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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Vasta Platform Limited | NASDAQ:VSTA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.08 | 2.67% | 3.08 | 0.95 | 3.95 | 3.10 | 2.97 | 3.04 | 31,067 | 22:00:00 |
Vasta Platform Limited (NASDAQ: VSTA) – “Vasta” or the “Company” announces today its financial and operating results for the fourth quarter of 2022 (4Q22) ended December 31, 2022. Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).
HIGHLIGHTS
MESSAGE FROM MANAGEMENT
The fourth quarter of 2022 continues to show a positive trend after strong results in the last quarter when we concluded the 2022 sales cycle (4Q21 to 3Q22), exceeding our 2022 ACV guidance of R$1.0 billion by 2.4%. Vasta’s accumulated subscription revenue during the 2022 fiscal year totaled R$1,121 million, a 39.5% increase compared to the 2021 fiscal year.
The fourth quarter of 2022 sales cycle represents the first quarter of the 2023 sales cycle, where subscription revenue grew 28% compared to 4Q21, or 8% above the ACV guidance. This growth in subscription revenue was mainly driven by (i) the growth in our complementary solutions portfolio (with more participating schools, and more solutions per school), (ii) increased participation of premium labels in the ACV mix and (iii) migration from PAR to subscription revenue. We intend to continue to seek ACV and revenue growth based on these factors. We expect the 2023 sales cycle to be slightly less concentrated in the first two quarters in 2023 (expected 65.1%) than in the previous year (66.5%), due to the different seasonality of new products and lower PAR revenue.
The 2023 ACV totaled R$1,230 million, representing an organic growth of 20% over the subscription revenue for the 2022 cycle, which comprised a more varied mix in sources of revenue as we had higher growth in our premium brands such as Anglo, Eleva and Mackenzie. We continue to believe that quality and reputation remain decisive in our business. Consistently with our strategy, we continue to invest in the migration from paper-based products (PAR) to digital subscription products (Textbook as a Service platform) offered on a fee-per-student basis. Complementary solutions is expected to have the highest growth rate among our business segments in 2023 (with a 39% increase compared to 2022 cycle subscription revenue) continuing its trend of increasing adoption by our client base. Traditional learning systems (including Textbook as a Service platform) are expected to grow 18% in 2023 compared to the 2022 cycle subscription revenue, driven by upsell & cross sell and price adjustments.
Moreover, we continue to see the normalization of the company’s profitability and cash flow generation. In 4Q22, Adjusted EBITDA totaled R$200 million, a 25% increase compared to R$161 million in 4Q21. We attribute this increase to the normalization of our business and improvement in gross margin due to a greater participation of premium products in our sales mix, increased sales of complementary solutions and cost dilutions combined with lower commercial and G&A expenses following operating efficiency gains and cost savings implemented in 2022. In the 2022 fiscal year, Adjusted EBITDA has grown 106%, to R$375 million, with a margin increase of 10.5 p.p. to 29.7%. Both Adjusted EBITDA and Adjusted Net Profit were partially offset by the R$15.0 million in provisions for doubtful accounts (PDA), relating to the entirety of Vasta’s receivables for products in inventories of a large retail company undergoing judicial recovery.
Vasta’s operating cash flow in 2022 totaled R$ 92 million, or R$ 112 million excluding the early payment of royalties (R$20 million) to content providers, from a negative R$94 million in the same period of 2021. This increase in operating cash flow reduced the net debt/adjusted EBITDA ratio to 2.78x, which maintained a downward trend for the fourth consecutive quarter.
During the 2022 fiscal year, we have announced the acquisition of a minority interest in Educbank, the first financial ecosystem dedicated to K-12 schools, which delivers to educational institutions services such as management and financial support by providing payment guaranty for tuitions. We have also announced the acquisition of Phidelis, a complete enterprise resource planning (ERP) software for K-12 schools with both academic and managerial features. The combination of Educbank and Phidelis, our academic and financial ERPs, proved a powerful tool to provide schools the critical information they need to be more efficient, adding key advantages to our platform as a service for K-12 schools. Since its acquisition, Educbank has increased its student-base 4.5x, totaling 62 thousand students as of December 31, 2022. Educbank delivers a frictionless business model and has a Net Promoter Score (NPS) of 85 out of 100. Educbank was the only representative from Latin America at the SXSW Innovation Awards, one of the main international innovation awards, during which Educbank became the first Brazilian company to receive the People's Choice Awards. Other awards and recognitions of Educbank include its selection for Endeavor's Scale-Up acceleration program and its TOP 3 ranking in the Education category of CNN’s 2022 Brazil Notable Awards.
Following our practice in past quarters, we have dedicated a section of our earnings release for Environmental, Social and Governance (ESG) matters, including a panel of key indicators that will be updated on a quarterly basis, reinforcing our commitment to the highest ESG standards.
Finally, we have announced Vasta´s CEO transition plan. Mr. Guilherme Mélega, the Company’s current chief operating officer, will assume the CEO role and Mr. Mario Ghio, who has chosen to step down from his executive role with the Company, will continue to serve as a member of the Company's Board of Directors and play a role in the Company's long-term strategy. Mr. Ghio will also continue to represent the Company in his role as the President of ABRASPE, the Brazilian Association of Education Systems and Education Platforms, an organization of leading companies in the sector. Mr. Ghio and Mr. Mélega have worked very closely in recent years, which is expected to promote a smooth transition in leadership and continuity in the management of Vasta.
2023 ACV COMPOSITION
The Annual Contract Value (ACV) for the 2023 sales cycle totaled R$1,230 million, which represents growth of 20% over the subscription revenue of the 2022 cycle (“2022 subscription revenue”, collected from the fourth quarter of 2021 to the third quarter of 2022). Complementary solutions has had the highest growth rate among our business segments (with a 39% increase compared to 2022 cycle subscription revenue). Traditional learning systems (including the Textbook as a Service platform) grew 20% compared to the 2022 subscription revenue cycle, driven by upsell & cross sell and price adjustments. PAR paper-based ACV declined 1% compared to 2022 subscription revenue, in line with the Company strategy in focusing in Traditional learning systems.
Values in R$ Million
2023 ACV
2022 Subscription
Revenue(1)
% Y/Y
Learning system & Platform
968
804
20%
PAR paper-based
109
110
-1%
Complementary solutions
153
110
39%
Total ACV (organic)
1,230
1,024
20%
(1) Revenue from subscription products collected from 4Q21 to 3Q22.
As in previous years, a combination of new clients, cross-sell/up-sell and price adjustments were key drivers of the growth in ACV. New clients represented 9% of the ACV growth, which offset the 9% increase in the rate of lost clients (or churn). The combined effect of cross-sell/up-sell and price adjustments contributed to a 20% growth in ACV (with the price adjustments above consumer price inflation (IPCA) of the last twelve months ended in December 31, 2022).
The churn rate was 1 p.p. higher than in previous years. While the churn rate of our premium brands remained low, there was an upward trend in the churn rate in the mainstream segment and PAR clients, both likely affected by unfavorable macroeconomic conditions.
% Change Y/Y
2023 ACV
New clients
9%
Cross-sell/up-sell + Price readjustment
20%
Churn
(9%)
Total ACV growth (organic)
20%
ACV change calculated over revenue from subscription products collected from 4Q21 to 3Q22.
OPERATING PERFORMANCE
Student base – subscription models
2023
2022
% Y/Y
2021
% Y/Y
Partner schools - Core content
5,157
5,351
-3.6%
4,508
18.7%
Partner schools – Complementary solutions
1,548
1,304
18.7%
1,114
17.1%
Students - Core content
1,557,503
1,589,224
-2.0%
1,335,152
19.0%
Students - Complementary content
452,693
400,192
13.1%
307,941
30.0%
Note: Students enrolled in partner schools
The fourth quarter of 2022 marks the beginning of the 2023 business cycle for Vasta. It is in this quarter that the first deliveries of content to students and partner schools regarding the 2023 ACV are made.
Overall, we observed a stability in the number of partner schools and students in core content. Aligned with the company´s strategy to focus on improving our client base in 2023 through a better mix of schools and growth in premium education systems (Anglo, PH and Fibonacci), brands with higher average ticket, lower defaults, greater adoption of complementary solutions and longer-term relationships. On the other hand, the reduction of our client base was concentrated on the low-end segment and PAR (paper-based), which have higher number of students on average, and a lower margin. Average ticket price of schools that remain in our client base in 2023 is 11% higher than that of schools that are no longer our clients.
FINANCIAL PERFORMANCE
Net revenue
Values in R$ ‘000
4Q22
4Q21
% Y/Y
2022
2021
% Y/Y
Subscription
443,950
346,842
28.0%
1,121,158
803,702
39.5%
Subscription ex-PAR
377,376
280,883
34.4%
994,479
680,559
46.1%
Traditional learning systems
284,465
223,151
27.5%
848,531
588,168
44.3%
Complementary solutions
92,911
57,732
60.9%
145,948
92,390
58.0%
PAR
66,574
65,959
0.9%
126,679
123,143
2.9%
Non-subscription
61,069
51,416
18.8%
143,121
143,717
-0.4%
Total net revenue
505,019
398,258
26.8%
1,264,280
947,419
33.4%
% ACV
36.1%
33.9%
2.2
n.m
n.m
n.m
% Subscription
88%
87%
0.8 p.p
89%
85%
3.95 p.p
In the fourth quarter of 2022, net revenue increased 27% year-on-year, to R$505 million. Subscription revenue grew 28%, driven by the recognition of 36% of 2023 ACV in 4Q22, mainly driven by the increase in traditional learning systems, complementary solutions, and textbook subscription products (“PAR”). As guidance for 1Q23, we expect a net revenue from R$ 395 million to R$ 415 million, to be comprised of R$ 350 million to R$ 360 million from subscription products (29% of 2023 ACV) and R$ 45 million to R$55 million from non-subscription products. We expect the 2023 sales cycle to be slightly less concentrated in the first two quarters in 2023 (expected 65.1%) than in the previous year (66.5%), due to the different seasonality and mix of our products.
EBITDA
Values in R$ ‘000
4Q22
4Q21
% Y/Y
2022
2021
% Y/Y
Net revenue
505,019
398,260
26.8%
1,264,280
947,419
33.4%
Cost of goods sold and services
(172,077)
(135,919)
26.6%
(473,135)
(396,829)
19.2%
General and administrative expenses
(119,888)
(126,071)
-4.9%
(471,626)
(430,279)
9.6%
Commercial expenses
(50,205)
(45,400)
10.6%
(194,043)
(164,439)
18.0%
Other operating income
(1,921)
3,352
-157.3%
1,020
5,554
-81.6%
(Loss) profit of equity-accounted investees
(2,362)
-
0.0%
(4,512)
-
0.0%
Impairment losses on trade receivables
(28,773)
(10,728)
168.2%
(45,904)
(32,726)
40.3%
Profit before financial income and taxes
129,793
83,495
55.4%
76,080
(71,300)
-206.7%
(+) Depreciation and amortization
69,694
61,664
13.0%
268,540
211,156
27.2%
EBITDA
199,487
145,159
37.4%
344,621
139,856
146.4%
EBITDA Margin
39.5%
36.4%
3.1
27.3%
14.8%
12.5
(+) Layoff related to internal restructuring
608
9,411
-93.5%
3,323
15,735
-78.9%
(+) Share-based compensation plan
107
6,119
-98.3%
27,364
26,677
2.6%
Adjusted EBITDA
200,202
160,690
24.6%
375,308
182,269
105.9%
Adjusted EBITDA Margin
39.6%
40.3%
(0.7)
29.7%
19.2%
10.4
Note: n.m.: not meaningful
In the fourth quarter, Adjusted EBITDA totaled R$200 million, a 25% increase compared to R$161 million in 4Q21. This increase was mainly driven by operating efficiency gains, cost savings and sales mix that benefited from the growth of subscription products. In the 2022 fiscal year, Adjusted EBITDA has grown 106%, to R$375 million, with a margin increase of 10.5 p.p. to 29.7%.
(%) Net Revenue
4Q22
4Q21
Y/Y (p.p.)
2022
2021
Y/Y (p.p.)
Gross margin
65.9%
65.9%
0.1
62.6%
58.1%
4.5
Adjusted cash G&A expenses(1)
-10.6%
-11.4%
0.8
-13.9%
-18.1%
4.2
Commercial expenses
-9.9%
-11.4%
1.5
-15.3%
-17.4%
2.0
Impairment on trade receivables
-5.7%
-2.7%
(3.0)
-3.6%
-3.5%
(0.2)
Adjusted EBITDA margin
39.6%
40.3%
(0.7)
29.7%
19.2%
10.4
(1) Sum of general and administrative expenses, other operating income and profit (loss) of equity-accounted investees, less: depreciation and amortization, layoffs related to internal restructuring and share-based compensation plan.
Consistent with the trend observed in our net revenue, gross margin grew from 58.1% in 2021 to 62.6% in 2022, a 4.5 p.p. increase resulting from the consistent implementation of our business strategy, which includes: (i) expansion of complementary solutions offered to our partner schools; (ii) migration of customers from non-subscription to subscription products, which affords greater loyalty, profitability and results predictability; and (iii) sale of upgrades to premium education systems, to partner schools within our existing client base.
Moreover, adjusted G&A expenses and commercial expenses decreased 4.2 p.p. and 2.0 p.p. respectively, driven by workforce optimization and budgetary discipline. We believe that the reduction in expenses highlight the operational scalability of Vasta's educational solutions business model and digital platform.
Reported provisions for doubtful accounts (PDA) has no significant variation between the years 2022 and 2021, however, it grew 3 p.p. in 4Q22 compared to 4Q21. This increase in PDA was due to the provisioning of 100% of accounts receivable from retail companies undergoing judicial recovery, in the amount of R$ 15.0 million. Excluding this factor, the participation of PDA in relation to Vasta's Net Revenue remains stable between 4Q21 and 4Q22 (2.7% in both quarters) and reduced by 1 p.p. as between the years 2021 and 2022 (3,5% to 2.5%).
Finance Results
Values in R$ ‘000
4Q22
4Q21
% Y/Y
2022
2021
% Y/Y
Finance income
32,218
13,847
132.7%
88,557
35,640
148.5%
Finance costs
(74,033)
(51,009)
45.1%
(270,324)
(120,183)
124.9%
Total
(41,814)
(37,162)
12.5%
(181,766)
(84,543)
115.0%
In the fourth quarter of 2022, finance income totaled R$32 million, from R$13 million in 4Q21, mainly due to the impact of higher interest rates on financial investments and marketable securities. In the 2022 fiscal year, finance income increased 149% to R$89 million. Finance costs in 4Q22 increased 45% (quarter-on-quarter), to R$74 million, driven by higher interest rates applicable to bonds and financings, accounts payable on business combination and provision for tax, civil and labor losses. In the 2022 fiscal year, finance costs increased 125% to R$270 million.
Net profit (loss)
Values in R$ ‘000
4Q22
4Q21
% Y/Y
2022
2021
% Y/Y
Net profit (loss)
75,862
19,781
283.5%
(54,573)
(118,754)
-54.0%
(+) Layoffs related to internal restructuring
608
9,411
-93.5%
3,323
15,735
-78.9%
(+) Share-based compensation plan
107
6,121
-98.3%
27,364
26,677
2.6%
(+) Amortization of intangible assets(1)
39,232
35,956
9.1%
155,481
122,460
27.0%
(-) Income tax contingencies reversal
(29,715)
-
0.0%
(29,715)
-
0.0%
(-) Tax shield(2)
(13,582)
(17,506)
-22.4%
(63,297)
(56,056)
12.9%
Adjusted net profit (loss)
72,512
53,763
34.9%
38,583
(9,938)
-488.2%
Adjusted net margin
14.4%
13.5%
0.9
3.1%
-1.0%
4.1
Note: n.m.: not meaningful; (1) From business combinations. (2) Tax shield (34%) generated by the expenses that are being deducted as net (loss) profit adjustments.
In the fourth quarter of 2022, adjusted net profit totaled R$72.5 million, a 35% increase compared to R$ 53.7 in 4Q21. In the 2022 fiscal year, adjusted net profit reached R$ 38.5 million, from a loss of R$ 10 million in 2021.
Accounts receivable and PDA
Values in R$ ‘000
4Q22
4Q21
% Y/Y
3Q22
% Q/Q
Gross accounts receivable
728,035
552,014
31.9%
378,587
92.3%
Provision for doubtful accounts (PDA)
(69,481)
(46,500)
49.4%
(49,250)
41.1%
Coverage index
9.5%
8.4%
1.1
13.0%
(3.5)
Net accounts receivable
658,554
505,514
30.3%
329,337
100.0%
Average days of accounts receivable(1)
187
192
(5)
102
85
(1) Balance of net accounts receivable divided by the last-twelve-month net revenue, multiplied by 360.
The average payment term of Vasta’s accounts receivable portfolio was 187 days in the 4Q22, 5 days lower than the same quarter of the previous year.
Free cash flow
Values in R$ ‘000
4Q22
4Q21
% Y/Y
2022
2021
% Y/Y
Cash from operating activities(1)
6,396
(37,373)
-117.1%
291,531
21,372
1264.1%
(-) Income tax and social contribution paid
(4,417)
-
0.0%
(7,153)
(1,167)
512.9%
(-) Payment of provision for tax, civil and labor losses
(55)
(113)
-51.2%
(1,363)
(628)
117.2%
(-) Interest lease liabilities paid
(4,128)
(3,128)
32.0%
(14,941)
(14,692)
1.7%
(-) Acquisition of property, plant, and equipment
(10,541)
(11,458)
-8.0%
(61,143)
(20,910)
192.4%
(-) Additions of intangible assets
(20,543)
(19,115)
7.5%
(87,362)
(55,878)
56.3%
(-) Lease liabilities paid
(6,594)
(6,690)
-1.4%
(27,003)
(21,998)
22.8%
Free cash flow (FCF)
(39,882)
(77,875)
-48.8%
92,566
(93,900)
-198.6%
FCF/Adjusted EBITDA
-19.9%
-48.5%
28.5
24.7%
-51.5%
76.2
(1) Net (loss) profit less non-cash items less and changes in working capital. Note: n.m.: not meaningful
In 4Q22, Free Cash Flow (FCF) totaled negative R$ 39 million, compared to a negative R$78 million FCF in 4Q21. In the 2022 fiscal year, FCF totaled R$ 92 million, or R$ 112 million excluding the early payment of royalties (R$20 million) to content providers, up from a negative R$94 million in the same period of 2021.
Financial leverage
Values in R$ ‘000
4Q22
3Q22
2Q22
1Q22
4Q21
Financial debt
842,996
811,612
844,778
817,517
831,226
Accounts payable from business combinations
625,277
647,466
585,503
570,660
532,313
Total debt
1,468,273
1,459,078
1,430,281
1,388,177
1,363,539
Cash and cash equivalents
45,765
44,343
147,762
145,998
309,893
Marketable securities
380,514
433,805
417,768
303,675
166,349
Net debt
1,041,994
980,930
864,751
938,504
887,297
Net debt/LTM adjusted EBITDA(1)
2.78
2.92
3.04
3.67
4.87
(1) LTM adjusted EBITDA includes Eleva. Eleva’s LTM adjusted EBITDA prior to November 2021 may not reflect Vasta’s accounting standards.
As of the end of the 2022 fiscal year, Vasta had a net debt position of R$1,042 million, higher than 3Q22, mainly due to the impacts of higher financial leverage and higher interest rates. The net debt/LTM adjusted EBITDA of 2.78x as of 4Q22, shows a downward trend for the fourth consecutive quarter. In comparison to 4Q21, the net debt position increase amounted to R$ 155 million, owing to higher interest rates and the investment made in the minority-stake acquisitions of Educbank (in July 2022) and Phidellis (in February 2022), both of which partially offset by the positive operating cash flow (OCF).
ESG
Since 2Q22, Vasta reports updates about its ESG standards, including a panel of key ESG indicators, in line with the topics identified in the materiality process. Information about 2021 can be found in Vasta’s Sustainability Report, which can be found here.
Check below the main highlights of ESG in the fourth quarter of 2022.
Global Compact
In December, Vasta signed the ten principles of the UN Global Compact on human rights, labor, environment, and anti-corruption. The movement reinforces the Company's commitment to sustainable development and the best ESG practices.
Corporate Sustainability Assessment – S&P
Vasta was ranked 6th globally by S&P Global’ s Corporate Sustainability Assessment in Consumer Services category - being a pioneer among peers. It is important to highlight that it was the first year that the questionnaire was answered by the Company, already in a prominent position.
Key Indicators
ENVIRONMENT
SDGs
GRI
Water withdrawn by source2 (m³)
Unit
1Q22
2Q22
3Q22
4Q22
6
303-3
Ground water
m³
1,786
2,674
3,438
2,771
Utility supply
m³
840
187
127
0
Total
m³
2,626
2,861
3,565
2,771
SDGs
GRI
Internal energy consumption
Unit
1Q22
2Q22
3Q22
4Q22
12 and 13
302-1
Total energy consumed
GJ
1,569
1,348
1,523
1,934
Percentage of energy from renewable sources3
%
92%
97%
98%
98%
SOCIAL
SDGs
GRI
Diversity in the work force by functional category
Unit
1Q22
2Q22
3Q22
4Q22
5
405-1
C-level - Women
% of people
20%
20%
25%
25%
C-level - Men
% of people
80%
80%
75%
75%
Total - C-level4
No. of people
5
5
4
4
Leaders - Women (≥ management level)
% of people
45%
47%
48%
47%
Leaders - Men (≥ management level)
% of people
55%
53%
52%
53%
Total - Leaders (≥ management level)5
No. of people
130
131
134
134
Academic faculty - Women
% of people
14%
31%
80%
19%
Academic faculty - Men
% of people
86%
69%
20%
81%
Total - Academic faculty6
No. of people
71
100
84
83
Coordinators and Administrative - Women
% of people
56%
57%
57%
56%
Coordinators and Administrative - Men
% of people
44%
43%
43%
46%
Total - Coordinators and Administrative7
No. of people
1,576
1,521
1,539
1.516
Total - Women
% of people
53%
54%
54%
54%
Total - Men
% of people
47%
46%
46%
46%
Total - Employees
No. of people
1,782
1,757
1,761
1.737
SDGs
GRI
Indirect economic impact
Unit
1Q22
2Q22
3Q22
4Q22
11
-
Scholarship holders in Somos Futuro program
nº
373
371
365
349
SDGs
GRI
Occupational Health and Safety
Unit
1Q22
2Q22
3Q22
4Q22
3
403-5,
403-9
% of units covered by the Environmental Risk Prevention Program
%
100%
100%
100%
100%
Total employees trained in health and safety8
No. of people
90
110
346
710
Total number of hours training in health and safety
No.
491
2,871
375
618
Average number of hours training in health and safety per participant9
No.
5.5
4.4
1.1
1,2
Total number of hours of on-site training for fire brigade
No.
248
408
56
0
Average number of hours of on-site training for fire brigade per participant9
No.
7.7
8.0
8
0
Employees - Injury frequency rate10
rate
0.92
3.75
4.06
3,89
Employees - High-consequence injuries rate11
rate
0.00
0.00
0,00
0,00
Employees - Recordable injuries rate12
rate
0.92
0.94
3.04
0,00
Employees - Fatality rate13
rate
0.00
0.00
0.00
0,00
Diversity
47% of leaders (management level and above) and 19% of the teaching faculty at Vasta are women. We are also committed to other measures that promote diversity and inclusion, such as the Somos Futuro project, from the Instituto Somos, to accelerate talents from public schools, in which almost 40% of the participants are black or of mixed race.
Indirect Economic Impact
The Somos Futuro Program, maintained by Vasta’s social arm, Instituto SOMOS, is an acceleration initiative for public school students, who receive full study scholarships for secondary education in Vasta partnering private schools. The participants also receive educational and para-educational materials, online tutoring, mentoring and access to the entire program support network, which includes psychological counseling. 349 students are enrolled in the current edition of the program – which has benefited almost 600 people since it began in 2018.
Health and Safety
Vasta invested in enhancing controls and communication on occupational health and safety for employees. This contributed to an increase in accident reporting rates, boosting the accuracy of control and management systems
GOVERNANCE
SDGs
GRI
Ethical behavior
Unit
1Q22
2Q22
3Q22
4Q22
8, 16
205-1
205-2,
205-3
Employees trained in anti-corruption policies and procedures
% of people
100%
100%
100%
100%
Operations submitted to corruption-related risk assessment
% of operations
100%
100%
100%
100%
Number of confirmed cases of corruption
No. of cases
0
0
0
0
SDGs
GRI
Data privacy and infrastructure
Unit
1Q22
2Q22
3Q22
4Q22
16
418-1
Substantiated complaints received from outside parties
No.
6
28
20
17
Substantiated complaints received from regulatory bodies
No.
0
0
0
0
Identified leaks, thefts, or losses of customer data
No.
0
0
0
0
SDGs
GRI
Diversity in the Board of Directors
Unit
1Q22
2Q22
3Q22
4Q22
5
405-1
Women
% of people
29%
29%
29%
29%
Men
% of people
71%
71%
71%
71%
Total
nº of people
7
7
7
7
Data Privacy
Contacts relating to data privacy issues, such as correction, access, confirmation and/or exclusion and portability of data, are received by our Privacy Portal. Vasta received no substantiated complaints related to leaks or loss of data.
FOOTNOTES:
SDG
Sustainable Development Goal. Indicates goal to which the actions monitored contribute.
GRI
Global Reporting Initiative. Lists the GRI standard indicators related to the data monitored.
NA
Indicator discontinued or not measured in the quarter.
1
Quarterly monitoring of a selection of material indicators. For further information, consult our Sustainability Report, available here.
2
Based on invoices from sanitation concessionaires.
3
Acquired from the free energy market.
4
CEO, vice presidents reporting directly to the CEO and all directors.
5
Management, senior management and leadership positions not reporting directly to the CEO (regional directors, unit directors and vice presidents).
6
Course coordinators, teachers, and tutors.
7
Corporate coordination, academic coordination, specialists, adjuncts, assistants, and analysts.
8
All the employees undergoing training in the period.
9
Total hours of training/employees trained.
10
Total accidents (with and without leave)/ Total man/hours worked (MHW) x 1,000,000.
11
Work-related injury (excluding fatalities) from which the worker cannot recover fully to pre-injury health status within 6 months. Formula: Number of injuries/MHW x 1.000.000.
12
(Accidents with leave + Fatalities)/ MHT x 1,000,000.
13
Fatalities/ MHW x 1,000,000.
CONFERENCE CALL INFORMATION
Vasta will discuss its fourth quarter 2022 results on March 23, 2023, via a conference call at 5:00 p.m. Eastern Time. To access the call [(ID: 3871721), please dial: +1 (888) 660-6819 or +1 (929) 203-1989]. A live and archived webcast of the call will be available on the Investor Relations section of the Company’s website at https://ir.vastaplatform.com.
ABOUT VASTA
Vasta is a leading, high-growth education company in Brazil powered by technology, providing end-to-end educational and digital solutions that cater to all needs of private schools operating in the K-12 educational segment, ultimately benefiting all of Vasta’s stakeholders, including students, parents, educators, administrators, and private school owners. Vasta’s mission is to help private K-12 schools to be better and more profitable, supporting their digital transformation. Vasta believes it is uniquely positioned to help schools in Brazil undergo the process of digital transformation and bring their education skill set to the 21st century. Vasta promotes the unified use of technology in K-12 education with enhanced data and actionable insight for educators, increased collaboration among support staff and improvements in production, efficiency and quality. For more information, please visit ir.vastaplatform.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others. Forward-looking statements appear in a number of places in this press release and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to of various factors, including (i) general economic, financial, political, demographic and business conditions in Brazil, as well as any other countries we may serve in the future and their impact on our business; (ii) fluctuations in interest, inflation and exchange rates in Brazil and any other countries we may serve in the future; (iii) our ability to implement our business strategy and expand our portfolio of products and services; (iv) our ability to adapt to technological changes in the educational sector; (v) the availability of government authorizations on terms and conditions and within periods acceptable to us; (vi) our ability to continue attracting and retaining new partner schools and students; (vii) our ability to maintain the academic quality of our programs; (viii) the availability of qualified personnel and the ability to retain such personnel; (ix) changes in the financial condition of the students enrolling in our programs in general and in the competitive conditions in the education industry; (x) our capitalization and level of indebtedness; (xi) the interests of our controlling shareholder; (xii) changes in government regulations applicable to the education industry in Brazil; (xiii) government interventions in education industry programs, that affect the economic or tax regime, the collection of tuition fees or the regulatory framework applicable to educational institutions; (xiv) cancellations of contracts within the solutions we characterize as subscription arrangements or limitations on our ability to increase the rates we charge for the services we characterize as subscription arrangements; (xv) our ability to compete and conduct our business in the future; (xvi) our ability to anticipate changes in the business, changes in regulation or the materialization of existing and potential new risks; (xvii) the success of operating initiatives, including advertising and promotional efforts and new product, service and concept development by us and our competitors; (xviii) changes in consumer demands and preferences and technological advances, and our ability to innovate to respond to such changes; (xix) changes in labor, distribution and other operating costs; our compliance with, and changes to, government laws, regulations and tax matters that currently apply to us; (xx) the effectiveness of our risk management policies and procedures, including our internal control over financial reporting; (xxi) health crises, including due to pandemics such as the COVID-19 pandemic and government measures taken in response thereto; (xxii) other factors that may affect our financial condition, liquidity and results of operations; and (xxiii) other risk factors discussed under “Risk Factors.” Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.
NON-GAAP FINANCIAL MEASURES
This press release presents our EBITDA, Adjusted EBITDA and Adjusted net (loss) profit and Free cash flow (FCF), which is information provided for the convenience of investors. EBITDA and Adjusted EBITDA are among the key performance indicators used by us to measure financial operating performance. Our management believes that these Non-GAAP financial measures provide useful information to investors and shareholders. We also use these measures internally to establish budgets and operational goals to manage and monitor our business, evaluate our underlying historical performance and business strategies and to report our results to the board of directors.
We calculate EBITDA as net (loss) profit for the period/year plus income taxes and social contribution plus/minus net finance result plus depreciation and amortization. The EBITDA measure provides useful information to assess our operational performance.
We calculate Adjusted EBITDA as EBITDA plus/minus: (a) income tax and social contribution; (b) net finance result; (c) depreciation and amortization; (d) share-based compensation expenses, mainly due to the grant of additional shares to Somos’ employees in connection with the change of control of Somos to Cogna (for further information refer to note 23 to the audited consolidated financial statements); (e) provision for risks of tax, civil and labor losses regarding penalties, related to income tax positions taken by the Predecessor Somos – Anglo and Vasta in connection with a corporate reorganization carried out by the Predecessor Somos – Anglo; (f) Bonus IPO, which refers to bonus paid to certain executives and employees based on restricted share units; and (g) expenses with contractual termination of employees due to organizational restructuring. We understand that such adjustments are relevant and should be considered when calculating our Adjusted EBITDA, which is a practical measure to assess our operational performance that allows us to compare it with other companies that operates in the same segment.
We calculate Adjusted net (loss) profit as the (loss) profit for the period/year as presented in Statement of Profit or Loss and Other Comprehensive Income adjusted by the same Adjusted EBITDA items, however, added by (a) Amortization of intangible assets from Business Combination and (b) Tax shield of 34% generated by the aforementioned adjustments.
We calculate Operating cash flow (OCF) as the cash from operating activities as presented in the Statement of Cash Flows less (a) income tax and social contribution paid; (b) tax, civil and labor proceedings paid; (c) interest lease liabilities paid; (d) acquisition of property, plant and equipment; (e) additions to intangible assets; and (f) lease liabilities paid.
We understand that, although Adjusted net (loss) profit, EBITDA, Adjusted EBITDA, and Operating cash flow (OCF) are used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations as reported under IFRS. Additionally, our calculations of Adjusted net (loss) profit, Adjusted EBITDA, and Operating cash flow (OCF) may be different from the calculation used by other companies, including our competitors in the education services industry, and therefore, our measures may not be comparable to those of other companies.
REVENUE RECOGNITION AND SEASONALITY
Our main deliveries of printed and digital materials to our customers occur in the last quarter of each year (typically in November and December), and in the first quarter of each subsequent year (typically in February and March), and revenue is recognized when the customers obtain control over the materials. In addition, the printed and digital materials we provide in the fourth quarter are used by our customers in the following school year and, therefore, our fourth quarter results reflect the growth in the number of our students from one school year to the next, leading to higher revenue in general in our fourth quarter compared with the preceding quarters in each year. Consequently, in aggregate, the seasonality of our revenues generally produces higher revenues in the first and fourth quarters of our fiscal year. Thus, the numbers for the second quarter and third quarter are usually less relevant. In addition, we generally bill our customers during the first half of each school year (which starts in January), which generally results in a higher cash position in the first half of each year compared to the second half.
A significant part of our expenses is also seasonal. Due to the nature of our business cycle, we need significant working capital, typically in September or October of each year, to cover costs related to production and inventory accumulation, selling and marketing expenses, and delivery of our teaching materials at the end of each year in preparation for the beginning of each school year. As a result, these operating expenses are generally incurred between September and December of each year.
Purchases through our Livro Fácil e-commerce platform are also very intense during the back-to-school period, between November, when school enrollment takes place and families plan to anticipate the purchase of products and services, and February of the following year, when classes are about to start. Thus, e-commerce revenue is mainly concentrated in the first and fourth quarters of the year.
KEY BUSINESS METRICS
ACV Bookings is a non-accounting managerial metric and represents our partner schools’ commitment to pay for our solutions offerings. We believe it is a meaningful indicator of demand for our solutions. We consider ACV Bookings is a helpful metric because it is designed to show amounts that we expect to be recognized as revenue from subscription services for the 12-month period between October 1 of one fiscal year through September 30 of the following fiscal year. We define ACV Bookings as the revenue we would expect to recognize from a partner school in each school year, based on the number of students who have contracted our services, or “enrolled students,” that will access our content at such partner school in such school year. We calculate ACV Bookings by multiplying the number of enrolled students at each school with the average ticket per student per year; the related number of enrolled students and average ticket per student per year are each calculated in accordance with the terms of each contract with the related school. Although our contracts with our schools are typically for 4-year terms, we record one year of revenue under such contracts as ACV Bookings. ACV Bookings are calculated based on the sum of actual contracts signed during the sales period and assumes the historical rates of returned goods from customers for the preceding 24-month period. Since the actual rates of returned goods from sales during the period may be different from the historical average rates and the actual volume of merchandise ordered by our customers may be different from the contracted amount, the actual revenue recognized during each period of a sales cycle may be different from the ACV Bookings for the respective sales cycle. Our reported ACV Bookings are subject to risks associated with, among other things, economic conditions and the markets in which we operate, including risks that our contracts may be canceled or adjusted (including as a result of the COVID-19 pandemic).
FINANCIAL STATEMENTS
Consolidated Statements of Financial Position
Assets
December 31,
2022
December 31,
2021
Current assets
Cash and cash equivalents
45,765
309,893
Marketable securities
380,514
166,349
Trade receivables
649,135
505,514
Inventories
266,450
242,363
Prepayments
56,645
40,069
Taxes recoverable
19,120
24,564
Income tax and social contribution recoverable
17,746
8,771
Other receivables
972
2,105
Related parties – other receivables
1,759
501
Total current assets
1,438,106
1,300,129
Non-current assets
Judicial deposits and escrow accounts
194,859
178,824
Deferred income tax and social contribution
170,851
130,405
Related parties
-
-
Investments accounted for using the equity method
90,603
-
Other Investments and interests in entities
8,271
-
Property, Plant and equipment
197,688
185,682
Intangible assets and goodwill
5,420,213
5,538,367
Total non-current assets
6,082,485
6,033,278
Total Assets
7,520,591
7,333,407
Consolidated Statements of Financial Position (continued)
Liabilities
December 31,
2022
December 31,
2021
Current liabilities
Bonds and financing
93,779
281,491
Suppliers
250,647
264,787
Reverse Factoring
155,469
-
Lease liabilities
23,151
26,636
Contractual obligations and deferred income
67,134
46,037
Accounts payable for business combination
73,007
20,502
Salaries and social contributions
100,057
62,829
Income tax and social contribution payable
5,564
16,666
Other liabilities
20,347
20,033
Other liabilities - related parties
54
39,271
Total current liabilities
789,209
778,252
Non-current liabilities
Bonds and financing
749,217
549,735
Lease liabilities
117,412
133,906
Accounts payable for business combination
552,270
511,811
Provision for tax, civil and labor losses
651,252
646,850
Contractual obligations and deferred income
-
128
Other liabilities
31,551
47,516
Total non-current liabilities
2,101,702
1,889,946
Shareholder's Equity
Share Capital
4,820,815
4,820,815
Capital reserve
80,531
61,488
Treasury shares
(23,880)
(23,880)
Accumulated losses
(247,787)
(193,214)
Total Shareholder's Equity
4,629,679
4,665,209
Total Liabilities and Shareholder's Equity
7,520,591
7,333,407
Consolidated Income Statement
December 31,
2022
December 31,
2021
Net revenue from sales and services
1,264,280
947,419
Sales
1,233,978
914,266
Services
30,302
33,153
Cost of goods sold and services
(473,135)
(396,829)
Gross profit
791,145
550,590
Operating income (expenses)
(710,553)
(621,890)
General and administrative expenses
(471,626)
(430,279)
Commercial expenses
(194,043)
(164,439)
Other operating income
1,020
5,554
Impairment losses on trade receivables
(45,904)
(32,726)
Share of (loss) profit of equity-accounted investees
(4,512)
-
Profit (Loss) before finance result and taxes
76,080
(71,300)
Finance result
(181,766)
(84,543)
Finance income
88,557
35,640
Finance costs
(270,323)
(120,183)
Profit (Loss) before income tax and social contribution
(105,687)
(155,843)
Income tax and social contribution
51,114
37,089
Current
10,668
(11,297)
Deferred
40,446
48,386
Net Loss for the period
(54,573)
(118,754)
Consolidated Statement of Cash Flows
For the year ended December 31,
2022
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before income tax and social contribution
(105,687)
(155,843)
(71,053)
Adjustments for:
Depreciation and amortization
264,135
211,156
174,088
Share of loss of equity-accounted investees
4,512
-
-
Impairment losses on trade receivables
45,904
32,726
25,015
Reversal for tax, civil and labor risks, net
(15,099)
(1,986)
(2,092)
Interest on provision for tax, civil and labor losses
42,063
34,300
13,297
Provision for obsolete inventories
40,924
22,117
4,057
Interest on bonds and financing
108,896
43,549
52,935
Interest on loans from related parties
-
-
2,922
Contractual obligations and right to returned goods
11,312
(1,159)
1,454
Interest on accounts payable for business combination
65,725
157
1,568
Imputed interest on suppliers
19,810
8,158
2,945
Share-based payment expense
19,043
22,526
39,648
Interest on lease liabilities
13,143
14,984
15,091
Interest on marketable securities incurred
(54,954)
(26,719)
(16,907)
Bank and collection fees
3,891
-
-
Other finance costs, liquid of the income finance
3,441
-
-
Cancellations of right-of-use contracts
616
(195)
-
Residual value of disposals of property and equipment and intangible assets
13,161
124
(454)
480,836
203,895
242,514
Changes in
Trade receivables
(189,329)
(25,408)
(123,412)
Inventories
(65,011)
(14,038)
(20,812)
Prepayments
(16,576)
(12,511)
(4,060)
Taxes recoverable
(16,566)
(4,914)
24,573
Judicial deposits and escrow accounts
(16,035)
(6,076)
184
Other receivables
1,133
(1,789)
4,516
Related parties – other receivables
(1,258)
-
-
Suppliers
121,519
(16,124)
42,620
Salaries and social charges
37,166
(9,890)
(6,693)
Tax payable
(4,039)
5,711
13,629
Contractual obligations and deferred income
9,657
(2,659)
(2,163)
Other liabilities
(10,748)
(670)
4,295
Other liabilities - related parties
(39,218)
(94,155)
117,299
Cash from operating activities
291,531
21,372
292,490
Interest lease liabilities paid
(14,941)
(14,692)
(14,675)
Payment of interest on bonds and financing
(92,500)
(24,922)
(49,404)
Payment of interest on business combinations
(603)
(1,572)
-
Income tax and social contribution paid
(7,153)
(1,167)
(5,234)
Payment of provision for tax, civil and labor losses
(1,363)
(627)
(7,716)
Net cash generated by (used in) operating activities
174,971
(21,608)
215,461
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment
(61,143)
(20,910)
(1,642)
Additions of intangible assets
(87,362)
(55,878)
(42,793)
Acquisition of subsidiaries net of cash acquired
(81,043)
(186,218)
(23,147)
Proceeds from (purchase of) investment in marketable securities
(166,543)
351,472
(474,195)
Net cash (used in) generated by investing activities
(396,091)
88,466
(541,777)
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contribution
-
-
2,426
Suppliers - related parties
-
(1,450)
(207,174)
Loans from related parties
-
-
65,600
Payments of loans from related parties
(254,885)
(20,884)
(76,830)
Lease liabilities paid
(27,003)
(21,998)
(12,835)
Acquisition of treasury shares
-
(23,880)
-
Parent Company's Net Investment
-
-
(6,335)
Issuance of common shares in initial public offering
-
-
1,836,317
Transaction costs in initial public offering
-
-
(154,849)
Payments of bonds and financing
(759)
(477,741)
(852,135)
Issuance of securities with related parties net of issuance costs
250,000
-
-
Issuance of bonds net off issuance costs
1,018
497,000
-
Payments of accounts payable for business combination
(11,379)
(19,168)
-
Net cash (used in) generated by financing activities
(43,008)
(68,121)
594,185
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(264,128)
(1,263)
267,869
Cash and cash equivalents at beginning of period
309,893
311,156
43,287
Cash and cash equivalents at end of period
45,765
309,893
311,156
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(264,128)
(1,263)
267,869
View source version on businesswire.com: https://www.businesswire.com/news/home/20230323005548/en/
Investor Relations ir@vastaplatform.com
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