Earnings call transcript: Cogna Educacao Q3 2025 sees strong revenue growth

Cogna Educacao (COGN3) reported robust financial results for the third quarter of 2025, with significant revenue growth and a positive shift in net profit. The company's stock, however, experienced a decline of 5.37%, closing at 8.75 BRL, reflecting investor concerns despite the strong financial performance. The company also shared optimistic guidance for future growth, particularly in its education segments.

Key Takeaways

• Revenue for Q3 2025 increased by 18.9% year-over-year to 1.523 billion BRL.
• Net profit reached 192 million BRL, a turnaround from a loss of 29 million BRL in Q3 2024.
• EBITDA rose by 9.8% year-over-year to 423 million BRL.
• Stock price fell by 5.37% following the earnings release.
• Positive outlook for 2026 with expectations of continued double-digit growth.

Company Performance

Cogna Educacao demonstrated strong performance in Q3 2025, with revenue growth of nearly 19% compared to the same period last year. This growth was supported by increased student intake and expansion in both presencial and distance learning programs. The company's net profit also showed a significant improvement, moving from a loss in the previous year to a healthy profit this quarter. The education sector's favorable market conditions, such as low unemployment and stable income levels, contributed to this growth.

Financial Highlights

• Revenue: 1.523 billion BRL (+18.9% YoY)
• EBITDA: 423 million BRL (+9.8% YoY)
• Net Profit: 192 million BRL (vs. -29 million BRL in Q3 2024)
• Nine-month Revenue: 4.816 billion BRL
• Nine-month EBITDA: 1.530 billion BRL (+12.4% YoY)
• Leverage Ratio: 1.11x, the lowest since Q4 2018

Outlook & Guidance

Cogna Educacao remains optimistic about its growth prospects for 2026, anticipating continued double-digit revenue growth. The company plans to expand its nursing courses and expects a neutral to positive EBITDA in Q4 2025. The upcoming electoral year is also seen as a potential boost for the education sector.

Executive Commentary

Roberto Valério, CEO, highlighted the company's substantial revenue growth, stating, "We are growing almost 19% of revenue in the third quarter." He also emphasized the success of the PAGFASIO payment program, which offers payment flexibility to students. Guilherme Melliger, Head of Vasta, expressed confidence in maintaining mid double-digit growth levels into 2026.

Risks and Challenges

• Regulatory changes in distance learning could impact course offerings.
• Market saturation in certain education segments may limit growth.
• Macroeconomic pressures, such as inflation, could affect consumer spending.
• Potential challenges in expanding on-site nursing courses.
• Competitive pressures in governmental book purchases.

Cogna Educacao's Q3 2025 results demonstrate solid financial performance and strategic positioning in the education sector. Despite the stock's decline, the company's optimistic outlook and strategic initiatives suggest potential for future growth.

Full transcript - Cogna Educacao SA (COGN3) Q3 2025:

Conference Moderator: We inform you that this conference is being recorded and will be available in the RI site of the company, www.cogna.com.br, where you can find the whole material for this result disclosure. You can also download the presentation in the chat icon, even in English. During the company's presentation, all participants will have their mics on mute. We will start the Q&A session. To ask your question, click the Q&A icon in the bottom part of your screen and write your question to remain in line. When invited, there will be a request to turn on your mic, so you turn it on and ask your questions. We suggest that questions are made all at once.

Before going on, we would like to clear that eventual declarations being made in this conference regarding the business perspectives of Cogna, projections, operational, and financial targets are the beliefs and premises of the company and the management, as well as the information available for Cogna. Future information are not guaranteed performance, and they depend on circumstances that may happen or not. You have to understand that the general conditions, the sector conditions, and other operational factors may affect the future results of Cogna and may lead to results that will be materially different from those expressed in future conditions. I'd like now to pass on the floor to Roberto Valério, CEO of Cogna, to start his presentation. Mr. Roberto, please, the floor is yours. Good morning, everyone. Thank you for participating in the conference to discuss the results of the third quarter of 2025.

As we always do, we have Frederico da Cunha Villa, our CFO here, Guilherme Melliger, the head of Vasta. This call will last one hour, in which we'll have a 40-minute presentation and 20 minutes for the Q&A. I would like to start this meeting by saying once again that we understand this is one more quarter with great results in our understanding. We keep growing with the ability of operational delivery in a quite good way. It grows in a fast pace, in double digits in the quarter and in the nine months. We are growing almost 19% of revenue in the third quarter and 13% in the nine months.

I'd like to say that both of the core business, therefore higher education and basic education, are growing double digits, and we keep investing in new fronts and future opportunities, as it is the case of our business line for governmental sales, as another example with our franchise starting. From the point of view of growth, we understand that the core has a lot of capacity to deliver results. We are growing double digits with the same methods since the beginning of the structure in 2021. We understand that the core business still has a lot of opportunity to grow, basically refining and improving processes and the client experience.

We keep here planting and seeding new business to grow the company the same way the operational result keeps growing in double digits, basically 10% in the quarter and 12.4% in the year in the accumulator of the year. This is the 18th consecutive quarter with the EBITDA growing. I'd like to reinforce our concern with consistency, and it's a structured growth. It's been four and a half years that we are consecutively growing operational results. From the point of view of EBITDA margin, this quarter is pressured by an increase in the PCLD regarding PAGFASIO. That was something that we did in Kroton in the commercial cycle. We will explore in the next slides as well as a lower margin in Saber due to seasonality.

As you know, Saber, as Somos, has the fourth quarter and the first quarter as strong quarters from the point of view of results. The third quarter is a smaller one, but in this case here of Saber, it pressured a little, but we'll talk specifically about PCLD later on. Now, talking about the net revenue, we had BRL 405 million in the nine months accumulated. I invited the delta growth in the quarter to the net income was BRL 220 million because we had losses in the third quarter of 2024. When we analyze the nine months, the delta of the net income is BRL 450 million.

Obviously, it's being fostered by the improvement in operational results that we emphasize in the quarters we are talking about, but not specially, but also due to the reduction in the financial expenses to reduce the debts and our liability management strategies that allow the cost of debt to be lower. Therefore, the operational result with the lower expenses is happening in the net income. In terms of cash generation, we reached BRL 392 million with BRL 1.9 million less compared to last year. As we always do, we let you judge if these points are one-off or not. In the third quarter of 2024, we recovered taxes in cash of more than BRL 115 million. Obviously, if we compare operational to operational in the recovery of taxes, our growth in the GCO would be 38%, therefore quite a strong one.

In the accumulated, 33% of growth, almost BRL 940 million in post-cap OGC. The highlight of the quarter and the nine months is the free cash flow. We reached BRL 300 million in this quarter, BRL 583 million in the nine months accumulated. Just to emphasize, this almost BRL 584 million in nine months is 50% more than all the free cash flow generation in the whole year of 2024. In nine months, we generated more cash, 50% more of free cash flow than the whole year of 2024. Now, going to the debts, we reduced the net debt in BRL 474 million in the 12 months. I emphasize that only in the second quarter to here, our reduction was more than BRL 220 million. The cash generation is, in fact, being used to reduce debts.

Fred will explain that aside from the reduction, we can also have important reductions in the average cost of the debts. Regarding leverage, we reached 1.1 times the EBITDA, the lowest one in the last seven years. The last time we had this level of leverage was in 2018. Therefore, we are quite satisfied with the results. Perspectively thinking for the fourth quarter into 2026, we keep optimistic and trusting that we have everything to have consistent results. Now, going to slide five, we'll talk about the operational performance of Kroton. I think I can start by emphasizing the growth in intake, more than 7% in the period. I would like to emphasize specifically the growth of the presencial one. That is not the first cycle of intake. It's the third cycle that we have growth in the presencial.

With the growth, I'll talk later, but with the growth specifically in the high LBV, I mean the most expensive courses, which help us in the ticket. I relate this growth in the presencial to our commercial model that is fine-tuned in the CAMPI and is allowing this growth. In distance education with a growth of 6.4%, that is specifically due to the change in the regulation for GL that fostered the course, mainly the healthcare courses that bring not only the benefit of growth, but also the improvement of the average ticket. In the mix, it helps a lot. Obviously, we have a lot of evolution in the team, improvement of processes, systems, and commercial strategies. I reinforce that in the presencial, this fine-tuned model in the campus helped a lot.

The change in the regulation of GL fostered the enrollment, mainly in the healthcare courses that are the most impacted by the new regulation. The student base grew 2.7% in total. If we consider only ProUni and ex-ProUni, the ones that in fact pay and generate cash to us, the student base grew 4%, quite important and consistent as it has been over the last years. From the point of view of average ticket, I also have an emphasis here in this quarter because Kroton as a whole is growing 11.7 percentage points in three segments, Presencial, GL, and on-site. I am sorry, Kroton Med. We have two points helping the average ticket. Newcomers, as I mentioned, and on-site, we have more enrollment in the most expensive tickets. In GL, also more newcomers in the healthcare courses. On average, with a greater ticket.

I also have to mention that we can repass the inflation to the old students in Kroton Med, on-site, and GL. We have both old and new students with an increase in the average ticket, which pushed this growth to almost 12 percentage points. Now in slide six, talking about the net revenue, obviously, if we have more enrollment. I forgot to say something important here about intake, reinforcing that obviously the volume of intake is important to us, but the balance between volume and ticket is very relevant. We always analyze intake, analyzing the revenue in the period, and the revenue grew 41% in this period. When we have a new period growing the revenue, and we know that the students will be with us for many semesters, in perspective, we have quite a positive result regarding the revenue for the next months and quarters.

Now, talking about revenue specifically, we grew almost 21%, growing a lot on-site and online education. We grew a lot in both fronts. To be completely transparent, even if we reclassify the discount, as you know, we have a complete disclosure with all the items we are using since we reclassified the discount with inactive students for PDG with a neutral impact in the EBITDA, but adjusting the revenue, this growth instead of 20.9% would be 15.9%, but even though quite a strong double-digit growth. Talking about the accumulated, it is the same, 17% in on-site and GL. Here we see the effect of PAGFASIO that we will talk about later. It is more diluted. Therefore, the delta between the growth we see of 17.4% and the growth ex PAGFASIO is smoother.

Now in slide seven, and talking about the gross profit as a whole, it grew 21.5% with a small increase in the gross margin from 79.4% to 79.9%. In the same way, in the accumulated year, we had an important growth in gross profit and a slight growth in the gross margin, which shows that the growth in operation in its core, that is revenue minus cost, is quite positive. We are gaining on efficiency. When we analyze the nine months, the gross margin improved 0.7 percentage points with a small reduction in the margin of Kroton Med. It's important to emphasize that in the 18 courses that we have, the 19 courses that we have, three are new. As they mature, they increase the base of costs because we hire more professors. The amount of hours increases, the general cost increases.

It pressures a little the margin, but according to expected and completely in line with our plans. In slide eight, costs and expenses, as you can see, when we analyze costs and expenses with the percentage of net revenue, we have a gain in performance in no line. Corporate expenses with a small gain in performance, the operational ones gaining more than 3 percentage points of market and sales with diluting 1 percentage point as the costs, as I mentioned in the previous slide. The company grows and grows, keeping the costs controlled and specifically the expenses controlled, which makes us gain efficiency and diluted them with the percentage of net revenue.

The only difference is PCLD that I'll explore in two slides because in the third quarter 2024, it was 6.2 percentage points to grow in 7.6 percentage points going to 13.8% due to two factors, both the reclassification of the discounts for inactive students as well as the greater penetration of PAGFASIO. I will talk about it in other slides. When we look at the accumulated, you see that we keep growing in efficiency with no operation expenses and marketing and costs. I'm in slide nine. We have two points more of dilution and marketing 1.4. Gaining efficiency, we see that the operation is quite adjusted. Now in slide 10, we take more time here explaining those differences in the PCLD, we made this diagram to be easier to understand. I am on the left.

Considering the third quarter of 2024 with the first information, you can see the net revenue, BRL 939 million, which was published in the third quarter 2024. The PCLD was BRL 58 million. Therefore, the percentage would be 6.2%. With the reclassification of the discount, that is so that we did not have reduction in the revenue every time we renegotiated with an inactive student, we would start classifying the discounts in the PDA. In the proforma of the third quarter of 2024, the PDA would be BRL 98 million and not BRL 58 million, but the revenue would increase from BRL 939 million to BRL 980 million. In the proforma comparing the third quarter of 2024 to 2025, the PDA divided by the RO would be 13.4% and 13.8%. Therefore, an increase of 3.7 percentage points in the PDA.

I explained the first delta of the 6.2 that adjusted by the reclassification of discount would be 10.1. If we consider delta for PAGFASIO, that is the offer that we implemented in this quarter, the PDA would be stable. Why would it be stable? Because our inadiplancy is not increasing. It's kept the same. The fact is that when we offer more offers in PAGFASIO, that is the facility to pay the first installments, we don't have the history of credit of the student. We provision more than a student that we already have their history. So that you have a reference, the level of provisioning is close to 10% to the student with the history. In this case here of the students coming with this offer of PAGFASIO, we provision 47%. Therefore, a greater provision. That's the explanation.

Why is the PDA growing? It increases in this quarter because this is when we give the offer to the student. In the fourth quarter, we do not have the offer anymore because we do not have newcomers anymore. You see a convergence of the PDD to the closer number of proforma. Explaining the movements, I would like to take some minutes here for you to understand the offer itself. With the change of the regulatory framework, many players among us started communicating that they should take the period before the regulatory framework change to enroll in courses that will not be available anymore. During the intake process, we realized that many players were offering discounts in the monthly payment.

In practice, it reduces the LTV of the student because all the payments that we come along the life of the student will be with a lower ticket. We decided another offer to keep the average ticket, but offering to pay the first and second payments in July and August, August in our case, installment. The student enrolls because they are making the enrollment in the middle of August when classes started. They did not pay July and they did not pay August. They are starting to pay from August on. These two parcels were not a bonus. We divided them in installments during the period of the student's courses. In this case, a student in four years would be divided into 46 months. As we do not know the credit profile of the student, they are new.

We provision more with these two payments that we booked and we are receiving month by month. For you to understand clearly the offer, that's it. It makes sense because we do not give up on the average ticket. We do not reduce the LTV of the student. We simply consider installments for the payment of one or two monthly payments along their course of time. If you have more doubts regarding that, we can discuss in the Q&A. We have a second table that is the deadline for receiving, which shows that the default is still positive. That is why we are decreasing the average deadline from 47 to 34 days. This is the clear proof that is the P&L because we see that the student is in fact generating cash. Now going to slide 11, the consequence of all that is the EBITDA result.

Therefore, the EBITDA in the quarter grew 10% in the year accumulated 15.8. You can see a drop in the margin between the third quarter of 2024 and 2025 going from 37% to 36%. The reclassification of discounts and the additional provision of PAGFASIO is pressuring the margin because it is increasing the PCLD. All the other costs like marketing, operationals, corporate, they are all diluted and gaining on efficiency. We see that clearly in the results and in the cash generation. With that, I finished the explanation of Kroton. I would like to pass on the floor to Guilherme Melliger for the comments on Vasta. Thank you, Roberto. I will go on with slide 13 on the net revenue.

I'll concentrate on the graph on the right with the commercial cycle because the third quarter is the one finishing what we call the commercial cycle of Somos Educação that goes from October to September. Here we have the total idea of how the classroom behaved and everything that happened and will happen in 2025. We reached BRL 1 billion 737 million, which is 13.6% considering the cycle of 2024. The highlight is the subscription product with the teaching and complementary solutions that grew 14.3%, reaching BRL 1 billion 32 million. Now the non-subscription had an increase of 17%, reaching BRL 118.6 million, result of the growth of our two flagships in Anglo, one in São José do Rio Preto and the Pasteur Institute, also with the growth in the pre-university preparatory courses in the year. We acknowledge the growth in the two main business lines of the company.

I also emphasize the B2G bringing a natural volatility, but we could, with new contracts, keep the balance in this line of revenue, also keeping a similar level to 2024, reaching BRL 76.2 million. Now go BRL 66.8 million, I'm sorry. In slide 14, I'll show our subscription sector. We start on the right where we have the breakdown of the core segments that are the learning and teaching segments, the complementary, the social-emotional, bilinguals, makers, and other complementary activities to the basic subjects. Our growth was quite robust, reaching 14.3% in total. The core segments grew 12.5% and the complementary segments 25%, as we can see a faster growth in the complementary over the years. I'd also like to emphasize something that Roberto commented that is quite important to us, that is our consistency over the years delivering that.

On the left, we see the first ACV of Vasta that is in 2020 when we acknowledge BRL 692 million compared to BRL 1 billion 552 million that we are delivering by the end of this semester. It represents 2.3 times more, so a figure of 17.5%. We are quite satisfied with the performance we can reach with the gain in market share and the penetration that our products are having on the private market. Now going to slide 15, talking about the EBITDA, we grew 10.6% in our EBITDA, focusing here also in the cycle. We reached BRL 480.9 million EBITDA, the greatest one of Vasta in a commercial cycle, representing a margin of about 28% in line with the previous year. Here we will decompose a little our expenses going to slide 16.

I'll talk briefly because the third quarter to Vasta is not so significant, but it is important to note when we look at the table, our recurring gain in lower provisioning of PCLD. We had a provisioning here, a lower one as we observed in other quarters. We have more investment in marketing and sales because we are in the peak of the campaign for 2026. When we analyze the next slide, 17, we have an idea on how our expenses behaved in a complete cycle. Here we have our total expenses when we analyze the table with the percentage of revenue, keeping in 71% with emphasis to the gains in productivity that we have in corporate expenses, operational expenses, and PDA, as I mentioned in the previous slides.

We have a small investment in marketing and sales that should keep the double digits of the revenue. In costs, I call your attention to the impact of 2.1% result of a mix that comprises more and more complementary products that we pay royalties for. They have a higher cost like bilinguals and social-emotional, as well as the McKinsey system that grows in a fast pace. These products have royalty. They increment a little our costs. On the other hand, we do not deliver capital to develop the product. When you look at the benefit that we have in the cash, it is much greater than the small points of margin that we observe in the total costs. Lastly, I would like to emphasize that we are in the peak of the commercial campaign for the cycle of 2026.

We are quite optimistic with this period to keep the growth and keep the history of ACV as we saw before. We will have probably quite a good 2026. I emphasize that we reached more than 50 contracts and started Anglo. We are operating six units this year. Next year will be eight as franchising with a total of 14 units. The B2G is a big path of growth that we have with a lot of prospection at this moment. We hope to have quite a hot fourth quarter to supply the cycle of 2026. Now I pass on the floor to Fred to go on the presentation. Thank you, Guilherme. Good morning, everyone. I will start the presentation of Saber here. Remember that Saber has some businesses, the National Program of Didactic Books, Languages, Other Services, encompassing Governmental Solutions, and so on.

Note the graph on the left that in the quarter we grew the revenue of 9.4%. This growth was fostered by the hitting of two businesses. First of all, 17% in languages. Secondly, the growth of Acerta Brasil, that is Governmental Solutions, with a growth of about 38%. It is important to remember that in 2025, this is the year of purchase for high school and repurchase for elementary school. In high school, we had a gain of 8.4% in market share, which shows the growth that we have in our products with the program of Didactic Books. However, we see that there is no representativity in the quarter. We had a displacement from the third to the fourth quarter. Now going to the graph on the right, in the accumulated, I had a reduction of 9% in nine months comparing 2024 to 2025.

This reduction, as I mentioned before, is only a reflex of the displacement and the reduction of the PDA, but it is according to the fourth quarter. We had businesses with a positive impact of about BRL 32 million in nine months in 2024. In the year, in the nine months, the big effect here was in the first quarter that we have had a revenue that walked back in about BRL 60 million. Our expectations, as I mentioned before, are that we will have a stronger fourth quarter with the displacement of the Didactic Books program. Going to slide 20, talking about the recurring EBITDA and margin EBITDA.

As we said before, this is a year to grow the margin, but with the EBITDA growing, and it should not, mainly due to the effects of investments that we will have in the material for marketing and all the commercial part, mainly, as I mentioned before, due to the repurchase program of high school. In the accumulated of nine months that finish in September 30, we saw a growth in our EBITDA of 16%, going from BRL 67.5 million to BRL 78.5 million with an expansion of margin in 4.7%. It is a neutral semester with a growth in revenue, but without growing the EBITDA. This is due mainly to the displacement of the PDA. Our expectation is to have a positive fourth quarter finishing the presentation of Saber. I start now Cogna. Cogna represents our three main businesses like Kroton and Somos and Vasta, and I just mentioned Saber.

Just a brief summary going to the final presentation. We had a growth in the revenue in the quarter in Cogna of 18.9%, reaching BRL 1.523 billion. We grew revenue in all businesses. In the accumulated, we also reached BRL 4.816 billion with a robust growth. Going to slide 23, we have the demonstration in the recurring EBITDA and margin EBITDA. We grew the EBITDA in the third quarter, 9.8%, reaching an EBITDA of almost BRL 423 million. As I mentioned, we grew the revenue in our three main businesses. In Saber, we decreased the EBITDA, but we have the effect, as Roberto mentioned before, the effect of our commercial strategy in Kroton for intakes via PAGFASIO. The main goal here was to keep the average ticket.

You can see in our release that we can keep and have even growth in our intakes. We had an impact in the PDA. We grew with a program to pay installments in Kroton. In this way, we grew the PDA. In the accumulated of nine months, we grew 12.4%, reaching an EBITDA of BRL 1.530 billion. Now going to slide 34 with net profit and margin. In the third quarter of 2024, we had losses of BRL 29 million. Now we reached a net profit of BRL 192 million with a growth of more than 700% and a growth in the margin of net profit. This comes from the growth of our operational results, and it grew about 10%. We had a reduction of our financial results. With many initiatives here in liability management and renegotiation, we reduced our financial results in 13%.

The main effect here is the effect of taxes of BRL 126 million. Elisa, we demonstrated this conciliation and operational effects. What are these effects? Mainly here with the reversion in the contingency that is not going over our bid and recurrent results. We had the condition of the income that I'll briefly explain, which means that we had a company, Saber, that had the tax losses in revenue of income. We incorporated this company so that we had this benefit in this year and future benefit. Look at this year, we had an accountability effect of BRL 126 million. In the fourth quarter, we'll compensate BRL 11 million in the taxes. This operation brings not only accountant benefits, but in the cash of 2025 and the years to come. In the accumulated, we reached almost BRL 406 million next year.

Last year, in December 31, 2024, we had a profit of BRL 879 million. Just remember that part would come from a reversion of contingency. And our net profit of the operation was BRL 120 million. In nine months, X effect of the income taxes, we reached the net profit of the operation compared to the previous year. Finishing that, the most important choice in the company is, as we manage the company and we look a lot that for getting EBITDA and now analyzing the net profit and the cash generation and free cash. We can see that in the operational cash generation, we had the slight reduction of 12%, going from BRL 392 million last year. Last year, we had a positive effect of BRL 115 million of receivables of taxes from the federal revenue. We had this benefit last year.

We did not have the benefit this year, but it is part of the game. There is no adjustment. We are not proposing that. We are just explaining. The most important choice is the free cash flow, that we grew in the free cash flow. When I say that, it is the generation of operational cash, post-capture CapEx and debt. We reached BRL 300 million with a growth of about 3%. I would like to mention also that the company, analyzing the risks, we capped the second quarter of 2024-2025 compared to the third one or the third of 2024. With the third quarter of 2025, we had a risk neutral with a small decrease of about BRL 9 million regarding the second quarter of 2025 and 2017 compared to the third quarter of 2024.

You can see that the free cash flow is not coming from postponing the risk. We are reducing our risk. Just to finish the free cash flow, an important data is that in the accumulated, we reached BRL 584 million. Last year, we had a generation of BRL 395 million. Remember that our fourth quarter, as I mentioned, is strong here in the National Program of Didactic Books. It is also a strong quarter in Somos Educação. We are thrilled with what is about to come to the fourth quarter. Now going to the end of the presentation, our cash position and debt, in slide 26, I would show that the important thing is that we are reducing the net debt. We reached BRL 2,576 million. We finished the third quarter in a strong cash position with BRL 1,277 million.

The message here is analyzing the amortization schedule. In 2026, we do not need to do any debt, and we have no amortization for 2026, which is generally a difficult year because it is the elections year. Now going to slide 27, the last one of my presentation, I would like to show the leverage of the company. We reached the leverage of 1.11 times, our lowest level of leverage since the fourth quarter 2018. Considering the third quarter of 2024, our leverage would be 1.58 times. We had a reduction in more than leverage. We monitor also the net debt. So we had a reduction of net debt compared to the last year, BRL 474 million.

Regarding the second quarter of 2025, compared to the third one, a reduction of BRL 230 million, which shows that in the last four years, we are doing what we say, what we committed to hit the revenue and generate EBITDA, that we will do the leverage of the company free cash flow and reduction of net debt. Last but not least, our average cost of debt is reducing. In the third quarter 2024, we had an average cost of 1.82, and in the third quarter, the 81.52. As we understand the market and our rating that we maintain debt, but with the positive prognostics, we have cost of an eventual debt for a future liability management in a lower cost than this one that I mentioned of 1.52.

We are still thrilled with more execution, more work, and I pass on the floor to Roberto Valério for the final considerations. Thank you. Now going to slide 28, I reaffirm our pillars and growth is one of the pillars. It is not by chance. It is the first in the list. As we showed, we grow in all operations, and we are planting and developing new pathways of growth to the future, as Fred mentioned. We are thrilled to the end of the year, the fourth quarter, that is generally with no news in Kroton. Given the diversity of our portfolio, we have good quarters in Vasta and Saber with a positive perspective to the year. We see no different challenge to 2026. We see the level of unemployment very low, people with good income. This next year is an electoral year, which benefits our businesses.

We are quite positive to this item of growth. From the point of view of efficiency, it's in the DNA of the company. We have quite well designed all the processes. We are converging systems to one or two single systems to gain on synergy and speed. We are working in improvement of processes, automation systems, implementing AI. That is something we've been doing since 2023. Basically two years, almost three. This is something that is spreading in our value chain, and it will keep bringing efficiency in gross margin and reduction of expenses. This is another front that we see opportunities. Experience, the client experience is something that is the core of our decisions. We keep improving the NPS of students and partners.

Just for you to understand, in this third, fourth, we had four important awards that are related to customer experience in many segments. It is a similar focus, and we understand that we serve well to reduce the churn and improve the growth. People and culture is an important pillar. We are investing a lot in training and development and assessing performance and skills and feedback of our workers so that they know how to develop and external trainings and courses. I think we are progressing a lot in this front. It is not by chance that we could be in the ranking of the best companies, great places to work. We have the GPTW CEO. We have had that, but being in the ranking is very difficult. We are there at the 12th position, and we are in the 66th position. I'm sorry.

It is quite nice and innovation. We are supporting the business areas of the company, speeding up the B2G and new ideas that are under discovery in the initial steps. I am pretty sure are the seeds for our growth in education. That is a big segment, and our approach is not only one segment. We have a multi-segmentary strategy. We have a broad portfolio, which in fact increases the options of growth to us. From the point of view of ESG, it is too important in the agenda. We had the Fit Education and ESG Forum this quarter. We were acknowledged in the ranking besides being acknowledged for being in the best companies in customer satisfaction by the Mask Institute and some awards, among which the best legal department in the education sector. It is said by other people, which is also more important because it is not our opinion.

It's the experts in the sector saying that to us. With that, I finish our presentation, and I open for the Q&A. Thank you. Now we'll start the Q&A session. Please remember that to ask your question, you must click the Q&A icon in the lower part of your screen and write your question to get in line. When called, you turn on your mic after the request to make your questions. We ask you that you make all questions at once. The first question is from Marcelo Santos, sales analyst, JP Morgan. Marcelo, we'll open your audio for you to ask your questions. Marcelo, please, you may go on. Thank you. Good morning, everyone. I have two questions. First, I'd like to mention PAGFASIO because you've always had the PMT.

I understand that in fact, you increased the amount of that, but the program would be the same. I would like to be sure of that. Was it more focused in DL? Does it have something to do with competition? I would like to understand why it is stronger in the divisions that you showed. I would like to know if next year it will be more normalized. The second question is related to the cash generation because the fourth quarter last year was very good. Is there any event, any effect to change the seasonality for this year? Or would you say that it would be the same as last year? Marcelo, thank you for the question. Regarding PAGFASIO, you are correct. It is the same program we already had. The mechanism is the same.

The only thing is that now we are offering to more students. In general, we would offer the benefits to the students later on in the course when they enter in August or September. We offer now since the beginning of the intake process when we start offering the benefit beforehand, more students make use of this. The penetration of the program increases. It is the same program with the same greater penetration for newcomers, which means that looking ahead, we should not see new growth. It should be more stable when comparing the quarters because the penetration was almost absolute, let's say, quite high. Basically, all students enrolled took advantage of PAGFASIO in the period. Regarding the cash generation, Fred will say, "Marcelo, thank you for your question. In the fourth quarter last year, we had a strong operational cash generation.

This is the beauty of our business, the diversity that we have. Last year, we had a positive effect of the National Program of Didactic Books and also governmental solutions. The cash here would not have anything different compared to what happened in Kroton last year. Our expectation is to have a positive cash. It comes with the same effect that we had last year with the National Program of Didactic Books. A point of attention here is that we are a little late. We would imagine that our third quarter would be stronger. The government is late. It may bring some impact to the cash in the fourth quarter. Our expectation is not different from previous years. It is to receive in the fourth quarter.

If we do not, Marcelo, then we should receive in the first 15 days or the first 20 days in January 2026. As I mentioned, it is our daily life. Just a follow-up in PAGFASIO, Roberto, it is more concentrated in some of the units. Due to the competition, it was more in DL, or is it general? I would like to understand this point. Sorry, you asked this question, and I did not answer. It is general. It is not focused in DL, both on-site and DL and the corresponding courses of Kroton Med. Okay, perfect. Thank you. The next question comes from Vinícius Figueiredo, sales side analyst, Itaú BBA. Vinícius, we open your audio so that you make your questions. Vinícius, please, you may go on. Good morning, everyone. Thank you for the question.

I'd like to discuss a little bit about this quarter because we had a more concentrated effect. You mentioned a lot of PCLD and PAGFASIO that reached the margin. Having that said, a good behavior of all lines in this quarter, along with the fourth quarter not being with such a strong PCLD due to the lower intake. Does it make sense that this quarter was quite atypical regarding the performance comparing the margins of the years? We would see the cycle again in expansion in the fourth quarter. In the context of next year, will this effect, along with the investments to adequate to regulation, how is that as a whole? The second point is a follow-up to Marcelo's question. What would you see here as the balance point to PAGFASIO outside this context?

This atypical context of the second semester and looking ahead, what is the participation it should have as a whole? Thank you. Vinícius, thank you for your questions. I think it is quite an important topic to us that you have it quite clear in PAGFASIO and PCLD. As basically all students came via PAGFASIO, there should not have any additional impact in any other quarter. Let's consider that in the third quarter, 2026, if all students have PAGFASIO, the delta should be only the growth of the enrollment and not the take rate of PAGFASIO. We have nowhere to go because basically all students took PAGFASIO. Whatever grows in the PCLD is related to the intake for the future. This is the first point. The second point, you are correct. As in the fourth quarter, we do not have newcomers.

Therefore, we do not have the pressure of PAGFASIO. The trend is that PCLD comes to the average and reduces to a lower level like the 2019. And the numbers that we have here, as Fred always mentioned, a PDA of proxies of 2019 would convert to that. Therefore, remove the pressure of the PDA improving the margin trend. You were perfect in your observation. Obviously, we cannot predict. We cannot give a specific guidance, but this is the specification. I do not know, Fred, do you have any additional comment? No comments. It is exactly that. The comment I would make is that as we collected more with PAGFASIO because PAGFASIO and TMT are only different commercial names, but basically it is the same. The important thing is that the PDA is high due to the payment installments.

If our inadimplency is in X, this effect is in line and close to 10%. We will see the quarters and understand that there is nothing new because it is already provision. If we improve the inadimplency and improve the dropout, we will have an upside to the future. Otherwise, the PDD is already correct. Regarding the perspectives for DL, considering the regulation, it is difficult to predict, but we can have some ideas considering two important aspects. One, that in the beginning, in May, when it was disclosed, how much of restriction of courses that were DL and now are semi-presential and how it could restrict the movement of the student, I mean, going from DL to on-site. This is the first doubt. We are seeing that, yeah, there is quite a positive migration effect.

In the first weeks, we are in the beginning of the cycle, but in the first weeks where the nursing courses are not available in DL, we do not have the regulation defined. We see quite a strong growth of these courses, especially nursing in on-site. The first doubt, if the fact we do not have cheap DL, the students will not be able to study. Therefore, we will not have so many enrollments. We do not see that. We see a strong growth in the on-site, which is positive from the growth point of view with the pressures on the margin because on-site courses have lower margin, but the nominal contribution is much greater. The final benefit to the cash generation is quite positive. This is the first element.

The second one that is in the air, and we expect to have more information in the last weeks, is how the fast track of approval of the nursing courses will be and from there on, how many units and halls will offer this course. We are quite optimistic that MEC will propose a transition rule to allow that those operating keep operating. This is only an expectation. We do not have any official information regarding the costing facts. We keep having the same view that we have had since the regulatory framework was launched. If you know that, from the point of view of cost, we understand it is quite not relevant both in online and semi-presential or EAD. They are prone to repasses in the average ticket of the student. As you can see, we keep repassing inflation. The average ticket is growing for newcomers and old students.

We have the same view, and we do not have elements to say that DL will have a non-manageable impact, let's say. Okay, good. Quite a complete response. Thank you very much. The next question comes from Caio Moscardini, sell-side analyst of Santander. Caio, we will open your audience so that you ask your question. Caio, please, you may go on. Hello, everyone. Thank you for allowing me to ask. Could you talk a little bit more of Vasta ACV, what we can expect in this new cycle? If the 14% that we saw in 2025 is a good proxy, I think it helps a lot. And in Saber, just to confirm if this market share of 30% is regarding a new cycle of the PDA from 2026 to 2029, that the government has a budget closed to $2 billion.

What should we expect in terms of EBITDA for Vasta in the fourth quarter if we can grow this EBITDA of Saber in 2026 comparing year to year? Thank you, Guilherme. Here, I'll talk about the Vasta ACV. As shown in the presentation, we are having quite a positive track record in the evolution of ACV. We have a CAGR of 17,000. I can tell you that we'll keep the growth for 2026 at a similar level as we had from 2024 to 2025, in the mid double digit of growth. Thank you, Madago. Regarding your question of Saber, Caio, you are correct. The last purchase of high school government typically makes one purchase a year. It can be fund one or two at the average. In the fourth quarter, we are talking about high school.

We've had market shares in schools and teaching systems choosing 30% of all the purchase being with our books from Saber. We will have a take rate of 30% of the program compared to a take rate of 22% in 2021. It is 8 percentage points more in shares. This is the information. Yes, we do expect to grow our income in this sense. We know that MEC as FNDE are discussing budget to comply with this purchase. Remember that next year's program is the new high school program. It is different with more disciplines, more content. Your interpretation is correct. I am basically confirming what you said in your comment. Okay, thank you. Regarding Saber in the fourth quarter, going from 2024 to 2025, it should grow year by year. Hi, Caio. Fred speaking here. Our point of attention is only seasonality.

If you have a displacement from the fourth quarter to the first one, as I mentioned, due to the delays, but EBITDA should be neutral positive because as it is a year of purchase, as Roberto mentioned, I also have expenses with marketing and advertising, which affects a lot of the cost. Due to the growth of 8% it can be positive. Okay, thank you very much. The next question is from Samuel Alves, sell-side analyst at BTG Pactual. Samuel, we'll open your audience so that you ask your question. Samuel, please, you may go on. Hello, Valério, Fred, Guilherme. Thank you for the space. My first question is about receivables, and maybe it's related to the comments before about PAGFASIO because we saw an important increase in receivables after one year.

Can it be related to PAGFASIO so that I get your idea about the aging? This is the first question. A second question is having a follow-up on the topic of the PCLD. If I'm not mistaken, the company had a certain target of EBITDA to 2025 in Saber of about BRL 200 million-BRL 230 million, if I'm not mistaken, but something like that. You were mentioning this point that Fred mentioned now about the marketing expenses and the cycle of purchase as a challenge. It caught my attention, the comment of EBITDA being neutral or positive compared to the years in the fourth quarter because it would be above that. Was it my misperception of not understanding your comment considering it was BRL 360 million? I guess the EBITDA last year of BRL 200 million was adjusted just to make it more clear about Saber's performance.

Thank you. Samuel, I'll start with Saber and Fred will talk about the aging. It's important to consider that Fred's aspect is that we are not so certain or clear on the income of high school in the fourth quarter. As the orders are delayed, maybe part of this income will decrease in the first week of January. It's difficult to be contundent and understand what is the EBITDA in the fourth quarter considering the uncertainty in the displacement of income. We have almost no doubt regarding the effectiveness of the purchase of the government. Therefore, government needs to handle the books to students in February when classes start. Maybe this misperception is a little more regarding the conviction that we have that the fourth quarter specifically will have a neutral positive EBITDA without knowing exactly what is the displacement of the income.

Any displacement should be of weeks because the program must be carried out. I do not know if I made myself clear. If you have any doubts, we can discuss more. I will then pass on the floor to Fred to talk about aging. Hi, Samuel, Fred here. About the aging of receivables, you are analyzing the IPR of the company. I have the growth and the installment programs for PAGFASIO. I am growing this potential, but the second effect of growth in the aging above 365 days is not for PAGFASIO. It is the PEP effect, PEP, the program that already finished. Here we have more than 70% provision. We have our natural efforts here for charging, nothing different from what we already have, nothing different from previous quarters or years. Okay, quite clear, Fred. Thank you very much. Thank you, Valério.

Our question is from Lucas Nagano, sell-side analyst, Morgan Stanley. We'll open your mic so that you ask your question. Lucas, please, you may go on. Hi, everyone. Thank you for the space. We have two questions as well. The first one is regarding PAGFASIO. And first of all, I'd like to check some points on the coverage because you mentioned the provision in the beginning is 40%, and in adolescence, default is converted to 10%. So if it's 47%, is it the same as the PCLD of the previous year, or does it vary in the cycle? The second one is regarding nursing, considering that the government will facilitate the accreditation. How far could it smoothen the effects of the margin? How feasible would be the implementation and offer of professors and the demand available for this level of teaching? Hi, Lucas, Fred.

I'll start with PAGFASIO's doubt because our provision uses always the historic as a criteria, the past history, because, as I mentioned, PAGFASIO and PMT are just the commercial trade names. So I need to use the history. And we use it. In the beginning, we provisioned 60%. But as I naturally have returns every month, the index of provision coverage is 47%. Just to make it clear to you, I use the history in the beginning, and I provisioned 60% of the budget. And in the history, it's 47%. You can do the math, okay? Back to the second question. Thank you, Fred. Lucas, regarding nursing, your question about the feasibility to carry out on-site nursing in this transition, the feasibility on our site is complete. I would like to emphasize two things.

One, our nursing costs, where we would offer nursing in the post, already had on-site hours of 42% with the new rule at 70%. I already have tutors and professors and labs and classrooms and everything. We would be working in a lower percentage. Going from 42% or 52% to 70% is as simple as increasing the amount of hours of the professors and tutors that we have. This is our reality because we always operate with healthcare courses, with on-site labs. We did not have a practice of offering nursing, as you asked, in a 100% online model. We always had the labs and so on. If we have a fast track made by MEC based on the evidence that we already had the lab and all the scholars, it would be quite fast, this impact.

It is fast, and the impact basically is zero, considering that students are migrating from DL to on-site where we have this offered provincially. This is my understanding. Obviously, we need to live to be sure that this scenario is the practice, but I have enough elements to say that, yeah, that's it. Just a quick follow-up. How should it affect the fast point of this poll? The average price of an on-site nursing course is 30% higher than the semi-presential. This is how the prices were made. I think that pricing is less related to the ability of payment of the students and more related to the level of competition of prices among the many players in the city.

If you remove players because they have no labs or professors or so on, the trend is that you can repass the prices and students can pay. That is why we are seeing a strong growth in the campus, even with the on-site being more expensive than semi-presential or DL. Okay, Valério and Fred, thank you. The next question is from Eduardo Resende, sell-side analyst, UBS. Eduardo, we will open your audio so that you ask your question. Eduardo, please, you may go on. Thank you, Roberto, Fred, Guilherme. I have two questions here. The first regarding the migration of DL students to the on-site or hybrid models, as you mentioned. I would like to understand what was the difference in the commercial strategy now to the next cycle that you see this movement.

Anything that you had to do differently in the marketing or any other front that might be helping that. The second question is regarding Acerta Brasil in Saber because this year and last year, we had this line contributing a lot to the growth. I'd like to understand if we have space to expand in the next years or if now raising the bar is too low for that. That's my question. Those are my questions. Thank you. Hi, Eduardo. Now, to answer your questions regarding the new commercial strategies to foster the migration from DL to on-site, the answer is no. It's a natural movement on the market. The student had options, and we are talking specifically about the campus. We had the on-site and the DL offers as DL, it's cheaper.

We have more demand on DL, but we kept making groups and enrolling students for on-site. We do not have DL. Now they have to enroll for the on-site education. We keep the levels of enrollment the same, but they simply migrated from a simple line of product to the other one with a higher average ticket, which means a net profit with a greater nominal contribution. As I said, a lower % of profit, but with a greater nominal contribution. Directly talking about your question, we have nothing specific. It is a natural movement of the market. Now talking about Acerta Brasil, there is no doubt Acerta Brasil reinforces the learning, especially for Portuguese and math, that we deal with the state and municipal secretaries of education. It is a good product. The indicators show the evolution of the students using this material.

We still have space to grow. Brazil has many states and cities, and we have more than 5,000 cities, and we sell to a small amount of that. We believe we still have space to grow. Okay, thank you. Next question is from Flavio Yoshida, sell-side analyst, Bank of America. Flavio, open your mic so that you can ask your questions. Flavio, please, you may go on. Hello. Good morning. My doubt here is regarding PAGFASIO as well. I'd like to understand better the economics of the students in PAGFASIO when we compare to out-of-pocket students and understanding the dropouts and the quality of payment of PAGFASIO. My second question is specifically regarding the technology CapEx. We know that when we consider the nine months of 2025 compared to the previous year, we had an expressive increase of almost 70%.

I would like to understand the drivers here and if we should wait impressive growth in 2026 as well. Fred, you start with CapEx. Yes, I start with CapEx. Flavio, thank you for your question regarding CapEx. Technology is a product here. We have strong investments in technology. We are doing this investment and note that in the nine months compared to 2024 and 2023, we also grew. We are here building this tool that is an academic ERP, and we believe nobody has that on the market. Aside from the investment, we are also making to improve the students' learning and all the development of AI. Here, this is what we look in terms of product view. What we mentioned before is that we do not understand that in the total CapEx of the company, we are not growing nominally here compared to the year.

For the next years, we believe that the CapEx is simply a seesaw. We reduce technology and invest more in the field, but it is natural. I cannot say only technology, but the CapEx as a whole should even grow nominally comparing the years. The second question regarding PAGFASIO, Flavio, it is important. I'll try to explain better because the student PAGFASIO is the out-of-pocket student. They pay. They are not funded. We do not fund any student. All of them pay to us every month. We have not funded students for a while, and this is PAGFASIO because the first monthly payments that are, as they understand, latest that they pay in installments. Considering January, so that you understand.

If the student enrolls in December, for example, December 25 to start studying in February 26, when they pay the monthly fee in December, what are they paying? They are paying the January monthly fee. The second is February, the third is March, April, and so on. When it is already March and the student comes late, they say, "Hey, but it's not fair. Why do I have to pay January and February if I didn't study? We still didn't have classes. It's already March." We say, "In fact, the point is you pay for the semester in six installments. As it's already March, I am facilitating. That's why it's called PAGFASIO, easily. You are late, so I let you pay installments January and February.

You choose 46 or 47 installments. We explain to the student, and to make it clear, PAGFASIO historically is a student that is late in paying the installments. They do not want to pay it all the time. We facilitate by paying the installments. There is no difference between PAGFASIO and the one that pays. The difference is that we only had this offer of PAGFASIO starting February, March, April, and now we are offering even for December, January for those who were correcting payments. That is why we increase the penetration of PAGFASIO. In this case, there is more quality or less quality. We understand they have more quality because if you enroll previously, you are scheduled to that, you organize. If you are enrolling in January or December, they are more organized and more engaged, probably a better payer.

In our understanding, the fact of allowing the monthly fees in installments would not facilitate the dropouts because they are good students. They come before the ones that are late in their enrollment. It is important to say that all this process to the students is quite clear. They sign a contract, acceptance term, so they can pay the installments that are, let's say, late, or they choose how to participate. Obviously, they have to choose the benefit. That is why they have such a big penetration. That is why we are completely transparent in all questions that we understand this strategy than simply reducing the prices to be competitive commercially. This is the strategy plan of PAGFASIO. Okay, quite clear. The next question is from Hannah Pratt, sell-side analyst, CT. Hannah, we will open your mic so that you ask your question. Hannah, please, you may go on.

Hello, everyone. Thank you for the space. Quite briefly, regarding the results, I think this line that we have four semesters with gains, I would like to understand your point of view on this funding. I do not know what you are thinking for this line. The other, if you can give an update of the trade-off of Vasta because there was some delay regarding SEC, but if you can update us, it will help as well. Thank you very much. Hello, Jamil. The first question of Risco Sacado. The risk is something that we know we are keeping that. In this case, it is in Saber Vasta. That is the installment, the funding of our raw material, mainly paper and printing. There is a correlation with the growth of revenue. As I grow the revenue, I need more paper and print the books and so on.

Note that I'm growing the revenue in Somos Educação and not Saber, but this strategy is ongoing. Why? Because today, my average cost of debt is CDI plus 1.5, and Risco Sacado is 2.9. What happens is that we are doing that naturally, Hannah, because if I simply remove all the risk and put it into a debt, I have no problems in leverage. The debt risk was always clear in the company. If I do that, I reduce the operational cash at the moment zero in BRL 490 million. Naturally, you will see that this line that was correlated to the revenue will be a line that will reduce quarter by quarter until we understand that we do not have to consider adaptive risk. The main reason is the average cost of adaptive risk regarding our debt. First question.

The second one regarding the trader offer of Vasta, it's public. I won't say anything different. We are just waiting for the American SEC, that is the Brazilian CVM, that is in the shutdown process due to political problems in North America. We are waiting for the reopening of SEC so that we can have the operational and legal bureaucracy for the operation. We postponed the operation due to the shutdown of the SEC. Until the deadline that is December 9, our expectation in discussions with our legal consultants in North America is that SEC will open in November. This is data that I'm just repassing what I've heard. There is no commitment in what I'm saying. The expectation is that until 9, we can have more elements in this operation to close everything. Okay, quite clear. Thank you very much.

The Q&A session is over. We will now pass on the floor to Mr. Roberto Valério for his final considerations. I thank you all for your participation. I would like to reinforce my thanks to every one of the 26,000 workers that are working nonstop so that we can reach these results and get better to our clients and students. Thank you very much. We are still available with our team to clear any doubts necessary. Thank you very much. We see you in the next quarter. The result conference regarding the third quarter of 2025 of Cogna Educação is over. The Department of Relation with Investors is available to clear any doubts you might have. Thank you very much to the participants and have a nice afternoon.

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