Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vasta Platform Ltd (VSTA, Financial) reported a 14% growth in subscription net revenue, reaching BRL1.152 billion for the 2024 cycle to date.
- The company's adjusted EBITDA grew by 15%, reaching BRL428 million, with an improved margin of 32.7%.
- Complementary solutions in the B2B segment showed a 20% expansion compared to the same period last year.
- Free cash flow increased by 4% to BRL90 million, with an improved conversion rate from 26% to 32%.
- The launch of the Start Anglo franchise is progressing well, with 30 contracts signed across 11 states in Brazil.
Negative Points
- Adjusted EBITDA for the second quarter decreased by 36% to BRL26 million due to higher commercial costs and non-recurring positive effects in the previous year.
- Non-subscription revenue dropped by 30% to BRL8 million, and the government sector did not generate new revenue in the quarter.
- Free cash flow for the second quarter decreased by 59% compared to the previous year, impacted by marketing expenses and production costs.
- Provision for doubtful accounts increased to 3.4% of net revenue, reflecting a more restrictive credit landscape.
- Net debt increased by BRL65 million from the beginning of the 2024 sales cycle, driven by financial interest costs and repurchase programs.
Q & A Highlights
Q: We noticed that the B2G business unit did not contribute to the consolidated revenue in the quarter. Can you provide more color on the seasonality of this segment and expectations for the second semester?
A: Yes, we did not record any new contracts for B2G this quarter. We focus on large public school networks, which take time to secure. However, we have a strong pipeline and expect growth this year, with new contracts anticipated in Q3 and Q4.
Q: Could you explain the increase in commercial expenses and provide any insights on the ACV for next year?
A: We are investing more in this season, focusing on key accounts and regional expenses to grow our learning systems and complementary products. This is part of our strategy to gain market share. We expect significant growth for 2025 and are investing accordingly in 2024.
Q: What is driving the better growth in ACV for next year, and how is competition behaving?
A: Our growth is driven by a regional focus, targeting areas where we can increase market share. Complementary products are also gaining momentum, offering schools ways to enhance their offerings. We are confident in our strategy and see strong potential for growth.
Q: Your main competitor announced a similar investment in Start Anglo. How does this affect your business plan, and what are your competitive advantages?
A: We are confident in our business model, having invested in Start Anglo for two years. Our competitive advantage lies in our strong brands, particularly the Anglo brand, and our partnership with Macmillan. We believe Start Anglo has a great future and is a significant growth avenue for Vasta.
Q: Can you provide more details on the free cash flow and its impact on the company's financials?
A: In the second quarter of 2024, free cash flow totaled BRL38 million, a decrease due to marketing expenses and production cost payments. However, we expect to maintain and improve free cash flow by year-end. Our focus on cash generation remains strong, with an improved conversion rate from 26% to 32%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
