Cogna Educacao S A S/Adr

Those hearing in English, there is an option to mute the original audio by clicking in Mute Original Audio. We inform you that this teleconference is being recorded and will be available in the RI website of the company, www.ricognite.com.br, where we have available the complete material of this result launch. You can download the presentation also in the chat icon, even in English. During the presentation of the company, all participants will be with their mics disabled. Then we'll start the Q&A session. To ask questions, click on the icon Q&A in the bottom part of your screen and write your question to be in line for that. When we call you, there is a request to open the mics. And you will click to open the mic to make your questions. We suggest all questions are asked at once. Before going on, we'd like to clear that event of declarations that would be done during the teleconference regarding the business perspectives of Cogna. Projections are operation and financial targets are the beliefs and premises of the company administration as well and information available for Cogna. future considerations is not an insurance of performance any of over risks uncertainties and premises as they refer to future events therefore they depend on circumstances that can happen or not Investors and analysts must understand that general conditions, the sector and other operational factors can affect the future results of Cogna and can lead to results different materially from those expressed in future conditions. I would now pass on the floor to Mr. Roberto Valério, CEO of Cogna, to start his presentation. Please, Mr. Roberto, you may go on. Thank you. Good morning, everyone. Thank you for being in this teleconference to discuss the results of Cogna in the second part of 2024. As usual, I have here with me Frederico Villa, the Financial Vice President, Guilherme Meller, Director of Ashton, Eduardo Ronzac, our director of investors, corporate finances, and M&E. We'll take about one hour in this call with 40 minutes presentation and 20 minutes for the Q&A. I'd like to start this call in the first slide to emphasize some main messages. The first one is the growth in the recurring EBITDA and margin EBITDA in the quarter of Cogna, showing the ability the company has to go on efficiently and so searching for efficiency in the project and changing structures and with a synergy in the process so that we have flexibility i also emphasize the cognitive net revenue that grew in the second quarter despite this is an ability of saber the second quarter is not a part of a strong, that is a strong saber. Another important highlight is the base of students in Croton. The first semester, the base grew 15.8%, reaching more than 1.2 students when we concede the graduation and post-graduation. So this growth will obviously help us keep growing revenues, especially the second quarter considering that will have more students and it will help us in growing their revenue in the second semester. Vasta also presented a 32.5 increase in subscription revenue in the quarter. Remember, this is our strategy to, I mean, to increase the penetration and grow revenue and subscription, both for core solutions and premium and the complementary ones. I also emphasize that that Vasta has reached 85.3% of the ACV24 and is working in the 25 cycle with a positive perspective. Besides, we constantly are working in liability-managed operations. We have more in the second quarter, changing the old debt for cheaper ones. And obviously, the goal is to optimize the cost and reduce the debt cost. This is the strategy that we are carrying out for a while. And once again, we are having success on that. With that, the net revenue grew 4%, EBITDA 13, and the leverage is stable. Fred will talk more about that, the net debt EBITDA. So we have a sequence of reduction in the net debt. Specifically in this quarter, it was stable. among other things due to the market that Fred will explain that better. But this is something not cash and specific for the moment. So it gives us a lot of trust that will keep reducing the leverage and look into the future, especially in the cash generation of the company. Now going on to slide five of Trotten, I believe the first highlight came and uh the student intake that was quite strange a strong 12.7 percent in new students i emphasize crop on magic growing 12.4 and uh dl also but presidential also had an important involved this is a modality that hasn't grown isn't growing a lot but this master grill which is positive I think that as highlights to emphasize the support of the growth is the distribution network with our photos and distributors, all the commercial team besides the marketing model that is quite focused in performance and digital media with a volume also with acquisition costs quite balanced. And I reinforce the point here, making the link to the dropout rate, that this growth is with quality, with volume, but with quality, reflecting in the reduction of dropouts that we see in the second graph. When we see the aggregated reduction in dropout growth as a whole, improved 4.4%. We left from 21.1% in the first semester, 21% to 16.7%. In 24. Both the present show and DL on site and DL increased and the dropout reduced. And this is the reflex of actions of many teams, among which the capture team bringing quality students and credits and financial quality. They are good payers. And also the federalization change that follows the students here, searching for greater academic engagement and reducing attrition in the experience of the students. And here's the reflect of the quality of the work that is being carried out. Obviously, when we talk about recruitment, strong and dropout dropping, it reflects in the student base that grew 15.8%. from 23 to 24, and I emphasize especially Croton Med and DL, that are the pillars of our strategy. The on-site is the base of our work, and we focus in high LTV, like laws to veterinary or dentology, and not necessarily the more popular courses, because our strategy is focused in DL that is a fixed course that is important. This is the 11th consecutive quarter of growth in the student base. We have some momentous peaks, but this is a consistent execution. And as I said, when we consider graduation and post-graduation, we have more than 1.2 billion students studying at Croton. In slide six, I think the first highlight is the revenue growth of 4.9%. you know that seasonality in the revenue is stronger in the odd uh quarters it was reinforced by the fact that we had a strategy especially with marketing graph As I mentioned in the first quarter, that was more concentrated. So when you have a strategy to anticipate the enrollment with more marketing, the first quarter, you bring more revenue to the first quarter. So the revenue was growing 15% in the first quarter and 5% in the second one. This is not a point of concern to us because as we said, we moved in fact the enrollment so we anticipated with more marketing efforts in the first quarter so when we analyze the semester we grew 8.2 the semester this is the proper way of analyzing it so for some questions we had of being losing the speed of growth it has not nothing to do with that it has to do with the seasonality of the recruitment especially of new students in the first quarter 4.9 in the second quarter quite positive as a third item of my comments i emphasize the growth in dl 12.7 percent as growth in croton med as i said that is the pillars of our strategy now slide seven i talk about the financial performance The growth was 3.8% in the gross profit in the quarter, different from the other quarter because of the return to classes. So the expenses are greater in the second quarter with allocation of preceptors and hours of studying. And that's why we have this difference. But according to the normality, this is expected. I would just like to emphasize the growth in the gross profit in DL, growing 12% in the quarter and 17% in the semester. And remember that DL has the benefit of a high operational leverage that is because the greatest part of the costs are fixed. As our mixed students are going to a greater concentration of DL, it benefits obviously the total profit gross profit that grew in the semester with a gross margin of 0.3%, as you see in the slide, just to explain a little bit of the effect. So this is an important message. So we are growing gross margin in the operation. Slide A, costs and expenses. I think the first highlight is the effort of efficiency and economy, the nominal expense, considering costs and expenses, reduce it from 663 to 632 with inflation and deflation and growth in the student base. It shows the capacity of gain in efficiency. We grew 0.4% in operation. That is the reduction of fixed costs. The company is greater. The operation is greater. The second is PDA that we've been talking for more than three years. We have more financial quality in the students, we have more criteria in the negotiations, and the PDA dropped once again 0.8 pp as the net revenue, which led to a reduction of five more days in the payment and the receivables, it's quite healthy in the correct direction. Operating expenses with the gaining due to many items, especially processes and systems. I would like to emphasize the reduction in marketing. So this is something that was questioned in the first quarter due to changing the strategy and the concentration of marketing. So I said the marketing expenses would reduce in the second quarter and nominally it did. We are spending 10 million reais less compared to second Q23. also as a percentage of the net revenue that dropped to 1.4 pp, reinforcing the consistency of the strategy that we say we'll do is what the numbers prove. And looking to the future, our strategy is to invest more in marketing in the odd quarters, like the first and the third one with growth and the second and fourth with reduction in marketing expenses. Now, slide 9, as a consequence of everything I said, we have in the quarter an important growth in EBITDA, 18.4%, with a gain in the margin EBITDA that is quite important. As a reduction of cost and growth in the revenue in this semester, we grew almost 10% in the EBITDA, with a small gain in the margin EBITDA. This is an operation that you might understand it's quite healthy, especially looking ahead with a greater base of students in the second semester that is positive from the point of view of results. With that, I finish the explanation of Croton and pass on the floor to Guilherme Melega to talk more about Vasta. Thank you, Roberto. Good morning, everyone. I'd like to start in slide 11 with the net revenue of Vasta. Well, in the second quarter, we have a small semester, stationally speaking. We had 294 million in revenue, 8.5 growth considering the second part of 23. And I emphasize our subscription business with ACP that grew 32.5%. As I said, stationally, we would have a shift between the first and the second quarter, so we are still in line with the guidance that we had of 12% in the year. Analyzing the cycle, the commercial cycle of Vasta that goes from Q4 23 until now, second Q24, we have 1,309,000,000 in revenue, 11% growth, mainly due to our uh acv with 13.8 growth in subscriptions reaching 1 billion 52 million and i emphasize the b2g that is our new business that has 69 million recorded in our cycle so far so far in slide 12 costs and expenses We see an overview of the cycle accumulated, reaching $886 billion in cost, 8% growth compared to the same period of the previous cycle. Remember, our revenue grew 11% in cost, only 8.2%. When we look at the of the revenue, we'll see that the total costs in the CMV has less pressure in paper and printing representing 3 pp than the previous cycle. And operational expenses keep the search for constant synergy and the growth of the company is still helping a lot in reducing the fixed costs. So we can save 2.4% In fact, we are investing in marketing and sales expenses. So we need to invest in the previous cycle and the one that we have in the contract. So we are investing 24 to have a good year in 25. So the investment in marketing and sales this year is greater. So we are investing for the year 25 and the results so far. 425 are quite promising. Slide 13 about the EBITDA. The quarter one reached 22 million. Again, it's a quarter that is small, but in the cycle on the right, we see that we are reaching 416 million in EBITDA in the cycle so far, which represents 17.4% growth. additionally we reached 31.8 percent of a margin ebita with a gain of 1.7 point percent in growth and market marketing and we are having margins in our companies so i think it's uh good to invest in growth and gain on margin so my final messages is that we are quite optimistic with what we will have for 25. The B2G has a very heated pipeline. We hope for new contracts in the third and fourth quarters, and August is an important month that we'll have MC Pasteur that is starting the flagship here in São Paulo. It's Centennial School, and the launch will be on August 27th, when we'll also launch our campaign for 25 enrollment now i pass on the floor to fred villa to keep on with the presentation good morning everyone i'll start the presentation on slide 15 talking about i start the presentation with net revenue both in the quarter and in the semester note that in the quarter we had a reduction in the net revenue this can be explained mainly for the sale of the a set business unit, we sold this company. We finished the sales on May 24. If we did not consider the effect of the revenue in June 23 for a proper comparison with that, the net revenue would reduce. 11.8%. This is a market with low margins and with a gradual reduction in size. And we wouldn't like to focus on the future. So that's why we stay. The positive news is that we see for the quarter is something positive that we are sure about the leverage in growth for the second quarter that is the result of improvement in educational solutions in the public market it was better than expected for the quarter and semester so we kept with the expectation for the second quarter in the semester we had the growth of 21.5 percent in revenue explained mainly by the improvement in educational solutions in the public market we keep looking ahead and analyzing the stationality between what happened in the first and second semester. Note in the comparison with the previous years that the second semester in Saber, mainly due to the national program of books, is quite stronger than the second one. That's why we keep reinforcing our trust in reaching our goal. Now going to slide 16, talking about recurring EBITDA and EBITDA margin. In the quarter, we've had a reduction in performance mainly in sales business and a temporal detachment to the national program of books that was pushed to the second semester. However, in the fair comparison of quarter and semester, remember in 23, we had an impact in our EBITDA in the reversion of suppliers. So if we had this effect, I would have the same basis to compare. In the semester, as I mentioned before, in the revenue, we had the growth. of 17.4% in our EBITDA in the semester, reaching 37.5 million reais, which gives us confidence to reach the guidance as we mentioned in the last Cogna Day, we had the guidance in Saber from 200 to 300 million reais. Now, to finish the presentation of Cogna, we now have the sum of the business explained by roberto of proton and with guilherme and what i explained before with the sabia so our net revenue in the quarter we had the growth of four percent reaching one billion four hundred forty one million reais just remember that we had the growth in all our business in the semester so in the semester we grew cotton 8.3 percent of vast 12 percent and 21 so i think the way we are following to reach our guidance is okay and we are strong in all business units they all grow consistently in revenue in the semester and in the quarter we grew the revenue both in croton that was 4.9% and we grew the revenue in past growing 8.5% as I explained before. Only in Saber the revenue decreased. Now going to the EBITDA and the margin we'll see in slide 19 that we had a quarter with a double digit growth in the quarter and in the semester in the quarter we reached a recurring EBITDA of R$ 482 billion, with a growth of 13.1%, with a margin of 33.4%. And in the semester, we reached a recurring EBITDA of R$ 971 billion, with a growth of 11.2%, and the margin growing 32.8%. So we had a gaining margin of 2.7 points per cent and 0.5 points per cent in the semester, demonstrating the company's ability to keep growing profitability. In slide 20, we'll talk about the adjusted net profit. We've had here a positive one, mainly due to the increase in the operational result and the reduction of non-recurring items that happened with this improvement in 23 to 24. So we have here the quarter reaching 50 million reais, about that, with a growth of 360% in the semester. A slight decrease. and they adjusted net profit reaching 101 million reais and i'll mention in the next slide but the profit was affected by uh our swaps market of the market with an effect of 53 million reais this is the non-cash effect but it passed through the financial result and here we had an impact on the net profit and we didn't adjust the profit Now, in slide 21, the operating cash generation, so we had a generation in the second quarter of 97 billion. In the second quarter, 23, it was 171, about a reduction of 43%. What happened that I'd like to explain was that we had more payments of suppliers so when i look the cash flow we see that we paid more suppliers about 85 84 million reais so there is an effect between the payment of the suppliers in the quarter and we also had synergies in the internal teams so those synergies of internal teams provided a better result in personal expense in the future, consequently, less payment of personnel in the future. However, I had the payment recorded in non-recurring items of 12.9 million reais. In the second quarter, we believe and we understand the seasonality of the business, as I mentioned in TAPE. We have this seasonality and this is historical. Our second semester is quite stronger. than the first one. And as Malika mentioned, our second semester in Vasta is much better than our first semester. Additionally, I would like to say that as we increase in recruiting and we have less dropouts, we reinforce our trust in Proton as well. And like 22, I'll talk about leverage and in-depthness. The leverage keeps constant compared the second quarter of 23 and the first quarter. But note the improvement regarding the second quarter compared to the second quarter of 23. That was 1.98 times. And now we reached 1.79. And I'd like to mention in our leverage that it was constant, mainly due to the effect, as I mentioned, of the market in our swap. The swap of the dApps that we have in TPA+, we changed it for CDI, and the impact of the MTM, that is the non-cash impact, at the moment we have the dApps, we want the ACDI So we had a synthetic swap that we have a PCA plus, we changed all of them to CDI plus as well. What happened is that this time detachment to the market is recorded in our financial expenses in 53 million reais. Additionally, as we had our liability management project, not considering the results in the short term, but future results, which I did hear that. That is what I'll explain in the next slide. However, we had to make some anticipation in payment of interest. We anticipated 103 billion reais, as explained in our release. Slide 23. I'd like to bring a case study of our renegotiations of our liability. So with the negotiations that we had, we have all of them in slides that in 24 we had CDI plus 1.33. And compared to 23, it was CDI plus 170. 22 cgi plus 2.16 which shows an increase in our costs of capital and the example that i bring to you that we also have uh the amortization of that so we'll left 1 billion 846 eyes at the cost of cgi plus 241 and then we had uh the spread the cost of 1.45 The difference for 1.44 to 1.33 is the depth that we have within Apple with a percentage of 60% of CGI bringing this cost of capital that is more adequate to the company. And I'd like to show you that all this work and effort is considered along the period. It's not only in the first or second or third quarter, but it considers the whole year with the value present of the debt in tens of millions of reais. Now my last slide, I would like to show you the process of liability management. On June 24, the company has a cash of 935 million reais with a net debt of 3 million 33. we had a reduction reduction of net depth of 1.2 compared to the second quarter in the second quarter of 24 and i'd like to reinforce the message of the agenda in this slide the graph below so we uh 24 we needed the amortization schedule of 1.455 that we reached, we only have to have 118 million reais of amortization. We negotiated and enlarged our debt, so in 2025 we would have 1.5 million and now it's 900 billion reais in 2025 with a displacement in the long term. Looking to the year of 2027, I had this displacement, I would have 300 and now 900 million reais. So the message is that we rebalance our debt, increasing the time and having the real cost where our generation of EBITDA and operational cash will bring to the company a constant process of leverage with a reduction of interest with more cash and more real interest in the company. With that, I finish my brief presentation and I pass on the floor to Robert Valet. Thank you, Fred. And I'll go into the last slide with the final messages and analyzing 24, the second part of 24, and also looking ahead, the company's view. Remember that we have the six strategic pillars that we follow with a lot of discipline. The first one, obviously, is growth and what will support the growth of the company and the revenue. is the growing of new students and the reduced dropout of Proton that I mentioned a lot, the expansion of subscription business and B2G at Vasta that Malaga also mentioned, and his trust regarding the growth of the subscriptions for 25 as well, besides the positive seasonality, as Fred mentioned, and BTP in Saber in the second quarter, 24 especially the fourth one from the point of view of experience we are diligent in searching for constant improvement in the experience not only of the students but also the b2b clients the schools as government as we are growing more and more in this segment we follow the nps of all clients in all business lines, the NPS, for undergraduate, postgraduate and schools that is good with all the processes, with the focus and the experience of the client. So we hope that the churn of students and schools is lower and lower over time and it will push the results of the companies, but I would like to emphasize especially one premium that is quite important that is the best education company in customer satisfaction by mass google this is something done directly with client with google tools this is an open survey it's a great census showing how strong what we are doing is and we are quite happy with this acknowledgement from the point of view of efficiency we'll keep investing in innovation Innovation has not only to do only with innovation, it's also redesigning processes, organization, system conversation, digitalization of things we do manually, intensive use of AI. We have more than 50 projects of AI running in the company, bringing not only a cost economy, but also improvement in the experience to the client with a fast response. And I understand all of this investment thinking of the financial efficiency and client satisfaction will keep generation generating rent profitability from the point of view of culture uh collaboration results and focus on clients this is something important to us this is something that we say every day it's a guidance to our team and we were acknowledged for the third following year as the great place to work it's not what we say it's what the market says in innovation we were quite happy that we were recognized on monday as the most innovative company in the education sector with the most important innovation award in brazil that is valor innovation brazil cognate is not only the best in the segment of education but is among the 30 more innovative in the country and we know that we are among them when we have all the segments of the company it's not a an easy challenge we are quite happy to reach that we reached more than 90 percent in the ranking from last year to this year. So it reinforces everything we are doing here. And the last highlight is that ESG that we disclosed the first integrated report assured by an external audit. And this report obviously strengthens everything we are doing from the point of view of sustainability, transparency, governance, So we are quite happy with this delivery. I finish with a quote that Fred mentioned that we reach the half of the year aware that we will deliver the guidance of 24 due to two factors. That is the relevant growth of Crota that will push the growth of revenues and results in the second semester. besides the seasonality that historically is quite positive in vast and saber especially in the fourth quarter that will push our abadar and cash generation to finish the year with that i finished the presentation and we open for questions thank you now we start the q a session Please remember that to ask questions, you must click the icon Q&A in the bottom part of the screen and write your questions to be in line. When invited, you have a request to open your mic on your screen and then you open your mic to make your questions. We ask please that the questions are made all at once. Now let's go on to the first question from Luca Marchesini, Southside analyst from Itaú. Luca, the floor is yours. Sorry, we'll have the next question from Mr. Marcelo Santos, self-side analyst from Morgan Stanley. Mr. Marcelo, please. Good morning, everyone. Roberto, Fred, Melegan. Thank you for the opportunity of asking questions. I have two. I'd like to know if you could give a little bit of the perspective of intake to the second half of the year in the many segments and mention a little the competitive environment that you see both in presidential and DL, I mean, on-site and DL. Thank you. Thank you, Marcelo. I'll take the first question here. We are still in the middle of the process. We have a lot to do, but from the point of view of direction, I can tell you that the presidential and on-site and DL modalities, especially the ones with labs and more on-site work, we see a good growth these are product lines that are going on especially in dl the digital census has a little bit more competitivity some discount and sales and price reduction offer but we still have a lot to do in this sense but as a highlight i would say that the most positive of on-site and hybrid is okay and more competition in dl okay thank you The next question is from Rafael Barro, Southside analyst, XP. Rafael, we'll open your audio to make your questions. Please, you may go on. Good morning, everyone. Thank you for my question. I have two questions here. First, I'd like to understand because we saw that the average ticket in the three segments of Croton was somehow forgotten. And then you mentioned that the biggest share of new students was one of the causes I would like to understand, because the maturation of basis should improve this number for the next quarters. And how is the prices being repassed? And this is the first question. And the second one, if you can give an idea, an overview, of how the company understands the recent discussions of a more strict regulation of DL and how it should impact the company. Rafael, thank you for your question. Well, regarding the average ticket, I think there are two effects that are very important to mention. The first one is as our strategy is more focused in DL, therefore, with a mix of recruitment that is more focused in DL, as you saw in the graphs I presented. So it makes the average entry ticket higher than the dropout, or I'm sorry, than the graduations, because the students in the bases have a more mixed onsite. The second effect is that, naturally, the students that are graduating, that are leaving the bases, has had three sometimes four inflation readjustments because sometimes we are repassing even more than inflation so the students are graduated with a higher average ticket so they enter with a lower ticket due to inflation they are more concentrated in dl so it pressures the tickets a little bit more and this is the general explanation now looking at the future i think It will keep reducing as the on-site basis will also reduce the burden in our mix of total basis. And the price repass that you asked, well, from the point of view of recruitment, we have a lot of competition. We cannot repass the prices in the recruitment, but we can do that. In the re-enrollment, at the moment, the students celebrate their time there. We've been requesting even more than inflation, and it's nothing new. For some cycles, we've been doing that. Regarding regulation, we've been following not only Cogna, but all the sector with all the associations that we participate with other players. We can see that. And we've been quite close to the discussions. with the Ministry of Education, there was a first meeting of CISSE Paris and members of the associations that participated in this meeting with the Ministry of Education and the feedback that we've had is that this first discussion was quite positive with the ministry quite open to open us and even setting visits to know our DL operations in local, which is quite positive, not only for us, but other players invite the ministry for that. And they've been doing that for many years. But in generally, the ministry don't visit. But the fact of being there and visiting us, I think, is quite positive. Obviously, it's too early to say what will go on, as we know. the ministry wants to have a new regulation until the end of the year. But at this moment, I don't see any point of attention. I think the dialogue will be very positive. The fact that we've already had is this changing the mix of on-site and education courses. And we adjust. It's not a big base of students and besides, of the companies and especially us we know how to operate with the hybrid courses and dl so i don't see a relevant impact to our results okay i think this is what i can tell you at this moment thank you the next question is from mauricio cepeda cell site analyst of morgan stanley will open your audio so that you make your questions. Maurício, please, the floor is yours. Good morning, everyone. Thank you for the space. I have two questions. The first is trying to understand the cash conversion. We see that the cash conversion was lower this quarter, and it generally... It is in absolute terms far from what you see as EBITDA, just EBITDA. The point is a little bit more of the factors involved in that and what we can wait for the future if it's a matter of turning capital. When I saw variations of the cash and to use more and use less more. And the problem is if EBITDA is adjusted by non-cash, if you have non-adjusted ones that are non-cash, so what is in that and what should we expect for that in terms of cash conversion? And the second question is regarding the, yes, you classified that as recurring, but I understand it's a reversion of provision and how does it deal with the cash? if you were collecting that somehow judicially or not, if there will be some cash effect, what can we expect from that? Thank you. Hi, Cepeda, Fred here. I'll answer both your questions. The first question about the cash conversion, well, in fact, we've had a cash conversion that was lower in the second quarter. in dl analyzing the working capital i could pay more suppliers as i explained before 84 million so if you analyze suppliers plus working capital and considering everything i have a reduction on the result so I had to pay 84 million reais, but our understanding here is that this is temporary, we keep using the risk due mainly to the detachment between the revenues, so we use that to buy paper, to buy cash, paper and in the graph, in the printing house in Saber and Somo, So I have that naturally because my revenue and my cash come from the cycle of the second semester. Additionally, you asked about the additional effect with the non-recurring events. So we had operational efficiency in the personnel and it was about 13, 14 million reais. So it is not in my EBITDA, but it is in my cash. So we are talking about 13, 14 million reais. So these were the two big effects that we've had. And talking about your first question about the AS system, well, this is processes that we've had since 2021 and these processes we've had questions about collecting the money about all the S, Thesis and I intrasystems we provisioned and it has always gone through our EBITDAs in previous years. However, we had a liminary and we didn't pay for that. So in our EBITDA We've had 34 million reais in our release, we showed that, and 6 million reais is from the period, it's not from the previous period, so 29 would be from the previous period, and this is a non-cash effect, this is an effect of competence, and looking ahead, it was discussed in the Supreme Court, and from now on, companies are obliged to provision and collect the S-system. I'd like to mention something important to our businesses, that if we remove the effect of the S-system from previous periods, we would see that it has always been in our habitat, so it's passing through the habitat the same way, it's not projected, I wouldn't have an acid system in the second semester or in the year 25 or 26, but it penalized my EBITDA in the previous years. But I would like to mention something important to you here, that is, if I look at the EBITDA of proton and the greatest effect of acid was in proton, so we've seen a growth in the quarter of 18%. If I exclude the effect of 2019 media now have a growth in the quarter of 11.1 percent the same if i did the same for the semester i keep having growth and expansion in my business my ebita is growing more than my revenue and this effect incognito is also true so making the same math if I grill my EBITDA in the quarter 13.1% incognito, if I exclude and then anyone has their analysis and ours is that I can't penalize one year and not be benefited in the other one. So my recurring EBITDA incognito would grow 6.3%. Thank you, Fred. Just to emphasize your point about cash generation, because I mentioned that we are quite aware about the cash generation in the second quarter. His explanation is perfect. This time affecting the working capital due to the amount of reducing suppliers naturally balances throughout the semester, reaching the levels that we historically have. That's why Fred is mentioning that, just to emphasize. Okay, thank you, Roberto. Thank you, Cepeda. Our next question is from . We'll open your mics so that you make your questions. Ian, please, the floor is yours. Good morning, Valerio, Fred, everyone. I'd like to make two questions here. The first is a follow up on Rafael about the DL regulation. I understand that the sector as a whole is still understanding is trying to understand how this discussion will progress with the ministry but we already have some preliminary decisions until the new regulation is in fact published until the end of the year among which we'll have the limitations to open new polls and courses and we'll be there until march 25 and i'd like to know if you see any acting this limitation in the short term thinking about the recruiting for the second semester of the 24 and the first one in 25 if you see something in this sense and i'd like to ask a question about b2g and try to understand how you can deliver the b2g for the rest of the year if you believe it will what can be incorporated in new contracts for this year thank you guys thank you yeah for your question i'll get the first one and malika the second one so regarding regulation you mentioned three points that are wonderful for us to give examples because there is some problems in opening new polls and courses and uh spots for 25 this is not a concern to me regarding 25 our distribution network is quite big we have more than 3 000 holds we have we are where we believe we should be it doesn't affect our plan especially because this is temporary i believe at some point we'll be back but we didn't have ambitious plans for this period so that related to also about courses our portfolio is quite broad additional courses to be launched are niched courses adding marginally in the recruitment so i understand your portfolio is quite complex complexity doesn't affect and in terms of openings and the media discusses that a lot. We have a lot of openings in all courses, so there will be no limitation of enrollment due to the small amount of openings. There's no concern about it. So to answer directly your question, I don't see any risk in affecting our recruitment for 25. Madigan? Thank you, Ian. Just a little bit more about B2G. Just remember that we work in the B2G with customized solutions focusing a lot on big public companies. We launched that last year and one contract got matured quite fast. We are quite satisfied with the performance. It's in the state of Pará. And at the same moment, we started with many prospections and we have a very strong pipeline in many of these networks and we've been discussing for more than a year so our expectation is that we mature new contracts in the second semester we are quite optimistic about the b2g and i believe the cycle of conversion of the contract we are learning now and we have quite a heated pipeline so just to explain you can explain uh expect new uh revenues in the sector in the b2g thank you valerian our next question is from leandro bastos sell side analyst city we'll open your mic so that you can ask your questions leandro please the floor is yours thank you good morning two questions that i'd like to ask first about marketing because of the seasonality and I know what the problems you face, especially considering the first semester with the pressure in the stance, so I'd like to understand if the idea for the second semester would be the same, if you can comment on that. This is the first question and the second is talking about recruitment and I understand the message. uh if you see a better scenario if you see more competition in a hundred percent online or hot so what is the relevance of this volume that you see on the online market in the pressure as a whole and if this competition is still wins a lighter volume for online or it's a matter of price and competition that's it thank you Well, Leandro, thank you for your question. So, now I'll answer. Regarding marketing, I reinforce the point that in the second quarter, we'll reduce it not only. And we'll have the seasonality with a greater concentration in the first and the third quarters. Our plan would be to invest more in marketing the year it was in our budget. we would bring this visibility to the market. Our preference is to invest in marketing with the percentage of the net revenue, and our understanding is that it will be stable. What will expand in marketing is stable with the percentage of the net revenue comparing 23 and 24. Obviously, there is some certainality, but this is our view, especially because marketing, as I've said before, is not only kept recruiting, but creating the brand and consolidating the image perception. So there is some investment in this sense. Regarding DL, I think I can't give a lot of information from the competition point of view, but I think the main point and dl is a greater competition especially because it is a market with more demand more distribution and is present in more points of sale so when we see a reduction in prices it obviously makes the ability of growth of any player reduced but i think this is what i can tell you now it's more competitive from the point of view of prices we have a lot of the cycle when classes start to grow and speed up and we started the classes this week so which is too early to give more information regarding the volume in dl thank you have a nice day the next question is from myself to sell side analysts that this will open your audio so that you can ask your question As you please, you may go on. Good morning, everyone. I'd like to ask two questions. The first about medicine. If you can tell us how was the relation in candidates and opportunities for this year and last year. And if you can say please a little bit about how you see the perspective to the future. with the increase in the positions with the judicial decisions and with the basic grades of much magic. So how do you see this balance and the sustainability of the payments in medicine courses? And if you are using, and if there is a space for financing medicine courses, So this is specifically about medicine and the second question is for you to talk a little bit about the leverage that you have in the second semester. For the division of problem, I think part you partially responded that because marketing will improve regard compared to the first quarter semester. I'm sorry, but if you have anything else to reach the guidance, these are the two questions. Thank you. thank you for your questions marcio let's see medicine we've seen a small drop in the relation in terms of candidates i think when we analyze the average there is a small drop because some units have more competition than others but we are not a big player in the census So maybe my experience, my view in Kratos Meds is more limited because we have less units than the competition. As our medicine units, some, at least half of them, are quite traditional in their making. They are present with the strength of the brand in the city and the state. So we don't see a relevant impact of candidates Some are even growing the relation, but on average, I can tell you that there is a small reduction. Looking to the future, I believe that the medicine courses will be divided into tiers. One with the reputation course with good locations, the one that will repass the prices with a healthy relation, and the others without those conditions will suffer more. i believe our schools are in areas with a lot of attraction of students and with traditional brands and or are in cities with the repressed demands in regions of brazil that make it quite big but this is a characteristic and i can extrapolate that to the market and i reinforce my view here once again that our population is lower than other players So this is a little bit of our experience regarding proton guidance. The growth in the delivery of results of Epidae and proton generation, cash generation in proton come from this greater base of students and the improvement of re-enrollment and improvement in underpayment and even with the charges in more efficient systems. I think all that will keep pushing cotton and bringing this concentration to the second semester. We trust that a lot, and we see that in the results. Even when I mentioned the courses and expenses, we see a lot of gain in efficiency online. It's not a specific one. Thank you, Valerio. Can you talk a little bit about the financing, funding in medicine? Do you think there is a space for more possibilities or private funding if necessary well i'm sorry about the i forgot this part yes we use the fees especially as a mechanism to fund the students we are using a lot some partnerships with private institutions we are small with just a few penetration in private funding in medicine Given space for us to potentially explore a little bit more, we are analyzing that. OK, thank you, Roberto. The next question is from Mirela Oliveira, Southside analyst, America Bank. We'll open your questions so that you will open your audio to ask your questions. Mirela, please, the floor is yours. Good afternoon. I'd like to know about the ticket repass with this better movement. Do you see some margin to repass more the prices for those new students so that will be old students in the next semester for us to understand the trend of speeding up or reducing the speed of revenue for the rest of the year? And the second question is regarding the margin in the second semester. What do you see as the main challenges? You mentioned the main upsides in the previous question, but I would like to understand the lines of attention. Thank you. Thank you for your questions. I'll answer the first and Fred answers the second one. So regarding repassing the prices i don't see space to increase the prices for new students i see space to repair some points above the inflation to the old students especially because as our basis is more concentrated in dl and the average ticket is lower the nominal growth and the uh payment is lower. So when we look at, of course, a student that is handling with 200 reais, it's different from an on-site course that starts with 900, 1000 reais. Even if we repass two or three points above inflation to an average ticket that is lower, we can repass nominally more. So in terms of value of the payment, we can repass more So I think the student can say that the student who decides to study and is engaged, if they have a good experience, it won't be some money more that will make them cancel. As the market is competitive, obviously the consumers choose for the best price, but when they are in the bases and they are satisfied with the experience and the product, we can repass above the inflation and I truly believe we'll keep doing that. And I think Fred will answer the second question. Yes, talking about the expense cost, as Roberto mentioned about the opportunities, and you asked about the challenges. Well, note that it's important to mention here that we are not growing the expenses in Crot. We didn't even grow the inflation. So when I look at the first semester, we have a gain in efficiency, but we don't gain inflation. So our courses, mainly the payroll of professors and all the expenses related to the business, they have the inflation repass. So it shows our efficiency, what we had in the first semester. and we see as an opportunity to the second semester. Here we have internal processes that are reflecting in our non-recurrent as a whole in personnel efficiency. So we have in the cooperating here and in the area supporting Proton, a reduction in teams. We don't believe we are forgetting quality, but we'll also recruit for the second semester. And as an opportunity or challenge, we have the PCLD because we are talking about that and the reflexes in dropout, we don't have a problem in this sense today, mainly due to recruiting students that are students who pay, they are in our bases, so we don't see a problem. So we follow that month after month, and we keep trusting that if you analyze from 2020 to 2024, our underpayment with the metrics that I like to use has some amount close to 10%, 11%, some quarters a little less. considering the audit even quarter so we have here challenges but challenges are also opportunities our expectation is in the second semester that we convert what we had in the first semester okay thank you very much Our next question is from Luca Marquezine, Southside analyst, Itaú. We'll open your audio for question. Luca, please, the floor is yours. Good morning, everyone. Can you hear me now? Yes, we can. OK, thank you and sorry for the technical issue. We would like to know about dropout. We would have dropout, especially in DL. If you could comment on the drivers for that. If we can consider this new lever as a more sustainable one from now on. If you could explore that a little bit more, it would help us. Thank you. Hi, Luca. Thank you for your question. I guess so. You can consider an improvement in dropout over time. I think dropout is always... The improvement in dropout is the effect of a set of actions that is carried out over time. It's not one quarter that will structurally make it decrease. But here the main drivers is that we've been talking about that for some years. I mean, having a lot of students in credit schools. We want the students to be aware that they read the contract, that they paid, that they know how much they will pay It's not that we are analyzing the students' credit, but there is a lot of barriers in the conversion that make us acknowledge as a student and as a revenue the ones that we know that are, in fact, engaging. This is the first aspect, and the commercial team is doing that quite well. It's not one period that will make this improvement. And the second important factor is all the improvement of the student's experience with the onboarding and how the digital experience of the student is, the experience with the professors, the process, if the payment is on date, if they can choose the disciplines. and we are dedicating a lot to analyzing each process, each detail to see what are the aspects we can improve in the student's experience, removing some friction that might be there or anticipating to things students might request due to the progression of the year. And it has increased the academic engagement and more participation to the classes and more constant and daily entries in the virtual environment and less problems financially speaking so all that has pushed our dropout in a positive way therefore improving it and it's not something specific it's a trend maybe the team can talk to you in more details later on for you to understand if it is your intention perfect valerio thank you very much The Q&A session is over. We would like now to pass on the floor to the final considerations of the company. Well, thank you for following this call for the results of the third quarter. As usual, I thank the Cogna team, our 24,000 workers that are helping us all the time to improve and search for more efficiency to our shareholders. Our RI team is available to any follow-up you might need. Thank you. Have a nice day. The teleconference on results regarding the second part of 24 of cognitive education is over. The Department of Relations with Investors is available to answer the other questions you might have. Thank you very much to the participants. Have a nice day.