Vasta Announces First Quarter 2022 Results

Rhea-AI Summary

Vasta Platform Limited (NASDAQ: VSTA) reported a 36% year-on-year increase in net revenue for 1Q22, totaling R$381 million, surpassing the R$370 million forecast. Subscription revenue surged 37%, driven by higher quality sources and a shift towards digital products. Adjusted EBITDA more than doubled, reaching R$141 million, with a margin increase of 450 bps. Adjusted net profit rose to R$51 million from R$21 million in the previous year, despite increased financial leverage. The company maintained its leadership in Brazilian university admissions, underscoring a successful business recovery post-pandemic.

Positive

• Net revenue increased 36% year-on-year to R$381 million in 1Q22.
• Subscription revenue grew 37%, with a significant shift towards digital products.
• Adjusted EBITDA doubled to R$141 million, reflecting operational improvements.
• Adjusted net profit increased to R$51 million, up from R$21 million in 1Q21.
• The company added 766 partner schools, serving nearly 1.6 million students.

Negative

• Increased financial leverage and higher interest rates offset some profit gains.
• Operating cash flow was negatively impacted by early royalty payments.

SÃO PAULO, Brazil, May 12, 2022 (GLOBE NEWSWIRE) -- Vasta Platform Limited (NASDAQ: VSTA) – “Vasta” or the “Company,” announces today its financial and operating results for the first quarter of 2022 (1Q22) ended March 31, 2022. Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).

HIGHLIGHTS

• Net revenue increased 36% year-on-year in the first quarter of 2022 (1Q22), to R$381 million, exceeding the R$370 million guidance.
• Subscription revenue grew 37% in 1Q22, driven by the recognition of 2022 ACV, or 48% excluding textbook subscription products (“PAR”). The 2022 ACV has had a superior quality in sources of revenue, as Vasta managed to increase growth in its premium brands and to initiate the migration from PAR to digital subscription products (Textbook as a Service Platform), aligned with the company’s strategy.
• In the 2022 cycle to date (4Q21 and 1Q22), subscription revenue grew 29%, or 41%, excluding PAR. The different seasonality of new brands (Eleva and Mackenzie) is leading to a less concentrated distribution of subscription revenue along the 2022 cycle when compared to previous cycles. In 2Q22, we expect ACV recognition to range between 16% to 18%, and our accumulated subscription revenue growth should gradually converge to the 2022 ACV growth of 35% by 3Q22.
• Adjusted EBITDA more than doubled in 1Q22, due to operating leverage gains, cost savings and better sales mix with the growth of subscription products and the contribution of Eleva. In the 2022 cycle to date, adjusted EBITDA grew 41%, with a margin increase of 450 bps.
• Adjusted net profit increased to R$51 million in 1Q22, from R$21 million in 1Q21, due to the growth in operating profit. In the 2022 cycle to date, adjusted net profit increased 4%, as the increased operating profit was partly offset by the higher financial leverage and interest rates.
• Operating cash flow (OCF) totaled R$13 million in 1Q22, impacted by the early payment of royalties to content providers. On a normalized basis, the OCF was a positive R$33 million, an improvement compared to 1Q21 figures, which remained close to zero.
• According to the results released in early 2022, Vasta’s brands maintained the leadership in the number of approvals in the admission tests of Brazil’s best universities (according to The Higher Education ranking).
• On April 28, 2022, Vasta issued its first Sustainability Report, elaborated according to GRI standards, SASB guidelines and aligned with IBC Stakeholder Capitalism Metrics and World Economic Forum (WEF) guidelines.

MESSAGE FROM MANAGEMENT

This quarter has a special meaning for us. Vasta 1Q22 results confirm that the worst of the Covid-19 pandemic’s impact is behind us: net revenue increased 36% year-on-year (and 29% in the 2022 cycle to date), driven by (i) the 35% growth in 2022 ACV, which we expect to be fully captured within the 2022 cycle; and (ii) the stabilization in non-subscription revenue (up 1% in the cycle to date). After a long period of results being hit by the Covid-19 pandemic, numbers finally attest that the business is back to normal, with predictability and recurrence among its most important attributes. In addition, the quality of our sales improved in the 2022 cycle, with a greater share of sales from premium and digital products in the mix. Subscription revenue represented 87.4% of total net revenue in the 2022 sales cycle, compared to 84.4% in the same period of the previous cycle.

Another key aspect of the quarter is the repositioning of Vasta’s profitability. Our operating margins returned to levels that we believe to be more aligned with the company’s potential. In the 2022 cycle to date, the adjusted EBITDA margin grew 450 bps, to 38.7%, the highest margin for this period in recent periods. Although much of this result came from the normalization of the business and a sales mix of superior quality, it came with certain efforts: we conducted a workforce optimization in December 2021 and reinforced our budgetary discipline. These actions are also paramount to navigating the challenging macroeconomic scenario ahead of us.

But more important than the improvement in our operating results is the success of our students, which is our real purpose. According to the results released in early 2022, Vasta’s brands maintained the leadership in the number of approvals in the admission tests of Brazil’s best universities (according to The Higher Education ranking). The performance of our premium brands was particularly noticeable in Medicine, the most competitive career in the country. Our top-of-mind brand Anglo expanded its leadership in admissions for Medicine at the University of São Paulo (USP), with an increase of 64% in admitted students compared to 2021. The top performance at Brazil’s best universities is among the key attributes considered by K-12 schools when choosing a content partner.

Reinforcing our commitment with the highest ESG standards, Vasta released its first Sustainability Report on April 28, 2022. The publication increases awareness around the work we do, reinforcing the bonds of trust forged with our partners, employees, customers, investors and other stakeholders. Our Sustainability Report is aligned with the guidelines of the Global Reporting Initiative (GRI), and incorporates indicators from the Sustainability Accounting Standards Board (SASB) and recommendations from the World Economic Forum (WEF) publication Stakeholder Capitalism Metrics. The report is available in Vasta’s website and can be accessed here.

OPERATING PERFORMANCE

Student base – subscription models

		2022		2021		% Y/Y
Partner schools - Core content		5,274		4,508		18.7	%
Partner schools - Complementary solutions		1,304		1,114		16.8	%
Students - Core content		1,589,224		1,335,152		15.4	%
Students - Complementary content		372,559		307,941		30.0	%

Note: Students enrolled in partner schools.

As we conclude the period of return of collections, we update the number of partner schools and enrolled students for the 2022 cycle. The company added 766 new partners schools compared to the 2021 cycle, serving nearly 1.6 million students with core content solutions. The partners school base of complementary solutions increased by 187 new schools, growing 30% in the number of students served compared to the previous cycle.

FINANCIAL PERFORMANCE

Net revenue

Values in R$ '000		1Q22		1Q21		% Y/Y		2022 Cycle		2021 Cycle		% Y/Y
Subscription		333,781		243,371		37.1%		680,624		527,221		29.1%
Subscription ex-PAR		296,713		201,120		47.5%		577,597		410,528		40.7%
Traditional learning systems		251,148		169,138		48.5%		474,299		350,463		35.3%
Complementary solutions		45,565		31,982		42.5%		103,298		60,065		72.0%
PAR		37,067		42,251		-12.3%		103,027		116,693		-11.7%
Non-subscription		46,801		37,461		24.9%		98,217		97,173		1.1%
Total net revenue		380,581		280,832		35.5%		778,840		624,394		24.7%
% ACV		33.4%		32.8%		0.5		68.1%		71.1%		-3.1
% Subscription		87.7%		86.7%		1.0		87.4%		84.4%		3.0

In 1Q22, net revenue increased 36% year-on-year, to R$ 381 million, which exceeded the $370 million guidance. Excluding Eleva, net revenue grew 28% year-on-year.

Subscription revenue grew 37% in 1Q22, driven by the recognition of 2022 ACV (33.4% of total), or 48% excluding PAR. The 2022 ACV has showed a superior quality in sources of revenue, as Vasta managed to increase growth in our premium brands and to initiate the migration from PAR to digital subscription products (Textbook as a Service Platform), aligned with the company’s strategy. In 1Q22, Vasta recognized 33.4% of the ACV, compared to 32.8% in the same period of last year.

In the cycle to date (4Q21 and 1Q22), subscription revenue grew 29%, or 41% excluding PAR. In the period, it represented 68.1% of 2022 ACV, versus 71.1% in the same period of the 2021 cycle. The different seasonality of new brands (Eleva and Mackenzie) is leading to a less concentrated distribution of subscription revenue along the 2022 cycle when compared to previous cycles. In 2Q22, we expect ACV recognition to range between 16% to 18%, and our accumulated subscription revenue growth should gradually converge to the ACV growth of 35% by 3Q22.

EBITDA

Values in R$ '000		1Q22		1Q21		% Y/Y		2022 Cycle		2021 Cycle		% Y/Y
Net revenue		380,581		280,832		35.5%		778,841		624,394		24.7%
Cost of goods sold and services		(129,237)		(113,982)		13.4%		(265,156)		(214,000)		23.9%
General and administrative expenses		(126,088)		(109,876)		14.8%		(252,159)		(250,475)		0.7%
Commercial expenses		(47,933)		(49,509)		-3.2%		(93,332)		(98,241)		-5.0%
Other operating income, net		933		2,467		-62.2%		4,286		3,813		12.4%
Impairment on trade receivables		(8,896)		(2,609)		241.0%		(19,624)		(14,920)		31.5%
Profit before financial income and taxes		69,360		7,323		847.2%		152,856		50,571		202.3%
(+) Depreciation and amortization		64,287		48,585		32.3%		125,951		93,539		34.7%
EBITDA		133,647		55,908		139.0%		278,807		144,110		93.5%
EBITDA margin		35.1%		19.9%		15.2		35.8%		23.1%		12.7
(+) Layoffs related to internal restructuring		1,459		4,936		-70.4%		10,871		4,936		120.2%
(+) IPO-related expenses		-		-		0.0%		-		50,580		-100.0%
(+) Share-based compensation plan		5,904		6,544		-9.8%		12,023		14,447		-16.8%
Adjusted EBITDA		141,011		67,388		109.3%		301,700		214,073		40.9%
Adjusted EBITDA margin		37.1%		24.0%		13.1		38.7%		34.3%		4.5

Note: n.m.: not meaningful

Adjusted EBITDA more than doubled in the quarter compared to 1Q21, reaching R$141 million, due to operating leverage gains, cost savings and better sales mix with the growth of subscription products and the contribution of Eleva. In the 2022 cycle to date, Adjusted EBITDA grew 41%, with a margin increase of 450 bps.

In proportion to net revenue, gross margin grew 660 bps in the quarter (from 59.4% to 66.0%), while commercial expenses and adjusted cash G&A expenses were down 500 bps and 280 bps, respectively. The impairment on trade receivables increased 140 bps in the quarter, reflecting increased provisions adopted in the second half of 2021. As a result, adjusted EBITDA margin grew from 24.0% in 1Q21 to 37.1% in 1Q22.

(%) Net Revenue		1Q22		1Q21		Y/Y (p.p.)		2022 Cycle		2021 Cycle		Y/Y (p.p.)
Gross margin		66.0%		59.4%		6.6		66.0%		65.7%		0.2
Adjusted cash G&A expenses(1)		-14.1%		-16.9%		2.8		-12.7%		-13.3%		0.6
Commercial expenses		-12.6%		-17.6%		5.0		-12.0%		-15.7%		3.8
Impairment on trade receivables		-2.3%		-0.9%		(1.4)		-2.5%		-2.4%		(0.1)
Adjusted EBITDA margin		37.1%		24.0%		13.1		38.7%		34.3%		4.5

(1) Sum of general and administrative expenses and other operating income, less: depreciation and amortization, non-recurring expenses, IPO-related expenses, and share-based compensation plan.

Net profit (loss)

Values in R$ '000		1Q22		1Q21		% Y/Y		2022 Cycle		2021 Cycle		% Y/Y
Net profit (loss)		20,190		(5,517)		n.m.		39,970		16,732		138.9%
(+) Layoffs related to internal restructuring		1,459		4,936		-70.4%		10,871		4,936		120.2%
(+) Share-based compensation plan		5,904		6,544		-9.8%		12,023		14,447		-16.8%
(+) IPO-related expenses		-		-		n.m.		-		50,580		n.m.
(+) Amortization of intangible assets(1)		38,693		28,300		36.7%		74,649		56,590		31.9%
(-) Tax shield(2)		(15,659)		(13,525)		15.8%		(33,165)		(43,028)		-22.9%
Adjusted net profit (loss)		50,587		20,738		143.9%		104,349		100,257		4.1%
Adjusted net margin		13.3%		7.4%		5.9		13.4%		16.1%		(2.7)

(1) From business combinations. (2) Tax shield (34%) generated by the expenses that are being deducted as net (loss) profit adjustments. Note: n.m.: not meaningful

In the first quarter, adjusted net profit increased to R$51 million, from R$21 million in 1Q21, due to the growth in operating profit. In the 2022 cycle to date, adjusted net profit increased 4%, as the increased operating profit was partly offset by the higher financial leverage and interest rates.

Accounts receivable and PDA

Values in R$ '000		1Q22		1Q21		% Y/Y		4Q21		% Q/Q
Gross accounts receivable		628,771		517,478		21.5%		552,014		13.9%
Provision for doubtful accounts (PDA)		(52,383)		(30,986)		69.1%		(46,500)		12.7%
Coverage index		8.3%		6.0%		2.3		8.4%		(0.1)
Net accounts receivable		576,388		486,492		18.5%		505,514		14.0%
Average days of accounts receivable(1)		198		198		0		190		8

(1) Balance of net accounts receivable divided by the last-twelve-month net revenue, multiplied by 360.

The increase in the net accounts receivable in 1Q22 arose from the growth in collected revenue, which was partly offset by the higher coverage of PDA. Since the beginning of the pandemic, our approach to credit issues faced by our school partners has been to extend payment terms instead of granting discounts, pressuring the PDA level due to aging of the accounts receivable portfolio. With the return of school activities in 2022, we expect a gradual normalization in payment cycles for the years to come. The average payment time of our accounts receivable portfolio was 198 days in the 1Q22, the same level as of 1Q21. By adding Eleva’s last-twelve-month (“LTM”) net revenue, the average time decreases to 188 days.

Operating cash flow

Values in R$ '000		1Q22		1Q21		% Y/Y		2022 Cycle		2021 Cycle		% Y/Y
Cash from operating activities(1)		76,855		71,853		7.0%		39,484		(15,662)		n.m.
(-) Income tax and social contribution paid		(523)		-		0.0%		(523)		-		0.0%
(-) Payment of provision for tax, civil and labor losses		(180)		(9)		1900.7%		(293)		(9)		3151.8%
(-) Interest lease liabilities paid		(3,750)		(4,021)		-6.7%		(6,878)		(7,796)		-11.8%
(-) Acquisition of property, plant, and equipment		(34,435)		(2,481)		1287.9%		(45,893)		(393)		11577.6%
(-) Additions of intangible assets		(19,716)		(9,107)		116.5%		(38,831)		(19,674)		97.4%
(-) Lease liabilities paid		(5,654)		(4,977)		13.6%		(12,344)		(8,605)		43.4%
Operating cash flow (OCF)		12,597		51,258		-75.4%		(65,277)		(52,139)		25.2%
OCF/Adjusted EBITDA		8.9%		76.1%		(67.1)		-21.6%		-24.4%		2.7

(1) Net (loss) profit less non-cash items less and changes in working capital. Note: n.m.: not meaningful

In 1Q22, operating cash flow totaled R$13 million in 1Q22, impacted by the early payment of royalties (R$20 million) to content providers. This compares with the R$51 million OCF registered in 1Q21, which was benefitted by the early receipt of accounts receivable amounting to R$52 million. Therefore, on a normalized basis, the OCF increased from nearly zero in 1Q21 to R$33 million in 1Q22. Likewise, the normalized OCF was a negative R$45 million in the 2022 cycle to date, up from a negative R$104 million in the same period of 2021. We observe that the operating cash flow generation is usually negative in the first half of the cycle, as we invest in the production of materials in preparation for the school year and we receive payment from costumers in arrears.

Financial leverage

Values in R$ '000		1Q22		4Q21		3Q21		2Q21		1Q21
Financial debt		817,516		831,226		812,016		505,951		687,203
Accounts payable from business combinations		570,660		532,313		73,713		65,201		62,973
Total debt		1,388,176		1,363,539		885,729		571,152		750,176
Cash and cash equivalents		449,673		309,893		377,862		335,098		415,093
Marketable securities		-		166,349		317,178		81,090		259,581
Net debt		938,503		887,297		190,689		154,964		75,502
Net debt/LTM adjusted EBITDA		3.67		4.87		1.13		0.76		0.30

(1) LTM adjusted EBITDA includes Eleva. Eleva’s LTM adjusted EBITDA prior to November 2021 may not reflect Vasta’s accounting standards.

Vasta ended the 1Q22 with a net debt position of R$939 million, mainly due to the incorporation of Eleva in late October, leading to a net debt/LTM adjusted EBITDA of 3.67x. By adding Eleva’s last-twelve-month EBITDA, this indicator stood at 3.28x.

CONFERENCE CALL INFORMATION

Vasta will discuss its first quarter 2022 results on May 12, 2022, via a conference call at 5:00 p.m. Eastern Time. To access the call (ID: 5859784), please dial: +1 (833) 519-1336 or +1 (914) 800-3898. A live and archived webcast of the call will be available on the Investor Relations section of the Company’s website at https://ir.vastaplatform.com.

ABOUT VASTA

Vasta is a leading, high-growth education company in Brazil powered by technology, providing end-to-end educational and digital solutions that cater to all needs of private schools operating in the K-12 educational segment, ultimately benefiting all of Vasta’s stakeholders, including students, parents, educators, administrators and private school owners. Vasta’s mission is to help private K-12 schools to be better and more profitable, supporting their digital transformation. Vasta believes it is uniquely positioned to help schools in Brazil undergo the process of digital transformation and bring their education skill-set to the 21st century. Vasta promotes the unified use of technology in K-12 education with enhanced data and actionable insight for educators, increased collaboration among support staff and improvements in production, efficiency and quality. For more information, please visit ir.vastaplatform.com.

CONTACT

Investor Relations
ri@somoseducacao.com.br

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others. Forward-looking statements appear in a number of places in this press release and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to of various factors, including (i) general economic, financial, political, demographic and business conditions in Brazil, as well as any other countries we may serve in the future and their impact on our business; (ii) fluctuations in interest, inflation and exchange rates in Brazil and any other countries we may serve in the future; (iii) our ability to implement our business strategy and expand our portfolio of products and services; (iv) our ability to adapt to technological changes in the educational sector; (v) the availability of government authorizations on terms and conditions and within periods acceptable to us; (vi) our ability to continue attracting and retaining new partner schools and students; (vii) our ability to maintain the academic quality of our programs; (viii) the availability of qualified personnel and the ability to retain such personnel; (ix) changes in the financial condition of the students enrolling in our programs in general and in the competitive conditions in the education industry; (x) our capitalization and level of indebtedness; (xi) the interests of our controlling shareholder; (xii) changes in government regulations applicable to the education industry in Brazil; (xiii) government interventions in education industry programs, that affect the economic or tax regime, the collection of tuition fees or the regulatory framework applicable to educational institutions; (xiv) cancellations of contracts within the solutions we characterize as subscription arrangements or limitations on our ability to increase the rates we charge for the services we characterize as subscription arrangements; (xv) our ability to compete and conduct our business in the future; (xvi) our ability to anticipate changes in the business, changes in regulation or the materialization of existing and potential new risks; (xvii) the success of operating initiatives, including advertising and promotional efforts and new product, service and concept development by us and our competitors; (xviii) changes in consumer demands and preferences and technological advances, and our ability to innovate to respond to such changes; (xix) changes in labor, distribution and other operating costs; our compliance with, and changes to, government laws, regulations and tax matters that currently apply to us; (xx) the effectiveness of our risk management policies and procedures, including our internal control over financial reporting; (xxi) health crises, including due to pandemics such as the COVID-19 pandemic and government measures taken in response thereto; (xxii) other factors that may affect our financial condition, liquidity and results of operations; and (xxiii) other risk factors discussed under “Risk Factors.” Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

NON-GAAP FINANCIAL MEASURES

This press release presents our EBITDA, Adjusted EBITDA and Adjusted net (loss) profit and Operating cash flow (OCF), which is information provided for the convenience of investors. EBITDA and Adjusted EBITDA are among the key performance indicators used by us to measure financial operating performance. Our management believes that these Non-GAAP financial measures provide useful information to investors and shareholders. We also use these measures internally to establish budgets and operational goals to manage and monitor our business, evaluate our underlying historical performance and business strategies and to report our results to the board of directors.

We calculate EBITDA as net (loss) profit for the period/year plus income taxes and social contribution plus/minus net finance result plus depreciation and amortization. The EBITDA measure provides useful information to assess our operational performance.

We calculate Adjusted EBITDA as EBITDA plus/minus: (a) income tax and social contribution; (b) net finance result; (c) depreciation and amortization; (d) share-based compensation expenses, mainly due to the grant of additional shares to Somos’ employees in connection with the change of control of Somos to Cogna (for further information refer to note 23 to the audited consolidated financial statements); (e) provision for risks of tax, civil and labor losses regarding penalties, related to income tax positions taken by the Predecessor Somos – Anglo and Vasta in connection with a corporate reorganization carried out by the Predecessor Somos – Anglo; (f) Bonus IPO, which refers to bonus paid to certain executives and employees based on restricted share units; and (g) expenses with contractual termination of employees due to organizational restructuring. We understand that such adjustments are relevant and should be considered when calculating our Adjusted EBITDA, which is a practical measure to assess our operational performance that allows us to compare it with other companies that operates in the same segment.

We calculate Adjusted net (loss) profit as the (loss) profit for the period/year as presented in Statement of Profit or Loss and Other Comprehensive Income adjusted by the same Adjusted EBITDA items, however, added by (a) Amortization of intangible assets from Business Combination and (b) Tax shield of 34% generated by the aforementioned adjustments.

We calculate Operating cash flow (OCF) as the cash from operating activities as presented in the Statement of Cash Flows less (a) income tax and social contribution paid; (b) tax, civil and labor proceedings paid; (c) interest lease liabilities paid; (d) acquisition of property, plant and equipment; (e) additions to intangible assets; and (f) lease liabilities paid.

We understand that, although Adjusted net (loss) profit, EBITDA, Adjusted EBITDA and Operating cash flow (OCF) are used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations as reported under IFRS. Additionally, our calculations of Adjusted net (loss) profit, Adjusted EBITDA and Operating cash flow (OCF) may be different from the calculation used by other companies, including our competitors in the education services industry, and therefore, our measures may not be comparable to those of other companies.

REVENUE RECOGNITION AND SEASONALITY

Our main deliveries of printed and digital materials to our customers occur in the last quarter of each year (typically in November and December), and in the first quarter of each subsequent year (typically in February and March), and revenue is recognized when the customers obtain control over the materials. In addition, the printed and digital materials we provide in the fourth quarter are used by our customers in the following school year and, therefore, our fourth quarter results reflect the growth in the number of our students from one school year to the next, leading to higher revenue in general in our fourth quarter compared with the preceding quarters in each year. Consequently, in aggregate, the seasonality of our revenues generally produces higher revenues in the first and fourth quarters of our fiscal year. Thus, the numbers for the second quarter and third quarter are usually less relevant. In addition, we generally bill our customers during the first half of each school year (which starts in January), which generally results in a higher cash position in the first half of each year compared to the second half.

A significant part of our expenses is also seasonal. Due to the nature of our business cycle, we need significant working capital, typically in September or October of each year, to cover costs related to production and inventory accumulation, selling and marketing expenses, and delivery of our teaching materials at the end of each year in preparation for the beginning of each school year. As a result, these operating expenses are generally incurred between September and December of each year.

Purchases through our Livro Fácil e-commerce platform are also very intense during the back-to-school period, between November, when school enrollment takes place and families plan to anticipate the purchase of products and services, and February of the following year, when classes are about to start. Thus, e-commerce revenue is mainly concentrated in the first and fourth quarters of the year.

KEY BUSINESS METRICS

ACV Bookings is a non-accounting managerial metric and represents our partner schools’ commitment to pay for our solutions offerings. We believe it is a meaningful indicator of demand for our solutions. We consider ACV Bookings is a helpful metric because it is designed to show amounts that we expect to be recognized as revenue from subscription services for the 12-month period between October 1 of one fiscal year through September 30 of the following fiscal year. We define ACV Bookings as the revenue we would expect to recognize from a partner school in each school year, based on the number of students who have contracted our services, or “enrolled students,” that will access our content at such partner school in such school year. We calculate ACV Bookings by multiplying the number of enrolled students at each school with the average ticket per student per year; the related number of enrolled students and average ticket per student per year are each calculated in accordance with the terms of each contract with the related school. Although our contracts with our schools are typically for 4-year terms, we record one year of revenue under such contracts as ACV Bookings. ACV Bookings are calculated based on the sum of actual contracts signed during the sales period and assumes the historical rates of returned goods from customers for the preceding 24-month period. Since the actual rates of returned goods from sales during the period may be different from the historical average rates and the actual volume of merchandise ordered by our customers may be different from the contracted amount, the actual revenue recognized during each period of a sales cycle may be different from the ACV Bookings for the respective sales cycle. Our reported ACV Bookings are subject to risks associated with, among other things, economic conditions and the markets in which we operate, including risks that our contracts may be canceled or adjusted (including as a result of the COVID-19 pandemic).

FINANCIAL STATEMENTS

Consolidated Statements of Financial Position

Assets		March 31, 2022		December 31, 2021
Current assets
Cash and cash equivalents		145,998		309,893
Marketable securities		303,675		166,349
Trade receivables		576,388		505,514
Inventories		208,744		242,363
Taxes recoverable		27,040		24,564
Income tax and social contribution recoverable		9,689		8,771
Prepayments		57,335		40,069
Other receivables		982		2,105
Related parties – other receivables		1,126		501
Total current assets		1,330,977		1,300,129
Non-current assets
Judicial deposits and escrow accounts		177,579		178,824
Deferred income tax and social contribution		129,453		130,405
Property, plant and equipment		222,265		185,682
Intangible assets and goodwill		5,542,991		5,538,367
Total non-current assets		6,072,288		6,033,278
Total Assets		7,403,265		7,333,407

Consolidated Statements of Financial Position (continued)

Liabilities		March 31, 2022		December 31, 2021
Current liabilities
Bonds and financing		267,568		281,491
Lease liabilities		27,915		26,636
Suppliers		261,219		264,787
Income tax and social contribution payable		16,644		16,666
Salaries and social contributions		75,952		62,829
Contractual obligations and deferred income		44,812		42,179
Accounts payable for business combination		59,296		20,502
Other liabilities		25,350		20,033
Other liabilities - related parties		30,393		39,271
Total current liabilities		809,149		774,394
Non-current liabilities
Bonds and financing		549,948		549,735
Lease liabilities		139,640		133,906
Accounts payable for business combination		511,364		511,811
Provision for tax, civil and labor losses		652,015		646,850
Contract liabilities and deferred income		4,544		3,986
Other liabilities		47,080		47,516
Total non-current liabilities		1,904,591		1,893,804
Shareholder’s Equity
Share capital		4,820,815		4,820,815
Capital reserve		65,614		61,488
Treasury shares		(23,880)		(23,880)
Accumulated losses		(173,024)		(193,214)
Total Shareholder's Equity		4,689,525		4,665,209
Total Liabilities and Shareholder's Equity		7,403,265		7,333,407

Consolidated Income Statement

		Jan 01, to Mar 31, 2022		Jan 01, to Mar 31, 2021
Net revenue from sales and services		380,581		280,832
Sales		374,734		274,884
Services		5,847		5,948
Cost of goods sold and services		(129,237)		(113,982)
Gross profit		251,344		166,850
Operating income (expenses)
General and administrative expenses		(126,088)		(109,876)
Commercial expenses		(47,933)		(49,509)
Other operating income, net		933		2,467
Impairment losses on trade receivables		(8,896)		(2,609)
Profit (Loss) before finance result and taxes		69,360		7,323
Finance result
Finance income		15,269		5,463
Finance costs		(57,963)		(19,715)
Profit (Loss) before income tax and social contribution		26,666		(6,929)
Income tax and social contribution		(6,476)		1,412
Profit (Loss) for the period		20,190		(5,517)
Profit (Loss) per share
Basic		0.242		(0.066)
Diluted		0.239		(0.065)

Consolidated Statement of Cash Flows

		For the three months ended March 31
		2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Profit (Loss) before income tax and social contribution		26,666			(6,929)
Adjustments for:
Depreciation and amortization		64,287			48,585
Impairment losses on trade receivables		8,896			2,609
Reversal of provision for tax, civil and labor losses		(6,109)			(740)
Interest on provision for tax, civil and labor losses		11,454			5,630
Provision for obsolete inventories		6,780			4,838
Interest on bonds and financing		23,974			6,077
Contractual obligations and right to returned goods		(10,732)			(6,220)
Imputed interest on suppliers		-			1,452
Interest on accounts payable for business combination		13,694			167
Share-based payment expense		4,126			5,271
Interest on lease liabilities		3,596			4,022
Interest on marketable securities incurred		(11,459)			(3,298)
Disposal of right of use assets and lease liabilities		(1,284)			14
Changes in
Trade receivables		(79,574)			3,133
Inventories		26,787			4,564
Prepayments		(17,266)			1,588
Taxes recoverable		(2,434)			(184)
Judicial deposits and escrow accounts		1,245			644
Other receivables		1,123			-
Suppliers		(3,568)			(16,804)
Salaries and social charges		13,153			(6)
Tax payable		(5,852)			(2,000)
Contract liabilities and deferred income		13,976			(3,128)
Other receivables and liabilities from related parties		(9,504)			20,281
Other liabilities		4,880			2,287
Cash from operating activities		76,855			71,853
Income tax and social contribution paid		(523)			-
Interest lease liabilities paid		(3,750)			(4,021)
Payment of interest on bonds and financing		(37,640)			(12,215)
Payment of provision for tax, civil and labor losses		(180)			(9)
Net cash generated by operating activities		34,762			55,608
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant, and equipment		(34,435)			(2,481)
Additions of intangible assets		(19,716)			(9,107)
Acquisition of subsidiaries net of cash acquired		(8,475)			(36,663)
Proceeds from (purchase of) investment in marketable securities		(125,866)			234,819
Net cash (applied in) from investing activities		(188,492)			186,568
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of loans from related parties		-			(20,884)
Lease liabilities paid		(5,654)			(4,977)
Payments of bonds and financing		-			(100,000)
Payments of accounts payable for business combination		(4,511)			(12,378)
Net cash applied in financing activities		(10,165)			(138,239)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(163,895)			103,937
Cash and cash equivalents at beginning of period		309,893			311,156
Cash and cash equivalents at end of period		145,998			415,093

FAQ

What were Vasta's net revenue figures for 1Q22?

Vasta reported net revenue of R$381 million for 1Q22, a 36% increase compared to the previous year.

How much did Vasta's adjusted net profit increase in 1Q22?

Adjusted net profit rose to R$51 million in 1Q22 from R$21 million in 1Q21.

What is the significance of Vasta's 1Q22 results?

The results indicate a strong recovery from pandemic impacts, with significant growth in subscription revenue and operational performance.

What was Vasta's adjusted EBITDA in 1Q22?

Vasta's adjusted EBITDA more than doubled to R$141 million in 1Q22.

How many partner schools did Vasta add in the 2022 cycle?

Vasta added 766 partner schools, serving nearly 1.6 million students.