Vasta Platform Limited

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 benefit, and our expectations regarding the market. Forward-looking statements are based on our management's beliefs and assumptions and on 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 Securities and Exchange Commission. 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 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. I would now like to turn the call over to Cesar Silva, Chief Financial Officer. Thank you, please go ahead.

Hello everyone, good evening, and thank you for joining us in this conference call to discuss VASTA Platform second quarter of 2025 results. I'm Cesar Silva, VASTA CFO, and today we have the presence of Guilherme Mélaga, VASTA CEO, who will be joining me on the call. Let me now hand over the floor to Guilherme Mélaga, our CFO, to make his opening statements.

Thank you, Cesar, thank you all for participating in our earnings call. Let's move to slide number three with some highlights of 2025. We are now entering the final portion of 2025 sales cycle, which runs from October 2024 to September 2025. I'm pleased to report that in the second quarter, we continue to deliver solid financial and operational performance, with consistent growth across both our core and complementary solutions. A particular highlight this quarter was our free cash flow. Subscription revenue reached ,000,000 in the cycle to date, 16% increase compared to the same period of 2024. This result demonstrates our ability to sustain double digit growth in our core business for the fourth consecutive year. Our complementary solution business grew 24%, supported by accelerated expansion in both student base and market penetration. As a result, net revenue in 2025 cycle to date reached ,000,000, a 14% increase compared to the same period in 2024. This growth was driven by the successful conversion of ACV bookings into revenue, along with the strong performance of complementary business. In the B2G segment, we recorded ,000,000 in revenue from new customers, totaling ,000,000 in the cycle to date. Over the last two quarters, we generated ,000,000 from new customers, mainly municipalities, who began using our product and service, confirming that our strategy is on the right track and diversifying our B2G portfolio into states and municipalities. In the 2024 bail cycle, we booked ,000,000 in revenue from the Pará contract, which was recognized all at once, covering the first and second semester. And in the current cycle, the first semester of Pará was booked in Q4 2024, and the second semester is expected to be performed in the second half of 2025. On the profitability front, adjusted ABTDA reached ,000,000, an 8% increase compared to the previous cycle. The ABTDA margin was 31.1%, reflecting a different product mix, lower -to-date B2G revenue, and higher marketing expenses related to business expansion. In Q2 alone, adjusted ABTDA was ,000,000, with a margin of 11.7%, up 2.9 percentage points from Q2 2024. Free cash flow remains a key strength. In the cycle today, free cash flow totaled ,000,000, an increase of ,000,000, -over-year. In Q2 2025, free cash flow reached ,000,000, 108% increase compared to Q2 2024. Our last 12 months free cash flow to a B2D conversion rate improved to 57.7, driven by growth and sustained efficiency measures. These results reflect our ongoing efforts in operational discipline from automation and collection process to centralized payment scheduling and renegotiation of supplier terms. We also continue to make progress in the leveraging, with net debt ABTDA last 12 months at 1.9 times, down from 2.28 times in Q2 2024. Turning to start angle bilingual school, another important growth avenue, we can say that our operations continue to expand. We implemented five new operating units this year, and together with our two flagship schools, we now have seven units in operation. Closing this quarter, we have signed over 50 contracts, and we are actively working to deliver another strong growth cycle in this business line. Finally, we remain committed to innovation and inclusion. As we prepare for 2026, throughout AI, we will introduce new tools focusing on equity and personalized learning. The Individualized Education Plan, EEP, will empower educators with tailored pedagogical recommendations, supporting inclusive practice and transforming challenges into opportunities for growth. We are confident in our strategy and proud of the progress made so far. I'll now turn back to Cesar Silva, who walk us through the financial results.

Thank you, Melina. In slide number four, we present the composition of Fastas Net Revenue. On the left side, you can observe the organic growth for the second quarter in total net revenue, which included by 21.8%, reaching 358 million reais. Fastas subscription revenue achieved in the second quarter of 2025, 320 million reais, a 15% increase comparing to the same quarter of 2024. No subscription revenue increased at 98% to 29 million reais, due to a seasonal effect between the first and second quarters related to the legal books. And in the governance segment in this quarter, we generated 90 million reais in revenues. And together with the five million book in the last quarter, we total 14 million reais in new customers. So in the sale cycle, we achieved 15 million reais, a decrease of 28% in comparison to 69 million reais of 2024, as there were explained by Guilherme before. Moving to the right side, you have the numbers of the net revenue for the 2025 sales cycle to date. We achieved an organic growth revenue of .6% in the 2025 sales cycle to date, amounted to ,000,000 reais, the main factors for this performance were, firstly, the subscription revenue had increased 16%, reaching ,000,000 reais and continues to be the major contributor to our total revenue, representing now 90% of the revenue share. No subscription revenue increased 11% to 98 million reais. This growth is mainly driven by two effects, the new revenue for our flagship start, Angulo Lyceo in Sao Paulo, that did not exist in 2004, 2024, and the growth in the number of students in the Anguipur University course, which enrolled 21% more students than last year. Moving to slide number five, we can say that in this quarter, our adjusted BPA amounted to 42 million reais, with a margin of 11.7%, an increase of 62% from the 26 million reais in the second quarter of 2024, mainly due to the growth in core content and B2G net revenue. On the right side, we see that adjusted BPA in 2025 sales cycle increased by 8.1%, to reach 462 million reais, with a margin of 31.1%. Let's now move on to the next slide and explain the breakdown of the adjusted BPA margin. Inside the number six, we can see that the adjusted BPA margin achieved .1% in the sales cycle, 1.6 percentage points, lower than the same period of 2024. Our gross margin reached 62%, a decrease of 2.4 percentage points, from .4% in the 2024 sales cycle, due to a lower revenue B2G and a different product mix. Provisions for delta accounts achieved .1% in relation to the net revenue, and have an improvement of 0.9 percentage points when compared to 2024. This indication has been showing improvement during the year, despite the very challenging rate-switching credit environment for non-premium brands, and we still have foreseen some challenge in the credit scenario for the next month. As a percentage of net revenue, our commercial expense increased by 0.6 percentage points, driven by higher expenses related to business pension of the commercial cycle of 2026, and remain stable near 17%. And finally, adjusted GLE expenses improved by 0.5 percentage points, mainly driven by workforce optimization budget-added discipline measures. Moving to slide number seven, we showed adjusted net profit. In the second quarter of 2025, adjusted net losses total minus 29 million reais, showing an improvement from the adjusted net loss of minus 37 million reais in the same quarter of 2024. In the sales cycle, adjusted net profit reached 111 million reais, and there has been a slight increase of 1% from the adjusted net profit of 110 million 2024. Moving to slide number eight, we showed the free cash flow evolution. In the second quarter of 2025, the free cash flow totaled eight million reais, representing a relevant increase compared to 38 million reais in the same period of 2024. And in the 2025 sales cycle, our free cash flow reached 223 million reais, an increase of 147% from 2024. The cash flow generation in the cycle has an outstanding performance and achieved the highest level of conversion related to the adjusted BPA in the last years, achieving 57.7%. This is .6% better than the same indicator as last year. This improvement is explained by certain measures that that company has implemented in their showing results. We can mention some of these measures. In our collection process, we implemented automatized process, like reminders and press to notification to the customers. We created a customer classification measure to make a faster renegotiation of overdue receivables. On the payment side, we implemented several initiatives to enhance discipline in payments, such as rigorous financial planning, centralized payment scheduling, and negotiating longer payment terms with suppliers. Additionally, the first semester of 2025 benefited from early collections of the 2025 sales cycle, which are expected to be normalized throughout the next quarters of the year. Is it worth mentioning that for the year, we expect that we will achieve a conversion rate of about 50% in the 2025 fixed sale year at the end of the year. This will represent a relevant increase from .8% compared to the same indicators in the last year of 2024. Moving to slide number nine, we show the provision for doubtful accounts. Total expenses with PGA in the second quarter of 2025, total 11 million reais, so presenting .1% of net revenue. An improvement from the comparable quarter in 2024, when the PGA achieved .4% of net revenue. In the sales cycle of 2025, the PGA amounted to 45 million reais, compared to 52 million reais in 2024. Provision for doubtful accounts were presenting .1% of net revenue in 2025, an improvement of 0.9 percentage points in comparison to 2024. As explained before, we still foresee some difficulty in the credit scenario mainly for the school related to mainstream brands. Moving to the next slide, we observed that the average payment terms of VASTA's account receivable portfolio was 153 days in the second quarter of 2025, which is one day higher than the comparable quarter in line with the business model's seasonability. Moving to the next slide, let's take a closer look at the net debt movement. In the second quarter of 2025, VASTA had a net debt position of 917 million reais, 46 million lower than the previous quarter. These achievements due to the positive cashflow generated during the period in the amount of 80 million reais, which surpassed the impact of interest accrual of 34 million reais. Moving to the right side of the slide, the net debt position decreased by 123 million reais in the sales cycle to date. This decrease was driven also by the free cashflow generated in 2025, which was partially offset by the financial interest costs. I will conclude my part of this presentation with slide 12, explaining some more detail about our net debt composition, which represents 917 million reais at the end of the quarter. This amount is composed of 717 million reais on the ventures issued to the parent company, in addition to 462 million reais on account payables for business combination, mainly related to a lab acquisition. These number were offset by 215 million reais on cash that the company owns. In the lower left part of this slide, we can see that in the second quarter of 2025, the net debt to last 12 months adjusted by Rachel has decreased 0.16 times from the last quarter, and now it's sent that 1.9 times. We would like to reinforce our commitment to continuing to generate free cashflow and devourage the company. Having said that, I finish our presentation, invite you all to the Q&A session.

As a reminder, to ask a question, please press star, followed by the number one on your telephone keypad. To withdraw any questions, press star one again. Our first question comes from Marcelo Santos from JP Morgan. Please go ahead, your line is open.

Hi, good evening. Thanks for the presentation and the opportunity to make questions. I wonder if you could comment a bit on the commercial cycle and the competitive environment and focus on core and complementary issues how these two are going. And the second question is regarding the outlook for B2G contracts for new states, and if the election year is a good year or is a bad year to close this kind of contracts. Thank you very much.

Thank you Marcelo for your questions. Let me

give

you some flavor about the commercial cycle. We are keeping the pace in our commercial cycle for 2026. We are seeing a very positive outlook for complementary products. The penetration in our school base keeps running, keeps improving. There is definitely demand for bilingual, social emotional and major products. We have been growing with more than 20% on complementary and we don't see that changing a lot for the next cycle. In terms of renews contracts, I would say so far it has been a very good year. So we keep a very positive outlook for 2026. But that mainly because we have a very strong portfolio, very complementary to the school needs. And I think we reached a very unique position to keep the growth. The market is very competitive, but we are moving ahead on that. In terms of B2G, our strategy to keep growing on B2G is being performed. We have around 10 new customers in the year to date, totaling 15 million reais in new contracts year to date. So we are working also in retail in B2G. Now we have municipalities on our base benefiting from the learning recomposition and SAEBI preparatory. We still have the second semester of para contract to be booked. We start receiving the orders and we expect at least one new state by year end. And that's pretty much the outlook. It's very positive for B2G also.

Thanks. And just follow up. Conceptually is an election year normal year, a good year, a bad year? Like, I know of course you don't have a crystal ball, but what can you say about the differences between selling during an election year and not selling election year?

Yeah, we don't have much history on that since it's a quite new business. And I pretty much give my guess that if you are doing an important, if you're helping the state or the clients, probably election year wouldn't be such a problem to keep the contracts. And definitely with elections, you have new governors and mayors willing to do new things on their mandate. So let's wait and see. So far we have a positive outlook.

All right, thanks a lot.

Our next question comes from Flavio Yoshida from Bank of America. Please go ahead, your line is open.

Hi, good evening everyone. I have two questions on my side. The first one is on the EBITDA margin, which came in very good shape, helped by lower provisions, right? So I would like to understand if the premium schools, the fact that premium schools are gaining share on the mix helped this trend, and also if we should expect these provisioning levels to continue improving going forward. And then my second question is also on B2G. So I was wondering if you guys could share with the B2G expectations for the second half of this year, if we could expect a similar level from last year, or you could expect some growth compared to the same period of last year. Thank you.

Thank you, Flavio. Talking about margins, yes, the margin is a reflect of premium products that we are selling, and also the growth. The growth has been a very important driver for margins, since it dilutes a very significant fixed cost that we have. And we expect Q4 to be a very important target because we recognize all the growth for 2026, and revenues and margins should be slightly above the 30% level. In terms of B2G, yes, we do have a very positive outlook for second semester. We expect to record the second half of the biggest contract that we have, which is Pará. We booked it for semester in Q4 2024, and we are receiving the orders for the second semester of 2025. On top of that, we have 10 new customers with more shipments in Q3 and Q4, and we expect to have new customers in municipalities, which are smaller contracts, but is enhancing our base. And we expect to grow in a state for Q4 2025. So that's the outlook. It's a positive trend.

Okay, that's very clear. Thank you.

Our next question comes from Lucas Nagano from Morgan Stanley. Please go ahead, your line is open. Lucas Nagano from Morgan Stanley, your line is open. Please go ahead.

Hi, can you hear me? Sorry, I was on mute. So yeah, thanks, and good evening. We have two questions. The first is related to start Angulo. From the contracts you already signed, do you expect all of them to begin operations already in 2026? And the second question is related to the non-subscription revenue. If you could provide some more color on this line, because you mentioned that the performance was kind of seasonal, but even when you look at the cycle to date growth, it's growing pretty decently. So what's driving this? Thank you.

Thank you. Thank you, Lucas. No, the new contracts, we have around 50 new contracts for start Angulo. We are already operating seven schools, two flagships and five franchises. We expect to have more eight new units in 2026, and the remaining will be opening 2027 and 2028 with a huge concentration in 2027. Regarding the non-subscription, yes, we have a seasonality in terms of revenue recognition in Q2, we have more revenue recognition, but the growth when you look at the cycle to date is mainly driven by the tuitions that we have on our two flagships of start, San Jose do Rio Preto and Liceu Paster in São Paulo, together with the prep horses, the Angulo prep horses that also grew. So the cycle to date reflects best the trend of this business, which now accounts for tuitions from our two flagship schools. And that's pretty much the trend for the non-subscription.

Very clear, thank you, Melliger.

We have no further questions. I'd like to turn the call back over to our CEO, Guillermo Melliger, for closing remarks.

Thank you all for participating in our call. The 2025 sales cycle to date continues reflecting vast solid execution and strategic focus. Our consistent revenue growth, strong cash flow generation and expansion in core business and complementary products, together with the two growth avenues of Sparta Angulo and B2G, reflect the commitment to delivering long-term value for our stakeholders. So thank you all to continue supporting us. We look forward to see you on the next call. Thank you all.

This concludes today's conference call. Thank you for your participation. You may now disconnect.