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]

[Unaudited Condensed Interim Consolidated Financial Statements](index=1&type=section&id=Unaudited%20Condensed%20Interim%20Consolidated%20Financial%20Statements) This section presents the company's unaudited condensed interim consolidated financial statements, including the balance sheet, profit or loss, changes in equity, cash flows, and detailed notes [Consolidated Statements of Financial Position (Balance Sheet)](index=3&type=section&id=Unaudited%20Condensed%20Interim%20Consolidated%20Statements%20of%20Financial%20Position) As of March 31, 2025, total assets slightly increased to R$7,214.2 thousand, with a shift from cash to marketable securities, while liabilities marginally rose and equity slightly decreased Statement of Financial Position Summary (in thousands of R$) | Account | March 31, 2025 (R$ thousand) | December 31, 2024 (R$ thousand) | | :--- | :--- | :--- | | **Total Current Assets** | 1,519,625 | 1,466,325 | | Cash and cash equivalents | 12,345 | 84,532 | | Marketable securities | 245,941 | 111,313 | | Trade receivables | 859,079 | 863,244 | | **Total Non-current Assets** | 5,694,531 | 5,738,830 | | Intangible assets and goodwill | 5,122,213 | 5,160,785 | | **Total Assets** | **7,214,156** | **7,205,155** | | **Total Current Liabilities** | 1,252,046 | 1,244,172 | | **Total Non-current Liabilities** | 970,400 | 967,672 | | **Total Liabilities** | **2,222,446** | **2,211,844** | | **Total Shareholder's Equity** | **4,991,710** | **4,993,311** | | **Total Liabilities and Equity** | **7,214,156** | **7,205,155** | [Consolidated Statements of Profit or Loss](index=5&type=section&id=Unaudited%20Condensed%20Interim%20Consolidated%20Statements%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Profit%20or%20Loss) For Q1 2025, the company reported a net loss of R$3.4 thousand, a significant decline from a profit in Q1 2024, due to decreased net revenue and increased operating expenses Profit or Loss Summary (in thousands of R$) | Account | March 31, 2025 (R$ thousand) | March 31, 2024 (R$ thousand) | | :--- | :--- | :--- | | Net revenue from sales and services | 430,392 | 460,716 | | Gross profit | 289,179 | 320,633 | | Operating income (expenses) | (242,871) | (224,582) | | Profit before finance result and taxes | 44,386 | 92,991 | | (Loss) profit for the period | (3,376) | 21,942 | | Basic (loss) profit per share | (0.04) | 0.27 | | Diluted (loss) profit per share | (0.04) | 0.30 | - The decline in profitability was influenced by lower net revenue, which fell from **R$460.7 thousand** to **R$430.4 thousand**, and higher commercial expenses, which rose from **R$73.3 thousand** to **R$97.7 thousand** year-over-year[7](index=7&type=chunk) [Consolidated Statements of Changes in Equity](index=6&type=section&id=Unaudited%20Condensed%20Interim%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total shareholder's equity slightly decreased to R$4,991.7 thousand as of March 31, 2025, primarily due to the net loss for the period, partially offset by share-based compensation - The key movements in equity for the three months ended March 31, 2025 include: - Net loss for the period: **(R$3,267 thousand)** attributable to controlling shareholders[8](index=8&type=chunk) - Share-based compensation granted and issued: **R$1,775 thousand**[8](index=8&type=chunk) - Vested share-based compensation leading to a transfer to treasury shares: **R$179 thousand**[8](index=8&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Interim%20Consolidated%20Statements%20of%20Cash%20Flows) For Q1 2025, the company reported a net decrease in cash and cash equivalents of R$72.2 thousand, driven by significant cash used in investing activities despite positive operating cash flow Cash Flow Summary (in thousands of R$) | Activity | March 31, 2025 (R$ thousand) | March 31, 2024 (R$ thousand) | | :--- | :--- | :--- | | Net cash from operating activities | 89,597 | 44,170 | | Net cash used in investing activities | (156,249) | (34,830) | | Net cash used in financing activities | (5,535) | (37,990) | | **Net decrease in cash and cash equivalents** | **(72,187)** | **(28,650)** | | Cash and cash equivalents at end of period | 12,345 | 67,214 | - The significant cash outflow in investing activities was driven by a net purchase of marketable securities amounting to **R$129.8 thousand** (**R$319.0 thousand** purchased vs. **R$189.2 thousand** in proceeds)[10](index=10&type=chunk) [Notes to the Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Interim%20Consolidated%20Statements) The notes provide detailed explanations of accounting policies and breakdowns of significant financial statement items, covering financial risk, instruments, assets, liabilities, related parties, and revenue recognition [Note 1 & 2: Company Overview and Basis of Presentation](index=9&type=section&id=1.%20The%20Company%20and%20Basis%20of%20Presentation) Vasta Platform Limited, a Cogna Educação S.A. subsidiary, provides K-12 educational solutions in Brazil, with interim financial statements prepared under IAS 34 in thousands of Brazilian Reais - The company is a technology-powered education content provider for the K-12 segment and is a subsidiary of Cogna Educação S.A[12](index=12&type=chunk)[13](index=13&type=chunk) - The financial statements have been prepared in accordance with **IAS 34 – Interim Financial Reporting** and are presented in thousands of Brazilian Reais (R$)[14](index=14&type=chunk)[15](index=15&type=chunk) [Note 5: Financial Risk Management](index=10&type=section&id=5.%20Financial%20Risk%20Management) The company manages market, credit, and liquidity risks, with its gearing ratio increasing to 59% as of March 31, 2025, reflecting changes in its capital structure - The company's main financial risks are market risk (interest rate fluctuations on CDI and IPCA indexed debt), credit risk (trade receivables), and liquidity risk[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) Capital Management - Gearing Ratio | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net debt (i) (R$ thousand) | 1,845,262 | 1,798,568 | | Total shareholder's equity (R$ thousand) | 4,991,710 | 4,993,311 | | Gearing ratio (%) | 59% | 56% | Financial Liabilities by Maturity (as of March 31, 2025, in thousands of R$) | Liability | Less than one year (R$ thousand) | Between one and two years (R$ thousand) | Over two years (R$ thousand) | Total (R$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Bonds | 273,907 | - | 497,820 | 771,727 | | Lease liabilities | 23,253 | 9,251 | 77,876 | 110,380 | | Accounts payable for business combination | 224,643 | 222,916 | 1,908 | 449,467 | [Note 9: Trade Receivables](index=16&type=section&id=9.%20Trade%20receivables) Net trade receivables slightly decreased to R$859.1 thousand as of March 31, 2025, with a significant portion not yet due and a provision for impairment losses Maturities of Trade Receivables (in thousands of R$) | Status | March 31, 2025 (R$ thousand) | December 31, 2024 (R$ thousand) | | :--- | :--- | :--- | | Not yet due | 728,441 | 693,581 | | Past due (Total) | 207,493 | 221,635 | | Impairment losses | (87,590) | (89,751) | | **Net Trade Receivables** | **859,079** | **863,244** | [Note 14: Bonds](index=20&type=section&id=14.%20Bonds) Total bonds outstanding were R$771.7 thousand as of March 31, 2025, with the company in compliance with its Net Debt / Adjusted EBITDA covenant of 2.17 against a 3.50% limit - The company was in compliance with its bond covenants, with a **Net Debt / Adjusted EBITDA ratio of 2.17**, below the required maximum of **3.50%**[71](index=71&type=chunk)[73](index=73&type=chunk) Bond Maturities (in thousands of R$) | Maturity | March 31, 2025 (R$ thousand) | % | | :--- | :--- | :--- | | One year or less (Current) | 273,907 | 35.5% | | Over one year (Non-current) | 497,820 | 64.5% | | **Total** | **771,727** | **100.0%** | [Note 20: Related Parties](index=24&type=section&id=20.%20Related%20parties) The company conducts significant transactions with related parties, including R$771.7 thousand in bonds payable to Cogna Educação S.A., and incurred R$3.6 thousand in key management compensation Key Related Party Balances (March 31, 2025, in thousands of R$) | Counterparty | Nature | Amount (R$ thousand) | | :--- | :--- | :--- | | Cogna Educação S.A. | Bonds Payable | 771,727 | | Cogna Educação S.A. | Indemnification Asset | 154,812 | | Editora Ática S.A. | Other Liabilities | 11,072 | | Editora Ática S.A. | Suppliers | 3,602 | - Compensation for key management personnel amounted to **R$3,615 thousand** for the three months ended March 31, 2025, up from **R$2,504 thousand** in the same period of 2024[88](index=88&type=chunk)[90](index=90&type=chunk) [Note 23: Shareholder's Equity](index=31&type=section&id=23.%20Shareholder%27s%20Equity) As of March 31, 2025, total shares outstanding were 83.6 million, with a share capital of R$4,820.8 thousand, resulting in a basic and diluted loss per share of R$0.04 - A share repurchase program for up to **R$62.5 thousand** was concluded on March 31, 2024[105](index=105&type=chunk) Share Ownership Structure (as of March 31, 2025, in units) | Shareholder | Class A (units) | Class B (units) | Total (units) | | :--- | :--- | :--- | :--- | | Cogna Group | - | 64,436,093 | 64,436,093 | | Free Float | 15,774,195 | - | 15,774,195 | | Treasury shares | 3,439,599 | - | 3,439,599 | | **Total** | **19,213,794** | **64,436,093** | **83,649,887** | [Note 24: Net Revenue and Seasonality](index=33&type=section&id=24.%20Net%20Revenue%20from%20sales%20and%20Services) Net revenue for Q1 2025 decreased to R$430.4 thousand, primarily due to declines in Textbooks and Other products and services, reflecting the company's seasonal revenue pattern Net Revenue Breakdown (in thousands of R$) | Category | March 31, 2025 (R$ thousand) | March 31, 2024 (R$ thousand) | | :--- | :--- | :--- | | Learning systems | 318,347 | 257,552 | | Textbooks | 34,266 | 50,730 | | Complementary education services | 47,519 | 49,095 | | Other products and services | 30,260 | 103,339 | | **Total** | **430,392** | **460,716** | - Revenue is subject to seasonality, with the main deliveries and revenue recognition occurring in **Q4** and **Q1**, aligned with the school year[114](index=114&type=chunk) This also impacts working capital needs, which are highest in **Q3** and **Q4**[114](index=114&type=chunk)

PART I [Key Information](index=13&type=section&id=ITEM%203.%20KEY%20INFORMATION) The company faces significant risks from competition, technology dependence, seasonality, Brazilian macroeconomic instability, and a controlling shareholder structure [Risk Factors](index=13&type=section&id=D.%20Risk%20Factors) - The company faces substantial competition and the risk of new entrants, which could lead to **loss of market share and reduced profitability**[63](index=63&type=chunk) - Operations are highly dependent on IT systems and subject to risks from technological change, where failure or security breaches could **negatively impact revenue and reputation**[65](index=65&type=chunk)[66](index=66&type=chunk) - The business is subject to seasonal fluctuations, with revenues concentrated in the first and fourth quarters, impacting **liquidity and cash flow**[81](index=81&type=chunk)[82](index=82&type=chunk) - As of December 31, 2024, the company had **R$762.0 million in total outstanding bonds**, and this significant debt could limit resources for operations and growth[120](index=120&type=chunk) - The Brazilian government's influence over the economy, along with political instability, inflation, and fluctuating interest rates, could **adversely affect the company's business**[197](index=197&type=chunk)[205](index=205&type=chunk) - Parent company Cogna controls **97.6% of the voting power** through its ownership of all Class B shares, limiting the influence of Class A shareholders[227](index=227&type=chunk) - **Material weaknesses in internal controls** over financial reporting were identified as of December 31, 2024, particularly related to general information technology controls (GITCs)[155](index=155&type=chunk)[157](index=157&type=chunk) [Information on the Company](index=47&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) Vasta operates as a leading K-12 education platform in Brazil, formed through acquisitions by its parent Cogna, with a Platform-as-a-Service (PaaS) business model [History and Development of the Company](index=47&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) - The company was formed by consolidating K-12 businesses from Somos Educação and Pitágoras under Vasta after **Cogna acquired Somos in 2018**[261](index=261&type=chunk) - Vasta expanded its portfolio through strategic acquisitions, including Mind Makers, Editora Eleva, Phidelis, and a **51% stake in Escola Start**[266](index=266&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[276](index=276&type=chunk) - A share repurchase program concluded on March 31, 2024, with **2,965,791 Class A shares repurchased for R$62.5 million** (US$12.5 million)[277](index=277&type=chunk) - The company began offering products to the public sector (B2G) in 2023, which grew to serve over 290,000 students and represented **6.2% of total revenue in FY 2024**[278](index=278&type=chunk) [Business Overview](index=51&type=section&id=B.%20Business%20Overview) - Vasta operates a Platform-as-a-Service (PaaS) for K-12 schools, comprising a Content & EdTech Platform and a Digital Platform[284](index=284&type=chunk)[372](index=372&type=chunk) Key Operational Metrics (as of Dec 31) | Metric | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Partner Schools | 4,744 | 5,032 | 5,274 | | Enrolled Students (thousands) | 1,432 | 1,539 | 1,589 | - The company's revenue is primarily subscription-based, accounting for **87.3% of total net revenue** from sales and services in FY 2024[289](index=289&type=chunk)[325](index=325&type=chunk) - Growth strategies include converting customers to subscription models, increasing service penetration, expanding into the public school market, and acquiring new technologies[334](index=334&type=chunk)[336](index=336&type=chunk)[340](index=340&type=chunk)[342](index=342&type=chunk) - The Plurall digital platform is a key offering with over **2.2 million registered student users** by the end of 2024[392](index=392&type=chunk)[435](index=435&type=chunk) [Organizational Structure](index=84&type=section&id=C.%20Organizational%20Structure) - Vasta Platform Limited is a Cayman Islands holding company with its main operational subsidiary, Somos Sistemas, based in Brazil[505](index=505&type=chunk)[506](index=506&type=chunk)[507](index=507&type=chunk) [Property, Plants and Equipment](index=85&type=section&id=D.%20Property%2C%20Plants%20and%20Equipment) - The company protects its intellectual property through trademarks and copyrights, owning approximately **581 trademark registrations** for key brands[510](index=510&type=chunk)[511](index=511&type=chunk) - Vasta occupies 14 properties, mostly leased, with property rental and condominium expenses amounting to **R$15.7 million** in FY 2024[513](index=513&type=chunk)[514](index=514&type=chunk) [Operating and Financial Review and Prospects](index=86&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) The company achieved a net profit of R$486.4 million in FY 2024, a significant turnaround driven by a tax contingency reversal, despite a decrease in enrolled students [Operating Results](index=86&type=section&id=A.%20Operating%20Results) FY 2024 vs. FY 2023 Financial Performance | Metric (R$ millions) | 2024 | 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | 1,674.2 | 1,486.2 | 13% | | Gross Profit | 1,020.7 | 915.3 | 12% | | Profit/(Loss) for the Year | 486.4 | (83.0) | N/A | - The significant increase in profit for 2024 was primarily due to a **reversal of tax contingencies**, which positively impacted expenses, finance income, and income tax[580](index=580&type=chunk)[583](index=583&type=chunk)[586](index=586&type=chunk) Key Business Metrics Evolution | Metric | 2024 School Year | 2023 School Year | 2022 School Year | | :--- | :--- | :--- | :--- | | Enrolled Students (thousands) | 1,432 | 1,539 | 1,589 | | ACV Bookings (R$ millions) | 1,350 | 1,230 | 1,000 | | Revenue Retention Rate | 92.8% | 91.4% | 90.7% | Non-GAAP Financial Measures (R$ millions) | Metric | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | 508.4 | 450.6 | 375.3 | | Adjusted Net Profit | 80.3 | 59.6 | 38.6 | [Liquidity and Capital Resources](index=97&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) Statement of Cash Flows Summary (R$ millions) | Cash Flow | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | From Operating Activities | 175.4 | 218.9 | 174.8 | | From Investing Activities | 30.9 | 44.6 | (394.9) | | From Financing Activities | (217.7) | (213.4) | (44.0) | - Net cash from operating activities **decreased by R$43.4 million** in 2024, mainly due to higher interest payments and an increase in trade receivables[590](index=590&type=chunk) - As of December 31, 2024, total outstanding indebtedness was **R$762.0 million**, and the company issued R$500 million in new debentures to refinance existing debt[600](index=600&type=chunk)[603](index=603&type=chunk) - Capital expenditures in 2024 totaled **R$128.3 million**, mainly invested in software, IT equipment, and digital education solutions[610](index=610&type=chunk) [Trend Information](index=101&type=section&id=D.%20Trend%20Information) - The company's performance is materially affected by **Brazilian macroeconomic conditions**, including economic growth, interest rates, inflation, and political instability[614](index=614&type=chunk)[615](index=615&type=chunk) [Directors, Senior Management and Employees](index=102&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) The company is led by a seven-member board and an executive team, with aggregate leadership compensation of R$12.5 million in 2024 and a total of 1,808 employees [Directors and Senior Management](index=102&type=section&id=A.%20Directors%20and%20Senior%20Management) - The Board of Directors consists of seven members, including Chairman Rodrigo Calvo Galindo and **three independent directors** who serve on the Audit Committee[619](index=619&type=chunk)[621](index=621&type=chunk) - The executive leadership team includes Guilherme Alves Mélega as Chief Executive Officer and Cesar Augusto Silva as Chief Financial Officer[631](index=631&type=chunk)[632](index=632&type=chunk)[633](index=633&type=chunk) [Compensation](index=105&type=section&id=B.%20Compensation) Aggregate Compensation of Directors and Executive Officers | Year | Aggregate Compensation (R$ millions) | | :--- | :--- | | 2024 | 12.5 | | 2023 | 19.3 | | 2022 | 20.4 | - The company utilizes a Restricted Share Unit (RSU) plan and a Performance-based Restricted Share (PSU) plan as **long-term incentives**[641](index=641&type=chunk)[642](index=642&type=chunk) [Board Practices](index=106&type=section&id=C.%20Board%20Practices) - The Board of Directors has one standing committee, the Audit Committee, which consists of **three independent directors**[648](index=648&type=chunk)[649](index=649&type=chunk) [Employees](index=108&type=section&id=D.%20Employees) Employee Distribution by Function (as of Dec 31, 2024) | Function | Number of Staff | % of Total | | :--- | :--- | :--- | | Customer Relations | 225 | 12.4% | | Content Production | 242 | 13.4% | | Educational Technology | 204 | 11.3% | | Operations | 187 | 10.3% | | Pedagogical | 454 | 25.1% | | Administrative Support | 496 | 27.4% | | **Total** | **1,808** | **100%** | [Major Shareholders and Related Party Transactions](index=110&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) Parent company Cogna holds 97.6% of voting power, and Vasta engages in numerous financial and operational transactions with Cogna and its subsidiaries [Major Shareholders](index=110&type=section&id=A.%20Major%20Shareholders) Beneficial Ownership (as of Dec 31, 2024) | Shareholder | Class B Shares | % of Class B | % of Total Voting Power | | :--- | :--- | :--- | :--- | | Cogna | 64,436,093 | 100.0% | 97.6% | - The dual-class structure, with Class B shares carrying **10 votes each**, ensures Cogna's control over the company[668](index=668&type=chunk)[669](index=669&type=chunk) [Related Party Transactions](index=111&type=section&id=B.%20Related%20Party%20Transactions) - In June 2024, subsidiary Somos Sistema issued **R$500 million in debentures** which were fully subscribed by parent company Cogna to refinance existing debt[673](index=673&type=chunk) - An indemnification agreement with Cogna covers Vasta for up to **R$153.7 million** in cash outflows related to historical contingencies[675](index=675&type=chunk) - The company has a cost-sharing agreement with Cogna for back-office, IT, administrative, and logistic expenses[676](index=676&type=chunk) - Vasta has multiple trademark assignment and license agreements with Cogna subsidiaries for key brands such as "Pitágoras" and "Somos Educação"[680](index=680&type=chunk)[681](index=681&type=chunk) [Financial Information](index=114&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) The company has no formal dividend policy and maintains a provision of R$157.1 million for various legal and administrative proceedings [Consolidated Statements and Other Financial Information](index=114&type=section&id=A.%20Consolidated%20Statements%20and%20Other%20Financial%20Information) - The company has not adopted a formal dividend policy and its ability to pay dividends is dependent on receiving cash from its operating subsidiaries in Brazil[697](index=697&type=chunk)[698](index=698&type=chunk) Provision for Losses (as of Dec 31, 2024) | Category | Provision (R$ millions) | | :--- | :--- | | Tax and Social Security | 110.9 | | Civil Matters | 24.0 | | Labor Related Matters | 22.3 | | **Total** | **157.1** | - A significant legal dispute involves an administrative proceeding concerning indemnities, for which an indemnification asset of **R$150.3 million** was recorded[704](index=704&type=chunk) [Additional Information](index=116&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) The company operates as a Cayman Islands entity with a dual-class share structure that concentrates control with Cogna and contains anti-takeover provisions [Memorandum and Articles of Association](index=116&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association) - The company has a dual-class share structure: Class A shares with one vote and Class B shares with **ten votes per share**, all held by Cogna[721](index=721&type=chunk)[728](index=728&type=chunk) - Class B shares automatically convert into Class A shares upon transfer or if their total number falls below **10% of total outstanding shares**[734](index=734&type=chunk) - Holders of Class B shares have the right to maintain their proportional ownership interest by purchasing additional Class B shares if new Class A shares are issued[733](index=733&type=chunk) - The Articles of Association contain **anti-takeover provisions**, including the board's authority to issue preferred shares without shareholder approval[777](index=777&type=chunk)[781](index=781&type=chunk) [Taxation](index=126&type=section&id=E.%20Taxation) - The Cayman Islands currently **does not levy taxes** on profits, income, gains, or appreciation, and there are no withholding taxes[792](index=792&type=chunk) - For U.S. Holders, distributions on Class A common shares are generally treated as dividends and may be taxed as **"qualified dividend income"**[803](index=803&type=chunk) - The company believes it was **not a Passive Foreign Investment Company (PFIC)** for the 2023 taxable year, but its status is subject to annual review[807](index=807&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=130&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risk is exposure to Brazil's CDI interest rate, with a hypothetical 15% rate increase projected to cause a negative impact of R$137.6 million - The company's main market risk is interest rate risk, as its financial instruments are primarily exposed to fluctuations in **Brazil's CDI interest rate**[822](index=822&type=chunk) Interest Rate Sensitivity Analysis (as of Dec 31, 2024) | Scenario | Impact on Net Exposure (R$ thousands) | | :--- | :--- | | Base Scenario | (114,670) | | Scenario I (+15% rate increase) | (137,604) | | Scenario II (+30% rate increase) | (160,538) | [Controls and Procedures](index=133&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were ineffective as of year-end 2024 due to material weaknesses in internal IT controls - Management concluded that the company's disclosure controls and procedures were **ineffective** as of December 31, 2024[837](index=837&type=chunk) - The ineffectiveness is due to **material weaknesses in internal control** over financial reporting, specifically related to general information technology controls (GITCs)[157](index=157&type=chunk)[839](index=839&type=chunk) [Corporate Governance and Other Disclosures](index=134&type=section&id=ITEM%2016.%20Corporate%20Governance%20and%20Other%20Disclosures) As a foreign private issuer, the company follows home country governance practices, completed a share repurchase program, and maintains an integrated cybersecurity strategy [Principal Accountant Fees and Services](index=134&type=section&id=ITEM%2016C.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Audit and Non-Audit Fees (KPMG) | Fee Type | 2024 (R$ million) | 2023 (R$ million) | | :--- | :--- | :--- | | Audit | 5.7 | 2.3 | | **Total** | **5.7** | **2.3** | [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=135&type=section&id=ITEM%2016E.%20PURCHASES%20OF%20EQUITY%20SECURITIES%20BY%20THE%20ISSUER%20AND%20AFFILIATED%20PURCHASERS) - A share repurchase program was completed on March 31, 2024, with **2,965,791 Class A shares repurchased for R$62.5 million** (US$12.5 million)[849](index=849&type=chunk) - As of December 31, 2024, the company held **3,447,864 Class A common shares in treasury**, valued at R$74.6 million[850](index=850&type=chunk) [Corporate Governance](index=136&type=section&id=ITEM%2016G.%20CORPORATE%20GOVERNANCE) - As a foreign private issuer, Vasta follows its home country (Cayman Islands) practices in lieu of certain Nasdaq governance requirements, such as **not having a majority-independent board**[853](index=853&type=chunk)[856](index=856&type=chunk) [Cybersecurity](index=142&type=section&id=ITEM%2016K.%20CYBERSECURITY) - Cybersecurity risk management is integrated into the enterprise risk program and overseen by the audit committee, in conjunction with the parent company, Cogna[893](index=893&type=chunk)[894](index=894&type=chunk)[898](index=898&type=chunk) - As of December 31, 2024, the company had **not identified any cybersecurity threats** that have materially affected or are reasonably likely to materially affect its business[897](index=897&type=chunk) PART III [Financial Statements](index=144&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) The company's audited financial statements show total assets of R$7.21 billion and a net profit of R$486.4 million for 2024, a significant improvement from a loss in 2023 Consolidated Statement of Financial Position (R$ thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **7,205,155** | **7,402,880** | | Total Current Assets | 1,466,325 | 1,456,821 | | Total Non-current Assets | 5,738,830 | 5,946,059 | | **Total Liabilities** | **2,211,844** | **2,882,089** | | Total Current Liabilities | 1,244,172 | 1,447,292 | | Total Non-current Liabilities | 967,672 | 1,434,797 | | **Total Shareholder's Equity** | **4,993,311** | **4,520,791** | Consolidated Statement of Profit or Loss (R$ thousands) | Account | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Net revenue from sales and services | 1,674,191 | 1,486,273 | 1,264,280 | | Gross profit | 1,020,742 | 915,366 | 791,145 | | **Profit (loss) for the year** | **486,354** | **(82,978)** | **(54,573)** | - A significant event in 2024 was the **reversal of tax contingencies** related to the deductibility of goodwill, resulting in a substantial positive impact on the income statement[929](index=929&type=chunk)[930](index=930&type=chunk)[931](index=931&type=chunk) - The company recorded an **impairment loss of R$8.3 million** in 2024 on its non-controlling interest in Flex Flix Limited[932](index=932&type=chunk)

Financial Data and Key Metrics Changes - In the fiscal year 2024, the company's net revenue increased by 13% to BRL 1.674 billion, driven by the successful conversion of annual contract value into revenue [6][7] - Adjusted EBITDA for the fiscal year grew by 13% to BRL 580 million, with a margin of 30.4% [7][14] - Free cash flow generation reached BRL 215 million, a 14% increase from 2023 [7][16] - The adjusted net profit totaled BRL 114 million in Q4 2024, an 18.9% increase compared to Q4 2023 [15] Business Line Data and Key Metrics Changes - The B2G business unit generated BRL 105 million in revenue for the year, a 29% increase compared to 2023 [8][12] - Subscription revenue increased by 14% to BRL 1.462 billion, representing 87% of total revenue [12][14] - Non-subscription revenue dropped by 16% to BRL 107 million [12] Market Data and Key Metrics Changes - The average payment terms of the accounts receivable portfolio was 186 days in Q4 2024, which is seven days higher than the comparable quarter [19] - The net debt position decreased to BRL 1.3 billion, a BRL 37 million decrease from the previous quarter [19][20] Company Strategy and Development Direction - The company is focusing on operational efficiency and cost savings, which have yielded positive results [7] - The technology platform, Purell, is set to feature an intelligent assistant named Blue starting in 2025, aimed at enhancing the educational experience [9] - The Startango Bilingual School franchise launched in 2023 has shown impressive progress, with 40 signed contracts and a strong pipeline of over 350 prospects [9][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy to positively impact public education, as evidenced by improved PIAIDI scores [8] - The company anticipates challenges in the credit scenario for the upcoming months but remains committed to generating free cash flow [18][21] - The outlook for 2025 includes expectations for similar growth levels in ACV and slight improvements in margins due to better sales mix [33][34] Other Important Information - The company achieved a free cash flow to adjusted EBITDA conversion rate improvement from 41.8% to 42.4% [17] - Provisions for doubtful accounts improved to 3.2% of net revenue, reflecting a decrease from the previous year [18] Q&A Session Summary Question: Comment on the decrease in PDA expenses as a percentage of net revenue - Management confirmed a reduction in PDA to 3.2% but expects a higher figure in the future due to anticipated challenges [26][27] Question: Insights on ACV growth and margin outlook for 2025 - ACV growth was 20% in Q4 and 14% for the fiscal year, with expectations for similar levels in 2025; margins are expected to improve slightly [30][33] Question: Clarification on G&A expenses and future expectations - G&A expenses remained flat as a percentage of sales, with a slight increase in commercial expenses due to revenue growth [41][42] Question: Expectations for B2G contracts and Start Anglo revenue - The B2G contract with Para is renewed at around BRL 80 million, with a strong pipeline expected; Start Anglo has around BRL 25 million in revenue with significant growth potential [45][46][48]

Financial Performance - In the fiscal year 2024, Vasta's net revenue increased by 13% to R$1,674 million, with a 26% increase in 4Q24 compared to the previous year[3]. - Subscription revenue for 2024 totaled R$1,462 million, a 14% increase year-over-year, with 4Q24 subscription revenue growing by 20% to R$619 million[3]. - Adjusted EBITDA for 2024 grew by 13% to R$508 million, with an Adjusted EBITDA Margin of 30.4%, up from 30.3% in 2023[3]. - The company reported a profit for the year of $486,354, a significant recovery from a loss of $82,978 in 2023[86]. - Profit before income tax for 2024 was $307.1 million, a significant recovery from a loss of $119.7 million in 2023[90]. - Adjusted net profit for 4Q24 was R$114 million, reflecting an 18.9% increase from R$95.9 million in 4Q23[29]. - The company achieved a free cash flow of R$69.3 million in 4Q24, a substantial improvement from a negative R$0.1 million in 4Q23[34]. - Cash generated from operating activities increased to $377.8 million in 2024, compared to $360.6 million in 2023[90]. Revenue Segments - The B2G segment generated R$105 million in revenue for 2024, a 29% increase from R$81 million in 2023[8]. - The company experienced significant seasonal revenue peaks in the first and fourth quarters, aligning with the academic calendar[75]. Cost and Expenses - Gross profit for the year was $1,020,742, compared to $915,366 in the previous year, indicating a gross margin improvement[86]. - Depreciation and amortization expenses rose to $294.1 million in 2024, up from $287.8 million in 2023[90]. - Interest on bonds decreased to $96.8 million in 2024 from $117.5 million in 2023[90]. - The company incurred impairment losses on trade receivables amounting to $53.0 million in 2024, slightly down from $55.8 million in 2023[90]. Cash Flow and Liquidity - Free cash flow (FCF) for 2024 was R$215 million, a 14% increase from R$189 million in 2023, with a conversion rate of FCF/Adjusted EBITDA improving from 41.8% to 42.4%[10]. - Cash and cash equivalents decreased to $84,532 in 2024 from $95,864 in 2023, reflecting changes in cash flow management[81]. - Net cash used in financing activities was $217.7 million in 2024, slightly higher than $213.4 million in 2023[90]. - The company reported a net cash inflow from investing activities of $30.9 million in 2024, compared to an inflow of $44.7 million in 2023[90]. Debt and Liabilities - Vasta's net debt/LTM adjusted EBITDA ratio improved to 1.97x as of 4Q24, indicating effective liability management strategies[10]. - The net debt position decreased to R$1,003 million in 4Q24, down R$61 million from R$1,064 million in 4Q23, with a net debt/LTM adjusted EBITDA ratio of 1.97[35]. - Total liabilities decreased to $2,211,844 in 2024 from $2,882,089 in 2023, showing improved financial health[84]. Customer and Market Insights - The number of partner schools using complementary solutions increased by 455, totaling 2,177 schools, representing a 22% growth year-over-year[15]. - The customer satisfaction assessment index (NPS) improved by over 30 points in the last 12 months, reflecting enhanced service quality[12]. - The Annual Contract Value (ACV) metric indicates strong demand for the company's solutions, calculated based on the number of enrolled students and average ticket per student[78]. Technological Advancements - The technology platform Plurall introduced an AI-powered intelligent assistant, enhancing personalized learning experiences for students and teachers[6]. - The company plans to continue expanding its product portfolio and enhancing its technological capabilities to adapt to market demands[68]. Human Resources and Safety - The number of C-level women executives decreased to 22% in Q4 2024 from 29% in Q4 2023, a drop of 7 percentage points[46]. - Total leadership positions (≥ managers) decreased by 20.9% year-over-year to 117 in Q4 2024, down from 148 in Q4 2023[46]. - The total number of employees trained in health and safety decreased significantly to 84 in Q4 2024 from 1,070 in Q4 2023, a decline of 92.1%[50]. - The injury frequency rate rose to 2.3 in Q4 2024, a 156.7% increase compared to 0.9 in Q4 2023[50]. - The number of external complaints substantiated by the organization increased to 3 in Q4 2024, up from 2 in Q4 2023, a 50% increase[59]. - The number of confirmed incidents of discrimination remained at 0 in Q4 2024, consistent with Q4 2023[55]. Environmental Impact - Total energy consumption increased by 4% year-over-year to 3,059 GJ in Q4 2024, up from 2,933 GJ in Q4 2023[45]. - The percentage of energy from renewable sources decreased to 87% in Q4 2024, down from 97% in Q4 2023, a decline of 9.8 percentage points[45].

Vasta Platform Limited (VSTA) came out with a quarterly loss of $0.11 per share versus the Zacks Consensus Estimate of a loss of $0.14. This compares to loss of $0.07 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 21.43%. A quarter ago, it was expected that this company would post a loss of $0.10 per share when it actually produced a loss of $0.03, delivering a surprise of 70%.Over the last four quarters, the company has surp ...