Vasta Platform Limited (NASDAQ: VSTA) – “Vasta” or
the “Company,” announces today its financial and operating results
for the fourth quarter of 2021 (4Q21) ended December 31, 2021.
Financial results are expressed in Brazilian Reais and are
presented in accordance with International Financial Reporting
Standards (IFRS).
HIGHLIGHTS
- The Annual
Contract Value (ACV) for the 2022 school year totaled R$1,000
million, which represents growth of 35% over the subscription
revenue for the 2021 cycle (collected from the fourth quarter of
2020 to the third quarter of 2021). Excluding the effects from the
acquisition of Plataforma de Ensino Eleva (Eleva), ACV grew 22%
compared to subscription revenue for the 2021 cycle.
- The 2022 ACV
showed a richer mix in sources of revenue, as we managed to
increase growth in our premium brands and to initiate the migration
from paper-based products (PAR) to digital subscription products
(Textbook as a Service platform). Excluding PAR, the 2022 ACV grew
32% compared to 2021 subscription revenue, while complementary
solutions continued to expand rapidly (with 47% growth
year-on-year).
- Net revenue
from subscription products increased 22% in the fourth quarter 2021
on a year-on-year basis, due to the first deliveries of the 2022
ACV and the integration of the Eleva (which contributed with R$25
million in the quarter). Excluding PAR, net revenue from
subscription products grew 34%.
- In the fourth
quarter, subscription revenue represented 34.7% of the 2022 ACV,
slightly lower than the 38.3% of the subscription revenue for the
2021 cycle that was recognized in 4Q20. We expect the 2022 ACV
recognition to be less concentrated than in the first two quarters
of the cycle than in previous years, due to differences in
seasonality of the new products (Eleva, Mackenzie and the Textbook
as a Service platform), as well as to the lower weight of PAR
(which sales occur in the first two quarters only).
- Guidance for
1Q22 is expected net revenue of R$370 million, composed of an
expected R$320 million from subscription products (32% of 2022 ACV)
and an expected R$50 million from non-subscription products.
- Adjusted EBITDA
increased 10% in 4Q21, following net revenue growth. Adjusted
EBITDA margin declined 230 percentage points, due to temporary cost
pressures, including expenses related with Eleva integration.
- In the fourth
quarter, adjusted net profit declined 17% year-on-year, to R$98
million, due to increased financial leverage and the higher level
of interest rates in Brazil.
- The B2B2C
services debuted in Vasta’s platform in 4Q21, with Plurall
MyTeacher (private classes platform) and Plurall Adapta (adaptive
learning platform) recording their first sales.
- On
December 10, 2021, Vasta concluded its first share repurchase
program, having acquired 1,000,000 shares that are currently held
in Treasury.
- On
January 17, 2022, Vasta announced the acquisition of Phidelis, a
full entrerprise resource planning (ERP) software for K-12 schools
with both academic and managerial features. With this acquisition,
Vasta takes another important step towards offering a complete
digital solution to K-12 schools.
- On April
25, 2022, Vasta will issue its first Sustainability Report,
elaborated according to GRI standards, SASB guidelines and
alignment with IBC Stakeholder Capitalism Metrics and World
Economic Forum (WEF) guidelines.
MESSAGE FROM MANAGEMENT
The fourth quarter represents a new chapter in
Vasta’s history. Vasta leaves behind perhaps the toughest period in
the Brazilian K-12 sector and the company’s history, and marks the
beginning of the collection of the 2022 ACV, which was 35% higher
than the subscription revenue collected in the 2021 cycle (4Q20 to
3Q21), resetting the company on its high growth trajectory. Despite
the surge of a third wave of Covid-19 cases with the Omicron
variant in January, the 2022 school year began within our
expectations, with K-12 schools fully reopened (with social
distance measures still in place), a scenario that enables Vasta to
fully convert the 2022 ACV into revenue.
We are proud to say that this ACV shows a richer
mix in sources of revenue, as we managed to grow faster in our
premium brands Anglo and pH and to initiate the migration from
paper-based products (PAR) to digital subscription products
(Textbook as a Service platform), in line with our strategy. The
ACV of traditional learning systems increased 31% over 2021
subscription revenue, while complementary solutions once again had
the highest growth rate among the business segments (with a 47%
increase), evidencing that Vasta has successfully captured the
strong cross-selling potential offered by its large core content
client base.
In this fourth quarter Vasta incorporated
Plataforma Eleva de Ensino (Eleva), the 6th largest learning system
in Brazil and the biggest acquisition in the company’s history.
Besides the acquisition, Vasta signed a long-term agreement with
Eleva Group for the exclusive supply of learning materials for its
K-12 schools, uniquely positioning Vasta for the upcoming
consolidation of the fragmented K-12 industry. Vasta also signed
the exclusive distribution agreement with Mackenzie Learning
System, a Christian confessional education system with strong
tradition in Brazil, reinforcing its presence in the religious
school segment. Both Eleva and Mackenzie are already fully
incorporated in Vasta’s 2023 go-to-market.
Finally, the fourth quarter marked Vasta’s
entrance in the B2B2C services: Plurall MyTeacher (private
tutoring) and Plurall Adapta (adaptive learning) recorded their
first sales. As with all products of this nature, first sales are
quite small, but we believe the long-term potential is sound, and
it could grow exponentially once the product is better known within
our Plurall community. Plurall Store, which offers a series of
complementary solutions in partnership with education companies
from all over the world, was also live in this quarter, offering a
wide range of extra complementary solutions to our partner
schools.
All these developments underscore how Plurall is
a true platform, the superapp of K-12 education in Brazil. The full
integration of its multibrand portfolio was the foundation, leading
to the capture of operating and financial benefits with a unified
go-to-market and technological backbone. As a second stage, the
platform’s relevance (more than one million students enrolled)
attracted important partnerships with third parties like Mackenzie,
Fibonacci, and all the ed-techs included in Plurall Store. The
third stage, the offering of new, disruptive products at a marginal
cost, began with our entrance into the B2B2C segment, and will
continue with the development of new products that tap other
relevant addressable markets, with expected launch in 2022.
From 2019 to 2022, Vasta delivered 20% average
growth in ACV, resulting from the combination of (i) the maturity
of the go-to-market process, (ii) the quality of the elements that
compose Vasta’s multibrand portfolio and (iii) the strength of the
company’s digital platform, Plurall, which continued to be the
undisputed leader in terms of K-12 traffic in Brazil and to support
K-12 schools in their digital transformation and adaptation to a
hybrid education solution. This achievement puts the company back
on a growth trajectory and paves the way for a sound recovery
toward profitability and cash flow generation in 2022.
2022 ACV COMPOSITION
The Annual Contract Value (ACV) for the 2022
school year totaled R$1,000 million, which represents growth of 35%
over the subscription revenue of the 2021 cycle (“2021 subscription
revenue”, collected from the fourth quarter of 2020 to the third
quarter of 2021). Complementary solutions had the highest growth
rate among the business segments (with a 47% increase compared to
2021 subscription revenue). Traditional learning systems (including
newly launched Textbook as a Service platform and excluding Eleva)
grew 31% compared to 2021 subscription revenue, driven not only by
the intake of new clients and price readjustments, but also by our
focus on converting former PAR clients into this segment.
Consistent with this strategy, PAR paper-based ACV declined 29%
compared to 2021 subscription revenue. Finally, Eleva delivered ACV
of R$98 million, contributing 13 percentage points to consolidated
2022 ACV growth.
|
|
|
|
|
|
|
|
Values
in R$ Million |
|
2022 ACV |
|
2021 SubscriptionRevenue(1) |
|
% Y/Y |
|
Traditional Learning Systems |
|
720 |
|
551 |
|
30.6% |
|
Complementary Solutions |
|
92 |
|
63 |
|
46.8% |
|
PAR
paper-based |
|
91 |
|
127 |
|
-28.7% |
|
Organic ACV |
|
902 |
|
741 |
|
21.8% |
|
Eleva |
|
98 |
|
- |
|
n.m. |
|
Total ACV |
|
1,000 |
|
741 |
|
35.0% |
|
n.m.: not meaningful. (1) Revenue from
subscription products collected from 4Q20 to 3Q21.
As in previous years, a combination of new
clients, cross-sell/up-sell and price readjustments were key
drivers for the growth in ACV. New clients represented growth in
ACV of 15% (including Mackenzie learning systems), while the sum of
cross-sell/up-sell and price readjustments contributed to 15%
growth in ACV (with the price readjustments just under the consumer
price inflation (IPCA) of the last twelve months ended in December
2021). The churn rate of 8% was slightly higher than in previous
years. While the churn rate of our premium brands remained
remarkably low, there was an upward pressure in the churn rate in
the mainstream segment and PAR clients, both likely affected by
unfavorable macroeconomic conditions. Approximately 35% of the
partner schools that left our base were delinquent as of December
31, 2021.
% Change Y/Y |
|
2022 ACV |
|
New clients |
|
15% |
|
Cross-sell/up-sell + Price readjustments |
|
15% |
|
Churn |
|
(8%) |
|
Organic ACV growth |
|
22% |
|
Eleva |
|
13% |
|
Total ACV growth |
|
35% |
|
ACV change calculated over revenue from
subscription products collected from 4Q20 to 3Q21.
OPERATING PERFORMANCE
Student Base – Subscription Models
|
|
2022(1) |
|
2021 |
|
% Y/Y |
Partner Schools - Core Content |
|
5,351 |
|
4,508 |
|
18.7% |
Partner
Schools - Complementary Solutions |
|
1,301 |
|
1,114 |
|
16.8% |
Students - Core Content |
|
1,540,391 |
|
1,335,152 |
|
15.4% |
Students - Complementary Content |
|
400,192 |
|
307,941 |
|
30.0% |
Note: Students enrolled in partner schools. (1)
Preliminary number, still subject to the regular Q2 adjustments
following the return period.
For the 2022 cycle, the number of partner
schools and the number of students enrolled at partner schools
increased 19% and 15% year-on-year, respectively, reflecting the
success of the 2022 commercial campaign, as well as the integration
of the Eleva. Since 2019, Vasta’s portfolio of partner schools grew
at an average rate of 16%, to 5,351, a solid base of long-term
partners that leaves the company well positioned to capture a
potential return of student population to pre-pandemic levels in
the coming years. Complementary solutions increased at a faster
rate in terms of students served (+30%), but it still represents
26% of the core content student population, which underscores the
high potential of this segment, particularly at Eleva and
Mackenzie, which joined Vasta’s student base in the 2022 cycle.
FINANCIAL PERFORMANCE
Net Revenue
Values in R$ '000 |
|
4Q21 |
|
4Q20 |
|
% Y/Y |
|
2021 |
|
2020 |
|
% Y/Y |
Subscription |
|
346,843 |
|
283,850 |
|
22.2% |
|
803,702 |
|
759,875 |
|
5.8% |
Subscription ex-PAR |
|
280,884 |
|
209,408 |
|
34.1% |
|
680,559 |
|
637,767 |
|
6.7% |
Traditional learning systems |
|
223,151 |
|
181,325 |
|
23.1% |
|
588,168 |
|
576,038 |
|
2.1% |
Complementary solutions |
|
57,732 |
|
28,083 |
|
105.6% |
|
92,390 |
|
61,729 |
|
49.7% |
PAR |
|
65,959 |
|
74,442 |
|
-11.4% |
|
123,143 |
|
122,108 |
|
0.8% |
Non-subscription |
|
51,416 |
|
59,712 |
|
-13.9% |
|
143,717 |
|
237,753 |
|
-39.6% |
Total
net revenue |
|
398,259 |
|
343,562 |
|
15.9% |
|
947,419 |
|
997,628 |
|
-5.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
In the fourth quarter, net revenue from
subscription products increased 22% compared to the same quarter of
2020, due to the first deliveries of the 2022 ACV and the
integration of the Eleva (which contributed with R$25 million in
the quarter). We expect the 2022 ACV recognition to be slightly
less concentrated than in the first two quarters of the cycle than
in previous years, due to differences in seasonality of the new
products (Eleva, Mackenzie and the Textbook as a Service platform),
as well as to the lower weight of PAR (which sales occur in the
first two quarters only). Net revenue from non-subscription
products decreased 14% compared to the same quarter of 2020, due to
the ongoing challenges in the dynamics of the textbook market and
to Vasta’s strategy of bringing clients to the subscription
segment, which totaled 87% of total revenue in the 4Q21.
Guidance for 1Q22 is expected net revenue of
R$370 million, composed of an expected R$320 million from
subscription products (32% of 2022 ACV) and an expected R$50
million from non-subscription products.
Adjusted EBITDA
Values in R$ '000 |
|
4Q21 |
|
4Q20 |
|
% Y/Y |
|
|
2021 |
|
|
2020 |
|
|
% Y/Y |
|
Net (loss) profit |
|
19,781 |
|
22,248 |
|
-11.1% |
|
|
(118,754 |
) |
|
(45,649 |
) |
|
160.1% |
|
(+) Income tax and social contribution |
|
26,552 |
|
9,393 |
|
182.7% |
|
|
(37,089 |
) |
|
(25,404 |
) |
|
46.0% |
|
(+) Net financial result |
|
37,162 |
|
11,606 |
|
220.2% |
|
|
84,543 |
|
|
98,426 |
|
|
-14.1% |
|
(+) Depreciation and amortization |
|
61,664 |
|
44,954 |
|
37.2% |
|
|
211,156 |
|
|
174,088 |
|
|
21.3% |
|
EBITDA |
|
145,159 |
|
88,202 |
|
64.6% |
|
|
139,856 |
|
|
201,460 |
|
|
-30.6% |
|
EBITDA Margin |
|
36.4% |
|
25.7% |
|
10.8 |
|
|
14.8% |
|
|
20.2% |
|
|
(5.4 |
) |
(+) Non-recurring expenses |
|
9,411 |
|
- |
|
0.0% |
|
|
15,735 |
|
|
- |
|
|
0.0% |
|
(+) IPO-related expenses |
|
- |
|
50,580 |
|
-100.0% |
|
|
- |
|
|
50,580 |
|
|
-100.0% |
|
(+) Share-based compensation plan |
|
6,119 |
|
7,903 |
|
-22.6% |
|
|
26,677 |
|
|
13,356 |
|
|
99.7% |
|
Adjusted EBITDA |
|
160,689 |
|
146,685 |
|
9.5% |
|
|
182,269 |
|
|
265,396 |
|
|
-31.3% |
|
Adjusted EBITDA Margin |
|
40.3% |
|
42.7% |
|
(2.3 |
) |
|
19.2% |
|
|
26.6% |
|
|
(7.4 |
) |
Note: n.m.: not meaningful
Adjusted EBITDA increased 10% in 4Q21, following
the growth in net revenue. At the margin, however, it declined 230
percentage points year-on-year, due to temporary cost pressures
(including expenses related with Eleva integration), which more
than offset the efficiency in commercial expenses and the slightly
lower provision for doubtful accounts.
Adjusted net (Loss) Profit
Values in R$ '000 |
|
4Q21 |
|
4Q20 |
|
% Y/Y |
|
2021 |
|
|
2020 |
|
|
% Y/Y |
(Loss) Profit before taxes |
|
46,333 |
|
31,642 |
|
46.4% |
|
(155,843 |
) |
|
(71,053 |
) |
|
119.3% |
(-)
Taxes paid |
|
- |
|
- |
|
0.0% |
|
- |
|
|
- |
|
|
0.0% |
(+)
Non-recurring expenses |
|
9,411 |
|
- |
|
0.0% |
|
15,735 |
|
|
- |
|
|
0.0% |
(+)
Share-based compensation plan |
|
6,119 |
|
7,903 |
|
-22.6% |
|
26,677 |
|
|
13,356 |
|
|
99.7% |
(+) IPO-related expenses |
|
- |
|
50,580 |
|
n.m. |
|
- |
|
|
50,580 |
|
|
n.m. |
(+) Amortization of intangible assets(1) |
|
35,956 |
|
28,290 |
|
27.1% |
|
122,460 |
|
|
113,022 |
|
|
8.4% |
Adjusted net (loss) profit |
|
97,819 |
|
118,415 |
|
-17.4% |
|
9,029 |
|
|
105,905 |
|
|
-91.5% |
(1) From business combinations. Note: n.m.: not meaningful
In the fourth quarter, adjusted net profit
declined 17% year-on-year, to R$98 million. Despite the growth in
operating profit registered in the quarter, the increase in net
financial expense due to our increased financial leverage (due to
the Eleva acquisition) and the higher level of interest rates.
Accounts receivable and provision for doubtful
accounts
Values in R$ '000 |
|
4Q21 |
|
|
4Q20 |
|
|
% Y/Y |
|
|
3Q21 |
|
|
% Q/Q |
|
Gross accounts receivable |
|
552,014 |
|
|
524,289 |
|
|
5.3% |
|
|
249,628 |
|
|
121.1% |
|
Provision for doubtful accounts (PDA) |
|
(46,500 |
) |
|
(32,055 |
) |
|
45.1% |
|
|
(39,103 |
) |
|
18.9% |
|
Coverage index |
|
8.4% |
|
|
6.1% |
|
|
2.3 |
|
|
15.7% |
|
|
(7.2 |
) |
Net
accounts receivable |
|
505,514 |
|
|
492,234 |
|
|
2.7% |
|
|
210,525 |
|
|
140.1% |
|
Average
days of accounts receivable(1) |
|
190 |
|
|
178 |
|
|
13 |
|
|
85 |
|
|
105 |
|
(1) Balance of net accounts receivable divided by the
last-twelve-month net revenue, multiplied by 360.
The increase in the net accounts receivable at
the end of 2021 results from the increase in the revenue collected
in the fourth quarter of 2021 on a year-over-year basis, which was
partly offset by the higher coverage of provision for doubtful
accounts (PDA). As we commented in the past earnings releases,
since the beginning of the pandemic, our approach to credit issues
faced by our school partners has been to extend payment terms
instead of granting discounts, which pressures the PDA level due to
the aging of the accounts receivable portfolio. With the
normalization of school activities in 2022, we expect a gradual
normalization in the payment cycle in the years ahead. The average
days of accounts receivable was 190 in the 4Q21, 13 days more than
in the 4Q20. The increase is due primarily to the integration of
Eleva, as it contributed with only two months of net revenue to the
last-twelve-month revenue base that composes the indicator. By
adding Eleva’s last-twelve-month revenue into the calculation, the
average days of accounts receivable was 177.
Financial leverage
Values in R$ '000 |
|
4Q21Proforma(1) |
|
4Q21 |
|
3Q21 |
|
2Q21 |
|
1Q21 |
|
Financial debt |
|
831,226 |
|
831,226 |
|
812,016 |
|
505,951 |
|
687,203 |
|
Accounts payable from business combinations |
|
532,313 |
|
532,313 |
|
73,713 |
|
65,201 |
|
62,973 |
|
Total
debt |
|
1,363,539 |
|
1,363,539 |
|
885,729 |
|
571,152 |
|
750,176 |
|
Cash
and cash equivalents |
|
309,893 |
|
309,893 |
|
377,862 |
|
335,098 |
|
415,093 |
|
Marketable securities |
|
166,349 |
|
166,349 |
|
317,178 |
|
81,090 |
|
259,581 |
|
Net
debt |
|
887,297 |
|
887,297 |
|
190,689 |
|
154,964 |
|
75,502 |
|
Net
debt/LTM adjusted EBITDA |
|
3.93 |
|
4.87 |
|
1.13 |
|
0.76 |
|
0.36 |
|
(1) LTM adjusted EBITDA includes Eleva. Eleva’s LTM adjusted
EBITDA prior to November may not reflect Vasta’s accounting
standards.
Vasta ended the 4Q21 with a net debt position of
R$887 million, mainly due to the incorporation of Eleva in late
October, leading to a net debt/LTM adjusted EBITDA of 4.87x. This
indicator considers the full capital employed into Eleva
acquisition, but only two months of contribution of adjusted
EBITDA. Considering Eleva’s last-twelve-month EBITDA, Vasta’s pro
forma adjusted EBITDA totaled R$226 million, leading to a proforma
indicator of 3.93x in December 2021.
CONFERENCE CALL INFORMATION
Vasta will discuss its fourth quarter 2021
results on March 24, 2022, via a conference call at 5:00 p.m.
Eastern Time. To access the call (ID: 6749694), please dial: +1
(833) 519-1336 or +1 (914) 800-3898. 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 Brazil powered by technology, providing end-to-end
educational and digital solutions that cater to all needs of
private schools operating in the K-12 educational segment,
ultimately benefiting all of Vasta’s stakeholders, including
students, parents, educators, administrators and private school
owners. Vasta’s mission is to help private K-12 schools to be
better and more profitable, supporting their digital
transformation. Vasta believes it is uniquely positioned to help
schools in Brazil undergo the process of digital transformation and
bring their education skill-set to the 21st century. Vasta promotes
the unified use of technology in K-12 education with enhanced data
and actionable insight for educators, increased collaboration among
support staff and improvements in production, efficiency and
quality. For more information, please visit
ir.vastaplatform.com.
CONTACT
Investor Relations ri@somoseducacao.com.br
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 Brazil, as well as any other
countries we may serve in the future and their impact on our
business; (ii) fluctuations in interest, inflation and exchange
rates in Brazil and any other countries we may serve in the future;
(iii) our ability to implement our business strategy and expand our
portfolio of products and services; (iv) our ability to adapt to
technological changes in the educational sector; (v) the
availability of government authorizations on terms and conditions
and within periods acceptable to us; (vi) our ability to continue
attracting and retaining new partner schools and students; (vii)
our ability to maintain the academic quality of our programs;
(viii) the availability of qualified personnel and the ability to
retain such personnel; (ix) changes in the financial condition of
the students enrolling in our programs in general and in the
competitive conditions in the education industry; (x) our
capitalization and level of indebtedness; (xi) the interests of our
controlling shareholder; (xii) changes in government regulations
applicable to the education industry in Brazil; (xiii) government
interventions in education industry programs, that affect the
economic or tax regime, the collection of tuition fees or the
regulatory framework applicable to educational institutions; (xiv)
cancellations of contracts within the solutions we characterize as
subscription arrangements or limitations on our ability to increase
the rates we charge for the services we characterize as
subscription arrangements; (xv) our ability to compete and conduct
our business in the future; (xvi) our ability to anticipate changes
in the business, changes in regulation or the materialization of
existing and potential new risks; (xvii) the success of operating
initiatives, including advertising and promotional efforts and new
product, service and concept development by us and our competitors;
(xviii) changes in consumer demands and preferences and
technological advances, and our ability to innovate to respond to
such changes; (xix) changes in labor, distribution and other
operating costs; our compliance with, and changes to, government
laws, regulations and tax matters that currently apply to us; (xx)
the effectiveness of our risk management policies and procedures,
including our internal control over financial reporting; (xxi)
health crises, including due to pandemics such as the COVID-19
pandemic and government measures taken in response thereto; (xxii)
other factors that may affect our financial condition, liquidity
and results of operations; and (xxiii) other risk factors discussed
under “Risk Factors.” Forward-looking statements speak only as of
the date they are made, and we do not undertake any obligation to
update them in light of new information or future developments or
to release publicly any revisions to these statements in order to
reflect later events or circumstances or to reflect the occurrence
of unanticipated events.
NON-GAAP FINANCIAL MEASURES
This press release presents our EBITDA, Adjusted
EBITDA and Adjusted Net (Loss) Profit, 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 profit (loss) 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) 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 (a) to the Consolidated Financial
Statements); (b) Bonus IPO expenses, share based payments offered
to certain employees and executives as result of IPO process and
(c) other non-recurring expenses composed substantially by
restructuring provisions. 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
net (loss) profit from the period 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 M&A, that included goodwill and other
assets and (b) taxes paid composed by cash effect over Income tax
and social contribution expenses.
We understand that, although Adjusted net (loss)
profit, EBITDA, and Adjusted EBITDA 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, and Adjusted EBITDA 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 |
|
December 31, 2021 |
|
|
December 31, 2020 |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash
and cash equivalents |
|
309,893 |
|
|
311,156 |
|
Marketable securities |
|
166,349 |
|
|
491,102 |
|
Trade
receivables |
|
505,514 |
|
|
492,234 |
|
Inventories |
|
242,363 |
|
|
249,632 |
|
Taxes
recoverable |
|
24,564 |
|
|
18,871 |
|
Income tax and social contribution recoverable |
|
8,771 |
|
|
7,594 |
|
Prepayments |
|
40,069 |
|
|
27,461 |
|
Other
receivables |
|
2,105 |
|
|
124 |
|
Related parties – other receivables |
|
501 |
|
|
2,070 |
|
Total current assets |
|
1,300,129 |
|
|
1,600,244 |
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Judicial deposits and escrow accounts |
|
178,824 |
|
|
172,748 |
|
Deferred income tax and social contribution |
|
130,405 |
|
|
88,546 |
|
Property, plant and equipment |
|
185,682 |
|
|
192,006 |
|
Intangible assets and goodwill |
|
5,538,367 |
|
|
4,924,726 |
|
Total non-current assets |
|
6,033,278 |
|
|
5,378,026 |
|
|
|
|
|
|
|
|
Total Assets |
|
7,333,407 |
|
|
6,978,270 |
|
Consolidated Statements of Financial
Position (continued)
Liabilities |
|
December 31, 2021 |
|
|
December 31, 2020 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Bonds
and financing |
|
281,491 |
|
|
502,882 |
|
Lease
liabilities |
|
26,636 |
|
|
18,263 |
|
Suppliers |
|
264,787 |
|
|
279,454 |
|
Income tax and social contribution payable |
|
16,666 |
|
|
1,761 |
|
Salaries and social contributions |
|
62,829 |
|
|
69,123 |
|
Contract liabilities and deferred income |
|
46,037 |
|
|
47,169 |
|
Accounts payable for business combination |
|
20,502 |
|
|
17,132 |
|
Other
liabilities |
|
20,033 |
|
|
4,285 |
|
Other
liabilities - related parties |
|
39,271 |
|
|
135,307 |
|
Loans
from related parties |
|
- |
|
|
20,884 |
|
Total current liabilities |
|
778,252 |
|
|
1,096,260 |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Bonds
and financing |
|
549,735 |
|
|
290,459 |
|
Lease
liabilities |
|
133,906 |
|
|
154,840 |
|
Accounts payable for business combination |
|
511,811 |
|
|
30,923 |
|
Provision for tax, civil and labor losses |
|
646,850 |
|
|
613,933 |
|
Contract liabilities and deferred income |
|
128 |
|
|
6,538 |
|
Other
liabilities |
|
47,516 |
|
|
- |
|
Total non-current liabilities |
|
1,889,946 |
|
|
1,096,693 |
|
|
|
|
|
|
Shareholder’s Equity |
|
|
|
|
Share
capital |
|
4,820,815 |
|
|
4,820,815 |
|
Capital reserve |
|
61,488 |
|
|
38,962 |
|
Treasury shares |
|
(23,880 |
) |
|
- |
|
Accumulated losses |
|
(193,214 |
) |
|
(74,460 |
) |
Total Shareholder's Equity |
|
4,665,209 |
|
|
4,785,317 |
|
|
|
|
|
|
Total Liabilities and Shareholder's Equity |
|
7,333,407 |
|
|
6,978,270 |
|
|
|
|
|
|
|
|
Consolidated Income
Statement
|
|
Jan 01, to Dec 31, 2021 |
|
Jan 01, to Dec 31, 2020 |
|
|
|
|
|
Net revenue from sales and services |
|
947,419 |
|
|
997,628 |
|
Sales |
|
914,266 |
|
|
967,374 |
|
Services |
|
33,153 |
|
|
30,254 |
|
|
|
|
|
|
Cost
of goods sold and services |
|
(396,829 |
) |
|
(378,003 |
) |
|
|
|
|
|
Gross profit |
|
550,590 |
|
|
619,625 |
|
|
|
|
|
|
|
|
Operating income (expenses) |
|
|
|
|
General and administrative expenses |
|
(430,279 |
) |
|
(406,352 |
) |
Commercial expenses |
|
(164,439 |
) |
|
(165,169 |
) |
Other
operating income (expenses) |
|
5,554 |
|
|
4,283 |
|
Impairment losses on trade receivables |
|
(32,726 |
) |
|
(25,015 |
) |
|
|
|
|
|
(Loss) Profit before finance result and taxes |
|
(71,300 |
) |
|
27,372 |
|
|
|
|
|
|
Finance income |
|
35,640 |
|
|
20,984 |
|
Finance costs |
|
(120,183 |
) |
|
(119,409 |
) |
Finance result |
|
(84,543 |
) |
|
(98,425 |
) |
|
|
|
|
|
(Loss) Before income tax and social
contribution |
|
(155,843 |
) |
|
(71,053 |
) |
|
|
|
|
|
Income tax and social contribution |
|
37,089 |
|
|
25,404 |
|
|
|
|
|
|
(Loss) for the period |
|
(118,754 |
) |
|
(45,649 |
) |
|
|
|
|
|
Total comprehensive (loss) for the period |
|
(118,754 |
) |
|
(45,649 |
) |
(Loss) per share |
|
|
|
|
Basic |
|
(1.43 |
) |
|
(0.55 |
) |
Diluted |
|
(1.42 |
) |
|
(0.55 |
) |
|
|
|
|
|
|
|
Consolidated Statement of Cash
Flows
|
|
For the twelve months ended December 31 |
|
|
2021 |
|
2020 |
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
Loss before income tax and social contribution |
|
(155,843 |
) |
|
(71,053 |
) |
Adjustments for: |
|
|
|
|
Depreciation and amortization |
|
211,156 |
|
|
174,088 |
|
Impairment losses on trade receivables |
|
32,726 |
|
|
25,015 |
|
Provision for tax, civil and labor losses |
|
(1,986 |
) |
|
(2,092 |
) |
Interest on provision for tax, civil and labor losses |
|
34,300 |
|
|
13,297 |
|
Provision for obsolete inventories |
|
22,117 |
|
|
4,057 |
|
Interest on bonds and financing |
|
43,549 |
|
|
52,935 |
|
Refund liability and right to returned goods |
|
- |
|
|
2,922 |
|
Imputed interest on suppliers |
|
(1,159 |
) |
|
1,454 |
|
Interest on accounts payable for business combination |
|
157 |
|
|
2,945 |
|
Share-based payment expense |
|
8,158 |
|
|
1,568 |
|
Interest on lease liabilities |
|
22,526 |
|
|
39,648 |
|
Interest on marketable securities incurred and not withdrawed |
|
14,984 |
|
|
15,091 |
|
Disposals of right of use assets and lease liabilities |
|
(26,719 |
) |
|
(16,907 |
) |
Residual value of disposals of property and equipment and
intangible assets |
|
(195 |
) |
|
(869 |
) |
|
|
124 |
|
|
415 |
|
Changes in |
|
|
|
|
Trade
receivables |
|
(25,408 |
) |
|
(123,412 |
) |
Inventories |
|
(14,038 |
) |
|
(20,812 |
) |
Prepayments |
|
(12,511 |
) |
|
(4,060 |
) |
Taxes
recoverable |
|
(4,914 |
) |
|
24,573 |
|
Judicial deposits and escrow accounts |
|
(6,076 |
) |
|
184 |
|
Other
receivables |
|
(1,789 |
) |
|
4,516 |
|
Suppliers |
|
(16,124 |
) |
|
42,620 |
|
Salaries and social charges |
|
(9,890 |
) |
|
(6,693 |
) |
Tax
payable/Income taxes and social contribution |
|
6,878 |
|
|
13,629 |
|
Contract liabilities and deferred income |
|
(2,659 |
) |
|
(2,163 |
) |
Other
receivables and liabilities from related parties |
|
(94,467 |
) |
|
117,299 |
|
Other
liabilities |
|
(1,525 |
) |
|
3,391 |
|
Cash from operating activities |
|
21,372 |
|
|
291,586 |
|
|
|
|
|
|
Income tax and social contribution paid |
|
(1,167 |
) |
|
(5,234 |
) |
Interest lease liabilities paid |
|
(14,692 |
) |
|
(14,675 |
) |
Payment of interest on bonds and financing |
|
(24,922 |
) |
|
(49,404 |
) |
Payment of provision for tax, civil and labor losses |
|
(628 |
) |
|
(6,812 |
) |
Net cash from operating activities |
|
(20,037 |
) |
|
215,461 |
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
Acquisition of property and equipment |
|
(20,910 |
) |
|
(1,642 |
) |
Additions to intangible assets |
|
(55,878 |
) |
|
(42,793 |
) |
Acquisition of subsidiaries net of cash acquired and payments of
business combinations |
|
(186,218 |
) |
|
(23,147 |
) |
Realization of investment in marketable securities |
|
351,472 |
|
|
(474,195 |
) |
Net cash applied in investing activities |
|
88,466 |
|
|
(541,777 |
) |
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
Capital contribution |
|
- |
|
|
2,426 |
|
Suppliers - related parties |
|
(1,450 |
) |
|
(207,174 |
) |
Loans
from related parties |
|
- |
|
|
65,600 |
|
Payments of loans from related parties |
|
(20,884 |
) |
|
(76,830 |
) |
Lease
liabilities paid |
|
(21,998 |
) |
|
(12,835 |
) |
Parent Company's net investment |
|
- |
|
|
(6,335 |
) |
Issuance of common shares in initial public offering |
|
- |
|
|
1,836,317 |
|
Transaction costs in initial public offering |
|
- |
|
|
(154,849 |
) |
Acquisition of treasury shares |
|
(23,880 |
) |
|
- |
|
Payments of bonds and financing |
|
(477,741 |
) |
|
(852,135 |
) |
Issuance of public bonds net off issuance costs |
|
497,000 |
|
|
- |
|
Payments of accounts payable for business combination |
|
(20,739 |
) |
|
- |
|
Net cash applied in financing activities |
|
(69,692 |
) |
|
594,185 |
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
|
(1,263 |
) |
|
267,869 |
|
Cash
and cash equivalents at beginning of period |
|
311,156 |
|
|
43,287 |
|
Cash
and cash equivalents at end of period |
|
309,893 |
|
|
311,156 |
|
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