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
- In the 2024 sales cycle to date (which commenced 4Q23 through 1Q24), 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. In 1Q24, net revenue totaled R$461 million, a 14% increase compared to the previous year.
- 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. The 2024 Annual Contract Value (ACV) was less concentrated in the first two quarters (64.5%) than in previous year (66.4%), due to the product deliveries migrated to third commercial quarter and different seasonality of new contracts.
- Our revised Annual Contract Value (“ACV”) Bookings for the 2024 sales cycle totaled R$1,350 million, which represents an organic growth of 12% over the subscription revenue for the 2023 sales cycle (from 4Q22 to 3Q23). Our previously stated ACV Bookings of R$1,400 million has been adjusted downward by 3.7%. This adjustment reflects the impact of the lower-than-anticipated effective number of students at our partner schools after the fulfillment of the additional sales orders occurred during the 1Q24.
- In the 2024 sales cycle to date, 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 1Q24, Adjusted EBITDA totaled R$162 million, a 24% increase compared to R$131 million in 1Q23 and Adjusted EBITDA Margin increased by 2.6 p.p. to 35.2%. This increase was mainly driven by gains in operating efficiency, cost savings and a sales mix that benefited from the growth of subscription products.
- Vasta recorded an Adjusted Net Profit of R$146 million in the 2024 sales cycle to date, a 49% increase compared to an Adjusted Net Profit of R$98 million in previous year. In 1Q24, Adjusted Net Profit totaled R$50 million, a 97% increase compared to R$26 million in 1Q23.
- Free cash flow (FCF) totaled R$52 million in the 2024 sales cycle to date, a R$59 million increase from negative R$7 million in 2023. In 1Q24 FCF totaled R$52 million, a 44% increase from R$36 million in 1Q23. The last twelve-month (LTM) FCF/Adjusted EBITDA conversion rate improved from 31% to 43% as a result of Vasta’s growth and implementation of sustained efficiency measures.
- 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, are now available to the K-12 public schools. With the B2G sector, we generated R$69 million in revenues in the 2024 sales cycle to date.
- On September 14, 2023, we announced the company’s second share repurchase program (the “Second Repurchase Program”), approved by our board of directors pursuant to Vasta’s commercial interest in entering into the Second Repurchase Program. Under the Second Repurchase Program, we were entitled to repurchase up to US$12.5 million in our Class A common shares in the open market, based on prevailing market prices, or in privately negotiated transactions, over a period that began on September 18, 2023, continuing until the earlier of the completion of the repurchase or September 30, 2024, depending upon market conditions. During 1Q24 we completed the Second Repurchase Program, pursuant to which we purchased in the open market US$12.5 million, equivalent to 2,965,791 of our Class A common shares, which are currently held in treasury.
- With 20 contracts signed and 2 units operational in 2024, the launch of the Start Anglo franchise in 2023, boasting bilingual education alongside academic excellence, signifies a strategic expansion in our quest for new revenue streams and it marks the onset of an exhilarating journey.
- New launch of the Plurall AI platform, also called “Plu”: we gathered all our content from our basic education systems that we want to enable in AI, where the AI itself divides, classifies, and prepares the content, creating several knowledge bases separated by brand and material. With each interaction, Plu understands your request, searches all related knowledge, and decides its best response. Building on this preparation, generative AI enables teachers to create supplementary lesson plans, generate images, scripts for presentations, question lists, and helps students develop study guides. This innovation aims to empower teachers in the teaching process and enhance students' learning process.
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 |
|
||||||||||
