VSTA - Earnings call transcript Q2 2022

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Operator

Good afternoon and welcome. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the Vasta Second Quarter 2022 Earnings Conference Call. [Operator Instructions]. Bruno Giardino, CFO, you may begin your conference.

Bruno Giardino

thank discuss joining XXXX Vasta and conference in results. everyone, to call Platform's evening, you me for this Good second quarter Vasta's With have Vasta's call the CEO; Ghio, COO. me Melega, and today, Guilherme on Mario we

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

relate that events or generally materially actual to may performance cause or future uncertainties risks, from future and by differ statements. known our involve unknown to these those and statements financial operating Forward-looking and other forward-looking contemplated factors results

this but future financial strategic include, limited expectations benefits statements in the expectations not statements and Forward-looking and our business related presentation regarding related market. performance, to, are product and regarding to periods, their our our initiatives for expectations our

presentation on those available Exchange risks available issued Securities well Forward-looking management. forward-looking hereof. statements These as forth with information set the of filings those today this the our based our date statements release based assumptions more currently as our described are The to that Commission. us include on in the as management's are in on press beliefs and we and fully and in to information

You should the any events statements, of to as not them disclaim forward-looking by we except on update any required law. predictions obligation as and future rely

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

the give now to to me Let statements. over his Ghio make call opening

Mario Ghio

earnings Thank you, all our you Bruno. release. for in participating Thank

Slide of the to on highlights jump Let's #X. quarter the

last loss to of BRLXX the adjusted same the last recent business a grew flow X.X attesting XX% severely of this cycle the a EBITDA percentage representing date this of date, acceleration year-on-year and to our in quarter subscription but attribute normal, million points for the in margin recovery and the expanded in than normalization over of quality, revenue recurrent of in of In in year. history. the to back grew is to cycle the date, We and flow the is XX% not the quarter sales the second that has only better also to mix working Vasta see improvement capital cycle predictable revenue was shows that EBITDA revenue a driven a company. the the platform of Adjusted main recovering XX% highest XX% pandemic. an period increase from driven hit following to from XX%, quarter, profitability XXXX strong superior second Operating and the consolidated the BRLXXX Vasta BRLXX our highlights, business second financial million delivered the XXXX As a with cash can the almost And -- Net over results recovery in in cycle in discipline. dynamics. only that we true but efforts such is the the by quarter, as by XXXX operation of a million generation, totaled and revenues. of BRLXX optimization significant workforce also consumption total growth cash to by that operating not that million year, and

by Guilherme our collect of XXXX to subscription commercial of the that growth the XXX% end growth BRLX or net approach year XX% in third Therefore, the ACV of cycle, reiterate As of we XXXX, I revenue we being that end implied of the will to end year. the this COO, by converged XXXX billion. our by the word said, of this ACV Melega. the pass quarter With we

Guilherme Melega

Thank you, Ghio.

less Mackenzie, than cycle different XX% date, captured. previous ACV compared concentrated seasonality along our and the namely growth subscription when composition. more ACV distribution the to cycle led to XXXX detail of The brands, we cycles. of a to XXXX was Eleva #X, Slide to XXXX moving revenue of Now In already has

which full be For ACV to recognition for guides Ghio expect a mentioned. we recognition the XXXX of quarter, following XX.X%, cycle, ACV as within

our the Bruno CFO, financial Giardino, will floor I'll the Now quarter. about of talk who results the turn to

Bruno Giardino

In the Slide we Melega. of net composition XXXX. quarter the the Vasta second in you, Thank X, present of revenue

side, can revenue you to in total million. As see increased year year-on-year the BRLXXX -- left XX% net XX%

the compared see the Moving XX%, of acceleration complementary to by plus revenue we in of an Learning Subscription of revenue as was driven revenue subscription occur X ACV growth. of previous composed In Eleva. the contribution of from revenue solutions year, cycle. and right side, when quarters the jumped recognition to the components mostly of the delivery PAR first mostly Systems, the in total, the

the revenue in net driven from quarter to in to analyze growth quarter second 'XX the revenue X. revenue. grew We Net fourth subscription XXXX date XX% period, 'XX. by XX% cycle for Moving Slide a this to

to the 'XX As receivables. BRLXX also provision XX%. There cycle, a respectively. was we the of in provision to of the decrease as subscription of adjusted adjusted with accounts our in the increase gross converging expectation growth in year. stability approach revenue, ACV X%, mix of This net see was significant bps, and with revenue fell leverage last operating end the there a XX savings following expenses and accommodate the growth or proportion of same decline XXX in XXX driven EBITDA on second grew the G&A this bps of the expenses in gains, initial contribution the the cash commercial In Non-subscription line revenue products margin from doubtful and hike In we million, of our small of growth bps, the in impacts the mainly were and for Eleva. quarter relevant line. by a down the better the pandemic minus subscription sales a in while cost totaled slide, BRLXX improvement million was quarter

of EBITDA XXXX XX.X% margin 'XX. second As negative the a result, last in to closer margin year EBITDA with grew This points. the Vasta's the adjusted quarter X.X% increase XX%, higher at of company's adjusted evidence in million, XXX potential. margin is and In basis this versus profitability date, to reached standing that now quarter year is a level second BRLXXX a much reaching cycle than

In terms in we net despite net growth the an higher the operating date, to by down worse second than mostly of million, adjusted the profit the profit, million, the same BRLXX and last loss interest of BRLXX the in higher to posted driven XXXX quarter, compared in financial XXXX totaled cycle year, country. cycle. In adjusted the leverage slightly net of the profit company the adjusted rates quarter

million. million. million compared of of consumption the amounting to BRLXX quarter, quarter when in date, our the million. and the the early of the In improvement to operating that providers the or even we excluded also Slide flow flow main highlight is accounts compared to this it which previous #X, an flow we quarter Moving the is receipts million, show the solution totaled when operating of This early to the normalize royalties BRLXXX BRLXX amount receivable when to had the BRLXXX to content cycle, view. improvement cash normalize second 'XX cash -- operating significant payments by quarter, flow we the of the in when In cash million cycle a cash BRLXX this BRLXX operating of totaled

Next, receivable. I'll in give more details accounts on the our provisions

days. the business for in seen as we accounts doubtful last them for over the know, partners completed. yet by a due partners' quarter we of By the gradual the average the have regular lower In is previous above challenging days our days this why the with school quarter, provision at last-XX-month recognized as of activities, payment XX this decision of year. not cycle still to normalization adjusting accounts was by That's in have days higher you receivables environment was to the support term payments restoration the of quarters, extending our to restoration net average As but school this revenue, well metric Eleva's terms. XXX date, same the aligned XXX

with as ended that generated the quarter, next in of since million. full. flow partly related measured operating the first the last-XX-month debt to net in started decrease debt offset first was to interest the decline slide. second mentioned the position the in before, as we net Eleva's the has right our to accrual to quarter BRLXXX cash leverage the by From a quarter, the adjusted Moving last-XX-month second over X.XXx EBITDA the reaching see including position. chart, quarter, In debt net X.XXx quarter our or 'XX, Vasta

We expect the to trend EBITDA our quarters over increases. base as downward the adjusted coming continue

last has This Educbank. was in about talk -- this acquisition recently July. our let's announced Next,

a dedicated financial first the schools. interest K-XX acquired we So in to Educbank, minority ecosystem

business how X-X a by The the of this regular to of usual Educbank a a by a with For are educational a tuitions Educbank. to BRLXX X business, the XX% school flow In value slide, over rate the of investment those market that year tuition, not billion, the earned works. provides paid payment stake have be of we cash total estimate in is familiar school of that will total flow bottom ways. take uncertain making to million billion. for This there discounted institutions an monthly payment BRLXXX guarantee this illustration is

cash to right base, X in of our student Educbank arising to managed according the will Vasta base. in out growth sale next capitalization First, to and million appoint the to our Board credits indefinitely the be of over access to the BRLXX -- continue the members two, of over to Educbank's -- of of years BRLXX founders. of X last million have the the client X will of Educbank, which portfolio; from the Directors Vasta right by

its With said, Vasta recognized Educbank will equity in pass word not the I'll results Ghio. As will to income. be being via back consolidate Educbank sheet, that balance

Mario Ghio

you, Bruno. Thank

several pockets in such I with it's distribution our slide, products the to with content and why invested access IPO, platform, Since details for Moving will and our in complete the the acquisition, Learning of important Fibonacci the you reason build K-XX core as creation schools. we new Educbank and why portfolio our the System to Eleva we give agreement had revenue Mackenzie. reinforcing developments to more Vasta's that next of platform,

for them build the to educate. BXBXC We our In also and that with entered the freeing launch aiming will to Plurall what we EMME focus Adapta. solutions SEL, the the address completed through of in up they schools, administrative segment the Teacher of time Phidelis, and to acquisition needs expanded best, My the and complementary of digital on portfolio the know partner Plurall services, services a bottom, our

exposure still to the With its gains us, in of development for adding digital arm payment the transaction, needs, a services Vasta platform. the Educbank K-XX segment another unexplored

about in indicators and materiality line will key panel accountability Moving Vasta first with report. quarter Greenhouse ESG operations. to our commitment the of of topics standards, process, purchase ESG The including launched XX%. by Committed in report transparency, with updates Vasta highest energy this reinforcing From the for next the the to emissions on, a quarterly its reduced ESG standards. renewable identified Gas Emissions the total Vasta's slide,

Another are -- our received participation consumed you. this of A granted visibility the comes vacancies our I certified. the this in Seal. being dos Thank mentoring space female was talents Important we related in In the than or from Program, society. BRLXX XX% of are every the Afro Black to and highlight in young actions public loss of field, XX% SOMOS in give leaks leadership PROFs for the Permanent from distribution we field, finish quarter of organization. session. schools. our suppliers and invested will environmental now in “Women to In PROFs And independent the program benefits space FSC for XX% Vasta renewable XXX% provide quarter Campos. intern also accelerates mention center create and no the generated fields, that of data. to members Directors in our social for Black Having people exclusive have On teachers. the SOMOS, the all relevant in Instituto the presentation of know permanent we largest sources, São us in to pedagogical which Internship is a Board” XXX% quarter open XXX women. In in we energy the that, a in Board of diverse that more governance Q&A Instituto from to BRLX said complaints with that I José

Operator

Instructions]. [Operator

Lucca Itau. the question line today Marquezini from Your with first of comes

Lucca Marquezini

year as due That now first The Vasta pandemic. consider decrease schools significant secondly, would systems provisions Educbank, financial revenue should quarter that should Should of we number was of in now from the learning acquisition up solutions. this be, net services beyond went in relevance a solutions reported the higher the the academic partner long offer regarding caused one of to term? in the normalized on? in terms go the the what with consolidated PDA, And by year-over-year there the then and said, level we last as delinquency expect

Bruno Giardino

Thank you much, Lucca. very

your It's still a services, it's Regarding on this projections small. for early nascent business. let's a the to still in new revenue, put because way. ramp-up It's Educbank an it's question accelerated tell financial but too is of business,

So -- important it predict will when to it's traditional compared we be cannot how business. our

a However, than potential we have addressable of the than the we than here more may the billion. This is huge other is markets addressable see in for have surpass -- we total company. market products more -- more that this BRLXX

to relevant wanted in that be relevant So this Educbank future. will the we business. financial be why be services in That's future; it's definitely and we will the a in great think potential

to kind of pie, question regarding give of prediction Second be too representative within However, revenue how PDA. it's any our will okay? early this

on I a are think level. our normalized we to way

I historical the not level when that of a is perhaps X%, should say. than We PDA company. less the are which approaching We situation there yet, normalizes, X%, have revenue the would think over we

not we yet. are there So

there. level, that can We mentioned, X% or below around XXXX, I be Eventually, as closer to are getting we okay? X%,

Mario Ghio

in Look, if may is If something question. the regarding to base the of that It's year, add tuition that for that's first important this And than Educbank is serving schools X,XXX those are Ghio that's I of -- total BRLXX may So more speaking. know schools. around Vasta billion our today the SAM clients. add, per amount understand the we right? I in

a Second, we have that important to mention minority stake.

So to Phidelis, powerful, are of for see and super financial P&L, it's our academic P&L, Educbank going Educbank. consolidating which right? combination are that plus the revenues to in important not understand And super we our in So our you third, Educbank right? ERP, not the us, is it's

we -- better to they Educbank. through to the of need more everything aiming school right, working in So also partner to a capital, have are schools be to to have to data, terms provide in be and the efficient the help this school schools

digital than more our combination Phidelis embedded Educbank Educbank in having is platform. the and of So important having

Operator

Tomita Your next question Vitor with from comes Goldman Sachs. the line of

Vitor Tomita

of our couple A questions from side.

sales The surpassing you see of first second XXX% cycle given you so views how if far? regarding this XXXX? early any And our is in could for revenue for would the initial question the of share likelihood one revenues trends actually be ACV do performance commercial the solutions cycle the strong of complementary

Mario Ghio

we more Vitor, just if of to are clarify right? the than question regarding expecting cycle, to have revenue your second ACV is this

Vitor Tomita

Yes, if think you cycle, possible. of the that's if -- this

Guilherme Melega

Okay.

So Vitor, I'll Guilherme here. is speaking. this start

a cycle had good, was view of initial commercial of very very positive. first good So the We the year. very half

and We come. both complementary. half of first peak the peak very the content so know, sound all we far, The is core As July good. yet the is to not season. XX, until in had so But campaign a

products that campaign. leading bilingual, to new us good in have We are complementary, a very in especially

about are the very campaign. positive So we

the expect expect our regarding we we we BRLX goals. market. last We keeping from we do increase already recognition the in ACV, And to did any the billion guided previous ACV same the reach so not are that year, trend

likely are billion. deliver year. to performing in most ACV, why will a have expected We this reach is what And That's QX as but the contracts QX seeing different expected. we more is BRLX concentrated the seasonality

Mario Ghio

just marketing adding Vitor, color on And more a this campaign. bit little

We long because we the also lower term, ticket, of important, mainstream that's the a are our selling And premium higher premium mainstream brand movement. because than a very, very have brands, a more brands, right? churn not premium interesting than churn is medium is, the but in only brand. average brands and seeing they are That

last -- So I we if same phenomenon the saw cycle happening we don't but as the saw know you well. remember, in

premium to this Fibonacci, to very important trend for are the performing right? is We that, is pH have pH exactly need we Anglo performing I installed, well, it's places some is this which because new also we So So more have only this that were mention third not brands address well, Fibonacci where but Anglo is seeing. very premium already guess right? brand, created and in

middle said, very are the So a in we marketing far, so good. so as campaign, far, of Melega but

Operator

comes Marcelo question next line with Santos JPMorgan. the from Your of

Marcelo Santos

I have two.

on could BXCXB The now. comfortable a net to So that you second an how progress? right us what first, Xx your around see EBITDA if be you would got the this idea could And initiatives? do update you you going on is level? the debt provide I Hope got this And one, time. if give leverage an should forward? what How -- to

Mario Ghio

Great.

Marcelo, So one. first for the I'm taking the thank questions. you

are month. and private right? very Plurall deploying our -- our every in Adapta, are classes fully We KPIs seeing the are We good. given that in Plurall full the new All we deploy are My of hundreds Teacher seeing reports

an So going Plurall Plurall we we well. that edtech our in My new as especially can part as right, it's really fine platform, of Adapta, say Teacher. excellent have

I'll and we a to we is with are we pass to product soon all connection piloting our that or connect deploy you to the So the started call us. now framework in a We the providing secondary more the little -- about are in the high Adapta are we as Now good good are I we school. to launching that -- for mean students opportunities experience was opens we going the on going Plurall a bit as well as and said launching tech last launch platform, products Giardino. or okay, remember, as are school we product focusing And may it's we for My to families also And right? deliver of therapist. Right right? see , first Plurall the are in

Bruno Giardino

the leverage question, thanks I for margin Good was waiting for but question evening, Marcelo, anyway. the

below lower to could our expectation Our our of in invest a expected. but Xx in Educbank, down right? leverage the not sure, as money faster adjusted is But net go right? speed, maybe I debt This to be lower Xx we we I our project to we leverage anywhere next have as pursue considering structure a year, now EBITDA to of end the this the fast good year, So right? year, capital, on between committed the growing think for than And fall probably -- this, leverage next and year should are okay? for expect be level company EBITDA level So Xx, by a we do as to we current Xx. around end a think, of would even

Mario Ghio

are that. also improving that EBITDA you on we give given right? mentioned you And more the you to -- color the touched margins, cash, And can

Bruno Giardino

XXXX, we Marcelo, Sure. belief XX-point-something when we had compared our perception okay? XXXX, in that XXXX higher will reiterate anywhere margins than expand in and right? the to our So level

Marcelo Santos

Perfect. as so I thanks ask would that follow-up, a a lot.

Bruno Giardino

I knew that, you. will thank do you

Operator

Instructions]. [Operator

one JPMorgan. question from have Santos more We Marcelo here with again

Marcelo Santos

So companies question, the doing the there prices your now? how in about of What's is they have down? How gone instead of Any non-listed great. outlook. your would are perceptions And sync pipeline I'll margin listed M&A -- appetite? is be -- ask with

Mario Ghio

Yes.

that would but of have we say -- not have studying. a strong companies So pipeline I we we are acquisitions,

on we But are complete hands acquisitions market we the -- medium M&A the players listed are are -- are content, the XX% talking of player, and on, in in and small X -- market market. moment, XX% to learning that to Educbank complementary more to And a focusing always, of as in of other guys share right? our and small mean right? talking that player, We the talks means investment. and the platform. we guys, the initiating system -- focusing are on Because other I have side the we you was around know, this seeing still terms very we these edtech, so small of in we of right? core important more as the in market, can solutions in right? how We we very, are is are at We

not only so EBITDA more but and Now more of also we revenues, and increase platform, Phidelis we cash, connecting Educbank stickiness are having our services will the our mind more will Let's after are right? school with that have will regarding leave generate on, there tough to adopting that the right? platform, and a the be ERP all So our opportunities. working capital in

if We for companies, question. not understood of other listed the are looking part your I

we are to aiming company. our more other currently, services, not Now an always TAM bring to more platform, -- if or we'll open we to. opportunity are more we had TAM, be especially But any complete listed to

Marcelo Santos

if hear old price, still not ambitious too to so I that it I decline. because that price ask didn't are buy trying like would sense Actually, high and companies or the asking this. if -- or was non-listed asking, to with the if just of we Arco you makes mindset an was non-listed anything a ask usually it are

So M&A I more conversations, no? this your just the question. on wanted to has -- rational was like become environment pricing That market the actual in or

Mario Ghio

guess, you that irrationality and the we we the better, is assets that This now, year I it. the in market, Compared right? are are got guys at all I I are with seeing tell of year. talking a -- with some Arco to last the rational, especially not can lot talk, better pretty they guess. suffering don't We the players right? studying the are if to year, we market, We it's represent of are opportunities kind we kind that Yes, are irrational, least the last to. is than

Operator

Q&A. today's call Bruno back to Giardino. concludes This the turn I over now

Bruno Giardino

projects, Vasta's CFO after period CFO year, dedicated helping Mr. an the the of will Guys, and like make that, to Silva personal for new Cogna's Director. transferring Controllership -- and my within the than And I currently the management XX activities important financial in XX transition will Vasta, information, for years more Cesar Silva, to the to be more He Vasta, will Cesar has until And of the be great controllership. Investor I Relations company, him. succeed your begin September will team, sure than years opportunity the cycle matters, Mario is IR a Thank experience the I XX, in And for today preparation of to later Officer. right? of as a I'm to the as and take myself with addition So announcement okay? part as be from After here. that you, of Emma. X.X he IPO I will a nearly first years Ghio would

for would So colleagues opportunity Vasta I this you thank together and presence I sharing Melega like Mario And having like particularly -- thank nice talented at guys the battles would with to a audience such people, here. today, with the for to all and of Ghio. these the -- my also to and here thank for being me sharing room especially you, Guilherme

thank 'XX you our Thank conference concludes Q And you. second So this much. very call.

Operator

for This concludes attending. Thank today's conference you call.

may disconnect. You now

Vasta Platform Limited (VSTA) 13 Aug 222022 Q2 Earnings call transcript