Cogna Educacao S A S/Adr

Good morning, everyone, and thank you for waiting. Welcome to the teleconference to disclose the results of the third quarter of 24 of Cognitive Education. I emphasize that if you need simultaneous translation, we have the tool available in the platform. To access it, just click the interpretation button, the bottom part of your screen, on the global icon, and choose your preference language, Portuguese or English. For those hearing the conference in English, you can mute the original audio in Portuguese. Just click Mute Original Audio. We inform this teleconference is being recorded and will be available at the RI website of the company, www.ri.cogna.com.br, where you see the complete material of this disclosure. It is possible to download the presentation in the chat icon, even in English. During the company presentation, all participants will have their mics disabled and will start the Q&A session afterwards. If you want to ask your question, click the Q&A icon in the bottom part of your screen and write your question to be in line. When you are invited, there will be a request for you to open your mic. Then you open your mic and ask your questions. We suggest the questions are made all at once. Before going on, we'd like to explain that some declarations made during this conference related to the business perspectives of cognitive projections, operational and financial targets are the beliefs and premises of the company administration, as well as the information currently available. Future considerations and our insurance of performance, it involves risks and uncertainties in the premises because they relate to future events, therefore determining circumstance that may or may not happen. Investors and analysts may understand that general conditions, conditions of the sector and other operational factors may affect the future results of Cognom. and can lead to results different materially from those expressed in the future conditions. I'd like now to 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. And thank you for participating in the teleconference to discuss cognitive results in this third quarter of 2024. I have in this call Frederico Villa, our financial vice president, Guilherme Melaga, the director of Vasta. The call is going to last one hour with about 40 minutes presentation, and then we go on for 20 minutes of Q&A. Well, Let's start with the presentation. I'd like to start by saying that in our understanding, it was a wonderful result with a quite strong quarter, especially with items related to cash flow, leverage, and that that at this moment with the increase of interest rates are quite important news for the company. Once again, we overcome the average of expectation of results on the market, which makes not only the administration, but the whole Cogna team quite happy with the results. Well, I'd like to start talking about Cogna Net Revenue. Despite growing 1%, it's easily understandable because we understand the results are quite positive. First, because the Croton net revenue that is about 65, 70% of the company grew strongly by the way the Croton results were excellent in the quarter, but the Croton revenue grew more than 13% due to many aspects among which the important growth in the student base and inflation that I'll discuss later on. So this is the business unit that brought a lot of revenue growth. On the other hand, we have the other two unit businesses advised with an ACV guidance with a 12.5% in subscription revenue. That is our main strategy, and it didn't grow more. due to a factor that I understand is specific that is the revenue in a new business line that is the B2G that we've been exploring recently and obviously we don't have complete control on decisionality and clearly this third quarter was influenced by the municipal elections. It is a new experience to us so we imagine it could happen but obviously all the people involved in the municipal elections and all the hiring are suspended for a period. And despite not having this B2G revenue in this third quarter of 2024 compared to the previous year, when we had 40 million reais, we understand this is a specific movement. We see more movement after the elections and Malaga will talk more about it. So this is not a point of concern. It's the opposite in the core of the company. With our subscription strategy, we keep growing, reaching this. So on the one hand, it explains Vasta. And on the other hand, with Saber, we've been saying it and we have a guidance of Saber so that the market understands our point of view. the revenue in Sabir is expected to be lower than 23 because the national, the direct books, the programs in 24 is smaller than 23 because it is a program with only repurchase. There is no purchase of fund one or two or medium. So it is a smaller program. And in the third quarter specifically, there was a small delay part of the revenue of the books that will come to the schools in 24 that could have been invoiced in the third quarter and they will be in the fourth quarter. So there is no concern to us because we know these books have to be in the public schools in the beginning of the year. So it is much more a movement from quarter to quarter. Having that said, the strong growth in Croton and explanations of Asta and Saber make us sure that the growth in the revenue is quite positive despite 1% growth doesn't seem so. Even though even the revenue has grown 1%, the EBITDA growth was quite strong. We reached almost 26% in the recurring EBITDA with the margin quite expressive of 6pp in the increase of margin in the quarter and increase of margin also in the nine accumulated months showing that in fact the company can progress a lot. Inefficiency, how I will explain later on. In a clear way, we've been saying that everything we are searching in revenue and EBITDA needs to be a quality revenue to become cash generation. Once again, we see that in the cash generation after CapEx with 400 million reais, more than 57% compared to the same period in 23. And it reinforces the point we were mentioning in the first quarter that the second semester would be stronger, much stronger with better results. I've said that in other calls. And here is the third quarter showing that the cash generation is quite strong. And the fourth quarter to us. is very good because we have not only VASTA with the income to schools and the B2B and selling to schools. We sell a lot and make a lot of revenue in the fourth quarter and the income of P&LD as well. Well, another important highlight is the free cash flow of 192 million reais in the third quarter, showing that the company, in fact, is able to generate a lot of cash with a relevant investment. overlapped and we reduced the net debt in 257 million reais basically 8% less debt compared to last year so the reduction in the debt is quite important with a very positive result obviously with more EBITDA and less debt our leverage would reduce and the reduction in leverage of 1.79 times a bit versus 1.58 is quite nice. We are celebrating. This is the lowest leverage of the company since the 2018. So in 22 quarters, it's the lower leverage, which shows we are working nicely. And our strategy is to reduce debt to have less financial expenses. And then invest the excessive capital in other projects. Now let's go on, go into slide five with Croton results. As I said, the Croton results are in fact wonderful. It's nice basically in all lines with the strong results. It's very nice in revenue, in EBITDA, in EBITDA margin and cash generation. But I would like to start by emphasizing our intake in the context that you know is quite difficult in this third quarter because we could grow a little in the intake with 1.3% compared to last year. But as I always say, and I've been saying that for more than three years, to us, more important than the amount of intake is the revenue in the intake. And the volume of revenue grows 7.7% in this quarter. So despite a smaller amount. the revenue in intake is much better. And we repeat that all the time, period after period. We are having additional revenue in intake with a business that is eminently with the fixed costs. We can only generate better margins and EBITDA in results. So once again, we could do that. And where... is this growth coming from this growth in the revenue? Well, it comes from selling courses with a greater LTV, the most expensive ones, both presentation and online and the, hybrid education. And it is easy to understand that creating a group in the presidential course, when you create a group in the first semester, all the enrollments for the second semesters are naturally absorbed in this group that is already formed. And I had already mentioned in previous calls that in the first semester we had the wonderful creation of groups, so many presidential groups created. Therefore, the enrollments for the second semester had no discharge. All the present show enrollment had groups to be incorporated. The same in the hybrid courses that we believe we have groups in the lab. it's a better result and selling and romancing groups of higher DL, that is our strategy, benefited a lot this cycle. So this is the emphasis. So the final base of students with a stronger growth, more than 12% growth, we are saying that our improvement in the processes in nps is important with many awards we are receiving over the last years showing the level of engagement of our students and we are focusing a lot in enrollment with equality so we only acknowledge them after the contract is signed and paid and the student in the learning environment, so we know that re-enrollment rates will increase and in this quarter it increased three points percent. And it pushed the growth of the student base in this 2.6% okay. Well, just a highlight here regarding Kratom Mad, because we had the approval of one more course in this quarter in St. Louis. It was via legal suit with more 60 spots, plus the 50 ones that we had in the end of the second quarter. in Ponta Porã are 110 new spots for medicines that started operating in this third quarter and will obviously contribute to the growth. And you see that the growth in the student base in Croton Med is quite relevant. So these two authorizations are quite important. In terms of the average ticket in Croton, it's stable with an increase in Croton Med that we are saying that our regional medicine brands are quite strong. We can give tickets above inflation, not only in Croton Med, but also in Presention as well. The average ticket in DL is a little lower because of this effect of the quality of intake with a freshman with lower tickets in the ratio of the base... greater because they have more quality, so they remain for a longer time. So it's natural that the average ticket of the freshman takes the other one to decrease. So that's why we have three points percent lower in the average ticket. This is a different... dynamic in CroatoMatch Presential and DL because it's different and in this slide I would like to talk about post-graduation because this business is growing strongly in this quarter it grew more than 18 percent in the base of students going on to slide six Now talking about the net revenue, obviously this 13% growth are pushed by the base growth. So the base is growing 12.6%, pushing the revenue up. And we can do repasses above the inflation due to the reasons that I mentioned with increase in engagement, improvement in the quality of the students. So, in fact, it's exceptional in my understanding to have this re-enrollment process that we have three points percent in efficiency, three more in the basis of re-enrollment this year compared to last year, and we could do repasses above the inflation, which shows the strength of our work. that it's not two or three quarters. This is something that we've been doing since the beginning of the project to restructure Croton in 2020 with all the base cleaning and we rethought the renegotiation, re-enrollment and credit model for the students. So this growth is quite strong with a highlight to Croton Med with a strong growth in the revenue pushed by the organic growth in the spots and by the repasses above inflation, as I mentioned. Now going to slide seven with the financial performance, I emphasize and some questions we receive are related to that about the perspective of gaining in gross profit. Well, this is one more part of that. We have 1.5% more. The strategy here is to focus in medicine and DL courses favoring this margin because these are product lines and better margins than the presidential education. So they are not only participating more in the total mix of revenue and gross profit, and individually they are gaining margin, especially Croton Med. So 1.5% of margin with a growth in the gross profit, quite important in Croton Med. And relevant in DL in the quarter, 51% in Croton Med, in DL, 14%. The same way in the accumulated, quite strong, 20% in Croton Med and 16% in DL. As we've been saying, presidential is still part of our scope, but it is focused in high LTV courses, so it's natural that it loses a little relevance in the growth. In the next slide, slide eight, we have good highlights. we had a reduction in the corporate expenses and operational expenses. Corporate expenses decreasing 0.8% and operational improving 4.5% as a rate of the net revenue. But as I mentioned before, I would like to emphasize that this is a reflex of all the redesign of processes and systems. gain in productivity with implementation of automation, implementation of AI, which allows us generate this reduction. And the same way we had the reduction in the PCL deal with the proposal from 9.5 to 6.2, it is important to mention that it's a reversal of approximately 50 million reais in provisions because in fact the quality is higher. So we understood that we should have this reversion in provisions. We work to improve our unpaid students and let's see the next quarters. It's natural that they are not kept in 6.2. It will grow a little, but the idea is that we keep gaining in pcld with the rachel overall along the next quarters and the last highlight is selling and marketing expenses that increased the 1.6 point percent nothing new here i've said that many times that the odd quarters would be the ones with the greatest marketing expenses we've said that the first quarter would be stronger And the second weaker, that's what happened. Now the third with more expenses in markets, more investments. But we know that the fourth quarter will also be with less expenses in the ratio of net revenue. So nothing new here. It's part of our strategy. But I understand the results are quite positive from the point of view of gaining efficiency and gaining margin. And slide nine, obviously all those efficiencies should bring improvement in the EBITDA margin. And we see here 36%, 38% in the recurring EBITDA and in the quarter 6.4 in the year. Due to what I mentioned before, we understand that the company is very big. We have efficiencies that can be captured over the next quarters as we improve the processes and converge systems. So I think this is a near evolution. So every quarter we improve a little the result. Having that said, I now pass on the floor to Guilherme Meliga so that he comments the results of VASTA. Thank you, Roberto. Starting with the slide 11 in VASTA net revenue, remember that the third quarter is a quarter that is naturally weaker, but it's important because it finishes the commercial cycle. Remember that the vastest cycle commercial starts in the fourth quarter of the previous year, supplying the schools for the school year, and it finished in the third quarter. So I'll focus my comment here on the commercial cycle, because we reached a revenue of 1,529,000 with a 6% growth with the highlight in our subscription revenues that we delivered a guidance of 12%, in fact, 12.5% of subscriptions. The emphasis in subscription is our complimentary products that grew above 20%. In the third quarter last year, acknowledge 40 million revenue in B2G and as Roberto mentioned, we expect to acknowledge new revenues of new contracts in B2G starting in the fourth quarter. We've had a strong year in prospection. The pipeline is quite heated and we believe that now after the elections, we will celebrate new contracts and acknowledge new revenues in the fourth quarter. In slide 12, in vast expenses, we have the focus on the cycle. And I emphasize it. the margin gain or the reduction of points percent that we had with the operational expenses and direct costs that all together represent five points percent so we could improve our productivity in direct costs and operational dispass in five points percent this is the result of the revenue growth and gain in efficiency in our costs Besides a more positive mix, generating more margins. So we have more revenue with less cost with the growth of the premium teaching systems. So these five margin points, we use these five points. We use 2.3 points to finance our growth in ACV in 25. So the commercial and marketing expenses grew 2.3%. which represents an investment in the growth of the company. So in this cycle, we deliver a growth in ACV of 12.5. We expect to acknowledge a growth for next year cycle greater than this 12.5% result of more investments that we are doing, the quality of our portfolio and the penetration we can have. In the next slide, slide 13, Talking about the Vasta EBITDA focusing on the closing of the cycle, we reached 435 million EBITDA with a growth of 14.2% in the commercial cycle. And as important as the growth is the margin growth. We reached 28.4%, almost 2.0% above the margin of the previous cycle. So we are financing our growth with our own generation of productivity and gaining margin. So we are in a very positive moment, very favorable for the company. And looking ahead, looking to the next cycle, we see a very robust ACV growth in the premium teaching systems and complementary products. With gains in prices significantly supported by our technology, this year we launched Plural IA, which allowed us a good repricing of our portfolio, so we have high expectations for the ACV in 2025. As I mentioned, in B2G, we also have a very heated pipeline and we hope to acknowledge new contracts soon. Lastly, In the last avenue of growth of the company, we have a new start with 35 contracts signed, of which two units are operational in 24, and seven will be operational in 25. So we are growing in a very sustainable way. Also, we now are franchising business with a bilingual performance. I emphasize here Liceu Pasteur, and the enrollment campaign that we have to our flagship with the potential of more than a thousand students in Sao Paulo. Now I pass on the floor to Fred to mention the results of Saber. So good morning, everyone. I start Saber presentation in slide number 15, showing the net revenue of the quarter. We've had a decrease in the net revenue of about 29%. This reduction was impacted mainly by the commercial calendar. The year 24 doesn't contemplate purchase and only repurchase and additionally the delay in the in the repurchase of the national purchase of the direct books as you can follow via media what is happening. However, we believe that it is only a delay, a temporal displacement that will happen in the fourth quarter. Additionally, we've had in the quarter an increase of 24 million in the Programa Certa Brasil. So I believe that we are speeding up. And additionally, in the quarter, growth of 24% in the language revenue. Note that when I look from the quarter to the nine months, we had the revenue with a slight decrease of 1.5%. And it's important to mention here that we sold in 24, our book businesses for higher education and excluding that the revenue in nine months, we would have a growth of about 7%. Now in slide 16, talking about the EBITDA, the EBITDA effect in the quarter, both in the accumulator, the main effect was the decrease in the revenue. We had some compensations as we had the delay in the national program of didactic books in their revenue. So we also had a cost compensation, but the message here, is that there was only a delay here. So it's a delay, a temporal effect. And we trust that with the guidance that we gave in Cognite Day, we would reach In our Saber Business, an EBITDA adjusted of 230 million reais. Now, in the final part, talking about Cogna, Roberto Valeri told about the final messages. In slide 18, it's important to see the revenue of the quarter that we had a growth of 1%, but in the accumulated, we have a growth of 7%. In the quarter, our main positive impact was the strong growth Croton with the 13.7%. And this accumulation and displacement, as I mentioned, and Guilherme Malaga mentioned, we believe that the fourth quarter, this displacement that didn't come from the national program of didactic books in Saber and in the growth avenue with the business with the government in Vasta. And I think we will have this positive impact in the fourth quarter, which makes us quite happy. In slide 19, leaving the revenue and considering the EBITDA, we had a growth in EBITDA, in recurring EBITDA and the EBITDA margin in the third quarter reaching 385 million reais with a 26 growth and it accumulated we had a growth of 15 so we have a growth of double digits in the quarter and it accumulated and here is our commitment to generate a value to the company additionally we've had a growth in the margin both in the quarter and in the nine months. So we had the 6.0% growth in EBITDA margin in the quarter and 2.4% in the accumulated of the year. Now going to slide 12. Talking about the adjusted net profit. So the profit here with amortization. So you see an evolution of the net profit in the quarter as well as the accumulated one. So we've had here net profit last year. Well, we had the loss adjusted. of 44 million and this year we disclosed the growth of 175%. So with adjusted net profit of 33 million reais and in the accumulated growth of 58% with adjusted net profit reaching 144 million reais. The main effect here of the net profit that we mentioned before, growth in the revenue. So in Croton, we grew the revenue and improved both in the expense, corporate expenses and the improvement of dropouts. And remember that dropout, our PDD only improved with the dropout. So this is a cash improvement, in fact, and improvement in financial result. So the financial result in the quarter had an improvement of 16% or 44 million reais. and also the non-recurrent items reduction. So this is one more indicator of a strong growth in the quarter and in the year. And in slide 21, we show the operating cash generation. So here is the cash what enters. In fact, there is no adjustment, non-recurrent. So this is the money that enters. So we disclosed here the operating cash generation after caps of 400 million reais with a growth of 57%. Here, the main effects are the growth of croton revenue and the better cash conversion. with the improvement of dropouts and the compensation that is in our working capital. When the nine month accumulated in September, we reached 707 million reais with 8.4% growth compared to the same period last year. Now go into the next slide, slide 22. We've talked internally, we discussed a lot to the market and our leverages since the third quarter of last year would be 1.58 times in the last 12 months and this is a work that we carry out in the company constantly. So now in the third quarter, we reached 1.58 times, reaching a net debt of $3 billion. million reais so with a reduction of the net debt of 257 million reais and this is our lowest level of leverage in the 22 quarters and one of the greatest impact in our leverage besides the improvement in the cash that comes from operation we also have a reduction in the financial expenses line as i mentioned before in the quarter of 44 million or 16 percent In slide 23, the cash position and indebtedness, it's quite clear to us the reduction of the net debt of the company from 274 or 7.8%. So we understand that over the last quarters and years, we addressed, in fact, the level of leverage of the company, but here it's a fact that we reduced the net debt. So we generated cash in the operational one and in the post caps, the capex and the free one after the payment, of interest and all the payments of the company. So it shows that in the net debt, we have a gross debt of 4.1 billion reais minus our availabilities of cash 1.1, reaching the net debt of 3.50 million. And we address it in the last year compared, and I show in the graph, our agenda of amortization before the liability management that we have. So the liability management, besides reducing the debt costs, we enlarged our profile and it shows that in 2025, In the fourth quarter of 23, we would have that in 25, we would have to amortize 1.5 million. We renegotiated and we are committed to paying 752. So we show the displacement of the amortizations that were quite concentrated in the years 24, five and six. And now we see more concentration in 27, 28. Besides addressing the leverage and reduction of interest, we also addressed our agenda, amortization schedule that is easier to reach for the next years. With that, I finish my presentation of Cogna and pass the floor back to Valerio. Thank you, Fred. Now in slide 24, the last one, the messages related to our strategic pillars, remember that we have five pillars, growth, experience of the client, of the students, efficiency, people and culture, innovation and ESG. So I think from the point of view of growth, We are proving now with this is that it's effective and real. The freshmen are growing in revenue generating operational leverage in an important way. We've been doing that for a while when we believe we can keep doing that despite the context of the competition and the micro and micro context. This is a strategy to us with the better students or more engaged students that increases our, reduces our dropouts. Obviously, our experience is also improving. So dropouts are decreasing. So we believe we have spaces for small and consistent and continuous gains over time. in Croton, in Vasta with the opportunities, both in the subscription product and the migration of product, the mainstream products to premium teaching systems that we are doing quite efficiently, bringing more loyalty in the base of the schools and improving the average ticket besides the new avenues of revenue in the B2G that we are learning a lot as well as starting that with opportunities of growth here. And we'll keep growing that and the sessionality that is quite positive in P&D, especially in the fourth quarter. In Saber, we have opportunities not only with the P&LD, but the team is also doing a great work both in languages with the brand as well as in sales to governments, not state governments, but municipal governments as well, with quite positive results that we understand will increase the portfolio, which will also benefit us. So in this growth item, there is no doubt Silver bullet, there is many different works and initiatives, but our journey over the years is showing that, yes, it's possible to have consistent improvement. From the point of view of experience, we are quite happy with the progression, the increase in nps in graduation and post graduation is consistent over the years we are also gaining evolution and winning awards and this year we were awarded many times with the as the company offering the best experience to the client and we are quite happy with the important evolution in the level of satisfaction of this partner schools and the b2b clients of us after a process of evolving systems that we did over the years, especially in the last year. So we were quite happy with the evolution with the NPS and it shows that we are having a good work and evolving as well as other brands that we also have like Red Balloon with a good level of experience. So experience, focus on clients, client in the center in the core as a value with good services and qualities with good training and usability as in the higher education and good approval in SATs like the teaching systems that are our focus and we'll keep following that from the point of view of efficiency I mentioned as Melek and Fred as well, that we are working in changing the operational model and evolving it and governance and processes, the system convergences that we are faster and more agile and waste less so that we don't invest in so many systems at the same time. We have a lot of opportunities beside the implementation of new technologies. I've been talking a lot about artificial intelligence. We have more than a hundred projects of artificial intelligence from the content production to tutoring or back office work. So we do all bring efficiency in an important way so that we dedicate our team to different things, generating new values. From the point of view of people and culture, we keep focusing in this culture of owners and partners with very engaged partners and focused in progressing with the company and collaborating and trying to integrate many benefits and use developments or applications of products with a BU in another one. So it brings a lot of synergy and opportunity for growth as well. Besides many initiatives focusing on the development of people and the competencies of leadership that are quite important for a company that wants to keep growing and working in many segments considered We have this scope of offering education products from two to 100 years. This is our competence. We'll keep doing that from the point of view of innovation besides artificial intelligence. And we are investing a lot in the corporate venture building, not necessarily in a fund, but with methods and initiatives to create new businesses. So we have some projects among which the technical courses and professional courses the info producers platforms and some others that we are fostering in our environment with the small businesses from the point of view of revenue that we understand over the years can contribute a lot to our growth. From the point of view of ESG, we are focused on the 14 commitments of Cogna improving our indicators and we are awarded by many magazines and institutions. And we are very happy to know that external people acknowledge our quality. And this month we received, we were awarded once again as one of the companies of IDL 100 with at least 30% in the board management, which make us very happy. With that, I finish my presentation and we open for questions for the Q&A. Now we'll start the Q&A session. Please remember that to ask your question, you need to click the Q&A icon in the bottom part of your screen and write a question to stay in the line. When invited, there will be a request to open your mic on screen. So you open your mic and ask your questions. We ask the questions to be asked all at once. The first question is from Luca Machesini, Itaú BBA. Luca, we'll now open your audio so that you ask your question. Please, you may go on. Good morning, everyone. Thank you for the questions. I have two regarding Croton. First, regarding tickets in the presidential, we see a growth of almost 6% in the average ticket. And I understand it's a mixed effect. But can you comment on... on the TKT in the capture, in the intake, maybe in the basis of same courses so that we understand better if there is a forecast of something stable and how it's in terms of competition. And second point about commercial expenses, because we've seen a growth of the commercial expenses in Croton that is in line with the strategy that you are mentioning. So if you can mention how long we'll see this increase and what level will be, if it will be stable. if you can talk about this commercial strategy it helps a lot thank you a lot so luca thank you for your question i'll answer them from the point of view of ticket i think especially in the presidential ticket that is what you emphasize it here it has an important effect here in our focus on greater LTV courses. So as the semesters go on and the cycles, we improve our competencies to improve the conversion of courses of students that are in the funnel of the sales of greater LTV courses. But I would say that, This is an aspect, and today we are facing a level of sophistication that the lead even is on the internet without passing the whole conversion process, and we can identify the interest of the student, like, for example, an odontology or law student with higher... average tickets we make more efforts and energy we have a specific team for the conversion and this lead go faster to the call center so that we can ensure a greater conversion rate so the focus is to bring not only volume but revenue in the intake so obviously we privilege the cur courses with a higher ticket as the present show naturally has a greater ticket it has more participation in the mix. So I can tell you that we are not necessarily gaining tickets in the freshmen, as your question mentioned, compared to course. So just to give Fred's example, last cycle and this cycle, does it have a real increase? No, but more participation in the mix of intake, which is helping, obviously. as the new students are becoming part of the students base they contribute so that the base grows as well it is little by little but it is happening regarding commercial expenses i think my answer to you is as a ratio of the net revenue we are stable we don't hope to have growth in the net revenue in marketing over net revenue In the second semester, it will be even a little less than the second semester of 23 with this rate of net revenue, maybe 0.5 or 1%. It's stable. We don't hope to be working with a 25 in the increase of this ratio. And I reinforce that we are trying to invest more in the odd quarters that are the beginning of the intake cycles to bring quality students and so that it reflects in the quality of the students base. Quite clear Valerio, thank you very much. The next question comes from Lucas Nagano from Morgan Stanley. Lucas will now open your mic so that you ask your question. Please, you may go on. Good morning, Valério, Fred, Melegan. Thank you for the space. Two questions as well. The first one, I'd like to know about the ticket, but with another approach. Because over the year, we see an oscillation in the income of the ticket, in the revenue, with the digits and acceleration and deceleration. And considering that the base doesn't suffer this kind of oscillation, what explains this behavior of what you gain per student? You mentioned the freshmen and the courses, but I would like to understand if there is some kind of stationality, some accountability, something like that. This is the first question. The second is regarding the capital allocation. the leverage has reached a more controlled level, but even stronger. And you mentioned that the goal is to deleverage, to look at the future opportunities. So we would like to understand how close you are from this moment of reaching the good level of leverage and what are the opportunities we see for the shareholders, MMA and medicine. I don't know. That's it. Thank you. Thank you, Lucas. Fred here. Well, I'll start with the second one that is on my mind about capital allocation. As you mentioned, we are here with the leverage of net revenue over EBITDA of 1.58 times. So we are closer to a scenario of a great leverage. And here, in fact, we have a discipline in the better location of capital and we understand that the best one today is the prepayment of that so this is what we are doing and with the scenario of interest it is still the best location however i'd like to mention that the company is starting a cycle quarter after quarter of improvement in the net profit. So we expect an accounting net profit. And with that, we also have a return to the shareholders via the payment of dividends in the minimum that is obliged. So this is to answer your first question about the allocation of capital. The second one about the ticket, as a whole, we have here some effect. We have a little of anticipation of FIES. And why? Because FIES has a lot to do with the medicine because we would acknowledge the accounting revenue here of FIES only when the payment was made and not when we had the contract signed. And we understand that FIES is set when we signed the contract. So this was a displacement of revenue. Comparing the years, it's the same. However, there was a displacement that happened in this quarter. regarding additionally the ticket, we also have an effect here of a PMT. So we have this effect that also helps positively in the ticket, but it's not a change in the structure. So remember that Our PMG here is a program that we receive every month. It's not receiving only after graduation. So this look is reflected in our PDD because it reflects in our not payment. So if they have the PMT in the period and they didn't pay, I will be reproving. So it shouldn't be an effect to look in that and we had the PMT in the first semester. So this is not an effect in the cash. So the effect in the cash is positive. Yeah, just to complement in the two questions regarding the capital allocation and reduction of debt, this is our focus. We can have a strategic M&A and invest in a medicine school here or start up there in line with our innovation strategy. So remember that we are now dealing with net profit and this is our expectation for next year to distribute the dividends. So this is a little bit of our mind, but Fred mentioned the focus is reducing the debt because it disturbs a lot with the payment of interest. And regarding the explanation of tickets, Fred mentioned quite well the seasonality of FIES. So you see in the second semester that there is some greater stability. So it had the strong growth in the third quarter and also in the fourth one. So the seasonality that happened in the first quarter won't, first semester won't happen in the second one due to what Fred mentioned. Okay, thank you. Okay, thank you guys. Next question is from Marcelo Santos, JP Morgan. Marcelo will open your audio for you to ask your question. Okay, thank you. Good morning, everyone. Valerio, Fred, people from Cogna, two questions. First, a comment on the competition environment in DL and what you see and deal with the tickets, how we behaved. And specifically about medicine courses, how do you see the medicine tickets over the next years considering the expansion of spots that we see and even with the more medicals? Well, regarding the competition environment in DL, we are living a very interesting moment. I think all the players, saw and everyone knew that, but now we see effectively in actions of each one of the players that reducing the ticket doesn't generate more students. This elasticity is not there. We've been saying that, I don't know, for more than two years, but we hear more players now talking about it. And I understand that everybody understood that reducing the ticket makes no sense. And that's why we see more difficulties and in some cases even a decrease in the intake. Because I understand both us and the companies are more focused on bringing revenue than volume. Now, looking at the numbers, we clearly see that the first quarter was better to the sector. I mean, the level of interest to the sector or searching on the internet and lead generation in the first quarter was quite positive. in the second and third quarters, this interest was reduced. Obviously we are not economists. It's more difficult to understand this dynamic, but we see clearly three factors impacting that. And there is the hypothesis of the bet that is strong, especially after the study that the consultancy bring regarding the amount of students that is interested in taking, going to college, gave up because somehow invested or put money on bets and it is in fact impacting. So it is very difficult for us to talk about what is necessarily impacting the whole sector, but we know there is less demand. I don't think it's structural. The families and people know that investment in education has an important return that tends to stabilize. But given the context, I see good competition from the point of view of competition and price reduction in a more aggressive way because it's not taking companies anywhere. This is a very difficult environment, not necessarily due to competition, but obviously the sector is competitive with many players and it's not only more competitive than it has always been in my understanding. Regarding medicine, well, I think we are... a player with an amount of spots and geographic distribution smaller than other ones. So it's difficult to talk about the sector as a whole. Our medicine colleges have two characteristics. They either are old ones, I mean, traditional in the regions with the strong brands, with the competition that is historically high despite reducing over the years but we feel our spots and our new colleges are especially in regions where the repressed demand was very high so we have an amount of competition per spot that is huge so obviously the increase in spots will generate more competition and will make it more difficult in some cases. I don't think it is as strong as it was in the presentation in the DL because the offers are different, but I believe it's much more a reality locally. So each medicine college, depending on the context and so on, can suffer more. So I look at Bahia, for example, with a huge offer in medicine, with Mais Magicos offer there, with a 13 or 15 new opportunities in medicine. So this is a region that will suffer more, but even though there will be a lot of opportunities in Brazil, and I think the competition is more local and some will suffer, and we will have a tier of colleges that are desired and another one that is not that much, and these will suffer more on our side. And you see that in numbers, Marcelo showed that we can repass the tickets even above inflation, not necessarily to freshmen, but to the graduated students. Okay, quite clear. Thank you for the answers. Next question is from Eduardo Rizende from UBS. Eduardo will open your mic so that you ask your question. Eduardo, you may go on. Good morning, everyone. Thank you for the opportunity to ask questions and congratulations on the results. I would just like to know regarding the DL basis, we saw more intake in the first semester, which contributed to all the numbers for this quarter. I would like to understand from you what to expect to the first quarter next year. And if you can talk about the strategy of the company for next year, it would be very interesting to us. Thank you very much. Eduardo, thank you for your question. I think there is some mic open, but you can hear me. Anyway, thank you for your question, Eduardo. Our strategy, as I mentioned, we changed some processes, which took to some changes in the organizational structure, specifically in Croton. We have a change in the leadership. we in fact redistributed some of the leadership. I understand that obviously it is positive by nature because new leaderships come with many ideas and excited. So I am more optimistic in this front, not because of the previous leadership, but because there is a new team coming. And part of the leadership that was here is in another challenge that is quite important to us as well in terms of growth. So on the one hand, that's it. On the other hand, we are evolving in some processes and strategies. I don't think, well, we don't work with a micro or macro scenario with competition, but we search for more productivity and ensuring our units have commercial teams given they have highly rotation, so that they are better selected and keep for a longer time working, generating more results. Our processes of moving the students from one stage to the other, that it's faster and with better conversion rates. And we are also having this brand work with brand concentration, like I am aware as a national brand with the local action. So there is no change. I mean, something that I can say, well, this is the silver bullet. Well, we have, in fact, these small changes that will make a difference to us. The intake cycle is in the beginning, basically two weeks. We are growing compared to the previous year, but it's irrelevant because we couldn't reach even 2% of the total amount of intakes. But I would say that I'm not pessimistic. I'm optimistic regarding this cycle for 2025. This is how we are working. This is how we are thinking about the budget for 2025. Quite clear. Thank you very much. The next question is from Yann Seskin from BTG Pactual. Yann, we'll open your mic so that you ask your questions. Yann, please. Good morning, Valério, Fred, Guilherme and everyone. I have three questions. The first one is about guidance. Fred soon mentioned the guidance to Saber despite the delay in the repurchase. I'd like to If you reiterate this guidance for 24 in the consolidated, the second question is about the PCLD in Croton. I'd like to understand after the reversion of PCLD and with the improvement in the average credit profile of the students, what you imagine should be recurrent in the provisions looking ahead. And the last question about the recoverable fiscal credits. And we see that it helped the cash generation in the quarter. And we've also seen that you still have 350 million for acknowledgement. I'd like to know if you work today with the expected schedule for this. Thank you. Thank you, Ian, for your questions. I'll answer the first one just to reinforce Fred's point. And then Fred talks about PCLD and fiscal credits. Yes, we reinforce the credits for EBITDA and cash. As we've said before, the second quarter is the strongest one. And within that, the fourth quarter quarter is the strongest one. So I reinforce it here, not only on Sabe's side specifically, but also in Cogna, we reinforce our guidance for cash EBITDA. We are sure that we reached these numbers. And now a person on the floor, PCLD, Fred for PCLD inquired. Well, regarding PCLD, what happened here was that this reversion in PCLD is for cash in fact. So there is no reversion in PCLD. It's an improvement in non-payment due to re-enrollment. So it happens when I have a student that should be unpaid and for the re-enrollment he had to pay. So when he paid, he paid the previous credits and I am reverting the amount that was paid. provision. So it is important to mention that it's not reverting PCLD. It is dealing with our inadimplency and this metric that we have on the PCLD about the net revenue in the last quarter is about 10 and 11%. Structurally, we should be closer to 10%. But it is an event that happened. We have to monitor and we still trust that we decrease that. And if you look at the receivables, the gross receivables, we reduce that. So we see cash in fact, and I don't think it is a change looking ahead from 10 to seven, but it is a gradient and we are improving our, uh, unpaid and therefore the PCLD, but structurally, I believe it would be closer to 10%. The second question about the fiscal credit, well, it happens in any company and in fact, it is in the working capital. So in this quarter, we had restitution of that, of this credit that is different from what we were doing before. So commonly we do the credit compensations. So in the year 21 and 22 and 23, we've had that. However, this year, we could restitute this cash as the tax credit is taxes that I paid above. So it is also cash and it's in the working capital. So that's why I don't understand it's a non-recurrent item. It is in our operation, but we have in our balance, as you mentioned, in our lease, 349 million reais, and we believe we'll compensate in the next years. I think... We will compensate in the next years. We have compensation to the fourth quarter, naturally. And how will the year 25 be? We believe that our compensation in the credits in 25 won't be lower than what happened in 24. So this is ongoing in the operation. as I also increase the tax credits, because for example, the tax credit comes from the income tax that is paid. So it's in my balance. So to conclude, it is an operation that to the next years, I will have a compensation and I don't believe it will be lower than 2024. Thank you, Fred and Valério. The next question is from Flavio Yoshida from Bank of America. Flavio, we'll open your mic so that you can ask your question. Hello, good morning, everyone. Thank you for the opportunity of asking questions. You mentioned that you are quite happy about reaching the IBDA guidance. I'd like to understand if you have a specific leverage to reach this guidance, because we understand the operational improvement that you are showing, but to understand if there is an extra point in this guidance. And my other question is regarding PDD. We see an effort with good results regarding the improvement in the quality of the basis. And I'd like to understand what you see as the new level of PDB of the company in a more sustainable way in the medium long-term with all the revenue. Hi Flavio, it's Fredy. I'll take your first question here and Roberto will conclude then. Because why we reinforce our commitment with guidance? Well, I'd like you to think that we have nine months over in 24. We have the recurring EBITDA of 1,362, okay? So what was our recurring EBITDA in the fourth quarter of... The fourth quarter of 2023, it was 552. So if we take it to account, it's more than 1.8 million. So as Roberto mentioned, and I mentioned, and Guilherme mentioned as well, our fourth quarter is the one with growth. If we look at the growth that we've had in our fourth quarter in 23 and 22, we had a growth in EBITDA In all our businesses, we don't believe our growth in revenue in EBITDA in the fourth quarter of 24 compared to 23 will be lower than 23 to 22. So... This is some math we make here. I cannot give the guidance of the quarter, but Melligan has reinforced that here we reached our ACV. No, we had an ACV of 12.5. I don't believe our ACV to the next year will be lower. We are not given the guidance, but it won't be lower than 12.5. So I'm inferring here a growth in the revenues. And the Croton Avenue, we had a growth in the third quarter of 13%. the revenue of Croto in the fourth quarter shouldn't reduce. And in Saber, I had the temporal displacement. So what comes from here is from the number that we reached plus the growth we believe we'll have in the fourth quarter that shouldn't be different from what happened from 23 to 22. So this is something that I would like to make it clear. Roberto, any comments? Well, very briefly, I would reinforce Fred's point. So let's think about Croton. Croton is strong in the fourth quarter. So this is a business that in decisionality of the semester, no. Let's see what is done in the third quarter. brings to the fourth quarter. So if the third one was good, the student is there enrolled, both the new and the old one. So I'm pretty sure it will be a strong result in the fourth quarter. And considering Fred's point, Vasta will have the first quarter of the cycle with the schools quite strong, growing more than 12.5 potentially. And we believe that with new governmental contracts. We have everything to keep growing. And Saber is another unit business that will be concentrating P&LG with opportunities in B2G. So there is no new leverage. So we know that. We are sure that this happened in the fourth quarter. So just to reinforce it. Yeah, and reinforcing the PCLD, Flavio, we've had here in our third quarter the effect of enrollment that was quite positive. So this positive effect in underpayment is reflecting in the improvement and reduction of our receivables. gross receivables. So in fact, we had an improvement in the PCLD. I don't believe it is structural at this point. We need to see that happening for more quarters. So remember that this level of PDD on revenue was quite closer to 17% than 13%. In the last year, we were saying that it was closer to 11% and now we are closer to 10%. So this is natural. We see this recurrence. The fourth quarter will have this response in terms of cash and inadvisability. So I can tell you if you have an improvement for less than 10%. Okay, thank you very much. Quite clear. Next question is from Renan Prata from City. Renan, we'll open your audio so that you can ask your question. Good morning, everyone. Thank you for the question here. Just briefly, because there was representative growth in Kratom Med with the tickets and so on. So I would like to know what is driving this growth among the different units of Kratom Med and a brief follow-up about the seasonality of the quarters because you mentioned that the fourth quarter of Croton shouldn't be seasonal as we see in the first quarter due to acknowledging the revenue of FIES. So I would like to be more clear on what are these movements in the second semester that should bring more stability in the growth of revenue. So that's it. Thank you. Hello, Hannah. I'll consider the first one. And if Fred wants to complement, well, Kratom Media has some factors that are helping. Well, the first one is that we have some new courses that were recently approved. So there are some that was recently approved with 110 spots and some that were approved in the medium term. They are still maturing. So the maturing of these spots that were not completely filled, especially in Mais Mágico, it is helping regarding the amount of students. The second item is that we are also improving the average ticket. going above inflation due to a series of reasons. I mean, we are investing in the colleges, we are improving their experience with the systems and academic processes. So these investments are also improving the engagement of students And if we believe we can do more inflation, that's okay. So these are the two main points to push the growth of the Kratomag revenue. As we have new medicine schools with 110 new spots coming, this growth in the revenue will keep happening. And Renan, regarding Fies, that was your question. FIES was only a displacement with anticipation in the fourth quarter of last year, second semester last year, the revenue of FIES was more concentrated in the fourth quarter. And now this revenue is more concentrated in the third quarter. Because as I mentioned before, we only acknowledge with the payment of fees and now with the signing of the contract, which is more correct because the student signed and is studying. So now we are acknowledging correctly by competence and not cash. So this is just an anticipation that happened in the fourth quarter last year and now in the third quarter this year. So in the semester as a whole, there is no impact to decisionality. Okay, quite clear. Thank you very much. The next question is from Kyle from Santander. Kyle will open your mic so that you can ask your question. Good morning, everyone. I would like to ask about the provision rules and receivables, what you are observing, if you have any study to change this provisioning rules. And the second question, thinking about the guidance of PCO, if this guidance would take into consideration the restitutions. I believe so, after Fred's response to other questions, but I would like to check from you this understanding. Thank you very much. Caio, thank you for your questions. I'll answer if Roberto wants, he'll answer as well. Regarding the provisioning rules, the improvement we can see and analyze in your cash is due to the best quality of the student and not with the change in the criteria. So if I have a better quality of the student, the non-payment will improve and I have more provisioning. So we have no study to change the provision criteria because we understand our provision is correct. Can I just add something, Caio? When we started the restructuring, when Fred came here in 2020, he carried out a study here with the team in an exhaustive way about provisioning and APDD and how to do and what are the methods. So we overcame this step. We are quite comfortable with our provisioning model because we studied a lot about that over the last four years. So we understand we are quite adequate. We need no adjustment and we don't like to make adjustments because we missed the reference. We understand we have a good model that we can keep so that you can have a clear tracking. Regarding the second question about the operational cash generation, when we had this guidance, we were in the end of 2020. So we were foreseeing the compensation of tax credits, okay, but the amounts we couldn't. We couldn't foresee in 2020. We couldn't foresee in 2020 what we would have in 24. So as I mentioned, we wouldn't see some anticipations of payments or displacement of the national program of didactic books. So it's natural in our operation. So some things are more positive, others more negative. But the important here is that regardless of everything, this is the operation of the cash, it is here we received, it's always been here in all operations and in the working capital. So we have a specific line and you can see both via the balance and the cash flow indirectly that we disclose in the movement that you see it's exactly this movement of tax credits. Quite clear. Thank you very much. Okay, the Q&A session is over. We'll now pass on the floor to the final considerations of the company. Well, I'd like to thank once again to our team, Cognite team, with more than 24,000 workers that are working hard so that we can improve the lives of our students and clients and deliver results to our shareholders. Thank you all. And the RI team is available for any doubts the investors might have. I wish you all a nice weekend. Thank you very much. The teleconference of results regarding the third quarter of 24 of Cogna is over. Thank you to all participants. Have a nice day.