Vasta Platform Limited

Good afternoon and welcome to VASTA Platform Limited's fourth quarter 2022 financial results conference call. All participants are in a listen-only mode. After the speaker's presentation, we will conduct a question and answer session. To ask a question, you'll need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Marcelo Wernick with Investor Relations. Thank you. Please go ahead.

Good evening, everyone, and thank you for joining us in this conference call to discuss VASTA Platform's fourth quarter and full year of 2022 results. The fourth quarter also represents the first quarter of the 2023 sales cycle, which goes from October 22 to September 23. I am Marcelo Werneck, VASTA's IR, and with me on the call today, we have Mario Gil, VASTA's CEO, Guilherme Melega, VASTA's COO, and Cesar Silva Vazquez, CFO. Before we begin, I'd like to read a forward-looking statement. 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 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, expectations for future periods, our expectations regarding our strategic product initiatives and their related benefits, and our expectations regarding the market. Forward-looking statements are based on our management beliefs and assumptions and all information currently available to our management. These risks include those set forth in the press release that we are issuing today, as well as those more fully described in our filings with the SEC. The forward-looking statements in this presentation are based on the information available to us as of today. You should not rely on them as predictions of the future events and we disclaim any obligation to update any forward look statements except as required by law. In addition, management may reference non-IFRS financial measurements 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. Let me now give the call over to Gil to make his opening statements.

Thank you, Marcelo. Thank you all for participating in our earnings release call. I would like to cover the slide number three with some highlights of the 2022 fiscal year. Vasta concluded this year with a 39% subscription revenue growth over the same period of last year. Subscription revenues totaled 1.12 billion reais in 2022, and the fourth quarter of 2022 or the first quarter of the next commercial cycle, continues to show a very positive trend after the excellent results showed in the 2022 sales cycle. And that exceeded our 2022 ACV guidance by 2.44%. The non-subscription segment, as expected, remained flat compared to the previous year, representing now only 11% of VASTA's revenue. Thus, in the 2022 full year, the net revenue grew 33% and reached R$1.264 billion. The results reflected strategic consistency and operational excellence, as we continue to observe. Migration of customers from non-subscription to subscription products, upsell to premium education brands, accelerated growth in the complementary solutions portfolio. Complementary solutions grew 58% compared to the last year. Vastas adjusted EBDA grew more than 100% and reached R$375 million, with a margin increase of 10.5 percentage points, reaching 29.7%. In the fourth quarter, adjusted EBDA totaled 200 million reais, a relevant 25% increase compared to the fourth quarter of 21. When adjusted, EBDA was 161 million reais. This improvement was mainly driven by operational leverage gains, cost savings, and improved sales mix with the growth of subscription products and the higher penetration of our premium brands. It's also worth mentioning that the adjusted BDA and adjusted net profit were negatively impacted by 15 million reais in provisions for adoptive accounts, or PDA, of a large retail company, a large retail Brazilian company undergoing judicial recovery. Our free cash saw a significant improvement of over 200 million reais to a total of 112 million normalized free cash flow in 2022 compared to a consumption of 94 million in the last fiscal year. The improvement is driven by the recovery of operational results and better working capital dynamic, that is bringing down the net debt ABDA ratio to less than three times. This is the fourth consecutive quarter of improvement in this indicator. And finally, talking about the 2023 ACV, as we announced last quarter, we signed a total of $1.23 billion realizing subscription contracts, which represents a 20% organic growth over the subscription net revenue of the 2022 commercial cycle. Traditional learning systems, ACV, grew 20%, while complementary solutions grew 39% in comparison to the last ACV. I will now turn back to Marcel Werneck, who will talk about the financial results of the quarter and the full year of 22.