SÃO PAULO, Brazil--(BUSINESS WIRE)--Vasta Platform Limited to Report Third Quarter 2025 Financial Results on November 06, 2025. ...

Group 1 - The article emphasizes a long-only investment strategy that evaluates companies from an operational and buy-and-hold perspective, focusing on long-term earnings power and competitive dynamics rather than market-driven price actions [1] - Quipus Capital's approach is to hold most companies, indicating that only a small fraction should be considered a buy at any given time, which is a deliberate strategy to provide valuable information for future investors [1] - The hold articles serve to introduce a healthy skepticism in a generally bullish market, highlighting the importance of operational aspects in investment decisions [1] Group 2 - The article does not disclose any stock, option, or derivative positions in the companies mentioned, nor does it plan to initiate any such positions in the near future [2] - The opinions expressed in the article are solely those of the author and are not influenced by any business relationships with the companies discussed [2] - Seeking Alpha clarifies that past performance does not guarantee future results and that the views expressed may not reflect the opinions of the platform as a whole [3]

Financial Data and Key Metrics Changes - Subscription revenue reached $1,340 million, a 16% increase compared to the same period in 2024 [6][14] - Net revenue for the 2025 cycle to date reached $1.488 billion, a 14% increase compared to the same period in 2024 [7][14] - Adjusted EBITDA reached $462 million with a margin of 31.1%, reflecting an 8.1% increase compared to the previous cycle [15][18] - Free cash flow totaled $223 million, an increase of 147% from 2024 [18][19] - Adjusted net losses totaled $29 million, an improvement from the adjusted net loss of $37 million in the same quarter of 2024 [18] Business Line Data and Key Metrics Changes - The complementary solutions business grew by 24%, supported by an expanded student base and market penetration [7] - In the B2G segment, revenue from new customers totaled $9 million, contributing to $14 million from new customers over the last two quarters [7][13] - Non-subscription revenues increased by 98% to $29 million due to seasonal effects [13] Market Data and Key Metrics Changes - The average payment terms for accounts receivable was 153 days, one day higher than the comparable quarter [22] - The net debt position decreased to $917 million, down $46 million from the previous quarter [22][23] Company Strategy and Development Direction - The company is committed to innovation and inclusion, with plans to introduce new tools focusing on equity and personalized learning in 2026 [11] - The strategy includes diversifying the B2G portfolio into states and municipalities, with a positive outlook for new contracts [30] Management's Comments on Operating Environment and Future Outlook - Management expressed a positive outlook for the commercial cycle and expects continued growth in complementary products [28][30] - The company anticipates a strong performance in the second half of the year, particularly in B2G contracts [36][38] Other Important Information - The company has implemented operational discipline measures, including automation in collection processes and centralized payment scheduling [19] - The net debt to last twelve months adjusted EBITDA ratio decreased to 1.9 times, down from 2.28 times in Q2 2024 [10][23] Q&A Session Summary Question: Comments on the commercial cycle and competitive environment - Management noted a positive outlook for complementary products and a strong portfolio supporting growth despite market competition [28][30] Question: Outlook for B2G contracts in an election year - Management indicated that while there is uncertainty, new governors and mayors may be open to new contracts, maintaining a positive outlook [32] Question: Impact of premium schools on EBITDA margin - Management confirmed that premium products and growth have positively influenced margins, with expectations for Q4 to exceed 30% [36] Question: Expectations for B2G in the second half of the year - Management expects growth in B2G contracts, particularly with the recognition of the Para contract and new customer acquisitions [36][38] Question: Start Anglo operations and non-subscription revenue - Management expects new contracts for Start Anglo to begin operations in 2026, with non-subscription revenue driven by tuition from flagship schools [43][44]

Financial Performance - Net Revenue increased by 14% compared to 2024[9] - Subscription Revenue increased by 16%[8, 17] - Adjusted EBITDA reached R$462 million, an 8% increase from R$428 million in 2024[11, 12] - Free Cash Flow increased by 147% to R$224 million compared to R$90 million in 2024[14, 34] - Adjusted EBITDA margin decreased by 1.6 percentage points to 31.1% compared to 32.7% in 2024[12, 28] Revenue Breakdown - Subscription revenue cycle to date increased by 16%[17] - Non-subscription revenue cycle to date increased by 11%[17] - B2G (Business-to-Government) revenue cycle to date decreased by 28%[17] Margin Analysis - Gross margin decreased by 0.6 percentage points[24] - Commercial expenses slightly increased but remained stable near 17% of net revenue[24, 26] - Adjusted G&A expenses decreased due to operational efficiencies and workforce optimization[24, 27] Debt and Cash Flow - Net Debt decreased by R$123 million cycle to date[47] - LTM (Last Twelve Months) FCF / LTM Adjusted EBITDA conversion improved by 25.8 percentage points to 57.7% compared to 31.9% in 2024[15, 34]

Unaudited Condensed Interim Consolidated Financial Statements This section presents the unaudited condensed interim consolidated financial statements and their accompanying notes for the period ended June 30, 2025 [Unaudited Condensed Interim Consolidated Statements of Financial Position](index=3&type=section&id=Unaudited%20Condensed%20Interim%20Consolidated%20Statements%20of%20Financial%20Position) The Company's financial position as of June 30, 2025, shows decreased total assets and equity, with reduced cash and trade receivables | Metric | June 30, 2025 (R$ thousands) | December 31, 2024 (R$ thousands) | Change (R$ thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total Assets | 7,096,696 | 7,205,155 | (108,459) | -1.50% | | Total Liabilities | 2,160,553 | 2,211,844 | (51,291) | -2.32% | | Total Shareholder's Equity | 4,936,143 | 4,993,311 | (57,168) | -1.14% | | Cash and cash equivalents | 14,257 | 84,532 | (70,275) | -83.13% | | Marketable securities | 300,942 | 111,313 | 189,629 | 170.36% | | Trade receivables | 725,258 | 863,244 | (137,986) | -15.98% | | Intangible assets and goodwill | 5,088,974 | 5,160,785 | (71,811) | -1.39% | [Unaudited Condensed Interim Consolidated Statements of Profit or Loss and Other Comprehensive Income or Loss](index=5&type=section&id=Unaudited%20Condensed%20Interim%20Consolidated%20Statements%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income%20or%20Loss) The Company reported an increased net loss for the six-month period ended June 30, 2025, despite higher net revenue, due to increased operating expenses and negative finance results | Metric | June 30, 2025 (R$ thousands) | June 30, 2024 (R$ thousands) | Change (R$ thousands) | % Change | | :------------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Net revenue from sales and services | 788,892 | 755,068 | 33,824 | 4.48% | | Gross profit | 491,358 | 484,218 | 7,140 | 1.47% | | Operating income (expenses) | (465,468) | (431,502) | (33,966) | 7.87% | | Finance result (net) | (95,392) | (104,054) | 8,662 | -8.32% | | Loss for the period | (59,527) | (44,229) | (15,298) | 34.59% | | Basic Loss per share (R$) | (0.74) | (0.52) | (0.22) | 42.31% | | Diluted Loss per share (R$) | (0.74) | (0.52) | (0.22) | 42.31% | [Unaudited Condensed Interim Consolidated Statements of Changes in Equity](index=6&type=section&id=Unaudited%20Condensed%20Interim%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total shareholder's equity decreased from R$4,993,311 thousand as of December 31, 2024, to R$4,936,143 thousand as of June 30, 2025, primarily due to the loss for the period | Metric | December 31, 2024 (R$ thousands) | June 30, 2025 (R$ thousands) | Change (R$ thousands) | | :-------------------------------- | :------------------------------- | :----------------------------- | :-------------------- | | Total Shareholder's Equity | 4,993,311 | 4,936,143 | (57,168) | | Loss for the period | - | (59,433) | (59,433) | | Share based compensation granted | - | 2,359 | 2,359 | [Unaudited Condensed Interim Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Interim%20Consolidated%20Statements%20of%20Cash%20Flows) The Company experienced a net decrease in cash and cash equivalents for the six-month period ended June 30, 2025, primarily driven by significant cash used in investing activities | Metric | June 30, 2025 (R$ thousands) | June 30, 2024 (R$ thousands) | Change (R$ thousands) | % Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Net cash from operating activities | 171,317 | 82,596 | 88,721 | 107.41% | | Net cash used in investing activities | (228,614) | (82,654) | (145,960) | 176.59% | | Net cash used in financing activities | (12,978) | (44,938) | 31,960 | -71.12% | | Net decrease in cash and cash equivalents | (70,275) | (44,996) | (25,279) | 56.18% | | Cash and cash equivalents at end of period | 14,257 | 50,868 | (36,611) | -71.97% | [Notes to the Unaudited Condensed Interim Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Interim%20Consolidated%20Financial%20Statements) This section provides detailed notes explaining the significant accounting policies, estimates, and financial risk management practices underlying the interim consolidated financial statements [1. The Company and Basis of Presentation](index=8&type=section&id=1.%20The%20Company%20and%20Basis%20of%20Presentation) Vasta Platform Limited, a Cayman Islands-incorporated company headquartered in São Paulo, Brazil, provides technology-powered educational content and digital solutions for K-12 private schools - Vasta Platform Limited is a publicly held company incorporated in the Cayman Islands, with headquarters in São Paulo, Brazil, providing technology-powered educational content and digital solutions for K-12 private schools[12](index=12&type=chunk) - The Company is a subsidiary of Cogna Educação S.A. and its shares are traded on Nasdaq Global Select Market under ticker symbol 'VSTA' since July 31, 2020[13](index=13&type=chunk) [2. Basis of accounting](index=8&type=section&id=2.%20Basis%20of%20accounting) The interim financial statements for the six-month period ended June 30, 2025, are prepared in accordance with IAS 34 and presented in thousands of Brazilian Reais, consolidating entities where Vasta holds a controlling interest - Interim Financial Statements are prepared in accordance with IAS 34 – Interim Financial reporting – and presented in thousands of Brazilian Reais ("R$"), the Company's functional currency[14](index=14&type=chunk)[15](index=15&type=chunk) | Company | Interest (June 30, 2025) | Interest (December 31, 2024) | | :------------------------------------------ | :----------------------- | :--------------------------- | | Somos Sistemas de Ensino S.A. | 100% | 100% | | Colégio Anglo São Paulo Ltda. | 100% | 100% | | MVP Consultoria e Sistemas Ltda. | 100% | 100% | | Sociedade Educacional da Lagoa Ltda | 100% | 100% | | EMME – Produções de Materiais em Multimídia Ltda | 100% | 100% | | Escola Start Ltda. | 51% | 51% | [3. Use of estimates and judgements](index=9&type=section&id=3.%20Use%20of%20estimates%20and%20judgements) Management applies judgments and estimates in preparing the interim financial statements, which affect reported amounts and are continuously evaluated, with fair value measurements categorized into Level 1, 2, or 3 inputs - Management makes judgments and estimates that affect the application of accounting policies and reported financial amounts, which are continually evaluated[19](index=19&type=chunk)[20](index=20&type=chunk) - Fair value measurements are categorized into Level 1 (quoted market prices), Level 2 (observable inputs), and Level 3 (unobservable inputs), with third-party appraisers engaged for Level 2/3 valuations if needed[21](index=21&type=chunk)[25](index=25&type=chunk) [4. Material accounting policies and new and not yet effective accounting standards](index=9&type=section&id=

Core Viewpoint - Vasta Platform Limited (VSTA) is currently viewed as a more attractive option for value investors compared to Universal Technical Institute (UTI) based on various valuation metrics and earnings outlook [1][3][7] Valuation Metrics - VSTA has a forward P/E ratio of 13.74, significantly lower than UTI's forward P/E of 30.19, indicating that VSTA may be undervalued [5] - The PEG ratio for VSTA is 0.28, while UTI's PEG ratio is 2.01, suggesting that VSTA offers better value relative to its expected earnings growth [5] - VSTA's P/B ratio stands at 0.39, compared to UTI's P/B of 5.91, further highlighting VSTA's relative undervaluation [6] Earnings Outlook - VSTA is experiencing an improving earnings outlook, which is a positive indicator in the Zacks Rank model, suggesting that its earnings estimates are likely to rise [3][7] - UTI, on the other hand, holds a Zacks Rank of 3 (Hold), indicating a less favorable earnings outlook compared to VSTA's 2 (Buy) rank [3]

Core Insights - Vasta Platform Limited (VSTA) reported quarterly earnings of $0.05 per share, missing the Zacks Consensus Estimate of $0.06 per share, and down from $0.13 per share a year ago, representing an earnings surprise of -16.67% [1] - The company posted revenues of $73.4 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 4.84%, and down from $93.06 million year-over-year [2] - Vasta Platform shares have increased approximately 115.5% since the beginning of the year, contrasting with a -4.3% decline in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.04 on revenues of $63.11 million, while for the current fiscal year, the estimate is $0.27 on revenues of $324.34 million [7] - The estimate revisions trend for Vasta Platform is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Technology Services industry, to which Vasta Platform belongs, is currently ranked in the top 27% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - In the first quarter of 2025, net revenue increased by 11% to reach BRL1.19 billion, driven by the successful conversion of annual contract value into revenue, which is a 17% increase compared to the same period in 2024 [8] - Adjusted EBITDA for the 2025 cycle to date was BRL420 million with a margin of 37.2%, an increase of 5% from BRL402 million in the last cycle [9][10] - Free cash flow totaled BRL144 million in the 2025 sales cycle, representing a 176% increase compared to the same period in 2024 [10][18] Business Line Data and Key Metrics Changes - Complementary solutions showed the highest growth rate among business segments with a 24% expansion compared to the same period last year [8] - Subscription revenue increased by 17% to BRL1.019 billion, representing 90% of total revenue, while non-subscription revenue dropped by 6% [14] - Adjusted net profit for the first quarter of 2025 totaled BRL26 million, a 49% increase compared to the same quarter in 2024 [17] Market Data and Key Metrics Changes - In the government segment, revenues generated from five new contracts amounted to BRL5 million, compared to BRL69 million in the first quarter of 2024 [14] - The net revenue of B2G reached BRL41 million, a decrease of 40% compared to the 2024 sales cycle [14] Company Strategy and Development Direction - The company is focused on operational efficiency and cost-saving measures, which have positively impacted profitability [9] - Continuous development of the technological platform, Lural, aims to enhance service delivery and educational inclusivity [11] - The company expects stable margins for 2025, with a focus on maintaining a strong product mix [26] Management's Comments on Operating Environment and Future Outlook - Management anticipates a challenging credit landscape for non-premium brands but remains committed to generating free cash flow and reducing net debt [20][22] - The company is optimistic about the pipeline for new contracts in B2G and expects to see sound growth in this segment [32] Other Important Information - The average payment terms for accounts receivables were 180 days, which is eight days higher than the comparable quarter [20] - The net debt position decreased by BRL40 million from the previous quarter, attributed to positive cash flow generation [21] Q&A Session Summary Question: How do you see margins for 2025 comparing to 2024? - Management expects stable margins for 2025, likely above 30%, with Q1 and Q2 having lower margins due to marketing spending concentration [26] Question: What is the strategy in terms of mix and expectations for the B2G business? - The strategy includes a focus on enhancing the mix in B2G, with expectations for new contracts to improve performance in Q2 and Q3 [27][28] Question: Do you expect a lower B2G revenue this year or should there be seasonality? - Management indicated that the seasonality for B2G should be similar to previous years, with a normal distribution expected [31]

Financial Data and Key Metrics Changes - In Q1 2025, net revenue increased by 11% to reach BRL1.19 billion, driven by the successful conversion of annual contract value into revenue [8][12] - Adjusted EBITDA for the 2025 cycle to date was BRL420 million with a margin of 37.2%, a 5% increase from BRL402 million in the last cycle [9][13] - Free cash flow totaled BRL144 million in the 2025 sales cycle, representing a 176% increase compared to the same period in 2024 [9][16] Business Line Data and Key Metrics Changes - Complementary solutions showed the highest growth rate among business segments with a 24% expansion compared to the same period last year [8] - Subscription revenue increased by 17% to BRL1.019 billion, representing 90% of total revenue, while non-subscription revenue dropped by 6% [12] - Adjusted net profit for Q1 2025 totaled BRL26 million, a 49% increase compared to the same quarter of 2024 [15] Market Data and Key Metrics Changes - In the government segment, revenues generated were BRL5 million from five new contracts, a decrease from BRL69 million in Q1 2024 [12] - The net revenue of B2G reached BRL41 million, a decrease of 40% compared to the 2024 sales cycle [12] Company Strategy and Development Direction - The company is focusing on operational efficiency and cost-saving measures, which have positively impacted profitability [9] - Continuous development of the technological platform, Lural, aims to enhance service delivery and educational inclusivity [10] Management's Comments on Operating Environment and Future Outlook - Management expects stable margins for 2025, with a forecast of similar margins to 2024 despite lower margins in Q1 and Q2 due to marketing spending [24] - There is a positive outlook for B2G contracts, with expectations for growth and a healthy pipeline of new contracts [30] Other Important Information - The last twelve months free cash flow to adjusted EBITDA conversion rate improved from 42.5% to 50.8% [17] - The net debt position decreased by BRL77 million since last year, driven by free cash flow generation [20] Q&A Session Summary Question: How do you see margins for 2025 comparing to 2024? - Management expects stable margins for 2025, likely above 30%, with Q1 and Q2 having lower margins due to marketing spending [24] Question: What is the strategy in terms of mix and expectations for the B2G business? - The strategy includes a concentration in B2G with new contracts expected in Q2, and complementary products are anticipated to grow above 20% [26] Question: Do you expect a lower B2G revenue this year or should there be seasonality? - Management indicated a more normal seasonality for B2G, with expectations for growth in 2025 and a heated pipeline of new contracts [30]

Financial Performance - Subscription Revenue increased by 17% to R$420 million[8] - Net Revenue increased by 11% compared to 2024[12] - Free Cash Flow increased significantly, reaching R$144 million, which is 176% higher than the R$52 million in 2024[10] - Adjusted EBITDA increased by 5% to R$18 million, reaching R$420 million compared to R$402 million in 2024[8] - Adjusted Net Profit decreased by 48.6% to R$26 million in 1Q25 compared to R$50 million in 1Q24[27] Margins - Adjusted EBITDA Margin decreased to 37.2% compared to 39.6% in 2024[8] - LTM FCF / LTM Adjusted EBITDA conversion improved to 50.8%, an 8.3 percentage point increase from 42.5% in 2024[11] - Gross Margin decreased, impacted by lower revenue in the period[21] Revenue Breakdown - Subscription revenue increased by 16.9% cycle to date[13] - Non-subscription revenue decreased by 27% in 1Q25 and 6.4% cycle to date[13] - B2G revenue decreased by 6.6% in 1Q25 and 40.5% cycle to date[13] Debt and Receivables - Net Debt decreased by R$77 million cycle to date[44] - Provision for Doubtful Accounts (PDA) as a percentage of net revenue decreased to 3.0% cycle to date, compared to 4.2% in 2024[35] - Average Days of Accounts Receivable increased by 8 days year-over-year[38]