Vasta Platform Ltd (VSTA) 2025 Q3 法說會逐字稿

(Operator Instructions)

Thank you for standing My name is Kathleen, and I will be your conference operator today.

At this time, I would like to welcome everyone to the Vasta Platform 3rd quarter, 2025 financial results.

All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question-and-answer session.

If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.

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Before we begin, I would like to read a forward-looking statement.

During today's presentation, our executives will make forward-looking statements.

Forward-looking statements generally relate to future events or future financial or operating performance and involve.

Known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those contemplated by these forward-looking statements.

Forward-looking statements in this presentation include but are not limited to statements related to our business and financial performance.

Expectations for future periods, our expectations regarding our strategic product initiatives and the related benefit and our expectations regarding the market.

Forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management.

This risk includes those set forth in the press release that we are issuing today, as well as those more fully described in our filings with the Securities and Exchange Commission.

The forward-looking statements in this presentation are based on the information available to us as of today.

You should not rely on them as predictions of the future events, and we disclaim any obligation to update any forward-looking statements except as required by law.

In addition, the management may reference non IFRS financial measures on this call.

The non-IFRS financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with IFRS.

And I would like to turn the call over to Professor Silva, the CFO, and Guilherme Malaga, the CEO. Please go ahead.

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

Thank you, Cesar. Thank you all for participating in our earnings release call. Let's move to slide number three, which summarizes the key highlights of the 2025 sales cycle.

We are closing the final quarter of this commercial cycle, and we are pleased with the results achieved. Once again, we delivered consistent growth in revenue and profitability, while maintaining strong operational discipline, cash flow performance, and advancing our strategy priorities. Starting with subscription revenue, we grew 14.3% comparing to the previous cycle, supported by ACV bookings of R$1,552 million.

And net revenue up 13.6%. This performance reflects the resilience of our core business and the successful execution of our commercial strategy, and we have demonstrated the ability to sustain double-digit growth in our core business for the 4th consecutive year.

Our complementary solutions continued to expand at an accelerated pace, growing 25.3% year over year, reinforcing the strength of our ecosystem and the value we bring to schools with our complete portfolio product portfolio.

In the B2G segment during this quarter alone, we recorded revenues of R$17 million from several new customers and from the state of par contract, totaling R$67 million in the 2025 sales cycle. This demonstrates stability in this revenue stream compared to 2024.

As a result, net revenue in 2025 sales cycle reached R$1,737 million. a 14% increase compared to the same period in 2024. This growth was driven by the successful conversion of ACV bookings into revenue, along with a strong performance of our complementary solutions as mentioned before. In profitability adjusted EBITDA reached R$494 million, a 10% increase compared to 2024. The margin was 28.4%, slightly below last year's 29.4%, mainly due to a different product mix and increased investment in marketing and growth initiatives. Despite these factors, we maintained healthy profitability levels, demonstrating our ability to balance expansion with operational efficiency.

A major highlight of this cycle was free cash flow, which totalled R$316 million rials, 117% higher than last cycle.

Our last 12 months, free cash flow to the conversion rate improved significantly to 64%, up 31.5% points from 2024. This improvement was driven by efficiency measures and disciplined cash management, including early collections and automation in the financial process.

We also continue to make progress in the leveraging.

We met that to the last 12 months EBITDA at 1.75 times.

Down from 2.32 times in the Q3 2024.

Beyond these financial metrics, we continue to make progress in strategic areas. In the B2G segment, we advanced our diversification strategy, adding new municipalities to our portfolio.

This reinforces our commitment to expand access to quality education through partnerships with public institutions.

In bilingual education, our stock angle franchise remains a key growth avenue. We now operate 6 units, which includes 4 schools implemented this year and have signed over 50 contracts, besides a robust pipeline with more than 300 prospects.

This position us well to capture demand from premium bilingual education in the coming cycles. It is worth mentioning we expect to launch 8 new operational units for the coming year.

Finally, as we look ahead to 2026, innovation remains the centre of our strategy. Throughout AI, we will introduce new tools focused on equity and personalized learning, including the Individualized Educational Plan, EEP. which will empower educators with tailored pedagogical recommendation and foster inclusive practice.

In summary, these results confirm the resilience of our business model and the successful execution of our strategy. We are confident in our ability to sustain growth, enhance profitability, and deliver value to our shareholders.

I will now turn back to Star Silva to walk us through the financial results.

Thank you.

Let's move on to slide number 5. In this slide, we present the composition of net resume.

On the left side, you can observe the organic growth for the third quarter in to net resume, which increases by 13.4%, reaching R$250 million. Yes.

Of subscription revenue achieving in the third quarter of 2025, R$212 million eyes. A 3% increase compared to the same quarter of 2024.

No description increased, 45% to R$21 million, supported by higher enrolment in the Start Anglo flagship schools and Anglo Pray university course.

Moving to the right side, you have the numbers of the net arrival for the 2025 sales cycle.

We achieved an organic net revenue growth of 13.6% in the 2025 sales cycle, amounting to 1,700 to 37 million. The main factors for this performance were, firstly, the subscription revenue has increased 14.3%, reaching R$1,552 million, and continues to be the major contributor to our total revenue, representing 89.3%. Of the net of the revenue share as the in-slide number 4 of this presentation, nondescription revenue increased 16% to R$1,190 million.

This growth is mainly driven by two effects the new revenue from our flagship.

In Sao Paulo that did not exist in 2024 and the growth in the number of students in the annual pre-university course, which enrolled 21% more students than last.

Moving to item number 6.

You can see that in this sales cycle our adjusted day amounted to R$494 million hairs with a margin of 28.4%, an increase of 9.9% to R$449 million hairs and which will break down the next slide.

So in this line number 7.

We can observe that the adjusted APDA margin achieved 28.4% in this 2025 sales cycle, 1% point lower than the same per of 2024.

Our gross margin reached 62.8%, a decrease of 1.4% points from 642% in 2024 sales cycle, mainly due to a different product mix. Is it worth mentioning complementary solutions have grown at a faster pace by high payments to product owners of certain products.

Provisions for downfalls accounts PDA achieved 3.1% in relation to the net revenue and have an improvement of 0.8% points when compared to 2024. This indicator has been showing improvement during the year despite the very challenging restrictive credit environment for non-premium, and we so foresee challenges in the credit scenario for the next month.

As a percentage of natural revenue, our commercial expenses increased by 0.8% points, driven by higher expense related to business expansion of the commercial cycle for 2026 and remains stable at near 19% of the revenue.

And finally, adjusted G&A expense improved by 0.3% points, mainly driven by workforce optimization in budgetary discipline measures.

Moving to slide number 8, we show the adjusted net croft.

That you can see in the vital side of this li in the sales cycle that the adjusted net profit with R$82 million hairs, and there has been an increase of 32% from adjusted net profit of R$62 million in 2024 because of the.

Moving to slide number 9, we show the pre cash flow evolution.

In the sales cycle, our free cash flow reaches 316 million highs, an increase of 117% from 2024. The cash flow generation in this cycle.

Has an outstanding performance and achieved the highest level of conversion in relation to the adjusted EPA in the last years, achieving 64%. This is 31.5% points better than the same indicator as last year. This improvement is explained by certain measures that the company has been implementing which are already yielding positive results.

We can mention some of these measures in our collection process.

We developed an automatized process like remarking, reminders, and pass-through notifications. We implemented customer segmentation and managing to make faster renegotiation on overdue receivables on the payment side, we implemented several initiatives to enhance discipline in payments such as he grows financial planning, centralizing premises scheduling, and was negotiating.

On payment terms with suppliers. Additionally, the first semester of 2025 benefited from early collections of the 2025 sales cycle, which are expected to normalize in the next quarter. Is it worth mentioning that for the fiscal year we expected to achieve a conversion rate of about 50% of the BTD.

This will represent a prevalent increase from 41.8% compared to the 2024 fiscal year.

Moving to slide number 12, let's take a closer look at the neck movement.

The net debt position decreased by 1R$7,777 million in the 2025 sales cycle. This decrease was driven mainly by the free cash flow generated in 2025, which was partially offset by financial interest costs.

Our net debt amount amounted to R$1,863 million at the end of the sales cycle, and we managed to reduce the leverage ratio of the net debt to last 12 months at just a date which achieved 1.75 times, a decrease of 0.

7 times of this of this indicator compared to the same quality of 2024. We would like to reinforce our commitment to continuing to generate free cash flow and deleverage the company. Having said that, I finish our presentation, invite you all to the Q&A session.

(Operator Instructions)

Thank you. Your first question comes from the line of Kamalee Asunkow of Morgan Stanley. Please go ahead.

Good evening. Thanks for the space. We only have one question. Could you provide please some colour on the ACV buildup for 2026 and if you could comment on your outlook for growth and the balance between volume and pricing.

Thank you, Camille, for your question. We just, ended the quarter of 20 of the cycle of 2025 recording a 14.3% subscription revenue growth. That's the trend that we expect to continue for 2026, so I would say it's mid, double-digit growth in terms of revenues. In terms of outlook of our performance, we are growing in learning systems, and gaining market share in premium learning systems, and complementary products, keeps the pace growing with more than 20%, and that's the trend should be continued to 2026.

In terms of pricing, we are, for the last 5 cycles, we were able to price EPCA plus, and we definitely are targeting the same level. I would say EPCA Plus between 1 and 2% for the next cycle should be a good guess for what we are seeing right now.

Very clear.

(Operator Instructions) Thank you. There are no further questions, I will now turn the conference back over to Guilherme Melega for closing remarks.

Thank you all for participating in our Q3 conference.

The sales cycle of 2025 continues to reflect Vasta’s solid execution and strategic focus. Our consistent revenue growth, strong cash flow generation, and expansion of core business reinforce our commitment to deliver long-term value. We are particularly proud of the progress made in our Start Angle bilingual school and the evolution in our plural platform and our disciplined approach to operational efficiency and financial management.

Thank you all for continuing trust and support. We look forward to seeing you in the earnings release goal at the end of 2025 fiscal year.

Thank you all.

Ladies and gentlemen, that concludes today's call.

Thank you all for joining. You may now disconnect.