Arco Platform Limited

Good afternoon, everyone. Thank you for standing by and welcome to ARCO Platform first quarter 2022 earnings call. This event is being recorded and all participants will be in a listen-only mode during the company's presentation. After ARCO 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 via 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 presentations.

Thank you. I'm pleased to welcome you to ARCO's first quarter 2022 conference call. With me on the call today, we have ARCO's CEO, Aridjisaka Bocconcinetto, 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 actual results to differ materially from those contemplated by these forward-looking statements. Four working 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 the filings 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 predictions 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 2021 financials. Let me now turn the call over to Adi Arco, 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. I would like to start with the highlights for the quarter on slide three. First, As mentioned in our fourth quarter results, the year started at a very strong pace, favored by the resumption of classes in the Brazilian private K-12 schools and the return of students who dropped out from school during the pandemic, creating a really positive momentum in the sector. This movement led to a significant number of additional orders placed in the first quarter. Second, as a result to this high level of late orders being placed in the first quarter, part of these orders were delivered in April, causing an unusual effect of revenues that are traditionally recognized in the first quarter slipping to the second quarter. When analyzing figures cycled to date from October 2021 Through April 2022, which will neutralize this effect, we showed that the ACV recognition was 66%, the highest level at this stage over the past years, confirming our expectation of 100% conversion of our ACV into revenues this year. Third, our adjusted EBITDA margin increased 300 basis points year over year, for the first four months of 2022, evidencing our commitment to improve processes and improve efficiency. We are reaffirming our margin guidance for 2022 fiscal year of 36.5% to 38.5%. Finally, on cash generation, this quarter we already had capex as a percentage of revenues returning to historical levels in a healthier receivable profile, indicating strong cash generation ahead. Also, in May, we concluded the incorporation of CoC and Don Bosco, leading to important tax savings going forward. This is a key priority for us this year. I will now turn the call to Otero, who will continue the presentation. Please, Otero.