Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CognaEducacao SA (COGNY, Financial) reported a growth in recurring EBITDA and margin EBITDA, demonstrating operational efficiency.
- Net revenue increased by 4% in the second quarter, with a significant 32.5% rise in subscription revenue for Vasta.
- The student base at Kroton grew by 15.8%, contributing to revenue growth and indicating strong recruitment and retention efforts.
- The company successfully managed liabilities by replacing old debt with cheaper options, optimizing costs and reducing debt expenses.
- CognaEducacao SA (COGNY) achieved a double-digit growth in EBITDA for the quarter, with a 13.1% increase, showcasing profitability improvements.
Negative Points
- There was a reduction in net revenue for the Saber segment due to the sale of the SaaS business unit.
- Cash conversion was lower in the second quarter, attributed to increased supplier payments and temporary working capital effects.
- The company faces increased competition in the digital learning (DL) segment, leading to price reductions and potential margin pressures.
- Marketing expenses were concentrated in the first quarter, leading to a reduction in the second quarter, which may impact brand visibility.
- The average ticket price for new students was lower, influenced by a focus on digital learning, which could affect revenue growth.
Q & A Highlights
Q: Can you provide a perspective on student intake for the second half of the year across different segments and discuss the competitive environment?
A: We are seeing good growth in on-site and hybrid courses, especially those with labs. However, digital learning (DL) is facing more competition with discounts and price reductions. Overall, the on-site and hybrid segments are performing well, while DL is more competitive.
Q: Could you explain the impact of the average ticket price in the three segments of Kroton and the potential effects of stricter DL regulations?
A: The average ticket is influenced by a focus on DL, which has a lower entry ticket compared to on-site courses. Graduating students have had multiple inflation adjustments, leading to a higher average ticket. Regarding DL regulations, we are closely monitoring discussions with the Ministry of Education. The dialogue has been positive, and we do not foresee significant impacts on our operations.
Q: What factors contributed to the lower cash conversion this quarter, and what should we expect moving forward?
A: The lower cash conversion was due to increased supplier payments and operational efficiencies in personnel expenses. We expect this to be temporary, with improvements in the second semester as revenue cycles align and operational efficiencies continue.
Q: How do you view the recent preliminary decisions on DL regulation, and what impact might they have on recruitment?
A: The temporary limitations on opening new poles and courses until March 2025 do not concern us, as our distribution network is extensive. We do not anticipate any impact on recruitment plans for 2025.
Q: Can you discuss the marketing strategy for the second semester and the competitive landscape in the online market?
A: Marketing expenses will follow the seasonal pattern, with higher spending in the first and third quarters. The online market is competitive, with price reductions affecting growth potential. However, we remain focused on maintaining brand perception and stable marketing investment relative to net revenue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
