Vasta Platform Limited (NASDAQ:VSTA) Q2 2021 Earnings Conference Call August 13, 2021 11:00 AM ET Company Participants Bruno Giardino - CFO Mario Ghio - CEO Guilherme Melega - COO Conference Call Participants Andres Coello - Scotiabank Operator Good day, ladies and gentlemen, and welcome to the Vasta Platform Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR Commission file number: 001-39415 (Exact name of Registrant as specified in its charter) Not applicable (Translation of Registrant's name into English) Cayman Islands (Jurisdiction of i ...

VASTA P L A T F O R M | --- | --- | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

Financial Data and Key Metrics Changes - The annual contract value (ACV) for the 2021 commercial year totaled BRL 850 million, a 23% increase compared to the subscription revenues recognized in the 2020 commercial year, achieved exclusively through organic growth [7] - The accumulated revenue for the whole year reached BRL 998 million, a slight increase of 1% compared to the previous year, with a gross profit of approximately BRL 620 million, reflecting a 14% increase compared to 2019 [12] - Adjusted EBITDA for the year was BRL 296 million, a robust 17% growth compared to 2019, with an adjusted EBITDA margin improvement of 4 percentage points, moving from 26% in 2019 to 30% in 2020 [12][13] Business Line Data and Key Metrics Changes - Subscription products, which include educational solutions with recurring revenue, accounted for 83% of total revenue during the fourth quarter, showing a 31% growth over the same period in 2019 [15] - Revenue from non-subscription business decreased by 59% compared to the same period last year, leading to a total net revenue decrease of 5.3% compared to Q4 2019 [16] - Traditional learning systems experienced close to 60% revenue growth in the quarter, while complementary solutions saw a 65% annual increase in the number of deals closed in the ACV for 2021 [18][8] Market Data and Key Metrics Changes - The second wave of COVID-19 in Brazil has negatively impacted textbook sales and enrollment processes, with 2.5% of students in private schools migrating to public schools, a trend expected to continue [9] - The company noted that the worst impacts of the pandemic on its business were expected to be behind by the second semester of 2021, anticipating a return to more traditional education [42] Company Strategy and Development Direction - The company aims to increase its student base both organically and through acquisitions, with a focus on enhancing the penetration of complementary solutions and leveraging new technologies for digital transformation [23] - Recent acquisitions, including the level learning system, are expected to provide scale gains and operational synergies, adding over 177,000 students to the company's base [29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the education sector, expecting a return to normalcy in the second semester of 2021, with the worst impacts of the pandemic behind [42] - The company is actively analyzing options to address concerns regarding stock price and liquidity, indicating a proactive approach to investor relations [43] Other Important Information - The company reported a free cash flow of almost BRL 134 million during 2020, with an adjusted EBITDA-to-cash conversion of 45.2% [13] - The company highlighted the importance of digital solutions and platforms, such as the Plurall Store, which offers affordable digital content to families [41][31] Q&A Session Summary Question: Opportunity for complementary solutions and growth expectations - Management noted that the development of 100% digital solutions, like the Plurall Store, has been crucial for ACV building, and they expect schools and families to return to a more traditional education model in the second semester [40][42] Question: Concerns about stock price and liquidity - Management acknowledged concerns regarding stock price and liquidity, stating they are analyzing solutions to address these issues [43] Question: Inclusion of Mind Makers in ACV guidance and details on receivables - Mind Makers is included in the ACV as it was acquired in January last year, and the ACV accounts for potential cancellations from COVID-19 [45][47] - Receivables increased by 37 days compared to Q4 2019, attributed to renegotiations with customers during the pandemic [50]