Vasta Announces Fourth Quarter 2024 Results

SÃO PAULO–(BUSINESS WIRE)–Vasta Platform Limited (NASDAQ: VSTA) – “Vasta” or the “Company” announces today its financial and operating results for the fourth quarter of 2024 (4Q24) ended December 31, 2024. Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).

HIGHLIGHTS

• In the 2024 fiscal year, net revenue increased 13% to R$1,674 million, mostly due to the conversion of Annual Contract Value (“ACV”) bookings into revenue and to the performance of the public-school sector (“B2G”) business unit. In 4Q24, net revenue totaled R$699 million, a 26% increase compared to the previous year.
• Vasta’s accumulated subscription revenue during the 2024 fiscal year totaled R$1,462 million, a 14% increase compared to the 2023 fiscal year. In 4Q24, subscription revenue grew 20% compared to same quarter of 2023, to R$619 million (from R$515 million in 4Q23).
• In the 2024 fiscal year, Adjusted EBITDA grew by 13% to R$508 million (R$451 million in 2023 fiscal year), and Adjusted EBITDA Margin grew to 30.4% (from 30.3% in 2023). In 4Q24, Adjusted EBITDA totaled R$299 million, a 25% increase compared to R$240 million in 4Q23. This increase was mainly driven by gains in operating efficiency, cost savings and a sales mix that benefited from the growth of subscription products.
• Vasta recorded an Adjusted Net Profit of R$80 million in 2024, a 35% increase compared to an Adjusted Net Profit of R$60 million in 2023. In 4Q24, adjusted net profit totaled R$114 million, a 19% increase compared to R$96 million in 4Q23.
• Free cash flow (FCF) totaled R$215 million in 2024, a R$ 26 million, or 14%, increase, from R$189 million in 2023. In 4Q24 FCF totaled a R$ 69 million, from negative R$ 0.1 million in 4Q23. The last twelve-month (LTM) FCF/Adjusted EBITDA conversion rate improved from 41.8% to 42.4% as a result of Vasta’s growth and implementation of sustained efficiency measures.
• The business unit of Brazilian public-school sector (B2G) continues to generate significant revenue for Vasta. In this growth avenue, we achieved R$36 million in revenue in 4Q24 and R$105 million in the fiscal year 2024, which represented growth of 14%.
• Start Anglo ended the year 2024 with 40 signed contracts and 2 operational units, in addition to more than 350 prospects in our pipeline under negotiation. This progress in signing new franchises reinforces the value generation capacity of our brand and demonstrates that we are on the right path for strategic expansion, reaching new sources of revenue.
• In the last quarter, we celebrated the 26th edition of the “Educador Nota 10” award, organized by the SOMOS Institute. This award is an incentive for professionals who make the difference in education and recognize educators who are committed to creating and implementing important initiatives for the continuous improvement of the sector. It is the largest and most important award for basic education in Brazil and recognized innovative projects in the areas of Sustainability, Human Rights, and Innovation and Technology. In 2024, we received more than 86,000 projects, which are evaluated by a panel of renowned experts.

MESSAGE FROM MANAGEMENT

2024 has been marked by significant achievements and milestones across our line of business, reflecting our commitment to delivering value to our customers, students, shareholders, and stakeholders. The company delivered a strong and resilient financial performance, showing improvements in net revenue, adjusted EBITDA, and free cash flow. Additionally, besides our continuous growth in the core segment, our complementary solutions have seen significant growth of 20% compared to 2023, with an accelerated increase in both the student base and market penetration.

Our technology platform Plurall, achieved a new stage of development and services delivered, providing from 2025 on, a more interconnected tool with artificial intelligence powered by AWS. This new Intelligent assistant (called “Plu”) has been supporting students to have a personalized learning experience, responding to questions about specific subjects and support them in their daily study time. For the teacher, Plu will be a personalized partner and will streamline activities such as creating presentations, slides, videos, questions, lessons plans and teaching materials.

Start-Anglo bilingual school, a franchise launched in 2023, is growing rapidly and continuing its expansion. In a short time, it has evolved from concept to reality, with 7 operational units running in 2025. We have signed 40 contracts located in several Brazilian states and with a broad geographic presence, we expect these units will be operational in the coming years. Additionally, throughout 2024, we held the reinauguration of the Liceu Complex in São Paulo, a historical location that preserved all the historical architectural design and introduced our main operations in São Paulo, that will be our Start-Anglo flagship, starting in 2025. Our strong pipeline, with more than 350 prospects underscores the robust potential for further growth and market penetration of Start-Anglo.

In the B2G segment, one of our main growth avenues, Vasta generated R$ 105 million in revenues in 2024, compared to R$ 81 million in the previous year, showing growth of 29%. We remain confident in our strategy to have a positive impact on public education, serving this segment and its students with our extensive portfolio of core content solutions, digital platform, and additional offerings, along with the custom learning solutions developed over decades in the private sector. We have renewed the contract with the State of Pará, and the release of the 2023 SAEB scores demonstrated a significant improvement in the students’ results in that state. The state moved from the second-to-last place (or 26^th place) in the National Ranking for High School to sixth place, with more than a 40% improvement in high school students’ scores. This is a remarkable result for us, the State of Pará, and most importantly for the students who benefited from the best products for recompositing learning and core-skill development.

Vasta’s accumulated subscription revenue during the 2024 fiscal year totaled R$1,462 million, a 14% increase compared to the 2023 fiscal year. Total net revenue increased 13% to R$1,674 million, up from R$1,486 million in the 2023 fiscal year. Another highlight of the year was the continued growth of the company’s profitability. In the 2024 fiscal year, Adjusted EBITDA grew by 13% to R$508 million, and Adjusted EBITDA Margin grew to 30.4%, up from 30.3% in 2023. This increase was mainly driven by gains in operating efficiency, cost savings, and a sales mix that benefited from the growth of subscription products.

The company’s cash flow generation was one of the main highlights of the year. Free cash flow (FCF) totaled R$215 million in 2024, a R$26 million or 14.2% increase from FCF of R$189 million in 2023. The last twelve-month (LTM) FCF/Adjusted EBITDA conversion rate improved from 41.8% to 42.4% as a result of Vasta’s growth and implementation of sustained efficiency measures. Moreover, we continue to make progress on deleveraging the company. The net debt/LTM adjusted EBITDA of 1.97x as of 4Q24 continues a downward trend, 0.35x lower than 3Q24 and 0.39x lower than 4Q23. This decrease reinforces our liability management strategy, which included issuing debentures in September 2024 with lower interest rates and longer payment terms.

Our revenue growth is directly related to the delivery of high-quality solutions that meet the needs of students, parents, educators, and partner schools. Great evidence of the evolution of our company and brands is demonstrated in the customer satisfaction assessment index (NPS), which in the last 12 months has grown by more than 30 points.

OPERATING PERFORMANCE

Student base – subscription models

The fourth quarter of 2024 marks the beginning of the 2025 business cycle for Vasta. It is in this quarter that the first delivery of content to students and partner schools regarding the 2025 ACV are made.

In the 2025 sales cycle, Vasta expects to provide approximately 1.6 million students with core content solutions and almost 600,000 students with complementary solutions. This is aligned with the company’s strategy to focus on improving its client base through a better mix of schools and growth in premium education systems (Anglo, PH, Amplia and Fibonacci), brands with higher average ticket, lower defaults, greater adoption of complementary solutions and longer-term relationships.

The partners-school base that uses our complementary solutions increased by 455 new schools, totaling an aggregate of 2,177 schools. This increase underscores 22% growth against the previous cycle in the number of students served by our solutions. The growth of our complementary solutions are concentrated in three main solutions: (i) Mind Makers, is a discipline that combines concepts and techniques from Computer Science, digital technologies, and Maker practices, targeting to develops a 21^st-century skills base on “Computational Thinking”, creativity, critical thinking, and problem-solving, (ii) Lider em Mim, a program focused on developing students’ socio-emotional competencies and providing support to create a conducive environment for the development of core emotional competencies; and (iii) English Starts and Eduall, resulting from an exclusive partnership between Vasta and Macmillan Education. Both solutions support the transition of the school to bilingual education.

FINANCIAL PERFORMANCE

Net revenue

In 4Q24, Vasta’s net revenue totaled R$699 million, a 26.1% increase compared to 4Q23, due to higher conversion of ACV into revenue, and revenues in the B2G segment in this quarter. Subscription revenue totaled R$ 619 million, a 20.3% increase compared to 4Q23, due to the increase in revenues from our Core Content, which grew by 15.4% this quarter compared to 4Q23, and reinforced by the greater penetration of our complementary solutions, which grew by 34.5%, compared to the same quarter of 2023.

In the 2024 fiscal year, Vasta’s net revenue totaled R$1,674 million, a 12.6% increase compared to the same period in the prior year. Subscription revenue grew 14.4% in 2024, due to the same factors mentioned above.

EBITDA

In the 2024 fiscal year, Adjusted EBITDA grew by 13% to R$508 million and Adjusted EBITDA Margin grew 0.1p.p to 30.4% (from 30.3% in 2023). In 4Q24, Adjusted EBITDA totaled R$299 million, a 25% increase compared to R$240 million in 4Q23. This increase was mainly driven by gains in operating efficiency, cost savings and a sales mix that benefited from the growth of subscription products. Share of loss equity-accounted investees relates to a minority stake in Educbank Gestão de Pagamentos Educacionais S.A. (“Educbank”), which registered a loss in equity-accounted investees in the amount of R$12 million in the 2024 fiscal year.

The Company proceeded with the partial reversal of the tax contingencies in 4Q24, related to the discussions of goodwill and other subjects derived from the acquisition of the Anglo Group in 2010 and subsequent restructuring. In the year 2024, considering the analysis and opinion of legal advisors, the Company decided to partially reverse the amounts initially provisioned. Total reversal amount of the R$ 385,685, are comprised: (i) R$ 102,431 related to the reversal of the principal portion, which impacted positively the line of General and administrative expenses (ii) R$ 177,993 related to reversal of the income tax and social contribution, (iii) R$75,032 related to a reversal of the indemnification asset. The interest amount of R$ 180,104 comprises R$ 206,961 related to the reversal of the interest and fines.

In proportion to net revenue, gross margin dropped from 61.6% in 2023 to 61.0% in 2024, a 0.6 p.p. decrease, showing a stability in the gross margin. Adjusted G&A expenses decreased by 0.5 p.p., driven by workforce optimization and budgetary discipline. Commercial expenses slightly higher by 0.3 p.p. and reported provisions for doubtful accounts (PDA) reduced by 0.6 p.p., in 4Q23 due to critical scenario of credit we booked an additional provision mainly for customers related to mainstream brands, impacting positively the comparison of this indicator. However, we foresee some challenges in the credit landscape for 2024.

Finance Results

In the fourth quarter of 2024, finance income totaled R$221 million, from R$17 million in 4Q23. In the fiscal year of 2024, finance income totaled R$267 million, from R$70 million in 2023. Finance income was positively impacted with a gain of R$207 million recorded in 4Q24, resulting from the reversal of interest on tax contingencies, as explained above.

Finance costs in 4Q24 decreased 22% (quarter-on-quarter), to R$55 million, driven by the reduction in the Finance Debt position between the comparison quarters and lower interest rate compared to 2023. In the 2024 fiscal year, finance costs decreased 15% to R$261 million due to the same factors mentioned above.

Net profit (loss)

In the fourth quarter of 2024, adjusted net profit totaled R$114 million, a 19% increase compared to R$96 million in 4Q23. In the 2024 fiscal year, adjusted net profit reached R$80 million, a 35% increase from an adjusted net profit of R$60 million in 2023.

The net profit was positively affected by: a) improvement in adjusted EBITDA, b) lower finance costs due to the reversal of the tax contingencies in 2024 and c) the reversal of tax contingencies as explained above. These effects (including success fees) are being adjusted to net income, given their non-recurring nature.

Accounts receivable and PDA

The average payment term of Vasta’s accounts receivable portfolio was 186 days in 4Q24, which represents 17 days higher than the same quarter of the previous year. This increase is because of the B2G revenue and a higher net revenue incurred in this quarter, which we expected to be received throughout the 2025 year, in accordance with our business model.

Free cash flow

Free cash flow (FCF) totaled R$215 million in 2024, a R$26 million increase from a FCF of R$189 million in 2023. In 4Q24 FCF totaled R$69 million, from a negative R$0.1 million in 4Q23. The last twelve-month (LTM) FCF/Adjusted EBITDA conversion rate improved from 41.8% to 42.4% as a result of Vasta’s growth and implementation of sustained efficiency measures.

Financial leverage

As of the end of the 2024 fiscal year, Vasta had a net debt position of R$1,003 million, a R$37 million decrease compared to 3Q24, mainly due to positive FCF generation, compensated by the impacts of financial interest cost. In comparison to 4Q23, the net debt position decreased R$61 million from R$1.064 million, driven by the foregoing factors and partially offset by the Second Repurchase Program. The net debt/LTM adjusted EBITDA of 1.97x as of 4Q24 shows a downward trend and is 0.34x lower than 3Q24 and 0.39x lower than 4Q23.

ESG

Sustainability Report

In 2024 we disclosed Vasta´s third sustainability report regarding the year 2023 prepared in accordance with international standards and the implementation of our corporate strategy, challenges, and achievements, while also reaffirming our commitment to transparency and sustainability. These include the publication of its second Greenhouse Gas Inventory, the company’s adherence to the UN Global Compact, the dedication of 1,991 thousand hours to the Corporate Volunteer Program, the SOMOS Afro program, an affirmative internship program, and the fact that 29% of the seats on the Board of Directors are occupied by women.

The report complies with the Global Reporting Initiative (GRI) 2021 version and considers other standards recognized in Brazil and abroad, such as the Sustainability Accounting Standards Board (SASB) guidelines for the education sector, the guidelines of the IBC Stakeholder Capitalism Metrics from the World Economic Forum, and the principles of the International Integrated Reporting Council (IIRC).

The document is available at: https://ir.vastaplatform.com/esg/. Information contained in, or accessible through, our website is not incorporated by reference in, and does not constitute a part of, this press release.

In line with the topics identified in the materiality process, every quarter we present Vasta’s most material indicators:

Key Indicators

ENVIRONMENT

The comparison of the last two quarters of the year 2024 with 2023 is impaired due to measurement issues in 3Q23 and 4Q23, with volumes much higher than the historical volume. When compared to the same quarters in 2024, there is a reduction of 55% and 31%.

When we analyze using annual volumes, the variations are small, for example, if we consider the average consumption from 2021 to 2024, we reach the amount of 14,565m³ per year, and compared to the total for the year 2024, we are only 2% above.

Contacts

Investor Relations

[email protected]

Read full story here