Vasta Announces First Quarter 2024 Results
SÃO PAULO , May 08 /Businesswire/ - Vasta Platform Limited (NASDAQ: VSTA) – “Vasta” or the “Company” announces today its financial and operating results for the first quarter of 2024 (1Q24) ended March 31, 2024. Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).
HIGHLIGHTS
MESSAGE FROM MANAGEMENT
With the 1Q24 results we have reached halfway through the 2024 sales cycle and we have delivered strong financial results. In the 2024 sales cycle to date, net revenue increased 12% to R$1,015 million, compared to the same period of the 2023 sales cycle, mostly due to the conversion of ACV into revenue and to the performance of the B2G business unit. Our complementary solutions have seen important growth of 21% compared to 2023, with an accelerated increase in both student base and market penetration. The partners-school base that uses our complementary solutions increased to an aggregate of 1,722 schools.
Vasta’s accumulated subscription revenue in the 2024 sales cycle to date year totaled R$872 million, a 9% increase compared to the previous year. It's noteworthy that the distribution of subscription revenue throughout 2024 differed slightly from the previous year, with less concentration in the first two quarters (64.5% compared to 66.4%). Importantly, the migration of product deliveries to the third commercial quarter is a natural consequence of operational processes alongside logistic cost optimization efforts.
The continued growth of the company's profitability was another highlight of the 2024 sales cycle to date as the Adjusted EBITDA grew by 21% to R$402 million compared to R$332 million in previous year, and Adjusted EBITDA Margin increased by 3.1 p.p. to 39.6%. In proportion to net revenue, gross margin increased 300 bps in the sales cycle to date (from 64% to 67%) mainly due to better product mix and reduced impact of paper and production costs, Adjusted cash G&A expenses reduced by 260 bps driven by workforce optimization and budgetary discipline and Commercial expenses increased by 270 bps. driven by higher expenses related to business expansion and marketing investments.
The company’s cash flow generation was one of the main highlights of the 2024 sales cycle to date. Free cashflow (FCF) totaled R$52 million, a R$59 million increase from negative R$7 million at the same point of the 2023 sales cycle. The last twelve-month (LTM) FCF/Adjusted EBITDA conversion rate improved from 30.8% to 42.5% as a result of Vasta’s growth and implementation of sustained efficiency measures. Moreover, we continue to make progress on deleveraging the company. The net debt/LTM adjusted EBITDA of 2.22x as of 1Q24, shows a downward trend and it is 0.14x lower than 4Q23 and 0.63x lower than 1Q23.
In line with our commitment to total transparency and the timely dissemination of information, we have adjusted downward our Annual Contract Value (“ACV”) Bookings for the 2024 sales cycle. The revised ACV now stands at R$1,350 million, reflecting a noteworthy organic growth of 12% compared to the subscription revenue recorded during the 2023 sales cycle (from 4Q22 to 3Q23). It's important to note that our previous ACV Bookings of R$1,400 has been revised downward by 3.7%, primarily stemming from a lower-than-anticipated number of students following the fulfillment of additional sales orders and the manifestation of returns of goods which were concluded in April 2024.
Start-Anglo, a cornerstone of our growth strategy, is experiencing continued expansion. With 20 contracts secured distributed across 10 states in Brazil, 2 operational units in 2024 and over 200 prospects in negotiation, this broad geographic presence and strong pipeline underscore the robust potential for further growth and market penetration of Start-Anglo.
Moreover, our strides into the Brazilian public-school mark a significant milestone, reaffirming our dedication to fostering positive change in education. By venturing into the B2G (Business-to-Government) domain, we have not only broadened our market reach but also solidified our position as a key player in shaping educational landscapes. The early months of 2024 have already yielded promising results, with revenues totaling R$69 million attributed to our endeavors in the B2G sector. This financial achievement serves as a testament to the effectiveness of our strategies and the resonance of our offerings within this vital segment. As we continue to navigate and innovate within the B2G space, we remain committed to delivering impactful solutions that drive progress and empower learners nationwide.
OPERATING PERFORMANCE
Student base – subscription models |
||||||||||
2024 |
|
2023 |
|
% Y/Y |
|
2022 |
|
% Y/Y |
||
Partner schools - Core content |
4,744 |
|
5,032 |
|
(5.7%) |
|
5,274 |
|
(4.6%) |
|
Partner schools – Complementary solutions |
1,722 |
|
1,383 |
|
24.5% |
|
1,304 |
|
6.1% |
|
Students - Core content |
1,432,289 |
|
1,539,024 |
|
(6.9%) |
|
1,589,224 |
|
(3.2%) |
|
Students - Complementary content |
483,132 |
|
453,552 |
|
6.5% |
|
372,559 |
|
21.7% |
|
Note: Students enrolled in partner schools |
As we conclude the period of return of collections, we update the number of partner schools and enrolled students for the 2024 sales cycle. In the 2024 sales cycle, Vasta expects to provide approximately 1.4 million students with core content solutions and near 500,000 students with complementary solutions. This is aligned with the company’s strategy to focus on improving its client base in 2024 through a better mix of schools and growth in premium education systems (Anglo, PH, Amplia and Fibonacci), brands with higher average ticket, lower defaults, greater adoption of complementary solutions and longer-term relationships. On the other hand, the reduction of our client base was concentrated on the low-end segment, which have higher number of students on average, and a lower margin.
FINANCIAL PERFORMANCE
Net revenue |
||||||||||||
Values in R$ ‘000 |
1Q24 |
|
1Q23 |
|
% Y/Y |
|
2024 cycle |
|
2023 cycle |
|
% Y/Y |
|
Subscription |
357,387 |
|
357,211 |
|
0.0% |
|
872,247 |
|
801,161 |
|
8.9% |
|
Core content |
|
308,292 |
|
301,038 |
|
2.4% |
|
692,004 |
|
652,077 |
|
6.1% |
Complementary solutions |
|
49,095 |
|
56,173 |
|
(12.6%) |
|
180,243 |
|
149,084 |
|
20.9% |
B2G |
69,031 |
|
- |
|
0.0% |
|
69,031 |
|
- |
|
0.0% |
|
Non-subscription |
|
34,298 |
|
45,624 |
|
(24.8%) |
|
73,546 |
|
106,693 |
|
(31.1%) |
Total net revenue |
460,716 |
|
402,835 |
|
14.4% |
|
1,014,824 |
|
907,854 |
|
11.8% |
|
% ACV |
|
26.5% |
|
29.6% |
|
(3.1 p.p.) |
|
64.5% |
|
66.4% |
|
(1.9 p.p.) |
% Subscription |
|
77.6% |
|
88.7% |
|
(11.1 p.p.) |
|
86.0% |
|
88.2% |
|
(2.3 p.p.) |
Note: n.m.: not meaningful |
In 1Q24, Vasta’s net revenue totaled R$461 million, a 14.4% increase compared to 1Q23. In the 2024 sales cycle to date (4Q23 and 1Q24), Vasta’s net revenue totaled R$1,015 million, a 11.8% increase compared to prior year. Subscription revenue grew 8.9% in the 2024 sales cycle to date. The ACV 2024 is less concentrated in the first two quarters (64.5%) than in previous year (66.4%), due to the different seasonality on digital products and product deliveries migrated to third commercial quarter.
EBITDA |
||||||||||||
Values in R$ ‘000 |
1Q24 |
|
1Q23 |
|
% Y/Y |
|
2024 cycle |
|
2023 cycle |
|
% Y/Y |
|
Net revenue |
|
460,716 |
|
402,835 |
|
14.4% |
|
1,014,824 |
|
907,854 |
|
11.8% |
Cost of goods sold and services |
|
(140,083) |
|
(155,126) |
|
(9.7%) |
|
(335,526) |
|
(327,203) |
|
2.5% |
General and administrative expenses |
|
(139,902) |
|
(127,281) |
|
9.9% |
|
(235,553) |
|
(247,169) |
|
(4.7%) |
Commercial expenses |
|
(73,260) |
|
(51,061) |
|
43.5% |
|
(140,388) |
|
(101,266) |
|
38.6% |
Other operating (expenses) income |
|
1,785 |
|
994 |
|
79.6% |
|
2,352 |
|
(927) |
|
(353.7%) |
Share of loss equity-accounted investees |
|
(3,060) |
|
(528) |
|
479.4% |
|
(16,183) |
|
(2,890) |
|
459.9% |
Impairment losses on trade receivables |
|
(13,205) |
|
(10,380) |
|
27.2% |
|
(42,199) |
|
(39,153) |
|
7.8% |
Profit before financial income and taxes |
|
92,991 |
|
59,453 |
|
56.4% |
|
247,328 |
|
189,246 |
|
30.7% |
(+) Depreciation and amortization |
|
65,533 |
|
68,804 |
|
(4.8%) |
|
136,563 |
|
138,672 |
|
(1.5%) |
EBITDA |
|
158,524 |
|
128,257 |
|
23.6% |
|
383,891 |
|
327,918 |
|
17.1% |
EBITDA Margin |
|
34.4% |
|
31.8% |
|
2.6 p.p. |
|
37.8% |
|
36.1% |
|
1.7 p.p. |
(+) Layoff related to internal restructuring |
|
501 |
|
487 |
|
2.9% |
|
980 |
|
1,095 |
|
(10.5%) |
(+) Share-based compensation plan |
|
3,334 |
|
2,666 |
|
25.1% |
|
3,229 |
|
2,773 |
|
16.4% |
(+) M&A adjusting expenses |
|
- |
|
- |
|
0.0% |
|
13,776 |
|
- |
|
0.0% |
Adjusted EBITDA |
162,359 |
|
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