decrease of 3.1% in relation to the net revenue , and have an improvement of 0.8 percentage points when comparing to 2020 .
Speaker #4: For this indicator has been showing improvement during the year . Despite the very challenging restrictions . Environment for non premium and we still foresee challenges in the credit scenario for the next month .
Speaker #4: As a percentage of net revenue , our commercial expenses increased by 0.8 percentage points by higher expenses related to business expansion of the commercial cycle for 2026 and remain stable near 19% of the revenue .
Speaker #4: And finally , adjusted for expenses improved by 0.3 percentage points , mainly driven by workforce optimization and budgetary discipline measures . Moving to slide number eight , we show the adjusted net profit that you can see in the right side of the slide in the sales cycle that the adjusted net profit reached 82 million .
Speaker #4: And that is an increase of 32% from adjusted net profit of 62,000,000 in 2020 . For because of the topic mentioned , moving to slide number nine , we show the free cash flow evolution in the sales cycle .
Speaker #4: Our free cash flow reached 316 million reais . An increase of 117% from 2020 . For the cash flow generation in this cycle has has an outstanding performance and achieved the highest level of conversion in relation to the adjusted EBITDA in the last years , achieving 64% .
Speaker #4: This is 31.5 percentage points better than the same indicator as last year . This improvement is explained by certain measures that company has been implementing , which are already used .
Speaker #4: Wielding positive results . We can mention some of these measures in our collection process . We developed Automatized process . Buy these reminders and pass through notifications .
Speaker #4: We implemented customer segmentation and managed to make faster and negotiation on overdue receivables on the payment side , we implemented several initiatives to enhance discipline in payments , such as gross financial planning , centralizing premises scheduling and waste negotiating long payment terms with suppliers .
Speaker #4: Additionally , the first semester of 2025 benefited from early collections of the 2025 sales cycle , which are expected to normalize in the next quarter .
Speaker #4: Is it worth mentioning that for the fiscal year , we expected to achieve a conversion rate of about 50% of the B2B ? This will represent a prevalent revenue increase from 41.8% compared to the 2024 fiscal year .
Speaker #4: Moving to slide number 12 , let's take a closer look at the net debt movement . The net debt position decreased by 177 .
Speaker #4: 77 million reais in the 2025 sales cycle . This decrease was driven mainly by the free cash flow generated in 2025 , which was partially offset by financial interest costs .
Speaker #4: Our net debt amounts amounted to one 863 million at the end of the sales cycle , and we managed to reduce the leverage ratio of net debt to last 12 months .
Speaker #4: Adjusted EBITDA , which achieved 1.75 times a decrease of zero point five seven times . Of this indicator . Of this indicator , compared to the same quarter of 2024 , we would like to reinforce our commitment to continuing to generate free cash flow in which the company .
Speaker #4: Having said finish our presentation , invite you all to the Q&A session .
Speaker #3: Thank you . We will now begin the question and answer session . If you have dialed in and would like to ask a question , please press star one on your telephone keypad to raise your hand and join the queue .
Speaker #3: And if you would like to withdraw your question , simply press the star one again . If you are called upon to ask your question
Speaker #3: and listening via loudspeaker on your device , please pick up your handset that , I ensure that your phone is not on mute .
Speaker #3: When asking your question again , please press star one to join the queue . And your first question comes from the line of Camile Assuncao of Morgan Stanley .
Speaker #3: Please go ahead .
Speaker #5: Good evening . Thanks for the space . We only have one question . Could you provide , please , some color on the ACV buildup for 2026 ?
Speaker #5: And also , if you could comment on your outlook for growth and the balance between volume and pricing .
Speaker #4: Thank you . Camile . For your question . We just ended the quarter of two of the cycle of 2025 , recording a 14.3% subscription revenue growth .
Speaker #4: That's . Definitely the trend that we expect to continue for 2026 . So I would say it's mid double digit growth in terms of revenues .
Speaker #4: In terms of outlook of our performance , we are growing in learning systems , gaining market share in premium learning systems and complementary products , keeps keeps the pace growing with more than 20% .
Speaker #4: And that's the trend should be continued to 2026 . In terms of pricing , we are for the last five cycles we were able to price Epca plus and we definitely are targeting the same level .
Speaker #4: I would say PCA plus between 1 and 2% for the next cycle should be a good guess for what we are seeing right now .
Speaker #5: Very clear . Thank you .
Speaker #3: Once again , if you would like to ask a question , please press Star One to join the queue . We will compile the Q&A roster .
Speaker #3: Again , if you'd like to ask a question , please press star one . And there are no further questions . I will now turn the conference back over to Guilherme Melega for closing remarks .
Speaker #4: Thank you all for participating in our Q3 conference . The sales cycle of 2025 continues to reflect vast , solid execution and strategic focus .
Speaker #4: Our consistent revenue growth , strong cash flow generation , and expansion of core business reinforce our commitment to deliver long term value . We are particularly proud of of the progress made in our start .
Speaker #4: Anglo Bilingual School and the evolution in our plural platform and our disciplined approach to operational efficiency and financial management . Thank you all for continued trust and support .
Speaker #4: We look forward to seeing you in the earnings , in the earnings release call of the end of 2025 , fiscal year . Thank you all .