Vasta Platform First Quarter 2023 Financial Results
SÃO PAULO--(BUSINESS WIRE)-- Vasta Platform Limited (NASDAQ: VSTA) – “Vasta” or the “Company” announces today its financial and operating results for the first quarter of 2023 (1Q23) ended March 31, 2023. Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).
HIGHLIGHTS
-
Subscription revenue grew by
18% (or22% , excluding PAR) in the 2023 cycle to date. The 2023 Annual Contract Value (ACV) was slightly less concentrated in the first two quarters (65.1% ) than in the previous year (66.5% ), due to the different seasonality and product mix. -
In the 2023 cycle to date (4Q22 and 1Q23) net revenue increased
17% toR , in line with our guidance.$908 million -
In the 2023 cycle to date Adjusted EBITDA grew
10% reachingR . EBITDA margin decreased 220 bps compared to the same period in the previous year, from 38,$332 million 7% to 36,5% , mainly due to provision for doubtful accounts (PDA) made in connection with a large retailer that entered into bankruptcy proceeding inBrazil and higher inventory cost caused by rising inflation on paper and production cost. Those increases were partially offset by operating efficiency gains, cost savings and better mix due to subscription products growth. -
Adjusted Net Profit in the 2023 cycle to date decreased
6% compared to Adjusted Net Profit in the same period for the 2022 cycle, totalingR .$ 98 million -
1Q23 Free cash flow (FCF) totaled
R , a$36 million 188% increase fromR in 1Q22. In the 2023 cycle to date, FCF totaled negative$13 million R an$7 million 89% increase from negativeR in 2022. The last twelve-month (LTM) FCF/Adjusted EBITDA conversion rate improved from negative$65 million 52% (2Q21-1Q22) to31% (2Q22-1Q23) as a result of company growth and constant efficiency pursuance. - In the 2023 cycle to date, university approvals were another highlight for Vasta’s brands. Vasta maintained its leadership in approvals in Brazil’s best universities (according to SISU results – Brazilian Unified Selection System).
-
Starting in 2023, Vasta started to offer its products and services to the Brazilian public sector (B2G). Our broad portfolio of core content solutions, digital platform, and complementary products together with customized learning solutions tested over decades by the private sector will now be available to the K-12 public schools. K-12 public sector in
Brazil comprises more than 32 million students, 5 times the number of students in the Brazilian K-12 private sector. -
In the first quarter of 2023 Vasta acquired a
51% stake in Escola Start Ltda. forR . Escola Start will be our flagship school boosting our entrance in the bilingual franchise business, responding to an increasingly strong demand of families and students for academic excellence (powered by Anglo content), bilingual education, and innovation.$ 4.5 million
MESSAGE FROM MANAGEMENT
With the 1Q23 results reached halfway through the 2023 cycle, we have delivered on our guidance for economic and financial results as anticipated in the previous quarter. In the 2023 cycle to date (4Q22 and 1Q23), net revenue increased
Moreover, we continue to see the normalization of the company’s profitability and cash flow generation. In 1Q23, Adjusted EBITDA grew
Another highlight of 2023 is that starting in the first semester, we plan to begin offering our products and services to clients in the public sector (B2G), in addition to our existing private school client base. Our broad portfolio of core content solutions, digital platform and complementary services will allow us to access a public-school market in need of the solutions we have developed over decades for private sector. Accordingly, we have taken certain steps to (i) create what we believe to be an attractive portfolio of products and services, focused on state secretariats for education; (ii) allocate managerial and financial resources for this new business initiative; (iii) implement certain business-generating and marketing strategies for the public sector and (iv) establish a robust governance process to guarantee the highest compliance standard. The K-12 Public sector in
Start-Anglo, a key pillar of our growth agenda, Start-Anglo continues to grow. In the first quarter of 2023 we acquired a
But more important than the improvement in our operating results is the success of our students. According to the results released in early 2023, Vasta’s brands maintained the leadership in the number of approvals in the admission tests of Brazil’s best universities (according to SISU). The performance of our premium brands was particularly highlighted in Medicine, the most competitive career in the country. Our top-of-mind brand Anglo expanded its leadership in admissions for Medicine at the University of São Paulo (USP), with an increase of
OPERATING PERFORMANCE
Student base – subscription models
2023 |
|
2022 |
|
% Y/Y |
|
2021 |
|
% Y/Y |
||
Partner schools - Core content |
5,032 |
|
5,274 |
|
( |
|
4,508 |
|
|
|
Partner schools – Complementary solutions |
1,383 |
|
1,304 |
|
|
|
1,114 |
|
|
|
Students - Core content |
1,539,024 |
|
1,589,224 |
|
( |
|
1,335,152 |
|
|
|
Students - Complementary content |
453,552 |
|
372,559 |
|
|
|
307,941 |
|
|
|
Note: Students enrolled in partner schools |
As we conclude the period of return of collections, we update the number of partner schools and enrolled students for the 2023 cycle. The company serves nearly 1.5 million students with core content solutions. Our partners school base that use our complementary solutions increased by 79 new schools, growing
FINANCIAL PERFORMANCE
Net revenue
Values in R$ ‘000 |
1Q23 |
|
1Q22 |
|
% Y/Y |
|
2023 cycle |
|
2022 cycle |
|
% Y/Y |
|
Subscription |
357,211 |
|
333,781 |
|
|
|
801,161 |
|
680,624 |
|
|
|
Subscription ex-PAR |
325,851 |
|
296,713 |
|
|
|
703,227 |
|
577,597 |
|
|
|
Traditional learning systems |
|
269,678 |
|
251,148 |
|
|
|
554,143 |
|
474,299 |
|
|
Complementary solutions |
|
56,173 |
|
45,565 |
|
|
|
149,084 |
|
103,298 |
|
|
PAR |
31,360 |
|
37,067 |
|
( |
|
97,934 |
|
103,027 |
|
( |
|
Non-subscription |
45,624 |
|
46,801 |
|
( |
|
106,693 |
|
98,217 |
|
|
|
Total net revenue |
402,835 |
|
380,581 |
|
|
|
907,854 |
|
778,840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% ACV |
|
|
|
|
|
(4.3 p.p.) |
|
|
|
|
|
(1.3 p.p.) |
% Subscription |
|
|
|
|
|
1.0 p.p. |
|
|
|
|
|
0.9 p.p. |
Note: n.m.: not meaningful |
In 1Q23, net revenue increased
EBITDA
Values in R$ ‘000 |
1Q23 |
|
1Q22 |
|
% Y/Y |
|
2023 cycle |
|
2022 cycle |
|
% Y/Y |
|
Net revenue |
|
402,835 |
|
380,581 |
|
|
|
907,854 |
|
778,841 |
|
|
Cost of goods sold and services |
|
(155,126) |
|
(129,237) |
|
|
|
(327,203) |
|
(265,156) |
|
|
General and administrative expenses |
|
(127,281) |
|
(126,088) |
|
|
|
(247,169) |
|
(252,159) |
|
( |
Commercial expenses |
|
(51,061) |
|
(47,933) |
|
|
|
(101,266) |
|
(93,332) |
|
|
Other operating income |
|
994 |
|
933 |
|
|
|
(927) |
|
4,286 |
|
( |
Share of loss equity-accounted investees |
|
(528) |
|
- |
|
|
|
(2,890) |
|
- |
|
|
Impairment losses on trade receivables |
|
(10,380) |
|
(8,896) |
|
|
|
(39,153) |
|
(19,624) |
|
|
Profit before financial income and taxes |
|
59,453 |
|
69,361 |
|
( |
|
189,246 |
|
152,856 |
|
|
(+) Depreciation and amortization |
|
68,804 |
|
64,287 |
|
|
|
138,672 |
|
125,951 |
|
|
EBITDA |
|
128,257 |
|
133,648 |
|
( |
|
327,918 |
|
278,807 |
|
|
EBITDA Margin |
|
|
|
|
|
(3.3 p.p.) |
|
|
|
|
|
0.3 p.p. |
(+) Layoff related to internal restructuring |
|
487 |
|
1,459 |
|
( |
|
1,095 |
|
10,871 |
|
( |
(+) Share-based compensation plan |
|
2,666 |
|
5,904 |
|
( |
|
2,773 |
|
12,023 |
|
( |
Adjusted EBITDA |
131,410 |
|
141,011 |
|
( |
|
331,786 |
|
301,700 |
|
|
|
Adjusted EBITDA Margin |
|
|
|
|
(4.4 p.p.) |
|
|
|
|
|
(2.2 p.p.) |
|
Note: n.m.: not meaningful |
In the 2023 commercial cycle to date, Adjusted EBITDA grew
In 2022 we acquired a
(%) Net Revenue |
1Q23 |
|
1Q22 |
|
Y/Y (p.p.) |
|
2023 cycle |
|
2022 cycle |
|
Y/Y (p.p.) |
|
Gross margin |
|
|
|
|
|
(4.6 p.p.) |
|
|
|
|
|
(2.0 p.p.) |
Adjusted cash G&A expenses(1) |
|
( |
|
( |
|
0.4 p.p. |
|
( |
|
( |
|
0.8 p.p. |
Commercial expenses |
|
( |
|
( |
|
(0.1 p.p.) |
|
( |
|
( |
|
0.8 p.p. |
Impairment on trade receivables |
|
( |
|
( |
|
(0.2 p.p.) |
|
( |
|
( |
|
(1.8 p.p.) |
Adjusted EBITDA margin |
|
|
|
|
|
(4.4 p.p.) |
|
|
|
|
|
(2.2 p.p.) |
(1) Sum of general and administrative expenses, other operating income and profit (loss) of equity-accounted investees, less: depreciation and amortization, layoffs related to internal restructuring and share-based compensation plan. |
In proportion to net revenue, gross margin dropped 200 bps in the cycle to date (from
Reported provisions for doubtful accounts (PDA) grew 1.8 p.p. between the compared commercial cycles. This increase in PDA was due to the provisioning of
Finance Results
Values in R$ ‘000 |
|
1Q23 |
|
1Q22 |
|
% Y/Y |
|
2023 cycle |
|
2022 cycle |
|
% Y/Y |
Finance income |
16,631 |
|
15,269 |
|
|
|
48,850 |
|
29,116 |
|
|
|
Finance costs |
(75,816) |
|
(57,963) |
|
|
|
(149,849) |
|
(108,972) |
|
|
|
Total |
|
(59,185) |
|
(42,694) |
|
|
|
(100,999) |
|
(79,856) |
|
|
In the first quarter of 2023, finance income totaled
Net profit (loss)
Values in R$ ‘000 |
|
1Q23 |
|
1Q22 |
|
% Y/Y |
|
2023 cycle |
|
2022 cycle |
|
% Y/Y |
Net profit (loss) |
(2,224) |
|
20,190 |
|
( |
|
73,669 |
|
39,970 |
|
|
|
(+) Layoffs related to internal restructuring |
487 |
|
1,459 |
|
( |
|
1,095 |
|
10,871 |
|
( |
|
(+) Share-based compensation plan |
|
2,666 |
|
5,904 |
|
( |
|
2,773 |
|
12,023 |
|
( |
(+) Amortization of intangible assets(1) |
39,069 |
|
38,693 |
|
|
|
78,301 |
|
74,649 |
|
|
|
(-) Income tax contingencies reversal |
|
- |
|
- |
|
|
|
(29,715) |
|
- |
|
|
(-) Tax shield(2) |
(14,355) |
|
(15,659) |
|
( |
|
(27,937) |
|
(33,165) |
|
( |
|
Adjusted net profit (loss) |
25,642 |
|
50,587 |
|
( |
|
98,185 |
|
104,349 |
|
( |
|
Adjusted net margin |
|
|
|
|
(6.9 p.p.) |
|
|
|
|
|
(2.6 p.p.) |
|
Note: n.m.: not meaningful; (1) From business combinations. (2) Tax shield ( |
In the first quarter of 2023, adjusted net profit totaled
Accounts receivable and PDA
Values in R$ ‘000 |
1Q23 |
|
1Q22 |
|
% Y/Y |
|
4Q22 |
|
% Q/Q |
|
Gross accounts receivable |
784,681 |
|
628,771 |
|
|
|
718,616 |
|
|
|
Provision for doubtful accounts (PDA) |
(72,253) |
|
(52,383) |
|
|
|
(69,481) |
|
|
|
Coverage index |
|
|
|
|
|
0.9 p.p. |
|
|
|
(0.5 p.p.) |
Net accounts receivable |
|
712,428 |
|
576,388 |
|
|
|
649,135 |
|
|
Average days of accounts receivable(1) |
199 |
|
198 |
|
1 |
|
185 |
|
14 |
|
(1) Balance of net accounts receivable divided by the last-twelve-month net revenue, multiplied by 360. |
The average payment term of Vasta’s accounts receivable portfolio was 199 days in the 1Q23, 1 day higher than the first quarter of the previous year.
Free cash flow
Values in R$ ‘000 |
|
1Q23 |
|
1Q22 |
|
% Y/Y |
|
2023 cycle |
|
2022 cycle |
|
% Y/Y |
Cash from operating activities(1) |
94,647 |
|
76,855 |
|
|
|
100,911 |
|
39,482 |
|
|
|
(-) Income tax and social contribution paid |
(331) |
|
(523) |
|
( |
|
(4,748) |
|
(523) |
|
|
|
(-) Payment of provision for tax, civil and labor losses |
|
(190) |
|
(180) |
|
|
|
(245) |
|
(293) |
|
( |
(-) Interest lease liabilities paid |
|
(3,668) |
|
(3,750) |
|
( |
|
(7,796) |
|
(6,878) |
|
|
(-) Acquisition of property, plant, and equipment |
(5,256) |
|
(34,435) |
|
( |
|
(15,797) |
|
(45,893) |
|
( |
|
(-) Additions of intangible assets |
(38,638) |
|
(19,716) |
|
|
|
(62,407) |
|
(38,831) |
|
|
|
(-) Lease liabilities paid |
(10,334) |
|
(5,654) |
|
|
|
(16,928) |
|
(12,344) |
|
|
|
Free cash flow (FCF) |
|
36,230 |
|
12,597 |
|
|
|
(7,009) |
|
(65,278) |
|
( |
FCF/Adjusted EBITDA |
|
|
|
|
18.6 p.p. |
|
( |
|
( |
|
19.5 p.p. |
|
LTM FCF/Adjusted EBITDA |
|
|
|
( |
|
82.6 p.p. |
|
|
|
( |
|
82.6 p.p. |
(1) Net (loss) profit less non-cash items less and changes in working capital. Note: n.m.: not meaningful |
Free cash flow (FCF) totaled
Financial leverage
Values in R$ ‘000 |
|
1Q23 |
|
4Q22 |
|
3Q22 |
|
2Q22 |
|
1Q22 |
|
Financial debt |
|
815,927 |
|
842,996 |
|
811,612 |
|
844,778 |
|
817,516 |
|
Accounts payable from business combinations |
|
599,713 |
|
625,277 |
|
647,466 |
|
585,503 |
|
570,660 |
|
Total debt |
|
1,415,640 |
|
1,468,273 |
|
1,459,078 |
|
1,430,281 |
|
1,388,176 |
|
Cash and cash equivalents |
|
42,680 |
|
45,765 |
|
44,343 |
|
147,762 |
|
145,998 |
|
Marketable securities |
|
331,110 |
|
380,516 |
|
433,803 |
|
417,770 |
|
303,675 |
|
Net debt |
|
1,041,850 |
|
1,041,992 |
|
980,932 |
|
864,749 |
|
938,504 |
|
Net debt/LTM adjusted EBITDA(1) |
|
2.85 |
|
2.78 |
|
2.92 |
|
3.04 |
|
3.67 |
|
(1) LTM adjusted EBITDA includes Eleva. Eleva’s LTM adjusted EBITDA prior to November 2021 may not reflect Vasta’s accounting standards. |
As of the end of 1Q23, Vasta recorded net debt in the amount of
ESG
Since 2Q22, Vasta reports updates about its ESG standards, including a panel of key ESG indicators, in line with the topics identified in the materiality process. Annual consolidated data is available in Vasta's Sustainability Report, which can be found here.
Check below the main highlights of ESG in the first quarter of 2023.
Global Compact
In December, Vasta signed the ten principles of the UN Global Compact on human rights, labor, environment, and anti-corruption. The movement reinforces the Company's commitment to sustainable development and the best ESG practices.
Corporate Sustainability Assessment – S&P
Vasta was ranked 6th globally by S&P Global´s Corporate Sustainability Assessment in Consumer Services category - being a pioneer among peers. It is important to highlight that it was the first year that the questionnaire was answered by the Company, already in a prominent position.
Key Indicators
ENVIRONMENT
SDGs |
GRI |
Water withdrawn by source2 (m³) |
Unit |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
6 |
303-3 |
Ground water |
m³ |
2,674 |
3,438 |
2,771 |
1,930 |
Utility supply |
m³ |
187 |
127 |
0 |
936 |
||
Total |
m³ |
2,861 |
3,565 |
2,771 |
2,866 |
||
SDGs |
GRI |
Internal energy consumption |
Unit |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
12 and 13 |
302-1 |
Total energy consumed |
GJ |
1,348 |
1,523 |
1,934 |
3,087 |
Percentage of energy from renewable sources3 |
% |
|
|
|
|
We expanded the scope covered in energy consumption data. Surveying four more locations, we now include all current VASTA units in the total, which explains the significant increase in our energy consumption. Furthermore, since these aggregate units are not in the free energy market model, the percentage of energy from renewable sources decreased compared to the previous period.
SOCIAL
SDGs |
GRI |
Diversity in the work force by functional category |
Unit |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
5 |
405-1 |
C-level - Women |
% of people |
|
|
|
|
C-level - Men |
% of people |
|
|
|
|
||
Total - C-level4 |
No. of people |
5 |
4 |
4 |
4 |
||
Leaders - Women (≥ management level) |
% of people |
|
|
|
|
||
Leaders - Men (≥ management level) |
% of people |
|
|
|
|
||
Total - Leaders (≥ management level)5 |
No. of people |
131 |
134 |
134 |
144 |
||
Academic faculty - Women |
% of people |
|
|
|
|
||
Academic faculty - Men |
% of people |
|
|
|
|
||
Total - Academic faculty6 |
No. of people |
100 |
84 |
83 |
85 |
||
Coordinators and Administrative - Women |
% of people |
|
|
|
|
||
Coordinators and Administrative - Men |
% of people |
|
|
|
|
||
Total - Coordinators and Administrative7 |
No. of people |
1,521 |
1,539 |
1.516 |
1.493 |
||
Total - Women |
% of people |
|
|
|
|
||
Total - Men |
% of people |
|
|
|
|
||
Total - Employees |
No. of people |
1,757 |
1,761 |
1.737 |
1.729 |
||
SDGs |
GRI |
Indirect economic impact |
Unit |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
11 |
- |
Scholarship holders in Somos Futuro program |
nº |
371 |
365 |
349 |
247 |
SDGs |
GRI |
Occupational Health and Safety |
Unit |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
3 |
403-5, 403-9 |
% of units covered by the Environmental Risk Prevention Program |
% |
|
|
|
|
Total employees trained in health and safety8 |
No. of people |
110 |
346 |
710 |
543 |
||
Total number of hours training in health and safety |
No. |
2,871 |
375 |
618 |
348 |
||
Average number of hours training in health and safety per participant9 |
No. |
4.4 |
1.1 |
1,2 |
1,6 |
||
Total number of hours of on-site training for fire brigade |
No. |
408 |
56 |
0 |
0 |
||
Average number of hours of on-site training for fire brigade per participant9 |
No. |
8.0 |
8 |
0 |
0 |
||
Employees - Injury frequency rate10 |
rate |
3.75 |
4.06 |
3,89 |
3,17 |
||
Employees - High-consequence injuries rate11 |
rate |
0.00 |
0,00 |
0,00 |
0,00 |
||
Employees - Recordable injuries rate12 |
rate |
0.94 |
3.04 |
0,00 |
1,06 |
||
Employees - Fatality rate13 |
rate |
0.00 |
0.00 |
0,00 |
0,00 |
Diversity
As of the end of the first quarter of 2023, our total headcount was 1,729. In terms of gender diversity,
Indirect Economic Impact
We continued the Somos Futuro Program, an initiative aimed at accelerating the education of public-school students. In the first quarter, 247 young people enrolled in the high school program, which in addition to the scholarship offered by the school includes didactic and supplementary material, online tutoring, mentoring, and access to the program's entire support network, which includes psychological counseling. This action is carried out through our social arm, SOMOS Institute.
Health and Safety
Vasta has a health and safety management system (SST) that nurtures a safe and healthy environment for all employees, preventing accidents and occupational diseases.
GOVERNANCE
SDGs |
GRI |
Ethical behavior |
Unit |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
8, 16 |
205-1, 205-2, 205-3 |
Employees trained in anti-corruption policies and procedures |
% of people |
|
|
|
|
Operations submitted to corruption-related risk assessment |
% of operations |
|
|
|
|
||
Number of confirmed cases of corruption |
No. of cases |
0 |
0 |
0 |
0 |
||
SDGs |
GRI |
Data privacy and infrastructure |
Unit |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
16 |
418-1 |
Substantiated complaints received from outside parties |
No. |
28 |
20 |
17 |
19 |
Substantiated complaints received from regulatory bodies |
No. |
0 |
0 |
0 |
0 |
||
Identified leaks, thefts, or losses of customer data |
No. |
0 |
0 |
0 |
0 |
||
SDGs |
GRI |
Diversity in the Board of Directors |
Unit |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
5 |
405-1 |
Women |
% of people |
|
|
|
|
Men |
% of people |
|
|
|
|
||
Total |
nº of people |
7 |
7 |
7 |
7 |
Ethical behavior
We have enhanced our internal procedures to advance ethical conduct in our business by initiating due diligence processes for critical suppliers and in mergers and acquisitions (M&A). Previously, our due diligence efforts focused on contracts involving governmental entities.
Data Privacy
Our Privacy Portal received 28 requests in the first quarter of 2023, of which 19 were considered valid, i.e., involving issues related to the rights of a data subject, pursuant to the Brazilian General Data Protection Law. In general, the requests involved the correction, updating and/or modification of personal information.
FOOTNOTES: |
|
SDG |
Sustainable Development Goal. Indicates goal to which the actions monitored contribute. |
GRI |
Global Reporting Initiative. Lists the GRI standard indicators related to the data monitored. |
NA |
Indicator discontinued or not measured in the quarter. |
1 |
Quarterly monitoring of a selection of material indicators. For further information, consult our Sustainability Report, available here. |
2 |
Based on invoices from sanitation concessionaires. |
3 |
Acquired from the free energy market. |
4 |
CEO, vice presidents reporting directly to the CEO and all directors. |
5 |
Management, senior management and leadership positions not reporting directly to the CEO (regional directors, unit directors and vice presidents). |
6 |
Course coordinators, teachers, and tutors. |
7 |
Corporate coordination, academic coordination, specialists, adjuncts, assistants, and analysts. |
8 |
All the employees undergoing training in the period. |
9 |
Total hours of training/employees trained. |
10 |
Total accidents (with and without leave)/ Total man/hours worked (MHW) x 1,000,000. |
11 |
Work-related injury (excluding fatalities) from which the worker cannot recover fully to pre-injury health status within 6 months. Formula: Number of injuries/MHW x 1.000.000. |
12 |
(Accidents with leave + Fatalities)/ MHT x 1,000,000. |
13 |
Fatalities/ MHW x 1,000,000. |
CONFERENCE CALL INFORMATION
Vasta will discuss its first quarter 2023 results on May 11, 2023, via a conference call at 6:00 p.m. Eastern Time. To access the call [(ID: 3871721), please dial: +1 (888) 660-6819 or +1 (929) 203-1989]. A live and archived webcast of the call will be available on the Investor Relations section of the Company’s website at https://ir.vastaplatform.com.
ABOUT VASTA
Vasta is a leading, high-growth education company in
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others. Forward-looking statements appear in a number of places in this press release and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to of various factors, including (i) general economic, financial, political, demographic and business conditions in
NON-GAAP FINANCIAL MEASURES
This press release presents our EBITDA, Adjusted EBITDA and Adjusted net (loss) profit and Free cash flow (FCF), which is information provided for the convenience of investors. EBITDA and Adjusted EBITDA are among the key performance indicators used by us to measure financial operating performance. Our management believes that these Non-GAAP financial measures provide useful information to investors and shareholders. We also use these measures internally to establish budgets and operational goals to manage and monitor our business, evaluate our underlying historical performance and business strategies and to report our results to the board of directors.
We calculate EBITDA as net (loss) profit for the period/year plus income taxes and social contribution plus/minus net finance result plus depreciation and amortization. The EBITDA measure provides useful information to assess our operational performance.
We calculate Adjusted EBITDA as EBITDA plus/minus: (a) income tax and social contribution; (b) net finance result; (c) depreciation and amortization; (d) share-based compensation expenses, mainly due to the grant of additional shares to Somos’ employees in connection with the change of control of Somos to Cogna (for further information refer to note 23 to the audited consolidated financial statements); (e) provision for risks of tax, civil and labor losses regarding penalties, related to income tax positions taken by the Predecessor Somos – Anglo and Vasta in connection with a corporate reorganization carried out by the Predecessor Somos – Anglo; (f) Bonus IPO, which refers to bonus paid to certain executives and employees based on restricted share units; and (g) expenses with contractual termination of employees due to organizational restructuring. We understand that such adjustments are relevant and should be considered when calculating our Adjusted EBITDA, which is a practical measure to assess our operational performance that allows us to compare it with other companies that operates in the same segment.
We calculate Adjusted net (loss) profit as the (loss) profit for the period/year as presented in Statement of Profit or Loss and Other Comprehensive Income adjusted by the same Adjusted EBITDA items, however, added by (a) Amortization of intangible assets from Business Combination and (b) Tax shield of
We calculate Operating cash flow (OCF) as the cash from operating activities as presented in the Statement of Cash Flows less (a) income tax and social contribution paid; (b) tax, civil and labor proceedings paid; (c) interest lease liabilities paid; (d) acquisition of property, plant and equipment; (e) additions to intangible assets; and (f) lease liabilities paid.
We understand that, although Adjusted net (loss) profit, EBITDA, Adjusted EBITDA, and Operating cash flow (OCF) are used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations as reported under IFRS. Additionally, our calculations of Adjusted net (loss) profit, Adjusted EBITDA, and Operating cash flow (OCF) may be different from the calculation used by other companies, including our competitors in the education services industry, and therefore, our measures may not be comparable to those of other companies.
REVENUE RECOGNITION AND SEASONALITY
Our main deliveries of printed and digital materials to our customers occur in the last quarter of each year (typically in November and December), and in the first quarter of each subsequent year (typically in February and March), and revenue is recognized when the customers obtain control over the materials. In addition, the printed and digital materials we provide in the fourth quarter are used by our customers in the following school year and, therefore, our fourth quarter results reflect the growth in the number of our students from one school year to the next, leading to higher revenue in general in our fourth quarter compared with the preceding quarters in each year. Consequently, in aggregate, the seasonality of our revenues generally produces higher revenues in the first and fourth quarters of our fiscal year. Thus, the numbers for the second quarter and third quarter are usually less relevant. In addition, we generally bill our customers during the first half of each school year (which starts in January), which generally results in a higher cash position in the first half of each year compared to the second half.
A significant part of our expenses is also seasonal. Due to the nature of our business cycle, we need significant working capital, typically in September or October of each year, to cover costs related to production and inventory accumulation, selling and marketing expenses, and delivery of our teaching materials at the end of each year in preparation for the beginning of each school year. As a result, these operating expenses are generally incurred between September and December of each year.
Purchases through our Livro Fácil e-commerce platform are also very intense during the back-to-school period, between November, when school enrollment takes place and families plan to anticipate the purchase of products and services, and February of the following year, when classes are about to start. Thus, e-commerce revenue is mainly concentrated in the first and fourth quarters of the year.
KEY BUSINESS METRICS
ACV Bookings is a non-accounting managerial metric and represents our partner schools’ commitment to pay for our solutions offerings. We believe it is a meaningful indicator of demand for our solutions. We consider ACV Bookings is a helpful metric because it is designed to show amounts that we expect to be recognized as revenue from subscription services for the 12-month period between October 1 of one fiscal year through September 30 of the following fiscal year. We define ACV Bookings as the revenue we would expect to recognize from a partner school in each school year, based on the number of students who have contracted our services, or “enrolled students,” that will access our content at such partner school in such school year. We calculate ACV Bookings by multiplying the number of enrolled students at each school with the average ticket per student per year; the related number of enrolled students and average ticket per student per year are each calculated in accordance with the terms of each contract with the related school. Although our contracts with our schools are typically for 4-year terms, we record one year of revenue under such contracts as ACV Bookings. ACV Bookings are calculated based on the sum of actual contracts signed during the sales period and assumes the historical rates of returned goods from customers for the preceding 24-month period. Since the actual rates of returned goods from sales during the period may be different from the historical average rates and the actual volume of merchandise ordered by our customers may be different from the contracted amount, the actual revenue recognized during each period of a sales cycle may be different from the ACV Bookings for the respective sales cycle. Our reported ACV Bookings are subject to risks associated with, among other things, economic conditions and the markets in which we operate, including risks that our contracts may be canceled or adjusted (including as a result of the COVID-19 pandemic).
FINANCIAL STATEMENTS Consolidated Statements of Financial Position |
|||
Assets |
March 31, 2023 |
|
December 31, 2022 |
Current assets |
|
|
|
Cash and cash equivalents |
42,680 |
|
45,765 |
Marketable securities |
331,110 |
|
380,514 |
Trade receivables |
712,428 |
|
649,135 |
Inventories |
263,220 |
|
266,450 |
Taxes recoverable |
33,608 |
|
19,120 |
Income tax and social contribution recoverable |
19,152 |
|
17,746 |
Prepayments |
77,227 |
|
56,645 |
Other receivables |
2,244 |
|
972 |
Related parties – other receivables |
993 |
|
1,759 |
Total current assets |
1,482,662 |
|
1,438,106 |
|
|
|
|
Non-current assets |
|
|
|
Judicial deposits and escrow accounts |
189,727 |
|
194,859 |
Deferred income tax and social contribution |
169,812 |
|
170,851 |
Equity accounted investees |
82,611 |
|
83,139 |
Other investments and interests in entities |
8,272 |
|
8,272 |
Property, plant and equipment |
191,192 |
|
197,688 |
Intangible assets and goodwill |
5,421,458 |
|
5,427,676 |
Total non-current assets |
6,063,072 |
|
6,082,485 |
|
|
|
|
Total Assets |
7,545,734 |
|
7,520,591 |
Consolidated Statements of Financial Position (continued) |
|||
Liabilities |
March 31, 2023 |
|
December 31, 2022 |
Current liabilities |
|
|
|
Bonds |
66,455 |
|
93,779 |
Suppliers |
223,457 |
|
250,647 |
Reverse factoring |
199,116 |
|
155,469 |
Lease liabilities |
24,196 |
|
23,151 |
Income tax and social contribution payable |
- |
|
5,564 |
Salaries and social contributions |
132,631 |
|
100,057 |
Contractual obligations and deferred income |
85,844 |
|
57,852 |
Accounts payable for business combination and acquisition of associates |
48,577 |
|
73,007 |
Other liabilities |
33,689 |
|
29,630 |
Other liabilities - related parties |
430 |
|
54 |
Total current liabilities |
814,395 |
|
789,210 |
|
|
|
|
Non-current liabilities |
|
|
|
Bonds |
749,472 |
|
749,217 |
Lease liabilities |
115,140 |
|
117,412 |
Accounts payable for business combination and acquisition of associates |
551,136 |
|
552,270 |
Provision for tax, civil and labor losses |
655,123 |
|
651,252 |
Other liabilities |
26,862 |
|
31,551 |
Total non-current liabilities |
2,097,733 |
|
2,101,702 |
|
|
|
|
Total current and non-current liabilities |
2,912,128 |
|
2,890,912 |
|
|
|
|
Shareholder's Equity |
|
|
|
Share capital |
4,820,815 |
|
4,820,815 |
Capital reserve |
83,189 |
|
80,531 |
Treasury shares |
(23,880) |
|
(23,880) |
Accumulated losses |
(250,065) |
|
(247,787) |
Total Shareholder's Equity |
4,630,059 |
|
4,629,679 |
|
|
|
|
Interest of non-controlling shareholders |
3,547 |
|
- |
|
|
|
|
Total Liabilities and Shareholder's Equity |
4,633,606 |
|
4,629,679 |
|
|
|
|
Total Liabilities and Shareholder's Equity |
7,545,734 |
|
7,520,591 |
Consolidated Income Statement |
||||
March 31, 2023 |
March 31, 2022 |
|||
Net revenue from sales and services |
402,835 |
380,581 |
||
Sales |
393,688 |
371,886 |
||
Services |
9,147 |
8,695 |
||
Cost of goods sold and services |
(155,126) |
(129,237) |
||
Gross profit |
247,709 |
251,344 |
||
Operating income (expenses) |
(187,728) |
(181,984) |
||
General and administrative expenses |
(127,281) |
(126,088) |
||
Commercial expenses |
(51,061) |
(47,933) |
||
Other operating income |
994 |
933 |
||
Impairment losses on trade receivables |
(10,380) |
(8,896) |
||
Share of loss of equity-accounted investees |
(528) |
- |
||
Profit before finance result and taxes |
59,453 |
69,360 |
||
Finance result |
(59,185) |
(42,694) |
||
Finance income |
16,631 |
15,269 |
||
Finance costs |
(75,816) |
(57,963) |
||
Profit before income tax and social contribution |
268 |
26,666 |
||
Income tax and social contribution |
(2,492) |
(6,476) |
||
Current |
(1,454) |
(5,523) |
||
Deferred |
(1,038) |
(953) |
||
Net (loss) profit for the period |
(2,224) |
20,190 |
||
|
|
|
|
|
Allocated to: |
|
|
|
|
Controlling shareholders |
|
(2,278) |
|
20,190 |
Non-controlling shareholders |
|
54 |
|
- |
Consolidated Statement of Cash Flows |
|||
|
For the period ended March 31, |
||
|
2023 |
|
2022 |
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
Profit before income tax and social contribution |
268 |
26,666 |
|
Adjustments for: |
|||
Depreciation and amortization |
68,804 |
64,287 |
|
Depreciation to digital book |
2,028 |
|
- |
Share of loss profit of equity-accounted investees |
528 |
- |
|
Impairment losses on trade receivables |
10,380 |
8,896 |
|
Reversal for tax, civil and labor risks, net |
(4,423) |
(6,109) |
|
Interest on provision for tax, civil and labor losses |
8,485 |
11,454 |
|
Provision for obsolete inventories |
3,023 |
6,780 |
|
Interest on bonds |
30,591 |
23,975 |
|
Contractual obligations and right to returned goods |
4,762 |
(10,732) |
|
Interest on accounts payable for business combination |
18,031 |
13,694 |
|
Imputed interest on suppliers |
7,074 |
- |
|
Share-based payment expense |
2,658 |
4,126 |
|
Interest on lease liabilities |
3,385 |
3,596 |
|
Interest on marketable securities |
(9,417) |
(11,459) |
|
Cancellations of right-of-use contracts |
3,053 |
- |
|
Residual value of disposals of property and equipment and intangible assets |
3 |
(1,285) |
|
|
149,233 |
133,889 |
|
Changes in |
|||
Trade receivables |
(72,466) |
(79,574) |
|
Inventories |
556 |
26,787 |
|
Prepayments |
(20,520) |
(17,266) |
|
Taxes recoverable |
(17,220) |
(2,434) |
|
Judicial deposits and escrow accounts |
5,132 |
1,245 |
|
Other receivables |
(16) |
1,123 |
|
Related parties – other receivables |
766 |
(625) |
|
Suppliers |
2,125 |
(3,568) |
|
Salaries and social charges |
32,097 |
13,153 |
|
Tax payable |
(5,474) |
(5,852) |
|
Contractual obligations and deferred income |
20,464 |
13,976 |
|
Other liabilities |
(406) |
4,880 |
|
Other liabilities - related parties |
376 |
(8,879) |
|
Cash from operating activities |
94,647 |
76,855 |
|
Payment of interest on leases |
(3,668) |
(3,750) |
|
Payment of interest on bonds |
(57,914) |
(37,640) |
|
Payment of interest on business combinations |
(15,820) |
- |
|
Income tax and social contribution paid |
(331) |
(523) |
|
Payment of provision for tax, civil and labor losses |
(190) |
(180) |
|
Net cash from operating activities |
16,724 |
34,762 |
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|||
Acquisition of property and equipment |
(5,256) |
(34,435) |
|
Additions of intangible assets |
(38,638) |
(19,716) |
|
Acquisition of subsidiaries net of cash acquired |
(3,205) |
(8,475) |
|
Purchase of investment in marketable securities |
(362,606) |
(707,080) |
|
Proceeds from investment in marketable securities |
421,427 |
581,214 |
|
Net cash from (applied in) investing activities |
11,722 |
(188,492) |
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|||
Lease liabilities paid |
(10,334) |
(5,654) |
|
Payments of accounts payable for business combination |
(21,197) |
(4,511) |
|
Net cash from (applied in) financing activities |
(31,531) |
(10,165) |
|
NET DECREASE IN CASH AND CASH EQUIVALENTS |
(3,085) |
|
(163,895) |
Cash and cash equivalents at beginning of period |
45,765 |
|
309,893 |
Cash and cash equivalents at end of period |
42,680 |
|
145,998 |
NET DECREASE IN CASH AND CASH EQUIVALENTS |
(3,085) |
|
(163,895) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230511005928/en/
Investor Relations
ir@vastaplatform.com
Source: Vasta Platform Limited