Vitru (VTRU)

Carlos Freitas Chief Financial Officer & Investors Relations
Vitor Tomita Goldman Sachs
Call transcript
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Good evening, ladies and gentlemen. And welcome to Vitru's First Quarter 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time.

As a reminder, this call will be recorded. to Vitru's host CFO. like call, today's now Freitas, Carlos would introduce for your conference I

You begin. may

Carlos Freitas

Thank you, here healthy. operator. for all joining for us. of And release the good afternoon, a the doing the pleasure everyone. first real you quarter to year. our are be of with of all It's you results Thanks Hope for and well

today's will Relations Maria which of Here the Investor a Gonçalves, available is also at our webcast, our Carolina Relations Department. with be slide in presentation me of Head And website part is Investor investors.vitru.com.pr.

Safe all So, everything is I that like this for hope front this in you begin, to course, just have in of the you. effect before I Harbor we of presentation, call. And, second note in slide make presentation this of

So to like to of X you Page the presentation. now, I'd go

we summarize this the page what highlights this of believe So, quarter the year. of are fourth briefly main

for Flex of a in launched into that hundreds and which smaller model have a opportunity enter huge [indiscernible]. other Courses, academic we Brazil First, new to call us cities we the represents

region we students southeastern say were growth of this education XX% great numbers organic the the with we intake hybrid in intaking Brazil XX% an that you as we in the shape that the quarter than what model. intake of current But of in of the year. had resilience XXX,XXX first the in of back-ended versus growth the year. in in with of year. what more strong was had growth last on first of cycle the Second, last our digital around than what southeastern cycle organic with reached compliment was it versus had last of of at confirms our inside ENEM, the a With the again, we this purely And a very delay basis more all know, XXX

revenue this year. XX.X% quarter; this not our of last net XX% a compared EBITDA a Digital numbers Undergrad numbers. and so flow EBITDA had, adjusted we solid from quarter very least, by adjusted up cash adjusted year. Education substantial on XX% last was we consolidated again perspective. but XX.X% future, in the segment in last And our increased The operations solid very grew means quarter The around quarter, from of conversion financial margin increase the cash to first our this XXX% margins, Regarding versus when XX% the as well reached operations flow which grew by core to

presentation, more will All discussed in page obviously. of this throughout next details with be Flex my We're the starting Courses.

now X, please. Page on So

the we deploy model, subject, I the Courses. to this year we which some We decided concepts Flex projects throughout Vitru. And with As Course Flex new that fun were mentioned, regarding successful. last quite did launched

classes with So dedicated meet that offer basically what our class-based and weekly virtually classmates your But that? a your in your It classmates weekly is the hub, live we traditional in is your same and instead with in tutor, tutor-centric model. meeting of with you tutor. approach hybrid

For is phase used hour model, instant a and the different at hub for exams.

imagine, would model we because better in for a minimum did in is I you size, for that? there and us a minimum smaller why very is us a So, a suited the hub mean, city. it? traditional hybrid we This scale our is Why are given open model do students cities. disturbed to doing as new not can by

with a in focusing model mid-size now our hub. weekly in a cities, of pure efforts until we and the large because with hybrid nature hub of So learned our night meetings

sense that you the university, scale, hub with And a accelerate education of high tutor. is you tutor-based a region; exam base sense belonging, quality you going by and hubs, have quality. throughout your student offering in our Brazil, of dedicated you being offer to go classes weekly represents So instead huge with with present for take corner which to from opportunity to in with nice when model live vision, classes experience the and go hubs small that live of a have a an growth Brazil our tutor again, because high with meet, expansion hubs and of our class-based us have the you to to physically to to your few a and to have the city, this you of every have of faster basically with your

is So, this when learning. from distance about think different you what competition is offered a from

snapshot moving to base. a of Now our the here have we Slide growth in in X Page X;

about XXX,XXX XX.X% We March, on -- education of them in segment business. of we digital almost our engaged courses. have students of education the base main digital which is end being our focused students And undergraduate

a of mentioned at side left yield; growth to shapes intake look I first why the this some CAGR and taking show for before, quarter, have we in in when on, curve due numbers You versus XX%. this bit the the quarter last is of I was year will over that? this of numbers about can it. we as Because year; XX%, see and different first quarter later And that was

year agenda of which due a Brazil, you and the in last as this being -- done for in segment with momentum released this enrollment post-secondary of results the last have the out mainly know, is to delay off March, year were And say sector. brings as it catalyst in the ENEM year. late did let's I -- important, think to an because in it shaped So, backend what may ENEM, instead

that confirming were high-teens fact. cycle, you full in releasing or the the the quarter, and told said late model. XX% -- whole So that we of to semester, especially a the the nice was the especially the I group intake are up that take in date now XX%, March, important in growing and now And we the meant intaking I for now when strength when remember we growth this so of cycle; of an high-teens; numbers and I resilience our year, intaking have last in our this when pandemic, coming numbers for intaking we with for the you in situation very

Page show move we and the in to base. if X; increase trends education we Now, digital our student

after in that We above throughout even is having market, And market the have expanded Brazil, opinion expand substantially a a this lot we're been well growing appealing will overall, our in and and further expanding within competition. this market, COVID. has second growing and

said, quarter compared of there the of was, year. they last to XX% had first this strong particularly by in growth in our of southeast what the as year in our region base I So grew March Brazil;

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

We quarter have throughout this been XXX have [ph], we around now year, open Brazil. hubs mostly you more know. our more And site XXX hubs as than per than

throughout Courses, the With we Flex more are Brazil. going even open hubs to

to As new growth will the and help in year the us I this throughout accelerate said, concept future.

Brazil. this for So year, open throughout to going XXX we are hubs

a the shy. Now was years. in growth, southeast the to we again been the expanding But on to historically we where strong fact, very last been focus X; to move two lot where have you in in southeast. have The have Page

'XX. cycle then, especially in current of a in then de our very, As the shy very of By were with intaking we partners. until then second you in as last the always a expanded hubs and market Brazil City Rio into in I this hubs the already last XXXX, very the were entered lot is year [indiscernible] that we Rio of know, largest of Rio this tell example, in very, successful, in number southeast intake. entered the and we 'XX, capital opened year, And we way, Janeiro

one The seat second is Rio de first is Janeiro. one Sephalagris [ph], the

are very itself you of this just even Paulo; southeast southeast, São are model is XXX lot growth So in a the now. strong we is the new in São the one-third a Paolo. proving we Rio as for there we southeast. now, the also of to in São in which our further San chart, here have hubs so important of that that And in where in And Paulo São going see confirm in are and Paulo now our in is frontier Paulo, we next in grow lot; the opened in already can growing hubs [indiscernible] and State to

Now overtime, growth X; most on we the which is here our expansion organic on of Page for focus important our maturation hubs. the driver

are expression this calculated or overtime hubs this around not hit divided the In hubs to here maturity, yet said. hubs substantial the expansion basically still reach we once working here We seven short, have in is growth have as mature; theoretical index, and potential we by are which students illustrate they they case, expansion chart XXX in of open our after is regulation number as on the we call cohort in of on therefore, that's maturation at change now under number, I up, the our the by potential, that average, of this hubs eight the why rate hubs XX% we right, were growth And hubs. after which years. for a They those now mature XXXX, overtime. roof maintained almost are in

in mark -- risk. the threefold. the partner this that growth means -- the course, of expansion just by first So risk are is those with said, execution. year. here we the hired, again, there; limited is hubs more there, that that is numbers The it we so increase What execution are of intake hubs with quarter to highlight profiling as maturation index up to have have there; this hear show back-ended now around picture we we're that must the the which this affected well, capacity the XX%, branded base have marks, of limited of is a as the working I growth the And, the and two-third

flat, hubs, for normalized scenario, example. ones they would we second the see expect in been should in of trend. for the normal base are So And in is the to than a stronger growth already, been total students mature the what that even the quarter, in have now number the obviously, have hubs that expansion more

and here for the the net Now intake moving the average to bit Page segments. and undergrad ticket as XX more to education focus a revenues the digital cycle on well

the in on quarter purely So segment, XX% base, second intake by and net increased the was the organic in this and profile. again, despite revenue

us. a in us contribute once which March, model, only join you that have is know, revenue us; for or on-campus approach our sequence revenues So as this we model which from have we can student April, join once it's you typical competition of in used modular the is contribution average join then different it a is by digital our you in In the she model. in new he or a based you and purely subjects; so and on so

have we because on the here say So profile in revenue quarter lower right, we first this the more year. expense contribution of this the had back-ended [ph] I'd intake, for

So, the XXXX, XX% I for purple curve were again, here you or here see right; the the on of February. -- would the say, by light occurred purple, it already if of intake newcomers

it intake While intake these in XX% different year total cycles. was the of XX%; only

brought main in strong revenue what? in is our So in very we cause They and clearly quarter, in much new This decrease more ticket a in after the But had average March, that every students. our our overtime. here pandemic; you now can of it was see quarter so off-season slower this here delay middle, X% you this denominator in was of then this which see months, are entrance not they the have picture clearly ticket, in the means that ticket, every here decrease are a of it this the for the which they February much that and last we in first means the but year, was January year. spread

half, stable in So saw reduction given I -- ticket ticket half in increased as it we X.X% tickets the the say, trend year. our the quarter by first second for be first And second Sao -- reverse of faced is in will that less is lesser this our year, that already -- to little this you we tickets trend would Paolo, The to -- for in of now this the compared half [ph] a this as quarter XXXX. remember; our sorry, model. obviously, Paolo, the and always see that increase bit we Sao overtime, of in second

a we bit Now Page several XX; more lines income about of the show statement. our

as growth before. education see completion can in led You by net revenue the of of I said undergraduate,

in profit, increases margins. and important EBITDA were there As adjusted gross

next the the these these focus of on revenue about relatively net to quarters. two to So These a drivers let's now slide move between the dig bit will deeper numbers.

revenue in was digital that in use the driven our compared digital with intense mix see, only consolidated As quarter in not discussed, mainly last by quarter. of and net growth the -- better education of also in a the digital by the substantial you education continuing say just undergrad education, can but net growth growth by a by XX% was graduate revenue by a segment growth and focused courses, there to I'd more of led this marketing courses we

further, not much whole is post-secondary courses the to do growth such the for which contribution as etcetera. extremely to diluted more overtime, a run of as This And growth now the lot. consolidated well. which has in use education more education in segments consolidated digital our the by been digital our line declining growth our see is and be positive, that law our The the continue overtime segment view with So, a offered segments concentrated Brazil. will important in the believe would our are rate revenue means kinds year continuing reduction -- mostly psychology, which we of segment growth more on and here by education consolidated net throughout in for growing closer sector relative and shall this close in we two was figures that in all segments,

X.X of the year. -- is which whole in the which is a of again, on first driver, are XX% Now in margins the our XX; smaller the EBITDA first quarter Page usually it the of in growth and points, the a the this margin adjusted pieces quarter, for -- usually month,

a increase the cost you slides. we reduction XX; had This an say, following leading to the profit. would a and -- important was things. due here service and can We Page to in in in margin which and is cost PDA have cost selling of increase the -- and expenses, in the an reduction service on in On I see -- of the of number in gross

costs. grow gain we we of naturally dilute First, our as more can further, scale; fixed

driven We was an per by reduction important personnel and in students better have costs, tutor. also this a of ratio

have as Flex differentiation also further, optimize daily well as reduction we are situation. go steadily, well. [ph] well our improving had basis to And we to this a cost steadily helped business, students. As in an -- as we we on of sent but The the important slowly Courses maximize as we the academic material

to margin the with Our the increase model books as the to books well. is students, still cost there book besides sending they besides and to Difficulty] in they like based systems; computer-based learning important reduction well also on in the have it the like and here was have, as a [Technical some app

in due revenue. to but roughly also our number to our in Regarding company, opinion, say the to our G&A of [ph], of what was net include a generated XX%, below and in such the would little ways reality is, with I a net the revenue we on X.X% out right; increase due nice ratio my see part increase G&A in travel way as line And in new peers.

our February, to intake basically to say bit I first was, big before this expenses; January selling on pandemic. I'd was to And year, chunk said, a expense So quarter. Last focus a in pandemic. of selling little the increased this as and due the

ENEM; money ENEM, the a whole to an our attention was also attract we hubs With role delay and Now to seen had spend in delay the intaking of in enrollment, which our the students. the closed in with bit sector. in hubs and pandemic, are our play more so, in process, important

going So, with the line. see forward, reduction possible as well shall here a in -- we segment

we last a Regarding first of in had than year, compared the PDA; or the saw the to what intaking second last to we very last higher the of seen of three on XX% one strong XXXX. year, improved due second less the the half was little more to year; the is aligned it bit left quarter, second in last we first right, reasons: we PDA year. grew of what but the semester first was cycle, this quarter is in quarter versus last the have intake And in

So PDA are of they increase as newcomers, concentrated these you so part newcomers; the explanation know, is most for this PDA. around of in

year. The third also, second different second the year, are hubs is harder course, our in the what provide credit; And closed. the third is, our that the last truth, is fact we it, first the of pandemic current saw of which and quarter, one. hit crisis which one line we the not cannot Last one, in from us

Our model one. is a hybrid

model hub; engaged the overtime, engagement. typical before it tutor those on relies it students the a set with that helps Our brings of mentioned a traditional keep in weekly communities enhancing to more us meeting I in

income time we net the there was here Last So, pandemic we return we members recognized income, had the I'd say, tax flow. go as and pandemic. in cash a Page for the out year, to of as return show, one-off move we of as normal reduction deferred and million assets because net of a well income, the at On last R$XX our weekly hub, this [ph]. meetings XX; with around the numbers of of Net first basically year. out

doubling. if have, So we it the see that is you cash virtually earnings,

R$XX have million grown if So would from more their out to X less. R$XX R$ this million or million last year, take you net earnings

operations. from important cash on flow growth right, on flow adjusted And operations net conversion cash in So, the basis. a growth important from here very earnings as well a cash in and

attracted and conversion very as a we and more collect for We of This have important are students, cash XXX%, them than this, XXX%. we well. from cash is flow tough us, the thank we here to increase generation, the in

We a we their us it very been for for to but about have a provide We, a people indication perspective. service lure student paying It have if focused not higher example, discount rate; easy for could have example, very flow tuition. are management. been without from we would simply for [ph] us would nice cash

the student is between that base, retention very for cash balance us. and So important tickets, flow

-- in new on already, top digital in mentioned I we in the of as Page growth launched are found few student before, hubs. that Now the regarding said and our expansion base offering XX. with now education the the new decided that this we very We've segment, the I expand -- the courses we second we still Brazil, second technical quarter On in the of Brazil half in of first success in -- to this throughout year.

Now, later avenue, a very in a this a throughout in person the market. potential growth is is that to our huge are us offer enroll with engage we XXX and very, the courses. on segmented same this the will hubs critical in client new And undergrad going around this Brazil; has typical public,

very say you be So overtime quickly Page on of able students but but life-long for we cost our the in to us are, this quite not some. this with the of discussing announced with have them in process. here players, and and be M&A. up process, a we to to large, been something I'd team with it's to last we a number advancing we minimizing trust are few And XX, yet dealing least, M&A way important funnel, to advancing Nothing through strongly we from going are client. effect the the a M&A,

a -- flow of digital every promised So, above pure-player as in Page to in in important takeaways. growth. in with XX; delivering to that the focus in leading Brazil, the cash get that important in growth ticket future well, the expectations the with IPO as margins southeast improvements hub to the all are generation for know, key ticket average base wrap well year we with sorry, and you our of on during past, Again, in growth we delivering last education up

to I like So for with would that, questions. open


Vitor comes first from Thank Sachs. with you. Instructions] [Operator question And our Tomita Goldman

is line Your open.

Vitor Tomita

our afternoon, thanks and good Hello, for taking questions.

a long-term, and the during bit Thank two thrash your have our is, second will this years be now, you more of five you competition is, our And on from in intake kind first questions if we base? or percentage student of you on you. if side; one question Flex [indiscernible] could as So dynamic revenue process? Course the elaborate say, do a believe of

Carlos Freitas

quarter competition the first a quarter. Starting in with enrollment normal delay first a everybody that say. piece had calendar. this I complete the I dynamics quarter, it's overall And in very important with question; in to think the I than then, the the guess would the ENEM, in bit stronger

the So say, March, more in I'd the this quarter, especially February, April and was the cycle -- was say it then May, normal. environment, -- in of January there in first the half and expected intaking I'd and

So competitive first mean, of fight with Flex in cycle able that say potential were the the guess a overhead potential, nice that, bit most it you question, and think Courses -- Course But the we very we to I future. the the to stronger growth. scenario stronger And can intaking deliver in we in because second was we had have I the of a slightly delay heard -- of Flex to I [ph]. for I the this

XX,XXX enter around with example, our XX,XXX Brazil Flex in XXX could that people and for are between we have for that example. We cities, Course,

on typically total focus people would population. than that XX,XXX bigger they cities in So are

-- say the Course be potential Courses but well, So, what expand just potential have consider important can growth with a for deferred this now number here with this every of would don't Flex to corner is reach growth going driver, we And Brazil. we clearly forward. as growth an that can our to has for the Flex important and I a target [ph].

Vitor Tomita

much. Perfect Thank you very


would call like the Carlos turn to Thank back I to over Instructions] Freitas. you. [Operator now

Carlos Freitas

here here two he He BTG. Well, questions. a from we Pedro -- making have was question is from

lower -- PDA intake, ideal is with is, higher First around forward? PDA looking very one, the the The what within of much I as and it's seniors. level newcomers said,

next something I our is dangerous. of stopped half level intake, tricky, don't if example, have growing very any ideal mean, very PDA second for quarter, PDA if be very, in So, we year. smaller would we of the very that this

that depend XX%; What we we here so we overtime it at it year we at declined given had it compared have as growth more nature commerce. student the and have. of the to number that seniors growth So, see last to XX%, slowly expect around our new would this is our base in was on

So, this around the -- five PDA have keep than intake term, I'd level growing we XX% an PDA will a we as that in that. student overall X% we middle to a been to say, of years going four, shall stopped lot because within base. our are would the smaller If three, have growing,

which this XX% affect of growth is one; cycle. half for the year of had closed is that very the what -- intaking this already I'd second of how for we intake But preparing within well. because it of growth second ourselves evolves a hubs a the our we that the fact year, the with of been say strong, second expectations The next intake course, the last -- in next XX% even Pedro pandemic It is is, the strong quarter have pandemic; cycle. question cycle? It in we prospect our middle semester have this Brazil the will, very for second was and so as on we depend the semester,


Freitas closing would turn like back call I now [Operator to Instructions] Carlos at remarks. this the to showing I'm not for questions time. over any

Carlos Freitas

you. Thank

Thank IR to deliver numbers. Carol at we Team, And nice again, were I questions. to your able, guess and we you disposal other So, very solve any are much. myself, whole


concludes conference This you today's participating. call. for Thank

now may disconnect. You