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spk01: is in fact flow from operations was also up even more, 71% in the full year, which led to a adjusted a site that kind of states and confirms the client orientation and client service in the last six months, we have a reputation 8.0 in UNICEF and 7.7 at UNICEF. Those are the highest numbers among the listed players in the country. Page 12. This is a new slide. This is to illustrate that we are top positioned regarding quality of our courses. In the chart at the left, we show the distribution of the institutional concepts, the CIs, as you know, of the six institutions of the virtual group, as well as the other listed players. we have five institutions in the video group with the maximum score of ci5 and only one with the safe four which by the way has few students this is even it's important even more now than ever because as you know one of the possible possible regulatory changes that have been discussed is to increase the bar to raise the bar from ci3 to c4 for an institution to be allowed to offer this learning courses And in the chart at the right, we show an indicator that is not usually mentioned, but it is public information. It is part of MEX evaluation. It is at INEP, which is the CC, which is the course concept. As most of you know, every three years, usually, the Ministry of Education makes an in-local evaluation about the quality of a course, taking into account different aspects such as the academic model, the technological infrastructure, and the level of teachers. So, as you can see in the short 61% of the V2 quarters that were evaluated over the last three evaluation cycles, meaning all quarters have a CC5, which is two times the average of the market, which is the first bar here at the left. And by the way, regarding regulation, we don't know what will change and we don't know if anything will change. We don't know when it will change, but we do believe that there will be a stricter focus on quality, which is good, as well as a need for more hybridism in several courses. So in this scenario, we're showing here that vitro would be quite well positioned and the changes in regulations may even benefit us. So for us, the higher the bar, the better. Slide 13 is also new, and it mentions ReadyNN. So ReadyNN, most of you probably don't know that we acquired ReadyNN two years ago, in September 2022. ReadyNN has different products, including BlogadoNN, which was one of the leading sites with content for the NN preparation, which had 17 million views and 1.3 million followers on Facebook. And also Curso Ending Gratuito is part of the group with 3.1 million users and almost 1 million followers on YouTube and 12 million views. So this is a major source of leads for us and a very nice piece of our digital education platform. Page 14, in this slide, we show details of the intake and the average ticket for each of the brands in the digital education undergrad business during the second half of last year, comparing to the second half of 22. So for intake, the intake in the second half of last year was 27% higher than the previous year, especially due to the performance of UNICEF. And as I mentioned in the previous call, last year we worked in the repositioning of UNICEF and achieved a more balanced split between the first and the second semesters of the year. we saw an untapped opportunity to increase the intake of this brand in the second intake cycle of the year, and then we grew 59% over the previous year. In the case of Unia Selvi, Intake grew by 13%, which is a strong performance considering the quite high comparison base, the quite tough comp, knowing that the intake of UniaSELV grew at an annual rate of almost 30% between 2019 and 2022. So for tickets, in the case of Unia Selvi, every ticket grew slightly above inflation, about 7%. This is mostly due to this pricing discipline that I mentioned before, our marketing intelligence and the tools and the procedures, the systems that we have in place to set our prices, to adjust our prices. And this is the kind of discipline that we have been using and mentioning to you over the last years. When we see the evolution of the average ticket of Unia Selvi in the last four years, the CAGR of the increase is virtually the same as the annual inflation rate in Brazil over the period. In the case of Unicezumar, we have noticed a clear improvement in the pricing throughout last year, so a 13% increase semester on semester. And these are the first results of the implementation of best practices between the two brands that we started in 22 and we are reaping now the results in 23. So this change had to do with several improvements, including the commercial approach to attracting students, the annual increase of tuition, for senior students and a more granular and data oriented use as we used to do at UNICEF and by the way regarding the current intake cycle until today today 21st of march we are growing the at the level of low double dips in the first quarter of this year compared to the first quarter of previous year So page 15, the big numbers, big financial numbers. Net revenue, as I mentioned, growing by 49% year on year. Gross profit increasing 59%. So margin went up by four points from 61.9 to 65.9 in the year. And the EBITDA margin went up by 2.7%, reaching, as I mentioned before, 36.6 in the year. now let's talk about each of these segments on page 18 first the digital education undergrad business which is our core business and we uh grew by 42 percent uh in the segment uh in the in the year quarterly on quarter was a 17 percent uh increase also important uh and uh and we keep kept and keep on gaining market share in the segment. But here on the right, you can see that we, as you know, that we have been gaining market share throughout the last years in a booming business. On page 19, some remarks about our medical business. As you know, a quite high quality business, the fifth best private school in Brazil, the largest medical campus in the south of Brazil. We ticket now over R$12,000. increasing above inflation, given this higher quality, and SIPs still maturing. So we expect promising results for this business over the next years. So with this combination of SIPs maturing and tickets growing above inflation, the net revenue of our medical business grew 31% in the quarter. On page 20, the on-campus ex-medical business, which grew by 6% in the quarter, but an important growth year on year, given the relevancy of this business within UNICEF, especially the health-related courses. And continuing education on the right. A strong growth here in the continued education course segment. This comprises not only our graduate courses, but also a growing business of technical courses and professional courses. The segment is our smallest today, so far with only 5% of our net revenue, but it is the one that is presenting the fastest growth. So this is also a very promising area, and we do believe that we can offer complementary products to our students throughout their adult life. And to illustrate this potential, to illustrate this prospect, we created slide 21 to show the prospects of the continued education segment. So just a few numbers here. We have in Brazil today around 1.2 million college graduates, which is an important flow for our postgraduate courses, and 7.7 million graduates in high school in Brazil, which is an important flow for our technical and professional courses as well, besides the undergraduate business. But it's also important to highlight here that we have around 58,000 students in this segment, most of them still in graduate courses, but the fastest growing business is the technical courses. This is a new business that until two years ago, more or less, was regulated only at state level in Brazil. But two years ago, the Minister of Education, the MEC, authorized this learning place such as Vitru and others to offer this type of courses at federal level based on the quality rates of the digital education undergrad courses. So because we offer high quality undergrad courses, we were allowed to offer and there is a specific accreditation process for each course to offer these technical courses. So given our quality, we were granted so far 42.8% of the seats authorized by the MEC. So this can be a nice contributor for our numbers over the next years. So now about a bda bda margin growing as a mission is 2.7% point sorry over the year, and let me show you now where you come from. So regarding cost of service, we had a. A slight increase in the quarterly numbers because of intra year some variations, but the yearly numbers, they were declined at 2.3% points year on year, which is basically due to operational synergies that I have been mentioned to you over the last quarters. For G&A is the same. We had a slight increase in the quarter, but basically because we had a strong decrease in the third quarter. So when you analyze these numbers, even for cost of service and for G&A, we had in case of cost of service, a decrease in the case of G&A, a stable number of around 6% of net revenue, which is by the way, the lowest in the industry. So we are quite lean and quite focused on maintaining a lower level of G&A. For selling expenses on page 24, the quarterly expenses as a percentage of net revenue were basically flat at 16.6%. And if you look at the early numbers, there was a slight reduction in such expenses as a percentage of net revenue, which uh given certain gains of scale and especially a more optimized mix between digital and offline marketing for the whole group for pda at the right as it was the case in the in the third quarter of last year the fourth quarter of 23 was very positive for us in terms of cash collection With that, the PDA is starting to go down. So PDA in the year amounted to 13.4%, so a reduction of 0.8 points over the number of 22, even despite the strong intake results of last year. This is not yet the ideal level, but I do believe that we are going in the right direction. on page 25, just net income. This quarter, we had a reduction in this net income for the quarter, which was affected by two effects, two things. One was higher financial expenses, given that we prepaid the sellers financing this in December. When we issued the ventures, we prepaid the sellers financing in the same day, which was associated with the acquisition of Unitasumar. And this prepayment generated a accounting increase in expenses. The other effect was due to lower default income taxes in the fourth quarter of 23 compared to the fourth quarter of 22. So the positive impact was roughly 30 million reais lower in the fourth quarter of 23 versus the fourth quarter of 22. so this deferred income taxes as you know is generated as you as we have taxable losses over time which is our case but the positive contribution of this was more important more were stronger in the fourth quarter of 22 in 30 million than it was in fourth quarter of of 23. Anyway, we're presenting an important growth in the income in the numbers, even with the acquisition that in our balance sheet throughout the year. But as you do remember, we acquired in May of 22. That's when we issued our 1.9 billion the first venture of the company. And here you can see on the right part of slides. the the increase in expenses uh in financial expenses that I mentioned so even with the increase in expenses of our about 100 million reais last year comparing 23 with 22 we had an increase of about 24 in the net income uh adjusted of last year page 26. So important cash flow generation and a reducing level of capex. So first capex went down throughout the year. So in the fourth quarter, reaching 7.1% of net revenue, reaching 6.2% throughout the year on average last year in 23, going down from 7.4 in 22. So this is... okay relatively low given our asset light operation and by the way around two-thirds of our capex is related to investments in learning and IT systems and technology so most of our capex is is focused on technology and very few of it very very little of it is focused on hard assets On the right part of the slide, cash flow. So we had a slight decrease in the cash flow in the quarter. This was because of certain, the same way that we had in the cost, we had a very strong performance in the third quarter, a smaller performance in the fourth quarter. So that's why we show here as well, the semester numbers in the middle of the chart. the second half of 22 and the second half of 23, we had a 36% increase in the operational cash flow between these two years. And by the way, as I mentioned, we acquired in May 22. So here we are do comparing apples to apples. But this is just to illustrate the positive working capital environment that we managed to have in the second half of last year. For example, we are now in December, we were at the lowest level ever in receivables days with 44 days compared to 57 days that we had, for example, in June of 23. And if we take, for example, our net revenue in 23. And compare this net revenue to the net revenue accumulated. In the previous quarter, I mean, between October 22 and September 23. There was an increase of 4.1% more or less, which is. More that's what we've been growing on a yearly basis, but there was a decrease. of around 10.8 percent in our short-term accounts receivables position uh in December 23 compared to September 23. so we managed to grow revenues by 4.1 percent in this in one quarter and reduce in almost 11 percent the accounts receivables so this is cash flow uh itself So page 27, the integration, which is called here Project Illumina. Integration, which is advancing, advanced and is advancing faster than expected. So here on the right, you can see the impact on EBDA through cost and expenses, the cost expense reduction that we had that we overachieved what we said that we were going to do. These levers are not only personal optimization, but also gains of scale in contracts and better retention practice at UniaSelvi. And also on the commercial side, as I mentioned before, through the expansion with other brands within the same city, through different new products and courses, we also managed to beat our estimations for commercial synergies. So now the next step will be the modernization of the criteria for recognition of the student's engagement, meaning that as from this year, UNICEF will use the same criteria of UNICEF for the activation of students. This will result over time in higher retention rates, lower PDA and higher EBITDA margins as well. So on page 28, our debt level, Our debt level was 1.94 billion reais in net debt. This without leasing, this is the way banks used to look at debt levels. So 1.9 billion reais of net debt. which meant a ratio of net debt over adjustability of 2.9 in december so it was 3.3 in june then 3.1 in september of last year and then 2.9 in december so we are not only uh the leverage but also very fast and of course this was all uh aligned with our financing plan that we draw that that we designed when we uh had the combination with and also with this new adventures that I mentioned before we also extended the average duration and demonstration schedule of our debts finally on page 29 the status of the migration from nasdaq to b3 so what we have been able to do in the last months well we launched the transaction in september of last year as you know we got the green light from cvm to convert virtual brazil sa from b category to a category in brazil in December 4th of last year. And then just after Christmas, we got the green light from B3 for the Novo Mercado listing. And finally, we got the green light from the SEC. The F4 form was declared effective by the SEC two weeks ago, March 6th, finally. It was a long, long process, but we managed to accomplish it. And then we were able to call the shareholders meeting, which was done last week, last Friday. And then the next step will be the shareholders meetings of both Virtual Brazil and Virtual Limited will take place, as I mentioned before. on April 19th, in one month from now, then there will be an election period of about one month as well, during which the shareholders of Virtual Limited will be able to choose whether to receive Virtual Brazil shares or Virtual Brazil ADRs. So some of them will choose to receive directly shares, which would be easier to trade here at B3. Some of them, for example, some small shareholders in the US, for example, they will choose to receive ADRs. So we do expect that the delivery of the securities, ADRs and shares, will take place potentially early June, and then we will be able to start trading at B3 at Novo Mercado. So, that was it I think it was a good set of results and now we'd like to open for questions.
spk03: We will now begin the Q&A session. Remember that to ask questions, you must click on the Q&A icon at the bottom of the screen to join the queue. If you prefer to write your question, please follow the same steps and you'll be joined the queue as well. Upon being announced, a request to activate your microphone will appear on the screen, and then you must activate your microphone to ask questions. We kindly request that all questions be asked at once. Let's proceed to our first question. It's from Lucas Di Nagano, Morgan Stanley. Lucas, we'll now open your audio so that you can ask your question. Please proceed.
spk06: Hi, Carlos. Good evening. Thanks for taking our questions. We have two.
spk07: The first one is related to average ticket. The increase last year was particularly high. And for 2024, should both move, both tickets move more aligned with inflation? And in the case of Unisuzumar, are you seeing any impact with attrition due to this new pricing policy? And the second question is related to regulation. If MAC goes in the direction of increasing the percentage of in-person hours to something from like 30% to 50%, let's say, how do you see it impacting your operations both for UniaSelvi and Unisuzumar? Thanks.
spk01: Great, Lucas. Thanks for your questions. So regarding tickets, let's indeed return there to the slide about tickets, which is here. So indeed, we had an important growth last year in the first semester, also in the second semester. Now, looking forward, I mean, we have the intention and we have been working to deliver it to increase tickets more or less in line with inflation. So there are quarters in which we'll be able to deliver more inflation and some quarters less inflation. I think it's still a bit premature to mention how this will evolve over time. What we are seeing is that so far we have been able to have intakes, for example, more or less at the same level of last year. So we were able last year to grow intake tickets quite well. This year we have already a higher price. So year on year, our intake price is more or less at the same level of last year. But this will mean that our average ticket will increase more than zero. But I don't know yet if this will be in line with inflation or slightly less inflation. Let's see. Over time, I mean, last year we grew by 7% and 13% to the month. So this is way more than inflation. So it's not feasible to keep growing more than inflation forever. So let's see how this evolves for the year. And for regulation regarding in-person hours, I mean, we will adapt. We have, when we see our hubs on a comparable basis, I mean, we have, in the case of UNIASELVI, the academic model is hybrid. In the case of UNIASELVI, the hubs are also hybrid. way better and bigger than the ones of the peers. And so we will adapt. So let's see what that comes. We do believe that we are better prepared than anybody else to adapt to this type of requirement for more in-person hours or percentage for these courses.
spk06: Carlos, thanks.
spk01: Thanks, Lucas.
spk03: The next question is from Mirela Oliveira, Bank of America. Mirela, we'll open your audio so that you can ask a question. Please proceed.
spk02: Good evening.
spk04: Sorry. Good evening, Carlos, William and Carol. I have one question here on costs. What do you think on cost cutting opportunities? What do you think are the main lines that could bring gross margin expansions in 2024? And secondly, you mentioned on the release, on the cash flow from operations, that there was a one-off effect for the semester. Which effect was that, if you could give more details on the impacts for the semester? Thank you.
spk01: Great. So for cost opportunities, I mean, we are I mean, quite well advanced in the integration. So I'd say the most of the gains and synergies, they are already incorporated in the numbers of last year. But there will still be some more gains for 24. And one of the lines that we do expect gains is, for example, contracts. So this impacts both costs and G&A. So when you renew a contract, a service contract, for example, or a IT contract. Now we have a much bigger scale and so our contracts which are two years, three years or one year in duration. So when you renew it, you have only the full year effect of this better rates only in the following year. So we still gonna have more impact for this year. We are also, integrating our year, our academic ERP. So, our ERP is still separate, the one for UNICEF and UNIASELV. The one of UNIASELV is proprietary. The one of UNIASELV is not. So, we are now integrating and moving to the one of UNIASELV, which also means some costs and savings in costs for this year. But I'll tell you to be frank that I mean, most of the gains coming from the integration, they are already in-house. We do expect, of course, some more gains of scale with the dilution of fixed costs, which is normal given our business, our size. But gains from integration, they are mostly in-house or done. And I mean, the, the, the 1 off effect in in in cash that that we mentioned, uh, we have. A very strong collection in in the in the 3rd quarter of of of last year. We had also some. Some postponements of payments in the 3rd quarter. So, and then we had to to. I mean. to pay this cost or to have a higher comparable basis in the fourth quarter of this year. So basically that's why we mentioned here that the normalized number for the semester is much more important to show and which grew 36%, if I'm not mistaken, which is here, 36% semester on semester. So my point is that the basis for the next for this year uh is what we have here so 225 million reais in in cash flow from operations in the semester uh is a very nice level and a very important cash conversion as well thank you that's super clear the next question is from luca marquezini itaubi luca will open your audio so that you can ask a question please proceed
spk05: Good evening, everyone, and thank you for taking our question. We've been hearing from other players that intake volume has been flattish so far in the first half intake cycle for this year, mainly due to not only a strong comparison base, but also to the top-down scenario as a whole. So can you provide us with some color on the intake so far and if you have been seeing the same trends for Vitru? Thank you.
spk01: Thanks, Luca, for your question. In our case, what we have been seeing so far is a growth in intake. So the first, until now, until today, 21st of March, we have a low double digits growth in the intake compared to the first semester of last year, the same period of last year, in fact, about low double digits growth in intake. and more or less flattish tickets for intake that's what we've been seeing so it seems that we are growing uh more than the market again given the quality of our offerings that's very clear thank you Carlos thank you Luca
spk03: The next question is from Caio Moscardini, Santander. Caio, we'll open your audio so that you can ask a question. Please let me proceed.
spk02: Good afternoon. Thanks for taking my question. I have two questions here. One in regards to regulation, right? One of the discussions that we have been hearing is that the Ministry of Education could implement a minimum number of professors per student. So I would like to ask, how can you protect yourself if something goes on that direction? And you have to increase the number of professors that you have to achieve a certain minimum, which we don't know. And the other question is in regards to leverage. What is your expectation in terms of net debt to EBDA during 2024? What level could you achieve in the end of 2024? Thinking just purely organically here. So thank you. Thank you for your answer.
spk01: the opportunity thank you so regarding the second question about leverage uh we we keep on expanding uh a bda and also reducing net debt given that we generate more free cash flow than accrued interest uh so our net debt will go down uh uh over time so that will be lower in december of this this year than it was the same last year so our expectation that this uh ratio of net debt over the cba uh will be at around two around two by the end of december of this year uh and again not taking into account leasing expenses in the debt, but taking into account leasing expenses as an expense in the BDA. So the way banks usually calculate the covenant. So around two, today we are 2.9, and this will go down at around more or less 0.2 points per quarter, more or less. And for regulation, I mean, regarding the the the number of professors or students per professor, this is not this is not a requirement, a requirement for the means of education. When this was, uh, when the, the requirements were, were defined a few years ago, uh, there was no, uh, indication. There was no requirement about having a minimum. Number or maximum number, sorry of, uh, professors, uh, uh, or sorry, maximum number of features of, uh, students per per processor. Sorry. Uh, so what we have, uh, uh, been, uh, uh, doing is that we are quite, let's say, uh, at easy with this with this, uh, issue we have the academic. Uh, uh, agents, which are also tutors, so the regulation mentions academic agents. Which are professors and tutors and we have today more than 3,500 tutors throughout Brazil. So this is what is required to have academic agents. There's no such requirement such as you cannot have more than X students per professor. So otherwise we will not be complying a lot. So how can I not comply a lot if there's no law? There's no maximum ratio. So, we're, we're quite, I'd say, uh, comfortable with that. And, and we, and we, that's why we showed that. Uh, anyway, when we see the CC, the course concepts that the ministry of location itself. gives to every institution and to every course, in fact, that I'm putting here as well in the screen on page 12, you see that 61% of our courses have a CC5 and 99% of our courses have a CC of four or five, sorry. So this is just an illustration that, I mean, we are not very worried about it.
spk02: That's very clear, Carlos. Thank you very much. Have a good evening.
spk01: You too.
spk03: We remind you that to ask questions, you must click on the Q&A icon at the bottom of the screen and write your question to join the queue. The next question is from Bruno Guevara, Tarpon. Bruno, we'll open your audio so you can ask your question. Please proceed.
spk00: Hi all, thanks for taking the question and congrats on the results. I have a specific question. I know it was not part of the discussion here, but it's related to churn. If there is any change in churn in 2024 and if you could give us some information on that. Thank you very much.
spk01: Thank you Bruno for your question. Regarding churn and retention rates, that's an important issue. When you compare the fourth quarter of last year with the fourth quarter of 2022, there was a slight improvement in this ratio, in this retention rate, both at Setobar and Unia Selvi. And so, this is, I think the start of this recovery process, we had a deterioration of this rate in the last years, given the economic situation, etc, given also our growth and now even. I mean, despite the fact that we are growing a lot and we had this important intake also last year, we managed to decrease it slightly. But the trend is positive. The turn. So and I mean, I mentioned the intake because most most of the turn is related to newcomers to new students. So we could have a very low churn, low overall average churn if we have no intake, for example. But we don't want it. So we have to have a balance between churn and intake and tickets. So this three piece equilibrium must be reached. And I guess that now we are closer to reaching this balance.
spk03: Thank you. This Q&A session is now closed. I would like to turn the floor over to Mr. Freitas for the company's closing remarks.
spk01: Thank you, everybody, for following us throughout last year. And we are available for any further questions you may have over the next days. Thanks and good evening.
spk03: The video conference of results referring to Vitru's fourth quarter and full year 2023 is closed. The investor relations department is available to address further questions and concerns. Thank you so much to all participants and have a good evening.
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