VTRU Vitru

Carlos Freitas Chief Financial and Investors Relations Officer
Thiago Bortoluci Goldman Sachs
Javier Martinez Morgan Stanley
Call transcript
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Ladies and gentlemen, thank you for standing by. And welcome to the Vitru Limited Fourth Quarter 2020 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] I will now like to hand the conference over to your speaker for today Carlos Freitas, you may begin.

Carlos Freitas

operator. you, Thank everyone. Good afternoon joining us. for Thanks pleasure It’s all the here you be our a full first results. after real for company, quarter with public to as year a time. well at are and all doing the Hope same healthy today's A slide presentation which our is been made is in as know, Relations webcast, us you available available, Investor which for has for website, I you. trust you all have this presentation in front of in detailed presentation begin, course, like to is as before Safe that the of we I for on of call. X And note Page this effect Harbor make

So like of I you now to all Page the to X go presentation.

we So in this page basically highlights XXXX first. XXXX what in what’s will be accomplished ahead and XXXX,

year which growth content U.S. have all facing we six this our are of for First, challenges that year continued at our tremendous journey course, several the of still, despite Vitru on for us faced last including, IPO here our and months we all businesses. in today fronts Last year, a ago. the was

number the EBITDA, in net growth margin. of First, and profit, sales, students

our in the Place reached of all which Brazil. year, to in is our standards of growth we quality with our the IDD in platform This highest conducted for certification results survey our at grade as of by the versions latest the of here Quality most is released which as is in here And measured as IDD a new example, Education highest Work to students. recent available the the Great players growth quality, satisfaction our app, the content latest well obviously and of our Ministry by confirmed ever. we year. of of indicator, by Second, employees, Vitru. third, in This last October that the all last among

about presentation today. for All of are excited my very looking discussed to this details these more And year you XXXX. forward will be throughout in we initiatives

deliver our First, numbers. in we again will important growth organic

and on opening new purely far, country have growth come delivered organic have the the so growth we again efficiency can But And deployment and will been be our a as so have from expertise. results. As this far our truly M&A of discussing And has the we ones, for I'll strong the also create through overheads, shareholders year, of today. we confident also focus the constant basis. you throughout know, this done This value balance that you and of maturation our operational issues on are all leverage. digital we with bit later we these sheet

Now moving please. X, to Page

of for some this the and year. the from Let highlights quarter me full reinforce

both brand called of new mission during and enhanced quarter digital reached version improving our we started launched important two lot app, first, milestone. As this new with businesses, We of Leo, which pilot Smart our also Fit of the user the a is experience. them We more both Gioconda a platform, year even Uniasselvi, last potential. with our still version partnership are projects, of very a and

last our XX% We versus our year that the to of next also in core strong. last XXXX, That's XX% year, quarter in of an a XXXX year, Digital XX% financial XXX,XXX XXXX, fourth to course, provided of above EBITDA have more basis the digital of in That's now Undergraduate performance fourth quarter up guidance and XX% adjusted XX.X% was by education. margin And, adjusted right consolidated huge last EBITDA than XXXX. compared And of increased points adjusted last the reaching net very by in The in compared XXXX. segment we November Education grew year students increase and versus income achievement. XXX year. with X.X

for the very our explain you, clients. on the digital delivery starting for each Page Page of me X. Now, That's better these points X let our about of core

looking We more are important our the to with now became which digital pandemic. experience even academic improve with always students solutions, for

versions of the very, are of last launched we app. year proud our Gioconda and very So new the digital Leo platform

such on here a is apps. which as through our the All now as more, a academic and personalized last learning available has her. of I The slide, that. and left year, students, the towards changed Leo at right there part the you a which experience more know. example, well-integrated mobile-oriented a full in him and is user-friendly some the important more the provides adaptive here as platform, the content For Brazil, would It mobile for access much support to is say, student Gioconda mobile more much we student which And has tools has as or experience customized a our app the app. country well on

the by now, is us. Internet So access paid

has of So new cost the to student no the full exploit app. capacity Leo the

instrumental go bit deeper Smart are expansion X deliver and that very partnership Page a offerings. to Fit, in on of growth the they Now also about our those partnerships, we this with

is year. clearly of signed us. is good So in just with very partnership to this This Smart January a this Fit we first you released that the for and partner

solid clubs, year, don't living Smart than last the are is Fit steady of in Uniasselvi those which largest like who Brazil know For just doing. is Latin and centers They growth around gym company it, brand with have and XXX XXX slightly America. in a of abroad fitness more

We just provides Smart And Again, offering consumers, provide which students, the the we pandemic. final facility, is in and for have a advanced a for model here in them the public, is with to in and now gym fitness in course employees. classes. and we particularly nothing digital, more potential far it's centers course after report, increasingly still, important gym because but that new the so for are health to their process of the fact, especially clear, sure, are Fit the the we this personal the general the wellness, open and launched now graduate course, we experience for

announce more we will partnerships more So them soon. we come, of and hope can

mentioned, come later that which I our numbers new you. and on to technical show as courses, this part of year previously strategy more to Finally, we we expand back to also launched we to offerings, have the are as will

So gist our now, of Page which of a the growth base. student to moving provides X,

We in and are far. digital of education have them the by almost XXX,XXX focus enrolled Undergraduate, base is again, courses, students. Education which, on we main XX% Digital business student in our

years, last of You we in this CAGR can XXXX, see and five maintained last XX% a that level year. growth of we have the have since

in confirm in last year. also year the our third the second period In semester of quarter our last As in was same last we of have year, disclosed higher than intake intake the of last release and the of effectiveness competitive XX% was of growth the growth as the side. a our year, well so first intake of advantages XX%, brand These the semester numbers substantial intake here model. and the improvement in

the a well. So trying been clear. do of to highlight, affect that's the since courses, product. as crisis economic On course, very the some IPO, have we current one of also the saying and market in our And year prospects to different our enroll was last hand, as did, dynamics have we different of willingness

and with this sense – our of we the compelling those hybrid they offer high-quality of do we courses support for and belonging, belonging the for and model, hand, this of but for sense going in need On the a offered all with handholding other those campus do tuition. people offer all in pay who our prospects and model, university. tutors to this can't And high hybrid experience alternative expenses

going home, pandemic five market from rate. this working studying home, the increase our That's is So by this has important this opinion, from the year, above we'll On expand home, forward. well lot years. course, And our we even brought fact, market in now in in been buying for the the we huge post-COVID Last expanding X, student the expanded base a scenario. to Brazil. together us with And growth country, four show about Digital the further substantially Education represents last Page a a customer in that in whole throughout opportunity highlight. changes of the market or

have faster been the growing and So within competition. than this markets, growing appealing we

Our but the years. And been expanding two it students. This – very of market, tutor-based last but we in in as the Southeast year, we historically had and of the hybrids been especially of competitive growth attract where last where I itself and our is lot a have where lot shy, country, say, best different was a importantly huge region academic proves learning course, a a the would model can option.

we once enter hybrid enter we region city, attract new quickly grow center a to So our new once and quickly model. students and we – total a we new

our last in hubs we Here on can see five as years. right number the of well the slide, the in of part the evolution the

are maintain base XX% the hubs mature our our regulations took after Page than XX shall more expansion on education undergraduate better partners, opening, digital have more were And per these of we on mostly opened are we hubs growth than is student and mature. that the and call segment Those in in XXX a We over XXX illustrated XX. slightly substantial they in model. with in change which year, expansion hub. average, so is still been what not – they XXXX, hubs time, our business which place the

the far growth for of pattern here, hubs, or like of say, show is because competitive the cohorts. over driver important it years cohort and of our maturation time. shows, the a They expansion They is, maturing chart our the are a on growth, over This our time. way, most are by obviously, operations. they maturity very, I hubs. lot by is up. – of seven These organic by this we after this far the strength reaching by ramping is chart here still that consistent the split This I'd growth our So which eight model consistent expansion in right, the

created students reach number these mature, extension are which number once of of those students them they And effect this none of currently maturity. mature. in they future to none growth enrolled same this them the we divided the hubs none maturation index, So hubs – in is are are of by of potential, basically theoretical hubs, the

So it's in help threefold capacity at their the is increase huge potential this base a next index that which XX%, do means growing to have years. to around the and

over in these to growth they all to hubs XXXX XX,XXX year. already this hubs, went apples, with XX,XXX decrease so XX% the Of reminder. fact, of because if December They from cohorts, index just can, apples just index important to from It's last course, is we in month-to-month to in people it But these in all this summarize, XXXX. this XX% new risk XXXX to of open even are compare hubs. limited cohort account expansion to as And opened. December maturation take from takes slight just the hubs we that increased into the highlight reached only of – finally, execution a

The business already the We and tutors. already contracted in and have working partners partner, the Uniasselvi our favor. there, is brand found hired the

So already in virtuous there is working our favor there. a cycle

is So growth execution this risk. with limited

revenues This in Now see XX. last combination net you was we page, slight segment. Education next average details in on and on XX, substantial the first, for more figures the as can can and increase was of, the I to hubs, mentioned new with the strong and especially on our of the of a quarterly as Page growth controlled maturation a face, dropout already, Digital Page the ticket, both now quarter due annual year. tuition see a There for and fourth Undergraduate

on Here expense of did XX, our left intake the student increase come we expansion in average not and highlight base the the of part, ticket. at that on Page

you sizable semester, of a the as semester remember, fact, quarter us you approach throughout variation to classes. increased at have this versus over less – we base academic or or was first And the XXXX, throughout meant this year, the increase of by ticket which in this was she half – number he of average new this know, despite students. as of ticket or the an the period. I second Our new model student reach X.X% of half a more mean, join the can

to them quarter-on-quarter or different of It dynamics semester have it here the so compare provide numbers. half full the year the in year, the of second positioning, we please, as you, of a of substantial that we the offer the year-on-year is the everything year. what important highlight half well compare first of seasonality The with year only market most dynamics throughout is different. So to our Never so brand and saying not a different confirms throughout that strength the did the of product. a been and we revenues, have

increasing. the Now health see of and the care engineering on of the contribution part center you can slide, here

So by mix of the our was ticket increase courses. also supported in

now slightly such and well. and higher growing So example, pharmacy of participation for but nutrition – a courses, biomedicine, we as steadily and health care as have and engineering,

So prospect nice size this provides ticket well. for as a our

that fact, you the which better in Finally, COVID, the retention see the despite of the part rate year saw year. than – what our can we rate slightly on retention XXXX, of in slide was affected the or in even last of effects first last half right

I slightly, our as value dropout intake it's newer seniors. even among our to know, is important seniors. improved much Here, think you higher that rate we And growing students lot highlight and a among the retention than PDA

the lot student base a includes the but tickets. retention slight, also new grew and only not we So

for November, provided full – was release the because exceptional we remember, after guidance you you were of This year as – year. in last XX, we first our Page to we the the IPO. on in with Moving we had

provided So and the full adjusted revenue EBITDA for we net guidance on the year. margin

can net the you R$XXX range, final As reaching end million. was revenue high our the at of very see, XXXX for

adjusted by basis before, and mentioned XXX the EBITDA year. as reached we range, last the XX.X% I Regarding exceeded, margin, points

and you are in keep delivering, expansion the expect us. revenues that margins from So delivering we'll we and all

Page in financial every growth you on our in XX, see business perspective. the Now can

net Digital revenue, in in just growth again First, have as by Education we led expansion Undergraduate, discussed.

third, on in in increase our finance. by explained cost increased gains scale and And EBITDA expansion and important in by constant this a digitalization. an efficiencies And margin, is margin focus Second, adjusted which of led profits. gross better gross personnel

fourth talk let's between quarter and about with of revenue bridge revenues XX. quarter provide fourth on this First, Page and XXXX in XXXX. of variation and main We net the XXXX XXXX

And by if reductions in driven Page can yearly appears numbers, again So focus in on-campus growth net I growth revenue both maybe of Education Continuing see if expansion you Undergraduate. it page, was was segments as Digital the now it, dilutive, this that on next you by and the Education on XX. call

focus courses the revenue in if in Page a revenue, you of growth Continuing XX% the last on first XX, we year. gross So on had Education, the graduate

decrease to the we marketing expect some courses. is of This and a a made was hub in mild suffered segment, of machine here, undergraduate an with disappeared be from courses already now, high We profitability sales of effect especially numbers growth they're back. the very a bar, last planning and there the to fourth explains averaged part piece [indiscernible], used There the benefited the is – which we basically graduate of here So a called year the the year. that which hubs some that slight XX%. so XXXX. the recently of Continuing important positive is come we quarter pandemic, half because contracts, had another our Education especially present of than the But we In pandemic. was of business the in the workload a of a taking more changes yellow in as in the in in today which the now rise, the XXXX, chart. so the importantly very should first factor whole, we performance And those growth the

a we level in on was XXXX. that deliver now, in base to more XXXX, that and of numbers expect comparison So high

been has declining it segment, on-campus legacy our Regarding over time.

we And its as which and our to know, believe that have highlights. tends have view less tends the relevance I education the – growth, in we do believe the going in reduce the and here, with business for psychology, on to not this provide growth sector. XX, weighted saying, increase It's now with digital and over means time, the Page forward to the concentrated be been will for courses more as for law, main less we that both numbers. EBITDA that's consolidated us you year for we whole full the On As education and nursing the main quarter three average relevant bridge over much such example. both line offered variations time. the

of our operational increase the and margins. leverage and in gross First, margin continuous net expansion our

plus cost XXXX, revenues XX% meaning for well It services and As virtually were of G&A. as on they roughly increased the at reduced of courses you of the basis, – revenue. year net in XX.X% X.X% of as flat and net an see, G&A over the can slightly XX% cost Selling for to both to expense well annual another flat, highlight. as of

reminder, expenses basically the a new education to to attract of especially segment, undergraduate which means process, are are for As students. the they related most that encouraged digital dating and

the And back more the intake, tax stronger to expense. And additional selling what's I'll higher is cost. the later. for the So this bit a here, the the customer, means, come

of Finally, PDA, revenues. bit increased it little to XX.X% a in XXXX also net

the combination on light we mix slide. the in students of and Here, have next a of more these country. of shed the all situation issues of We'll

XX, Page reported back operational R$XXX.X, segment. calculation, from service slightly gains as to digitalization of basis adjusted in cost optimization the personnel leverage yearly of reduced throughout we costs, increased the gains So our and a reflecting by for scale, brought to come the R$XXX EBITDA and on

focus adjusted and constant mind. in there agile, expense a of these scale as slightly for revenues, illustrates report This was net administrator As gain than reducing G&A support of shall – costs. G&A next they lean from in percentage revenue percentage performance maintaining expenses, by say, keep net It as strategic see were a with and year. only our and a to of means this on digital with XX% of orientation that of our XX.X% over to a percentage revenue year. fixed net an important EBITDA dilution can a you last time XXXX, XX.X% calculation, reported here, efficiency and reduction in in as of increased smaller our again, our revenue, net

seniors' Page expense Now going XX. the to selling, on

part the revenue on in chart. selling expenses XX.X% Two selling year, roughly X% that. of reasons left XX%. to For of the Last from net expense of was increase there for

were are First, still of the intake last and we we seniors. year, and today at between peak ratio this

Second, the role play process. in important the an selling hubs

more had last bit as digital year. closed, will more This were be case the year. we – well this rely they to media on so So a

in increase was However, mentioned if we cash, before, at the I as look an efficiency. there

selling this segment, yearly So when that's slightly in see, our annual ratio by previous you take the Education was of can that smaller and you and in the Digital Undergraduate them intake expenses year. in divide XXXX release, than the

here, Regarding little the modest a the the three a is column why there's and at profile. yearly we this. right, PDA XXXX percentage a reasons PDA our – quarter for XXXX, in in in had XX.X% on year. as were to this as PDA call, last bit fourth appropriate the before And the that's the in IPO. revenue, more policy. of XXXX which adopted went explained you in from PDA to We the policy certain changed had net But XX.X% end, we There last as XXXX of PDA

The which expenses. first in some as of one, [indiscernible] well, base, increase higher expanded the newcomers percentage our in

this which of done that this are P&L XXXX. receivables recognized was that bit indeed, in December was which in, of means the expected already a bit our third, accounting affected of older we the year the average XXXX, mid and course, technical. previous year, is in – recognition more in than also in this – PDA aging XXXX, payment crisis in we we slightly our lower of accounts have capacity than Second, our last a losses The of is economic the and what in And clients. in our now in

context, PDA believe slightly So I in the that was this increased do justifiable.

year. see in XX, whole income last in as to you substantial it business our increased XX%. of the there expansion XXXX, adjusted of for number which expansion XX% and the moving Page a by that main EBITDA the was expansion of driver Now a can the was net The

the flow had IPO. the before a have had some effects tax year year recognition year. of And we of We also positive we in next higher cash XXXX last impact also, a assessments which and just this in positive the after assets,

but the On increasing last the improved year right, we have last flow management. from driven outstanding from in business, receivables year. increase Undergraduate to year, With the in million adjusted XX% Education coming our XX% which course, substantially cash by was this Once again, cash that, performance discipline Digital of last operations by our reached our backed R$XXX operations, of XXXX. conversion flow from continued XX%

So growth support this us next slides. are the our in two enables financial plans, position to which

XX, organic. current through purely and far, so accomplished our and up in growth be has Page So again, has This year ramp of growth, next organic been the the accomplished been will hubs.

mentioned year. capacity As a the – adding as by XXX to capacity I the regulatory we per already, hubs open hubs, new reminder, have

one We and before, digital the also lifetime constrained. courses marginal a growing are by finally, and of allowed they providing the as digitally which education courses. courses, further psychology also, by Continuing I increases students expensed by Education adding at in but day, law, second And new our as graduate cost. especially and value mentioned nursing, And

Finally, to on Page close XX.

Let's talk means little opportunities, inorganic growth bit M&A. about a which

the used M&A. net less proceeds million, As $XXX will remember, be basically our IPO, than for for slightly you

hope to it new will for active with IPO: investment and and our have of discussions when two – enhance soon sense and, several in our bring value, products our services; can we that So first several make pillars these do And potential course, EdTech portfolio; before in we complementary M&A. targets should you announce consolidation. when we create today discussions the to we we defined features

first So ends this take and the with questions. to ready of now part your this we that, meeting, are

questions. for lines So please operator, the open


comes Goldman Our Thiago Instructions] Bortoluci line the of Sachs. you. with Thank first from [Operator question

Your open. line is

Thiago Bortoluci

taking Carlos team. and Thanks Hi, for Yes. question.

as the curve, hear getting In financial in from question and we're Moving been to fees apply churn coverage far an the of very here in is original update any you you Thank terms accelerated our saw question. That’s that owners guys plan, of regarding retail able the the so the you have franchisees. if one broad you the to higher the rebate currently like sense, changes the would of to per hubs. on health if especially this much. forward, I

Carlos Freitas

for you change satisfaction in No, change level partners. the our in churn, was no Thank the question. no of there

per change did Our last every It in month. not year. X% churn is the quite year, small. It's around

So the to say with That money with always gains I'd partners, that's that. clients created definitely – try they as with them why make very for is us. important. the are of make the incentivized money make We us we this, and scale. look And expand well to to

that's and that's have partners. hubs, So doing, what opening, and them been been than with they've – we more of again, most XXX

most the doing in hubs are recent of more opening fact, In of this partners. with than that of year, we are XX% beginning them our in

that number If our historically, around XX% partners. you was remember with

the year hope whole fourth and fact, year, partners in year. for XXXX, we for Now in XX% more are already that with are this the opening quarter this than of

prove that making to with to show just and are are happy us. and us, they money they So with

Thiago Bortoluci

clear, Thank Carlos. That’s you very much.

Carlos Freitas

you. Thank


Thank you.

Our the next Javier from comes of Martinez Morgan Stanley. line with question

Your open. line is

Javier Martinez

Hi, Thank Carlos. Thank you. you.

expectation, key during have prices keep after about we performance in our above prices, That the increasing. that Once investors my IPO increasing weight view, with given One good historical again, quite are IPO impressive, of you to was the of the the and quite impressive. the and was capacity newcomers debates is of prices. the

that of expect is those of mix, you mix, color dynamics And if if much give is bit that those – you part prices? like-for-like how that more dynamics little much mentioned a you how continue but So of us forward? to going if is that maybe – could

Carlos Freitas

Thanks your a Javier. question. is several things. Price of for mix Hi,

joined explained of a the ticket when the of seniors beginning us, That adjustment that we is the also example. a guy courses a It matter a it's on make of the mix for in what First, second the before. on semester, and basis. the annual pay yearly student net of of is matter this is I mix newcomer runway a as or of that will

was have are I far, engineering still nice [indiscernible] is growing. to new, So we mean important actually, the invest of have last to it here it able, not courses base, mix they're first, been so health – because performance. – contribution year still The that and in terms a

and there they going from think the frankly, discipline important – So contributor. we was, a do I are It's newcomers, this will to for really between to ticket more first, forward, not we participating ticket. XXXX, this thing that. was that. And contribution one growth that on think, is, much a important But very be contribution and the try that maintain the in I balance

important everybody. thing of the seen be will what intake last especially this year does for and year important this that intake. is second is different not The – profile yield have different from profile the quarter The and of the we

bit, so a delayed, this For has profile changed the little – we it’s a very last year, year, bit more had start some year, and for a the start in beginning intake. of the the

intake. now We have stronger a

us, we okay because then, until it when in are It's high So of but and before is. is – that far, the that for to in of people for XX And not March. teens relevant, teens, our fact, all principle, in – intake grown today, high looking have it until production. course,

the two days, have last we important and in already interest seen a So new very increase in in course.

last very, administration. And in increased helped student which of year, strong also the in the the average the we the course, price for doing the important. very curve seniors overall years. ticket say, the say, normal, a this for to last example, in January, the So year very are I'd it's year the We have average finally, as we the very was of Throughout the beginning been very, price sustain very, well, did very, important I'd is, And in as for this important very because sustained ticket. ticket. sector

that I in back-ended. So think relevant the or, in thing is cycle thing change, fact, intake this will – will or fact, of is year that newcomers, the going is more the forward, this only which profile change, curve, most the

But see So will this we quarter, are recognition, of numbers terms this in always the change. revenue good.

in high the to already teens. that It XX with As last example. remember of cycle the should year far. of year-over-year it intake was this of up take already, And And we same so competitor are March I mentioned – tier or year, part for [indiscernible] last poor, year. the very increased

confident So we intake. ahead of growth for deliver are a the still that we will nice us

Javier Martinez

follow another Carlos, if may with one. I

little so that obviously, and already At improved. So still you information year a another maybe rate on it's year going the – this good be rates? how about – to the is is next mentioned seniors, about but in re-enrollment, good point, retention XXXX is the your retention some was seniors, you Is have moving? talking probably that early,

Carlos Freitas

re-enrollment is that's difference than the we last reality. being but slightly is we It pre-pandemic good. far, year. a be had as is than smaller between So had last number the is clear expected, good the what And and It post-pandemic so which slightly far, may what it year. more

Javier Martinez

Thank Carlos. Understood. you,

Carlos Freitas

You welcome. are


Thank you. in am showing call I’ll [Operator the Carlos. you questions no queue. further Instructions] I the turn to back

Carlos Freitas

you, Thank operator.

now well all. a a us takeaways from XX, with like solid So year, We quite future for and it key up very growth. to the solid very I'd on positioned Page had wrap please, quarter which

the emphasizes the sense still with – tutor. as affordability, the a model, hybrid and a before, and on based I flexibility are with, we in flexibility combined a belonging which and know, you model, mentioned centric from As handholding of support –

before. top as a this and discussed this time. on We to is focused with build keep you, student this value expanding And and way over that of and base prospect, and grow keep an maturing momentum which this bottom expanding keep to we proving confident to line, as I we during way increasing, the growth efficient believe course. an hubs, Enrollment quarter, by do important margins, further are to shareholder creation long-term the is mentioned can numbers. on remain line previous and grow be and delivered we So

All of we to announce arise. with mentioned I hope as opportunities expansion that, soon to together already you that to you, and M&A

in the excited and the believe So are we in right path future, we very are Vitru about growth. for we

you that, interest you. I Thank Thank We our the for to very you. look with leave So meeting about with much forward all. you company.


call. conference today's participation. you concludes Ladies Thank your and for gentlemen, this

now You may disconnect.