Ânima Holding S.A. (ANIM3) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the earnings results. If you'd like to listen to this presentation in English, please click on the interpretation button in the bottom side of the window. I'm Carina Carreira, IR of Ânima Educação. Presenting with me, we have Paula Harraca, our CEO; Atila Cunha, our Financial Director; and Guilherme Soarez, responsible for Inspirali. So the presentation will be available on our IR website where you can find all the materials of the earnings results. [Operator Instructions] Paula, I'll turn over to you.

Thank you very much, Carina. Good morning, everyone. Thank you very much for being with us. We are very happy to share with you the earnings results of the first quarter of 2025. I am virtually connected with you. But in-person currently, I am in Belo Horizonte, the [ Catalão ] Una, where all the history of Ânima started exactly 22 years and three days. On Tuesday, we celebrated 22nd anniversary of Ânima Educação, which actually is a different math because for 22 years, we have 150 years of operations and presence in the Brazilian market through '25, the ecosystem brand of Ânima. So I'm representing over 14,000 educators that are part of our ecosystem that every day wake up to do what is most legitimate, which is the mission of transforming Brazil through education. So Una is in this school. I'm here. We see the students. So it's an exam week. So it's very interesting, exciting to see what happens day after day, class after class. And we are here today representatives of this team. It was exactly in this place that I took the mission of leading Ânima, a bit less than a year ago. This is where I received from the three founding partners, Daniel, Mauricio and Marcelo, the mission of giving continuity to this legacy. That's why I wanted to be here today because it is a striking result to us the numbers that Atila will share with you. So it is a clean numbers, sound results there. The reflection of this third wave of experience, the trust that we are on the right track, starting this new cycle of sustainable growth of the company. So some important highlights that deserve our attention and again, collective effort and gratitude to each one of the educators that generate those results. And again, so we have our seven principles, the results to us, it's not an end, it's a means in itself to impact people increasingly more. Very important, we resume the growth of revenue in all verticals of business. One important thing for Ânima core that reverse a trend with intake growing over 9%, also growing 4.9% in its ticket. We were able to get a historical process that is quite important in terms of intake and also in terms of student stays. So we have net revenue, almost 10% in medical schools and 7% in digital learning. This top line growth is followed by very consistent discipline, very strong and focused in the best use of our resources. The resources that have to go to the best service, the best experience for our students. We're able to translate this quality revenue and EBITDA generation of BRL 360 million, growing over 10% regarding previous year and even expanding margin, [ 1.7% ] points and having net profit that also grows over 10% to BRL 115 million. We are continuing our strategy of revenue generation, growing in all business lines, translating this in a sound generation of EBITDA, reaching 34.7% margin, almost 5%, generating cash and also reducing our leverage, which is very important for the sustaining of our results 2.63 of leverage. The great message here and the great highlight, we do report, somebody see -- we were doing our homework, resuming the growth of our core along with the 1.5% increase -- generates this revenue, and we see the recovery in the Ânima core business to continue and bring more details to the numbers. I'd like to bring my copilot commander Atila. Join us, please. It's up to you now.

Good morning, Paula. Good morning, everyone. Good morning, all the Ânima educators, our shareholders, our dear investors. Paula, thank you very much for your words. I think it's important to highlight. I'd like to congratulate Ânima for his 22nd anniversary. It's a beautiful history of a lot of commitment and passion for transforming this country through education. And those results confirm our commitment. Moving on with our presentation, as Paula said and put it quite well, I'd like to reinforce our commitment of resuming sustainable revenue growth. What you see on this slide, great indicators that show an inversion of outlook after some quarters of drop in the core revenue drop, and we see some indicators inverting the trend. We have intake with 9% growth regarding previous year, 9.1%. But this growth with no loss to the ticket that has grown 4.9% and aligned to an improving dropout rate, dropped 1.5% points, keep the base close to stability and more than that, sowing seeds of growth in the future. And if you think as to how this behaves from now on, we work the trajectory, generating a positive effect. That is quite important for our revenue that has grown 1.7% during the period. All of this aligned to our commitment, right, Paula? We have a lot of discipline in money allocation that is the most valuable, which is from our students' commitment of actually allocating our funds with responsibility, we were able to grow margin in absolute terms and also proportionally with a 3.5% growth in our results and expanding 0.7 points in margin in the digital learning. Seen, it grows quite consistently. We have had an expansion of the ticket aligned to our strategy of quality revenue. We also have the result of dropout rates reflecting the improvement of our services and the choices we have been making. These better dropout rates align to the ticket growth enabled the conditions of continuing our net revenue growth and consequently, expanding margins and growing results. Also consistently, I'd like to call Guilherme to talk about Inspirali.

Thank you, Atila. Good morning, Carina and Paula. Good morning, everyone. I'd also like to congratulate Ânima for the 22 years. It's an incredible journey. I hope we have another 22, 44, 66 years ahead. I should wish Happy Mother's Day for the mothers celebrating on the coming Sunday and celebrating the mothers of all our Inspirali ecosystem and all our students. . As Atila mentioned, we are steadfast in building, consolidating Inspirali as a pathway or an avenue not only of growth but also of impact in our medical schools and lifelong medical education. We have more consistent numbers of EMR, Eu Médico Residente in lifelong learning. We have strong growth. If we were to report to pro forma growth there, they continue growing quite robust growth with yet another part in this lifelong medical education platform. I should also stress the growth in undergraduate studies, although 2024, we had high rates of graduation, higher levels of students graduating, we continue growing in the base, but that reflects our quality positioning. With a new ticket repositioning, we are firm on our projects. We are quite strong and steadfast in the building of this project that we call Inspirali. I turn back the floor to Atila.

Well, thank you very much, Guilherme. Inspirali is precious jewel that we have in the Ânima ecosystem. I congratulate all the educators that turn this project into reality every day and also for the absolutely consistent results, those results of the three verticals of our businesses show that we are on the right track with growth in revenue, gaining ticket and margins. They add -- show the result of a company that once it's consolidated, it's also growing. We can see positive results in all the items, even the group that we have and more difficult areas. We have quarters comparatively. We keep on growing margin. This is the result of our commitment and the quality of our business. We have no silver bullet that justifies the results, but the set of work of thousands of educators. Each one of those items, they show the effort of each one of our people be it in the efficiency, in the cost, in delinquency management. So we have educators' commitment, committed delivering results, and we managed to get growth of 10% in our EBITDA growth. And we have 1.7% points in the margin growth if we consider a year already high margin. Moving on we have the tradition. I'd like to mention our dear [indiscernible] our great IR Officer. See our chart keeps on growing is the 13th consecutive quarter of margin increase. This should be highlighting our consistency. This is discipline. This is a commitment to our results. We have important results that show the margin expansion, but more than this, it is a trajectory that is more important than the snapshot is the film and the film is consistent. Moving on to the next slide. We have our CapEx. I always joke that many of you have heard me joking with the metaphors that when we move to a new house, we invest a lot. We did that in 2022, '23, changing systems, ERP units. And 2024, when you have the new house, we have a decrease in the need of buying new things because everything is brand new. And then we go back to normality. We understand the CapEx returns to normality, and we prioritize what to us is core to our strategy systems. Ânima continues to evolved, to drive, to consolidate its technological platforms. Our Ulife, the app students use inclusively better assessed on the platforms and the Apple Store, Play Store score close to the maximum. I congratulate all the developers with the brilliant results, the fast evolution and the consistent use of resources in -- shown in CapEx. We've also evolved in the works. We are closing the delivery to Cubatão, our polyclinic, our new campus. This also has an impact in the middle boxes and then investment in equipment and laboratories to improve students' experience. All of this together puts us in an appropriate CapEx level that we understand is healthy. That continues to give continued possibility of providing better services to our students. Next, we have our great villain, which is the increase in the interest rate, that's the big rate. We worked hard last year, reducing spreads in early 2023 from [ BRL 2.4 million ], 240 bps to 270 bps spread to try to minimize the effect of the interest rate, but this increase is importantly has been consuming resources and its merit in the increase of financial expenses. On the other hand, the growth of our cash generation gives us confidence to face with great health and robustness. This moment of increase in interest rates, we have been able to improve our liquidity indicators consistently. Two weeks ago, we had the increase in the upgrade in our rating. Fitch upgraded our rating to A. And this is quite optimistic in terms of our results, and it gives continuity to our work. Just going back to a previous slide, I think it's important to highlight, Carina that yesterday, we worked a lot. We issued a new debenture continuing with the reduction of spreads and our liability. We have 160 bps less than our average cost and contributes to the evolution of this average, but expands our liability. So we have absolute liquidity and robustness in the headlines in the forthcoming two years totally ensured by our robust cash position. This commitment with the quality results that generate cash that despite the Selic rate being high, we managed to reduce our debt in the quarter. We had a reduction of BRL 102 million reduction, consistent to the same period as last year. And we have much higher financial costs. This shows the consistency, the robustness of our cash generation what has led us to have this important movement of deleveraging. So we moved from 2.8 in closing December to 2.63. So any -- that any questioning is not necessary and also shows that our ability to deleverage and our -- the strength of our business and our ability to deleverage in a major way, and having the company deleveraged in an organic way. It's a company that generate cash. That reduces debt and reduces leverage in a major way over the quarter. Next, I'd like to call Paula for our final remarks. Paula, it's up to you.

I had to summarize these numbers into a phrase. Ânima is back, growing, and it's back bringing important elements of its essence, its culture and [indiscernible] that enable the strategy that we shared with you late last year. We have built with various minds and hearts. We had a strategic reflection process. We've outlined the strategic fronts and growth avenues for what we call Ânima's third wave. We talked, we stopped, we defined a strategy, we set up a team, and we have this great differential. This rare thing, which is the essence of Ânima, and I am here with the better principles, the guardian of this culture. This is what enables the execution of the strategy with consistency and in a smooth and slowing way. We are growing and we are committed, we are focused. We are learning, adjusting the direction. We haven't talked about it here. We can talk about it later. But when we look at permanent that was -- has been a record in the past four years, along with this significant intake level. We're talking about core. We have a resumption, trust of our students, our educators and everybody together. So Ânima is a collective result. We, Atila, myself, Guilherme, Carina, we are representing this team that is sailing or rowing together. We talked about [indiscernible] I'd like to briefly read the message I got from him this morning that summarize the story, Marcelo, Paula, Atila, Marina, what a spectacular result first quarter 2025 growth in revenue and profit should have a record quarter, if not in the history of Ânima [indiscernible] and consistency better profitability. EBITDA margin, 29%. The work of a team of very well-aligned people and growing quite strongly. Congratulations to all of you that are Ânima and all of you to serve our Ânima. I'd like to read that, people leave Ânima, but Ânima doesn't leave people. The third wave has just started. The journey ahead is long. And we are continued with a focus, with great consistency in the use of our resources to generate value to students translated in this loyalty because this word of mouth is the best way of realizing that what we are enhancing, improving continuously is being perceived and is generating value to our students. So Atila and Carina, now the team with me, congratulations to the team that is generating all of that. But the most important goal is not attaining not the results that we have attainted. The most important goal is always the next goal. So we're here available for Q&A. And I'd like to close. Thank you. Thanking every educator that are part of the construction of this result that now continues to finance the building of our future. Thank you all very much.

Thank you, Paula, Atila, Guilherme. [Operator Instructions] The first question is from Samuel Alves from BTG Pactual.

I have two questions. The first, I'd like to explore an aspect regarding the results, especially tickets, in the core we have seen a greater resilience. The company follows the strategy of procuring ticket to volume to improve cash conversion. Do you believe that this will be a trend for the rest of the year? So it's a revenue that is growing in the core, very much driven by the ticket. This is my first question. And the second would be more to tap into your understanding. How do you see this outstanding regarding the regulation of the distance learning? We have a new ordinance issued recently on that. How do you see that? Have you been interacting with the Brazilian people from time to time deals think that this regulation will be put in effect or not? Could you give us some color on that?

Thank you, Samuel, for the question. Look, when we presented our strategy, we talked about revenue quality, we have the head of this revenue is Atila. We talked about the formula. The great point we are working on in a way that we -- hard to get data driven. We have brand-to-brand strategy, modality-to-modality and company-to-company, or campuses-to-campuses. This repositioning because it is repositioning. You see on average, but we have some brands that had increases well above some courses that have very high ticket that we have a lot of students staying and we have very high levels of ticket. This is the beauty of Ânima. It can make its differentiation. So there are brands that are much more premium. So the competitive aspect is varied according to the marketplace. So we are working on the increase. We look at everything. We look at price and student base. But Atila, would you like to say something about this point? Or should we go to distance leaning?

Well, I think it's consistency. There is no silver bullet. There is -- it's very granular work, and we believe this strategy of price improvement. And be it health on the accounts receivable, implemented last year when we focus on the Q shown in the 9% of intake growth and less 150 bps of improvement in dropout rate, the best rate in the -- since the history of the merger with Laureate allow us to aspire revenue growth in the future, both in volume and ticket growth. It's a differentiation strategy, and it is being more sophisticated and fine-tuned. It's a building, it has to do with positioning brands, several elements, value proposal, the selection process. We are working on this very specifically with this power to get directives of our brands, our competitive intelligence strategy, et cetera. On distance learning, we are very following it up closely. We received the message which is official. We have just talked to the Secretary [ Martha Bernal ], ensuring that we'll have the publication of this regulation. I'm reading a message. The industry will be invited for a technical event to detail the terms. So regulation, things will be published. We will have suggestions and things. So we are being following very closely everything. Since we started, looking to this building of this new stage of growth of the company, we know about those scenarios. We see a very clear trend in the market of migration to more in-person or on-campus, semi on-campus that in regulation, it's distance courses that are most hybrid are increasing. We're very well positioned for this supply. We have positioned our opportunities. We have a clear view of our market positioning, where we have opportunities where we can gain this regulation. Public gains strength. I think it's just good headwind in terms of our competitive focus in Ânima. We're working and looking forward to see it working because all this movement is towards a better quality of education. And this is very good for students and for education in Brazil overall.

The next question is from Flavio Yoshida from Bank of America.

I have two questions on my side. The first regarding intake. We see a very positive number. I'd like to understand what you understand you have changed in the intake strategy that led to this number to improve. There's no silver bullet. But I'd like you to give more details whether it's been marketing strategy, changing the profile students and price? And are you thinking has to be improved for the next cycles? My second question is regarding costs. And also relating to the net results, the federal examination that you show the material, it has worsened for the industry and for Ânima it hasn't been different. Everybody impacted by the pandemic. And you also talk about curriculum reform for all courses, and we see that. At the same time, you are increasing cost. And you also mentioned academic improvement. I'd like to understand better your evaluation on the energy and these costs regarding the academic improvement. It is -- if it is to address these federal examination in ADI. So should we -- how should we expect this core find ahead.

Look, Flavio, the first part of your question. We have done what we said we would, and it seems simple when we talk about walking the talk is not easy. We give strength to each one of the brands, understanding the attributes -- the value attributes, not from our mind, listening to students, to professors. There is a rescue of many of these brands. So we have this work of recovery. Ânima is back. We're back to the value assets of each brand because remember, we commented on this sometimes. Post integration, we -- it was two spreads in terms of pricing and readjustment, communication and the campaign communication. Second semester '24, it was very similar. We communicated as if it were everything equal. So we have 18 -- 80 buildings, different territories. Well, you know Brazil better than I, I've only been here for 14 years. It's a continent. We have different conversations with students that are in remote places in Bahia and very different from somebody in Sao Paulo, in the neighborhood of Belo. But we started working with local agencies hubs or movement that power to get the brand directors very close. They depend on operations Le Cordon Bleu next to me that works already with me and book the Marketing Director. And it's an architecture and work. We are working with the ecosystem, boosting the brand so that they can actually win in their own territories with intelligence, data-driven, listening to students, being humble, learning where each brand plays best. We've done that. That was the first layer as part of your question, what do we expect ahead to keep on enhancing sophisticating our pricing model, our positioning because this is dynamic. The market is dynamic. We're playing and out of the play and understanding what is adding value, what is not. So we work every week on that, and we have a long-term view. It's short-term but its positioning branding, positioning that is long term, that is guiding our strategy that goes down and pulls down to tactics and operational. Atila, anything would you like to add?

Sure. Sorry, he brought up the question on costs and the academic improvement. I'd like to bring up a point, but if you wish to do that, go ahead.

Well, back then. So second part. Well, Flavio, when we defined 18 strategic fronts of what we call having factors or drivers of our growth. One of the items is the academic quality, service to students going through the curricular model not only an academic project, but the whole student experience, that is nonacademic service in general. We have various teams focused working on this. And of course, the end result comes as an import to enhance our geometry of data and to see where we have more opportunities to enhance. It's a result that overall, if you look at the market, it has significantly impacted the market because it takes students, students that took in name more the entrance examination before pandemic. So we had an attitude in the pandemic. And we know that the improvements that we had signaled to have increasingly more academic adherence, greater power, better quality. This enhancement of our pedagogical proposal needs to continue serving the market needs that are dynamic. So we have the new [indiscernible] that, along with my arriving, and we're working hard on that very deeply with a lot of data in this continuous journey of bringing new curriculum majors that have been implemented now in the law schools and other important Ânima schools. Atila, please.

Paula, I was going to add to the cost that probably acts quite well. We have it very clearly that the search for efficiency and the expenses to invest in quality. This is very clear. So the company is constantly challenged to be more efficiency in its processes that do not add value to students so that it can invest in things that add value to students, and we are carrying out the strategy. So we are able to expand margins, even investing more the very end in quality of service. This is the clear strategy reflected and it is executed with discipline, Flavio.

Our next question is from Leandro Bastos from Citibank.

I have two questions. The first, I'd like to explore what you see as margin leverages for the year. Adding to the last question, we see a pressure in the growth in profit, but we have other commercial revenues. If you could tell us what we should think about those drivers ahead, how we could think about the profitability of the company. That would be the first company. And the second, I'd like to explore capital allocation. Whether to click Inspirali, we have Mais Médicos III in the pipeline. So you have a more heated market. So you see certain dividends. If you could tell us a bit about what you see in terms of capital allocation, especially for this branch of medical school. These are my questions.

Atila, would you like to start.

I'll start speaking -- talking about capital allocation. Thank you for your question. As we've mentioned in previous calls and our meetings, the Inspirali project is also one of growth. We have growth avenues that are organic and also inorganic growth avenues. Considering all the regulatory challenges that we've had in the past years, the market has become a bit more flattened. We started having more activities. We always keep dialogues and follow up. And if there are opportunities in an accretive way, we will be analyzing and positioning ourselves as well. Leandro, regarding margins, I think that -- well, to answer your question, we don't need much more than looking at our history. We have great consistency in our history, improving efficiency. This philosophy is deeply rooted in the corridors and aisles in all discussions and decisions taken within the company. So it is a constant such or doing better day after day. So we actually -- when we work on our budget, Paula challenges us to seek efficiency, reducing what does not add value, and we have to be efficient to what adds value and drive the third wave of growth of Ânima, where we have increasingly more value being delivered to students selling seats of growing revenue in the future in terms of ticket, in terms of growing intake and in terms of reduced dropout rates. I think this is very consistent. I don't see changes in this philosophy. I don't see any changes in this trajectory. And consequently, I don't believe the company will disappoint [ focus ] in the chart of margin expansion. That's it, Atila.

Within our front of -- the 18 strategic initiatives of fronts. One of them is focused exactly on the seat, because when you reduce cost, I've worked in the industry for 20 years, you have a limit. You have your efficiency level where you operate well, otherwise, you go too far, there are improvements that require technology, our third principal lever of our projects. So we have a structuring front looking precisely at that how could take a great efficiency leap looking from end-to-end from the management standpoint, how we can do in a better and simpler way. We always have room for development with technology and also looking at our students end-to-end where we have opportunity of unlocking value to the company, and we have ambitions there to continue, as Atila said, like a focused chart keeping -- looking at profitability and Inspirali being an important profitability source for the company.

Next question is from Mauricio Cepeda from Morgan Stanley.

I have two questions. The first is in terms of cash generation. This has been brought up by your competitors on the possibility of generating more cash this year. In your case, I see that you also would have some great room if you improved the receivables. Do you see any space or room to do some kind of operation with receivable while bringing them forward while you operate with 86 days. There seems to be some room there if you decide. So could you comment on this possibility for this year? And the second question I'd like to insist on this margin point, but cost vis-a-vis expenses. At least looking at the earnings results, what you've been talking about recently, the cost seems to be at the time of being resumed in line with your comments, Paula, that you're rescuing reputation, and the expenses are dropping in line with this idea of -- but I'm also an engineer that you're always cutting things that are not productive, et cetera. Do you -- how do you see this movement ahead? Is there a need to rebuild or reorganize costs? Or do you think that the expenses have been optimized? Is this front saturated? Or should we still see some optimization in terms of what is not related to productive.

Would you like to talk about receivables, Atila?

Sure. Cepeda, thank you for your question. Within our formula P times Q times I, we've been intensely working with I for a long time to use modestly our balance sheet to turn revenue into cash. And this is what has been happening, Cepeda. I believe the company shows accounts receivable that is absolutely well focused and it shows quality in the revenue. Obviously, our industry has its inventory or stock of inventory of receivables that can be negotiated, especially those that are resulting from private funding. This is a lever we have used this in the past. But this quarter, we haven't had any kind of enabling this lever. So I believe we have quite confident -- great confidence regarding our cash generation and our growth from now on. I'm going to move on to the second part of your question and turn to you, Paula, for you to conclude. Every day, we wake up and we see a chance of doing better. There's no way. Well, this is why it is important to have this movement that Paula has been conducted with great mastering, which is the stability of the teams. The stability of the initiatives, discipline and strategy. This leads us to conclude a project, deliver results and start a new one. And we end one, we deliver results and start a new one. And this doing in the right pace has brought efficiency. I see room. So we have the structured brand of the strategy of improving efficiency through technology. We have a lot of value to deliver. We have considering -- well, we have been reducing -- well, we have room to be the best and using that to the benefit of students. This is our strategy. Paula?

The efficiency, Mauricio, is the muscle. You go to the team every day. You don't see results go another. Well, at the end of the year, you're fit. That's what Atila said. There is disciplined pace looking in the specificity. Before we joined you, we announced. We made an announcement to our leaders team. So firsthand, we shared the results with them. And we brought some attention points, people, hey, guys look at this and that and that. This is something that happens daily. But there is something that is important that Atila mentions in the stability cost management. Well, anyone can do it. My daughter -- eight-year-old daughter says, "Well, you get spent it on, but to do intelligent cost management is different, it's not only where to cut, et cetera." This is -- the third wave is summarizing towards sustainable growth. No use growing if you're not sustainable. So it's doing things well. It's why are we doing it? What is the impact? What do we gain? What would it lose? So it's an intelligent exercise that is careful but well done looking always 360. If you look at the efficiency, you may lose on the academic quality. You have to balance things out. So your question, certainly, yes, we have a lot of room. We keep on looking in a diligent, competent, careful way, collectively. This is very important. I've never seen something that is really cool. It's a very adhesive and strong team working together. Everybody contributing, decisions are better taken. When you consider all the perspectives, we'll on working in a disciplined way, Mauricio, every day and the year-end, we will see that we have been going to the gym.

The next question is from Lucca Marquezini from Itau BBA.

We have two questions on our side. First, on profitability. You've mentioned that one of the levers for the margin improvement was more assertiveness in actually collecting the tuition fees. So has this impacted the dropout rates in the quarter? This would help? And second point, lever where we see better cash generation, we see reduction in cost generation. And to understand this is a movement that should continue over the year, we should have a space for that. Well, we need cash generation aspect as well -- well, numbers were up to you.

Lucca, we have been educating in a very pedagogical way. Our base with the importance that we have paying on time of honoring our commitments, each one doing their part, and then everybody will leave the day in a better way. So we have the commitment of delivering increasingly better services, our students have been contributing on their part. Actually, improving the delinquency. This has been leading to lower dropout rates. This is very important. Well, we should not accumulate debt, not make students to go back to re-enrollment with very high debt that they cannot equate or pay for. Our work in managing delinquency continues as the day rates. We continuously work to help our students to be paying their tuition fee so that they can be back without this concern of having to renegotiate debts when they register. This has helped us to -- better results in terms of dropout rates. I trust this dropout rate that has been the best since the integration with Laureate, even are being more restrictive in our renegotiation policies. This shows something else that is also important, which is the commitment of our students to continue study. When they renew their registration, the enrollment, they renew this movement of trust. If they do that quarter after quarter, they show that they believe in what we are delivering to them. This to us in addition to the financial highlights, it's also a very important quality highlight. So we've talked about this part -- the first part of your question. So the second part of your question, I believe that the benefits now are marginal in terms of debt management. We issued a debenture yesterday. Everything at the same time now, we have planning the lease the ventures. The team has worked hard over these days. I congratulate everyone. And we have reduced a bit cost of debt. It's a bit below our average. Our average is usually 170. Now we managed to close at 160, but the benefits are marginal at deleveraging trajectory that is organic is mostly focused on the improvement in our EBITDA cash generation that is consistent in the company, and this leads us to be able to continue to see this trajectory ahead. I think those two questions have been answered.

Next question is from Marcelo Santos from JPMorgan.

I have two. The first would be for Atila. We see deleveraging over the quarter. What is the goal of leverage? Where do you want to get it? This is the first question. The second question a bit more on the market. I'd like you to -- if you could draw some -- make some comments on the competitive environment and this is where you see release your entrance examination, you had a drop of 9%. If you had no change in the cut-off date. But it has been evolving well. I'd like to interpret how the market is behaving. So you are at the very front. Could you give us some color?

I'll start answering and then I'll turn it over to you, Paula. Well, Marcelo, thank you for the question. I think this -- we've always been talking about our trajectory. We believe in it very much in reducing leverage. We are consistent in this direction of cash generation. We have already worked in 2, 2.5 quite confidently in the past. This is not a goal. Our goal is to generate cash to improve the business. And our goal is to make students to be happier day after day. We understand that we are on a healthy route of reducing leverage that leads us to lower levels in an organic way. Second part of your question, I'll start answering, and then I'll turn it to Paula to end. Part of this what we see is the result of this general leasing that happens in the legal framework. We understand that quality education is fundamental. It is -- it needs to evolve in regulation, but you understand that we need to quickly have this new legal framework so that we -- can we, the teaching institutions from the legal framework, we can define our strategies, our initiatives so that we can actually look as to how to address an important market, which is digital learning market, how to adapt our hybrid offers and work with visibility. Since there is no visibility today, things end up getting some more stationary. Everybody is in this waiting moment. We need to take a step ahead, and I think -- and I strongly believe we will, to the benefit of Brazil.

I would add to what Atila says, Marcelo, so we have this cloud or fuzzy scenario ahead. So what is very clear to us strategically? Obviously, I'm not going to open up all the details of our strategy. Our repositioning goes through that, choosing with much more clarity what brand or offers, choices and giving up certain things. Well, this is a traction. Nobody is good at everything. If you're everywhere, you end up having problems. So we have all our repositioning, considering this change in regulatory seen. And we have our strategic positioning as to where we want to be in the future as Ânima. So we see the market, we see the behaviors, results we're seeing in evolving ticket, et cetera with consistency of our strategy reflects what we believe in our bets that are being confirmed with the results that we have seen in this quarter.

Our last question in the interest of time is from Andre Salles from UBS.

I'd like to explore a specific point. We've seen a strong quarter with the acceleration of intake aligned with reduced dropout rates. And this third wave of Ânima, how should we view dropout rates considering this new growth cycle? What kind of measures have you taken to keep dropout rates at the current levels? My second question is regarding CapEx. You have a slight improvement year-over-year. Atila mentioned this past investment cycle. Just to understand if you have some seasonality in Q1, some opportunity that you were able to identify or if we should shortly see the CapEx close to the BRL 15 million for 2025?

*The second part of the question is -- this is the answer. We are at this CapEx healthy level of 50% of our revenue. We should keep it at that. That's a good reference to us, Andre. Talking about dropout rates, our re-enrollment was the best in the past four years since 2022 first semester. If you see the curve of re-enrollment with transfers and price adjustments that we go to our students, considering the experience improvement. This curve is anticipated courses with very high ticket and at a very high conversion right in the beginning. So to me, the great summary here is, well, in a nutshell, it's a virtuous circle. The third wave is a trend in merchant that reflects virtuous circle that we started at Ânima. When you have a good value proposal that is coherent to what students expect and you deliver that, people like it and start recommending, they want to stay, we have a retention. We opened this cycle because of the circumstance where we have pandemic, other synergies, we are not there. Well, where they had to be integrating two companies of that size, moving out of a pandemic, understanding so many uncertainties, so many clouds. Well, we had demos. So we had blackouts in rainy days. Well, when I got here, I said, well, the company is on the track. I don't like that. It feels like a trainer and are trained. So Ânima is back to its essence of quality education of a differentiated experience, and it's indeed different. So I love the professors, now they are totally engaged. This is the return. Of course, it's the beginning. We still have great opportunities ahead. To give you an idea, we have one of the front, the road map to leadership, where we have an economics. We know brand by brand. You know our students value, what they don't, how much we invest that NPS, how much this will generate. This is all data-driven. We don't do anything from our opinion on how. There's a lot of love in what we do. It's not only love, it's message, size, data listening the pace. This is the work that we've just started that has been okay. We had a lot of work of improving service, et cetera, but we are at this level of enhancing, increasing more. The continuous improvement journey that will boost this virtuous circle of quality delivery that generates more satisfaction. Well, we have this satisfaction, et cetera. But now it's a concept with a sea that shine in beautiful experience and sharing between professor, students, back to simple, back to basics and simple that is well done. And from then on, excellence surprising [indiscernible] pedagogical proposal that is different, innovative, and we have different proposals that Ânima has been able to do quite well and now we're doing it with greater strength.

Well, thank you all very warm for your participation. If you have any questions, our IR team will be available. Well, have a good day and see you next time. Thank you.