Cogna Educação S.A. (COGN3) Earnings Call Transcript & Summary

Welcome, everyone, to the first conference of the first quarter 2025 of Cogna Educação. [Operator Instructions] We are recording this meeting that will be available at our website, www.cogn.br. where you can see the material for our results disclosure also available.[Operator Instructions] Before going on, we would like to clear that event of declarations that are made during this teleconference by people about the business perspectives and financial projections are the premises of the administration of the company, just like the information available to Cogna now. Future considerations are not a guarantee of performance and it involves risks and uncertainties in the premises and future events, therefore, depending on the circumstances that may or not happen. Investors must understand the general conditions and other operational factors that can affect the future results of Cogna and can lead to results different materially from the ones expected in future conditions. I'd like now to pass on the floor to Mr. Roberto Valerio, Cogna's CEO, to start his presentation. Please, Mr. Valerio, you may go on.

Good morning, everyone. I could see that her voice was not very nice. She was having problems in the transmission. I will go on. If you believe there will be a problem, if you can't hear well, we may stop and check for solution. But anyways, good morning, everyone. Thank you for participating at the teleconference to discuss the first quarter of '25 of Cogna Educação. We have here in this call, Frederico Villa, our Financial Vice President; and Guilherme Melega, the Director of Vasta. As usual, this call will take about 1 hour, about 40 minutes of presentation, followed by 20 minutes for the Q&A. I'd like to start my presentation in Slide 3 with the message of the management because we are very happy with a good quarter with great results. This is the 16th followed quarter with EBITDA growing and increase in cash generation, and it's a good quarter. The revenue reached BRL 1.6 billion, 5.8% growth compared to '24. This revenue was pushed by Croton that had a strong growth, 18.8% compared to the semesters. And I'd like to start by emphasizing that specific decreases in the revenue of Vasta and Saber are not a point of concern. We'll discuss that during this call. The core of the business is quite good. It's like a temporal mismatch in the revenue. The growth in the revenue obviously allowed us to grow in double digit in recurring EBITDA, 12% compared to the quarters. It was not an absolute growth, but also an expansion of margin in 2% here with an important contribution of cotton that despite having lower revenue, had a good result in EBITDA that was quite positive. So as I said, it was the 16th quarter with growth in EBITDA, good results. But we understand that the best and new information that we understand that the best ones in the quarter are the ones following the presentation that are basically the net profit and operational cash after CapEx and free cash, as we've said in the fourth quarter '24. We have it quite clear that the fourth quarter was the beginning of a new scenario to the company that is a scenario of continuous net profit in all quarters, considering the efficiency of the company and the size of our EBITDA as well as the reduction of financial expenses that have leveraged our net profit. As a consequence, our profit was BRL 55 million with a growth of more than BRL 100 million, reverting the losses in the first quarter of '24 that would be BRL 8.5 million. Post-CapEx cash generation, it's very important, 19%, reaching BRL 250 million. The same indicator in the first quarter was BRL 210 million. So we had 19% growth. I think this is a very good information in the generation of free cash, reaching BRL 150 million in this sense, which is 16x greater than the first quarter of '24. The GCL of '24 in the first quarter was BRL 9.5 million, and now we reached BRL 150 million, so in fact, it's a new moment for the company where the net profit, GCO and GCL are the good positive indicators showing important growth. Obviously, with these results, especially in the cash, the net debt decreased this quarter. We reduced BRL 66 million. And please remember, it could be a little more if we haven't had BRL 60 million in share buybacks. That is one of the ways that we see in our strategy to return capital to our shareholders. So we had BRL 66 million in the reduction of net debt in the quarter, even with the BRL 6 million of buybacks in the first quarter. So just to reinforce, we've had also BRL 25 million in buybacks in the fourth quarter. So we account for BRL 85 million in buybacks. Just emphasizing here the net debt. If we compare the net debt in the last 12 months, we reduced more than BRL 460 million of net debt with the results of the company. With that, the reduction in the leverage had to keep going. And we kept reducing the leverage in the first quarter, we reached 1.3x the EBITDA compared to 1.8x in the first quarter '24. Just remember that we make some payments now in May of BRL 120 million of dividends that was approved in the Annual General Meeting. So this is another way of returning money to the shareholders besides the buybacks. We also paid the dividend and look ahead in this perspective of generating net profits all trimester, and we'll probably keep distributing dividends considering 2026 with the results of '25. Now going to the next slide to talk a little bit about Kroton. We obviously keep the standard of the presentation. So you can see the first graph of intake with 1.5% growth in the volume of intake. But remember that we report that with ProUni students that are important, they generate a cost. Obviously, they are part of our database of students, but they do not generate revenue. As you know, and we've been talking about it for almost 5 years, that important to us is the amount of revenue in the intake. Therefore, what is important to us is the amount of students that grow paying. So here, we had a proxy and the volume of intake grew 6.5%, excluding Pro Uni and considering only the ones generating revenue, the intake was quite positive in the presidential, almost 10% growth. This is our greatest growth since the beginning of the pandemic in this segment. We are quite happy with this result. KrotonMed grew also 12.5%, more concentrated in decent education, and we have medicine that are presentation in online because we have medicine in all institutions, but they are not only medicine courses. And the decent online courses grew 6.5% in volume. I'd like to emphasize they take revenue that is the most important to us, P versus key. Obviously, it's important, but the most important is having a constant growth in revenue, and it was 23%. We are quite satisfied with that. It's very important because it drives the revenue over the year. The growth was above 6.5% in volume because the mix was more concentrated in high presentially courses. That is the presential courses with and the ones that have presential classes in the online courses and the base of students keep growing. So it's the fifth quarter of growth in the student base, 8.3%, with growth in all segments, emphasizing KrotonMed that grew 9% and online 9%. And in the last quarter, it grew a little, now 3.5%. From the point of view of average ticket, as I mentioned, the average ticket of KrotonMed dropped 10% due to the mix, the presential on-site 2%. And remember, our on-site strategy is high LPV courses like love veterinary and odontology that are the most expensive ones. And online also grew. So this growth is related not only to more intake of courses, but also the ability of repass the inflation to the old students. This is something we do currently. In the next slide, we'll talk about the financial performance. As I said, the net revenue grew 18.8%. Obviously, it is pushed by the growth in the intake, as I mentioned before, 23%. The reenrollment base grew 10%. So we have 8.3% of growth in volume, as I mentioned in the previous slide, plus the increase in the ticket. as our reenrollment rates are better, it is helping a lot in generating revenue. And I think it's also important to emphasize, as we always do, to make it clear that this is the second quarter where the movement of discounting renegotiations that until the third quarter of '24 were reducing the revenue. Now they are recorded in the PCLD. So when we compare both years, we have to take into consideration that these discounts are now in the PCLD and not in the revenue. As I always say, an increase in revenue when we have a structure asset-light as we do with more fixed than variable courses, there is no other way than improving the gross profit and the margin. So we had an expansion here of 1.5%, which is a reflect of the operational leverage of the online courses with more fixed costs. But in the on-site with a greater volume of intake of students, we could have a better amount of students per class, which generates a big primary margin in KrotonMed, as it is a business that grows in Kroton with great margins, it contributes to this primary margin for it to grow. In the next slide, we'll talk a little about the cost and expenses. It was quite positive in terms of gaining productivity. I would call your attention to the first point that is what I mentioned before, that is the reduction of direct cost of 1.5%. And we could also have efficient reduction in operational expenses, 1.6%. And this is the result of improvement in processes, systems and team vision reduction expenses and personnel because we are improving everything with AI to gain on efficiency. Marketing and sales expenses, we were able to save a little on these expenses. We can explore that a little more in the Q&A. On January and February, we had very good months from the point of view of growth. October, November, December were not good months to grow the intake, but January and February were very good, and we could see we could grow volume and revenue. We grew 26% in the intake without investing that much in marketing. So we reduced a little of the marketing expenses in the first quarter. And corporate expenses, despite we are gaining 19.9%. This is transient. In the second quarter, we'll have a little more expenses and corporate expenses. So it is a transient gain. And the last item that is PCLD overhaul, we have 3% compared to the same quarter last year, but due to the reclassification of the discounts that were now reducing revenues and now impacting PCLD. But in terms of dropout in PCLD, we are stable. There is no significant move in the PCLD. Well, with that, we gained a good positive margin of 4.7%. We grew 35% in the EBITDA compared to the quarters in Kroton. With that, I finish Kroton and pass on to Guilherme Melega to comment Vasta.

Thank you, Roberto. I'll go on to Slide 9, mentioning the net revenue of Vasta. So in this first quarter, we had a seasonal effect of the B2G that last year, we had a concentration of acknowledgment of revenue of BRL 69 million to date, this year's BRL 5 million, but BRL 5 million of new contracts and the contracts that comprise this BRL 69 million will have another seasonality over the year. I emphasize here ACV in the quarter with a growth of 12%, reaching BRL 400 million. When we analyze the cycle that is always the best way of analyzing our business, we reached BRL 1.129 billion in revenue, 11% growth. The highlight is ACV with acknowledgment of 17%. When we dismount the 17%, 15% is what we call the core disciplines, core content and 24% growth in complementary solutions. So we keep following the line of our strategy of having the B2B strong and growing with the complementary CT systems. Now going to the next slide, Slide 10. we can see our expenses in the quarter in percentage terms due to the seasonality that I mentioned before, we had less revenue. The percentages are the one that makes less sense to analyze the business. So I'll emphasize some points here, and I emphasize the operational expenses, corporate expenses that is I'm sorry, operating expenses with a reduction of BRL 9 million compared to the same quarter last year. So it is the result of a lot of efficiency that we are searching in our company. Regarding commercial and marketing expenses, we see an increment in those expenses, and it's something specific that we'll have in the first quarter and part of the second quarter. But when analyzed by year, we expect to have the same percentage compared to last year's revenue that is about 17%. So it doesn't represent a relative increase in the year in terms of marketing and sales expenses. Now going to Slide 11, our EBITDA. I'll focus in the EBITDA of the cycle because we have an increment of 5.8%. So Vasta reached BRL 417 million in the cycle. It is also a significant increment here. And when we normalize our margins with the seasonality that will come in the next quarters, we also expect to keep a similar margin to last year, a little above 30%. When we analyze the beginning of the year, the first quarter, we are quite thrilled here with the good conversion of ACV in '25. After batch and after sale, we have a good idea of how the B2B pipeline is, so we can trust this first moment in '26. And B2G, that is another important growth avenue with less predictability, but very important. We reach a moment of a lot of maturity in the pipeline. We hope in the next month as we can acknowledge new contracts in quite a significant way. So the perspectives here to our year in '25 are quite good in the main business fronts. Now I pass on the floor to Fred to go on with the presentation.

Thank you, Melega. Good morning, everyone. I'll start the presentation talking about Saber that is in Slide 13. So please remember, Saber contemplates the TLT business, governmental business, Red Balloon and book. So note this first graph on the left, the revenue. We had in the first quarter a reduction in the revenue of about 31%. The main effects that happened were, first of all, the reduction of revenue in NRD which is not a point of concern. It's just a mismatch in the calendar. It's a time mismatch. So there was no big effect in the comparison of the first and we won't have this big effect in the second quarter. However, it is displaced to the third and fourth quarters. Two, just to remember, we sold our headquarters operations. In the first quarter last year, we had a revenue of BRL 21 million. And due to the sale, we have 0. So this is the second effect. When we talk about red balloon and English it is neutral comparing both years but the positive news here is that one of the 2 main growth pathways in Saber that are business with the government in the product Acerta Brasil and [indiscernible], we had a significant growth. Comparing the quarters, we could reach a revenue of BRL 86.6 million with a growth of 46.5%. If you look to the right in EBITDA, despite having a decrease in the revenue we had a neutral growth in the EBITDA, a growth of 2% with a gain in the margin of about 36.5%. So our business in Saber is a business that we had the first quarter according to expectations talking about P&L. And in the first quarter, it was quite positive in terms of business with the government that we call here the products of Acerta Brasil with this growth of about 46%. With that, I start the presentation of the last part talking about Cogna, Roberto and Guilherme mentioned the business and Kroton and Vasta. And I just mentioned Saber. So Cogna is the 3 big business altogether. And the first quarter was quite positive. The net revenue reached BRL 1.628 billion with a growth of 5.8%. And the consequence was explained before, the main effect of growth was the growth of 18.8% in the Kroton revenue and we grew 5.8% despite the last 2 business Saber almost decreased in the revenue. Now going to the right the recurring EBITDA, we had a recurring EBITDA of 12.2% growth, reaching BRL 556 million with more than 2% in the margin growth. And the big effect here as in the revenue was the effect in the growth of EBITDA in Kroton reaching 35%. Now talking about the operational cash generation, the company is quite focused in generating operational cash. But more than that until last year, the middle of last year, we had a shift. We are now analyzing the free cash generation. And please remember that the operational cash generation is after CapEx and the free one is post CapEx and debt service. With that, the operational cash generation reached BRL 250 million with a growth of 19%. Last year, we had BRL 210 million with a conversion in the generation of cash of 45%. And this growth in the generation of operational cash came from the 3 BUs. So we had growth in Kroton, Vasta and Saber. Now analyzing the free cash generation as I mentioned before, that is the operational after caps and debt services, we had a growth compared to the first quarter of '24 of 16x and our free cash generation was BRL 150 million. Now going to Slide 17, net profit. In the fourth quarter of '24, we launched this new cycle of the company, a cycle of generation of net profit and we had the adjusted one in the first quarter last year BRL 50 million. This year, BRL 155 million with a growth of 206%. Now analyzing the net profit adjusted, that is the net profit with the amortization. So analyzing the generation of net profit and our net margin in the company, we had a net profit of BRL 95 million with a growth of more than 1,000% compared year-by-year. And looking to the future, we can see that we should have this parity in the next quarters. Now going to the next slide that will talk about leverage and indebtedness of the company. By the end of the first quarter of '25, our leverage reached the level of 1.28x as we mentioned before, the leverage to us we are always aware of this index but more than leverage, our main indicator is the net debt and our net debt had a reduction in the first quarter of '24 compared to the first quarter of '25. We had a reduction of 0.51x the EBITDA or about BRL 463 million a reduction of 14%. And comparing the fourth quarter '24 and the first one in '25, we had a reduction of leverage of 0.07x or about BRL 66 million. During this quarter, the company didn't have any new captures or amortizations. And in the first quarter of '25, our average cost of the debt is CDI 0.126 with a duration of 27 months. Now the next slide, that is the position of cash and debtedness, we have BRL 1 million, and we analyzed it in March 21, '25 with BRL 1.422 million, the net debt BRL 2.814 billion, considering that our net debt here considers our swaps of about BRL 6 million and the payables. And the company has an agenda of amortization of loans, that is the graph below with an amortization of about BRL 500 million in August, the second quarter of '25 and in '26, about BRL 500 million of amortization as well. The company keeps working in one more round of negotiation for partners. So, you can see in the next quarters, one more round of that with the goal of reducing the cost of debt and long in the time of debt. We have to mention that the reduction of net debt, as I mentioned, was BRL 66 million, but we had in the first quarter, considering our program of buyback, we bought back BRL 60 million. Our understanding is the best allocation of capital that we might have. But if we hadn't done that this buyback, our net debt would reduce even more close to BRL 130 million, BRL 140 million. The company is still quite thrilled with the cycle of profit and cash generation, operational and free ones and leverage of the company and analyzing the best way to give the capital back to the shareholders. With that, I finish my presentation, and I pass the floor to Roberto Valerio.

Thank you, Fred. Now going to Slide 20. As Fred said, we are starting '25, quite thrilled with the results of the first quarter. the summer cycle in Kroton was quite positive, bringing a strong conviction that the year will be good in terms of revenue with aspects of better groups even on-site or online or hybrid, which helps us to have more intakes for the second semester. So, it's a positive perspective in Kroton and the same way in Vasta and Saber. We take into account what Fred and Melega mentioned regarding the seasonality of the revenues, as they mentioned, with the supply of Vasta that came with a different seasonality to clients in B2G, but quite strong in subscription that is the core business. It will stabilize over the semester. And Saber also has all the P&L agenda had with good perspectives of selling solutions to state and municipalities. So, we are quite thrilled about this growth in the revenue, considering that our structure is asset-light and the costs are basically fixed. So, it's a positive perspective also to EBITDA. Talking about experience, we are constantly evolving in AVA that is the virtual environment of Kroton, which allows the students to have greater and greater engagement. I mean, good engagement, good experience and the good quality of credit of the students are making good rates of re-enrollment, and we are looking and expecting that for the future. We still have a lot to do, especially in the virtual learning environment with the growth of the PTC program that is the transformation program of our systems. So not only new revenues with intakes, but also re-enrollments, we are quite positive. I would just like to emphasize one more award that we gained from the point of view of client experience, that was the award of client FA in the gold category, obviously, when other people talk about us, we like a lot because it's external acknowledgment. In terms of efficiency, we have positive perspectives in gaining efficiency in the future based, obviously, in the gain of scale. Whenever our school base growth and our student base growth, we have gains in scale that are quite important. And even the process improvement that the company is focusing more and more in the culture of processes and optimization of systems and automization, it brings perspectives over time. And obviously, it's considered with many, many quarters, but we have opportunities ahead of us, but I would like to emphasize here efficiency. So, both the operational that we will keep delivering efficiency, and we'll see that in the post-CapEx GCO. And the liability that Fred mentioned will keep happening with all the actions. We see a good and interesting search for that. We are quite thrilled about the context and proposals that we are receiving in terms of credits by the banks, seeing our ability to generate cash and offering new debt lines. Therefore, with the perspective of reducing the financial debt and enlarging the payment deadline that is very important. So, it's operational and financial efficiency that will affect our free cash generation. In terms of people and culture, we are a company of people with 24,000 employees. We have a lot of programs related to talent and culture of the company. We recently launched Avanci program, that is the program to manage the performance so that we can assess the performance of the teams in a more precise way. Besides the feedback campaign, and I think we understand that a culture of feedback, obviously, has to be clear and assertive to make the company faster, and we are doing that with our team. besides the leadership training because in the end, they are the ones to dictate the culture of the company, and we want a strong company with the ability to grow. So we are investing a lot of time on that because we understand in the long term, it's worth it. From the point of view of innovation, we keep investing time, energy and talent in some pillars among which the corporate building like Voomp and Start Anglo and other initiatives besides open innovation that is the relation with the many start-ups that are there, always creating something, and we are quite focused on that. And to finish the items of AI, Cogna Day, we had 2 presentations of the AI tool that we use in graduation that is or in the basic education that is plu from Pluro, and we keep evolving every quarter, every PA in the development of apps. We are progressing even more with these tools, and we are quite thrilled with this road map of, in fact, having customized education in scale, not only in graduation and in basic education, but taking disability to other courses like free courses, technical courses and even red balloon that we can use disability in other products that we have here. And from the point of view of ESG, we kept the ECG and we also have one more acknowledgment as industry mover in the Sustainability Yearbook 2025, and we started just like every year, keeping the award for Educador Nota 10 that is the Oscar of Educators here. So we had a significant increase in the amount of people enrolled, and it's quite thrilling because this is an opportunity to show those who impact education in Brazil. With that, we finish the presentation, and we start the Q&A session.

So we'll start now the Q&A session. [Operator Instructions] Let's start with our first question. Lucca Marquezini from Itaú.

Well, we have 2 questions here. First, regarding PMT, it was mentioned that there was a positive impact in revenue due to more participation in the PMT program. So if you could develop the reason for more participation in that? And do you think it's a trend that should last over the year and also impact the intake cycle for the second semester? And regarding KrotonMed, you mentioned that only in medicine, we would have an average ticket growing 11% that is much greater than the IPCA. So do you see any resistance in repassing the tickets? And is there any change in competition or maybe a change in the pricing in the places where you work, please?

Luca, thank you for your question. I'll start asking about PMT. Fred, if you want to complement, please. Well, I mentioned, Luca, that the months of October, November and December were strict months from the point of view of growth of volume and intake, but January and February were very good, especially February and March. So why do we have more PMT? Remember that PMT is offered as of the second month. So if they enroll in December and January, they are paying the first installment. That's okay, no PMT. Starting February, they start using the benefit of PMT because they take the first month that theoretically is over and they should pay and they pay that along the course. So the logic explanation is quite simple as we had a greater concentration than what we have historically in February and March. And I mentioned that regarding the calendar of holidays, Carnival, the beginning of the school year because the Carnival was late, so schools start later, so they know they take their time for the enrollment. So when we look at the mix of enrollment, it's much more concentrated in February, March and April than historically. And these are the months that we offer the PMT. So it's not a trend because I believe it's much more related to the calendar of the beginning of the school year and Carnival and so on. So as Carnival goes back to the beginning of February, like the other years, the distribution would have a greater concentration in December and January. So it's no specific action that we did. It's due to seasonality. Fred, do you want to say something?

No, Roberto, I think it's only important to consider that this PMT effect happened in the first quarter. We don't have this effect in the second quarter. So analyzing it, we see a growth in the revenue. And remember that in Kroton, it grew 18.8% with the PMT effect. In the second quarter, we won't have that. So the growth won't be in 18%, but the revenue will keep growing without surpassing any guidance, it would be in 2 digits. So the best way to analyze it is in the semester. That's what you have to keep clear.

And your second question, Lucca, about the average ticket of KrotonMed, we have 2 informations here. KrotonMed, just remember, if you don't know all these details, Lucca knows, but if you are hearing us and you don't know, to us, krotonMed is a specific company with a specific corporate number, all the teaching institutions with medicine schools have these corporate numbers. It's not that it has only medicine. It has medicine and all the other courses like UNIC, for example, in Cuiaba. They have medicine and also law and offers of distant courses if students want to study online. So if you analyze KrotonMed as a whole, we have 76% of medicine, but there is a part that is not medicine and is growing a lot. Especially the courses that are online with the difference in the average ticket in the medicine courses is very big as they have more students online, they reduce the average ticket in medicine, despite only medicine has entry of new colleges, the new ones when we launched the new ones like the case of Ponta Pora and Sao Luis, the average tickets are a little lower, like BRL 8,500, that is a little lower than the average of UNIC or Uniderp that has BRL 11,000. But to give you the final average, even with new courses, the average ticket of medicine is still growing. So just to reply to you, only medicine despite having new courses, it is still growing. It keeps growing. But KrotonMed as a whole is impacted by the mix of online education and our perspective regarding the average ticket as the new courses start creating their reputation in the city as we did before with [indiscernible] we still increase the average ticket. So the perspective is that the schools like Ponta Pora and Sao Luis every semester, every year increase the average ticket for entry. I think that's it. Lucca, I hope I could answer.

The next question is from Lucas Nagano from Morgan Stanley.

We have 3 questions that are more specific. The first one is about the intake of Pro UNI. As I understood, it was a choice to optimize the work, and it won't impact the program, nor the taxes paid. And the second question is about the marketing that started having a reduction by the end of the cycle. But considering what you said that you have to consider the percentage of revenue for '25, do you believe there will be an increase for that or now a reduction? And the third question is about the corporates. If you can quantify the displacement that happens.

Lucas, so let's separate the answers here. So Fred, if you want to complement?

Well, Pro UNI, we obviously offer Pro UNI in all courses in all cycles of intake. Pro UNI doesn't bring revenue but brings costs. So every semester, we follow the amount of students we have. Obviously, we offer more than we need not to have a risk of being below the minimum threshold of students. But when we have more students than needed, we take some strength from the process. So remember that despite the student not paying, you have a funnel of conversion. We have the call center to convert the students. We can collect all the documentation when we need because it's closer to the limit. We put more strengthen in the commercial teams in the poll so that they take those students from Pro UNI. And as we had a lot by the last cycles, we had less effort. There is no risk of not complying to the threshold of Pro UNI. This is a matter of putting or not energy on it due to the amount of students that we have. And remember that Pro UNI student doesn't have revenue, but cost. And if we can minimize them, we do. And I reinforce that to us, the most important in the intake is the amount of students and the average ticket generating revenue. We have no problem in having a lower volume of students, but we don't want to lose the growth of revenue comparing both periods. First question. Do you want to complement?

Yes, I would like to say that considering a little bit of legislation and the taxation, we comply with the legislation in force. We cannot do anything different than that. Yes. Okay. You asked about the taxation. So regarding marketing, in the fourth quarter call, we said we would search for efficiency gain, reducing tax with a series of strategies to reduce tax. And I said that as a perspective here in the budget, we were searching for keeping the marketing expenses with the percentage of net revenue. After the first quarter, and specifically see that in the first quarter, we have a lot of intake and marketing. We understand that we can search for something with some efficiency, a little below what we had in the marketing expenses with the percentage of the net revenue compared to last year. It's important to say, Lucas, that, okay, the first cycle of intake is over, but we are still on May. We have a lot to happen. But I think this perspective improved compared to the fourth quarter that we were searching for the stable percentage, and we can see that potentially we can gain a little margin Kroton differently from what Melega mentioned in Somos.

Yes, because Roberto, we are having a concentration of commercial and marketing expenses coming from the launch of GTM. So we hope to have a high concentration in this first quarter and also in the second quarter with a similar level of expenses, similar to the first one, and we hope to normalize that in the third and fourth quarters, finishing the year with a percentage of expenses in marketing stable compared to last year of about 17%.

Okay. Very nice, Melega. I think there was a question.

Yes, the last question was about the corporate expenses.

I'll answer here. So corporate expenses, we mentioned some displacement that is marginal. So it should be units and not dozens, but units of millions of reals. So it would be a decrease of 16%. It should be lower, but it's not significant in the second quarter, right? Yes, we would see in the second quarter.

The next question is from Jessica Mehler, sell-side analyst from JPMorgan.

I have 2 questions, in fact. First, I would like to go deeper on this previous answer about the marketing because I understood there should be a reduction compared to the revenue in '25. And then I understood it would be stable. I would like to clear if there will be a reduction again in efficiency or if it is the level of 17%. And the second question is regarding ordinance that was published today. How do you see it today? How do you see it? How does it impact? Do you have any news in the sense? These are the 2 points.

Okay. First question. Well, Roberto mentioned marketing Kroton and Melega mentioned marketing Vasta. So we have the marketing in the company. I'm talking about Kroton, the revenue is growing a lot. So we see the space in the gain of margin here. So the reduction of expenses in the margin compared to the revenue. So there is some space regarding Vasta, It is constant. It's because the first quarter of '25 had a growth in the expenses of marketing. And what we mentioned here is that over the year, we'll normalize that so that we have no growth in the marketing expenses in Vasta compared to the revenue. So this is the first question. The second one about the ordinance. Well, about the ordinance on online education, we have no additional information other than what everybody already knows. Today, the Ministry of Education postponed once again the limit date. So the information is that it's closed. It should be done this May despite postponing for more 30 days, I guess. It won't take that long. At least this is what we hear, not officially, but this is what we hear. Well, the perspective. Clearly, the ministry is searching for an increase in the presidential presential classes in the online modality, they are creating the semi-presential modality, we truly support this increase in the courses. I'd like to say that when we launched the courses of health in 2016, our courses had more than 50% of presential classes. Then MEC adjusted that in the regulation saying that online courses should have no more than 30% of presential classes. And we modified, but we believe there should be presential classes, all our poles to operate a health care course need presential lab classes and the labs are even equipped with cameras in such a way that in our central, we can follow the presential class. So I would say that, obviously, I'm talking about something I don't know that is the details of the content of this decree. But the guidance of increasing on-site classes and practices are on site in the lab and not digital in the computer, I think it tends to be beneficial to us. So my perspective is that this increase will help us from the operational point of view because we have this structure set and not all other players have that set. But once again, I don't know all the details of the content, so I cannot tell you any more than that. But I think we are quite close to having a disclosure of this decree.

The next question is from Samuel Alves sell-side analyst on BTG.

I have 2 points to ask here. We talked more about Kroton bringing some questions from other segments. And one question about Saber. The quarter would improve the margin and the semester decrease. When do we have the change for the purchase that we have to deal more with the cost structure? And I would also like to understand what you understand of the year? Do you have any space for the revenue to grow and maybe with a lower margin and EBITDA growing in Saber? So this is the first question. And the second one in Vasta, specifically in B2G, how are the efforts to replicate the B2G value for this year? What is the expectation of the company? How are you working in this front?

So Melega, you start. Okay.

Thank you, Samuel. Let me just give you an insight on the B2G. We're having a go-to-market in B2G focused on big networks and the first contract we are operating is with the state of Pará that is a reflex of this focusing big networks. The news we bring in this quarters is that we have municipalities adopting the same solution. So we start having a more granular result in the B2G. We acknowledge BRL 5 million with new contracts that are basically of some cities, but they follow the same trend of big contracts of recovery learning and focusing SAEB and large-scale assessment. So we are having a go-to-market focusing on big contracts. I would say this is the big effort of the company. And 2 years after our entry on the market, we have a very mature pipeline. We do not control the timing of the public entity decision, but we believe that when it's a year of SAEB, we will have good news considering the next quarter, the second one with new contracts. So the contracts may be big like in the case of state and small, low or medium in the case of municipalities, but we have more predictability in the quarters, and we also observed the supply of the B2G in the bigger contract in a more similar way to the private market, that is the fourth quarter being supplied to the beginning of the next school year and then with supply in the middle of the year for the second semester. So seasonality starts to configure this way additionally with the capillarity that we could also have in municipalities. So it is a little bit of the B2G in Vasta.

Okay. Regarding Saber Samuel, let's separate because we have parts in Saber. The PNLD that didn't have a lot of revenue in the first quarter is, in fact, more concentrated in the second semester and even more in the fourth quarter. So the PNLD will grow in revenue comparing both years. It's more concentrated in the second semester, specifically in the fourth quarter. So the revenue will grow, but it is a year of purchase. So we need communication efforts and efforts of distribution and visiting schools and teachers to show the material. So the second semester will have an increase in the revenue, but also in cost, especially with expenses of marketing and sales. So the perspective is to grow the revenue with a margin that loses a little strength in PNLD, specifically because we have the cost to present the product, but the income comes later on in the fourth quarter or the first quarter of '26. That is the tradition as it always happens in PNLD. The second more important line that is growing, that is [indiscernible], it's growing 46% this first quarter. And the perspective as it is to Vasta, as Melega mentioned, is quite positive.

We are dealing with a lot of states and municipalities, providing them with many of our products, especially in the reinforcement for learning. So we have a perspective of growing the revenue here as well despite the revenues not strong. I mean it decreased in the first quarter. The trend is to grow in the year. I'm sure of that.

The next question is from Raphael sell-side analyst, XP.

The first one is regarding the PMT and Pagacio, you mentioned a lot about it regarding this effect, but I would like to understand how you distributed that regarding the different courses, if it's worth it to highlight some specific courses or if it was spread in the basis. I'd like to understand more of the dynamics in this sense. And the second, if you can give a little more information in how is the profile of students compared to the rest. If you can talk a little bit more about these 2 points, I think it can be very interesting.

Okay. I'll answer this one, Rafael, because there is no difference. There is no concentration of PMT per course. How does the PMT work? Well, we start offering starting in February when we have the first installment with the due date expired. And we offer for online courses, presential courses, on-site courses, no matter if it's law, veterinary engineering, they follow the seasonality and the enrollment curve. So this was the first question. The second one. The PMT acquisition cost there is no difference because the PMT student is the one that pays. This is something important for you to understand. The PMT students pay for that. They have no specific funding. They don't have a different profile. They only have this characteristic of entering later so that's why we call it Pagfast. You pay easily. So you pay the installment that you should have paid, that is the first one as it's 1 month later. So we'll facilitate for you so you can get this first month and divide it along the course. That's simple.

The next question is from Mirela Oliveira, sell-side analyst of Bank of America.

I have 2 here. The first is regarding SEC. Last year, you had a relevant contribution in the cash generation due to the efforts to recover the receivables. What can you say about the expectations in this sense for '25? And if you can talk a little about what you understand, that is the driver for this improvement? And a second one, now going to Kroton. Could you mention how is the occupation of the company and how far we are from the ideal levels of occupation? If you could talk a little about it so that we can understand what should be the normalized margin of Kroton from now on?

Fred speaking. I'll talk about the first question. Remember that PEP is a program that is reducing year by year. So in '25, it has a significant reduction compared to '24. And PEP only moves with a small revenue by the receivables and with the payables and the value that we have here is what we understand is the value to be received, the dynamics regarding the previous year has absolute no change because we have a big effort here to charge and bring the cash to the company. No difference.

Regarding the second question, about the occupation and expenses, I think I can start that. So Mirela, regarding the camp occupation, we are about 60% occupied. When we take the average of the 113 camp, we have here a big opportunity of reduction of costs as the contracts are over and we renegotiate both the costs of rent and physical spaces that we use. We even produce the material for Cogna Day. We have a slide that maybe we can share with you so that you understand better, because with rentals, we have BRL 400 million, BRL 430 million paid in rentals a year. And we have an important window of contracts that will be over from '27 to '29 with about BRL 330 million. So out of this BRL 430 million, we'll have BRL 250 million that will be open for renegotiation, and we believe we can capture a great part of it, trying to make this occupation to get closer to 85%, 90%. That is what we understand is ideal. We cannot do all at once because the contracts are atypical, and we should pay the whole contract to renegotiate it. So we have to wait for them to expire. As they expire, we renegotiate. We already do that. That's why our costs our expenses in rentals is constant over the last 4 years, it's not increasing because whenever one contract is over, we renegotiate. So we keep this line stable despite the revenue of Kroton is growing strongly, as we could see here, 18.8%. That's why I tend to say that most of our costs are fixed. So that's it. Yes, there is a perspective in gaining profitability over the years, more concentrated starting on '27, the space for gain is growing this 6% to 85%, 90% from now to 2029, 2030. And another point that Fred mentioned here, another point that helps us when we reduce rentals and physical spaces, we also reduce utilities and facilities because we have less planning, security to pay. So it also brings other benefits that helps in the margin of croton.

The next question is from Andre Salles, analyst from UBS.

I have 2 questions here. The first one is in the cycle of intake with this strong cycle in Croton, how do you monitor dropouts in the future? And specifically, it is a movement that I believe is more sectorial, with more presence in the online courses. So if you can comment on this point, it will help us. And my second question is about the flow of buybacks. How do you see that in the next quarters in this analysis of deleverage because you have space in the balance and in the program as well. So if you can say something on that, it will help us.

Andre, thank you for your question. Regarding dropouts, it's not a point of concern to us. I'll develop that. Well, first, we only consider the person as a student as a new will take if they sign the contract with us, if they pay the installment and if they have virtual activities in the virtual environment. I mean, if they are engaged an infective study. So it reduces a lot the risk of dropouts because they are impossibly there or because there is a seller forcing an enrollment. So we've done that for many years. So that's why I'm safe enough to say that we are not concerned about dropouts. This is the first point. The second point is the fact of them being more concentrated in online education at some point, which was not the case in this cycle because they are even more concentrated in presential and the online with presentiality, which brings a lower dropout rate in the future. And along with what I mentioned that we are investing a lot in experience of the environment and the virtual environment of learning and the app and all the follow-up that we have in dropouts, it is stable. So there is no element that I can analyze from the ones that impact dropouts that I see a worse perspective to the future, therefore, an expectation of increase in dropouts. Our dropout that is represented by the reenrollment rate is consistent over the last 4 years, and I believe there is no reason not to continue having this small improvement that is 0 point something that we gain every semester, but we are always gaining. I think that's it in the buyback.

Yes, the cycle of buybacks. Just to remember, we have a tripod on how to relocate capital in the company, if I leverage or deleverage the company and how to give money back to the shareholders buying dividends. As I mentioned sometimes, we don't have M&As here. We are always having small conversations with the small M&A. So it may happen, but it doesn't change a lot the leverage of the company. Given the interest rates and last Wednesday, we had another increase, reaching 14.75%. We monitor effectively what is the best way. I mean, if we keep delivering in the company or if I give back with buybacks or dividends. As we launched in the fourth quarter, the generation of net profit in the first quarter, we had a generation of BRL 95 million, and we understand here that we keep following the cycle and analyzing that probably you'll have a part of deleverage of the company and returning the capital to the shareholder with the buyback or dividends that probably will happen over the year of 2025.

The next question is from [indiscernible], sell-side analyst of [indiscernible] .

It's a quick question. The first is a little bit of marketing of proton mainly. You said that there is a space for that, but I would like to understand the comparison considering the reallocation of discounts and the gross revenue for PDD. And if you can also mention a little bit as possible, the headlines of possible merge with other big educational group. So that's it.

Okay. Fred here, I'll comment on the marketing first. What I mentioned in my answer is that I have space for a small reduction in Vasta, it is stable. And in Kroton, we have the revenue growing a lot. So we have space in any metric, okay, if we have the PDD or without the PDD, we see that there is a space for reducing the marketing expenses. So any metrics with or without PDD, we will be improving the percentage of marketing over the revenue. Regarding the second question about the merge. Well, about merge, we have no comments regarding that. There speculations or news that you see from time to time happening. I'd like to say that we all know each other in the sector. We are always having lunch or coffee with each other, having meetings together in any association but we have no comments regarding that.

The Q&A session is over. So now I'll pass on the floor for the final considerations of the company.

Well, once again, I would like to thank all Cogna teams that is having a wonderful work over the years, one more quarter with positive results. Congratulations to the team, the more than 4,000 employees and the leaders that we have. Thanks once again. We'll go on with positive perspectives for the year. We started the first quarter properly, and the RI team is available to clear doubts or any conversations that investors may need. Thank you. Have a nice day.

The result teleconference regarding the first quarter of 2025 is over. The Department of Relation with Investors is open to clear any other doubts you might have. Thank you all, and have a nice evening. [Statements in English on this transcript were spoken by an interpreter present on the live call.]