Arco Platform Limited

Thank you for standing by and welcome to Arco Platform's second quarter 2023 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 Roberto Otero, Arco's CFO. Otero, you may begin your presentation.

Thank you. I'm pleased to welcome you to Arco's second quarter 2023 conference call. With me on the call today, we have Arco's CEO, Aridji Sarkovo-Continente. During today's presentation, we'll 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 our actual results 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 products 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 Action Commission. The forward-looking statements in this presentation are based on the information available to us as of the date hereof. You should not rely on them as predictions of future events, as 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 for revenue, gross margin, sale 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's comparable period, unless otherwise stated. We also note that year-over-year comparisons are affected by acquisitions not included in our 2022 financials. With that, I'd like to turn the call over to Adi, our co-CEO.

Thank you, Otero. I would like to start with the highlights of the quarter on slide three. 2023 second quarter post-IFRS. strong operating cash flow dynamics across all business verticals with consistent improvement of all important underlying cash flow drivings such as operating working capital and capital allocation. Arco's pedagogical segment comprising both our core and supplemental solutions have maintained solid operational performance in the current 2023 cycle. yielding an adjusted EBITDA minus CapEx of 453 million Reais, a 56% growth year over year. This represents an expansion of margin of adjusted EBITDA minus CapEx of seven percentage points compared to the prior year cycle. This is also a strategy of capturing efficiency gains with centralized functions while increasing operation leverage with our continued growth, effectively mitigating the recent volatility in cost pressures highlighted in our previous reports. Our free cash flow to firm for the pedagogical segment in 23 cycle is 205 million reais, up from minus 81 million reais during equivalent period last year. The 20 percentage points improvement in free cash flow to firm represents the result of optimized working capital dynamics, reducing effective tax rates, and better allocating capex. Our financial management solution segment, referred to as F&M, continues its accelerated growth trajectory posting a 104% increase in net revenue year-over-year, reflecting the segment's product-market fit aligned with solid execution. This growth was accompanied by an adjusted EBITDA margin expansion of 86 percentage points, reaching minus 2.4 in this quarter. These gains were enabled by our focus on scalability and pursuit of operational efficiency with healthy delinquency levels in our portfolio. I will now turn the call to Otero, who will continue the presentation. Otero, please go ahead.