Arco Platform Limited

Good afternoon, everyone. Thank you for standing by and welcome to ARCO's platform third quarter 2021 earnings call. This event is being recorded and all participants will be in a listen-only mode during the company's presentation. After ARCO's remarks, there will be a question and answer session. At that time, further instructions will be given. Should any participant need assistance during this call, please press star zero to reach the operator. This event is also being broadcast live by webcast and may be accessed through ARCO's website at investor.arcoplatform.com, where the presentation is also available. Now, I will turn the conference over to Karina Carreira, ARCO's IR Director. Karina, you may begin your presentation.

Thank you. I'm pleased to welcome you to ARCO's third quarter 2021 conference call. With me on the call today, we have ARCO's CEO, Aridi Sakavalkanti Neto, and ARCO's CFO, Roberto Otero. During today's presentation, our executives will make forward-looking statements. Forward-looking statements generally relate to future events or future financial or operating performance, and involve known and unknown risks, uncertainties, and other factors that may cause or actually result to differ materially from those contemplated by these forward-looking statements. Forward-looking statements in this presentation include, but are not limited to, statements related to our business and financial performance, our expectations and guidance for future periods, our expectations regarding strategic product initiatives and their related benefits, and our expectations regarding the market. These risks include those set forth in the documents that we issued earlier today, as well as those more fully described in our findings with the Securities and Exchange Commission. The forward-looking statements in this presentation are based on the information available to us as of the day hereof. You should not rely on them as prediction of future events, and we disclaim any obligation to update any forward-looking statements except as required by law. In addition, management may reference non-IFRS financial measures on this call. The non-IFRS financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with IFRS. We have provided a reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measure in our press release. Please note that except from revenue, gross margin, selling expense, G&A, and cash flow from operations, all other financial measures we discuss here are non-IFRS, and growth rates are compared to the prior year comparable period unless otherwise stated. We also note that year-over-year comparisons are affected by acquisitions that were not included in our 2020 financials. Let me now turn the call over to Ari, our co-CEO.

Thank you, Karina, and thanks everyone for joining today's conference call. We hope that you and your families are all healthy and safe. We'd like to present three topics today, as shown in slide three. First, on the results, we had a 16% revenue recognition in the quarter, leading to a net revenue of R$ 1,057,000,000 for the 2021 cycle. Excluding new business, which our business not accounted for in the nine months of 2020, our G&A expenses started to reflect efficiency measures, which will lead to improved profitability and earnings quality. while selling expenses increased aligned with the successful 2022 commercial cycle. We highlight and will detail further ahead the positive performance of our allowance for doubtful accounts, which dropped 61.8% year over year and has returned to historical levels with a sequential increase in our coverage index. The adjusted EBITDA margin for the quarter was 8.6%, the lowest margin of the cycle as expected due to historic seasonality. Additionally, it reflects product development and investments in sales and marketing, as well as the new business which carry lower margins as they are still in early stages of maturation. Margin for the 9 months of 2021 was 26.8%. Excluding the acquisitions concluded in 2021, the 9-months 21 margin was 27.3%. Second, we reiterate our 2021 adjusted EBITDA margin, which will be between 35.5% and 36%. We will present the drivers that will take us to this result further ahead. but I wanted to emphasize that this will configure an important achievement and indicates our commitment to the guidance we disclose to our shareholders, despite the lower than expected revenue generation this year, which was not anticipated by us by the time of the guidance announcement. Finally, we are announcing today our guidance for next year. We're very proud to say that we have a very strong commercial cycle, despite the fact that our commercial activities start later than usual this year because of the second wave of COVID in Brazil. We expect revenues to grow between 27% and 29% organically in the 2022 cycle, or 38% to 42% with recent M&As. We are also moving the announcement of our adjusted EBITDA margin guidance for the upcoming fiscal year to the third quarter as we have revisited our budgeting process. We are moving our EBITDA margin guidance range to 36.5% to 38.5% for 2022, from 35.5% to 37.5% for the last three years. as ARCO continues to reinforce its platform profile and benefits from a more efficient structure. I will now turn the call to Otero to discuss the results for the quarter. Otero, please go ahead.