Yduqs Participações S.A. (YDUQ3) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to Yduqs conference to discuss the results for the fourth quarter and full year of 2021. This video conference is being recorded, and the replay will be available at the company's website at www.yduqs.com.br. The presentation will also be available for download. [Operator Instructions] Before proceeding, we'd like to clarify that any statements that may be made during this conference regarding the company's business prospects, operational and financial projections and goals are the beliefs and assumptions of Yduqs Executive Board and the current information available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore, depends on circumstances that may or may not occur. Investors, analysts and journalists should be aware of events related to the macroeconomic scenario, the industry and other factors that may cause results to differ materially from those expressed in the respective forward-looking statements. Present at this videoconference, we have Mr. Eduardo Parente, CEO of Yduqs, and Mr. Eduardo Haiama, CFO and Investor Relations Officer. I would like to hand over the floor to Mr. Eduardo Parente, who will begin the presentation. Please, Mr. Eduardo, you may proceed.

Thank you very much. Good morning, ladies and gentlemen. We're doing this session in English as an experiment. We got some feedback in the recent past that sometimes that translation is not the best or I speak too fast or -- so we decided to make 2 sessions. The first one being held in Portuguese and translated to make sure that if anyone is curious enough to watch both or feels more ease with a Portuguese version. And the second one being English, and we'll leave this recorded, I think, for someone starting to study the case, might be interesting to listen directly from us without a translator in between what's going on. So the idea here is to go through the same content that we want -- just went in Portuguese, perhaps a little slower. So people not familiar with the case, can understand better what it means. We would appreciate if you can give our Investor Relations some feedback on what you believe on this initiative, so that we can evaluate if we continue or not doing this on the coming quarters. So my name is Eduardo Parente, I'm the CEO of the company. I would like to start on this page here with the highlights of the previous year and the previous quarter. All in all, when we look into 2021, we see a second pandemic year in many ways, rougher on us because on the first pandemic year, we had, had a very strong intake on the on-site in the first half of 2020 before the pandemic hit us. So that did not happen in 2021, as we look at the year as a whole, we had a bad intake on site in the first and the second quarter, which would have hit us hard, had we not provided an evolution in the other businesses. that when you take a look at the overall year result, we had a 2021 result, very close to the last pre-pandemic year with very little adjustments on nonrecurring versus the first year of the pandemic, okay? So all -- when you take a look at the highlights here, on the left-hand side, top left-hand side of the page, we see average tickets either flattish or moving well versus the previous year. We had strong renewal rates. On the digital side, it's the first time we hit 80% and important evolutions on NPS. I think a lot of that credited to us, not only improving a lot of the infrastructure that we have in our Campi, but also adding a lot of technology to everything that we do here, to the whole student experience, but also to the behavior we had during the panamic and on this comeback. There's a lot of appreciation from the students on how fast we came back, we actually came back a year ago in the on-site with 20% of the capacity always thinking about safety and the best solution for everybody to keep healthy. We came back 20% 1 year ago, 50% in the middle of the year, and we're back full speed now. So there's a lot of appreciation of this set of things that we've been able to provide in the past years for the students. But looking to the middle of the page on the top, we see our netting of our revenues. There is a 14% growth versus the previous year, the reported revenues. We've been saying for quite a while that last year, the 2 high-growth businesses with total half of our revenues, and that happened. Those businesses, when you look to the right-hand side, it totaled 70% of our EBITDA, which, all in all, when we look at the reported numbers, is a 37% growth versus the previous year. When you look at this dark blue square here in the middle of the page, in the rectangle is about us being able to hold on to the financial position that we had before and during now after the pandemic, 91% cash conversion is more than what we had before the pandemic. We have almost BRL 2 billion in cash and less than 2x net debt to EBITDA, which we think is -- on this moment, after pandemic a war going on, it's on the safe side to be, and I think this is one of the strength side versus the rest of the sector here. On the table on the left-hand side, on the bottom left-hand side, we see that the results both Q4 and all full year, they are -- the adjusted EBITDA very much in line with the previous year, which I think there's 2 things. One, we all in all, a rougher year especially in terms of the on-site, and we're able to sustain results and also near the pre-pandemic numbers. But also that the adjustments that we made to the EBITDA in 2020, they were accurate reflecting the medium-term perspective. The adjustments that we had this year 2021, and you can see the nonrecurring items line there, they were a fraction of what they were in the previous year. And the adjustments here are not -- most of them are not related or we're talking more layoffs that we made in the fourth quarter. And in order to keep on reducing our costs and becoming more competitive. So reported numbers, obviously, they are much higher than they were the previous year and the previous quarter. But when we see adjusted EBITDA, which I think is a way to look at this, numbers in line with the previous year and better than they were pre-pandemic. And again, in a year that the on-site suffered a lot, and we're very glad that we had such a strong portfolio with gross revenues. On the right-hand side here, we are moving even further on the digital side. We've been working first phase of digital side was a lot on the experience of the -- what we call the client experience, the customer experience, which is the payment experience or how can navigate to see these grades, we moved on to the student experience, which is the hope pathetic side, the way they learn the way they experience the whole learning system and how we support faster in the classroom with the greatest technology. Now we're moving towards using artificial intelligence to understand who is learning what, we're getting the 260 million questions that our students answer every semester. And we are understanding who's who, who's teaching what, what is the best method to teach what. So this is feedback into the system. And we're evolving a lot in -- and the way we see our learning system and who is the best professor we can incentivize professors moving forward, the best guy, not only based on the student perception, but also on the learning. We can compare additional learning on site and see what's working, what's not working over there. On the far hand right-hand side, we had the medical students. Medicine is important for any institution in Brazil, is a course to have way more demand and supply in a very steep cost curve. So if you know how to operate this, you're going to have very interesting margins. If you don't, you're going to flatten the margins. We are, as an in every business that we are on the left-hand side of the cost curve. We had given last year a guidance of between 6,100 and 6,500 students, grad students, undergrad students finishing the year. We finished the year with 6,400. We've given the guidance for between 7,100 and 7,500 for this year. A lot of the growth coming from the maturation of our courses, which means a lot of our courses are the first or the second year of the classes. So we have either 5, 6 -- 4, 5, 6 more years to grow just based on the intake. But also on the authorization by the Education Ministry of another 200 seats, completely in line with our plan, no surprises here, but this was good news that came in February, March this year, okay. So moving on to the premium business. We -- pre business, we call what is the high-end business education that we have. It's not only a business, a lot of the others started this business. We call it a IBMEC. And on the medicine side, which I just described to you. Medicine is something that's been growing more than 30% year after year for quite some time now. IBMEC is something that we acquired in 2020. So you see a very high growth of revenues between the gray area on the second bar chart here. We see high growth there. This is because in 2020, we were not accounting for the full year 2021 that came for the full year. So all in all, this unit grows substantially. When you see on the adjusted EBITDA, the high growth versus 2020, if you -- of 28%. If we look to the report, it will be even more, but that just is the right number to look at. When we see the margins on the right-hand side, the margin in 2021 was smaller than the margin in 2020. This is something we had already advanced to the market because as medicine courses, they mature, the classes become more expensive. We have a very high cost at the beginning, the installation of the class and then as of the fourth year, of course, go up as well. So when we see this 4% to 6% is more or less what we think is going to be for what we believe and what we project is going to be for the future, no minor variations around this number. On the bottom left-hand side, what we have is a student base. Here, we account for the full base. It's only undergrad and grad students. You'll see the medicine base growing at 6,800 is both grad and post-grad -- undergrad and grad, sorry. When you see the post-grad was a very bad year, this pandemic year. So on the gray side, you'll see the total number of IBMEC students shrinking. But actually, when you see the undergrad, that number is growing. When you see the middle of the page, the 6,400 to the 10,800 there, this is the growth that we have just by maturing the courses that we already have. So our undergrad base finished 2021 at 6,400. This is the number I just told you on the previous page, it's going to be between 7,100 and 7,500 at the end of 2022. And that growth until 10,800 is a growth that is already contracted based on the allowance of seats that we have, the authorized seats that we already have. So there's a 70% growth contracted with us without any additional license for the government. And we expect additional licenses to come. If you want a deep dive on that. I'm not going to cover it but on the back half of this presentation, you can see scope-by-scope, what we have and what's expected to happen and when. Moving forward to the right-hand side, we have rough flattish prices both on medicine and in the IBMEC side. Of course, the reported is a very big increase. That's what, at the end of the day, enters our pocket. But when you want to understand market trends, we have a 4% increase versus the previous year. Last year -- last week, we announced the acquisition of Hardwork Medicina, which is a lifelong education for doctors is a start-up founded by 2 guys 3 years ago. We enjoy very much this model of -- we don't think we can be the venture capitalist, but once people have a certain number of students and a already cash flow generation. We understand that we are a good platform for these kind of businesses to grow because of our technology, the student base that we have, the market capabilities that we have. So this is the second one we do in a year. The first one is Qconcursos, I'm going to speak about it in the while. But Hardwork was founded by 2 guys years ago, and it was a fantastic growth business that we brought in last week to add to our portfolio, okay? So this is premium. Let's go over to digital. On digital, we have 2 very different behavior on business in the digital learning. One is what we call Lifelong, which is a lot of post-grade 3 courses. The other was the Undergraduate relative to learning. Digital, the Undergraduate digital is always represent high growth since many years. So we have already a substantial base, very strong cash generation, fully asset-light business. This year, we reported 34% growth in revenue that you've seen there. Lifelong, again, suffered more on doing the pandemic. When you see the far right-hand side there, this is why the margin dropped 45% to 39%. There are 2 factors here. One of them being lifelong living a very tough year to people during the pandemic went more to the regular undergrad courses. The second one being that the growth is coming a lot from the new sites -- the new sites would pay higher commissions to the new sites, average commissions roughly around 30% here. On the new sites, we paid up to 50%. So this has an impact on this growth that we have. We see -- unlike on the premium side that I told you, margins should be around 46%. For the future, we see these margins going up a little bit in the near future. Again, a very important growth in EBITDA, 17%. This unit already represents 39% of our EBITDA as a whole. The bottom-left-hand side, what you see, the growth in student base, there is a very important growth on the Lifelong learning. This is about the acquisition of Qconcursos. You see that on the base. You don't see that on the net revenues. The average ticket of Qconcursos is much, much lower than what we charge. We're talking on the digital side, around BRL 200, the course can cost about BRL 20 is the average ticket. So you'll see a very important growth on traffic. You see effects in the medium term on our CAC, you'll see effect on the way we see technology as well. But on revenues, it's a very healthy business, strong cash generation, but smaller than what we have as a long distance learning units business. What we see on the units on the business lending centers in the middle of the chart, we had given the guidance of -- distance learning centers by the end of 2021. We fulfilled that. We're talking about 2,500 by the end of 2022. Important here, as I said before, most of the centers are still maturing and all our growth comes from new centers, the old centers, they hold their base, mostly on the big count. Most of the growth from the distance learning centers that are coming from small towns. We have -- the smallest town that we have at this distant center in Brazil has 2,600 inhabitants. We were able, under the leadership of Aroldo here to move our breakeven on a distance learning center from roughly 150 students to 32. So this is why we're being able to grow on the countryside so much. These guys, especially 678 that you see on the bottom of the chart there, they are gaining a higher commission than the average that we pay so that we can speed up the payback and attract more investors, they are more entrepreneurs to open the sites with us. Average ticket, they -- against an average so they're moving sideways. I think that when you see the same course year-over-year, though, that ticket is probably lower, we're being benefited by the mix of courses that we have by the mix of distant learning going to the countryside, you can charge a little more there because you have less competition. So when you take a look at the same course, same site 2 years in a row, that ticket is going down, but we have the benefit of the mix that's favoring us to move sideways on the average ticket. The Qconcursos is the net [indiscernible] that we bought early last year, early around March or April. They are a fantastic machine of engaging classes C and D on study. Basically, they work in a freemium model. On average, they have 1.4 million users every month, roughly 1/3 of those payers, 1 million people use them for free. There are more -- almost 20 million people on their base there. It is growing very fast, their CAC is very close to 0 because the engagement they are able to generate they are a very low-cost operation, very young guys, again, generating substantial cash flow on this revenue that you see. But more important than all, they have a very big impact on the way the whole Yduqs Group see technology, they think of simple solutions, and we think they are very used to analyzing tests and answers, and this has been very helpful for the journey that I described to you earlier of us analyzing the 260 million questions that our students answer every semester. So not only this is a sound financial business that we think has a very strong potential to grow and to create its own independent avenues. But going to see the kind of money inflow that some of their competitors have. We think that we can position this as an independent business in a very healthy scenario. But all in all, it's having a very big impact on the way we see things, okay. They have an independent office. There's none of us working there. Sometimes they come here and help us with things that -- specific initiatives that we need and then they come back to their world, a very independent operation, very, very sound. We're very excited about this acquisition that we made. Moving on to the on-site operation, the on-campus operation. As I said in the introduction, it was a tough year for us. We had a 2 bad intake seasons that has hit us hard on all the numbers that you see on this page from student base, on the revenues and the adjusted EBITDA, on the margins that we have. I think the -- they are very important in this page: a, yes, this was highly compensated by the other businesses that we have, the high-growth business and high-margin business that we have; and b, you'll see towards the end of the presentation that the intake season this year has been completely different than the past year. I think whereas the past year, we had a strong shrink versus the year before. What we see here is a high growth versus the year before. So we are very positive that the impact on these numbers are going to be very different than what you see here towards the other end of [indiscernible]. So we've been investing in the bottom middle of the page, we've been investing a lot on the shift towards, the course towards the health side, which is more expensive courses with a higher margin. and this is being proved a good strategy. When you see the right-hand side bottom here, you see prices evolving. They have stopped shrinking since 18 or 24 months. And now we see some movement towards the positive direction here, okay. With all that said, I'm going to hand over to Haiama. He's going to talk a little bit about the numbers and I'll come back with a further perspective of the business in a little while.

Thank you Parente. So moving to net revenues. I believe like the main highlight here is return to growth mode. So compared to 2020, even not just as figures, we grew by 90%. And the segment that are growing a lot to continue to be premium and digital. But for this year, probably you're going to see an important growth coming from the on-campus given the intake cycle. So that by the end of 2021, about 50% of the total revenue already represented by digital and premium segments and the remaining ones by the on-campus. Another highlight is the severe reduction in nonrecurring effects instead represents more than BRL 200 million. [indiscernible] was about like BRL 35 million. And for 2022, this number should be much lower than that. We are talking about maybe in the first semester BRL 1 million per quarter. So that overall, the numbers we posted were much cleaner than it was last year that you can see on the chart on the right-hand side on the bottom. Moving to the cost. What are the main highlights in terms of cost. So you have, first, like the way we were able to manage costs in line or below inflation. So you can see in the chart below, like quarter-over-quarter of '20 to '21, we were able to increase by only 5%. And the main highlight here is like advertising that we mentioned in the first quarter of last year after some of the market participants, they got confused about the level of spending that we had in the first quarter. And then we mentioned like from the second quarter until the end of the year. The absolute investment will be the same that we had in 2020. That's exactly what happened. That's why you had a drop of 24% in this line in this quarter. The third highlight here is the bad debt/discounts, financial accounts that has been kind of stable for quite a while. That shows our collection rate is still robust. We're still converting a lot of cash in terms of the total revenue that we have. So that when you look at the EBITDA, what do we have? First, much cleaner numbers? So the reported EBITDA grew by almost 80%. The adjusted EBITDA, kind of flat kind of 276 -- 275. And you look for the full year, it's the same pattern. So we have a growth of 40% reported growth. And in terms of adjusted one, it's quite stable, 1%. Moving on to the net profit slide, there is something that I wanted to call -- First, it's out of '20. It was the year that we acquired a talent when we had almost BRL 2 billion of net debt and we concluded this acquisition in May. So until then, we were net cash and now we are -- we have a net debt position. On top of that, this year was the year that the Central Banking in Brazil start to increase interest rates. And that's already been related here in the numbers comparing '20 to '21, the increase in net debt and the increase in interest rates. Another highlight here is the gap between reported income to net income, if we look at ex IFRS, what is important that because IFRS consider that all the leasing payments to be adapt, and it's a rental. I mean, that we can extinguish most of the rentals that we have. It's a short term or in the -- that we can -- I just almost immediately. So if you compare to what we had in terms of net debt rentals as a rental [indiscernible] debt, our reported income would grow from BRL 160 million to BRL 200 million. This gap should reduce over time and even revert, right, so that reported income should be bigger than the ex IFRS income when the interest rates adjust over time in this cash flow. Finally, regarding this slide is the dividends that we are proposing to pay. We are proposing to pay the minimum one, BRL 38 million. We believe like there are some good potential opportunities in the near term, either for a potential position or to do our share buyback. And that's why we are recommending to pay the minimum dividend at this time. On the next slide, we talk about the cash flow. When we look at the cash flow, all the EBITDA, how they translate into free cash flow from operations. This year, we converted about 91%. In 2020, it was 102% and why we had a drop basically because in 2020, given the drop in net revenues, we actually -- we benefit from the working capital that was a positive impact last year in 2020. This year, given the growth, of course, it consumes some working capital against the cash conversion to 91%. But more important than that, when you compare to 2019, it's not here. In 2019, it was the pre-pandemic year, we had a cash conversion of 87%. So to show that our collection rates and everything else has been very robust since mid of 2020. Finally, in terms of CapEx, we continue to invest heavily on this transformation IT and 2022 should be the last year, big year of these investments. 2023 should be smaller than that when we conclude most of the investment in IT part of the business. But for 2022, the absolute investments in terms of CapEx overall, should be more or less the same or what we have invested in 2021. With that, I conclude my part and go to Parente again.

Thank you, Haiama. I think that for someone coming to the business now, I think this is probably the most important chart, talks about -- a little bit about past and how we see the future. We put here the journey that we've been and we separated in 2 lines here, one of them about business optimization, the other one building a bit in the future. And we started the journey in 2017 because it was -- we had a failed merger attempt with another company, and we had to reconstruct a lot of the business here. And when you see 2017 and '18, the focus on business optimization was a cost. So we -- you see the number that we chose to illustrate the effort that we made was this faculty cost over net revenue. We reduced that from 29% to 18% -- we don't see anybody else in the market whose numbers are similar to those. And there's a lot of technology involved in this, both on the digital side of us giving very good digital content for the student, which in many ways, replace our professor to ours him learning by himself. Then on the analogic side of us understanding that if you have a class that's with 5 students in the first semester, 5 in the second semester and after that class once a year for 10 students and you're going to optimize the cost as a whole. When we look at the bottom of 2017 and '18, we invested a lot of time in making sure that we've got Medical's license for additional medical seats where -- and you can see that our medical base went from 3,300 to 6,400 at the end of the last year, and I showed you a few charts ago that we're going to grow to 10-ish without doing anything just for natural growth of the business. So there was a very good investment that we made in 2017 and '18. In 2019, on the business optimization, we basically reversed some decisions that we made the were bad decisions, including self-financing, entering our K-12 and opening greenfields. We chose to illustrate that our student per campus is pretty much the same or slightly below what it was on the on-site business in 2017. Despite the base being much smaller, especially due to the end of the FIES program, which was this government financing program that was very favorable to the students and for us that ended in 2015 and started strong drops in the number of students in the base and the revenues and the EBITDA they generated as of 2017. On building the future 2019, we hit the gas on opening new distance learning centers. We had 284 in 2017. We finished last year with 2,000. We're going to finish this year at 2,500. So this is also something decision made in the past, the been of big time now. 2020 and '21 was a lot about fighting the COVID effects and cash preservation, already mentioned these numbers in the beginning of the presentation. We think that we're second to none and first by far, in terms of financial health in the sector. And on the bottom, about in the future, we created this independent company called [indiscernible], which creates white label content for all our units. We invested a lot of digital transformation. We bought Qconcursos. Number chose to illustrate this path is on the NPS variation, but we could have chosen as well retention and satisfaction with professors and the engagement we have with professors, everything is being very positive and I think we're creating a very solid base for the future years. The bar chart on the right-hand side is the so what of all this 5-year journey that I just described to you. When you look into our business in 2017, BRL 1.3 million, and virtually all of our EBITDA came from the FIES program. So this financing for the government was very favorable to us. We increased a lot of the demand that we had when we increase demand, you increase the overall prices of the market, you increase -- you reduce the sensitivity to costs of our students, so he tends to choose a higher ticket courses. And above all, it did not have any delinquency, although delinquency was absorbed by the state. So this was something that was very good for orphan education institutions, including ourselves. In 2017 and 2021, that number went from BRL 1.3 billion to BRL 300,000. Those BRL 300,000 in revenue -- I'm sorry, 300 million, you changed the chart right there -- those BRL 300 million in revenues from FIES, it's not the same as it was before because it's a new FIES program, so it doesn't have the same basis that delinquency is ours. It is the same as regular student. So it's not a nova statement to say that we lost BRL 1.3 billion in revenues. In a very high margin, we estimated around 75% margin that we had in 2017. But what we see at the right-hand side of this bar chart is that this slightly became a BRL 1.3 billion business for us. And when you see the BRL 0.7 billion that on the premium side there, it will naturally, with the seats that we already have, just the maturation of those seats like I explained before, we're going to reach that BRL 1.3 billion very soon. So it's not wrong to say that we created 2 FIES business that are very asset-light, totally independent from government policies, high growth with a lot of market to growth in place of that BRL 1.3 billion business of FIES. So when you look into the 2021 numbers, you see 2 very healthy businesses, BRL 1.3 billion [indiscernible] about -- anytime soon, it's going to reach that BRL 1.3 billion as well instead of BRL 1 billion. And we've been -- people who follow us know that we've been for the past 2, 3 years, saying, okay, on-site is shrinking, but these 2 businesses are holding us together, which is actually what's happening. But we see the on-site business moving forward in a totally different way. You're going to see soon 3 charts from now the intake numbers that we're seeing for everything, including on-site. So we're very positive about the trends that we're going to be talking about already in the first quarter, but more and more on the next quarters and the next years. About 3 very healthy business, 3 very healthy growing business that -- I think that when you look at us versus the competition, this chart also illustrates how different we are in competition. I does not grow in distance learning or have medical courses that are already mature or not in a position that we are to capture the on-site growth that we see coming on the on-site business. Moving on to the closing remarks here. What we see is that we are recovering from the pandemic, showing better results. We have a change in our revenue composition that's very healthy. We are reinventing the business with a lot of financial health and improving efficiency and investments that are ensuring the future sustainable growth for us. And the investments that we made in technology since a long time and now specifically on digital transformation, it's paying off big time for us as well. So some of the details here on the right top side, 60%, 61% of our students are already in the new base. So that in the new educational system created by a senior company that I mentioned to you. There's a lot of quality perception improvement both on the student and the professor side, which is very important to us. Campus intake coming in very strong, which is what we are showing on the next chart for you. So what we see here is a guidance that we are used to give on the even waters. So we're always talking about now and in August, how the intakes are coming. Let me just spend some time here because I think it's very important that you understand one by one here, okay? Premium is 2x a year intake. So it's now -- so Premium is 2x a year, March and August. And what we see now this increase in intake between 10% and 20% is very close to its end. So it's a fairly precise number here. When we report that average ticket is increasing versus previous years, basically for 2 reasons, medical courses are pulling this up. But also, when you see on the premium, the number of freshmen compared to the whole base is a smaller proportion than you see on the other business. So premium is always growing steadily based on the number of seats that we have. So the number of freshmen does have an impact on the average ticket, but it's not as big as in the other business. Digital learning is a quarterly business. We have intakes every quarter. So we're finishing one intake now. We're going to finish another one in June. We're going to finish another one in October and we finished another one in December. So these numbers are growing immensely now in this quarter, between 50% and more than 60%. It can be -- we're looking at the numbers perhaps even higher than that. Take that with a grain of cautious because the base of comparison that we had last year, in March, we're pushing a lot of students to start only in April. So when you see on a semester base, which is the right comparison to make here, the increase numbers are going to be smaller than that. We're going to be talking about roughly talking to apples-to-apples with I think roughly 20% less than we're going to hear. We don't want you guys to have a big excitement about the first quarter and the second quarter, which is likely to show a decrease, you have a disappointment there. So all in all, the first quarter is going to be coming very strong, maybe even above 60% growth. But when you talk apples-to-apples, think about 20 less of about 40% or 50% growth there. Ticket, there is a dynamic that when you're bringing in-sourcing so many [indiscernible]. We have big discounts on the first semester for everyone. So when you saw the average ticket of BRL 200 for the digital learning, when people are coming in, they are coming at BRL 129. In some examples, even less than that. That's what they pay on the first semester. So when we think about what's happening to our tickets, we think about a lot about the second month of payment. Second month of payment is coming very much in line with what we had in the past, okay? But we have a huge base of freshmen coming in at very big discounts for the first semester. So that pushes our prices -- our average prices down. So we're going to see in the first quarter and in the second quarter, lower prices than in the past year because of this massive amount of people coming in at bigger discounts. When these people reach the seventh month, you're going to see prices coming back to the normal as they were before. Natural question that will come to that. Doesn't that phenomenon repeat in the second half? No. Okay. In the second half, what happens is the intake is much smaller than in the first semester. So you don't have that relationship refreshment to base as big as we are seeing now. So we're likely to see numbers close to 0 or around that on the second semester, same fault applies to the on-campus. On-campus is another semester business. So it's now in August. So when you see this number growing 30% to 50% versus last year, we're looking into -- of course, this is quarter numbers, but we semester numbers don't change much from that. So this is what I was mentioning before. This is a very important number for us. We have idle capacity to absorb these extra students coming in, which means that there's going to be a lot of additional revenue without a lot of additional costs coming in. The price effect is the same as I described in digital learning. So this massive amount of freshmen will bring our average ticket for the first quarter and the second quarter down. This estimate here is for the first quarter. But the effect that we see on bottom line and EBITDA of these numbers here for the first quarter are very, very positive. We're looking into an important increase of EBITDA in the first quarter compared to last year. And of course, the first quarter has impact of this massive intake, has impact of our DIS program that's discounts that we give to people that we charge them back over the course of their course here. So we're expecting a very, very healthy first quarter that we're going to be announcing mid-May, okay. I hope that was clear. Happy to entertain any questions on that. Last but not least, page if it can change. Haiama gave in the news on Friday that he's leaving us. He got this offer that he cannot turn down, an opportunity of its lifetime. He didn't tell me what it is. So people are asking me, if anyone knows, please tell me, he's going to be announcing that in a couple of weeks. And we decided to -- the board decided yesterday or this morning to replace him with Rossano Marques. Rossano Marques, the guy in the picture there has been with us since 2018. He joined us from Atento. He was the CFO of Atento before joining us. And these 4 years has been with us actually, the whole group has been here for around 4 years together. I am -- is the first important loss that we have on this group. But since you joined here, Rossano has taken care of a lot of things very close to the financial area, noteworthy the IT department and the shared services, which is a lot of finance and payments. So he's been sitting beside Haiama here for the past 2.5 years that Haiama's been with us by [indiscernible] you a lot of ideas. He's a guy who graduated from a top school here in Brazil, this is MBA from MIT. His whole career before joining us was on the finance area. Haiama, do you want to talk a little bit about...

First, I'd like to thank a lot for the company and everyone else that I met for all this 2.5 years, very intense ones, especially during the pandemic period. And to say that I'm very comfortable to leave the company at a very good moment after this period that I've made here, like Parente mentioned in like 2 slides, before the company almost -- I wouldn't say completed as there is many front that we want to grow. But the big transformation is over. And I believe like 2022 with the pandemic's almost over, we can now unleash, let's say, our plan that it was supposed to be unleashed in 2020 then came the pandemic, and Rossano, I believe, like probably the well most prepared for that job, given that lots of part of this transformation that we have been implementing to us under his umbrella. So with that, I believe like I will say good bye now, but it's still going to be a month so that we have a very smooth transition. But again, very thankful for all the experience that I had at Yduqs.

So having said that, I would like to close this presentation with an overview of what I believe was the year I think that we were able to create a business -- 2 businesses, the size of FIES, here that are very profitable and high growth that have showed a lot of resilience during these tough times. When we see what's coming up, there is an important intake coming that will change the dynamics of the profitability of the on-site, having a strong impact on the first quarter and having a stronger impact on the medium and long term. We expect to resume profitability on the on-site. And again, we think that the ties that we had either end of year, financial crisis, COVID pandemic are behind us, and we expect to come back to you in mid-May with a very strong result for the first quarter. Thank you very much for your trust, for the guys that are with us. Thank you for being with us in these tough times. And I hope that when I come back with Rossano here mid-May, we are looking forward to have very good news for you.

[Operator Instructions] Our first question comes from Vitor Tomita from Goldman Sachs.

Two questions from our side. The first one is on Lifelong learning. Following the acquisition of Qconcursos and Hardwork, some volatility in graduating Lifelong learning results in the fourth quarter. Could you elaborate a bit more on your strategy for the Lifelong learning segment in 2022? And also on what we imagine Yduqs Lifelong learning could look like in a longer time frame? That would be our first question. And our second question would be on medical schools and tickets. Following up on that discussion on tickets, on the sliders and given that it's -- and given the below inflation increase in premium tickets, could you give us some more color on how you think about pricing decisions and price readjustments in medical schools more generally, given that there is more demand for seats than there are seats available, but I imagine there are also some intact quality considerations that are made.

Thank you very much, Vitor. Good to hear from you again. Excellent questions. Lifelong learning, we are huge in Lifelong learning. When you compare us to the competition and to even people who are not in the graduate business, we're likely the biggest lifelong learning player in Brazil. Though we have an issue that a lot that we do is tied to the path, very analogic. So the coming of Qconcursos and of Hardwork and others that we're looking into have this intent that we find the right platform to be very competitive. When we talk about Lifelong learning, there are a whole spectrum of things from BRL 20 to BRL 20,000. And I think that we're good in everything that's analogic and very well recognized for that. But if you want to be a big player on that, you have to find the right platform to deliver those results. And I don't think that we are thinking about either creating that from scratch or buying somebody that's trading at a very high multiple of revenues of students or whatever. So we went in to the medium-sized and we've made some interesting financial deals to bring people that will help us moving in that direction. And I see us -- this is the fourth growth avenues. This is the reason we reported separately because we wanted -- when we see this sky rocket. You see -- you're already used to that business are not coming with a surprise 1 year when you're down the road. So, oh my god, I have this business, let me tell you about it. And the expectation is that we can still this year, we will launch some very interesting things that we're going to bring back to you in a little while. We don't want to advance our movement to the competition. But we expect this to be a new source of growth for us in the near future. Regarding medical school tickets, we had this pandemic time. that it was a little rough to get aggressive there. What we -- what I can tell you is we've been moving towards the premium, within the premium on the medical side, taking, for example, Rio de Janeiro, where we have our biggest operation. 3 years ago, we used to charge a freshman BRL 8,000 and the competition charged BRL 8,000 to deal with changing 13.5% and the competition charges the same BRL 8,000. So the movement of making this premium unit having a different brand, investing a lot in the equipment and the facilities and professors is paying off big time. Of course, when you see tickets on the big cities like Rio or [indiscernible], it is completely different when you see on small accounts in the Northeast. It's why the average is not BRL 13,000. The average is closer to BRL 9,000. And of course, we have this 2 types of school strategy where we can offer something in the range of BRL 8,500 and BRL 9,000 to somebody with best means and offer a very, very premium experience at BRL 13,500. We see tickets to the future moving at inflation or above that, perhaps not in the same pace that we've been moving in the first years that we've changed a lot the quality and the perception of the course like I mentioned before. Did I answer your question?

Yes, very clear.

The question-and-answer session is over. I would like to hand over the floor back to Mr. Eduardo Parente for the company's final remarks.

Again, ladies and gentlemen, thank you very much for your trust. I think that 2021 was a year that approved our resilience. 2022 is the first year of the rest of our lives. If I can ask you one more thing, if you can give us our Investor Relations department feedback and if you think that this session was -- either you've seen it live or recorded afterwards, if it was worth it for us to evaluate if we continue this or not. Thank you very much. I would like to thank Haiama for his services, 2.5 years here. He made a lot of difference in the way we organize things and we -- and the way we view acquisitions and debt and our costs. And again, -- thank you, you all and 2022 [indiscernible] year for all of us. I'm looking forward to coming back with Rossano in May with great news for all of you. Thank you.

Yduqs' videoconference is now closed. We thank you for participation and wish you a very good day.