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

Well, good morning, everyone. Welcome to our earnings release call of the second quarter '26. [Operator Instructions] I am Carina Carreira with Anima -- Investor Relations Officer. And we have Paula Harraca, our CEO; Atila da Cunha, our CFO; and Tiago Moraes with Inspirali. This presentation is being recorded and will be provided today through our website, where you can also find the other materials of our earnings release of the quarter. [Operator Instructions]. Paula, please?

Thank you, Carina. Good morning, everyone. We are all very glad to share with you the results of the second quarter of the year and the first half of 2026. These results show the consistency of our journal of execution and delivery of sustainable growth in all our lines of business of the company. Starting from growth of revenue. We are closing our half with BRL 2.2 billion, or 6% growth compared to the first half of 2025. This is not just growth in volume. It is also associated with increase in ticket in all different segments. And I would like to make a highlight to our core -- because it's been delivering growth in revenue and with 9.5% increase in net ticket, which is something really important, consistent with our strategy of repositioning our brands. We've also been applying discipline, consistency, is something that Atila and I keep on repeating on a quarterly basis, careful use of resources, placing or making our investments in places where we have added value service. EBITDA was BRL 691 million in the quarter, 7.6% growth, which is also motivated by the area of Inspirali, which has delivered fantastic results in the second quarter. Net income was BRL 135 million in the first half, 29% growth over the quarter, over 200% if we compare just quarter-over-quarter. In other words, results with profitability and generating solid cash position, BRL 449 million, 7.2% compared to the first half '25, which has brought our leverage to 2.41x compared to 2.66x in the same period last year. In other words, we've been growing with profitability and deleveraging the company. I would like now to hand it over to Atila my co-pilot, our CFO, who is going to share with you the results by business. Atila?

Thank you. And I call her my boss. I would like to greet all of those today. We are starting one more half year, one more semester of education. It's great to see the life in the campuses. This is what really drives us. Let's go on into the next slide. I'm going to start describing the core segment. These are the numbers for the quarter and the half year. We've come from a very strong cycle of intake that we saw when we started '26. This strong cycle of intake was impacted, as we said in the previous earnings release call by a trend of worse dropout rate. We realized that this was an issue, and we announced that in our earnings release because we always want to have our investors aware of what's going on in our businesses, even though these are problems. It has led to increased dropout rate, but it has brought us all together to deal with issues as quickly as possible. So we closed the half year, the last weeks, presenting lower dropout rates than what we had observed in the same period last year. And right now, we are reenrolling everyone. We are aware that problems are gone, and now we have more and more students coming to our businesses, really meeting our expectations. We're still maintaining our journey of good average ticket, yes, right there. We are maintaining our average ticket rate. In the second release, second -- first quarter, we showed the impact of the full new enrollment, which helps us really sustain and help us increase the average ticket. And we've shown once again, consistency in results being delivered. Average ticket is a priority to us. It reflects our strategy and our commitment, which is to improve services the whole time to our students. Thanks to this strategy, we can sustain an increase in revenues. We've delivered 4% in the quarter and 7% in the half year. Operating results was impacted by dropout, which was really brought to a halt. It's back into the expected levels. And half year was somewhat impacted by the quarter, but something that we understand that is just solved and now we are just going to see it through a -- the rear mirror. Now digital education. We've been monitoring its journey, its path. There was a decrease in revenue, which was partially offset by improvement in dropout rates, which was lower than we expected, a maturation of our bases leads to this healthy indicators in addition to the average ticket, which has been increasing. So we can offset a very important issue, which is the decrease in our base. Aware of the situation of the drop in revenue, we have planned to obtain efficiency in structure, in cost, and we've managed to compensate it significantly. Therefore, digital education is showing positive numbers in the period. Now let's see the next slide. I would like to invite Tiago to talk about Inspirali, this great driving force that this business is.

Good morning. Good morning, everyone. It's always a pleasure to share with you the numbers of Inspirali. It is maintaining its path very consistently with discipline, focused on quality and on doing the right things well. This is what we do. And it takes us to this number. The average ticket went up 4% with significant increase in the second quarter despite the impact of FIES and everything that we've talked about, FIES, the financing system. The base of students has also gone up, which is a recognition of the students make of the good work we deliver. It impacts once again, our net revenue despite the impact of FIES, as we pointed out in the first quarter, we have significant increase in the line of net revenue. And operating result, doing things appropriately, focusing on quality, maintaining investments in faculty in the practice, making a right allocation of available resources and really using a lot of discipline on cost, administrative expenses, marketing, things that we've already talked about before. Everything is under control, and this is how we intend to close the year. Inspirali is following its journey with commitment, understanding its role in the training of future physicians and focused on quality. Atila, back to you.

Thank you, Tiago, and kudos to you, to Inspirali team, for this wonderful quarter, showing the consistent resilience and quality of this project of all our operations, courses and the top quality of our Inspirali team. Next slide. We've presented the consolidated data of growth quarter-over-quarter. And it's important to make some highlights here in terms of revenues and EBITDA. Always being very transparent with our shareholders. We had a problem of dropout rate, as I told you, more attrition, made everyone aware of that. We said that the rate was not enough to impact our trajectory of increasing growth. And this is what we can see here, 4.4% growth quarter-over-quarter and 6.1% half year over half year, consistent growth. In the previous earnings release call, where there was a decrease in margin, and we thought that would be a one-off effect. But we maintained our understanding of having stable margins year-over-year, and that would be recovered throughout the year. Once again, following our philosophy, we are not trying to expand margins. Whatever we obtain in efficiency in expenses, in costs in all added value initiatives, we are going to transfer into value-added initiatives and the margins come from operational leverage. We told you in the first quarter that we would certainly recover our margins throughout the year, and it can be shown here. It shows the results of our second quarter, so 200 bps of margin and a significant almost 12% expansion of our EBITDA in the quarter. Let me tell you about some other elements that we go from EBITDA to net profit. There are some positive and negative effects impacting all the lines below EBITDA. But net, we can see an expansion of net profit over the half year, showing that the factors that come below EBITDA are softer than they used to be in the past, despite financial expenses. We still are dealing with this burden. We've been working with the liability management, as I'm going to show you, but it's still a quite strong factor. But we've been improving net profit regardless of that with an expansion of nearly 30% of net income in the half year numbers. Next slide, we can see our CapEx. And once again, I reinforce the consistency between what we say we are going to do and what we effectively do. We still have CapEx of about 30%. We're still investing more on digital transformation to improve processes, to gain scale, to reduce expenses, obtain efficiency and improve services provided to our students. Consolidated numbers, we can see the same levels that we've been following for a while. Here, we can see cash generation for the half year. We delivered BRL 100 million in the half year. Second quarter was somewhat worse, but the first half was better -- or rather the first quarter was better. So in the end of the 6-month period, we can see cash generation that is very consistent with the cash generation of the same period last year, despite the change in interest rate between January 1, '25 and the interest rate this year. But despite that, we still have a consistent strategy of cash generation. Cash was used to pay dividends somewhat above what we paid last year following our policy of distributing 25% of our net income. We also have increased our share in subsidiary, which has led us to reduce the results of minority holding, but it is taking some cash consumption. But if net income increases because of that, we can see that the strategy has been successful. Now going into the next slide. In this quarter, we have also taken very important initiatives to pay some of our debt. Our treasury is working in a very disciplined, consistent way to reduce cost and to extend our payment terms. We have issued some new commercial notes, reinforcing our cash position, as I'm going to show you in the next slide. BRL 1.8 billion cash position, which makes us quite at a comfortable level to pay the interest on the main debt and also to sustain the robustness of our business. It's important to emphasize, as we are going to see in the next slide, something important, which is leverage. It is being an impact year-over-year. And it's important to say that in this quarter, the discount of receivables were consistent with what had happened in the previous quarter. You should note, though, that the receivables from credit cards were somewhat higher, but those of Pravaler were somewhat smaller, BRL 12 million more for credit cards, BRL 15 million lower for Pravaler, about BRL 3 million less than the same period last year. Just to make a clarification here that you might have concerning these figures. It's also important to emphasize that in the same period, we had one specific covenant of a debt we have with IFC, an BRL 80 million difference, BRL 20 million to be paid in September. It's going to go down to BRL 60 million, and there are going to be 3 more payments of BRL 20 million each. The debt is based on future interest rate and the main debt versus 1.3x EBITDA. Everybody knows this indicator. It's interest rate coverage. As we have Inspirali debt due in May next year, there is this impact. IFC understands and recognize the problems of this indicator. And this is why the waivers are naturally granted. So once all these issues are clarified, we can move on. I would like to hand it back to Paula. Thank you, all our educators who work every day for Anima to deliver increasing results, solid results, which shows our strong operating capacity, our capacity to grow ticket revenues margins, EBITDA margins, our capacity to keep on growing net income and as shown here, showing a consistent trajectory of reduction of leverage. I thank you all very much, all of you who wake up every single day to deliver very good and consistent results. Thank you very much. Paula, now back to you.

Thank you, Atila. I think your point is very well taken. These results are not isolated indicators. They are the combination of a strategy being very carefully executed by this group of educators who is joined in this great mission. It's very important news to share with you. The figures we are sharing with you is just part of the story. There are some other numbers that we are going to keep on sharing with all of you, with the society, which is the impact that we generate by doing our activities. You know this is a topic that I particularly like as well as Anima's, because what we do is social impact. And probably this is the best way to show the power and the great difference we make every single day. Anima is a sustainable activity in its essence, and we've started a very deep work, since 2024 with diagnosis. And in 2025, we had interviews, heard stakeholders. You know right, how it works. But we wanted to share with you our strategy, which is now gaining more and more momentum to be maximized and given more visibility. We are doing that for the whole ecosystem, Inspirali, Anima, Anima Institute, all brands and organizations that are part of that. So I'm very glad to share the news with you. We had a meeting with our leaders. We first talked to our leaders. We shared the results with them, and then we share with you, investors. I'm very glad to be here. This is the work of so many people who joined us in creating this strategy. Atila made a very interesting point. We are celebrating here a very solid half year. There were some glitches. I used to be a goalkeeper and well, I had problems now and then. And you know sometimes you are doing fine, but well, there is a problem. And we can change things. We have resilient. The whole team worked deeply towards that. I'm so proud to tell you, yes, we have had problems. We suffered. We were impacted by that, but we embrace them as challenges. Some of them were our own issues, other were a result of the mix. But what have we done? We understood the causes, start working. And today, we are doing so much better. Back-to-school is great. I could see classes full of students, everyone engaged, teachers, educators, coordinators, the whole team. This is not a commercial process of attracting students. No, no. It is managing a much deeper link that we believe we have. We have to nourish that with our students. This is what creates the quality of our revenues. This is what really provides us to have an improvement in average ticket, providing better experience, always focused on operating discipline, careful, very strict control of expenses, overcoming operating challenges and fully committed with academic quality because this is our DNA. It is to deliver education of quality to many, and this is what I would like to emphasize. I would like to thank all educators, all students. I've talked to so many students about the challenges. We are very firm and confident and I'd like to thank our Board of Directors. Yesterday, we had a meeting with them. They are constantly supporting and challenging us in this third wave of Anima. Carina, back to you, and I'll be glad to answer any questions. Thank you.

Great. Thank you, Paula, Tiago and Atila let's start our Q&A session. [Operator Instructions] The first question comes from Flavio Yoshida with Bank of America.

I have 2 questions, actually. First, concerning the dropout, the attrition rates. The core segment had an increase in dropout rates, and it has impacted the base. I have 2 points to ask. When do you expect it to reach the previous rates? And have you already dealt with the issues of the first quarter for this next cycle of intake? And I have a second question concerning margins. The main cost lines were more stable, and there was a gain of margin, which was supported by the line of others. What should we think from now on in terms of margins?

I'm going to start with the second part, and then Paula can answer the first part of the question. We have a very clear commitment with control of expenses. It is a priority to us, and it can be seen in our results. We are controlling very strictly all the numbers and the recoveries that we have observed a part of the business, business as usual. Credits, for example, that we have of PIS and COFINS, taxes that are now going to be offset with PIS and COFIN over financial revenue. And in the next 12 months, the credit will be turned into cash. This is part of our businesses. We have to experience that on a yearly basis. It's not going to change. It's part of the business, credit over expenses and then benefit over revenue. There is nothing unexpected there. And I'd like to emphasize once again our understanding that we are working with stable margins year-over-year. We are not going to focus on gains of margin, but rather efficient expense allocation so that it can be translated into additional quality to our students. This is the company's philosophy, and we're going to keep on doing it. Paula?

Thank you, Atila. And thank you, Flavio. Just understanding the dropout rate that we had in the second quarter, which was mainly due to the in-person and semi-in-person course. First, we have more new students. We've made a very good intake movement. So more freshmen. We also have more students in the semi-in-person process, which we tend to have more dropout and the operating challenges. In terms of operational challenges, which were changes being done at the same time, product, educational plan. We try to do it all at the same time. And yes, there was some noise, some minor changes, maybe some more complex challenges, but we've solved them all, and we brought the teams together. We had a war room. We managed the prices. It's all solved. So concerning trend, it's already stabilized. The end of half of the year, it was stabilized, drop rates went back to the expected levels. So that's a problem that lies in the past and above all, what matters is not the problem, but rather the solution. What have we learned from it. We have become more resilient, a number of points that we detected. Of course, nobody wants problems to have. I am a goalkeeper, but I don't want to have goals being scored on me. So I think we've become so much better in adjustment of governance, management system. And I believe that today, August 14, back-to-school, just running seamless, no noise, no attrition, no operational challenges. I think we've done our homework, and we are operating at a very much better level.

The next question comes from Marcelo Santos with JPMorgan.

First question concerns the entry test for the second half of the year. How did it go? And secondly, average ticket. Do you think -- still think it's a favorable average ticket? What do you see against your competitors? These are my 2 questions.

Marcelo, we've maintained our strategy that we've shared with you, sustainable revenue, growing volume and ticket. This is exactly what we've been focusing on. We keep on growing. And this is something that we are working with AI, commercial strategy. It's a level of details that now we can see campus by campus. It used to be brand by brand. Now it's campus by campus, where there is more space, investing, getting more and more momentum. So in practice -- and of course, we are not going to give you any guidance towards that. But I can tell you that we are following the same strategy, growth of volume, increase of average ticket, and we are very comfortable. We know the market is more aggressive, but we are very firm in our strategy without going into war prices. We keep on with our purpose because it's not only a change in price list, but it's an improvement in experience, engagement of faculty. This is the virtuous cycle that we have at Anima organizations. And once again, there are 74 campuses. Some of them can have improvement in tickets, other maybe less. And this is what coordinate all our campuses and our businesses. What about volume of entry test here? I think it's also aligned. The first half, we ended quite well compared against the market. In-person market hasn't grown and we did. So the first half of the year, fine. Now second half, we are doing okay, in line with what expected. And I think it's important to talk about the medical course. Maybe Tiago can say something as well because most of our medical schools, we didn't have half year entry test. We are directly going to 2027. So at the core, we are aiming high, doing okay. It's challenging. It's not easy. We are not celebrating, but we are doing fine. really focusing on our initiatives and the same for the medical school. Maybe Tiago can jump in and say something.