Vitru Ltd (VTRU) 2021 Q4 法說會逐字稿

Good evening, ladies and gentlemen, and welcome to Vitru's Fourth Quarter and Full Year 2021 Earnings Conference Call. (Operator Instructions) As a reminder, this call is being recorded and will be available on Vitru's IR website.

Now I would like to introduce your host for today's conference call, Mr. Carlos Freitas, Vitru's CFO. You may begin.

Thank you, operator, and good afternoon, everyone. Thanks for joining us again. It's a pleasure to be here with you all for the release of the fourth quarter '21 numbers, as well as the numbers for the full year of '21. A slide presentation will be part of today's webcast, which is also available in our Investor Relations website at investors.vitru.com.br. I trust you all have the presentation in front of you. And as usual, before we begin, I'd like to remind you that as detailed in Slide 2 and 3 of this presentation, safe harbor is in effect for this call.

So now I invite you to go to the Page 5. Here on Page 5, we have the main highlights for last year and fourth quarter of last year. The first one, which is not new, was the announcement of the combination with Unicesumar, which is, as you know, a leading institution here in Brazil with the highest quality indicators in the higher education sector in the country, defines a very sizable business in medicine. This transaction is as you know, is still being evaluated by the antitrust authority in Brazil. And I'm going to show again to you some number of Unicesumar in a few minutes.

Second important remarks, which also not new, is the Nursing course that we launched in August of last year. And just after a couple of months, it quickly became our #1 course in the intake of the second semester of last year, which is important not only for the expansion of the market as a whole, but also as a tool to sustain tickets and improve tickets over time.

Third highlight is that we reached at the end of last year, nearly 360,000 digital education students, mostly in our core business, which is under graduation in digital education, in which we had an increase of 27% in the intake of the second semester of last year and by the way 32% increase in the first semester of last year. And a very important growth as well in the Southeast region, where we grew around 45% year-on-year between December of '21 and December of '20.

Going to Page 6. Another important remark is the average ticket. I cannot -- I repeat myself, just to say that we have a different business and we have been able to sustain and improve tickets over time given that we sell a different product than the market. Our other tickets in our core business, again, digital education under graduation, increased by around 6% in the second semester of last year when compared to the second semester of '20, and now it reached BRL 278 per month. This is a, I'd say, remarkable achievement. We have always said that we have a disciplined approach to tickets.

We don't want to grow just for sake of growing, but we want growth to sustain and improve the tickets. And this -- by the way, this was not only the effect of Nursing, Nursing is a premium course in which the average ticket is way higher than our normal traditional course. Without nursing the increase in ticket would have been around 5%. So the increase as a whole here in the ticket is in function of our continuous efforts to sustain and to maintain a disciplined approach to tickets.

Regarding financial numbers, net revenue in our core business increased by 26% last year and the consolidated net revenue increased by 22%. Adjusted EBITDA increased by 24% last year with a slight increase in margins as well in adjusted EBITDA margin now reaching almost 29%. And finally, regarding cash flow from operations, we had [BRL 137 million] last year, increasing from 2020 with a nice cash conversion ratio of around 83%.

So now on Page 7, before we dig deeper each to the numbers of the year. Just a reminder of what we have been doing since the IPO. We said at the time that we would grow in 4 growth avenues; 3 and 1 inorganic. We have been [briefing], we have been delivering what we promised. Now the first one was ramp-up of current hubs, which now represents around 2-thirds of expansion hubs are student based and more than 91% of our overall portfolio of hubs is still ramping up, which means the important growth driver with [digital] education risk.

We -- as I said, we grew to [265,000] students as a whole. We opened as well around 240 hubs, 230 hubs last year, of which almost 100 hubs in the Southeast and of which 50 hubs in the State of Sao Paulo. We said a few times that we are still a bit shy, we were still a bit shy in the Southeast and that's why the most important I would say organic region for us is the Southeast, and that's where we've been focusing and we are growing a lot there in the states in the Southeast.

Third one would be course offering, I said already about Nursing. And soon, we will have Psychology and Law. Law will also come to digital education. That will happen hopefully soon. And once it happens will be a game-changing movement for the whole industry. And fourth, inorganic about the transaction with Unicesumar that I mentioned a few times already, which is the page now, on Page 8. Just as a reminder, Unicesumar is a company, an institution with a 5, more or less seemed as one that we have this year are the numbers for the second quarter of 2021, which are the latest information that we show to the market.

In a couple of weeks, we're going to release to you the numbers of Unicesumar for 2021 as a whole. But so far, what we have here are numbers for the second quarter of last year. So 40% of adjusted EBITDA margin is very nice business in Medicine. They are the fifth best educational institutions in Medicine in Brazil, most represents around 25% of the revenues of Unicesumar. And they have, as I said before, the best quality indicator when we see the digital education business in Brazil.

On Page 9, it's important to highlight and to emphasize that we are going to maintain both brands because they attack different markets. And also, there is an important synergy -- commercial synergy to be exploited here. And currently, there are around 600 cities in which you have only Unicesumar, but not UNIASSELVI or vice versa. And here on the right, these are the numbers for the market share and growth in the market as a whole, which do not yet reflect the new numbers that were released by the Ministry of Education a few weeks ago with the first numbers of 2020 census, here you have only the numbers between '16 and '19. And this is because we are still waiting for the micro data to be made available by the Ministry of Education.

But according to the first numbers that were released, the combined market share of UNIASSELVI and Unicesumar reached 20%. It was 10%, 10.5% in 2016, growing over time. So we have been able to grow faster than the market and to gain market share with that. We had 18.5% market share according to the census of the MEC in 2019, and now we have around 20% of the product in digital education market. So we keep gaining market share. In function of the differentiation assets of both institutions, which is here on Page 10. Just a quick reminder that we offer our typical hybrid academic model, while Unicesumar offered a hub-based 100% online model and we have the different products that's why we have been able to grow faster than the market.

And finally, on Page 11, before we jump into the financials. This year is the validation by the clients, by the market. On the left, the grades that we have of our apps, the app of UNIASSELVI and the app of Unicesumar, this is with the average between Play Store and Google Store and Apple Store with app for event for growth of each player with the highest number of valuations of each player in fact. And if you see here that we have the highest rates in the industry, noting that maximum 5, so we have 4.4 and Unicesumar has 4.7. So this confirms the tech-driven approach that we have to education.

And by the way, our app now represents around 60% of our enrollments. And this is something that we start to offer more or less 6, 8 months ago, and now it represents around 6% of our intaking cycle through our apps. So it's a totally different experience for the newcomers. On the right, the Reputation Index with the Reclame Aqui in which we have 7.6, Unicesumar 8.2. These are, again, the highest number among the listed players in Brazil.

So now jumping to Page 12. As I said before, Nursing being offered, we are sustaining ticket with nurse and we will be able to do so even further with law and psychology once it is approved by the Ministry of Education, which we hope to take place soon. I'll now go to the numbers of last year on Page 13. As I said, we have now around 260,000 students in digital education, 265,000 in total including the 6,000 we have in on-campus courses.

In the chart, you have on the right, the evolution of digital education students in under graduation. And by the way, this has been purely on an organic basis, as you all know. So we grew 18% last year, year-on-year, which is an impressive achievement, given the tough comp of 2020. As a reminder, we had a 40% increase in intake in the second semester of 2020. So the bar was already quite high here.

Page 14. As I said, we had an increase in intake last year of 27% in second semester and 32% in the first semester of around 30% increase in intake last year. And the pie chart show the breakdown of the intake in 2020 and '21. So here, there are a number of points to bear in mind. The first one is the reduction in the black spot here of the pie, which is Vocational. Vocational means [technolable] which are shorter courses, courses that take -- have a duration of 2 years, 2.5 years. So they were 36% of intake, now they are 32% of intake.

And most important is the increase in premium courses. I mean, health-related courses and engineering, which has a higher ticket. The average ticket of an engineering or health courses such as Nursing and Nutrition, Biomedicine, et cetera, and Physical Education is a bit higher than -- a bit more than BRL 400 per month, which is more or less 50% higher than what we have in our average ticket.

So when you see here the intake of the premium courses, it was 23% of 2020, I mean 4% in Engineering and 19% in Health courses. And now -- or last year, they grew to 32% of intake. But those courses, they still represent only around 20%, something, 22%, 23% of the overall student base last year. There were 32% of intake, but still they are a bit more than 20% only of the whole base of last year. So the trend is that premium courses will represent a higher and higher share of our base, which will be an important driver to sustain even more our tickets and I'll go back to this a bit later.

On Page 15, the breakdown of our growth in our student base in digital education under grads throughout the country. So we grew 18% year-on-year for the whole country, including 10% in the South, which is our income that's driven, around 36% in the Central-West, an important growth there, around 15% in the Northeast and as I said before, 45% in the Southeast. And on the right, you see the breakdown of the number of hubs per region, this is new information. So here, you can see that the evolution of the hub base throughout the country in the last 4 years. And now for the first time, the Southeast region represents the biggest region in terms of hubs. We had an increase of 61% in the number of hubs in the Southeast, which now have 245 hubs out of the 939 that we have in the whole country.

So this is, again, an important growth driver for the future, which is here on Page 16. We have intensified the presence in the Southeast, which represents 40% of the whole market in the country. So as I said, 61% growth in hubs, 45% growth in student base there. And the -- when we see the whole intake in numbers, the Southeast was 8% in 2019, and then grew to 17% in 2020, and then 19% in 2021 of the whole intake. So we are increasing our footprint in the Southeast.

In Page 17, our famous chart with the evolution of the student base per cohort, knowing that a cohort is the number of hubs that were open in a given year. So we keep increasing and we keeping maturing our hub base. And as I said, this is an important driver with limited education risk, because the hub is there, the partner is there, the UNIASSELVI brands is there and word of mouth is working in our favor. So we keep increasing our maturation of hubs. And today, the theoretical maturation index of the overall portfolio of hubs is around 33%, but it's important to highlight that this index takes into account all the expansion hubs.

So when we open several hubs at the same time, we had a dilution effect of this index and effectively even end up with a lower index. But for example, if we take only the 2018 cohorts, the maturation index of this hub increased from 36% in December '19 to 50% in December '20 and now to 60% in December 2021. So we will keep increasing the maturation of our hubs. On Page 18, I figure the -- some key financials. So net revenue as I said growing by around 22% on a consolidated basis. Gross profit increased 31% in the whole year, reaching a gross margin of around 62%, an increase of 4.5 points in 2020 and 2021. And then I'm going to get back to show the reasons. And adjusted EBITDA growing, as I said, 24%, reaching a margin of 28.9% in the year.

On Page 19, you see here on the left that for example, the digital education undergraduate net revenue grew at 26% in the year, driven by the expansion of student base, but also by the expansion of tickets. And here are the numbers. We -- as I said, we have now in the second semester of last year, BRL 278, which is around 6% higher than one year before, which was around 4% higher than one year before. So we keep increasing our average ticket because of the differentiation aspects of our products. And again, as I said, this increase of 6%, 1% of this is Nursing, the other 5% is indeed the overall portfolio that we had already before. And this mix effect is important.

As I said, the average ticket of premium courses is around BRL 400 per month. While -- so because we have [BRL 278] of our average tickets, it means that the average ticket of the traditional courses is around BRL 241 per month. So as I said before, we expect the relative weight of premium courses to keep increasing over time, not only because of the higher penetration of our current courses such as Nursing, but also in the near future, Psychology and Law.

So just as an example, so if we had for example 50-50, so 50% of premium courses, which now has represented more than 20% and 50% of traditional courses, our average ticket will have reached BRL 320, I mean, BRL 400 for the premium and BRL 240 for the traditional BRL 320 on average. So there is still a lot of potential here to sustain tickets. And this not counting with inflation in any other effect, just on a mix effect, we still have a lot of space to increase tickets as we increase the relative weight of premium courses in our overall portfolio.

So on Page 20, the contribution of the Aggregated segments. First continuing education grew by 29% last year, which is explained by higher offerings and higher digital marketing that we increased last year. And -- but on the other hand, on-campus, there was a decrease of 16% on a year-on-year basis, which is aligned to our vision that this is a business that will, I'd say, keep discussing a little bit more over time because we do believe that there is a trend -- a continued trend of migration of interest from on-campus to digital.

So on Page 21, the net revenue was boosted by digital education segment, the increase of 26% in digital education undergraduate -- I mean, continuing education and a decrease of 15% in the net revenues of on-campus. So the consolidated number is 22% for net revenue. When you see about costs on Page 22. The cost of service declined from 34.7% to 30.5% of revenue, this was because of overall optimizations of personnel costs.

As we grow further, we are able to more and more optimize the ratio between students per tutor. So this is a function of growth. And also, of course, the natural gains of scale as we go further, we can dilute more and more fixed cost. On the right, the G&A. G&A now represents only 8% of our net revenues, which is way lower than competition, which shows our continued efforts to maintain a lean and agile structure, which reflects in our closure. So we had a growth of around 8% only of G&A costs in last year -- G&A expenses last year.

On Page 23, on the right -- on the left. Selling expenses grew by 34%, this increase was a function mostly of the increased intake that we had last year. As I said, we had an increase of around 30% last year. And the selling expense increased 34%, which means that the CAC increased a little bit, increasing around 3% when we see the year-on-year comparison. So I think it was a normal increase in the CAC around 3%. And also because the hubs were again, closed last year. Just as a reminder, the hub is an important piece in our overall [selling] machine. For now as we resume operations at hubs, we are now resuming our operation at the hubs. So this will be also important to use the hub in our selling machine further throughout this year.

And on the right, the PDA, which is called net impairment losses on financial assets, so it's the same as PDA. It increased last year from 14.8% to 17.5% last year and this is first of the pandemic and also because of the higher share of newcomers and new students in certain days. As you know, most of the PPA is concentrated in new students coming from the first semester. And also because, again, the hubs were closed. So in our academic model, part of the experience is to meet your colleagues and hubs. So when we lose this piece of the whole experience is part of the students, we are not in our full potential of the overall experience. So now as we resume the physical encounter, the weekly meetings at the hubs, we expect the overall retention and PDA levels to go down this year.

So now jumping to Page 25. Adjusted net income and cash flow. So adjusted net income declined 7% last year. And the first reason was the high comparison based on 2020. In 2020, we recognize for the first time before tax assets. So this made a tough comp for 2020. And also, we gained BRL 13 million just after our IPO in FX gains, which is part of net income of 2020. And besides that, last year, as you know, we had a huge increase in IPCA, in the inflation ratio of Brazil, which went from 4.5% in 2020 to 10% and most of our debt is in IPCA. So we had a slight decrease of net earnings, net results.

And in cash flow, we had an increase of 7% -- sorry, 11% last year. The first reason was -- the reason for this increase of only, I would say, 11%, was, as I said, the gain in FX of BRL 13 million. This is in IFRS is part of the operational cash flow. So if were not for this BRL 13 million gain in FX, our net income in 2020 would have been around BRL 110 million. So we would have had a growth of a bit more than 20% in cash flow from operations, which is aligned to our growth in EBITDA. So again, a net or nice cash conversion ratio of 83%.

So that was it I had for now. And now I'd like to open for questions.

(Operator Instructions) Our first question comes from Vitor Tomita with Goldman Sachs.

2 questions from our side. The first one would be on margins. Considering that reopening offshore hub, it's likely to increase some cost lines in 2022, but also considering that your margin has been benefiting from operating leverage and efficiency initiatives, how much room do you see for further margin improvement this year? And our second question would be more specific on the technology angle. You mentioned that your mobile assets when compared to mobile apps, what should you say are the key differentiating factors or features of your mobile assets differentiate it from compared to this?

Thanks for your questions. The first one about margins. I mean we -- because we are really focused on digital education and different from the other -- most of the peers in the industry, we didn't have a, I'd say, huge saving in 2021, in '20 because of hubs closed or on-campus units closed. We had some savings in (inaudible) for example, but it's not that material when you compare to a typical on-campus operations. In on-campus, some peers had with normal some savings. We had some savings as well, but it's not that material because most of our business is around digital education. So going forward, what we expect regarding margins, we should expect a decline in the cost of PDA going forward, as I said, because of the hopes have been opened and then we being able to offer the full experience for the newcomers.

So this could be important drivers of our growth in margins. But this will, of course, depend on the overall economic situation. So we do expect some gain in margins for this year, as we have had in 2021 and '20 and '19, but this is going to be, I'd say, not a big jump in margin but a slight but continuous growth in margins before the conclusion of the deal with Unicesumar. Once we close the deal with Unicesumar, then our margins will grow a lot because they have an overall margin that is higher than what we had. We had around 30%, more or less, and they had a margin or EBITDA margin of around 40%.

The second question, I had some problems to hear you. But if I got it correctly, you are asking about why our second approach is different from competition. And I would say because of the way we operate. We have been focusing on digital, learning and digital education for 15 years now and different from some of the peers. We have this location as the core business of our institution for years now. And this reflects in the culture and this reflects in the way we see technology and the whole approach we have to technology and digital education as a whole.

So it is the app, for example, that I showed before was already an intrinsic piece of the overall student experience. It was not a complement of something new. It was already for some years, part of the whole student experience to have a nice app. And now last year, what we changed was to offer the enrollment through that, but the fact of having a nice app, for example, was already part of the overall strategic vision and orientation of Unicesumar for year now. So it is a function of focus, focus and culture around technology.

Our next question comes from Vinicius Figueiredo with Itaú.

First question is regarding the intake cycle of first half of 2022. If you could please share any first impressions from the cycle, it would be great. And also, how should we expect the average price mainly for freshmen to behave? It will also be amazing. So second question, it would be regarding PDA. We have seen a surge in this during this quarter, right? Is there any nonrecurring event that explains this increase? Or any seasonality specific to the fourth quarter? And should we expect this number to normalize in the next quarters?

So for your first question about intake and ticket now for the current cycle. Yes, we are still -- I mean in the middle of the cycle. What we have seen so far is, again, a strong performance in the cycle. So so far, what we have when you compare the year-on-year numbers, I mean the intake we had until beginning of March of last year and the intake of between March this year, we are growing around mid-20s, around mid-20% growth year-on-year so far intake with a increasing ticket for the intake. When you see the -- only the tickets that we had this year and last year, this is increasing and increasing, again, not only because of Nursing, but increasing because we have I'd say a very disciplined approach to ticket as a whole. So so far, so good. We are growing the intake and we are growing as well average ticket.

Second question about PDA. Yes, you're right, we had an increase in PDA in the fourth quarter of last year, basically because we update our PDA curve on a yearly basis at the end of the year. So last year, we -- in December, we did it. And we had the effect of the pandemic. So all of the invoices that were sent to students in 2020, for example, we usually have a write-off of invoices after 12 months. So we -- our PDA curve increased over time. And after 12 months, if this invoice is not paid, we have a write-off. And this write-off is what is used in the PDA curve.

So what we had was an increase in the losses of the invoices that were issued in 2020 and that were written off in '21 because of pandemic, especially those that were issued in March, April and May of 2020, just after the pandemic. So that's why we had this jump in PDA in the fourth quarter. But this is bit to correct the number for the whole year of 2021. So the number for the whole year is the right number for the overall PDA of last year. So going forward, we should expect a slight decrease of this number for 2022.

Our next question comes from Mauricio Cepeda with Crédit Suisse.

So I have some questions. One relating to tickets, I think, not only in the short term now for this intake cycle. But in terms of trends in the market, I understand that the education groups in Brazil have noticed that distance learning is a growth avenue. So what are the possibilities of kind of a price war in tickets going forward? How do you see that? Or if you see that the sector is a scale business, therefore, it should consolidate in the hands of field, therefore, it diminishes this kind of competition?

My second question is about where growth is coming from now after the pandemics, if there was any reduction in the interest for this fully distributed courses and/or if the new courses would be, let's say, the ones that would drive growth? And the third question is about market share. If I remember correctly, at least in the third quarter, other groups, notably EDUCs were growing a little bit more year-on-year. If you feel that you were losing or gaining share in the distance learning market?

Okay. Let's start with the final one. I mean I can ask comment on the overall market. But what we see is that we have been able to gain market share over time. And we grew our intake this year, last year. So maybe we are, let's say, at this moment, growing a bit less in market share than in the past, but we're still, I'm sure, gaining market share than competition because what's happening is that the market is concentrating around fewer names, as I said before about the (inaudible), et cetera. The listed players are the ones who are gaining share, not only ourselves, but I'm sure [Gaotu] and other players, we because we have, I'd say, more scale, we've been able to gain market share from the smaller players because it is a business of scale. So that's why I don't believe that we are losing market share when you compare to the whole market.

So the second question was definite. I do believe that the sector will tend to consolidate more, either organically as, as I said, more and more leased players gain share and other players lose share or inorganically. The transaction that we announced with [Cesumar] is one example. I am sure that there will be other transaction in the medium term. I still think that the secondary is still too fermented in Brazil, given the need to have scale to offer a high-quality product and at the same time to make money. This is a high-technology business, it require scale. So I do believe that the sector will tend to consolidate around fewer names going forward. And the ticket, the trends in ticket are first one that you made, what we have been delivering over time is that now for a few years is that we have been able to sustain tickets. We are including tickets over time, every ticket, still not at the same level of inflation. So we grew 6% now, in pesos, 10%. But 1 year before, we grew 4%, in pesos, 4.5%. So more or less the same.

So we have been able to sustain tickets over time because of the differentiation aspects that we have. And I do believe that there is a differentiation aspect here that important to bear in mind that we offer a hybrid model with a tutor and a class and we are the only player that is focused on this model, which is tough to implement, it's tougher to create and to operate, but we know how to do it. We have been doing this and play the game for the last 15 years. So that's why we have been able to only gain market share but also to sustain tickets going forward. So when we look forward, I mean, I do believe that -- I don't believe that we're going to have a product works, because it has a bit of scale. There will be few and fewer players.

There was a price war in the beginning in '17, for example, beginning of the new reality, when several traders jumped into the game. But I do see now that there is more and more a rational approach and disciplined approach to get not only of ourself but for the whole industry. So I do believe that we have reached a kind of say, 4 in tickets for the online -- the 100% online courses, which is not our case. Our case is a -- we have been able to increase ticket which is different from the competition because at the end of the differentiation aspects that we offer a different product. And going forward, not only this will continue, but the relative weight of premium courses will increase. We had, again, 22% of the days in premium courses, but 32% of the intake, and it was 23%, 1 year before. So the trend is that they will reach 32% very soon and probably 60% in a couple of years. So there will be a important mix affected as well in tickets.

So you would say that the new courses tend to be higher ticket in general and these are the ones driving growth? So it's a positive mix effect at the end?

Yes. There are 2 things. The positive mix effect, but also the overall performance of the apple-on-apple comparison. So as I said, we grew 6% the ticket. The biggest gain we had in health courses was Nursing. But if you take Nursing out of the equation, for example, we would have grown ticket by 5% instead of 6%. So when you compare the apples-to-apples, we are growing a little bit our ticket and despite that there is a mix effect that will increase over time. So going forward, our ticket will tend to increase as we have been seeing.

(Operator Instructions)

So the first question from Pedro Lima. In fact 2 questions. First one, what are you expecting for '22 intake cycle? Do you believe that it should still present another round of strong growth as in recent years?

(inaudible) yes, as I said, we -- so far, we are growing at around mid-20s growth year-on-year when you see the same period of time of this year compared to the first half -- the first intake of last year with a [equity] ticket, so the intake cycle is still far from finished. But yes, we'll have double-digit growth for the overall intake cycle as we finish.

Second question, you guys have been posting better ticket dynamics than the rest of the industry. Do you think that it's possible to maintain this growth in '22? How do you see competition on the market?

Yes, that's what I was [explaining earlier]. We do believe that we're going to be able to sustain ticker going forward. And for the whole industry as a whole, I do believe that there will be fewer players, there will be more concentration. And I don't believe in price wars in the industry. So I do believe that we have reached a kind of a flow of prices here.

From [Lucas Namo] about (inaudible) in Brazil, the separate closing date and any possible remedies?

We don't expect any, let's say, relevant remedy in (inaudible). We don't have a huge overlap with Unicesumar. We do have some overlap in some cities, but that we put events at a very minor stake of share of all (inaudible). So we don't expect any relevant remedy if all. Regarding dates, we are confident that we'll be able to have closing in a couple of months. Let's see how (inaudible) but things are evolving okay or very fine as expected. We do believe that we could have closing in a couple of months.

Commercial synergies with Unicesumar. Could you give some color on how (inaudible) in order to expand the revenue?

Yes, there will be, I'd say, a number of growth synergies there. The first one will be the faster expansion of hubs. And as I showed before, today, you have around 600 cities in which you have only 1 of the 2 brands. So once we have closed the deal, we'll be able to accelerate the growth and the offerings of both brands in the cities. The second one would be the increase in the portfolio of courses, today, UNIASSELVI offers around 150 undergrad courses, while Unicesumar offers 100 courses in under graduation.

So with a few changes, we can improve and enhance, increase the portfolio of course of Unicesumar. The third one will be as well cross-selling opportunities between under graduation and graduation with both brands. So there are a lot of synergies, commercial synergies to explore. Today, we don't have any numbers because we cannot have, I'd say, commercial discussions between the 2 companies because of the unforced rules. But we'll be able to have some rough numbers, but some, some big picture numbers to announce to you when we have the closing.

One last question from (inaudible) here as well. Time taken integration with Unicesumar?

So integration will take time. We are already preparing the integration. So we hired bank consulting to help us in the preparation of the integration, but this is going very, very well. We have a detailed plan for integration because we do believe that we'll be able to have a very smooth transition. Both corporates have a very nice culture, a culture oriented towards the customer, the students and the willingness to cooperate and to operate in an integrated manner. So this will be -- of course, the full integration with all the areas in all departments will take a couple of years, especially when you see, for example, the integration of the content production and some changes that we're going to do there to have synergies over time. But I'm going to get more -- to give you more details about this integration timetable and numbers when we announced the closing.

And one last question from Caio Moscardini. To give more color on the PDA expenses. How the PDA for Nursing compared to the current portfolio of revenues? And where PDA you expect in the next couple of years.

And PDA of Nursing is still quite to know because we offer the first -- the (inaudible) page was less than 6 months ago around 6 months ago, in August and September of last year. So we don't have a big clarity on that. But we want to see that the overall PDA expenses for this year, as I said, we do expect a slight decrease this year because on the one hand, we are still in the middle of economic crisis. But on the other hand, we are going to and we are opening the hub. So the fourth experience will be able to be offered to the students. And the most important driver of PDA is the engagement of newcomers.

I'd say that today, the PDA ratio of newcomers is way, way higher than the PDA of seniors. So if we are able to again to open the hub as we are opening now, we are going to be able to offer the full package, the full academic experience and people who have meet colleagues and meet tutors, it is what we -- how we designed the product and the service with the weekly meetings at the hubs. So once it is resumed, this will be, for sure, it will have an impact in the pension rates and, of course, EPD.

So those were the questions on the webcast. Is there any other question live?

(Operator Instructions) There are no further questions. Mr. Freitas, please continue with any closing remarks.

Well, thank you all for being here. It was a pleasure. It was our first full year as a [learning] company. So we are very proud of what we have been able to achieve and to deliver to you and we keep available for any further questions. Thank you very much. Good night.

This concludes the program. You may now disconnect.