Table of Contents 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, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Rodovia José Carlos Daux, 5500, Torre Jure ...

[Introduction & Highlights](index=1&type=section&id=Introduction%20%26%20Highlights) [CEO Letter](index=2&type=section&id=Co-CEOs%20LETTER) The CEO's 2023 annual review highlights significant achievements including a 2.7 percentage point EBITDA margin increase, 15.0% student base growth, and a 9.9% rise in average DE Undergraduate course ticket, alongside initiating a stock listing migration to B3 - The student base grew by **15.0% to 883.6 thousand students** as of December 31, 2023, with **97.5%** enrolled in Digital Education (DE) courses[5](index=5&type=chunk) - The average ticket for DE Undergraduate courses increased by **9.9%** in the second semester of 2023 compared to the same period in 2022[6](index=6&type=chunk) - The company has started the process of migrating its stock listing from NASDAQ to the B3 exchange in Brazil[7](index=7&type=chunk) 2023 Key Financial Metrics | Metric | Value | Growth (YoY) | | :--- | :--- | :--- | | Adjusted EBITDA | R$ 718 million | - | | EBITDA Margin | 36.6% | +2.7 p.p. | [Highlights of 2023 and Thereafter](index=4&type=section&id=HIGHLIGHTS%20OF%202023%20AND%20THEREAFTER) This section consolidates Vitru's 2023 key achievements, showcasing significant growth in net revenue, Adjusted EBITDA, and student numbers, alongside progress on its B3 listing migration Key Financial Highlights (2023 vs 2022) | R$ million (except where stated) | 2023 | 2022 | % Chg | | :--- | :--- | :--- | :--- | | Net Revenue | 1,962.5 | 1,317.3 | 49.0% | | DE Undergraduate Net Revenue | 1,414.1 | 998.2 | 41.7% | | Adjusted EBITDA | 718.5 | 447.2 | 60.7% | | Adjusted EBITDA Margin | 36.6% | 33.9% | 2.7 p.p. | | Adjusted Net Income | 253.8 | 204.9 | 23.9% | | Adjusted Cash Flow from Operations | 613.6 | 358.8 | 71.0% | - The total student base reached **883.6k** at the end of 2023, with a **15.4%** increase in Digital Education Undergraduate students[15](index=15&type=chunk) - The average ticket in the DE Undergraduate segment rose by **9.9%** in 2H 2023 compared to 2H 2022[15](index=15&type=chunk) [Operating Results](index=5&type=section&id=OPERATING%20RESULTS) [Student Base and Hubs](index=5&type=section&id=Student%20base%20and%20hubs) Vitru's total student base grew 15.0% to 883.6 thousand by year-end 2023, with 97.5% in digital education, and hubs expanded 15.2% to 2,499, indicating significant future organic growth Student Base and Hubs (as of Dec 31, 2023) | Metric | 4Q23 | 4Q22 | YoY Change | | :--- | :--- | :--- | :--- | | Total enrolled students ('000) | 883.6 | 768.4 | 15.0% | | % Digital education students | 97.5% | 97.3% | +0.2 p.p. | | Number of digital education students ('000) | 861.6 | 747.5 | 15.3% | | Number of hubs | 2,499 | 2,170 | 15.2% | - The majority of hubs (**93.2%**) are still in the expansion phase and have not reached full maturity, representing a key avenue for future growth[19](index=19&type=chunk) [Intake and Retention](index=6&type=section&id=Intake%20and%20Retention) Combined student intake for Uniasselvi and UniCesumar in 2H 2023 increased by a strong 27.3%, driven by growth across both institutions DE Undergraduate Intake Volume ('000) | Intake Cycle | 2023.2 | 2022.2 | % Change | | :--- | :--- | :--- | :--- | | **Total DE undergraduate intake** | **313.5** | **246.2** | **27.3%** | | Uniasselvi DE undergraduate intake | 194.2 | 171.1 | 13.5% | | UniCesumar DE undergraduate intake | 119.3 | 75.1 | 58.9% | [Tuitions and Average Ticket](index=7&type=section&id=Tuitions%20and%20Ticket) In 2H 2023, total Digital Education undergraduate tuitions grew 22.0%, with the average monthly ticket increasing 9.9% to R$279.0, reflecting successful pricing strategies DE Undergraduate Tuitions and Average Ticket (2H23 vs 2H22) | Metric | 2H23 | 2H22 | % Change | | :--- | :--- | :--- | :--- | | Total DE undergraduate tuitions (R$ million) | 1,168.5 | 957.7 | 22.0% | | Average ticket Vitru DE undergraduate (R$/month) | 279.0 | 253.8 | 9.9% | | Average ticket Uniasselvi DE undergraduate (R$/month) | 323.8 | 301.7 | 7.3% | | Average ticket UniCesumar DE undergraduate (R$/month) | 236.6 | 209.1 | 13.2% | - The increase in UniCesumar's average ticket is partly due to implementing new pricing strategies aligned with Uniasselvi's, particularly for the first annual renewal of the 2022.2 freshman class[34](index=34&type=chunk) [Financial Results](index=8&type=section&id=FINANCIAL%20RESULTS) [Net Revenue](index=8&type=section&id=Net%20Revenue) Consolidated net revenue for 2023 increased 49.0% to R$1,962.5 million, primarily driven by strong growth in the Digital Education Undergraduate segment Net Revenue Breakdown (2023 vs 2022) | R$ million | 2023 | 2022 | % Chg | | :--- | :--- | :--- | :--- | | Digital education undergraduate | 1,414.1 | 998.2 | 41.7% | | On-campus undergraduate (ex-medicine) | 189.3 | 120.3 | 57.3% | | Medicine undergraduate | 255.5 | 130.8 | 95.3% | | Continuing education | 103.7 | 68.0 | 52.5% | | **Net Revenue** | **1,962.5** | **1,317.3** | **49.0%** | [Cost of Services](index=9&type=section&id=Cost%20of%20Services) Cost of services rose to R$669.5 million in 2023, but improved by 2.2 percentage points as a percentage of net revenue, reflecting efficiency gains Cost of Services Analysis (2023 vs 2022) | R$ million (except where stated) | 2023 | 2022 | % Chg | | :--- | :--- | :--- | :--- | | Cost of Services | 669.5 | 502.3 | 33.3% | | Cost of Services for Adj. EBITDA calculation | 582.0 | 420.3 | 38.5% | | as % of Net Revenue (for Adj. EBITDA) | 29.7% | 31.9% | (2.2) p.p. | - The improvement in cost of services as a percentage of revenue is mainly due to continuous efforts to improve combined operations and exchange best practices between brands[43](index=43&type=chunk) [Gross Profit and Gross Margin](index=10&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit reached R$1,293.0 million in 2023, with gross margin expanding 4.0 percentage points to 65.9%, driven by slower hub openings and increased average tuition tickets - Gross Margin for the full year 2023 reached **65.9%**, a gain of **4.0 percentage points** compared to 2022[46](index=46&type=chunk) - The margin improvement is attributed to a reduced pace of new hub openings and continuous work to improve average tickets[46](index=46&type=chunk) [Operating Expenses](index=10&type=section&id=Operating%20Expenses) Total operating expenses grew in 2023 due to expansion, with selling expenses improving as a percentage of revenue, while G&A expenses rose due to IT costs and one-off acquisition items [Selling Expenses](index=10&type=section&id=Selling%20Expenses) Selling expenses increased 47.2% to R$360.4 million in 2023, but improved by 0.4 percentage points as a percentage of net revenue, reflecting scale gains and optimized marketing Selling Expenses Analysis (2023 vs 2022) | R$ million (except where stated) | 2023 | 2022 | % Chg | | :--- | :--- | :--- | :--- | | Selling Expenses | 360.4 | 244.8 | 47.2% | | Selling Expenses for Adj. EBITDA calculation | 305.4 | 210.7 | 44.9% | | as % of Net Revenue (for Adj. EBITDA) | 15.6% | 16.0% | (0.4) p.p. | [General and Administrative Expenses](index=11&type=section&id=General%20and%20Administrative%20Expenses) G&A expenses rose 44.5% to R$259.1 million in 2023, driven by higher IT costs and one-off M&A earn-out and pre-offering expenses G&A Expenses Analysis (2023 vs 2022) | R$ million (except where stated) | 2023 | 2022 | % Chg | | :--- | :--- | :--- | :--- | | G&A Expenses | 259.1 | 179.3 | 44.5% | | G&A Expenses for Adj. EBITDA calculation | 117.4 | 78.1 | 50.3% | | as % of Net Revenue (for Adj. EBITDA) | 6.0% | 5.9% | 0.1 p.p. | - G&A expenses in 2023 included **R$33.9 million** in earn-out payments for the UniCesumar acquisition and **R$11.2 million** in capitalized pre-offering payments, which were treated as one-off expenses[51](index=51&type=chunk) [Net Impairment Losses on Financial Assets (PDA)](index=11&type=section&id=Net%20Impairment%20Losses%20on%20Financial%20Assets) Provisions for doubtful accounts (PDA) totaled R$263.5 million in 2023, but improved by 0.8 percentage points as a percentage of net revenue, reflecting best practice exchanges - For the full year 2023, PDA as a percentage of Net Revenue showed a gain of **0.8 p.p.** compared to 2022, reflecting operational improvements[54](index=54&type=chunk) - The company is working to roll out UniCesumar's more effective onboarding and retention processes across the entire business to improve PDA performance[54](index=54&type=chunk) [Adjusted EBITDA](index=12&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA grew 60.7% to R$718.5 million in 2023, with the margin expanding 2.7 percentage points to 36.6%, driven by strong revenue growth and improved margins Adjusted EBITDA Performance | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA (R$ million) | 718.5 | 447.2 | +60.7% | | Adjusted EBITDA Margin | 36.6% | 33.9% | +2.7 p.p. | - The increase in Adjusted EBITDA margin for the year reflects the solid growth of Uniasselvi, the contribution of UniCesumar's results, improved average tickets, and better gross margins[57](index=57&type=chunk) [Financial Results (Net Finance Costs)](index=13&type=section&id=Financial%20Results) Net financial expenses increased 52.9% to R$305.6 million in 2023, primarily due to higher indebtedness and Q4 expenses from new debentures and seller financing prepayment Financial Results Breakdown (R$ million) | Item | 2023 | 2022 | % Chg | | :--- | :--- | :--- | :--- | | Financial Income | 61.0 | 64.6 | (5.6)% | | Financial Expenses | (366.5) | (264.4) | 38.6% | | **Financial Results** | **(305.6)** | **(199.8)** | **52.9%** | [Adjusted Net Income](index=13&type=section&id=Adjusted%20Net%20Income) Adjusted Net Income increased 23.9% to R$253.8 million for 2023, though Q4 saw a 78.3% decrease to R$10.7 million due to higher financial expenses and deferred tax impact Adjusted Net Income Performance (R$ million) | Period | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Full Year | 253.8 | 204.9 | 23.9% | | Q4 | 10.7 | 49.3 | (78.3)% | [Cash Flow and Cash Conversion from Operations](index=14&type=section&id=Cash%20Flow%20and%20Cash%20Conversion%20from%20Operations) Adjusted Cash Flow from Operations grew 71.0% to R$613.6 million in 2023, with a strong conversion rate of 96.2%, driven by positive working capital and improved collection Cash Flow Performance (2023 vs 2022) | R$ million (except where stated) | 2023 | 2022 | % Chg | | :--- | :--- | :--- | :--- | | Adjusted Cash Flow from Operations | 613.6 | 358.8 | 71.0% | | Adjusted Cash Flow Conversion from Operations | 96.2% | 96.0% | 0.2 p.p. | [Indebtedness](index=15&type=section&id=Indebtedness) Vitru reduced total net debt by R$109.3 million in 2023 to R$2,268.1 million, issuing R$500 million in new debentures to prepay seller financing, maintaining a Net Debt / Adjusted EBITDA ratio of 2.9x Net Debt (R$ million) | Metric | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Net Debt (ex-IFRS 16) | 1,940.2 | 2,054.0 | | Total Net Debt (IFRS 16) | 2,268.1 | 2,377.4 | - The company issued **R$500 million** in new debentures at CDI + **2.45%** to prepay **R$532.2 million** of seller financing that cost CDI + **3.0%**[71](index=71&type=chunk)[72](index=72&type=chunk) - The Net Debt / Adj. EBITDA (ex-IFRS 16) ratio was **2.9x** at year-end 2023, well below the covenant limit of **4.0x**[74](index=74&type=chunk)[76](index=76&type=chunk) [Capital Expenditures (CAPEX)](index=16&type=section&id=CAPEX) [Capital Expenditures (CAPEX)](index=16&type=section&id=Capital%20Expenditures%20(CAPEX)) Capital Expenditures (CAPEX) totaled R$122.6 million in 2023, increasing 26.4% but decreasing to 6.2% of Net Revenue, indicating improved capital efficiency CAPEX Breakdown (2023 vs 2022) | R$ million (except where stated) | 2023 | 2022 | % Chg | | :--- | :--- | :--- | :--- | | Property and equipment | 49.0 | 40.3 | 21.6% | | Intangible assets | 73.6 | 56.7 | 29.8% | | **Total Investing activities** | **122.6** | **97.0** | **26.4%** | | as % of Net Revenue | 6.2% | 7.4% | (1.2) p.p. | [Appendix & Reconciliations](index=17&type=section&id=Appendix%20%26%20Reconciliations) [About Vitru](index=17&type=section&id=ABOUT%20VITRU%20(NASDAQ%3A%20VTRU)) Vitru is Brazil's leading pure-play digital education company, offering a hybrid distance learning model for post-secondary students through Uniasselvi and UniCesumar - Vitru is the leading pure-player in Brazil's private post-secondary digital education market based on the number of enrolled undergraduate students[80](index=80&type=chunk) - The company's pedagogical model is a hybrid methodology that combines a proprietary Virtual Learning Environment (VLE) with in-person or online meetings led by tutors[82](index=82&type=chunk) - Operations are divided into three segments: Digital education undergraduate courses, On-campus undergraduate courses (including medicine), and Continuing education courses[83](index=83&type=chunk) [Additional Information & Disclaimers](index=18&type=section&id=ADDITIONAL%20INFORMATION) This section provides important legal notices, including details on the proposed corporate restructuring and B3 listing migration, and a forward-looking statements disclaimer - The press release contains information on the proposed corporate restructuring and migration of Vitru's listing from NASDAQ to the B3 exchange in Brazil[84](index=84&type=chunk) - The document includes forward-looking statements that involve risks and uncertainties, and readers are cautioned not to place undue reliance on them[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) [Non-GAAP Financial Measures](index=19&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) This section defines the calculation methodologies for key non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, Adjusted Cash Flow Conversion, and Net Debt - The company uses non-GAAP measures to supplement its IFRS financial statements for the convenience of investors[89](index=89&type=chunk) - Key non-GAAP measures used are Adjusted EBITDA, Adjusted Net Income, Adjusted Cash Flow Conversion from Operations, and Net Debt[89](index=89&type=chunk)[93](index=93&type=chunk) - Adjusted EBITDA is calculated by adding back items such as taxes, financial results, depreciation & amortization, share-based compensation, and M&A/restructuring expenses to net income[90](index=90&type=chunk) [Financial Tables](index=21&type=section&id=FINANCIAL%20TABLES) This section presents unaudited interim condensed consolidated financial statements, including profit or loss, financial position, and cash flows, for Q4 and FY 2023 and 2022 - Includes the unaudited interim condensed consolidated statements of profit or loss for Q4 and FY 2023 and 2022[95](index=95&type=chunk) - Includes the unaudited interim condensed consolidated statements of financial position as of December 31, 2023, and 2022[96](index=96&type=chunk) - Includes the unaudited interim condensed consolidated statements of cash flows for the twelve-month periods ended December 31, 2023, and 2022[98](index=98&type=chunk) [Reconciliations of Non-GAAP Financial Measures](index=25&type=section&id=Reconciliations%20of%20Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations of non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, Adjusted Cash Flow Conversion, and Net Debt, to IFRS - Provides a detailed reconciliation of Net Income to Adjusted EBITDA for Q4 and full-year 2023 and 2022[99](index=99&type=chunk) - Provides a detailed reconciliation of Net Income to Adjusted Net Income for Q4 and full-year 2023 and 2022[100](index=100&type=chunk) - Provides reconciliations for Adjusted Cash Flow Conversion from Operations and Net Debt[101](index=101&type=chunk)[103](index=103&type=chunk)

[Unaudited Interim Condensed Consolidated Financial Statements](index=1&type=section&id=Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) [Consolidated Statements of Financial Position](index=2&type=section&id=Consolidated%20Statements%20of%20Financial%20Position) As of June 30, 2023, Vitru's total assets increased to BRL 6.05 billion from BRL 5.66 billion at the end of 2022, driven by a significant rise in current assets, particularly cash and short-term investments. Total liabilities also grew to BRL 3.72 billion, primarily due to an increase in current liabilities, including loans and payables from acquisitions. Consequently, total equity rose to BRL 2.33 billion from BRL 2.17 billion Consolidated Balance Sheet Summary (in thousands of BRL) | Balance Sheet Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | 734,767 | 371,540 | | **Total Non-Current Assets** | 5,311,120 | 5,287,539 | | **Total Assets** | **6,045,887** | **5,659,079** | | **Total Current Liabilities** | 1,055,578 | 392,366 | | **Total Non-Current Liabilities** | 2,662,013 | 3,092,324 | | **Total Liabilities** | **3,717,591** | **3,484,690** | | **Total Equity** | **2,328,296** | **2,174,389** | | **Total Liabilities and Equity** | **6,045,887** | **5,659,079** | [Consolidated Statements of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2023, Vitru reported a significant increase in financial performance compared to the same period in 2022. Net revenue nearly doubled to BRL 965.7 million, and net income more than tripled to BRL 143.3 million. This growth was reflected in the basic earnings per share, which rose from BRL 1.84 to BRL 4.24 Income Statement Highlights - Six Months Ended June 30 (in thousands of BRL) | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | **Net Revenue** | 965,719 | 485,806 | +98.8% | | **Gross Profit** | 638,864 | 302,756 | +111.0% | | **Operating Profit** | 226,873 | 64,890 | +249.6% | | **Net Income for the Period** | 143,276 | 44,797 | +219.8% | | **Basic Earnings Per Share (R$)** | 4.24 | 1.84 | +130.4% | | **Diluted Earnings Per Share (R$)** | 4.02 | 1.72 | +133.7% | [Consolidated Statement of Changes in Equity](index=5&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) Total equity increased from BRL 2.17 billion at the end of 2022 to BRL 2.33 billion as of June 30, 2023. The primary driver for this growth was the net income of BRL 143.3 million generated during the period. Other changes included capital contributions and share-based compensation adjustments Equity Movement - Six Months Ended June 30, 2023 (in thousands of BRL) | Description | Amount | | :--- | :--- | | **Equity at December 31, 2022** | 2,174,389 | | Profit for the period | 143,276 | | Treasury Shares | (3,644) | | Capital contributions | 8,614 | | Value of employee services | 5,661 | | **Equity at June 30, 2023** | **2,328,296** | [Consolidated Statement of Cash Flows](index=6&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2023, the company generated BRL 138.4 million in cash from operating activities, a notable increase from BRL 107.9 million in the prior year period. Cash used in investing activities was BRL 282.6 million, mainly for acquisitions of short-term investments. Financing activities provided BRL 180.5 million, largely from new loans. This resulted in a net increase in cash and cash equivalents of BRL 36.4 million Cash Flow Summary - Six Months Ended June 30 (in thousands of BRL) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | 138,428 | 107,901 | | **Net cash used in investing activities** | (282,560) | (1,999,957) | | **Net cash provided by financing activities** | 180,485 | 1,929,546 | | **Net increase (decrease) in cash** | 36,353 | 37,490 | | **Cash at end of period** | 83,540 | 113,077 | [Notes to the Unaudited Interim Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) [Note 1: Corporate Information](index=7&type=section&id=1.%20Corporate%20information) Vitru Limited is a Cayman Islands holding company listed on NASDAQ (VTRU), primarily providing educational services in Brazil through 2,301 learning centers. The company reported a negative net working capital of BRL 320.8 million as of June 30, 2023, resulting from its growth and acquisition strategy, but remains confident in its ability to meet financial obligations. The company's revenue is seasonal, with higher enrollments in the first and third quarters leading to higher revenue in the second and fourth quarters - The company provides educational services in Brazil through **2,301** learning centers as of June **30**, **2023**, an increase from **2,170** at year-end **2022**[12](index=12&type=chunk) - As of June **30**, **2023**, the company had a **negative net working capital** position, with short-term liabilities exceeding short-term assets by BRL **320,811** thousand, mainly due to growth strategies including the Unicesumar acquisition[13](index=13&type=chunk) - On May **5**, **2023**, the company issued a new series of debentures totaling BRL **190** million through its subsidiary Vitru Brasil[17](index=17&type=chunk) [Note 3: Business Combinations](index=8&type=section&id=3.%20Business%20combinations) This note details the acquisition of Unicesumar, which closed on May 20, 2022. The total purchase consideration was BRL 3.28 billion, consisting of cash, shares, and a contingent payment. The acquisition resulted in BRL 3.14 billion of goodwill, primarily attributed to workforce synergies and the combined track record of the institutions. A smaller acquisition of Rede Enem for BRL 1.4 million in September 2022 is also mentioned - The acquisition of Unicesumar closed on May **20**, **2022**, a leading higher education institution with approximately **331** thousand students[24](index=24&type=chunk)[25](index=25&type=chunk) Unicesumar Purchase Consideration (in thousands of BRL) | Component | Amount | % of Total | | :--- | :--- | :--- | | Cash payable at acquisition | 2,162,500 | 65.94% | | Payable after 12 months | 525,681 | 16.03% | | Contingent consideration | 30,608 | 0.93% | | Payable through Vitru shares | 560,544 | 25.92% | | **Total Consideration** | **3,279,333** | | - The acquisition generated goodwill of BRL **3,142,283** thousand, based on total acquired net assets of BRL **137,050** thousand and a purchase consideration of BRL **3,279,333** thousand[27](index=27&type=chunk) [Note 4: Segment Reporting](index=12&type=section&id=4.%20Segment%20reporting) The company's operations are divided into three segments: Digital education undergraduate courses, Continuing education courses, and On-campus undergraduate courses. For the first six months of 2023, the Digital education segment was the largest contributor, generating BRL 705.6 million in net revenue and BRL 316.1 million in Adjusted EBITDA. The company's overall Adjusted EBITDA margin for the period was 44.90% Segment Performance - Six Months Ended June 30 (in thousands of BRL) | Segment | Net Revenue 2023 | Net Revenue 2022 | Adjusted EBITDA 2023 | Adjusted EBITDA 2022 | | :--- | :--- | :--- | :--- | :--- | | Digital education undergraduate | 705,649 | 399,897 | 316,082 | 163,462 | | Continuing education | 49,624 | 28,177 | 16,519 | 17,532 | | On-campus undergraduate | 210,446 | 57,732 | 101,045 | 20,055 | | **Total** | **965,719** | **485,806** | **433,646** | **201,049** | - The company operates solely in Brazil, and the Chief Operating Decision Maker (CODM) does not evaluate performance based on geographic regions[38](index=38&type=chunk) [Note 7: Trade Receivables](index=14&type=section&id=7.%20Trade%20receivables) Total trade receivables increased to BRL 327.2 million as of June 30, 2023, from BRL 271.1 million at year-end 2022. The balance is composed of tuition fees and various educational credit programs. The allowance for expected credit losses also grew to BRL 234.0 million, representing a significant portion of gross receivables Trade Receivables Breakdown (in thousands of BRL) | Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Tuition fees | 470,889 | 410,393 | | Gross Receivables (subtotal) | 568,444 | 489,643 | | Allowance for expected credit losses | (234,004) | (211,986) | | **Total trade receivables** | **327,242** | **271,140** | - The allowance for expected credit losses increased by BRL **22.0** million during the first six months of **2023**, with additions of BRL **133.5** million and write-offs of BRL **105.3** million[51](index=51&type=chunk) [Note 8: Current and Deferred Income Tax](index=16&type=section&id=8.%20Current%20and%20deferred%20income%20tax) For the first six months of 2023, the company recorded a total income tax benefit of BRL 55.0 million on pre-tax earnings of BRL 88.2 million, resulting in a negative effective tax rate of (62)%. This was primarily due to BRL 89.9 million in tax exemptions from the ProUni program, which provides scholarships to low-income students - The company benefits from the ProUni program, which provides tax exemptions for offering scholarships. This resulted in an income tax benefit of BRL **89,897** thousand for the first half of **2023**[52](index=52&type=chunk) Deferred Tax Assets and Liabilities (in thousands of BRL) | Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Deferred tax assets** | 254,138 | 203,043 | | **Deferred tax liabilities** | (752,144) | (773,394) | [Note 13: Intangible Assets](index=19&type=section&id=13.%20Intangible%20assets) As of June 30, 2023, total intangible assets were valued at BRL 4.39 billion, slightly down from BRL 4.43 billion at the end of 2022. The largest components are Goodwill (BRL 1.86 billion) and Operation licenses for distance learning (BRL 1.46 billion), both of which are indefinite-lived assets. No impairment was identified during the period Intangible Assets Net Book Value (in thousands of BRL) | Asset | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Goodwill | 1,862,589 | 1,862,589 | | Operation licenses for distance learning | 1,458,209 | 1,458,209 | | Trademarks | 384,920 | 393,863 | | Customer relationship | 233,915 | 261,190 | | Non compete agreements | 232,347 | 250,378 | | Software | 89,537 | 60,071 | | **Total Intangible Assets** | **4,391,817** | **4,427,643** | - Goodwill and licenses for distance learning operations are tested for impairment annually. No evidence of impairment was identified during the first half of **2023**[64](index=64&type=chunk) [Note 14: Loans and Financing](index=20&type=section&id=14.%20Loans%20and%20financing) Total loans and financing stood at BRL 1.79 billion as of June 30, 2023, up from BRL 1.62 billion at year-end 2022. The increase is due to a new debenture issuance of BRL 190 million in May 2023. The debt primarily consists of debentures with maturities extending to May 2028 - On May **5**, **2023**, the company issued a new series of debentures for BRL **190,000** thousand, maturing between May **2025** and May **2028**[66](index=66&type=chunk) Loans and Financing Breakdown (in thousands of BRL) | Category | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Current | 229,187 | 131,158 | | Non-current | 1,563,373 | 1,489,088 | | **Total** | **1,792,560** | **1,620,246** | [Note 16: Accounts Payable from Acquisition of Subsidiaries](index=21&type=section&id=16.%20Accounts%20payable%20from%20acquisition%20of%20subsidiaries) The company has an outstanding liability of BRL 526.8 million related to the acquisition of Unicesumar. This amount, including accrued interest, is classified as a current liability and is due to be paid on May 20, 2024 - A final installment of BRL **526,826** thousand for the Unicesumar acquisition is payable on May **20**, **2024**. This amount includes the principal of BRL **525,681** thousand plus accrued interest[70](index=70&type=chunk) [Note 18: Equity](index=22&type=section&id=18.%20Equity) As of June 30, 2023, Vitru's share capital consisted of 33,805,517 common shares. In May 2023, the board approved a share buyback program for up to 500,000 shares. By the end of June, 46,802 shares had been repurchased. The company does not anticipate paying dividends in the foreseeable future, intending to retain earnings for business expansion - As of June **30**, **2023**, the Company's share capital is represented by **33,805,517** common shares[79](index=79&type=chunk) - A share buyback program was approved on May **11**, **2023**, to repurchase up to **500,000** common shares. During the period, **46,802** shares were repurchased for BRL **3,644** thousand[81](index=81&type=chunk)[82](index=82&type=chunk) - The company did not pay cash dividends in the six months ended June **30**, **2023**, and does not plan to in the foreseeable future[83](index=83&type=chunk) [Note 19: Earnings Per Share](index=23&type=section&id=19.%20Earnings%20per%20share) For the six months ended June 30, 2023, basic earnings per share (EPS) was BRL 4.24, and diluted EPS was BRL 4.02. This represents a significant increase from the same period in 2022, when basic and diluted EPS were BRL 1.84 and BRL 1.72, respectively. The calculation for diluted EPS includes the potential effect of 1.88 million outstanding share options Earnings Per Share (EPS) - Six Months Ended June 30 | EPS Type | 2023 (R$) | 2022 (R$) | | :--- | :--- | :--- | | Basic EPS | 4.24 | 1.84 | | Diluted EPS | 4.02 | 1.72 | - As of June **30**, **2023**, there were **1,880** thousand outstanding and unexercised share options that have a dilutive effect on earnings per share[86](index=86&type=chunk) [Note 22: Revenue](index=25&type=section&id=22.%20Revenue) For the six months ended June 30, 2023, gross revenue from services was BRL 1.26 billion. After deductions for cancellations, discounts, and ProUni scholarships (BRL 129.8 million), net revenue was BRL 965.7 million. The vast majority of revenue (BRL 954.6 million) is recognized over time as educational services are provided Revenue Reconciliation - Six Months Ended June 30 (in thousands of BRL) | Item | 2023 | 2022 | | :--- | :--- | :--- | | Gross amount from services provided | 1,255,024 | 625,846 | | (-) Cancellation | (45,512) | (8,137) | | (-) Discounts | (81,709) | (34,629) | | (-) ProUni scholarships | (129,771) | (81,595) | | (-) Taxes and contributions | (32,313) | (15,679) | | **Net revenue** | **965,719** | **485,806** | [Note 25: Financial Results](index=26&type=section&id=25.%20Financial%20results) For the six months ended June 30, 2023, the company reported a net financial expense of BRL 138.6 million. This was composed of BRL 24.7 million in financial income, primarily from interest on late tuition payments and investment yields, and BRL 163.3 million in financial expenses, dominated by interest on loans (BRL 114.1 million) and interest on acquisition-related payables (BRL 19.5 million) Financial Results - Six Months Ended June 30 (in thousands of BRL) | Item | 2023 | 2022 | | :--- | :--- | :--- | | **Financial income** | 24,667 | 29,478 | | **Financial expenses** | (163,307) | (76,740) | | **Net Financial Results** | **(138,640)** | **(47,262)** | - The largest financial expense was interest on loans and financing, which amounted to BRL **114,082** thousand for the first half of **2023**, a significant increase from BRL **33,371** thousand in the same period of **2022**[99](index=99&type=chunk)

[Introduction and Highlights](index=3&type=section&id=Introduction%20and%20Highlights) [Letter to Shareholders](index=3&type=section&id=Letter%20to%20Shareholders) The company is transitioning to a single CEO, William Matos, following the successful integration of UniCesumar, which led to strong Q1 2023 results including significant revenue and EBITDA growth - The company is transitioning from a co-CEO structure to a single CEO, with **William Matos** assuming the role and **Pedro Graça** moving to the Board of Directors within six months[6](index=6&type=chunk) - The integration of Uniasselvi and UniCesumar has positioned Vitru as a leader in Brazil's distance learning higher education sector, serving approximately **800,000 digital education students** across **2,248 hubs** as of March 31, 2023[5](index=5&type=chunk) - Consolidated intake in the DE Undergraduate segment grew by **17.7%** in Q1 2023 compared to the pro-forma combined intake in Q1 2022[9](index=9&type=chunk) Q1 2023 Financial Performance Highlights | Metric | Value (R$ million) | Growth vs Q1 2022 (%) | | :--- | :--- | :--- | | Consolidated Net Revenue | 444.2 | 149.9% | | Consolidated Adjusted EBITDA | 168.5 | 255.5% | | Adjusted EBITDA Margin | 37.9% | +11.2 p.p. | [First Quarter 2023 Highlights](index=6&type=section&id=HIGHLIGHTS%20OF%201Q23%20AND%20THEREAFTER) Vitru reported substantial Q1 2023 growth, driven by UniCesumar consolidation, with significant increases in student base, net revenue, and profitability Key Financial Highlights Q1 2023 vs Q1 2022 | R$ million (except margins) | 1Q23 | 1Q22 | % Chg | | :--- | :--- | :--- | :--- | | Net Revenue | 444.2 | 177.8 | 149.8% | | Adjusted EBITDA | 168.5 | 47.4 | 255.5% | | Adjusted EBITDA Margin | 37.9% | 26.7% | 11.2 p.p. | | Adjusted Net Income | 81.1 | 26.5 | 206.0% | | Adjusted Cash Flow from Operations | 128.0 | 46.9 | 172.9% | - Total student base reached **886.1 thousand** at the end of Q1 2023, a **127.7% increase** compared to Q1 2022, with **97.4%** of students in Digital Education courses[20](index=20&type=chunk) - The company approved its first Share Buyback Program for up to **500,000 shares** and issued its second debentures amounting to **R$190 million**[20](index=20&type=chunk) [Operating and Financial Performance](index=7&type=section&id=Operating%20and%20Financial%20Performance) [Operating Results](index=7&type=section&id=OPERATING%20RESULTS) Q1 2023 operating results show significant expansion driven by the UniCesumar acquisition, with doubled student base and hubs, and solid intake growth [Student Base and Hubs](index=7&type=section&id=Student%20base%20and%20hubs) Vitru's student base grew 127.7% to 886.1 thousand and hubs increased 129.2% to 2,248, with most hubs still in expansion, indicating significant future growth potential Student Base and Hubs Breakdown (as of March 31, 2023) | Metric | 1Q23 | YoY Change | | :--- | :--- | :--- | | Total enrolled students ('000) | 886.1 | 127.7% | | Number of digital education students ('000) | 862.8 | 125.8% | | Number of hubs | 2,248 | 129.2% | | % of Expansion hubs | 92.5% | +1.1 p.p. | | Theoretical maturation index | 46.5% | +9.4 p.p. | - The high percentage of hubs in expansion (**92.5%**) with a low average maturation ratio (**46.5%**) represents a substantial future growth avenue for the company[24](index=24&type=chunk) [Intake and Retention](index=8&type=section&id=Intake%20and%20Retention) Q1 2023 saw a **17.7%** increase in combined DE undergraduate intake, while retention declined to **74.7%** due to a higher mix of first-year students Q1 2023 Key Operational Highlights | Metric | 1Q23 | YoY Change | | :--- | :--- | :--- | | Total DE undergraduate intake ('000) | 412.6 | 17.7% | | Uniasselvi DE undergraduate intake ('000) | 207.6 | 21.5% | | UniCesumar DE undergraduate intake ('000) | 205.0 | 14.1% | | DE undergraduate retention rate | 74.7% | (5.2) p.p. | - The deterioration in retention rates in Q1 2023 is explained by strong student intakes in 2022, which increased the mix of freshmen who typically have higher drop-out rates in their first two semesters[31](index=31&type=chunk) [Tuitions and Average Ticket](index=9&type=section&id=Tuitions%20and%20Ticket) Total DE undergraduate tuitions grew **19.0%** to **R$514.2 million**, with average monthly tickets for Uniasselvi and UniCesumar increasing by **4.9%** and **2.4%** respectively DE Undergraduate Tuitions and Average Ticket (Pro-forma) | Metric | 1Q23 | 1Q22 | % Chg | | :--- | :--- | :--- | :--- | | Total DE undergraduate tuitions (R$M) | 514.2 | 432.0 | 19.0% | | Avg. ticket Uniasselvi (R$/month) | 315.2 | 300.6 | 4.9% | | Avg. ticket UniCesumar (R$/month) | 226.2 | 221.0 | 2.4% | - The **2.4%** growth in UniCesumar's average ticket indicates successful application of Uniasselvi's pricing strategies post-combination[40](index=40&type=chunk) [Financial Results](index=10&type=section&id=FINANCIAL%20RESULTS) Q1 2023 financial results show dramatic growth, primarily from UniCesumar consolidation, with net revenue up **149.8%** and significant surges in profitability and cash flow [Revenue Analysis](index=10&type=section&id=Revenue%20Analysis) Consolidated Net Revenue for Q1 2023 increased **149.8%** to **R$444.2 million**, driven by UniCesumar, with significant growth in both digital and on-campus undergraduate revenues Net Revenue Breakdown Q1 2023 vs Q1 2022 | Metric (R$ million) | 1Q23 | 1Q22 | % Change | | :--- | :--- | :--- | :--- | | Digital education undergraduate | 320.7 | 156.0 | 105.6% | | On-campus undergraduate | 102.6 | 10.0 | 926.0% | | Continuing education | 20.9 | 11.8 | 77.1% | | **Net Revenue** | **444.2** | **177.8** | **149.8%** | [Profitability Analysis](index=12&type=section&id=Profitability%20Analysis) Q1 2023 profitability significantly improved, with Gross Profit up **159.9%**, Adjusted EBITDA surging **255.5%** to **R$168.5 million**, and Adjusted Net Income rising **206.0%** - Gross Margin increased from **63.4%** in Q1 2022 to **66.0%** in Q1 2023, primarily due to a decreased depreciation and amortization ratio over net revenue post-UniCesumar consolidation[55](index=55&type=chunk) - Adjusted EBITDA increased **255.5%** to **R$168.5 million**, with the Adjusted EBITDA Margin expanding by **11.2 p.p.** to **37.9%**, reflecting UniCesumar's contribution and operational success[65](index=65&type=chunk) - Adjusted Net Income grew **206.0%** to **R$81.1 million**, driven by the strong growth in Adjusted EBITDA[66](index=66&type=chunk) [Expense Analysis](index=11&type=section&id=Expense%20Analysis) Q1 2023 expense management showed positive results, with selling expenses dropping to **17.2%** of net revenue and provisions for doubtful accounts improving to **10.7%** - Selling Expenses for Adjusted EBITDA calculation decreased as a percentage of Net Revenue from **26.9%** in Q1 2022 to **17.2%** in Q1 2023, primarily due to UniCesumar's hub partners bearing more intake costs[57](index=57&type=chunk) - G&A expenses for Adjusted EBITDA calculation decreased as a percentage of Net Revenue to **6.6%** from **7.1%**, attributable to corporate structure synergies from ongoing integration[61](index=61&type=chunk) - Net impairment losses on financial assets (provisions for doubtful accounts) decreased by **3.8 p.p.** to **10.7%** of Net Revenue, primarily due to UniCesumar's more effective onboarding and retention processes[63](index=63&type=chunk) [Cash Flow and Capital Management](index=15&type=section&id=Cash%20Flow%20and%20Capital%20Management) Adjusted Cash Flow from Operations increased **172.9%** to **R$128.0 million**, with CAPEX decreasing to **4.5%** of revenue, reflecting strong cash generation and capital efficiency gains Cash Flow & Conversion | Metric (R$ million) | 1Q23 | 1Q22 | % Chg | | :--- | :--- | :--- | :--- | | Adjusted Cash Flow from Operations | 128.0 | 46.9 | 172.9% | | Adjusted Cash Flow Conversion from Operations | 79.8% | 115.8% | (36.0) p.p. | Net Debt Position | Metric (R$ million) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Net Debt (ex-IFRS 16) | 2,031.9 | 2,054.0 | | Total Net Debt (IFRS 16) | 2,353.3 | 2,377.4 | - CAPEX as a percentage of Net Revenue decreased by **1.2 p.p.** to **4.5%** in Q1 2023, reflecting planned synergies in content production and hub expansion[77](index=77&type=chunk)[78](index=78&type=chunk) [Supplementary Information](index=17&type=section&id=Supplementary%20Information) [About Vitru and Forward-Looking Statements](index=17&type=section&id=ABOUT%20VITRU%20and%20FORWARD-LOOKING%20STATEMENTS) Vitru is the leading pure-player in Brazil's private post-secondary digital education market, operating through Uniasselvi and UniCesumar across three core segments - Vitru is the leading pure-player in Brazil's private post-secondary digital education market based on enrolled undergraduate students[80](index=80&type=chunk) - The company's operations are divided into three segments: Digital education undergraduate, On-campus undergraduate (including medical), and Continuing education courses[83](index=83&type=chunk)[84](index=84&type=chunk) [Non-GAAP Financial Measures](index=18&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) The company uses non-GAAP measures like Adjusted EBITDA and Net Income to assess core operational performance and facilitate comparisons by excluding specific non-recurring items - The company uses non-GAAP measures such as Adjusted EBITDA, Adjusted Net Income, and Net Debt to provide additional information on its core operational performance[87](index=87&type=chunk) - Adjusted EBITDA is calculated by adjusting net income for taxes, financial results, depreciation & amortization, share-based compensation, and M&A/restructuring expenses[88](index=88&type=chunk)[92](index=92&type=chunk) - Adjusted Net Income is calculated by adjusting net income for M&A expenses, share-based compensation, amortization of intangible assets from business combinations, and their corresponding tax effects[89](index=89&type=chunk)[92](index=92&type=chunk) [Financial Statements and Reconciliations](index=20&type=section&id=FINANCIAL%20TABLES%20and%20Reconciliations%20of%20Non-GAAP%20Financial%20Measures) This section presents unaudited interim condensed consolidated financial statements for Q1 2023, including profit or loss, financial position, cash flows, and detailed reconciliations of non-GAAP measures - This section contains the unaudited interim condensed consolidated statements of profit or loss, financial position, and cash flows for the three-month period ended March 31, 2023[93](index=93&type=chunk)[94](index=94&type=chunk)[97](index=97&type=chunk) - Detailed reconciliations are provided for key non-GAAP measures, including Adjusted EBITDA, Adjusted Net Income, Adjusted Cash Flow Conversion from Operations, and Net Debt[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk)

Part I [Item 1. Identity of Directors, Senior Management and Advisers](index=10&type=section&id=Item%201.%20Identity%20of%20Directors%2C%20Senior%20Management%20and%20Advisers) This section is not applicable as per the report [Item 2. Offer Statistics and Expected Timetable](index=10&type=section&id=Item%202.%20Offer%20Statistics%20and%20Expected%20Timetable) This section is not applicable as per the report [Item 3. Key Information](index=11&type=section&id=Item%203.%20Key%20Information) This section presents selected financial data, non-GAAP reconciliations, and significant risks related to the business and recent acquisitions [Selected Financial Data](index=11&type=section&id=A.%20Selected%20Financial%20Data) The company presents key financial data for fiscal years 2020-2022, showing significant growth in revenue and net income Statement of Profit or Loss Data (in R$ millions) | Indicator | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Net revenue** | **1,317.3** | **631.1** | **519.2** | | Gross profit | 815.0 | 390.2 | 297.7 | | Operating profit | 201.0 | 78.8 | 60.9 | | **Net income for the year** | **93.3** | **70.7** | **52.1** | | Basic earnings per share (R$) | 3.52 | 3.04 | 2.79 | | Diluted earnings per share (R$) | 3.23 | 2.87 | 2.68 | Statement of Financial Position Data (in R$ millions) | Indicator | As of Dec 31, 2022 | As of Dec 31, 2021 | | :--- | :--- | :--- | | Total current assets | 371.5 | 514.8 | | Total non-current assets | 5,287.5 | 1,012.6 | | **Total assets** | **5,659.1** | **1,527.4** | | Total current liabilities | 392.4 | 259.4 | | Total non-current liabilities | 3,092.3 | 201.9 | | **Total liabilities** | **3,484.7** | **461.3** | | **Total equity** | **2,174.4** | **1,066.1** | Non-GAAP Financial Measures (in R$ millions) | Indicator | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net Revenue | 1,317.3 | 631.1 | 519.2 | | Net Income for the Year | 93.3 | 70.7 | 52.1 | | **Adjusted EBITDA** | **447.1** | **182.4** | **146.7** | | **Adjusted Net Income** | **214.5** | **91.5** | **98.2** | | Adjusted Cash Flow Conversion from Operations | 96.0% | 82.9% | 88.1% | [Risk Factors](index=16&type=section&id=D.%20Risk%20Factors) The company outlines significant risks related to its business, Brazilian operations, the UniCesumar acquisition, and internal controls - A **material weakness in internal control over financial reporting** was identified as of December 31, 2022, related to insufficient accounting resources and processes following the UniCesumar Business Combination[134](index=134&type=chunk) - The company's business is highly dependent on its relationships with hub partners, as **93.6% of hubs are partner-operated**, and failure to maintain these partnerships could adversely affect business[95](index=95&type=chunk)[96](index=96&type=chunk) - Significant risks related to operating in Brazil include **government influence over the economy**, political instability, inflation, and exchange rate fluctuations[77](index=77&type=chunk) - The UniCesumar acquisition presents risks, including potential failure to realize anticipated benefits, integration difficulties, and the **adverse impact of increased indebtedness** on liquidity[77](index=77&type=chunk) [Item 4. Information on the Company](index=69&type=section&id=Item%204.%20Information%20on%20the%20Company) This section details the company's history, hybrid business model, organizational structure, and the impact of the UniCesumar acquisition [History and Development of the Company](index=69&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) The company evolved from a regional institution to a leading digital education provider through strategic acquisitions and its 2020 IPO - In 2016, the company was acquired by The Carlyle Group and Vinci Partners, leading to a strategic shift to focus on the expansion of digital education operations[383](index=383&type=chunk) - On May 20, 2022, the company closed its business combination with UniCesumar for a purchase price of **R$3.21 billion**, a transformative acquisition that significantly expanded its operations[388](index=388&type=chunk) - In late 2022, the company secured a **R$300 million investment from Crescera** and raised an additional US$14.8 million through a Rights Offering, strengthening its capital position[391](index=391&type=chunk)[392](index=392&type=chunk) [Business Overview](index=73&type=section&id=B.%20Business%20Overview) Vitru operates a scalable, asset-light hybrid digital education model through a vast network of partner-operated hubs across Brazil - The company's mission is to democratize access to education in Brazil through a digital ecosystem, empowering students to create their own success stories[403](index=403&type=chunk) - Vitru's core business is a hybrid digital education model that combines online learning with in-person weekly meetings led by tutors, delivered through an extensive network of hubs[406](index=406&type=chunk) - The business model is asset-light and scalable, relying on partnerships with hub operators who are compensated with a percentage of tuition fees; **93.6% of hubs were partner-operated** as of December 31, 2022[407](index=407&type=chunk)[661](index=661&type=chunk) Key Operational Highlights | Indicator | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Number of Hubs | 2,170 | 939 | 709 | | Total enrolled students | 768,384 | 365,433 | 309,560 | | Digital education to total enrolled students | 97.3% | 98.3% | 97.4% | [Organizational Structure](index=106&type=section&id=C.%20Organizational%20Structure) Vitru Limited is a Cayman Islands holding company operating in Brazil through its primary subsidiary, Vitru Brasil Empreendimentos - Vitru Limited is a Cayman Islands holding company that became the parent of Vitru Brasil Empreendimentos, Participações e Comércio S.A. through a corporate reorganization before its IPO[636](index=636&type=chunk) - The main operating subsidiaries providing educational services are **Uniasselvi and UniCesumar**, both held under Vitru Brasil[640](index=640&type=chunk)[641](index=641&type=chunk) [Property, Plant and Equipment](index=108&type=section&id=D.%20Property%2C%20Plant%20and%20Equipment%2E) The company's key assets include its intellectual property and brands, with principal corporate offices held under lease agreements - The business relies significantly on its intellectual property, including the **"Uniasselvi" and "UniCesumar" brands**, and owned 51 trademarks as of December 31, 2022[647](index=647&type=chunk)[648](index=648&type=chunk) - The company's principal executive offices and corporate headquarters are located in leased facilities in Florianópolis (SC), Indaial (SC), and Maringá (PR)[650](index=650&type=chunk)[652](index=652&type=chunk)[653](index=653&type=chunk) [Item 5. Operating and Financial Review and Prospects](index=109&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) This section analyzes financial performance for 2020-2022, liquidity, capital resources, and key business trends [Operating Results](index=109&type=section&id=A.%20Operating%20Results) Net revenue more than doubled in 2022, driven by the UniCesumar acquisition, though net income was impacted by higher finance costs - **Net revenue increased by 108.7% in 2022**, driven by a R$466.5 million increase in digital education revenue and a R$204.1 million increase in on-campus revenue, both impacted by the UniCesumar consolidation[749](index=749&type=chunk)[752](index=752&type=chunk) - Operating expenses grew 97.2% to R$614.0 million in 2022, mainly due to the UniCesumar acquisition, with selling expenses rising 119.6% and G&A expenses rising 100.8%[755](index=755&type=chunk) - **Financial expenses increased 253.0%** to R$264.4 million in 2022, primarily due to R$157.2 million in interest on loans and financing related to the debentures issued for the UniCesumar acquisition[773](index=773&type=chunk)[774](index=774&type=chunk) Results of Operations (in R$ millions) | Indicator | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Net revenue** | **1,317.3** | **631.1** | **519.2** | | Gross profit | 815.0 | 390.2 | 297.7 | | Operating profit | 201.0 | 78.8 | 60.9 | | **Net income for the year** | **93.4** | **70.7** | **52.1** | [Liquidity and Capital Resources](index=127&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company's liquidity was significantly impacted by the UniCesumar acquisition, financed primarily through R$1.95 billion in debentures - **Total consolidated indebtedness increased to R$2,450.9 million** as of December 31, 2022, from R$311.3 million in 2021, primarily due to financing the UniCesumar acquisition[791](index=791&type=chunk) - On May 15, 2022, Vitru Brasil issued two series of **debentures totaling R$1.95 billion** to partially fund the UniCesumar acquisition, maturing in 2024 and 2027[798](index=798&type=chunk) - Capital expenditures totaled R$97.0 million in 2022, up from R$58.3 million in 2021, mainly for internal project development, IT equipment, and facility refurbishments[806](index=806&type=chunk) Cash Flow Summary (in R$ millions) | Indicator | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Cash flows from operating activities | 121.5 | 65.0 | 75.9 | | Cash flows from (used in) investing activities | (2,162.1) | 100.0 | (610.3) | | Cash flows from (used in) financing activities | 2,012.2 | (175.4) | 617.9 | [Trend Information](index=131&type=section&id=D.%20Trend%20Information) Future performance is subject to uncertainties from Brazil's economic and political environment and the successful integration of UniCesumar - Key trends and uncertainties include the **economic and political crisis in Brazil**, political instability related to the new presidential administration, potential inflation, and market volatility[812](index=812&type=chunk) - The company's ability to realize anticipated benefits from the UniCesumar acquisition and recent capital raises is a critical factor for future performance[812](index=812&type=chunk) [Item 6. Directors, Senior Management and Employees](index=132&type=section&id=Item%206.%20Directors%2C%20Senior%20Management%20and%20Employees) This section details the company's board, executive team, compensation practices, and employee base, which grew significantly in 2022 [Directors and Senior Management](index=132&type=section&id=A.%20Directors%20and%20Senior%20Management) The company is managed by an eleven-member board and an executive team led by two Co-CEOs - The board of directors is composed of **eleven members**, with Carlos Eduardo Martins e Silva serving as Chairman[816](index=816&type=chunk)[817](index=817&type=chunk)[818](index=818&type=chunk) - The executive team is led by **Co-Chief Executive Officers** Pedro Jorge Guterres Quintans Graça and William Victor Kendrick de Matos Silva[835](index=835&type=chunk)[836](index=836&type=chunk) [Compensation](index=136&type=section&id=B.%20Compensation) Executive compensation includes fixed and variable components, with long-term incentives provided through two share option plans - The company has two share option plans, the First Share Option Plan (2017) and the Second Long-Term Incentive Plan (2020), to provide long-term incentives to management[851](index=851&type=chunk)[858](index=858&type=chunk) Total Compensation of Directors, Officers, and Senior Management | Year | Compensation (in R$ millions) | | :--- | :--- | | 2022 | 2.2 | | 2021 | 25.2 | | 2020 | 21.5 | [Board Practices](index=138&type=section&id=C.%20Board%20Practices) The board includes an independent Audit Committee but follows home country practices by not having nomination or compensation committees - The board has an **Audit Committee consisting of three independent directors**, with Aline Leite San Lee Sun serving as the chair and designated "audit committee financial expert"[863](index=863&type=chunk) - The company does not have a nomination and corporate governance committee or a compensation committee, as permitted for foreign private issuers under Cayman Islands law[861](index=861&type=chunk) [Employees](index=139&type=section&id=D.%20Employees) The employee count grew to 10,177 in 2022, mainly from the UniCesumar acquisition, with a highly qualified workforce - The majority of employees are located in the **South region of Brazil (7,212)**, followed by the Northeast (1,029)[869](index=869&type=chunk) Number of Full-time Personnel | Year (as of Dec 31) | Number of Employees | | :--- | :--- | | 2022 | 10,177 | | 2021 | 6,036 | | 2020 | 6,174 | [Item 7. Major Shareholders and Related Party Transactions](index=141&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) This section outlines the company's major shareholders and details significant transactions with related parties [Major Shareholders](index=141&type=section&id=A.%20Major%20Shareholders) As of March 2023, major shareholders include Vinci Partners, Compass Group, Neuberger, The Carlyle Group, and Crescera Beneficial Ownership of Major Shareholders (as of March 31, 2023) | Shareholder | % of Total | | :--- | :--- | | Vinci Partners | 18.0% | | Compass Group LLC | 17.2% | | Neuberger | 12.9% | | The Carlyle Group | 12.3% | | Crescera | 11.4% | | Ninety One UK Limited | 7.3% | | SPX Capital | 6.2% | [Related Party Transactions](index=143&type=section&id=B.%20Related%20Party%20Transactions) The company engages in transactions with related parties, including lease agreements and investments in Vinci-managed funds - The company has **lease agreements for properties owned by former shareholders of UniCesumar**, with a monthly rent of approximately R$1.8 million and a 20-year initial term[893](index=893&type=chunk)[894](index=894&type=chunk) - An Amended and Restated Registration Rights Agreement is in place with major shareholders, granting them rights to require the company to register their shares for public resale[889](index=889&type=chunk)[890](index=890&type=chunk) [Item 8. Financial Information](index=145&type=section&id=Item%208.%20Financial%20Information) The company has no dividend policy, retains earnings for expansion, and discloses R$29.2 million in provisions for legal proceedings - The company has not adopted a dividend policy and **does not anticipate paying any cash dividends** in the foreseeable future, intending to retain earnings for business expansion[899](index=899&type=chunk) - As of December 31, 2022, the company was a party to 2,400 legal and administrative proceedings, with an aggregate **provision of R$29.2 million** recorded for probable losses[905](index=905&type=chunk) - The legal proceedings are primarily civil (2,031 cases), labor-related (349 cases), and tax/social security matters (20 cases)[906](index=906&type=chunk)[907](index=907&type=chunk)[908](index=908&type=chunk) [Item 10. Additional Information](index=148&type=section&id=Item%2010.%20Additional%20Information) This section details the company's corporate governance, shareholder rights, anti-takeover provisions, and key tax considerations [Memorandum and Articles of Association](index=148&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association) The articles grant specific director appointment rights to major shareholders and contain anti-takeover provisions - The company is a Cayman Islands exempted company with an authorized share capital of **1,000,000,000 shares** with a par value of U.S.$0.00005 each[919](index=919&type=chunk)[924](index=924&type=chunk) - Major shareholders **Vinci Partners, Carlyle SPX, and Crescera are entitled to appoint directors** to the board based on their percentage of share ownership[958](index=958&type=chunk) - The Articles of Association contain anti-takeover provisions, including the board's authority to issue preferred shares without shareholder approval[981](index=981&type=chunk)[969](index=969&type=chunk) [Taxation](index=159&type=section&id=E.%20Taxation) The company is a tax-exempt Cayman Islands entity but highlights the potential PFIC classification risk for U.S. investors - The company is a Cayman Islands exempted company and is **not subject to taxes on profits, income, gains, or appreciation** in the Cayman Islands[1006](index=1006&type=chunk)[1007](index=1007&type=chunk) - The company believes it was not a Passive Foreign Investment Company (PFIC) for the 2022 taxable year, but its future PFIC status is uncertain, which could lead to **adverse U.S. federal income tax consequences** for U.S. Holders[1022](index=1022&type=chunk) [Item 11. Quantitative and Qualitative Disclosures About Market Risk](index=162&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate, credit, and liquidity risks, with sensitivity analyses provided - The company's primary market risks are **interest rate risk, credit risk, and liquidity risk**[1036](index=1036&type=chunk) - Interest rate risk exposure relates to short-term investments and liabilities tied to variable rates like Brazil's **CDI and IPCA inflation rate**[1038](index=1038&type=chunk) Interest Rate Sensitivity Analysis (as of Dec 31, 2022) | Financial Instrument | Balance (R$ millions) | Index | Probable Scenario Impact (R$ millions) | | :--- | :--- | :--- | :--- | | Short-term investments | 26.4 | 100% CDI – 13.65% | 1.0 | | Trade receivables | 51.5 | IPCA – 5.78% | 3.0 | | Lease liabilities | 1,645.4 | IGP-M – 5.45% | 89.7 | | Payables from acquisition | 509.2 | IPCA – 5.78% / CDI + 3% | 29.4 | [Item 15. Controls and Procedures](index=166&type=section&id=Item%2015.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were ineffective as of year-end 2022 - Management concluded that **disclosure controls and procedures were ineffective** as of December 31, 2022, due to a material weakness[1063](index=1063&type=chunk) - A **material weakness in internal control over financial reporting** was identified, stemming from insufficient accounting resources and processes after the UniCesumar acquisition[1067](index=1067&type=chunk) - The company is adopting **remediation plans** to improve its processes and internal controls environment to address the identified material weakness[1070](index=1070&type=chunk) Part III [Financial Statements](index=175&type=section&id=Item%2018.%20Financial%20Statements) This section contains the audited IFRS consolidated financial statements for fiscal years 2020, 2021, and 2022 - The independent auditor issued an opinion that the consolidated financial statements **present fairly, in all material respects**, the financial position and results of operations in conformity with IFRS[1135](index=1135&type=chunk) - The acquisition of UniCesumar was accounted for using the acquisition method, resulting in the recognition of **R$1,556.3 million in goodwill** and significant identifiable intangible assets[1163](index=1163&type=chunk)[1164](index=1164&type=chunk)[1167](index=1167&type=chunk) - As of December 31, 2022, the company had a **negative net working capital position** of R$21.4 million, though management expressed confidence in its ability to meet obligations[1155](index=1155&type=chunk)

[Report of Independent Registered Public Accounting Firm](index=2&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) This section presents the auditor's opinion on Vitru Limited's consolidated financial statements [Opinion on the Financial Statements](index=2&type=section&id=Opinion%20on%20the%20Financial%20Statements) PricewaterhouseCoopers Auditores Independentes Ltda. issued an unqualified opinion on Vitru Limited's consolidated financial statements for the three years ended December 31, 2022, confirming fair presentation in conformity with IFRS - The audit covers the consolidated statements of financial position as of December 31, 2022 and 2021, and the related statements of profit or loss, comprehensive income, changes in equity, and cash flows for the three years ended December 31, 2022[3](index=3&type=chunk) - The auditor's opinion confirms that the financial statements are presented fairly in all material respects and conform with IFRS[3](index=3&type=chunk) - The audit was conducted in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB)[5](index=5&type=chunk) [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) This section provides an overview of Vitru's financial position, performance, and cash flows [Consolidated Statements of Financial Position](index=3&type=section&id=Consolidated%20statements%20of%20financial%20position) Vitru's total assets significantly increased from **R$1.53 billion** in 2021 to **R$5.66 billion** in 2022, primarily driven by a surge in intangible assets from **R$670 million** to **R$4.43 billion** due to acquisitions, while total liabilities also grew substantially from **R$461 million** to **R$3.48 billion**, mainly from new loans and financing of **R$1.62 billion** and increased payables from acquisitions, consequently doubling total equity from **R$1.07 billion** to **R$2.17 billion** Consolidated Assets (in thousands of BRL) | Asset Category | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | **371,540** | **514,784** | | Cash and cash equivalents | 47,187 | 75,587 | | Short-term investments | 26,389 | 253,042 | | Trade receivables | 224,128 | 140,560 | | **Total Non-Current Assets** | **5,287,539** | **1,012,643** | | Intangible assets | 4,427,643 | 670,152 | | Right-of-use assets | 350,393 | 136,104 | | Property and equipment | 194,575 | 106,839 | | **Total Assets** | **5,659,079** | **1,527,427** | Consolidated Liabilities and Equity (in thousands of BRL) | Liability & Equity Category | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Current Liabilities** | **392,366** | **259,342** | | Loans and financing | 131,158 | — | | **Total Non-Current Liabilities** | **3,092,324** | **201,957** | | Loans and financing | 1,489,088 | — | | Deferred tax liabilities | 773,394 | — | | Payables from acquisition of subsidiaries | 507,361 | — | | **Total Liabilities** | **3,484,690** | **461,299** | | **Total Equity** | **2,174,389** | **1,066,128** | | **Total Liabilities and Equity** | **5,659,079** | **1,527,427** | - As of December 31, 2022, the company had a negative net working capital position, with short-term liabilities exceeding short-term assets by **R$21,438 thousand**, though management remains confident in its ability to meet obligations due to its business model's resilience and operational cash flow generation[19](index=19&type=chunk) [Consolidated Statements of Profit or Loss and Other Comprehensive Income](index=5&type=section&id=Consolidated%20statements%20of%20profit%20or%20loss%20and%20other%20comprehensive%20income) For the year ended December 31, 2022, Vitru's net revenue more than doubled to **R$1.32 billion** from **R$631 million** in 2021, with operating profit increasing to **R$201 million**, while net income rose more modestly to **R$93.3 million** from **R$70.6 million** in 2021, heavily impacted by a sharp increase in financial results to **R$199.9 million**, and basic earnings per share increased to **R$3.52** from **R$3.08** year-over-year Key Profit & Loss Items (in thousands of BRL) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Net Revenue** | **1,317,346** | **631,147** | **519,179** | | Gross Profit | 815,015 | 390,223 | 297,727 | | Operating Profit | 200,990 | 78,765 | 60,943 | | Financial Results | (199,871) | (29,359) | (27,860) | | **Net Income for the Period** | **93,320** | **70,648** | **52,114** | | Basic EPS (R$) | 3.52 | 3.08 | 2.79 | | Diluted EPS (R$) | 3.23 | 2.89 | 2.68 | [Consolidated Statement of Changes in Equity](index=6&type=section&id=Consolidated%20statement%20of%20changes%20in%20equity) Total equity increased from **R$1.07 billion** at the end of 2021 to **R$2.17 billion** at the end of 2022, primarily driven by net income of **R$93.3 million**, issuance of shares for the Unicesumar acquisition valued at **R$560.5 million**, and capital contributions of **R$428.4 million** Changes in Equity in 2022 (in thousands of BRL) | Description | Amount | | :--- | :--- | | **Equity at Dec 31, 2021** | **1,066,128** | | Profit for the period | 93,320 | | Issuance of shares for acquisition | 560,546 | | Capital contributions | 428,375 | | Value of employee services (Share-based comp) | 26,020 | | **Equity at Dec 31, 2022** | **2,174,389** | [Consolidated Statement of Cash Flows](index=7&type=section&id=Consolidated%20statement%20of%20cash%20flows) In 2022, net cash from operating activities nearly doubled to **R$121.5 million**, but the company experienced a significant net cash outflow of **R$2.16 billion** from investing activities, dominated by a **R$2.29 billion** payment for subsidiary acquisitions, which was financed by **R$2.01 billion** in net cash from financing activities, including **R$1.91 billion** from new loans and **R$428.4 million** from capital contributions, resulting in an overall decrease in cash and cash equivalents by **R$28.4 million**, ending the year at **R$47.2 million** Consolidated Cash Flows (in thousands of BRL) | Cash Flow Category | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Net cash provided by operating activities** | **121,464** | **65,035** | **75,913** | | **Net cash used in investing activities** | **(2,162,073)** | **100,022** | **(610,295)** | | Payments for acquisition of subsidiaries | (2,291,688) | (127,804) | (117,248) | | **Net cash provided by (used in) financing activities** | **2,012,209** | **(175,400)** | **617,855** | | Proceeds from loans and financing | 1,905,851 | — | 150,000 | | Capital contributions | 428,375 | 9,722 | — | | **Net increase (decrease) in cash** | **(28,400)** | **(10,343)** | **83,473** | | Cash and cash equivalents at end of period | 47,187 | 75,587 | 85,930 | [Notes to the Financial Statements](index=8&type=section&id=Notes%20to%20the%20financial%20statements) This section provides detailed explanations and breakdowns of the figures presented in the consolidated financial statements [Note 1: Corporate Information](index=8&type=section&id=1.%20Corporate%20information) Vitru Limited is a Cayman Islands holding company, publicly traded on NASDAQ (VTRU), primarily engaged in providing educational services in Brazil through digital and on-campus platforms, with operations significantly expanded in 2022 through the acquisition of Unicesumar and Rede Enem, operating through 2,170 learning centers as of December 31, 2022, and having secured a major investment from Crescera Capital during the year - Vitru Limited is a holding company incorporated in the Cayman Islands, trading on NASDAQ under the ticker "VTRU"[14](index=14&type=chunk) - The company provides educational services in Brazil, including undergraduate and continuing education courses, through eight on-campus sites and **2,170 learning hubs** as of December 31, 2022 (up from 939 in 2021)[17](index=17&type=chunk) [1.2 Business Combination with Unicesumar](index=8&type=section&id=1.2.%20Business%20Combination%20with%20Unicesumar) On May 20, 2022, Vitru completed the acquisition of 100% of Unicesumar, a leading Brazilian higher education institution, for a total purchase consideration of **R$3.21 billion**, comprising cash, Vitru shares, and a contingent payment, which resulted in goodwill of **R$1.56 billion** and significantly expanded Vitru's operations, contributing **R$541.3 million** to revenue and **R$181.5 million** to net profit from the acquisition date to year-end - The acquisition of Unicesumar was closed on May 20, 2022[24](index=24&type=chunk) Unicesumar Purchase Price Consideration (in thousands of BRL) | Component | Amount | % of Total | | :--- | :--- | :--- | | Cash payable at acquisition date | 2,162,500 | 67.36% | | Amount payable after 12 months | 456,721 | 14.23% | | Contingent consideration | 30,608 | 0.95% | | Payable through issuance of Vitru shares | 560,544 | 17.46% | | **Total** | **3,210,373** | **100.00%** | - The acquisition generated goodwill of **R$1,556.3 million**, attributed to workforce synergies and enhanced market position[27](index=27&type=chunk)[36](index=36&type=chunk) - From the acquisition date to December 31, 2022, Unicesumar contributed **R$541,272 thousand** in revenue and **R$181,466 thousand** in net profit[37](index=37&type=chunk) [1.3 Acquisition of Rede Enem](index=11&type=section&id=1.3.%20Acquisition%20of%20Rede%20Enem) On September 1, 2022, Vitru acquired 100% of Rede Enem Serviços de Internet Ltda, a platform providing free educational content, for a purchase price of **R$1,400 thousand** in cash, resulting in goodwill of **R$1,407 thousand** - On September 1, 2022, the Company acquired 100% of Rede Enem, a platform for free educational content[39](index=39&type=chunk) Rede Enem Acquisition Details (in thousands of BRL) | Item | Amount | | :--- | :--- | | Total acquired net assets at book value | (7) | | Purchase price consideration (cash) | 1,400 | | Goodwill arising on acquisition | 1,407 | [1.4 Investment from Crescera Capital](index=12&type=section&id=1.4.%20Investment%20from%20Crescera%20Capital) On November 10, 2022, Crescera Capital, a leading asset manager, invested in Vitru by subscribing to 3,636,363 new common shares, amounting to a capital increase of **R$328.7 million** (approximately **US$58.3 million**) - Crescera subscribed for **3,636,363** new common shares in a capital increase of **R$328,728 thousand** (US$58,260 thousand) on November 10, 2022[41](index=41&type=chunk) [Note 2: Significant Accounting Policies](index=12&type=section&id=2.%20Significant%20accounting%20policies) The consolidated financial statements are prepared in accordance with IFRS under the historical cost convention, with Brazilian Reais (R$) as the functional and presentation currency, and key policies include the acquisition method for business combinations, recognition of revenue from contracts with customers over time as services are rendered, and annual impairment testing for goodwill and indefinite-lived intangible assets, with financial instruments classified and measured at amortized cost or fair value through profit or loss (FVPL) - The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB[43](index=43&type=chunk) - The functional and presentation currency is the Brazilian Real (R$)[53](index=53&type=chunk) - Revenue from tuition is recognized over time as services are rendered, and the company operates a joint operation model with hub partners, recognizing only its portion of revenue from digital education[154](index=154&type=chunk)[158](index=158&type=chunk) - Business combinations are accounted for using the acquisition method, with goodwill measured as the excess of consideration over the fair value of net identifiable assets[118](index=118&type=chunk)[119](index=119&type=chunk) - Goodwill and intangible assets with indefinite useful lives are tested for impairment annually[139](index=139&type=chunk)[140](index=140&type=chunk) [Note 3: Significant Accounting Estimates and Assumptions](index=27&type=section&id=3.%20Significant%20accounting%20estimates%20and%20assumptions) Management makes critical judgments and estimates that affect reported financial amounts, with key areas including the impairment of non-financial assets (like goodwill) which relies on discounted cash flow models, fair value measurement of financial instruments, estimating credit losses on trade receivables using a provision matrix, assessing provisions for legal contingencies, and determining lease terms and incremental borrowing rates for lease accounting - Impairment of non-financial assets is a key estimate, based on value-in-use calculations using a discounted cash flow (DCF) model over a five-year budget period[183](index=183&type=chunk) - Credit losses on trade receivables are estimated using a provision matrix based on historical loss experience and forward-looking factors, with a receivable considered in default when over **365 days** past due[186](index=186&type=chunk)[188](index=188&type=chunk) - Provisions for legal contingencies are recognized for proceedings assessed as probable losses, based on evidence and legal counsel opinions[189](index=189&type=chunk) - Determining the lease term, especially with renewal options, and calculating the incremental borrowing rate for lease liabilities requires significant judgment[190](index=190&type=chunk)[192](index=192&type=chunk) [Note 4: Segment Reporting](index=29&type=section&id=4.%20Segment%20reporting) Vitru reports performance across three operating segments: Digital Education Undergraduate Courses, Continuing Education Courses, and On-campus Undergraduate Courses, with the Digital Education segment being the largest in 2022, generating **R$998.2 million** in net revenue and **R$387.4 million** in Adjusted EBITDA, and total allocated Adjusted EBITDA for all segments reaching **R$523.4 million** in 2022, a significant increase from **R$237.9 million** in 2021 - The company's operating segments are: Digital education undergraduate courses, Continuing education courses, and On-campus undergraduate courses[202](index=202&type=chunk)[205](index=205&type=chunk) Segment Performance (in thousands of BRL) | Segment | Net Revenue 2022 | Adj. EBITDA 2022 | Net Revenue 2021 | Adj. EBITDA 2021 | | :--- | :--- | :--- | :--- | :--- | | Digital Education | 998,220 | 387,373 | 531,716 | 188,936 | | Continuing Education | 68,058 | 36,596 | 52,460 | 26,898 | | On-campus | 251,068 | 99,447 | 46,971 | 22,103 | | **Total Allocated** | **1,317,346** | **523,416** | **631,147** | **237,937** | Reconciliation of Profit Before Taxes to Adjusted EBITDA (in thousands of BRL) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Profit (loss) before taxes | 1,119 | 49,406 | | (+) Financial result | 191,871 | 29,359 | | (+) Depreciation and amortization | 150,951 | 54,479 | | (+) Other adjustments | 180,964 | 94,493 | | **Adjusted EBITDA allocated to segments** | **524,905** | **237,937** | [Note 5: Financial Instruments and Risk Management](index=31&type=section&id=5.%20Financial%20assets%20and%20financial%20liabilities) As of December 31, 2022, total financial assets at amortized cost were **R$343.2 million**, while total financial liabilities were **R$2.6 billion**, a substantial increase from **R$405.3 million** in 2021, mainly due to new loans and acquisition-related payables, with the company managing market risk (interest rate and exchange rate), credit risk, and liquidity risk, and sensitivity analyses showing that a **25%** increase in interest rates could increase lease liabilities by **R$112.1 million** and acquisition payables by **R$36.8 million** Financial Assets and Liabilities Summary (in thousands of BRL) | Category | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Financial Assets (Amortized Cost)** | **343,227** | **475,122** | | Trade receivables | 269,651 | 146,493 | | **Financial Liabilities (Amortized Cost)** | **2,577,556** | **353,003** | | Loans and financing | 1,645,368 | — | | Payables from acquisition of subsidiaries | 509,152 | 149,765 | | **Financial Liabilities (FVPL)** | **19,805** | **52,283** | - The company is exposed to market risk (interest and exchange rates), credit risk (from customers and financial institutions), and liquidity risk[212](index=212&type=chunk) - A sensitivity analysis indicates that a **25%** increase in interest rates would increase lease liabilities by **R$112.1 million** and payables from acquisition of subsidiaries by **R$36.8 million**[217](index=217&type=chunk) [Note 6: Fair Value Measurement](index=33&type=section&id=6.%20Fair%20value%20measurement) The company's share-based compensation liabilities are the primary financial instruments measured at fair value on a recurring basis, classified as Level 3 due to the use of significant unobservable inputs, with the fair value of these liabilities decreasing from **R$52.3 million** in 2021 to **R$19.8 million** in 2022, mainly due to the issuance of shares to employees, while the fair values of other financial instruments like cash, short-term investments, and current receivables/payables are considered to approximate their carrying amounts - Share-based compensation liabilities are measured at fair value and are classified as Level 3 in the fair value hierarchy[227](index=227&type=chunk) Changes in Level 3 Fair Value Liabilities (Share-based compensation, in thousands of BRL) | Description | 2022 | 2021 | | :--- | :--- | :--- | | **Opening balance at January 1** | **52,283** | **46,260** | | Issue of shares to employees | (32,478) | — | | Expenses recognized | — | 6,023 | | **As of December 31** | **19,805** | **52,283** | - Key unobservable inputs for Level 3 valuation include net operating revenue growth rate (**22.84%** in 2022) and a pre-tax discount rate (**13.35%** in 2022)[230](index=230&type=chunk) [Note 7: Capital Management](index=34&type=section&id=7.%20Capital%20management) The company's primary capital management objective is to ensure its ability to continue as a going concern while maximizing shareholder returns, managing its capital structure by adjusting dividend payments, returning capital, or issuing new shares in response to economic conditions, and having no transactions subject to financial covenants - The main objectives of capital management are to safeguard the company's ability to operate as a going concern and to maintain an optimal capital structure to maximize shareholder returns[231](index=231&type=chunk) - The company may adjust its capital structure by changing dividend policies, returning capital to shareholders, or issuing new shares[232](index=232&type=chunk) - The company is not subject to any financial covenants[233](index=233&type=chunk) [Note 8: Cash and Cash Equivalents and Short-term Investments](index=34&type=section&id=8.%20Cash%20and%20cash%20equivalents%20and%20short-term%20investments) At the end of 2022, the company's cash and cash equivalents stood at **R$47.2 million**, down from **R$75.6 million** in 2021, while short-term investments also saw a significant decrease, falling from **R$253.0 million** to **R$26.4 million**, with these investments primarily held in high-liquidity investment funds with highly rated financial institutions Cash and Investments (in thousands of BRL) | Category | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | 47,187 | 75,587 | | Short-term investments | 26,389 | 253,042 | | **Total** | **73,576** | **328,629** | [Note 9: Trade Receivables](index=35&type=section&id=9.%20Trade%20receivables) Net trade receivables increased to **R$271.1 million** in 2022 from **R$146.5 million** in 2021, driven by a rise in gross tuition fees receivable to **R$410.4 million**, with the allowance for expected credit losses (ECL) also growing significantly from **R$113.9 million** to **R$212.0 million**, reflecting the larger receivables base, and the majority of receivables being current, though non-current receivables increased from **R$5.9 million** to **R$47.0 million** Trade Receivables Breakdown (in thousands of BRL) | Category | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Tuition fees | 410,393 | 247,419 | | Allowance for expected credit losses | (211,986) | (113,934) | | **Total trade receivables** | **271,140** | **146,493** | | Current | 224,128 | 140,560 | | Non-current | 47,012 | 5,933 | Change in Allowance for Expected Credit Losses (in thousands of BRL) | Description | 2022 | 2021 | | :--- | :--- | :--- | | **At the beginning of the year** | **(113,934)** | **(102,128)** | | Allowance for expected credit losses | (206,775) | (127,557) | | Write-off of uncollectible receivables | 89,481 | 98,883 | | Reversal | 19,242 | 16,868 | | **As of December 31** | **(211,986)** | **(113,934)** | - Receivables are written off when they are over **365 days** past due, with collection efforts continuing on written-off amounts[238](index=238&type=chunk) [Note 10: Current and Deferred Income Tax](index=36&type=section&id=10.%20Current%20and%20deferred%20income%20tax) In 2022, the company recorded a total income tax benefit of **R$92.2 million** on pre-tax profit of **R$1.1 million**, resulting in a highly negative effective tax rate, primarily due to a **R$95.9 million** tax benefit from the ProUni program and a **R$110.2 million** deferred income tax income, with deferred tax assets increasing to **R$203.0 million** from **R$83.4 million** in 2021, mainly from tax loss carryforwards and allowances for expected credit losses Income Tax Reconciliation (in thousands of BRL) | Description | 2022 | 2021 | | :--- | :--- | :--- | | Earnings before taxes | (1,119) | 49,406 | | Income tax at statutory rates (34%) | 380 | (16,798) | | Income exempt from taxation - ProUni benefit | 95,871 | 20,211 | | Non-deductible expenses | (7,079) | (2,863) | | Other | (1,211) | 20,682 | | **Total income tax and social contribution** | **92,201** | **21,242** | | Effective tax rate | (8240)% | 43% | Deferred Tax Assets (in thousands of BRL) | Source | 2022 | 2021 | | :--- | :--- | :--- | | Tax loss carryforward | 93,242 | 14,410 | | Allowance for expected credit losses | 59,739 | 47,128 | | Other provisions | 38,699 | 4,661 | | **Total Deferred Tax Assets** | **203,043** | **83,350** | [Note 11: Prepaid Expenses](index=37&type=section&id=11.%20Prepaid%20expenses) Prepaid expenses decreased from **R$35.0 million** in 2021 to **R$20.0 million** in 2022, primarily driven by a reduction in 'Costs related to future issuances' from **R$24.0 million** to **R$8.5 million** Prepaid Expenses Breakdown (in thousands of BRL) | Category | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Costs related to future issuances | 8,514 | 23,952 | | Prepayments to hub partners | 5,109 | 345 | | Prepayments to suppliers | 4,303 | 4,111 | | Prepayments to employees | — | 4,425 | | Others | 2,084 | 2,124 | | **Total Prepaid Expenses** | **20,010** | **34,957** | [Note 12: Receivables from Hub Partners](index=37&type=section&id=12.%20Receivables%20from%20hub%20partners) As of December 31, 2022, the company reported new receivables from hub partners totaling **R$80.1 million**, net of a **R$2.6 million** allowance for expected credit losses, with these receivables representing cash transferred to hub partners, and **R$32.0 million** classified as current and **R$48.1 million** as non-current Receivables from Hub Partners (in thousands of BRL) | Category | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Credit to hub partners | 82,650 | — | | Allowance for expected credit losses | (2,554) | — | | **Financial assets** | **80,096** | **—** | | Current | 31,979 | — | | Non-current | 48,117 | — | [Note 13: Leases](index=38&type=section&id=13.%20Leases) The company's right-of-use assets more than doubled to **R$350.4 million** in 2022 from **R$136.1 million** in 2021, primarily due to **R$228.3 million** in assets acquired through business combinations, with corresponding lease liabilities increasing to **R$323.3 million** from **R$161.5 million**, as the company leases buildings for offices and hubs with contracts typically ranging from 1 to 20 years Movement in Right-of-Use Assets and Lease Liabilities (in thousands of BRL) | Description | Right-of-Use Assets 2022 | Lease Liabilities 2022 | | :--- | :--- | :--- | | **Balance at Dec 31, 2021** | **136,104** | **161,532** | | Business combinations | 228,258 | 171,829 | | New contracts | 6,901 | 6,901 | | Depreciation expense | (20,630) | — | | Accrued interest | — | 28,246 | | Payments (Principal & Interest) | — | (46,620) | | Other adjustments | (191) | 1,451 | | **Balance at Dec 31, 2022** | **350,393** | **323,339** | - The company recognized **R$5,882 thousand** in rent expense from short-term and low-value asset leases in 2022[247](index=247&type=chunk) [Note 14: Property and Equipment](index=39&type=section&id=14.%20Property%20and%20equipment) The net book value of property and equipment increased to **R$194.6 million** in 2022 from **R$106.8 million** in 2021, with growth driven by **R$78.1 million** in assets acquired through business combinations and **R$40.3 million** in new purchases, partially offset by **R$19.3 million** in depreciation Changes in Property and Equipment (Net Book Value, in thousands of BRL) | Description | 2022 | 2021 | | :--- | :--- | :--- | | **Net book value at beginning of year** | **106,839** | **92,144** | | Purchases | 40,316 | 25,995 | | Business combinations | 78,124 | — | | Disposals | (11,365) | (9) | | Depreciation | (19,340) | (15,816) | | **Net book value at end of year** | **194,575** | **106,839** | [Note 15: Intangible Assets](index=40&type=section&id=15.%20Intangible%20assets) Intangible assets surged from **R$670.2 million** in 2021 to **R$4.43 billion** in 2022, almost entirely due to business combinations which added **R$3.79 billion** in intangibles, including **R$1.56 billion** in goodwill, **R$1.21 billion** in distance learning operation licenses, and **R$341.4 million** in trademarks, with the company performing impairment tests and concluding there was no goodwill impairment for the year ended December 31, 2022 Changes in Intangible Assets (Net Book Value, in thousands of BRL) | Description | 2022 | 2021 | | :--- | :--- | :--- | | **Net book value at beginning of year** | **670,152** | **660,950** | | Business combinations | 3,788,142 | — | | Purchase and capitalization | 56,722 | 32,320 | | Amortization | (87,373) | (23,118) | | **Net book value at end of year** | **4,427,643** | **670,152** | Intangible Assets from Business Combinations in 2022 (in thousands of BRL) | Asset | Amount | | :--- | :--- | | Goodwill | 1,557,774 | | Operation licenses for distance learning | 1,206,641 | | Trademarks | 341,369 | | Customer relationship | 294,525 | | Non-compete agreements | 272,416 | | Other | 115,417 | | **Total** | **3,788,142** | - Goodwill and operation licenses for digital education were allocated to Cash-Generating Units (CGUs) for impairment testing, with the recoverable amount determined using value-in-use calculations based on five-year cash flow projections[251](index=251&type=chunk)[255](index=255&type=chunk) - No goodwill impairment was recognized for the year ended December 31, 2022[256](index=256&type=chunk) [Note 16: Loans and Financing](index=42&type=section&id=16.%20Loans%20and%20financing) In May 2022, Vitru issued two series of debentures totaling **R$1.95 billion** to finance its operations, particularly the Unicesumar acquisition, resulting in an outstanding balance of loans and financing of **R$1.62 billion** as of December 31, 2022, with maturities extending to May 2027 and interest rates tied to the CDI rate - On May 19, 2022, the company issued debentures totaling **R$1.95 billion** through its subsidiary Vitru Brasil[262](index=262&type=chunk) Loans and Financing Details as of Dec 31, 2022 (in thousands of BRL) | Category | Amount | | :--- | :--- | | **Total Balance** | **1,620,216** | | Current | 131,158 | | Non-current | 1,489,088 | | Interest Rate | CDI +2.9% and CDI +3.2% p.a. | | Maturity | Nov/23 to May/27 | [Note 17: Labor and Social Obligations](index=42&type=section&id=17.%20Labor%20and%20social%20obligations) Labor and social obligations increased from **R$25.0 million** in 2021 to **R$43.1 million** in 2022, with the main components of this liability being social charges payable (INSS, FGTS), salaries payable, and accruals for bonuses and vacation Labor and Social Obligations (in thousands of BRL) | Category | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Social charges payable | 15,675 | 7,562 | | Salaries payable | 10,374 | 4,172 | | Accrual for bonus | 9,522 | 8,683 | | Accrued vacation | 6,883 | 4,443 | | Other | 651 | 155 | | **Total** | **43,105** | **25,015** | [Note 18: Payables from Acquisition of Subsidiaries](index=43&type=section&id=18.%20Payables%20from%20acquisition%20of%20subsidiaries) Payables from the acquisition of subsidiaries increased significantly to **R$507.4 million** in 2022 from **R$149.8 million** in 2021, primarily due to the Unicesumar acquisition which added a future payment obligation of **R$525.7 million**, due in May 2024, with the entire balance as of December 31, 2022, classified as non-current - The payable from the Unicesumar acquisition is **R$525,681 thousand**, due on May 20, 2024, and is adjusted by the IPCA inflation rate for the first year and CDI + **3%** for the second year[267](index=267&type=chunk) Changes in Payables from Acquisition of Subsidiaries (in thousands of BRL) | Description | 2022 | | :--- | :--- | | **At the beginning of the year** | **149,765** | | Proceeds from acquisition of subsidiaries | 680,015 | | Payment of principal | (236,461) | | Accrued Interest & Other | (33,958) | | **As of December 31** | **507,361** | [Note 19: Contingencies](index=43&type=section&id=19.%20Contingencies) The company's provision for contingencies (probable losses) nearly doubled to **R$29.2 million** in 2022, largely due to **R$12.5 million** in provisions assumed from business combinations, with labor claims constituting the majority of this provision, and an additional **R$111.4 million** in possible losses for which no provision has been made, up from **R$71.4 million** in 2021, with tax claims being the largest component Provision for Contingencies (Probable Loss, in thousands of BRL) | Category | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Labor | 24,643 | 12,038 | | Civil | 4,539 | 2,834 | | **Total** | **29,182** | **14,872** | Contingencies with Possible Loss (Not Provisioned, in thousands of BRL) | Category | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Tax | 59,916 | 33,025 | | Labor | 28,284 | 24,645 | | Civil | 23,210 | 13,746 | | **Total** | **111,410** | **71,416** | - A significant tax contingency classified as a possible loss is a **R$28.0 million** claim from the Porto Alegre City Hall regarding Service Tax (ISS) for the period January 2012 to June 2017[273](index=273&type=chunk) [Note 20: Equity](index=45&type=section&id=20.%20Equity) As of December 31, 2022, Vitru's share capital was represented by **33,687,213** common shares, with the capital structure significantly impacted in 2022 by a **R$328.7 million** capital increase from Crescera's investment and a **R$79.0 million** rights offering, and the company has an authorized capital limit of **1 billion** shares and did not pay any dividends in 2022 - As of December 31, 2022, the company's share capital consists of **33,687,213** common shares with a par value of **US$0.00005** each[282](index=282&type=chunk) Capital Contributions in 2022 (in thousands of BRL) | Source | Amount | | :--- | :--- | | Crescera Investment | 328,728 | | Rights Offering | 79,024 | | Share Option plan | 20,623 | | **Total** | **428,375** | - The company did not pay any cash dividends in 2022 and does not anticipate paying any in the foreseeable future[286](index=286&type=chunk) [Note 21: Earnings Per Share](index=46&type=section&id=21.%20Earnings%20per%20share) For the year ended December 31, 2022, basic earnings per share (EPS) was **R$2.81**, calculated on a net income of **R$75.6 million** and a weighted average of **26.9 million** outstanding shares, while diluted EPS was **R$2.62**, reflecting the potential dilution from **6.2 million** outstanding share options Basic Earnings Per Share (in thousands, except per share amounts) | Description | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net income attributable to shareholders | 75,585 | 70,648 | 52,114 | | Weighted average outstanding shares | 26,900 | 22,922 | 18,702 | | **Basic EPS (R$)** | **2.81** | **3.08** | **2.79** | Diluted Earnings Per Share (in thousands, except per share amounts) | Description | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net income attributable to shareholders | 75,585 | 70,648 | 52,114 | | Weighted average diluted shares | 28,849 | 24,436 | 19,465 | | **Diluted EPS (R$)** | **2.62** | **2.89** | **2.68** | [Note 22: Share-Based Compensation](index=46&type=section&id=22.%20Share-based%20compensation) Vitru operates two share option plans to incentivize and retain key personnel, with the First Plan being a compound instrument (cash or equity settled) and the Second Plan being equity-settled, and in 2022, the company recognized a net expense of **R$(6.0) million** for share-based compensation, a significant shift from the **R$14.9 million** expense in 2021, mainly due to a **R$32.5 million** cash-settled expense reversal in the first plan, with **88,474** options outstanding under the First Plan and **1,319,523** under the Second Plan as of year-end - The company has a First Share Option Plan (approved 2017) and a Second Share Option Plan (approved 2020) for managers and executives[291](index=291&type=chunk)[308](index=308&type=chunk) Share-Based Compensation Expense (in thousands of BRL) | Plan | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Cash-settled - first plan | (32,478) | 8,455 | 11,823 | | Equity-settled - first plan | 20,623 | — | — | | Equity-settled - second plan | 5,845 | 6,410 | — | | **Total** | **(6,010)** | **14,865** | **11,823** | Outstanding Options at Year-End | Plan | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | First Share Option Plan | 88,474 | 474,892 | | Second Share Option Plan | 1,319,523 | 866,914 | [Note 23: Key Management Compensation and Related Parties](index=50&type=section&id=23.%20Key%20management%20compensation%20and%20related%20parties) Total compensation for key management personnel was **R$2.2 million** in 2022, a sharp decrease from **R$25.2 million** in 2021, due to a **R$(6.0) million** credit from share-based compensation in 2022 compared to a **R$12.5 million** expense in 2021, with the company engaging in transactions with related parties, including joint operations and lease agreements with entities like SOEDMAR and WM Administracao, primarily arising from the Unicesumar acquisition Key Management Compensation (in thousands of BRL) | Category | 2022 | 2021 | | :--- | :--- | :--- | | Salaries and related charges | 8,241 | 12,662 | | Share-based compensation | (6,010) | 12,520 | | **Total** | **2,231** | **25,182** | - Related party transactions in 2022 included significant lease agreements with SOEDMAR, resulting in a right-of-use asset of **R$160.2 million** and a lease liability of **R$165.1 million**[321](index=321&type=chunk) [Note 24: Revenue](index=51&type=section&id=24.%20Revenue) Net revenue for 2022 was **R$1.32 billion**, up from **R$631.1 million** in 2021, derived from gross service fees of **R$1.68 billion**, reduced by cancellations, discounts, ProUni scholarships (**R$201.4 million**), and taxes, with the vast majority of revenue (**R$1.30 billion**) recognized over time as educational services are delivered Revenue Breakdown (in thousands of BRL) | Description | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Gross amount from services provided | 1,682,512 | 801,206 | 673,872 | | (-) ProUni scholarships | (201,436) | (109,217) | (98,289) | | (-) Discounts | (100,425) | (30,305) | (24,128) | | (-) Cancellation | (18,906) | (10,200) | (14,764) | | (-) Taxes and contributions | (44,399) | (20,337) | (17,512) | | **Net revenue** | **1,317,346** | **631,147** | **519,179** | - In 2022, amounts billed to students to be transferred to hub partners under joint operations totaled **R$343.6 million**, with a year-end payable balance of **R$43.7 million**[323](index=323&type=chunk) [Note 25: Costs and Expenses by Nature](index=51&type=section&id=25.%20Costs%20and%20expenses%20by%20nature) Total costs and expenses more than doubled to **R$926.5 million** in 2022 from **R$441.8 million** in 2021, with the largest components being payroll (**R$427.6 million**), sales and marketing (**R$181.9 million**), and depreciation and amortization (**R$151.0 million**), allocated across cost of services (**R$502.3 million**), general and administrative expenses (**R$179.3 million**), and selling expenses (**R$244.8 million**) Costs and Expenses by Nature (in thousands of BRL) | Category | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Payroll | 427,583 | 220,372 | 207,511 | | Sales and marketing | 181,898 | 93,026 | 67,532 | | Depreciation and amortization | 150,951 | 54,479 | 51,475 | | Material | 57,138 | 16,488 | 13,023 | | Other expenses | 108,932 | 57,393 | 42,367 | | **Total** | **926,502** | **441,758** | **381,908** | [Note 26: Other Income (Expenses), Net](index=52&type=section&id=26.%20Other%20income%20(expenses)%2C%20net) The company reported a net other expense of **R$2.3 million** in 2022, a shift from a net income of **R$65 thousand** in 2021, primarily driven by **R$9.8 million** in other expenses, including a **R$4.7 million** write-off of permanent assets, partially offset by a **R$4.6 million** gain from the modification of lease contracts Other Income (Expenses), Net (in thousands of BRL) | Category | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Other expenses | (9,848) | (380) | (2,898) | | Other revenues | 5,477 | 730 | 743 | | Modification of lease contracts | 4,625 | 379 | 3,052 | | Deductible donations | (2,322) | (300) | (300) | | Contractual indemnities | (252) | (364) | (85) | | **Total** | **(2,320)** | **65** | **512** | [Note 27: Financial Results](index=52&type=section&id=27.%20Financial%20results) The company's net financial result was a significant expense of **R$226.8 million** in 2022, a dramatic increase from a **R$29.4 million** expense in 2021, driven by a surge in financial expenses to **R$291.4 million**, primarily due to **R$191.0 million** in interest on new loans and financing, while financial income was **R$64.6 million**, led by financial investment yield and interest on late tuition payments Financial Results (in thousands of BRL) | Category | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Financial income** | **64,566** | **45,520** | **36,558** | | Financial investment yield | 31,392 | 23,982 | 6,296 | | Interest on tuition fees paid in arrears | 26,545 | 17,456 | 15,715 | | **Financial expenses** | **(291,351)** | **(74,879)** | **(64,418)** | | Interest on loans and financing | (191,003) | (8,642) | (6,205) | | Interest on payables from acquisition | (41,860) | (40,405) | (34,980) | | Interest on lease | (28,246) | (16,008) | (15,085) | | **Financial results** | **(226,785)** | **(29,359)** | **(27,860)** | [Note 28: Other Disclosures on Cash Flows](index=52&type=section&id=28.%20Other%20disclosures%20on%20cash%20flows) The company reported significant non-cash investing and financing activities in 2022, including **R$26.1 million** in additions to right-of-use assets recognized with a corresponding increase in lease liabilities, and a **R$1.5 million** reversal related to contingency provisions against the indemnification asset - In 2022, non-cash transactions included **R$26,115 thousand** in additions to right-of-use assets, which were also added to lease liabilities[328](index=328&type=chunk) - A non-cash transaction of **R$1,469 thousand** related to contingency provisions was reversed to the indemnification assets line item[328](index=328&type=chunk)

Exhibit 99.1 Vitru Limited Unaudited interim condensed consolidated financial statements September 30, 2022 (In thousands of Brazilian Reais) | | | September 30, | December 31, | | --- | --- | --- | --- | | | Note | 2022 | 2021 | | LIABILITIES | | | | | CURRENT LIABILITIES | | | | | Trade payables | | 67,661 | 41,706 | | Loans and financing | 14 | 97,035 | - | | Lease liabilities | 11 | 53,434 | 27,204 | | Labor and social obligations | 15 | 97,617 | 25,015 | | Taxes payable | | 10,958 | 3,253 | | Prepaymen ...

[Unaudited Interim Condensed Consolidated Financial Statements](index=1&type=section&id=Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) [Consolidated Statements of Financial Position](index=2&type=section&id=Unaudited%20interim%20condensed%20consolidated%20statements%20of%20financial%20position) As of June 30, 2022, Vitru's total assets significantly increased to R$5.74 billion from R$1.53 billion at year-end 2021, primarily driven by a surge in intangible assets from R$670 million to R$4.54 billion due to the Unicesumar acquisition. Total liabilities also rose dramatically to R$4.04 billion from R$461 million, mainly due to new loans and financing of R$1.94 billion and a substantial increase in accounts payable from acquisitions. Consequently, total equity grew to R$1.70 billion from R$1.07 billion Consolidated Statement of Financial Position (in thousands of BRL) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **TOTAL ASSETS** | **5,740,731** | **1,527,427** | | Total Current Assets | 606,008 | 514,784 | | Total Non-Current Assets | 5,134,723 | 1,012,643 | | *Intangible assets* | *4,539,245* | *670,152* | | **TOTAL LIABILITIES** | **4,040,246** | **461,299** | | Total Current Liabilities | 1,096,186 | 259,342 | | *Accounts payable from acquisition* | *841,253* | *149,765* | | Total Non-Current Liabilities | 2,944,060 | 201,957 | | *Loans and financing* | *1,939,222* | *-* | | **TOTAL EQUITY** | **1,700,485** | **1,066,128** | [Consolidated Statements of Profit or Loss](index=4&type=section&id=Unaudited%20interim%20condensed%20consolidated%20statements%20of%20profit%20or%20loss%20and%20other%20comprehensive%20income) For the six months ended June 30, 2022, net revenue increased by 53.2% to R$485.8 million compared to the same period in 2021. Despite a significant rise in operating and financial expenses, net income for the period grew to R$44.8 million from R$37.2 million year-over-year. Basic earnings per share increased to R$1.84 from R$1.62 Statement of Profit or Loss Highlights (Six Months Ended June 30, in thousands of BRL) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | 485,806 | 317,146 | 53.2% | | Gross Profit | 302,756 | 204,583 | 48.0% | | Operating Profit | 64,890 | 46,761 | 38.8% | | Net Income for the Period | 44,797 | 37,249 | 20.3% | | Basic Earnings Per Share (R$) | 1.84 | 1.62 | 13.6% | | Diluted Earnings Per Share (R$) | 1.72 | 1.51 | 13.9% | [Consolidated Statement of Changes in Equity](index=5&type=section&id=Unaudited%20interim%20condensed%20consolidated%20statement%20of%20changes%20in%20equity) Total equity increased from R$1.066 billion at the end of 2021 to R$1.700 billion as of June 30, 2022. This R$634 million increase was primarily driven by the issuance of R$560.5 million in shares for a business combination and the R$44.8 million in net profit for the period Changes in Equity (Six Months Ended June 30, 2022, in thousands of BRL) | Description | Amount | | :--- | :--- | | **Equity at December 31, 2021** | **1,066,128** | | Profit for the period | 44,797 | | Issuance of shares for business combination | 560,546 | | Capital contributions | 13,285 | | Value of employee services (Share-based comp) | 15,729 | | **Equity at June 30, 2022** | **1,700,485** | [Consolidated Statement of Cash Flows](index=6&type=section&id=Unaudited%20interim%20condensed%20consolidated%20statement%20of%20cash%20flows) For the first six months of 2022, net cash from operating activities was R$107.9 million. The company used a substantial R$2.0 billion in investing activities, almost entirely for the acquisition of a subsidiary. This was funded by R$1.93 billion in net cash from financing activities, primarily from new loans. Cash and cash equivalents increased by R$37.5 million during the period Cash Flow Summary (Six Months Ended June 30, in thousands of BRL) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | 107,901 | 61,240 | | Net cash used in investing activities | (1,999,957) | 1,152 | | *Payments for acquisition of subsidiaries* | *(2,080,236)* | *(10,557)* | | Net cash provided by (used in) financing activities | 1,929,546 | (5,093) | | *Proceeds from loans and financing* | *1,905,851* | *-* | | **Net increase in cash and cash equivalents** | **37,490** | **57,299** | | **Cash and cash equivalents at end of period** | **113,077** | **143,229** | [Notes to the Financial Statements](index=7&type=section&id=Notes%20to%20the%20unaudited%20interim%20condensed%20consolidated%20financial%20statements) [Note 1: Corporate Information and Significant Events](index=7&type=section&id=Note%201%20Corporate%20information) Vitru Limited is a Cayman Islands holding company (NASDAQ: VTRU) providing educational services in Brazil. The company experienced significant growth, with learning centers increasing from 939 to 2,028. Key events in the first half of 2022 include the acquisition of Unicesumar, issuance of debentures to fund it, and typical revenue seasonality with higher enrollments in Q1 and Q3 leading to higher revenues in Q2 and Q4 - The company is engaged in providing educational services in Brazil, with a network that expanded to **2,028 learning centers** by June 30, 2022, up from 939 at the end of 2021[12](index=12&type=chunk) - On May 20, 2022, the company closed the acquisition of Unicesumar, a major business combination[18](index=18&type=chunk) - On May 19, 2022, the company issued two series of debentures totaling **R$1.95 billion** to finance the acquisition[19](index=19&type=chunk) - Business seasonality leads to higher student enrollments in Q1 and Q3, resulting in higher revenues in Q2 and Q4[13](index=13&type=chunk) [Note 3: Business Combinations](index=9&type=section&id=Note%203%20Business%20combinations) On May 20, 2022, Vitru acquired 100% of Unicesumar, a leading Brazilian distance learning institution. The total purchase consideration was R$3.28 billion, paid through cash, shares, and a contingent consideration. The acquisition resulted in R$3.14 billion of goodwill and identifiable intangible assets, including brand, customer relationships, and operating licenses. From the acquisition date to June 30, 2022, Unicesumar contributed R$98.2 million in revenue and R$40.6 million in net profit - The acquisition of Unicesumar closed on May 20, 2022. Unicesumar has **999 centers** and approximately **331,000 students**[26](index=26&type=chunk)[27](index=27&type=chunk) Purchase Consideration (in thousands of BRL) | Component | Amount | | :--- | :--- | | Cash payable at acquisition date | 2,162,500 | | Payable after 12 months | 525,681 | | Contingent consideration | 30,608 | | Payable through issuance of new Vitru shares | 560,544 | | **Total Consideration** | **3,279,333** | Goodwill Calculation (in thousands of BRL) | Item | Amount | | :--- | :--- | | Total acquired net assets at fair value | 137,050 | | Purchase consideration | 3,279,333 | | **Goodwill arising on acquisition** | **3,142,283** | - If the acquisition had occurred on January 1, 2022, the combined net revenue for the six-month period would have been **R$831.7 million** with a net income of **R$57.3 million**[33](index=33&type=chunk) [Note 4: Segment Reporting](index=10&type=section&id=Note%204%20Segment%20reporting) The company's operations are divided into three segments: Digital education undergraduate courses, Continuing education courses, and On-campus undergraduate courses. For the first six months of 2022, the Digital education segment was the largest contributor, generating R$399.9 million in net revenue and R$163.5 million in Adjusted EBITDA. The total Adjusted EBITDA for all segments was R$201.0 million, a significant increase from R$123.3 million in the same period of 2021 Segment Performance (Six Months Ended June 30, 2022, in thousands of BRL) | Segment | Net Revenue | Adjusted EBITDA | % Adjusted EBITDA Margin | | :--- | :--- | :--- | :--- | | Digital education undergraduate | 399,897 | 163,462 | 40.88% | | Continuing education | 28,177 | 17,532 | 62.22% | | On-campus undergraduate | 57,732 | 20,055 | 34.74% | | **Total Allocated** | **485,806** | **201,049** | **41.38%** | Reconciliation of Adjusted EBITDA to Income Before Taxes (Six Months Ended June 30, 2022, in thousands of BRL) | Description | Amount | | :--- | :--- | | **Adjusted EBITDA allocated to segments** | **201,049** | | (-) Other operational expenses unallocated | (36,695) | | (-) M&A and Offering Expenses | (24,352) | | (-) Restructuring expenses | (11,504) | | (-) Share-based compensation plan | (7,833) | | (-) Depreciation and amortization | (46,107) | | (-) Financial result | (47,262) | | Other adjustments | (9,668) | | **Income before taxes** | **17,628** | [Note 7: Trade Receivables](index=13&type=section&id=Note%207%20Trade%20receivables) Total gross trade receivables increased to R$473.4 million as of June 30, 2022, from R$264.6 million at the end of 2021. After accounting for a significantly higher allowance for expected credit losses (ECL) of R$197.6 million (up from R$113.9 million), net trade receivables stood at R$271.3 million. The increase in receivables and ECL is partly due to the Unicesumar acquisition Trade Receivables Breakdown (in thousands of BRL) | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Tuition fees | 421,294 | 247,419 | | Allowance for expected credit losses | (197,608) | (113,934) | | **Total trade receivables** | **271,263** | **146,493** | Changes in Allowance for Expected Credit Losses (in thousands of BRL) | Description | 2022 | 2021 | | :--- | :--- | :--- | | At the beginning of the year | (113,934) | (102,128) | | Business combinations | (74,616) | - | | Allowance for expected credit losses | (78,304) | (61,723) | | Write-off & Reversal | 69,246 | 56,791 | | **As of June 30** | **(197,608)** | **(107,060)** | [Note 13: Intangible Assets](index=17&type=section&id=Note%2013%20Intangible%20assets) The net book value of intangible assets surged to R$4.54 billion as of June 30, 2022, from R$670.2 million at the end of 2021. This increase is almost entirely due to the R$3.88 billion in assets recognized from the Unicesumar business combination, which includes goodwill (R$1.63 billion), distance learning operation licenses (R$1.21 billion), and trademarks (R$352.2 million) Changes in Intangible Assets (in thousands of BRL) | Description | Amount | | :--- | :--- | | **Net book value at Dec 31, 2021** | **670,152** | | Purchase and capitalization | 15,836 | | Business combinations | 3,878,417 | | Amortization | (25,160) | | **Net book value at June 30, 2022** | **4,539,245** | - Key intangible assets from the business combination include Goodwill (**R$1.63 billion**), Operation licenses for distance learning (**R$1.21 billion**), Trademarks (**R$352 million**), Customer relationships (**R$295 million**), and Non-compete agreements (**R$272 million**)[59](index=59&type=chunk) [Note 14: Loans and Financing](index=18&type=section&id=Note%2014%20Loans%20and%20financing) To finance its recent acquisition, the company issued two series of debentures on May 19, 2022, totaling R$1.95 billion. After accounting for transaction costs and accrued interest, the outstanding balance of loans and financing was R$1.94 billion as of June 30, 2022. These debentures have maturities extending from November 2023 to May 2027 - On May 19, 2022, the company issued two series of debentures with a nominal value of R$1,000 each, totaling **R$1.95 billion**[60](index=60&type=chunk) Loans and Financing Balance (in thousands of BRL) | Description | Amount | | :--- | :--- | | Proceeds from issuance of debentures | 1,950,000 | | Costs related to issuance of debentures | (44,149) | | Accrued interest | 33,371 | | **As of June 30, 2022** | **1,939,222** | [Note 16: Accounts Payable from Acquisition of Subsidiaries](index=19&type=section&id=Note%2016%20Accounts%20payable%20from%20acquisition%20of%20subsidiaries) Accounts payable from acquisitions increased from R$149.8 million at the start of the year to R$841.3 million by June 30, 2022. This increase is primarily due to the R$677.4 million in new payables arising from the Unicesumar acquisition, with a significant portion (R$492.1 million) due in May 2023 - The acquisition of Unicesumar on May 20, 2022, added significant payables, with **R$492.1 million** due on May 20, 2023, adjusted by the IPCA inflation rate[66](index=66&type=chunk) Changes in Accounts Payable from Acquisitions (in thousands of BRL) | Description | 2022 | | :--- | :--- | | At the beginning of the year | 149,765 | | Proceeds from acquisition of subsidiaries | 677,428 | | Accrued Interest | 19,266 | | Payment of principal | (5,206) | | **As of June 30** | **841,253** | [Note 18: Equity](index=19&type=section&id=Note%2018%20Equity) As of June 30, 2022, the company's share capital was represented by 28,573,902 common shares. The company has an authorized capital of up to 1 billion shares. The additional paid-in capital reserve can be used for distributions, subject to a solvency test. The company did not pay any cash dividends in the first half of 2022 and does not anticipate doing so in the near future - As of June 30, 2022, the Company's share capital is represented by **28,573,902 common shares**[73](index=73&type=chunk) - The company does not anticipate paying cash dividends in the foreseeable future, intending to retain funds for business development and expansion[76](index=76&type=chunk) [Note 19: Earnings Per Share](index=20&type=section&id=Note%2019%20Earnings%20per%20share) For the six months ended June 30, 2022, basic earnings per share (EPS) was R$1.84, calculated on a net income of R$44.8 million and a weighted average of 24.3 million shares. Diluted EPS was R$1.72, considering the potential dilution from 1.725 million outstanding stock options Earnings Per Share (Six Months Ended June 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net income (thousands BRL) | 44,797 | 37,249 | | Weighted average shares - Basic (thousands) | 24,323 | 23,058 | | **Basic EPS (R$)** | **1.84** | **1.62** | | Weighted average shares - Diluted (thousands) | 26,048 | 24,648 | | **Diluted EPS (R$)** | **1.72** | **1.51** | [Note 22: Revenue](index=22&type=section&id=Note%2022%20Revenue) For the six months ended June 30, 2022, gross revenue from services was R$625.8 million. After deductions for cancellations, discounts, ProUni scholarships, and taxes, net revenue was R$485.8 million. The vast majority of revenue (R$475.3 million) is recognized over time, consistent with the delivery of educational services Revenue Breakdown (Six Months Ended June 30, in thousands of BRL) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Gross amount from services provided | 625,846 | 397,997 | | (-) Deductions (Discounts, ProUni, etc.) | (124,357) | (75,877) | | (-) Taxes and contributions on revenue | (15,679) | (10,321) | | **Net revenue** | **485,806** | **317,146** | [Note 23: Costs and Expenses by Nature](index=23&type=section&id=Note%2023%20Costs%20and%20expenses%20by%20nature) For the six months ended June 30, 2022, total costs and expenses amounted to R$357.6 million, up from R$217.9 million in the prior year period. The largest components were payroll (R$157.7 million), sales and marketing (R$74.3 million), and depreciation and amortization (R$46.1 million). Consulting and advisory services also saw a significant increase, rising to R$37.1 million from R$9.3 million Costs and Expenses by Nature (Six Months Ended June 30, in thousands of BRL) | Expense Category | 2022 | 2021 | | :--- | :--- | :--- | | Payroll | 157,686 | 108,626 | | Sales and marketing | 74,255 | 53,655 | | Depreciation and amortization | 46,107 | 25,524 | | Consulting and advisory services | 37,118 | 9,284 | | **Total** | **357,561** | **217,903** |

Part I [Key Information](index=17&type=section&id=Item%203.%20Key%20Information) This section presents selected financial data for fiscal years 2019-2021 and outlines the company's major business risks [Selected Financial Data](index=17&type=section&id=A.%20Selected%20Financial%20Data) Key financial data from 2019-2021 shows significant revenue and net income growth alongside a reduction in total liabilities Statement of Profit or Loss Data (in R$ millions) | Indicator | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | **Net revenue** | **631.1** | **519.2** | **461.1** | | Revenue from digital education undergraduate courses | 531.7 | 423.0 | 336.3 | | Revenue from continuing education courses | 52.4 | 40.6 | 47.1 | | Revenue from on-campus undergraduate courses | 47.0 | 55.6 | 77.6 | | **Gross profit** | **390.2** | **297.7** | **249.5** | | **Operating profit (loss)** | **78.8** | **60.9** | **(35.9)** | | **Net income (loss) for the year** | **70.7** | **52.1** | **(66.2)** | | Basic earnings per share (R$) | 3.04 | 2.79 | (3.93) | | Diluted earnings per share (R$) | 2.87 | 2.68 | (3.93) | Statement of Financial Position Data (in R$ millions) | Indicator | As of Dec 31, 2021 | As of Dec 31, 2020 | As of Dec 31, 2019 | | :--- | :--- | :--- | :--- | | **Total current assets** | **514.8** | **731.7** | **214.9** | | **Total non-current assets** | **1,012.6** | **956.1** | **873.8** | | **Total assets** | **1,527.4** | **1,687.8** | **1,088.7** | | **Total current liabilities** | **259.4** | **382.6** | **221.4** | | **Total non-current liabilities** | **201.9** | **327.2** | **416.0** | | **Total liabilities** | **461.3** | **709.8** | **637.4** | | **Total equity** | **1,066.1** | **978.0** | **451.3** | Non-GAAP Financial Measures (in R$ millions, except percentages) | Indicator | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Net Revenue | 631.1 | 519.2 | 461.1 | | Net Income (Loss) for the Year | 70.7 | 52.1 | (66.2) | | Adjusted EBITDA | 182.4 | 146.7 | 117.6 | | Adjusted Net Income | 91.5 | 98.2 | 57.7 | | Adjusted Cash Flow Conversion from Operations | 82.9% | 88.1% | 75.4% | [Risk Factors](index=23&type=section&id=D.%20Risk%20Factors) The company faces significant risks related to its business, the Brazilian economy, a pending acquisition, and its shares - Key business and industry risks include the **COVID-19 pandemic**, dependence on hub partners, extensive government regulation, **significant competition**, and the importance of its brand reputation[83](index=83&type=chunk) - Key risks related to Brazil include **government influence on the economy**, political instability, inflation, and perceptions of risk in other emerging markets[83](index=83&type=chunk)[87](index=87&type=chunk) - Key risks related to the UniCesumar Business Combination include the **possibility of not completing the acquisition**, challenges in realizing anticipated benefits, and potential for significant liabilities[85](index=85&type=chunk) - Key risks related to the company's common shares include **anti-takeover provisions**, reliance on exemptions as a foreign private issuer, and potential unsuitability for all investors[86](index=86&type=chunk)[89](index=89&type=chunk) [Information on the Company](index=106&type=section&id=Item%204.%20Information%20on%20the%20Company) This section details the company's history, asset-light business model, organizational structure, and key properties [History and Development of the Company](index=106&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) The company evolved from an on-campus institution to a digital education leader following a 2016 acquisition and 2020 IPO - The company was acquired by **The Carlyle Group and Vinci Partners in 2016**, leading to a strategic focus on expanding digital education operations across Brazil[351](index=351&type=chunk) - In September 2020, the company completed its **initial public offering on Nasdaq**, raising U.S.$96 million in total proceeds, primarily intended to fund inorganic growth[355](index=355&type=chunk) - On August 23, 2021, the company entered into a definitive agreement to acquire **UniCesumar for a total enterprise value of R$3,150 million**, a transaction pending regulatory approval[357](index=357&type=chunk) - In response to the COVID-19 pandemic, the company implemented remote support measures, resulting in **no material impact on operations** as of the report date[359](index=359&type=chunk)[363](index=363&type=chunk) [Business Overview](index=112&type=section&id=B.%20Business%20Overview) The company operates a scalable, hybrid digital education model through a large network of partner-operated hubs in Brazil Key Operational and Financial Highlights (as of Dec 31, 2021) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | **Number of Hubs** | 939 | 709 | 32.4% | | **Enrolled Students** | 373,977 | 309,560 | 20.8% | | **Net Revenue (R$M)** | 631.1 | 519.2 | 21.6% | | **Net Income (R$M)** | 70.7 | 52.1 | 35.7% | | **Adjusted EBITDA (R$M)** | 182.4 | 146.7 | 24.3% | | **Adjusted Net Income (R$M)** | 91.5 | 98.2 | -6.8% | - The company operates an **asset-light, scalable business model** where hub partners manage day-to-day operations, with **86.6% of its 939 hubs** managed by 275 hub partners as of December 31, 2021[373](index=373&type=chunk)[375](index=375&type=chunk) - The business is centered on a **hybrid digital education model** that combines online learning with in-person weekly meetings led by over 3,000 local tutors[371](index=371&type=chunk) - According to the 2020 INEP census, Vitru was the **second-largest digital postsecondary education group** in Brazil by enrollments[491](index=491&type=chunk) [Organizational Structure](index=191&type=section&id=C.%20Organizational%20Structure) Vitru Limited is a Cayman Islands holding company that serves as the parent of its Brazilian operating subsidiary - Vitru Limited is a Cayman Islands holding company that became the parent of its Brazilian operating subsidiary, Vitru Brasil, through a **corporate reorganization prior to its IPO**[686](index=686&type=chunk) - As of December 31, 2021, the company had **23,329,324 common shares issued and outstanding**[687](index=687&type=chunk) [Property, Plant and Equipment](index=193&type=section&id=D.%20Property,%20Plant%20and%20Equipment) The company protects its intellectual property through trademarks and operates entirely out of leased facilities - The company owned **28 trademarks** as of December 31, 2021, including its key brands "Vitru" and "Uniasselvi"[690](index=690&type=chunk) - All of the company's operational and administrative facilities, including its corporate headquarters, were **leased** as of December 31, 2021[691](index=691&type=chunk)[692](index=692&type=chunk) [Operating and Financial Review and Prospects](index=194&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) This section analyzes financial performance, liquidity, capital resources, and key business trends affecting the company [Operating Results](index=194&type=section&id=A.%20Operating%20Results) Revenue and net income grew in 2021, driven by digital education, despite rising operating and impairment expenses Results of Operations (in R$ millions) | Item | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | **Net revenue** | **631.1** | **519.2** | **461.0** | | Cost of services rendered | (240.9) | (221.5) | (211.5) | | **Gross profit** | **390.2** | **297.7** | **249.5** | | Operating expenses | (311.4) | (236.8) | (285.3) | | **Operating profit (loss)** | **78.8** | **60.9** | **(35.8)** | | Financial results | (29.4) | (27.8) | (41.2) | | **Profit (loss) before taxes** | **49.4** | **33.1** | **(77.0)** | | **Net income (loss) for the year** | **70.7** | **52.1** | **(66.1)** | - Net revenue growth in 2021 was driven by a **R$108.7 million (25.7%) increase** in revenue from digital education undergraduate courses, reflecting hub expansion and maturation[789](index=789&type=chunk)[792](index=792&type=chunk) - Net impairment losses on financial assets **increased by 44.1% to R$110.7 million** in 2021, primarily due to a higher proportion of freshmen with historically higher default rates[802](index=802&type=chunk)[804](index=804&type=chunk) [Liquidity and Capital Resources](index=226&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company reduced its total indebtedness in 2021 through loan repayments, funded by operating cash and investments Cash Flow Summary (in R$ millions) | Cash Flow Activity | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | **Operating Activities** | 65.0 | 75.9 | 56.0 | | **Investing Activities** | 100.0 | (610.3) | (49.5) | | **Financing Activities** | (175.4) | 617.9 | (6.5) | - Total consolidated indebtedness **decreased from R$576.0 million to R$311.3 million** as of Dec 31, 2021, mainly due to the full repayment of a R$150.0 million loan[836](index=836&type=chunk)[838](index=838&type=chunk) - **Capital expenditures totaled R$58.3 million** in 2021, primarily for internal project development, IT equipment, and facility improvements[841](index=841&type=chunk) Contractual Obligations as of December 31, 2021 (in R$ millions) | Obligation | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Trade payables | 41.7 | - | - | - | 41.7 | | Lease liabilities | 28.4 | 55.6 | 54.5 | 121.8 | 260.3 | | Accounts payable from acquisition of subsidiaries | 155.6 | - | - | - | 155.6 | | Share-based compensation | - | 24.7 | - | 30.8 | 55.5 | | **Total** | **229.6** | **82.3** | **55.9** | **153.2** | **521.0** | [Trend Information](index=232&type=section&id=D.%20Trend%20Information) Future performance is expected to be influenced by the COVID-19 pandemic and Brazil's economic and political climate - The business is expected to continue being affected by the **COVID-19 pandemic** and governmental responses, impacting employees, students, and partners[849](index=849&type=chunk) - Key trends that could materially affect future results include the ongoing **economic and political crisis in Brazil**, the 2022 presidential elections, and potential inflation increases[851](index=851&type=chunk) [Directors, Senior Management and Employees](index=234&type=section&id=Item%206.%20Directors,%20Senior%20Management%20and%20Employees) This section details the company's leadership, compensation policies, board structure, and employee base of 6,036 people [Directors and Senior Management](index=234&type=section&id=A.%20Directors%20and%20Senior%20Management) The company is managed by a seven-member Board of Directors and four executive officers with extensive industry experience - The Board of Directors is composed of **seven members**, including a Chairman and three independent directors who also serve on the Audit Committee[855](index=855&type=chunk)[857](index=857&type=chunk) - The executive team is led by **CEO Pedro Jorge Guterres Quintans Graça** and CFO Carlos Henrique Boquimpani de Freitas[869](index=869&type=chunk) [Compensation](index=242&type=section&id=B.%20Compensation) Executive compensation totaled R$25.2 million in 2021 and includes fixed salaries and long-term incentive plans Total Compensation (in R$ millions) | Year | Total Compensation | | :--- | :--- | | 2021 | 25.2 | | 2020 | 21.5 | | 2019 | 34.1 | - The company has **two share option plans** with a combined 1,101,919 options outstanding as of Dec 31, 2021[882](index=882&type=chunk)[887](index=887&type=chunk)[892](index=892&type=chunk) [Board Practices](index=245&type=section&id=C.%20Board%20Practices) The Board operates with an Audit Committee and a Disclosure Committee, leveraging foreign private issuer exemptions - The Board has two committees: the **Audit Committee** and the **Disclosure of Information Committee**[893](index=893&type=chunk) - The Audit Committee is composed of **three independent directors**, with Aline Leite San Lee Sun serving as the designated "audit committee financial expert"[894](index=894&type=chunk) [Employees](index=247&type=section&id=D.%20Employees) The company employed 6,036 full-time staff as of year-end 2021, with local tutors comprising the largest group Number of Full-time Employees by Function | Function | As of Dec 31, 2021 | As of Dec 31, 2020 | As of Dec 31, 2019 | | :--- | :--- | :--- | :--- | | Local tutors | 3,391 | 3,617 | 3,117 | | Student Support and Academic Staff | 1,715 | 1,788 | 2,075 | | General and Administrative | 681 | 422 | 303 | | **Total Full-time Personnel** | **6,036** | **6,174** | **5,711** | - The company was certified as a **"Great Place to Work"** with an employee satisfaction rate of 84 (out of 100) in 2021[904](index=904&type=chunk) [Major Shareholders and Related Party Transactions](index=249&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) Vinci Partners, NB Funds, and The Carlyle Group are the principal shareholders, with certain related party transactions disclosed Major Shareholders' Beneficial Ownership | Shareholder | % of Total | | :--- | :--- | | Vinci Partners | 26.8% | | NB Funds | 18.7% | | The Carlyle Group | 17.9% | | Compass Group LLC | 11.1% | | SPX Capital | 8.9% | | Navi Holding Participações | 6.3% | | Board of Directors and Executive Officers as a group | 1.2% | - The company has a **Registration Rights Agreement** with its Principal Shareholders, allowing them to require the company to register their shares for public resale[919](index=919&type=chunk)[920](index=920&type=chunk) - Related party transactions include investments in funds managed by Vinci Partners and an **insurance policy with Austral Seguradora S.A.**[917](index=917&type=chunk) [Financial Information](index=253&type=section&id=Item%208.%20Financial%20Information) The company does not plan to pay dividends and has provisioned R$14.9 million for probable legal proceeding losses - The company has not adopted a dividend policy and **does not anticipate paying cash dividends** in the foreseeable future, intending to retain earnings for business expansion[927](index=927&type=chunk) - As of December 31, 2021, the company was a party to 1,274 legal proceedings and had recorded **provisions of R$14.9 million** for cases where a loss is considered probable[931](index=931&type=chunk) - A significant tax proceeding involves an **ISS tax claim for R$32.9 million**, for which the chance of loss is estimated as possible and no provision has been recorded[935](index=935&type=chunk) [Additional Information](index=258&type=section&id=Item%2010.%20Additional%20Information) This section details the company's corporate framework, material contracts, and key tax considerations for shareholders [Memorandum and Articles of Association](index=258&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association) The company's articles grant major shareholders director appointment rights and include anti-takeover provisions - The company is a Cayman Islands exempted company with an authorized share capital of 1,000,000,000 shares and **23,323,224 common shares outstanding** as of the report date[944](index=944&type=chunk)[946](index=946&type=chunk) - The Articles of Association grant major shareholders **Mundi and Vinci Partners the right to appoint directors** as long as they meet certain ownership thresholds[978](index=978&type=chunk) - The Articles include **anti-takeover provisions**, such as the Board's authority to issue preferred shares without shareholder approval[1000](index=1000&type=chunk)[1002](index=1002&type=chunk) [Taxation](index=275&type=section&id=E.%20Taxation) The company is not subject to tax in the Cayman Islands but notes a potential PFIC classification risk for U.S. Holders - The Cayman Islands does not levy taxes on profits, income, or gains, and the company has received a **20-year tax concession undertaking**[1022](index=1022&type=chunk)[1023](index=1023&type=chunk) - For U.S. Holders, distributions on common shares are generally treated as dividends, and gains from the sale of shares are treated as capital gains, **subject to PFIC rules**[1033](index=1033&type=chunk)[1035](index=1035&type=chunk) - There is a risk the company could be classified as a **Passive Foreign Investment Company (PFIC)**, which would result in adverse U.S. federal income tax consequences for U.S. Holders[346](index=346&type=chunk)[1037](index=1037&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=283&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate, credit, liquidity, and foreign exchange risks - The company's primary market risks are **interest rate, credit, liquidity, and foreign exchange risk**[1050](index=1050&type=chunk) - Interest rate risk exposure comes from short-term investments and accounts payable from acquisitions, which are subject to variable rates like the **CDI and IPCA inflation rate**[1051](index=1051&type=chunk) Interest Rate Sensitivity Analysis (as of Dec 31, 2021) | Financial Instrument | Balance (R$M) | Index | Probable Scenario (R$M) | Possible Scenario 25% (R$M) | Remote Scenario 75% (R$M) | | :--- | :--- | :--- | :--- | :--- | :--- | | Short-term investments | 253.0 | 111.11% CDI - 4.42% | 11.2 | 8.4 | 2.8 | | Lease liabilities | 161.5 | IGP-M - 17.79% | 28.7 | 35.9 | 50.3 | | Accounts payable from acquisition of subsidiaries | 149.8 | IPCA - 10.06% | 15.1 | 18.8 | 26.4 | Part II [Material Modifications to the Rights of Security Holders and Use of Proceeds](index=286&type=section&id=Item%2014.%20Material%20Modifications%20to%20the%20Rights%20of%20Security%20Holders%20and%20Use%20of%20Proceeds) Net proceeds from the 2020 IPO are intended to fund inorganic growth, including the UniCesumar business combination - The company closed its IPO on September 22, 2020, selling 6,000,000 common shares at U.S.$16.00 each, for **gross proceeds of U.S.$96 million**[1073](index=1073&type=chunk) - Net proceeds from the IPO are primarily intended to fund **inorganic growth**, with a specific plan to apply them to the UniCesumar business combination[1073](index=1073&type=chunk) [Controls and Procedures](index=287&type=section&id=Item%2015.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were ineffective as of year-end 2021 - Management concluded that as of December 31, 2021, the company's disclosure controls and procedures were **ineffective due to material weaknesses** in internal control over financial reporting[1074](index=1074&type=chunk) - Management's annual report on internal control over financial reporting concluded that, as of December 31, 2021, these controls were **not effective** due to insufficient accounting resources for SEC and IFRS compliance[1078](index=1078&type=chunk) - The company has implemented **additional internal controls** during 2021, including personnel training and system implementations, which are expected to materially affect internal controls[1082](index=1082&type=chunk) [Corporate Governance and Other Matters](index=289&type=section&id=Item%2016.%20Corporate%20Governance%20and%20Other%20Matters) The company follows home country practices for certain Nasdaq rules and discloses principal accountant fees and code of ethics - The company's audit committee chair, Aline Leite San Lee Sun, is considered an **"audit committee financial expert"** as defined by the SEC[1083](index=1083&type=chunk) Principal Accountant Fees (in R$ millions) | Fee Type | 2021 | 2020 | | :--- | :--- | :--- | | Audit fees | 4.4 | 4.6 | | All other fees | 0.5 | — | | **Total** | **4.9** | **4.6** | - As a foreign private issuer, the company follows home country (Cayman Islands) practice in lieu of certain Nasdaq rules, including requirements for a **majority-independent board** and a nominations committee[1092](index=1092&type=chunk)[1093](index=1093&type=chunk)[1099](index=1099&type=chunk) Part III [Financial Statements](index=302&type=section&id=Item%2018.%20Financial%20Statements) This section contains the company's audited consolidated financial statements for fiscal years 2019, 2020, and 2021 - The report includes the **audited consolidated financial statements** for the years ended December 31, 2021, 2020, and 2019, prepared in accordance with IFRS[1130](index=1130&type=chunk)[1139](index=1139&type=chunk) - The independent registered public accounting firm, PricewaterhouseCoopers, issued an **unqualified opinion** on the consolidated financial statements[1139](index=1139&type=chunk)

[Report of Independent Registered Public Accounting Firm](index=2&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) [Opinion on the Financial Statements](index=2&type=section&id=Opinion%20on%20the%20Financial%20Statements) PwC issued an unqualified opinion on the 2019-2021 financial statements, confirming their fair presentation in conformity with IFRS - PwC issued an **unqualified audit opinion**, stating the financial statements for the three years ended December 31, 2021, present fairly the financial position and results of operations in conformity with IFRS[2](index=2&type=chunk) - The audit was conducted in accordance with PCAOB standards but did not include an opinion on the effectiveness of the Company's internal control over financial reporting[4](index=4&type=chunk) - PwC has served as the Company's auditor **since 2016**[6](index=6&type=chunk) [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statements of Financial Position](index=3&type=section&id=Consolidated%20statements%20of%20financial%20position) Total assets decreased to R$1.53 billion while total liabilities fell, resulting in an increase in total equity to R$1.07 billion **Consolidated Statement of Financial Position (in thousands of BRL)** | Metric | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | 514,784 | 731,790 | | **Total Non-Current Assets** | 1,012,643 | 956,055 | | **Total Assets** | **1,527,427** | **1,687,845** | | **Total Current Liabilities** | 259,342 | 382,560 | | **Total Non-Current Liabilities** | 201,957 | 327,337 | | **Total Liabilities** | **461,299** | **709,897** | | **Total Equity** | **1,066,128** | **977,948** | | **Total Liabilities and Equity** | **1,527,427** | **1,687,845** | [Consolidated Statements of Profit or Loss](index=5&type=section&id=Consolidated%20statements%20of%20profit%20or%20loss%20and%20other%20comprehensive%20income) Net revenue grew 21.6% to R$631.1 million in 2021, driving profit for the year up to R$70.6 million from R$52.1 million in 2020 **Key Income Statement Data (in thousands of BRL, except EPS)** | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | **Net Revenue** | 631,147 | 519,179 | 461,067 | | **Gross Profit** | 390,223 | 297,727 | 249,520 | | **Operating Profit (Loss)** | 78,765 | 60,943 | (35,856) | | **Profit (Loss) for the Year** | 70,648 | 52,114 | (66,160) | | **Basic EPS (R$)** | 3.08 | 2.79 | (3.93) | | **Diluted EPS (R$)** | 2.89 | 2.68 | (3.93) | [Consolidated Statement of Changes in Equity](index=6&type=section&id=Consolidated%20statement%20of%20changes%20in%20equity) Total equity increased to R$1,066.1 million in 2021, driven by net profit and capital contributions **Changes in Equity in 2021 (in thousands of BRL)** | Description | Amount | | :--- | :--- | | **Equity at Dec 31, 2020** | **977,948** | | Profit for the year | 70,648 | | Capital contributions | 9,722 | | Value of employee services (Share-based comp) | 7,810 | | **Equity at Dec 31, 2021** | **1,066,128** | [Consolidated Statement of Cash Flows](index=7&type=section&id=Consolidated%20statement%20of%20cash%20flows) Cash from operations decreased to R$65.0 million, while investing activities provided cash due to sales of short-term investments **Cash Flow Summary (in thousands of BRL)** | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | **Net cash provided by operating activities** | 65,035 | 75,913 | 56,049 | | **Net cash provided by (used in) investing activities** | 100,022 | (610,295) | (49,497) | | **Net cash used in (provided by) financing activities** | (175,400) | 617,855 | (6,470) | | **Net decrease (increase) in cash and cash equivalents** | (10,343) | 83,473 | 82 | | **Cash and cash equivalents at end of year** | 75,587 | 85,930 | 2,457 | [Notes to the Financial Statements](index=8&type=section&id=Notes%20to%20the%20financial%20statements.) [Note 1. Corporate Information](index=8&type=section&id=1.%20Corporate%20information) Vitru provides educational services in Brazil and agreed to acquire Unicesumar for R$3.15 billion, pending regulatory approval - The Company provides educational services in Brazil, with **939 learning centers** ("hubs") as of December 31, 2021, up from 709 in 2020[15](index=15&type=chunk) - On September 17, 2020, Vitru Limited priced its IPO of 6,000,000 Class A common shares at US$16.00 per share, raising **net proceeds of US$90.7 million** (R$492.6 million)[19](index=19&type=chunk)[20](index=20&type=chunk) - On August 23, 2021, the company agreed to acquire Unicesumar for an equity value of **R$3,150 million**, a transaction pending regulatory approval[21](index=21&type=chunk)[22](index=22&type=chunk) - The company has monitored the COVID-19 pandemic and states there has been **no material impact** on its operations as of December 31, 2021[26](index=26&type=chunk) [Note 2. Significant Accounting Policies](index=10&type=section&id=2.%20Significant%20accounting%20policies) Financial statements are prepared under IFRS with key policies for revenue recognition, goodwill impairment, and credit losses - The financial statements are prepared in accordance with **International Financial Reporting Standards (IFRS)** and presented in Brazilian Reais (R$)[28](index=28&type=chunk)[41](index=41&type=chunk) - Revenue from tuition fees is recognized over time, and the company receives tax exemptions through the **ProUni program**[145](index=145&type=chunk)[155](index=155&type=chunk) - Goodwill is tested for impairment annually, and a simplified approach is used for **expected credit losses (ECLs)** on trade receivables[129](index=129&type=chunk)[68](index=68&type=chunk) - The company adopted the IFRS 16 amendment for COVID-19 rent concessions, recognizing a **gain of R$210 thousand** in 2021[29](index=29&type=chunk)[171](index=171&type=chunk) [Note 3. Significant Accounting Estimates and Assumptions](index=40&type=section&id=3.%20Significant%20accounting%20estimates%20and%20assumptions) Key management estimates include goodwill impairment, fair value of financial instruments, and provisions for legal contingencies - Impairment of non-financial assets, particularly goodwill, is a key estimate based on **5-year discounted cash flow models**[183](index=183&type=chunk) - Expected credit losses on trade receivables are calculated using a provision matrix, with receivables considered in default when **365 days past due**[189](index=189&type=chunk) - Provisions for legal contingencies are recognized for proceedings assessed as **probable losses** based on legal counsel opinions[190](index=190&type=chunk) - Estimating the fair value of share-based payments requires determining the appropriate valuation model, such as **Black-Scholes**[198](index=198&type=chunk) [Note 4. Segment Reporting](index=44&type=section&id=4.%20Segment%20reporting) The company operates in three segments, with Digital education being the largest, contributing R$531.7 million in 2021 revenue **Segment Performance 2021 vs 2020 (in thousands of BRL)** | Segment | Net Revenue 2021 | Adjusted EBITDA 2021 | Net Revenue 2020 | Adjusted EBITDA 2020 | | :--- | :--- | :--- | :--- | :--- | | Digital education undergraduate | 531,716 | 188,936 | 423,035 | 156,089 | | Continuing education | 52,460 | 26,898 | 40,589 | 27,045 | | On-campus undergraduate | 46,971 | 22,103 | 55,555 | 16,848 | | **Total allocated** | **631,147** | **237,937** | **519,179** | **199,982** | - The Digital education undergraduate courses segment accounted for the majority of impairment losses on financial assets, with **R$90.1 million in 2021**[204](index=204&type=chunk) - The company operates **solely in Brazil**, and all assets, liabilities, and results are allocated within the country[202](index=202&type=chunk) [Note 5. Financial Instruments and Risk Management](index=45&type=section&id=5.%20Financial%20assets%20and%20financial%20liabilities) The company manages market, credit, and liquidity risks associated with its financial assets and liabilities **Financial Assets and Liabilities (in thousands of BRL)** | Category | 2021 | 2020 | | :--- | :--- | :--- | | **Financial Assets (at amortized cost)** | **475,122** | **723,170** | | Cash and cash equivalents | 75,587 | 85,930 | | Short-term investments | 253,042 | 515,201 | | Trade receivables | 146,493 | 122,039 | | **Financial Liabilities** | **405,286** | **654,471** | | At amortized cost | 353,003 | 608,211 | | At FVPL (Share-based comp) | 52,283 | 46,260 | - The company is exposed to **interest rate risk** on its short-term investments (CDI rate) and certain liabilities (IGP-M, IPCA)[211](index=211&type=chunk) - Liquidity risk is managed by monitoring cash flows; contractual undiscounted liabilities due within one year total **R$229.6 million**[219](index=219&type=chunk)[221](index=221&type=chunk) [Note 9. Trade Receivables](index=52&type=section&id=9.%20Trade%20receivables) Net trade receivables increased to R$146.5 million in 2021, with an associated allowance for credit losses of R$113.9 million **Trade Receivables Composition (in thousands of BRL)** | Component | 2021 | 2020 | | :--- | :--- | :--- | | Tuition fees | 247,419 | 206,107 | | Allowance for expected credit losses | (113,934) | (102,128) | | Provision for revenue cancellation | (4,191) | (3,136) | | **Total trade receivables** | **146,493** | **122,039** | **Changes in Allowance for ECL (in thousands of BRL)** | Description | 2021 | 2020 | | :--- | :--- | :--- | | At the beginning of the year | (102,128) | (79,659) | | Allowance for expected credit losses | (127,557) | (100,592) | | Write-off of uncollectible receivables | 98,883 | 59,704 | | Reversal | 16,868 | 23,752 | | **At the end of the year** | **(113,934)** | **(102,128)** | - Receivables are written off when they are **over 365 days past due**[235](index=235&type=chunk) [Note 14. Intangible Assets](index=57&type=section&id=14.%20Intangible%20assets) Intangible assets totaled R$670.2 million, primarily goodwill and licenses, with no impairment recognized in 2021 **Intangible Assets Breakdown (in thousands of BRL)** | Asset | Net Book Value 2021 | Net Book Value 2020 | | :--- | :--- | :--- | | Goodwill | 304,815 | 304,815 | | Operation licenses for distance learning | 245,721 | 245,721 | | Trademarks | 53,985 | 57,543 | | Software & Development | 65,631 | 52,361 | | Other | — | 510 | | **Total** | **670,152** | **660,950** | - Goodwill and operation licenses for digital education were allocated to the **Digital Education and Continuing Education CGUs** for impairment testing[250](index=250&type=chunk)[251](index=251&type=chunk) - **No impairment loss** was recognized for goodwill in 2021 or 2020, with the digital education segment's recoverable amount exceeding its carrying amount by R$4.03 billion[256](index=256&type=chunk) - An impairment loss of **R$51.0 million** was recognized in 2019 for the on-campus undergraduate courses segment[257](index=257&type=chunk) [Note 17. Accounts Payable from Acquisition of Subsidiaries](index=60&type=section&id=17.%20Accounts%20payable%20from%20acquisition%20of%20subsidiaries) Payables from acquisitions decreased to R$149.8 million after principal payments of R$127.8 million in 2021 **Changes in Accounts Payable from Acquisitions (in thousands of BRL)** | Description | 2021 | 2020 | | :--- | :--- | :--- | | **Balance at January 1** | **274,861** | **379,540** | | Accrued Interest | 40,405 | 34,809 | | Payment of principal | (127,804) | (117,248) | | Payment of interests | (37,697) | (22,240) | | **Balance at December 31** | **149,765** | **274,861** | - The remaining liability from the Uniasselvi acquisition is payable in **one final installment on December 31, 2022**, adjusted by the IPCA inflation rate[267](index=267&type=chunk) [Note 18. Contingencies](index=61&type=section&id=18.%20Contingencies) The company has provisioned R$14.9 million for probable losses and identified R$71.4 million in possible, unprovisioned losses **Provision for Contingencies (Probable Loss) (in thousands of BRL)** | Type | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Civil | 2,834 | 2,050 | | Labor | 12,038 | 12,389 | | **Total** | **14,872** | **14,439** | **Contingencies (Possible Loss - Not Provisioned) (in thousands of BRL)** | Type | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Civil | 13,746 | 8,106 | | Labor | 24,645 | 17,385 | | Tax | 33,025 | 31,674 | | **Total** | **71,416** | **57,165** | - A significant tax contingency relates to a **R$28.0 million Service Tax (ISS) dispute** with the Porto Alegre City Hall[275](index=275&type=chunk) [Note 21. Share-Based Compensation](index=65&type=section&id=21.%20Share-based%20compensation) Total share-based compensation expense was R$14.7 million in 2021, related to two active share option plans - The company has two active share option plans: the **First Plan** (a compound instrument) and the **Second Plan** (equity-settled)[289](index=289&type=chunk)[308](index=308&type=chunk) **Outstanding Options as of Dec 31, 2021** | Plan | Number of Options Outstanding | | :--- | :--- | | First Share Option Plan | 474,892 | | Second Share Option Plan | 866,914 | **Share-Based Payment Expense (in thousands of BRL)** | Plan | 2021 | 2020 | | :--- | :--- | :--- | | First Plan (Equity & Cash-settled) | 6,552 | 11,823 | | Second Plan (Equity-settled) | 8,176 | 525 | | **Total Expense** | **14,728** | **12,348** | [Note 23. Revenue](index=71&type=section&id=23.%20Revenue) Net revenue increased to R$631.1 million in 2021, primarily from services recognized over time and generated entirely in Brazil **Revenue Breakdown (in thousands of BRL)** | Component | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Gross amount from services provided | 801,206 | 673,872 | 598,344 | | (-) ProUni scholarships | (109,217) | (98,289) | (82,132) | | (-) Other deductions (Cancellations, Discounts, Taxes) | (60,842) | (56,404) | (55,145) | | **Net revenue** | **631,147** | **519,179** | **461,067** | - Revenue recognized over time was **R$624.9 million** in 2021, while revenue recognized at a point in time was R$6.3 million[321](index=321&type=chunk) [Note 24. Costs and Expenses by Nature](index=71&type=section&id=24.%20Costs%20and%20expenses%20by%20nature) Total costs and expenses rose to R$441.8 million in 2021, with payroll and sales & marketing being the largest categories **Costs and Expenses by Nature (in thousands of BRL)** | Expense Category | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Payroll | 220,372 | 207,511 | 212,683 | | Sales and marketing | 93,026 | 67,532 | 54,212 | | Depreciation and amortization | 54,479 | 51,475 | 62,445 | | Consulting and advisory services | 25,729 | 14,732 | 11,927 | | Material | 16,488 | 13,023 | 17,911 | | Impairment losses | - | - | 51,022 | | Other expenses | 31,664 | 27,635 | 27,540 | | **Total** | **441,758** | **381,908** | **437,840** | - Payroll expenses in 2021 included **R$205.6 million for salaries** and benefits and **R$14.7 million for share-based compensation**[324](index=324&type=chunk)