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Vasta Announces First Quarter 2024 Results


Vasta Platform Limited (NASDAQ: VSTA) ? "Vasta" or the "Company" announces today its financial and operating results for the first quarter of 2024 (1Q24) ended March 31, 2024. Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).

HIGHLIGHTS

MESSAGE FROM MANAGEMENT

With the 1Q24 results we have reached halfway through the 2024 sales cycle and we have delivered strong financial results. In the 2024 sales cycle to date, net revenue increased 12% to R$1,015 million, compared to the same period of the 2023 sales cycle, mostly due to the conversion of ACV into revenue and to the performance of the B2G business unit. Our complementary solutions have seen important growth of 21% compared to 2023, with an accelerated increase in both student base and market penetration. The partners-school base that uses our complementary solutions increased to an aggregate of 1,722 schools.

Vasta's accumulated subscription revenue in the 2024 sales cycle to date year totaled R$872 million, a 9% increase compared to the previous year. It's noteworthy that the distribution of subscription revenue throughout 2024 differed slightly from the previous year, with less concentration in the first two quarters (64.5% compared to 66.4%). Importantly, the migration of product deliveries to the third commercial quarter is a natural consequence of operational processes alongside logistic cost optimization efforts.

The continued growth of the company's profitability was another highlight of the 2024 sales cycle to date as the Adjusted EBITDA grew by 21% to R$402 million compared to R$332 million in previous year, and Adjusted EBITDA Margin increased by 3.1 p.p. to 39.6%. In proportion to net revenue, gross margin increased 300 bps in the sales cycle to date (from 64% to 67%) mainly due to better product mix and reduced impact of paper and production costs, Adjusted cash G&A expenses reduced by 260 bps driven by workforce optimization and budgetary discipline and Commercial expenses increased by 270 bps. driven by higher expenses related to business expansion and marketing investments.

The company's cash flow generation was one of the main highlights of the 2024 sales cycle to date. Free cashflow (FCF) totaled R$52 million, a R$59 million increase from negative R$7 million at the same point of the 2023 sales cycle. The last twelve-month (LTM) FCF/Adjusted EBITDA conversion rate improved from 30.8% to 42.5% as a result of Vasta's growth and implementation of sustained efficiency measures. Moreover, we continue to make progress on deleveraging the company. The net debt/LTM adjusted EBITDA of 2.22x as of 1Q24, shows a downward trend and it is 0.14x lower than 4Q23 and 0.63x lower than 1Q23.

In line with our commitment to total transparency and the timely dissemination of information, we have adjusted downward our Annual Contract Value ("ACV") Bookings for the 2024 sales cycle. The revised ACV now stands at R$1,350 million, reflecting a noteworthy organic growth of 12% compared to the subscription revenue recorded during the 2023 sales cycle (from 4Q22 to 3Q23). It's important to note that our previous ACV Bookings of R$1,400 has been revised downward by 3.7%, primarily stemming from a lower-than-anticipated number of students following the fulfillment of additional sales orders and the manifestation of returns of goods which were concluded in April 2024.

Start-Anglo, a cornerstone of our growth strategy, is experiencing continued expansion. With 20 contracts secured distributed across 10 states in Brazil, 2 operational units in 2024 and over 200 prospects in negotiation, this broad geographic presence and strong pipeline underscore the robust potential for further growth and market penetration of Start-Anglo.

Moreover, our strides into the Brazilian public-school mark a significant milestone, reaffirming our dedication to fostering positive change in education. By venturing into the B2G (Business-to-Government) domain, we have not only broadened our market reach but also solidified our position as a key player in shaping educational landscapes. The early months of 2024 have already yielded promising results, with revenues totaling R$69 million attributed to our endeavors in the B2G sector. This financial achievement serves as a testament to the effectiveness of our strategies and the resonance of our offerings within this vital segment. As we continue to navigate and innovate within the B2G space, we remain committed to delivering impactful solutions that drive progress and empower learners nationwide.

OPERATING PERFORMANCE

Student base ? subscription models

 

2024

 

2023

 

% Y/Y

 

2022

 

% Y/Y

Partner schools - Core content

4,744

 

5,032

 

(5.7%)

 

5,274

 

(4.6%)

Partner schools ? Complementary solutions

1,722

 

1,383

 

24.5%

 

1,304

 

6.1%

Students - Core content

1,432,289

 

1,539,024

 

(6.9%)

 

1,589,224

 

(3.2%)

Students - Complementary content

483,132

 

453,552

 

6.5%

 

372,559

 

21.7%

Note: Students enrolled in partner schools

As we conclude the period of return of collections, we update the number of partner schools and enrolled students for the 2024 sales cycle. In the 2024 sales cycle, Vasta expects to provide approximately 1.4 million students with core content solutions and near 500,000 students with complementary solutions. This is aligned with the company's strategy to focus on improving its client base in 2024 through a better mix of schools and growth in premium education systems (Anglo, PH, Amplia and Fibonacci), brands with higher average ticket, lower defaults, greater adoption of complementary solutions and longer-term relationships. On the other hand, the reduction of our client base was concentrated on the low-end segment, which have higher number of students on average, and a lower margin.

FINANCIAL PERFORMANCE

Net revenue

 

Values in R$ ?000

1Q24

 

1Q23

 

% Y/Y

 

2024 cycle

 

2023 cycle

 

% Y/Y

Subscription

357,387

 

357,211

 

0.0%

 

872,247

 

801,161

 

8.9%

Core content

 

308,292

 

301,038

 

2.4%

 

692,004

 

652,077

 

6.1%

Complementary solutions

 

49,095

 

56,173

 

(12.6%)

 

180,243

 

149,084

 

20.9%

B2G

69,031

 

-

 

0.0%

 

69,031

 

-

 

0.0%

Non-subscription

 

34,298

 

45,624

 

(24.8%)

 

73,546

 

106,693

 

(31.1%)

Total net revenue

460,716

 

402,835

 

14.4%

 

1,014,824

 

907,854

 

11.8%

% ACV

 

26.5%

 

29.6%

 

(3.1 p.p.)

 

64.5%

 

66.4%

 

(1.9 p.p.)

% Subscription

 

77.6%

 

88.7%

 

(11.1 p.p.)

 

86.0%

 

88.2%

 

(2.3 p.p.)

Note: n.m.: not meaningful

In 1Q24, Vasta's net revenue totaled R$461 million, a 14.4% increase compared to 1Q23. In the 2024 sales cycle to date (4Q23 and 1Q24), Vasta's net revenue totaled R$1,015 million, a 11.8% increase compared to prior year. Subscription revenue grew 8.9% in the 2024 sales cycle to date. The ACV 2024 is less concentrated in the first two quarters (64.5%) than in previous year (66.4%), due to the different seasonality on digital products and product deliveries migrated to third commercial quarter.

EBITDA

 

Values in R$ ?000

1Q24

 

1Q23

 

% Y/Y

 

2024 cycle

 

2023 cycle

 

% Y/Y

Net revenue

 

460,716

 

402,835

 

14.4%

 

1,014,824

 

907,854

 

11.8%

Cost of goods sold and services

 

(140,083)

 

(155,126)

 

(9.7%)

 

(335,526)

 

(327,203)

 

2.5%

General and administrative expenses

 

(139,902)

 

(127,281)

 

9.9%

 

(235,553)

 

(247,169)

 

(4.7%)

Commercial expenses

 

(73,260)

 

(51,061)

 

43.5%

 

(140,388)

 

(101,266)

 

38.6%

Other operating (expenses) income

 

1,785

 

994

 

79.6%

 

2,352

 

(927)

 

(353.7%)

Share of loss equity-accounted investees

 

(3,060)

 

(528)

 

479.4%

 

(16,183)

 

(2,890)

 

459.9%

Impairment losses on trade receivables

 

(13,205)

 

(10,380)

 

27.2%

 

(42,199)

 

(39,153)

 

7.8%

Profit before financial income and taxes

 

92,991

 

59,453

 

56.4%

 

247,328

 

189,246

 

30.7%

(+) Depreciation and amortization

 

65,533

 

68,804

 

(4.8%)

 

136,563

 

138,672

 

(1.5%)

EBITDA

 

158,524

 

128,257

 

23.6%

 

383,891

 

327,918

 

17.1%

EBITDA Margin

 

34.4%

 

31.8%

 

2.6 p.p.

 

37.8%

 

36.1%

 

1.7 p.p.

(+) Layoff related to internal restructuring

 

501

 

487

 

2.9%

 

980

 

1,095

 

(10.5%)

(+) Share-based compensation plan

 

3,334

 

2,666

 

25.1%

 

3,229

 

2,773

 

16.4%

(+) M&A adjusting expenses

 

-

 

-

 

0.0%

 

13,776

 

-

 

0.0%

Adjusted EBITDA

162,359

 

131,410

 

23.6%

 

401,876

 

331,786

 

21.1%

Adjusted EBITDA Margin

35.2%

 

32.6%

 

2.6 p.p.

 

39.6%

 

36.5%

 

3.1 p.p.

 

Note: n.m.: not meaningful

In the 2024 sales cycle to date, Adjusted EBITDA grew 21.1% to R$402 million with a margin of 39.6%, representing an increase of 3.1 p.p. in comparison to prior year. In 1Q24, Adjusted EBITDA totaled R$162 million, a 23.6% increase compared to R$131 million in 1Q23.

This increase was mainly driven by gains in operating efficiency, cost savings and a sales mix that benefited from the growth of subscription products. Share of loss equity-accounted investees relates to a 45% minority stake in Educbank Gestão de Pagamentos Educacionais S.A. ("Educbank"), which registered a loss in equity-accounted investees in the amount of R$16.2 million in the 2024 sales cycle to date mainly due to costs associated with the write-off of a potential M&A target of Educbank, which ultimately did not materialize.

(%) Net Revenue

1Q24

 

1Q23

 

Y/Y (p.p.)

 

2024 cycle

 

2023 cycle

 

Y/Y (p.p.)

Gross margin

 

69.6%

 

61.5%

 

8.1 p.p.

 

66.9%

 

64.0%

 

3.0 p.p.

Adjusted cash G&A expenses(1)

 

(15.6%)

 

(13.6%)

 

(2.0 p.p.)

 

(9.3%)

 

(11.9%)

 

2.6 p.p.

Commercial expenses

 

(15.9%)

 

(12.7%)

 

(3.2 p.p.)

 

(13.8%)

 

(11.2%)

 

(2.7 p.p.)

Impairment on trade receivables

 

(2.9%)

 

(2.6%)

 

(0.3 p.p.)

 

(4.2%)

 

(4.3%)

 

0.2 p.p.

Adjusted EBITDA margin

 

35.2%

 

32.6%

 

2.6 p.p.

 

39.6%

 

36.5%

 

3.1 p.p.

(1) Sum of general and administrative expenses, other operating income and profit (loss) of equity-accounted investees, less: depreciation and amortization, layoffs related to internal restructuring, share-based compensation plan and M&A one-off adjusting expenses.

In proportion to net revenue, gross margin increased 300 bps in the sales cycle to date (from 64% to 67%) mainly due to better product mix and reduced impact of paper and production costs. Adjusted cash G&A expenses reduced by 260 bps driven by workforce optimization and budgetary discipline and Commercial expenses increased by 270 bps. driven by higher expenses related to business expansion and marketing investments while Impairment on trade receivable (PDA) remained stable with a slight improvement of 20 bps, although still impacted by 4Q23 credit review.

Finance Results

 

Values in R$ ?000

 

1Q24

 

1Q23

 

% Y/Y

 

2024 cycle

 

2023 cycle

 

% Y/Y

Finance income

13,543

 

16,631

 

(18.6%)

 

30,218

 

48,850

 

(38.1%)

Finance costs

(69,810)

 

(75,816)

 

(7.9%)

 

(141,202)

 

(149,849)

 

(5.8%)

Total

 

(56,267)

 

(59,185)

 

(4.9%)

 

(110,984)

 

(100,999)

 

9.9%

In the first quarter of 2024, finance income totaled R$13.5 million, from R$16.6 million in 1Q23 due to the impact of lower interest rates on financial investments and marketable securities and in the 2024 sales cycle to date, finance income decreased 38% to R$30 million from R$ 48 million in prior sales cycle to date when finance income was impacted with a gain of R$10 million recorded in 4Q22, resulting from the reversal of interest on tax contingencies.

Finance costs in 1Q24 decrease 7.9% (quarter-on-quarter), to R$69 million and in the 2024 sales cycle to date finance cost decreased 5.8% driven by the reduction on the Finance Debt position between the comparison quarters and lower interest rate.

Net profit (loss)

 

Values in R$ ?000

 

1Q23

 

1Q23

 

% Y/Y

 

2024 cycle

 

2023 cycle

 

% Y/Y

Net (loss) profit

21,942

 

(2,224)

 

n.m.

 

81,910

 

73,669

 

11.2%

(+) Layoffs related to internal restructuring

501

 

487

 

2.9%

 

980

 

1,095

 

(10.5%)

(+) Share-based compensation plan

 

3,334

 

2,666

 

25.1%

 

3,229

 

2,773

 

16.4%

(+) Amortization of intangible assets(1)

39,304

 

39,069

 

0.6%

 

79,598

 

78,301

 

1.7%

(-) Income tax contingencies reversal

 

-

 

-

 

0.0%

 

-

 

(29,715)

 

(100.0%)

(+) M&A adjusting expenses

 

-

 

-

 

0.0%

 

13,776

 

-

 

0.0%

(-) Tax shield(2)

(14,667)

 

(14,355)

 

2.2%

 

(33,178)

 

(27,937)

 

18.8%

Adjusted net profit

50,414

 

25,642

 

96.6%

 

146,315

 

98,185

 

49.0%

Adjusted net margin

10.9%

 

6.4%

 

4.6 p.p.

 

14.4%

 

10.8%

 

3.6 p.p.

 

Note: n.m.: not meaningful; (1) From business combinations. (2) Tax shield (34%) generated by the expenses that are being deducted as net (loss) profit adjustments.

In the first quarter of 2024, adjusted net profit totaled R$50 million, a 96.6% increase compared to R$26 million in 1Q23. In the 2024 sales cycle to date, adjusted net profit reached R$146 million, a 49% increase from an adjusted net profit of R$98 million in 2023.

The 2023 sales cycle to date was impacted by a gain related to the reversal of tax contingencies recorded in 4Q22, which impacted corporate tax and finance results. The 2024 sales cycle to date was impacted by the M&A adjusting expenses occurred in 4Q23 as they related to one-off costs associated with the write-off of a potential M&A target of Educbank, which ultimately did not materialize and impacted our Share of Loss of Equity-Accounted Investees in the amount of R$13.8 million.

Accounts receivable and PDA

 

Values in R$ ?000

1Q24

 

1Q23

 

% Y/Y

 

4Q23

 

% Q/Q

Gross accounts receivable

864,511

 

784,681

 

10.2%

 

789,529

 

9.5%

Provision for doubtful accounts (PDA)

(93,489)

 

(72,253)

 

29.4%

 

(92,017)

 

1.6%

Coverage index

 

10.8%

 

9.2%

 

1.6 p.p.

 

11.7%

 

(0.9 p.p.)

Net accounts receivable

 

771,022

 

712,428

 

8.2%

 

697,512

 

10.5%

Average days of accounts receivable(1)

180

 

199

 

(19)

 

169

 

11

 

(1) Balance of net accounts receivable divided by the last-twelve-month net revenue, multiplied by 360.

The average payment term of Vasta's accounts receivable portfolio was 180 days in the 1Q24 which represents 19 days lower than the same quarter of the previous year.

Free cash flow

 

Values in R$ ?000

 

1Q24

 

1Q23

 

% Y/Y

 

2024 cycle

 

2023 cycle

 

% Y/Y

Cash from operating activities(1)

102,347

 

94,647

 

8.1%

 

159,716

 

100,911

 

58.3%

(-) Income tax and social contribution paid

-

 

(331)

 

(100.0%)

 

(672)

 

(4,748)

 

(85.8%)

(-) Payment of provision for tax, civil and labor losses

 

(134)

 

(190)

 

(29%)

 

(376)

 

(245)

 

53.469%

(-) Interest lease liabilities paid

 

(2,029)

 

(3,668)

 

(44.7%)

 

(3,530)

 

(7,796)

 

(54.7%)

(-) Acquisition of property, plant, and equipment

(8,983)

 

(5,256)

 

70.9%

 

(12,273)

 

(15,797)

 

(22.3%)

(-) Additions of intangible assets

(34,776)

 

(38,638)

 

(10.0%)

 

(78,643)

 

(62,407)

 

26.0%

(-) Lease liabilities paid

(4,300)

 

(10,334)

 

(58.4%)

 

(12,230)

 

(16,928)

 

(27.8%)

Free cash flow (FCF)

 

52,125

 

36,230

 

43.9%

 

51,992

 

(7,009)

 

n.m.

FCF/Adjusted EBITDA

32.1%

 

27.6%

 

4.5 p.p.

 

12.9%

 

(2.1%)

 

15.0 p.p.

LTM FCF/Adjusted EBITDA

 

42.5%

 

30.8%

 

11.6 p.p.

 

42.5%

 

30.8%

 

11.6 p.p.

 

(1) Net (loss) profit less non-cash items less and changes in working capital. Note: n.m.: not meaningful

Free cash flow (FCF) totaled R$52 million 1Q24, a 44% increase from a FCF of R$36 million in 1Q23. In the 2024 sales cycle to date, FCF totaled R$52 million, a R$59 million increase from negative R$7 million 2023. The last twelve-month (LTM) FCF/Adjusted EBITDA conversion rate improved from 30.8% to 42.5% as a result of Vasta's growth and implementation of sustained efficiency measures.

Financial leverage

 

Values in R$ ?000

 

1Q24

 

4Q23

 

3Q23

 

2Q23

 

1Q23

Financial debt

 

762,985

 

791,763

 

765,350

 

846,443

 

815,927

Accounts payable from business combinations

 

616,247

 

614,120

 

601,171

 

591,620

 

599,713

Total debt

 

1,379,232

 

1,405,883

 

1,366,521

 

1,438,063

 

1,415,640

Cash and cash equivalents

 

67,214

 

95,864

 

106,757

 

38,268

 

42,680

Marketable securities

 

242,799

 

245,942

 

261,264

 

385,002

 

331,110

Net debt

 

1,069,219

 

1,064,076

 

998,500

 

1,014,793

 

1,041,850

Net debt/LTM adjusted EBITDA

 

2.22

 

2.36

 

2.43

 

2.57

 

2.85

As of the end of 1Q24, Vasta had a net debt position of R$1,069 million, a R$5 million increase compared to 4Q23. The FCF generated in the period was offset by the impacts of financial interest cost and the Second Repurchase Program.

The net debt/LTM adjusted EBITDA of 2.22x as of 1Q24, shows a downward trend and it is 0.14x lower than 4Q23 and 0.63x lower than 1Q23.

ESG

Sustainability Report

In 2023, Vasta released its sustainability report for the year 2022. This report, which is the company's second, was prepared in accordance with international standards for reports of this category and showcases the implementation of our corporate strategy, challenges, and achievements, while also reaffirming our commitment to transparency and sustainability. These include the publication of its first Greenhouse Gas Inventory, the company's adherence to the UN Global Compact, the dedication of 3,216 thousand hours to the Corporate Volunteer Program, the SOMOS Afro program, an affirmative internship program, and the fact that 29% of the seats on the Board of Directors are occupied by women.

The report complies with the Global Reporting Initiative (GRI) 2021 version and also considers other standards recognized in Brazil and abroad, such as the Sustainability Accounting Standards Board (SASB) guidelines for the education sector, the guidelines of the IBC Stakeholder Capitalism Metrics from the World Economic Forum, and the principles of the International Integrated Reporting Council (IIRC).

The document is available at: https://ir.vastaplatform.com/esg/. Information contained in, or accessible through, our website is not incorporated by reference in, and does not constitute a part of, this press release.

In line with the topics identified in the materiality process, every quarter we present Vasta's most material indicators:

Key Indicators

ENVIRONMENT

Water withdrawal2

SDGs

GRI

Disclosure

Unit

1Q2024

1Q2023

% Y/Y

4Q2023

% Q/Q

3, 11, 12

303-3

Total water withdrawal

5,088

2,866

78%

6,163

(17%)

Municipal water supply1

%

0%

33%

(33 p.p.)

0%

0 p.p.

Groundwater

%

100%

67%

33 p.p.

100%

0 p.p.

Energy consumption within the organization2

SDGs

GRI

Disclosure

Unit

1Q2024

1Q2023

% Y/Y

4Q2023

% Q/Q

12, 13

302-1

Total energy consumption

GJ

2,393

3,087

(22%)

5,730

(58%)

Energy from renewable sources2

%

95%

68%

27 p.p.

50%

45 p.p.

In the 1Q24, we observed lower water consumption compared to the last quarter mainly due to the reduction in leaks and because this is a period of low production demand. Two Anglo units, Paulista and Vila Mariana, have moved to new addresses. Therefore, the water consumption data is still in the process of being integrated with our platform. In the next quarter, we will update the information and consequently, we anticipate an increase in consumption in the upcoming quarters.

SOCIAL

Diversity in workforce by employee category

SDGs

GRI

Disclosure

Unit

1Q2024

1Q2023

% HA

4Q2023

% HA

5

405-1

C-level ? Women

%

29%

40%

(11 p.p.)

29%

0 p.p.

C-level ? Men

%

71%

60%

11 p.p.

71%

0 p.p.

C-level- total4

no.

7

5

40%

7

0%

Leadership (? managers) ? Women

%

45%

45%

0 p.p.

47%

(2 p.p.)

Total - Leadership (? managers) ? Men

%

 

55%

 

55%

 

0 p.p.

 

53%

 

2 p.p

Leadership (? managers) 5 ? total

no.

 

149

 

138

 

8%

 

148

 

1%

Academic staff ? Women

%

18%

21%

(3 p.p.)

18%

0 p.p.

Academic staff ? Men

%

83%

79%

4 p.p.

82%

1 p.p.

Academic staff 6 - total

no.

80

85

(6%)

74

8%

Administrative/Operational ? Women

%

56%

56%

0 p.p.

56%

0 p.p.

Administrative/Operational ? Male

%

44%

44%

0 p.p.

44%

0 p.p.

Administrative/Operational 7 - total

no.

1,595

1,476

8%

1,603

(1%)

Employees ? Women

%

54%

53%

1 p.p.

53%

1 p.p.

Employees ? Men

%

46%

47%

(1 p.p.)

47%

(1 p.p.)

Employees - total

no.

1,831

1,704

0%

1,832

(0%)

73% of the vacancies closed in the last quarter brought new employees within one of the Diversity groups - Blacks, Women Leaders, Trans, PCDs, LGBTQIAP+, 50+. We launched the Women's Leadership Training program with a focus on training 35 coordinators, specialists and managers in order to strengthen them in their role as team leaders. We changed the control of our indicators and started monitoring the hiring funnel by diversity pillar (application, passing tests, interviews and hiring).

Social impact* 8

SDGs

GRI

Disclosure

Unit

1S2024

1S2023

2S2023

4, 10

-

Scholars of the Somos Futuro Program

no.

215

236

232

 

* Indicators presented progressively, referring to the total accumulated since the beginning of the year, which is why we are not presenting the variations compared to previous semesters.

We continue to maintain the Somos Futuro Program via Instituto SOMOS. The initiative enables public school students to attend high school at one of Vasta's partner schools. In the first quarter, 215 young people were studying through the program receiving didactic and paradidactic material, online school tutoring, mentoring and access to the entire support network of the program, which includes psychological monitoring, in addition to the scholarship offered by the school.

Health and Safety

SDGs

GRI

Disclosure

Unit

1Q2024

1Q2023

% HA

4Q2023

% HA

3

403-5, 403-9

Units covered by the Risk Management Program (PGR)

%

100%

100%

0.0 p.p

100%

0.0 p.p

Trained employees

no.

361

543

(34%)

1,070

(66.3%)

Average hours of training per employee 9

no.

1.33

0.60

122%

1.53

(13%)

Injury frequency 10

rate

0.90

3.10

(71%)

0.90

0%

High-consequence injuries

no.

0

0

0%

0

0%

Recordable work-related injuries 11

rate

0

1.06

(100%)

0.90

(100%)

Fatalities resulted from work-related injuries

no.

0

0

0%

0

0%

Fatalities 12

rate

0

0

0%

0

0%

The main causes of work-related injuries were impacts suffered in internal and external circulation areas causing abrasions, contusions, and sprains.

The need for and quantity of training can vary within cycles according to demand, whether for newcomers (initial training), refresher training to meet regulatory standards deadlines, or for performance improvement/guidance.

GOVERNANCE

Diversity in the Board of Directors (gender)

SDGs

GRI

Disclosure

Unit

1Q2024

1Q2023

% HA

4Q2023

% HA

5

405-1

Members

no.

7

7

0%

7

0%

Women

%

29%

29%

0 p.p.

29%

0 p.p.

Ethical conduct

SDGs

GRI

Disclosure

Unit

1Q2024

1Q2023

% HA

4Q2023

% HA

16

2-25

Cases recorded in our Confidential Ethics Hotline 13

no.

9

NA

n.m.

62

(85%)

10

406-1

Grievances regarding discrimination received through our Confidential Ethics Hotline 13

no.

0

NA

n.m.

2

(100%)

Confirmed incidents of discrimination 13

no.

0

NA

n.m.

0

0%

5

405-1

Employees who have received training on anti-corruption policies and procedures

%

100%

100%

0 p.p.

100%

0 p.p.

Operations assessed for risks related to corruption

%

100%

100%

0 p.p.

100%

0 p.p.

Confirmed incidents of corruption

no.

0

0

0%

0

0%

 

NA: Not available: quarterly disclosure began in the second quarter of 2023. It used to be reported annually in Sustainability Reports.

This quarter, we promoted the "Forms of Harassment and Discrimination" course, launched at the end of last year, which is compulsory for all monthly employees.

Compliance*

SDGs

GRI

Disclosure

Unit

1Q2024

1Q2023

% HA

4Q2023

% HA

16

307-1, 419-1

Fines for social and economic noncompliance

R$ thousand

0

0

0%

0

0%

Non-financial sanctions for social and economic non-compliance

no.

0

0

0%

0

0%

Fines for environmental noncompliance

R$ thousand

0

0

0%

0

0%

Non-financial sanctions for environmental non-compliance

no.

0

0

0%

0

0%

* Only cases deemed material, i.e., cases that harm Vasta's image, which lead to a halt in operations, or where the amounts involved are over R$1 million.

We did not record significant sanctions or fines related to economic and social issues, except for the normal course of business.

Customer data privacy

SDGs

GRI

Disclosure

Unit

1Q2024

1Q2023

% HA

4Q2023

% HA

16

418-1

External complaints substantiated by the organization

no.

7

19

(63%)

2

250%

Complaints received from regulatory agencies or similar official bodies

no.

0

0

0%

0

0%

Cases identified of leakage, theft, or loss of customer data

no.

0

0

0%

0

0%

FOOTNOTES:

SDG

Sustainable Development Goal. Indicates goal to which the actions monitored contribute.

GRI

Global Reporting Initiative. Lists the GRI standard indicators related to the data monitored.

ND

Indicator discontinued or not measured in the quarter.

NM

Not meaningful

1

Based on invoices from sanitation concessionaires.

2

Acquired from the free energy market.

3

n.a.

4

Takes into the account the positions of CEO, vice presidents and director reporting directly to the CEO

5

Management, senior management and leadership positions not reporting directly to the CEO

6

Course coordinators, teachers, and tutors.

7

Corporate coordination, specialists, adjuncts, assistants and analysts.

8

Indicators reported on semi-annual basis (2Q and 4Q).

9

Total hours of training/employees trained.

10

Total accidents (with and without leave)/ Total man/hours worked (MHW) x 1,000,000

11

Work-related injury (excluding fatalities) from which the worker cannot recover fully to pre-injury health status within 6 months. Formula: Number of injuries/MHW x 1.000.000.

12

Fatalities/ MHW x 1,000,000.

13

Indicators measured from the first quarter of 2023. It used to be reported annually in Sustainability Reports

The first quarter tends to have a higher volume of requests received because it is the enrollment period.

The number of requests received has been decreasing over time (YoY), and this is due to the adoption of the holder's consent to the Privacy Policy or Privacy Notice when obtaining their data, in which we collect only the information that is strictly necessary. Data Control: we have dedicated management for information security and another for privacy. In the first quarter of 2024, we did not record losses, breaches, or theft of customer data, nor complaints from the regulatory agency.

CONFERENCE CALL INFORMATION

Vasta will discuss its first quarter 2024 results on May 8, 2024, via a conference call at 5:00 p.m. Eastern Time. To access the call (ID: 3871721), please dial: +1 (888) 660-6819 or +1 (929) 203-1989. A live and archived webcast of the call will be available on the Investor Relations section of the Company's website at https://ir.vastaplatform.com. Information contained in, or accessible through, our website is not incorporated by reference in, and does not constitute a part of, this press release.

ABOUT VASTA

Vasta is a leading, high-growth education company in Brazil powered by technology, providing end-to-end educational and digital solutions that cater to all needs of private schools operating in the K-12 educational segment, ultimately benefiting all of Vasta's stakeholders, including students, parents, educators, administrators, and private school owners. Vasta's mission is to help private K-12 schools to be better and more profitable, supporting their digital transformation. Vasta believes it is uniquely positioned to help schools in Brazil undergo the process of digital transformation and bring their education skill set to the 21st century. Vasta promotes the unified use of technology in K-12 education with enhanced data and actionable insight for educators, increased collaboration among support staff and improvements in production, efficiency and quality. For more information, please visit ir.vastaplatform.com. Information contained in, or accessible through, our website is not incorporated by reference in, and does not constitute a part of, this press release.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that can be identified by the use of forward-looking words such as "anticipate," "believe," "could," "expect," "should," "plan," "intend," "estimate" and "potential," among others. Forward-looking statements appear in a number of places in this press release and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to of various factors, including (i) general economic, financial, political, demographic and business conditions in Brazil, as well as any other countries we may serve in the future and their impact on our business; (ii) fluctuations in interest, inflation and exchange rates in Brazil and any other countries we may serve in the future; (iii) our ability to implement our business strategy and expand our portfolio of products and services; (iv) our ability to adapt to technological changes in the educational sector; (v) the availability of government authorizations on terms and conditions and within periods acceptable to us; (vi) our ability to continue attracting and retaining new partner schools and students; (vii) our ability to maintain the academic quality of our programs; (viii) the availability of qualified personnel and the ability to retain such personnel; (ix) changes in the financial condition of the students enrolling in our programs in general and in the competitive conditions in the education industry; (x) our capitalization and level of indebtedness; (xi) the interests of our controlling shareholder; (xii) changes in government regulations applicable to the education industry in Brazil; (xiii) government interventions in education industry programs, that affect the economic or tax regime, the collection of tuition fees or the regulatory framework applicable to educational institutions; (xiv) cancellations of contracts within the solutions we characterize as subscription arrangements or limitations on our ability to increase the rates we charge for the services we characterize as subscription arrangements; (xv) our ability to compete and conduct our business in the future; (xvi) our ability to anticipate changes in the business, changes in regulation or the materialization of existing and potential new risks; (xvii) the success of operating initiatives, including advertising and promotional efforts and new product, service and concept development by us and our competitors; (xviii) changes in consumer demands and preferences and technological advances, and our ability to innovate to respond to such changes; (xix) changes in labor, distribution and other operating costs; our compliance with, and changes to, government laws, regulations and tax matters that currently apply to us; (xx) the effectiveness of our risk management policies and procedures, including our internal control over financial reporting; (xxi) health crises, including due to pandemics such as the COVID-19 pandemic and government measures taken in response thereto; (xxii) other factors that may affect our financial condition, liquidity and results of operations; and (xxiii) other risk factors discussed under "Risk Factors". Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

NON-GAAP FINANCIAL MEASURES

This press release presents our EBITDA, Adjusted EBITDA and Adjusted net (loss) profit and Free cash flow (FCF), which is information provided for the convenience of investors. EBITDA and Adjusted EBITDA are among the key performance indicators used by us to measure financial operating performance. Our management believes that these Non-GAAP financial measures provide useful information to investors and shareholders. We also use these measures internally to establish budgets and operational goals to manage and monitor our business, evaluate our underlying historical performance and business strategies and to report our results to the board of directors.

We calculate EBITDA as net (loss) profit for the period/year plus income taxes and social contribution plus/minus net finance result plus depreciation and amortization. The EBITDA measure provides useful information to assess our operational performance.

We calculate Adjusted EBITDA as EBITDA plus/minus: (a) income tax and social contribution? (b) net finance result? (c) depreciation and amortization? (d) share-based compensation expenses, mainly due to the grant of additional shares to Somos' employees in connection with the change of control of Somos to Cogna (for further information refer to note 23 to the audited consolidated financial statements)? (e) provision for risks of tax, civil and labor losses regarding penalties, related to income tax positions taken by the Predecessor Somos ? Anglo and Vasta in connection with a corporate reorganization carried out by the Predecessor Somos ? Anglo? (f) Bonus IPO, which refers to bonus paid to certain executives and employees based on restricted share units; and (g) expenses with contractual termination of employees due to organizational restructuring. We understand that such adjustments are relevant and should be considered when calculating our Adjusted EBITDA, which is a practical measure to assess our operational performance that allows us to compare it with other companies that operates in the same segment.

We calculate Adjusted net (loss) profit as the (loss) profit for the period/year as presented in Statement of Profit or Loss and Other Comprehensive Income adjusted by the same Adjusted EBITDA items, however, added by (a) Amortization of intangible assets from Business Combination and (b) Tax shield of 34% generated by the aforementioned adjustments.

We calculate Free cash flow (FCF) as the cash from operating activities as presented in the Statement of Cash Flows less (a) income tax and social contribution paid; (b) tax, civil and labor proceedings paid; (c) interest lease liabilities paid; (d) acquisition of property, plant and equipment; (e) additions to intangible assets; and (f) lease liabilities paid.

We understand that, although Adjusted net (loss) profit, EBITDA, Adjusted EBITDA, and Free cash flow (FCF) are used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations as reported under IFRS. Additionally, our calculations of Adjusted net (loss) profit, Adjusted EBITDA, and Free cash flow (FCF) may be different from the calculation used by other companies, including our competitors in the education services industry, and therefore, our measures may not be comparable to those of other companies.

REVENUE RECOGNITION AND SEASONALITY

Our main deliveries of printed and digital materials to our customers occur in the last quarter of each year (typically in November and December), and in the first quarter of each subsequent year (typically in February and March), and revenue is recognized when the customers obtain control over the materials. In addition, the printed and digital materials we provide in the fourth quarter are used by our customers in the following school year and, therefore, our fourth quarter results reflect the growth in the number of our students from one school year to the next, leading to higher revenue in general in our fourth quarter compared with the preceding quarters in each year. Consequently, in aggregate, the seasonality of our revenues generally produces higher revenues in the first and fourth quarters of our fiscal year. Thus, the numbers for the second quarter and third quarter are usually less relevant. In addition, we generally bill our customers during the first half of each school year (which starts in January), which generally results in a higher cash position in the first half of each year compared to the second half.

A significant part of our expenses is also seasonal. Due to the nature of our business cycle, we need significant working capital, typically in September or October of each year, to cover costs related to production and inventory accumulation, selling and marketing expenses, and delivery of our teaching materials at the end of each year in preparation for the beginning of each school year. As a result, these operating expenses are generally incurred between September and December of each year.

Purchases through our Livro Fácil e-commerce platform are also very intense during the back-to-school period, between November, when school enrollment takes place and families plan to anticipate the purchase of products and services, and February of the following year, when classes are about to start. Thus, e-commerce revenue is mainly concentrated in the first and fourth quarters of the year.

KEY BUSINESS METRICS

Annual Contract Value, or ACV, is a non-accounting managerial metric and represents our partner schools' commitment to pay for our solutions offerings. We believe it is a meaningful indicator of demand for our solutions. We consider ACV is a helpful metric because it is designed to show amounts that we expect to be recognized as revenue from subscription services for the 12-month period between October 1 of one fiscal year through September 30 of the following fiscal year. We define ACV as the revenue we would expect to recognize from a partner school in each school year, based on the number of students who have contracted our services, or "enrolled students," that will access our content at such partner school in such school year. We calculate ACV by multiplying the number of enrolled students at each school with the average ticket per student per year; the related number of enrolled students and average ticket per student per year are each calculated in accordance with the terms of each contract with the related school. Although our contracts with our schools are typically for 4-year terms, we record one year of revenue under such contracts as ACV. ACV is calculated based on the sum of actual contracts signed during the sales period and assumes the historical rates of returned goods from customers for the preceding 24-month period. Since the actual rates of returned goods from sales during the period may be different from the historical average rates and the actual volume of merchandise ordered by our customers may be different from the contracted amount, the actual revenue recognized during each period of a sales cycle may be different from the ACV for the respective sales cycle. Our reported ACV is subject to risks associated with, among other things, economic conditions and the markets in which we operate, including risks that our contracts may be canceled or adjusted (including as a result of the COVID-19 pandemic).

FINANCIAL STATEMENTS

Consolidated Statements of Financial Position

 

Assets

March 31, 2024

 

December 31, 2023

Current assets

 

 

 

Cash and cash equivalents

67,214

 

95,864

Marketable securities

242,799

 

245,942

Trade receivables

771,022

 

697,512

Inventories

293,308

 

300,509

Taxes recoverable

21,257

 

19,041

Income tax and social contribution recoverable

18,846

 

16,841

Prepayments

76,339

 

71,870

Other receivables

2,760

 

2,085

Related parties ? other receivables

12,137

 

7,157

Total current assets

1,505,682

 

1,456,821

 

 

 

 

Non-current assets

 

 

 

Judicial deposits and escrow accounts

212,597

 

207,188

Deferred income tax and social contribution

197,644

 

205,453

Equity accounted investees

61,424

 

64,484

Other investments and interests in entities

9,879

 

9,879

Property, plant and equipment

137,607

 

151,492

Intangible assets and goodwill

5,283,706

 

5,307,563

Total non-current assets

5,902,857

 

5,946,059

 

 

 

 

Total Assets

7,408,539

 

7,402,880

Consolidated Statements of Financial Position (continued)

 

Liabilities

March 31, 2024

 

December 31, 2023

Current liabilities

 

 

 

Bonds

512,985

541,763

Suppliers

214,082

221,291

Reverse factoring

262,337

 

263,948

Lease liabilities

11,485

17,078

Income tax and social contribution payable

8,676

-

Salaries and social contributions

120,946

104,406

Taxes payable

10,896

 

7,821

Contractual obligations and deferred income

46,307

 

32,815

Accounts payable for business combination and acquisition of associates

211,444

216,728

Other liabilities

20,667

26,382

Other liabilities - related parties

21,472

15,060

Total current liabilities

1,441,297

1,447,292

 

 

 

 

Non-current liabilities

Bonds

250,000

250,000

Lease liabilities

67,982

79,579

Accounts payable for business combination and acquisition of associates

404,803

397,392

Provision for tax, civil and labor losses

710,448

697,990

Other liabilities

10,868

9,836

Total non-current liabilities

1,444,101

1,434,797

 

 

 

 

Total current and non-current liabilities

2,885,398

2,890,912

 

 

 

 

Shareholder's Equity

Share capital

4,820,815

4,820,815

Capital reserve

91,005

89,995

Treasury shares

(80,495)

(59,525)

Accumulated losses

(309,387)

(331,559)

Total Shareholder's Equity

4,521,938

4,519,358

 

 

 

 

Interest of non-controlling shareholders

1,203

 

1,433

 

 

 

 

Total Shareholder's Equity

4,523,141

4,520,791

 

 

 

 

Total Liabilities and Shareholder's Equity

7,408,539

7,402,880

Consolidated Income Statement

 

March 31, 2024

March 31, 2023

 

Net revenue from sales and services

460,716

402,835

Sales

 

442,545

393,688

Services

18,171

9,147

 

Cost of goods sold and services

(140,083)

(155,126)

 

Gross profit

320,633

247,709

 

Operating income (expenses)

(224,582)

(187,728)

General and administrative expenses

 

(139,902)

(127,281)

Commercial expenses

(73,260)

(51,061)

Other operating income

 

1,980

 

994

Other operating expenses

 

(195)

-

Impairment losses on trade receivables

(13,205)

(10,380)

 

 

 

 

 

Share of loss equity-accounted investees

 

(3,060)

(528)

 

Profit before finance result and taxes

92,991

59,453

 

Finance result

(56,267)

(59,185)

Finance income

 

13,543

16,631

Finance costs

(69,810)

(75,816)

 

Profit before income tax and social contribution

36,724

268

 

Income tax and social contribution

 

(14,782)

(2,492)

Current

(6,973)

(1,454)

Deferred

 

(7,809)

(1,038)

 

Profit (loss) for the period

21,942

(2,224)

 

Allocated to:

Controlling shareholders

22,172

(2,278)

Non-controlling shareholders

(230)

54

Consolidated Statement of Cash Flows

 

 

 

For the period ended March 31,

 

 

2024

 

2023

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Profit before income tax and social contribution

 

36,724

268

Adjustments for:

 

Depreciation and amortization

 

69,534

70,832

Share of loss profit of equity-accounted investees

 

3,060

528

Impairment losses on trade receivables

 

13,205

10,380

Provision (reversal) for tax, civil and labor losses, net

 

289

(4,423)

Interest on provision for tax, civil and labor losses

 

12,273

8,485

Interest on bonds

 

24,366

30,591

Contractual obligations and right to returned goods

 

9,293

4,762

Interest on accounts payable for business combination and acquisition of associates

 

15,664

18,031

Interest on suppliers

 

12,500

7,074

Share-based payment expense

 

2,939

 

2,658

Interest on lease liabilities

 

2,113

3,385

Interest on marketable securities

 

(5,786)

(9,417)

Cancellations of right-of-use contracts

(1,951)

3,053

Residual value of disposals of property and equipment and intangible assets

 

943

 

3

 

 

195,166

146,210

Changes in

 

Trade receivables

 

(86,715)

(72,466)

Inventories

 

7,201

3,579

Prepayments

 

(4,469)

(20,520)

Taxes recoverable

 

(11,194)

(17,220)

Judicial deposits and escrow accounts

 

(5,379)

5,132

Other receivables

 

(675)

(16)

Related parties ? other receivables

 

(4,980)

766

Suppliers

 

(21,320)

2,125

Salaries and social charges

 

16,540

32,097

Tax payable

 

11,751

(5,474)

Contractual obligations and deferred income

 

4,199

20,464

Other liabilities

 

(4,191)

(406)

Other liabilities - related parties

 

6,412

376

Cash from operating activities

 

102,346

94,647

Payment of interest on leases

 

(2,029)

(3,668)

Payment of interest on bonds

 

(53,423)

(57,914)

Payment of interest on business combinations

 

(2,590)

(15,820)

Income tax and social contribution paid

 

-

(331)

Payment of provision for tax, civil and labor losses

 

(134)

(190)

Net cash from operating activities

 

44,170

16,724

CASH FLOWS FROM INVESTING ACTIVITIES

 

Acquisition of property and equipment

 

(8,982)

(5,256)

Additions of intangible assets

 

(34,776)

(38,638)

Acquisition of subsidiaries net of cash acquired

 

-

(3,205)

Purchase of investment in marketable securities

 

(266,215)

(362,606)

Proceeds from investment in marketable securities

 

275,143

421,427

Net cash (used in) from investing activities

 

(34,830)

11,722

CASH FLOWS FROM FINANCING ACTIVITIES

 

Repurchase shares on treasury

 

(22,531)

-

Lease liabilities paid

 

(4,300)

(10,334)

Payments of accounts payable for business combination and acquisition of associates

 

(11,159)

(21,197)

Net cash used in financing activities

 

(37,990)

(31,531)

Net decrease in cash and cash equivalents

 

(28,650)

 

(3,085)

Cash and cash equivalents at beginning of period

 

95,864

 

45,765

Cash and cash equivalents at end of period

 

67,214

 

42,680

Net decrease in cash and cash equivalents

 

(28,650)

 

(3,085)

 


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