Yduqs Participações S.A. ($YDUQ3)

Good morning, ladies and gentlemen. Welcome to Yduqs' video conference to discuss the results regarding the first quarter 2. This video conference is being recorded, and the replay can be accessed on the company's website, www.yduqs.com.br. The presentation is available for download also on the company's website. [Operator Instructions] Before proceeding, we would like to clarify that any statements that may be raised during this conference regarding the company's business prospect, projections and operational and financial goals are beliefs and assumptions of Yduqs' Board of Directors based on the current information available to the company. Those statements may involve risks and uncertainties as they relate to future events and, therefore, depend on circumstances that may or may not occur. Investors, analysts and journalists should take into account that events related to the macroeconomic environment, the education segment and other factors could cause results to differ materially from those expressed in the respective forward-looking statements. It is important to stress that for a better viewing of the presentation, we recommend enabling full-screen mode. Present at this video conference, we have Mr. Rossano Marques, CEO of Yduqs; Mr. Alexandre Aquino; and Mr. Marcel Desco, Vice President of Sales and Marketing. We would now like to give the floor to Mr. Rossano Marques, who will begin the presentation. Please, Mr. Marques, you may proceed.

Good morning, everyone. Thank you for being with us. We're here to inform you the first quarter results of Yduqs. I have here our CFO, Aquino. Well, let's talk about the results. First slide, please. This quarter that once again shows the great power of Yduqs portfolio. We talk about this constantly. It's very common in our speech. This is our positioning. We are a higher education company focused on this horizontal portfolio. With different verticals, we can bring stability and confidence in the growth of results of the company. Yet another quarter that proves that this generates record cash generation, the company, BRL 276 million cash generation first quarter at market price, this is a return of almost 20%. We'll talk about how this drives our current buyback program. Let's talk about our portfolio strength of 2 major levers, Ibmec and IDOMED. At this moment, when we have challenges on demand, especially B and C classes, income problems with indebtedness of company, A-class products offer less for that. This reassures us as business cooperation as a result that Ibmec, IDOMED can be strong and behave well in the bucket is growing. Ibmec is growing 23% year-over-year, [ EBITDA ] 4% points that was happening before Ibmec, a brand that is increasingly premium. We bring the ticket view first quarter 10% above previous year. Well, very well positioned in the market as one of the main brands. And every marketplace with great growth opportunity. We're going to talk about Ibmec in a specific slide. Added to that, we have IDOMED. We knew it would be challenging for intake in medical schools because of the great offerings. We believe in the strength of our brand and the ascertain strategy. This is another growth, 10% year-over-year. Stable margin is considering investments and quality investments with a premium brand of every market it operates. We have very strong results obtaining highest intake, over 2,000 students for the time -- for the first time. In a challenging market scenario, the 2 brands together, we attained almost half of our business. This is a company that has over 50 years. It started with single brand, focused on a specific audience, has been expanding, and we see the strength of portfolio, Ibmec, IDOMED, new brands to the company. Well, they're young within Yduqs attaining half of the results of our company. This changed the profile. While we have this constant result strength of our business shown very clearly by cash generation. And our cash allocation with this cash continues in 2024. We show that we reduce so that we wanted to reduce leverage. Well, if we hadn't paid a dividend and our buyback, we would be at 1.2. A bit early in 2026. We're clearly following the space to get to this net debt EBITDA by 2027. This is the growth path. Even with the investments, buyback and constant dividend payment over the past years, we've followed the pace to get to this level of deleveraging. We keep our share buyback program. Our priorities deleveraging, we would actually take the timely opportunities in markets. So what we have FCFE new is a great opportunity for us. It's another successful buyback program just as the one we had in 2024 and '25. When we bring cash to the great driver, this change, we made some adjustments in the revenue recognition, turning our results simpler to understand more predictable and cleaner. A way of showing that is the drop in this DSO. So when we look at revenue over year-over-year, the results in this cleaner way is actually reducing DSO and also our bad debt. So we have drop in bad debt year-over-year. And we've been telling the market that we'll be continuously keep happening over the next quarters. Let's talk about individual businesses, and we'll go into detail on the next slide. Net revenue [ bigger ], consolidated company, we have a breakdown in each one of the brands we talked about, Ibmec, IDOMED. We have Estácio, Wyden here. First, highlighting what we talked about highlights to Ibmec IDOMED 49% stake. That was 32% in 2022. Since the pandemic strong growth of 2 brands that continue to present new growth levers. High margins with very fast growth rates. And we'll talk about the opportunities we see both for IDOMED and Ibmec. It's important to say that we have this view that is in a comparable basis year-over-year, excluding the fact that I have the loss in this addition or the this effect. Second quarter 2025, we started having a drop of this effect or addition. We talked about that in 2025 first quarter 2026 as is relevant difference here in terms of this addition. This improves the quality of our results and our earnings. It reduces revenue reduces bad debt and volatility over the years. This is happening. We see lower bad debt now in the comparative year-over-year. So the first quarter's drop in revenue, that is not relevant to cash is accounting that will reflect into lower bad debt. So this is important for comparable basis to bring this growth without the DIS number. The number is there, if you want to make the adjustment, it shows clearly what impacted. When we see comparable basis, we have a 5% growth in this environment that for families is more difficult in Brazil, 5% growth. And with the margin growth 7% in EBITDA. Now with the Estácio, Wyden, we have a resilience at a time of regulatory change, very challenging time. It's a year of transition, it's the year that we have the effectiveness of the changes of the legal or regulatory framework. This has been undermining the trust of consumers in the distance learning modality that was kind of pursued by this kind of regulation. But yet it strengthened the Semi On-campus that we had been highlighting. We named it as a modality under the new framework, it's a delivery format. Semi On-campus is very appreciated under the new framework. We see different intakes. Semi On-campus growing 67%. We're beating this segment. It's -- we bet a lot along with the government. It is really reinforced by this framework, and we have great room for growth with the expansion of supply or offerings in the various centers and we have our campuses on-campus, and we started offering that on the various centers and this great level that we have of expansion. Through our hubs, we have the strategy that we've been adopting on-campuses. We have a footprint strategy, actually privileging smaller campuses and more noble positions of retail, smaller campuses better located, better positioned with great Semi On-campus offering possibilities. And we have a strategy that we believe strongly that it's starting this year will yield great results in 2027. We have no doubt about that. Speaking on the legal framework, the changes of the 3 delivery pharmacy brings some challenges in this transition phase. Along with the scenario of indebtedness in families, we have been observing that through market analysis, other segments, retail consumption. So it's not different for [indiscernible]. It's a challenging year for this audience, for our families. So on a comparable basis, excluding the DIS factor, that is the third one that impacts its vision. This is just an accounting view. If we reduce that, it will keep on growing. Very much driven by Semi On-campus. It's a transition year that will bring great positive fruits for Estácio, Wyden. We believe very much on the part of the 2 brand. We see great growth potential Wyden, our umbrella of local brands. We historically grew a lot with a single brand Estácio made acquisitions incorporated into the Estácio brand, we decided some years ago to create this second expansion strategy with local brands that are strong, that have a positioning in a tier, second tier of population that allows us to have higher tickets, and we decide to keep the local brands under the Estácio, Wyden umbrella. So this has been having great growth potential in on-campus and digital. So we have good positioning of the [ one ] campus Wyden brand. We're going to strengthen that on the digital, actually, having the strength of the Wyden umbrella with great growth opportunities. Speaking of these outlook that are quite -- that is quite positive for the future, we have total intake without the performance we expected. So the base was a slight drop because of this digital distance learning change. It lost some strength and growth when we look at ticket structure, very important. On-campus following the strategy we've been talking about ticket recovery, change certain stability on its base. We've been fighting for growing ticket positioning, increasingly better position while recovering what we had lost, especially during the pandemic. This will bring some fruits. We have healthier cycles with a reduction of this better position ticket with a strategy that is less aggressive. We have better quality [ students ]. We have 88% of renewal rates, and it should improve in the forthcoming years. When we look at Semi On-campus and digital, the ticket is almost twice as much as digital. This migration of digital to semi brings this additional benefit. It has much higher ticket, with the behavior of students that we believe will tend to behave closer to the on-campus. We see that in the more matured [indiscernible] and renewal rates, we see closer to digital, but they have great concentration on students in the first second period. That's where we have the highest rates of dropout. When we have -- they move on in their studies, we have students pay more with a ticket that is stronger with a trend of greater retention. General quality of the student base will be higher than digital. Students, digital students, we keep the ticket stable in a very challenging market. We don't -- we're not doing anything crazy there. We're keeping it stable year-over-year, and that will be our strategy from now on. When we look at EBITDA, loss of margin and absolute numbers. Most of it comes from the DIS decline. If this factor were to be excluded, our margin would be stable. Again, even if an extremely challenging scenario of indebtedness of families, problems with revenue. A lot of the families revenue is being consumed in election year, usually complex for consumption market overall brings uncertainties. In this change of regulatory framework, you know the consumption decision of students has a horizon 2 up to 6 years. They need to have certain stability when they look ahead. So obviously, a year with so many legal changes brings uncertainties. Considering all the centers starting in 2026, a complex year, we bring results that are very robust for the Estácio, Wyden brand. Here, getting to medicine, in the opening, we said it's a year that would be challenging, considering the great offerings that we have in the market because of the consolidation of the past years. We worked hard in the past years to keep the IDOMED brand as the preferred brand in private education or medical education for our marketplace in this more fierce competition scenario. This has been happening in 2026, IDOMED brand is positioning very well, 10% revenue growth called by great growth of intake, 8%, and intake growth containing over 2,000 students for the first time, a symbolic brand or cornerstone for IDOMED. Congratulations to the whole IDOMED team in a challenging time, keeping the margins relatively stable. And we keep on making investments, keeping quality teaching, very well maintained structure of extremely high quality with the margin being kept at a very high level. We continue having ticket on lending very close to inflation to become and also influenced by the intake. We have a differentiated strategy. Here, we talked about the new seats effect differently. Different markets, we have appropriate ticket, appropriate to each environment. And we have some -- well, very high success in this strategy in Rio Janeiro marketplace that was competitive, becoming more competitive. IDOMED is performing very well with great intake, excellent levels of NBS, very premium fewer brands, students leave for best residencies and activities. So we're very well positioned in Rio. It's a very important marketplace for us. On the second premium, vertical Ibmec, expanding its portfolio that was more restricted in the past. It's been very successful. Of course, it's related to technology, law school and expanding its graduate study is very important. We haven't talked about that in the IDOMED. It's a very important lever, graduate studies. This is very important for IDOMED and also for Ibmec, it's a very large business here with the potential for growth that is huge. Only good news here, 23% of revenue year-over-year, very strong growth, and margin close to 50%. 46% margin, growing 3.7 [ percent points ] year-over-year with great growth, high growth and high margin with growing margin within that. Intake is doing very well, growth in ticket upper classman above inflation, but most importantly, intake ticket growing a lot 2-digit growth, positioning Ibmec as a premium player in each one of its marketplaces. We have 95% stable renewal rates, increasing profitability. So it's doing very well, considering all its metrics, it's going to continue being a relevant growth lever. We analyze new opportunities of growth levels that we have on our pipeline to carry out in the future. Getting to costs and expenses. I'm going to turn over to Aquino.

Talking about cost and expenses, I think they're very relevant point here for us to notice on the slide is that even going through a difficult macroeconomic with moment indebtedness of company's quality of our revenue engagement we had with students, we noticed a reduction that is strong in our bad debt. Well, we have a reduction of bad debt with lower discounts and more penalties paid. The 2 last impacting our financial results. We had an improvement of 2 percent points compared to the first quarter '25. Only in bad debt, the improvement was 0.7 percent points. Estácio, Wyden most impacted brands. Macroeconomic entries had an improvement at 0.8 point points. Additionally, if we make the comparison equivalent basis without the impact of the drop in this, we had an improvement of 1 percent point compared to the previous year. Looking at numbers as reported, we had an increase of 0.3 percent points of M&S, and this is very related to the increase in allocation of M&S to the 2 premium brands that are growing very strongly which is IDOMED, Ibmec. And looking to the cost G&A is related to 2 items. 1/3 of this variation comes from the increase of on lending to main partners, and half of it is linked to more collection with positive effect on bad debt and the other one related to the compliance of our centers to the regulatory framework. It will have a negative impact of our cost of 0.3 percent points over this year. Second important part is that with the increase of our portfolio, premium portfolio of our brands, growth of Ibmec and IDOMED, we have an impact of cost of faculty. 2/3 of this variant Estácio, Wyden. We have more on-campus with the growth of Semi On-campus that increase the cost. On a comparable basis, our net income is growing 29% year-over-year. As we mentioned previously, the effect of logistics line has an accounting impact, but it does not impact our cash. You see on the next slide that the cash growth that we see compared year-over-year, it's much closer to the growth that we have when we make the adjustment of our net income because of the decline in this. In the quarter, we had helping in our results. We had very positive financial results with interest fines and financial discounts that minimize the impact of the increase of the Selic, the interest rate in the quarter. You remember the first half of last year, Selic had a growing trajectory, reaching 15% in June, and we have a decreasing trajectory of Selic. So the negative impact of Selic is greater. Now part on our part is the first quarter. So we have depreciation and amortization. We had small impact on the next slide. We see, as always, the strength that we've had and our cash generation that has been recurring in our results in the past quarter. In this quarter, we had a growth of 10% in cash generation compared year-over-year, met by the free cash flow to equity, adding to BRL 276 million record of first quarter. We never had such strong cash generation. We accumulated in 12 months, BRL 525 million FCF yield of 20%, such high return that we decided in this quarter to start a buyback program, as you will see in the next slide. Again, as we've mentioned previously, the fact that we have DIS decline does not reflect in our cash generation because it's much more accounting fit rather than business results. So we have a DIS decline, our cleaner results more predictable, with future drop of bad debt that we don't yet see in our results. This addition, with the renewal of our students, the way we receive a private financing or loans. So with the measures we took in the past years, allowed us to actually have a reduction to 16 days, the DSO, compared first quarter '25 to 2026. So when we look at the end of first quarter, we closed a very cash position exceeding BRL 1 billion. We see the amortization programs that we have this year and view '26 and '27. We have amortizations that are acquired easy or smooth we can do with our cash. We start having amortization plans in '28 and '29. We're going to work over this period to extend the debt as we did in the past years. And this conservative attitude that we have to extend our debt allows us to tap into opportunities of the market, and we were able to leave with that with a promo spread of 2%, practically in the first quarter of '23, one of the lowest in the Brazilian market to below 1% in the first quarter '26. With this journey, we see our leverage. We had our debt, we could reduce that. It would get 1.2x our EBITDA. If it hadn't been for the program we had following our strategy, our framework of capital allocation of having buyback, dividend payout and M&A. In the past 2 years, we made major payments of dividends. We usually make -- we pay dividends in April. This year, we decided to bring it earlier for February. We had a drop in leverage that was less relevant had we kept it for April, but this will be reverted when we look at the results of second quarter. Additionally, we closed the Unifametro acquisition, yet another brand for our portfolio, with on-campus operations and 60 seats for medicine, and we closed the payment in this first quarter. We included in our net debt. We have BRL 75 million to be paid. So the share price, well, with dividend -- FCI yield was -- well, actually allowed us to have FCFE yield where we have buyback promo, we had 30 million in this program. Now I'm going to call Rossano to continue with the presentation.

Thank you, Aquino. This is a traditional slide that we have every quarter. We're very focused on the short-term results. Now it's time for us to store the [ drone ] to have a sort of more and more macro view longer term. It's important for the business view that we have this feeling of ownership that we have. After long-term value building, very consistent since 2019 before the pandemic. CAGR at 7% year-over-year, very constant growth with margin keeping at very high levels, suffering very little in the pandemic, always above 30% year-over-year. And we can't return to shareholders very constant paying dividends every year. Making several shares buyback programs highlight to '24 '25, almost BRL 300 million. Now we launched this year, a new buyback program of BRL 100 million. We've been carrying out with discipline. All of this is driven or boosted by the great cash generation that we have in the past years. We move from negative cash flow in '22, moving to cash flow in the past 12 months of BRL 525 million. We're going to show in -- our guys showing the trust we have in this growth of cash generation through the years. Closing slide. We have a transition. I'm going to say goodbye to Aquino, you'll be back at the Q&A. And Marcel is going to talk about AI now.

Okay. See you soon.

AI is increasingly a key part of our strategy. We've been talking about key investments that we're making over the years, right? Marcel is setting up the basis so that we could take off and find our data structure so that we can bring features for the company, a leap that we started seeing this year, and Marcel is going to talk about our experience.

Thank you, Rossano. Good morning once again. To comment on our AI initiatives that we've been carrying out at Yduqs quite broadly. It's a strategic pillar for the company. We want to share what we've been doing in terms of expansion within the organization. In March this year, we took an important step launching play, which our platform of agents for Yduqs with the goal of having the company included in various processes. We had great addition in the part of creation of agents and training of all Yduqs associates. Today, we have over 365 agents on topics and issues of the various areas there, actually using the tools that are available to solve problems that happen on the day to day. It's very much in our mind to have the AI to supporting efficiency, productivity, increasing quality of our work, especially to serve our students. I have 2 examples of projects that were born in the Champions program. It's a program of replicating and expanding the literacy in AI of all our associates. The first one is the Nora Project that was born thinking about digital product development. It encompasses not only being a quality predictive in the software development, but it reorganizes the whole ideation, planning, story creation and implementation. Very close to digital product with also coding. The gains in rework, resource allocation, productivity are obvious and very fast. I think it's a project that was born within a digital product sell to resolve an existing problem. Another one, how AI agents have been driving the operations, which have been trying to help Aquino with the tools and the team financial operations has developed within the bad debt project to -- that analyzes and reduce a lot of time spent in financial information that are quite spread in the organization. Those initiatives show the potential of the tool to have is a great accelerator of AI in the company the associates.

That's wonderful, Marcel.

In the past quarters, there were some cases top down, great cases of use in the organization of agents and customer service, sales, content production, things that we do in a centralized way, and we open up. This is a view that is bottom-up. We actually prepare our associates to have this ability and understand the day-to-day [ prompt ], how they're going to use AI to their benefit. This is one of the great revolutions of AI. It's a technological leap that is very important. Democratizing the access of tools that are used to be very restricted to technology. Now there are tools available to anyone in any area. In finance, technology. We have many people in marketing. So it is funny to see this change as how we have been facing this technological change in the jewel way, bottom up and top down, and the 2 yielding great results to the organization with important training aspect. We start training, in general, we think how we take that capacity building program to students. Well, we've been discussing a lot the replacement of humans by IA, but we want to boost human capacity to deliver results. On our ESG slide, we highlight the publication last year of our integrated report 2025. Once again, 2025 was super important year. We published our sustainability strategy for the '25 '30 period. Our leading role in this ESG, we have [ 4 ] but education, governance and several areas. So we have important roles in these pillars, several certificates of 2025. One of them, Yduqs once again has this leadership role in education. We look at 2026, we have several accomplishments. I'm going to talk about the literacy program as I'm very fond of it. So we aim through our educational lever. We know it's a company that is focused in higher education, but we have this commitment on surroundings to eliminate illiteracy in each one of our units communities. We're trying to actually boost those programs. We have important players there. We are present in 10 states in Brazil. The idea is to expand the program to the whole of Brazil. We were at the farm, women in sports. We are actually the only partners of the Brazilian Olympic Committee and innovation and employability. We've been developing several initiatives. I'm going to highlight the professional experiences that we provide to our students, investing students use of events, audio visual, manufacturing and scientific research. Employability is the core of our business and covered by this umbrella of ESG of the company.

Thank you, Marcel. Now we get to the guidance slide, traditionally closing the first quarter of the year. The strongest intake, we have more confidence to talk about our yearly view 2026 and the forthcoming years. As we commented over the presentation, we have this portfolio of businesses that is very strong, given a very -- great reassurance, we see a scenario of growth for the business, all verticals. It's a more challenging year in the intake of Estácio, Wyden because macroeconomic conditions, indebtness level, the regulatory framework. But when we look ahead, we see great opportunities for growth. Several levers of growth that we've been exploring within the Estácio, Wyden. Ibmec, IDOMED, as you mentioned previously, deploying their levers of growth, and we're finding other growth levers, we're delivering this growth in an environment that is challenging, with high profitability, very strong cash generation. We think the main indicator to look at the basis of our business and the outlook we have ahead. So we have the impact. We talked a bit about the penetration of this decline, it impacts revenue, the result, but almost no impact to cash. Cash is the clearest indicator for you to visit results over the next years. In the release, we have are the result of initiatives that have impacted the results of 2025 and not impacted cash. The profit should be recovered considering the cash. Okay. Our view of cash. We delivered BRL 500 million of cash generation or free cash flow to equity. Very strong. When we look at 2026, we see the growth again on this number that is already high. We have a range from BRL 520 million to BRL 620 million over 2026. When we look ahead, we continue declaring here or stating our vision of growth of results in this interval between '27 and 2030. The earnings per share, impacted by some of the accounting points we had in 2025, even so we see a range of growth. We're expanding the range of guidance. Last year, we had a range of only BRL 0.03 per share minimum maximum of guidance. Today, we are expanding that, well, small variations in revenue, the number is not proportional. Profit is very leveraged the sense. So they impact the earnings. So we increased the range. So guidance for growth of 2026. We're going to look at '27 to '30. We see earnings per share going from 2 to 3.5x in our maximum scale. So very confident in the future of the company, our capability for growth with very high profitability, very strong cash generation. This is our view of results for the next year. Now we get to the end of our presentation. Thank you very much to all of you who have been with us up to now. So being another quarter that strengthens our strategy. We had a very strong cash generation quarter, which has been our main discourse over the past years. With certain that this is what shows the strength of our business. We have our guidance, the confidence we have on the continuity of this delivery. This has been done, thanks to the strength of our portfolio. First quarter very much defended by IDOMED, Ibmec growth with high profitability growth on all verticals with several levers still to be developed. Great potential for growth in the future for those units. When we look at Estácio, Wyden, we see the great resilience in a macroeconomic environment that is very challenging. So the availability of income of the population that challenge that and the new regulatory framework being put into effect, great challenges. These difficulties position Estácio as the leader in the segment, and I'm sure it will be even stronger in 2027, contributing to our journey of growth of cash generation. We're sure that with our discipline in capital allocation, our framework that has been communicated, has been executed with great discipline with a company that will generate great value to shareholders in the mid or short, mid, long term. Thank you very much for your time. We'll move on to Q&A now.

[Operator Instructions] Our first question comes from Flavio Yoshida from Bank of America.

We have 2 here. First, on receivables. You mentioned during the presentation shows how you're focused on generating cash. So we see a reduction in the DSO. That is quite important. I'd like to know if this is sustainable in this level? If you have room for improvement, which would be the levers for this receivable to improve ahead if there is room? The other question is regarding personnel costs. We see an increase that is more relevant there when we compare with the revenue evolution. I'd like to understand looking ahead, if this level is sustainable, if you have some more costs to come in as you move on along the year and until 2027.

Flavio, thank you for your question. To start answering the first and then I'll turn over to Aquino to add. It's very sustainable. We had been talking about receivables. This is a move we had been building. It's an important integral part of the strategy. Cleaning results that make results more stable, more consistent, more predictable. It's a message that we had been sharing since early last year, and it continues. [indiscernible] that you know this reduction -- gradual reduction decline of this that impacts the revenue year-over-year. It reduces bad debt and it was featuring our fourth quarter last year. This will be stronger this year. And provision for nonengaged students, we started working on last year. It reduces the account of accounts receivable and bad debt. Yes, it is sustainable. We have room for improvement. There are still things to be captured and will happen this year. And it's not by chance. It's a planned action structured one that will go in the direction of what we believe in terms of our market strategy. Aquino answer your second question.

Flavio, thank you for your questions. I think Rossano covered the point quite well. We'll be showing this decreasing strategy by average receivable standing on this better strategy, the days of sales outstanding. This has led us to consistently being reducing our DSO. Looking ahead, we had this effect that is temporary this year of the change in the [ PraValer ]. We received as students paid and we started receiving in the semester, the student are in the school. So this is transitory. We had an improvement of BRL 90 million. This year, we have about BRL 35 million to improve. That will reduce our accounts receivable in the future. The decline in this has helped us in the past quarters. And we noticed looking ahead that potentially, it will stabilize. This is what we've noticed. This addition dropped a lot. First quarter last year, even more so in the second semester last year, we are at a level now very similar to what we had in the second half of last year. So this part actually is related to your second question. So when we look at our drop in profitability, smaller margin, as the number reported, linked to the decline in this. If we eliminate this effect, we would have an increase of 1 percent point in our margin compared year-over-year. Looking ahead, so this addition will be more stable second half when we compare it to last year. This effect will no longer exist in the second half. Regarding costs, what we had is increase on-campus. Our premium brands on the portfolio, IDOMED, Ibmec and the Semi On-campus. So the net should be an increase in margin that we would have seen if it hadn't been this decline in this. We had increase in costs, we offset in the other lines, and we will have a margin increase of that.

Let me add to what private financing or private loans, Aquino. This is a move that is sustainable and stabilizes actually lower levels of accounts receivable. Before you had our long-term receiving a receivable model as students [indiscernible] we received cash we returned actually everything students pay in the quarter. We kept the long-term accounts receivable. As a counter is long-term accounts receivables is reduced generates specific cash input. So it will further reduce that this year, another help this year that will actually improve our DSO. So it's structured action that will remain at the level that we have today. And drop a bit, considering the moves we are expecting to happen. Thank you, Flavio.

Our next question is from Caio Moscardini from Santander.

Two questions on the guidance. Looking at the GPS guidance, what's the level of recovery of distance learning that are you considering for a second semester? And what level of margin that is embedded in this guidance? Second question is regarding the cash generation. You sold a property. How much of the cash generation in the guidance comes from the sale of this property? How much of it is in the first quarter, just for us to try to understand this recurrence in cash generation.

Caio, good questions. Well, how much you have in recovery of distance learning. First quarter, when we look at -- until there, we see the strong migration of less distance learning and more on-campus. This should continue over the year. First quarter is more impacted by intake when it's stronger. But in proportional terms, we don't see great fluctuation happening for the guidance to happen. So we have upside here if we have better performance over the year. The margin. I think Aquino mentioned that. We see it stable year-over-year. On the guidance, we don't see great levers for growth. No margin reduction. Our aim is that the margin should be relatively stable. Excellent question regarding the property that may generate the question, the impact of cash of this property is about BRL 1 million, BRL 1.5 million that almost did not impact the cash of this year. We have some positive impact, but contributes very little for the year. It was a sale on installments, a negative impact that we had. It was precisely sold amount that will be charged in the cash of the accounting value. Negative cash impact was [ 0 68 million ], and the receivable will happen on installments. So the impact of this quarter, very small, BRL 1 million or BRL 1.5 million happen in the quarter. Anything to add, Aquino?

I think it was [ 1 million 300 ] a quarter in the year -- BRL 5 million, around BRL 5 million. Very little impact to the cash flow considering the sale of this building.

Our next question comes from Marcelo Santos from JPMorgan.

You mentioned the fierce competition in medical schools. I'd like to have some more flavor of that. What markets offered more? What was the ratio candidate seats? And the second question, you just mentioned that the margin on the guidance kind of stable. How is this broken down in the different business units that you've opened up? Just to understand.

Well, Marcelo, thanks for the question. I'd like to thank everyone, to take the opportunity. Well, I'd like to thank everyone, for all the analysts who were being here. I know you're quite busy this week, everyone making their presentation. Thank you very much for honoring our call and asking your questions. Great question on fierce competition. We mentioned that this is an important year that is very important for our medical schools. Everybody was anxious regarding the market with this great volume of new seats considering legal measures in the past years. We would see this impact more significant than previous. So you see, it's happening, in fact, will happen market by market. And it's very [ heterogenous ]. Some marketplaces were very protective because they had a smaller volume of new seats, maybe the brands were very consolidated. In some marketplace, we have 25, 30 years of market presence and we're very solid there. In those places, nothing changed. We had very similar competitive dynamics and our behavior and our situation had no impact. Now the marketplace is the most impacted marketplace. We actually have 2 factors in isolated and added. There are small marketplaces in interstates that depend on other larger marketplace to feed students, and they had too many additional seats offer. The market was more competitive. Everybody was looking into that to understand the competitive environment. So on our call and other and us, our market partners, other companies working on medical education, what happened was an expansion of penetration of FIES to supply greater competitiveness in the market. It was not a transforming volume that actually impacted intake. But we had a successful intake. We showed the number for the first time. IDOMED attaining the level of 2,000 students, the highest intake in our history of -- the history of IDOMED. It's a challenging environment and we had this market or this cornerstone level of 2,000 new students. This impact the initial effect of revenue. You have FIES, the funding, you recognize that in -- now we have more quality students there, FIES. We'll have 0 bad debt. Discount is an anticipation of recognized bad debt by the government, a much higher level of retention, students stay much more than normal ordinary tuition fee payment students. And financially, you eliminated this average of initial NOR. And we have the FIES student with an additional benefit. It's academically very strong with competitiveness -- competing for the FIES seat in institution. This is very high. The filter is very tight. Students that join with a very high -- with very high scores, very high accomplished students. So this will impact at the end when we have the general examination of the government, the [indiscernible] examination, they're going to perform very well. I'm going to leave the second question for Aquino to answer.

Marcelo, thanks for your question. As we've seen in the first quarter, if we look at our margin, the consolidated margin, we had a margin of IDOMED moving sideways. And Ibmec growing up year-over year and Estácio, Wyden was impacted because of the decline in this. Looking ahead, our expectation, there we don't have decline. This, the comparable basis is more favorable now onwards and even numbers there, quarters, we have similar DSO, the levels will be the same as last year. IDOMED with similar margin. Ibmec, we should have some margin gain compared year-over-year.

Marcelo, I'm going to allow [ Silvio ] to add that because the medicine question was very good. Tell us about the outlook on the quarter. It's important for Silvio to give you some flavor of medicine from now on.

Very briefly. It is fact that marketplaces who have seen this move, which we had more seats change in the demand. We noticed the cycle proves that, reinforces our view onwards and some families that show some courses that were new and places that are not still consolidated. We notice a return of the demand, perception, the quality, the offerings, technology and infrastructure, they briefly is noticed as a differential. Now we see in some places as [indiscernible], for example, that you followed that was a [ first ] moment or move of opening schools is move the distribution of demand. This briefly was resumed because the courses are in places that do not deliver the level of service that is comparable. Even with the ticket that is BRL 1,000 to BRL 1,000 below, this is not worthwhile. So we mentioned that previously. So we kept on investing on differentiation. Naturally, this would be rebalancing. We keep on believing on that despite having more seats, the differential actually makes -- gives an impact to this kind of audience.

What do you need, 1 or 2 intakes to have this return? 1 or 2 cycles and then you start noticing the return?

Yes, precisely 1 or 2 intakes and then we start noticing this resumption schools with more tradition. Not only our case, every [indiscernible]. Those adventure schools, lower quality, they had a move of pulling the flow and 2 cycles later, we see the return. So not a cycle. We had 2,000 students of freshmen. So we see the return. Students go to other institutions with no benefits, and they have external transfer. This has been a clear movement in the industry.

Our next question is from Vinicius Figueiredo from Itaú BBA.

I just like to understand specific point when we look at results, it's a very specific result. Looking at the earnings with more operations. When we talk about lines receivables on the side of revenue and discounts, you see great improvement. You had an increase of a bit over 20% in revenue, and it dropped financial discount. So I'd like to understand a bit of the reason behind this. If we could continue on this part of financial -- operating financial results, if we call it. So what would be the recurrence of this in the next quarters? Another point I'd like to dive into. You talked a lot about cash generation. But I'd just like to see what's implied here in the minds of the head of the company for capital allocation? You've been various search in the buyback program, you have dividend payments overall. Just for us to understand, if there is a wish of the company, your trying to outline a specific policy of dividend pay out every time the company shows cash generation of x and a change in net debt of x, it actually pays out to shareholders. I don't know if you can explore these topics a bit. That would be great.

Thanks, Vinicius. Great questions. Second question, we launched in our Yduqs' Days, we launched our capital allocation strategy. We mentioned that the main focus would be reducing leverage. We would generate cash and we'll use the cash fundamentally to reduce leverage until we would reach the multiple of onetime net debt to EBITDA. We are on the track. We would tap into opportunities. We would be opportunistic, but considering opportunity, we had BRL 3 million buyback, '24, '25 a new buyback program of BRL 100 million because of market conditions. We have our guidance, our framework. We didn't know how the market would react. Obviously, we cannot be blind considering those opportunities we have. We have to embrace them. Specific M&As just came up. We recently had Unifametro, very well positioned institutionally for [ Talesa ]. We're very happy with the acquisition of on-campus. It's a brand on digital grade, school of medicine, we're sure that it's very accretive to the group. We'll keep on looking for small opportunities. We are focused on getting onetime net debt EBITDA. And this should happen in 2027. We should attain this goal. And dividend payment happens or follows what we mentioned we had close. The minimum using adjusted net income to calculate. I mean, we should have stable payment as we had in '25, similar in '26 until we obtain the goal. And from then on, the idea is to have the vision of payment of dividends more established until we get there. This is the framework to reducing leverage and payment of dividend cost to minimum, similar to what we've been doing in '25 and '26. Let me turn over to Aquino to answer the second.

Excellent question, Vinicius. We actually had on our report. If you look at it in detail, when we report bad debt, we report those 2 lines to show that this has been a very positive effect that has helped our financial results, not only this quarter, but in past ones relate to our better renewal rates, and we've been able with a better collection and keep both academically, keep more engagement of students and lower short-term budgets as we use to. We need to offer less discounts for the renewal and generate positive results. In addition to improvement in the bad debt, we have positive results on the 2 loans of our financial results. Our expectation is to keep on this level much better than previous year.

Our next question is from Eduardo Resende from UBS.

I have 2 on our side. The first regards slightly higher dropout rate year-over-year on on-campus. I'd like to better understand that if the company sees any risk of cannibalization of the on-campus offer to a higher offering of the on -- Semi On-campus courses can only be offered on on-campus, but for other courses overall? I'd like to know if you see a bit of this trend as a company? Second is on the intake cycle of first quarter. So -- and we had the key turning of regulations, what has worked, what hasn't? And how the company has been addressing what did not work well for the intake in midyear.

Thank you, Eduardo, for your questions. On your first point on dropout, is really negligible in on-campus, nothing structural and certainly has nothing to do with the expansion of Semi On-campus. The Semi On-campus, the campuses where you could actually have this migration has been happening for a long time, very little impacted now. What is impacted on on-campus is the positive in the starting of the nothing when schools or courses. So it's not a great impact. We are working hard to improve students satisfaction. We're working hard on AI. We should actually increase our level of retention that we have on our institutions. On intake, I turn over to Marcel. But overall, we're actually happy with the intake results. As I said, obviously, in a year, everybody can see the news, families are in debt. Now this is historical. This makes a decision of students more difficult. So they actually have to decide on higher education, and these are more challenging years. Considering that it's been very good year. Considering the difficulty of implementing -- well, intake, you have the new regulatory framework fully implemented. But for intake, we have all the causes adapted to the framework. It's a year that is adapted to get to the right level of prices for the students to understand their options. So it takes a little bit longer for the learning of students and the offerings to balance. So this has been a scenario of intake considering that we grew, we knew on-campus growing a lot. Semi On-campus grew a lot with the delivery of [indiscernible] format. Now this is actually working. We've been having great results. Let me turn over to Marcelo to go into details here.

Thank you, Rossano and Eduardo. Just to add, we've been very prudent in the part of pricing tickets, especially on on-campus. We've been following this wave for some semesters, and we've been able to keep that quite well and control it. Well, something we managed to do quite well has been our marketing investments that were needed to get our intake. Adding to what Rossano mentioned, in line with what we're looking ahead, I believe, again, we have this market pricing discovery in the Semi On-campus that we're following up. For clients this is becoming increasingly clearer. The boundaries of each one of the products, and we understand how the dynamics of those courses operate. There are mostly on distance learning. On on-campus, we've been working on portfolio improvement, expansion of cost distribution. That's something we've been working on. Generates a workfront that has been in operation in the past quarters, and now we are more robust and stronger to expand this, implies reviewing the cost portfolio that we have in every marketplace and privilege the courses that are more on campus that naturally have higher pricing.

Our next question comes from [ Marcio Osako ] from Bradesco BBI.

I have 3 questions actually. The first on contingencies. Last year, you showed on the release, the mismatch you had between what happens in the income statement and cash disbursement. And how do you set for 2026? And if you have this mismatch? And second one, on cash generation. If you see there any change of any gain in the working capital, excluding the PraValer aspect. And the third, so whether you could talk a bit about the situation? How do you see the financial situation of the center in this new environment where we had a drop in intake that was relevant? So if a higher ticket offsets, if there is any risk of sustainability of the various hubs in this new scenario? If you should have an increase in on lending or partnering hubs to be maintained, if there is an adjustment on the regulatory part that could hinder us financial sustainability of the partnering side.

Good question. Allows us to talk about topics that have not addressed. Great insight. To speak on contingency, I'm going to turn over to Aquino to go into details. At this point, it's very important. When we look at future outlook, cash was the best way of looking at our results and predict how it's going to behave in the future. We have several lines that take the P&L to be delivering with a gap below the cash view. One of them is contingency. We see higher expenses contingency than we actually have in cash. So we have a provision rearrangement. This will stabilize, and it should actually match the cash outflow. This is something we've been doing for a long time to reduce our contingency impact, especially labor side. This will stabilize '25 '26, and we should seek a balance trying to reduce as of [ 2027 ]. This is one of the lines. We have other line that shows the importance of looking at cash effectively as one of the most important results for the company to look into. I'm going to ask Aquino talk it about. And then Rodolfo can talk about partnering.

Great question on the partnering centers. The key concern of our partners are very important lever for delivery of our students and future growth. So super important to have your point for us to ensure that they have a healthy view of their businesses that we are supporting in whatever is possible within the organization. So I'll now -- Aquino to address the 2 first, and then I'll turn it over to Rodolfo.

Marcio, thank you for your question. Excellent questions. As Rossano mentioned, if we take the results of last year, we had 3 main factors that kept a difference between our FCFE and our net income. One of them was the difference between contingencies impacting our cash and contingency impacting our net income. Last year, the difference was BRL 50 million. For this year, we still see the difference happening. As of '27, this number will be comparable, it will be closer to cash disbursement as we have in our provision line. The other important variation we had over the next year, this should take a bit longer than the year to balance is the difference between depreciation and our level of CapEx. We have BRL 40 million, BRL 50 million that we had last year and difference. And quite major, we reduce our CapEx level previous years. We'll keep the same level for the next years. But our depreciation is about BRL 40 million above what we had of CapEx last year, probably will be similar to this year. And lastly, we have the [ fair ] 6 impact of lending or land or what we have in terms of leasing. And this generates a negative impact to the profits. And from there on, and it's positive. After the contract, it's actually on a 0 level. On our contract, we still generated this effect that is negative. It's been about BRL 30 million. So these 3 factors, about [ 120 30 million ] difference of last year, it is a point on which we think that our cash generation gives much better visibility than our income for our actually profitability. If we take the cash that we're going to generate this year, that is consistent, not a nonrecurring effect that is relevant here. We have as BRL 520 million as bottom [indiscernible] BRL 0.20 per action, which is equivalent to the top of the guidance when we look at net income. Speaking of working capital for '26, last year was quite positive. As we said, we had several ways of increasing our transparency, predictability of revenue we presented in the past years that generated a negative effect to our revenue or EBITDA and net income, that has no cash effect. The counterpart of what we did last year came up as positive working capital. This year, first quarter, we had a new drop or decline in this, helped us to have more positive working capital in first quarter. But looking ahead, we see those effects reducing [indiscernible] more. The trend is that our working capital should be close to more neutral working capital over the year without having the positive effect we had last year, with the capture of results coming more directly on EBITDA. Rodolfo, would you take the third question?

Sure. Thanks for the question, Marcio. I think -- this is one of the fundamental point of attention. We have to balance a bit of this -- of the scale, our profitability and sustainability for partners. This story starts when we make more -- well, faster expansion of our site. So financial expectation in the opening of business and following it up over time is one of the strengths that we have here, our operations, our regional hubs, and they are business consultants and their mission is to ensure profitability and the alignment to regulation, infrastructure of the business just as our profitability. Over the past many years, we have a lot of data to help the partners to understand what the profitability of their businesses. What is the best cost we have, real estate or personnel. We have this infrastructure of information and personnel for that. When we have the new legal framework, especially last year, we know what we have to do. We obtained, we had structured results. We had operation. We've built a very solid line of the transition of 2 years. Now we have yet 1 year until May '27 for the regulatory framework to be totally in effect. We make this transition considering all the variables with the legal framework and a very transparent way in terms of the impact to profitability. Part of what Aquino mentioned of some marginal impact that we had of margin this year was because of that, of the adjustments we needed to make in site hub infrastructure. We don't believe this will have great variations of the on-lending percentage for those ventures. We see migration to distance learning a bit of, Rossano mentioned from what distance learning to Semi On-campus is a sustainable way for the centers to keep on working, and we have other products that will be implemented. We've been talking about undergraduate. And we have other alternative expansion on-campus and professionalizing courses. We have more diversified portfolio revenue mix, the sustainability of the partners, not to be a concern, although we work hard to adapt and follow up that over time, okay?

Next question, from Mauricio Cepeda from Morgan Stanley.

Let me tap into the center question to ask about something else. Even if you're trying to offset the economics of those sites, we may understand that some places become unfeasible because they can no longer have pedagogy. Some courses have become more unlikely. Do you see any potential reduction of the number of sites? Considering the new legal framework, how many will be shut down, consolidate the profile of those locations that are more impacted. What kind of course will be offered on those centers? If this actually changes the profile of what those centers will be in the future. I'd like to go back to another topic, the dropout rates, not looking at the past, but looking into the future. You commented a lot on the results of macroeconomic pressure, elections, greater indebtedness of families, less trust or confidence. Do you see that would be greater pressure on dropout rates in 2026? Do you -- would you lose more the norm of the intake that you had in the first quarter of the year?

Thank you for the question, Cepeda. Well, second question is a good question. We don't see this phenomenon happening in other times. The mass education market is cyclic. You see this phenomenon of great [indiscernible] and then you have an economic leave, greater intake. We don't see this correlation with dropout rates happening as it happening in intake. Much on the contrary, when you have lower intake, lower volumes of intake, you -- that's almost like appealing of the student base. You have more qualified students coming in that have a greater trend, retaining more financial possibilities, leading to lower dropout rates historically. This is not what we see. So we don't consider that we have greater pressure for our dropout rates. We had similar scenarios, type scenarios, interest rate, more indebtedness of families. So we don't see that happening or impacting our dropout rates. This is what should happen this year. Allow Rodolfo to talk -- to keep talking about the various centers.

Thank you for the question, Cepeda. In this context, we're talking about legal framework and center of sustainability. This has different impacts when we talk about locations. Large midsized companies will have more restricted impact. We see that as a growth opportunity for Semi On-campus in small towns that we had been signaling since the legal framework was disclosed was how much this could actually limit the access. In small towns, actually, what we see, that they tend to have a movement of reduction. This is not relevant. It's important to clarify, considering the business model that we've been building. It is sustainable, although with all the reductions, changes in the portfolio, we've had Semi On-campus offset part of that, but some locations will end up having -- will be shut down. It's not a great impact considering the impact of those hubs. They had actually little impact. We won't have impact in terms of the number of centers and results. I'd like to draw the attention to this point. We are a company focused on results, but we also have this accountability in terms of social impact as a public policy. We think it's a topic to be addressed by the government to think about access in some places where, obviously, this move towards a more restrictive legal framework for distance learning excludes a certain segment of the population, certain marketplaces. So it's a little representative for our profit and our results, but certainly has a social impact. There may be an upside there as a public policy should be [indiscernible] on going back to our fundaments. Brazil is a country for a great opportunity for higher education penetration. We have structural reasons for us to believe that it's still a country in which higher education has great value. Employability, when we think about students coming out of higher education and not coming out middle school, a great difference. So study show that clearly, there is a great difference in value. So we are exposed to the macroeconomic way, but we keep it there, to serve you as a professional covering this industry, you can see this positive outlook that education has in terms of growth in Brazil. And this is a great fundamental of education. This is a great fundamental for education in Brazil. Thank you very much for your questions.

Our next question is from Renan Prata from Citi.

Brief question. I'd like to understand this new opening brands, give a focus on IDOMED if this has any change in strategic bias of -- if you have an improvement in Ibmec? I mean, I'd like to understand the strategy for this business line, thinking about Ibemec, specifically. And Ibmec, I understand that an avenue segment of high growth with the margin opportunity, I'd like to tap into what Aquino mentioned, you have [indiscernible] for Ibmec. But thinking about matured center, how much do you expect of margin and results for the company as a whole? This is it.

And thank you for your questions. First, Ibmec is a super strategic vertical for us. We've been opening its results since last year. And we bet strongly that it is business of growth, of high profitability, not common in education as a whole. It's a jewel that we have in our portfolio, that has been growing consistently with high margins and growing in some quarters, will keep on happening. We still have opportunity for growth. We constantly find new growth opportunities for Ibmec. It has good penetration in the main marketplaces it operates. It's growing In Brasilia, the course is maturing, new campus. In Rio, we have a new positioning, the campus is not so new. In Sao Paulo, [indiscernible] new area with highlights in those cities. We have possibilities of geographic expansion. We'll analyze carefully. Throughout its life, it's underpenetrated, just as IDOMED and other opportunity, 2 very strong brands in undergraduate studies that do not have a super share. So throughout their lives. They have great room for expansion for Ibmec and IDOMED. Well, in terms of margin, obviously, we will not keep expanding 4 percent point in margin. We still find rooms. We'll get close to stability. We should operate with a margin that is close to IDOMED today. So this will depend very much on the expand of [ Bravidatoda ] program. So we're constantly studying that. I cannot give you such clear outlook. But we certainly have space for margin expansion and growth opportunities. I think I've answered your questions.

The Q&A session is closed. I'd like to give the floor to Mr. Rossano Marques for the final remarks.

Thank you very much. Once again, I'd like to thank everyone's presence. We know it's a very intense week for earnings results call. So we had great questions that helped us to clarify even more the content of our presentation. I hope you have reinforced your belief in us that -- which is great in the capabilities of this business of increased profitability, cash generation and also growth. We talked about all the levers that we see. We have several others that we are seeing. So main verticals that we reported, IDOMED, Ibmec. I just mentioned answering Renan's question. We talked a bit of Estácio, Wyden. Even though it's very mature, we still have great fantastic opportunities for us to gain share, margin expansion of penetration, fundamental reasons for us to believe in the expansion of business of higher education in Brazil. It will be a business that will generate a lot of cash for shareholders, return on capital, very disciplined disclose, clear consistence of the business. I'd like to close our meeting. Once again, I'd like to thank everyone for your attendance.

Yduqs' video conference is closed. We thank everyone for their participation, and have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]