Good morning, ladies and gentlemen, and thank you for waiting. Welcome to Cogna Educação's earnings conference call on the fourth quarter 2021 results. This event is also being broadcast simultaneously via the Internet with a webcast and audio and slides, and it may be accessed in Cogna's investor relations website, ri.cogna.com.br, banner webcast for 4Q 2021. The presentation is also available to download from the website. This earnings conference call is being recorded and all participants will be listening in listen-only mode. After the presentation, we'll have a Q&A for analysts and investors. At that time, further instructions will be provided. Should you need assistance during the conference, please dial star zero for an operator. The information is available in BRL according to the Brazilian corporate legislation and Brazilian accounting practices, which now conform to international accounting standards, IFRS, except where otherwise indicated.
Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding Cogna Educação's business prospects, operating financial projections and goals constitute the beliefs and assumptions of the companies and are based on information currently available. Forward-looking statements are not performance guarantees. They involve risks, uncertainties and assumptions as they refer to future events, and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors could affect Cogna's future performance and could lead to results that differ materially from those expressed in such consideration. Now, I would like to turn over the conference to Cogna's Educação CEO, Mr. Rodrigo Galindo will start the presentation. You may proceed, sir.
Good morning, everyone. Thank you for participating in today's call to discuss the results of Q4 and 2021. With me in this call, Frederico da Cunha Villa, our Finance Vice President, and the CEOs of our vertical business units, Roberto Valério, Kroton, Mário Ghio Junior, Vasta, in addition to Bruno Giardino Roschel de Araujo, Vasta CFO, and Eduardo Honzak, our IRO and Corporate Finance Officer. Beginning on slide three with an overview about Cogna's, our achievements in Q4 and in the year 2021. Looking at this year, I mean, it has been a difficult year, and we said that the measures we've implemented in 2020 were already bringing on consistent results. Q4 has confirmed this consistency, recovering our student base that is growing in the last quarters. Our student intake is growing volume and also revenue because we don't want to grow volume at any cost.
We're also generating cash, our main focus. Therefore, we feel confident that Cogna is on the right recovery track. We're looking at the results of Q4 2021. Looking at Kroton on the left-hand side, let us try to understand the operational turnaround. First, we see exceptional numbers with relevant and perennial gains. In 2021, we began to capture efficiency gains, and in Q4, Kroton comes from 295- to a positive EBITDA, BRL 191 million, growing BRL 486 million in recurring EBITDA with a 28.7% margin, 25 percentage points better than the year before. Even if we deduct the effects of our doubtful debt, we still had a growth in our margin, goes from 13% to 23%. That is a very robust growth and a sustainable growth.
In 2021, our EBITDA margin goes from 3% to 28.7%. A new level of profitability for higher education, bringing long-lasting results. Now, student intake in 2021 had growth in both volume and revenue. We have a higher intake in three straight cycles in a row, but we believe that it is not worth growing volume without growing revenue. Now, with a growing student intake, Kroton will resume growth in revenue as of 2023. To maintain distance learning growing, and we've had an expansion of partner learning centers. We now have 2,517 learning centers. Thus a great expansion. Talking about medical education, we plan to have 636 medical seats in 2022, with a potential of 5,250 students.
That represents an organic growth of 75% in the number of medical students. Still talking about Kroton, we've had a growth in student base 5.2%, led by 15.1% growth in digital. Another highlight was our growth in programs with a higher lifetime value, medical, dentistry, law, that have been growing sustainably in the last trade cycles. It means we have been able to implement our strategy as announced to the market, growing on digital and hybrid and on-campus prioritize higher LTV programs. Now let's talk about Vasta in the middle of the slide. The 2022 trade cycle began in Q4 2021. As you know, we begin in Q4, and the year goes up to Q3 of the following year, and it marks the beginning of a new chapter in Vasta history.
We concluded the 2022 trade cycle with an ACV, annual contract value, of BRL 1 billion, 35% higher compared to our subscription revenue posted in the commercial cycle of 2021. 30% ACV growth shows we are resuming growth. One of the highlights is our supplementary solutions growing 47%. It strengthens our cross-selling potential offered to a very large client base in our core business. We have a robust client base. Now, let's talk about revenue. In Q4 2021, our revenue soared 16% at Vasta, and we announced the net revenue guidance for Q1 2021, different from previous years when the ACV was concentrated in Q1 and Q2. Now, in 2022, because new products have a different seasonality and because we have a lower PAR revenue, we see less concentration in Q1 and Q2.
Which would be, you know, Q4 in the calendar year and Q1 in the following calendar year. That would be the full commercial cycle. Now, we come to BRL 370 million in Q1 2022 in terms of revenue for Vasta, growing 32% compared to Q1 2021. Now, this revenue guidance is very consistent. I mean, we are already on March 25th. The first quarter is about to end. Adding up the first quarter of our trade cycles, we will reach BRL 768 million. That is, they represent 23% increase compared to the revenue of the year before. It means that our revenue continued strong in Q3 and Q4. 32% growth in Q4 compared. In Q1 2022 compared to Q1 2021, and we continue with a strong performance. Now some more information about Vasta.
By October, Vasta concluded the acquisition of Eleva Learning platform. In November, we started the integration. It's following the plan. We already concluded a few milestones, the definition of the new organizational structure, definition of commercial team, editorial, digital, and the onboarding of Eleva students in Plurall platform. Eleva will now be included in our go-to market for the commercial cycle beginning in 2022 for 2023. Vasta will be able to tap the full sales potential of our new platform. Also important to highlight is the strength of Vasta brands, especially Plurall. In 2021, we started, and we've already spoken about this, we've started important partnerships. For example, Fibonacci Sistema de Ensino. It is one of the top 10 performing schools in the national exam. Mackenzie and the partnership with Macmillan. We already had this partnership, but it's now even stronger.
It's one of the largest publishers in language worldwide. In addition to EdTechs worldwide, offering their solutions, I'm sorry, on our Plurall store now. It shows our capacity to partner with other important brands. Finally, on the right side of the slide, let us talk about Cogna. Cogna's results in Q4 show a performance recovery with a recurring EBITDA 96% higher compared to Q4 2021. We have 20.6% EBITDA margin, so a growth and post CapEx operating cash generation of BRL 494 million. I think this is the biggest piece of news. In 2021, almost BRL 500 million. I mean, it's more than double compared to the previous year. That confirms our strategy to concentrate our efforts on cash generation. Also important, I mean, student intake is key, but we must have revenue.
As we mentioned, student intake and volume has to be followed by revenue. EBITDA is also important. That's why we are also working to improve cash generation. Now, in terms of leverage, it is kept at a comfortable level with a net debt to EBITDA ratio of 2.16 x. It confirms our confidence in the company's future results. We have recently announced a stock buyback program. Now, three of our executives have also announced individual Cogna stock investment plans. Their investment plans are personal decisions. I mean, they are investing their own money without any kind of benefit or special condition compared to the market. It only shows that our executives are confident in the organization. In 2021, we also consolidated initiatives related to Cogna ESG. Our practices matured in line with our ESG strategy. We launched Cogna's commitments for a better world.
This is a public manifesto with our goals until 2025 based on three pillars: balance between people and nature; education, diversity, and human rights; and governance and integrity. We have not only public goals, but also our own internal goals, and they reinforce our commitment with ESG. Now, some examples of our goal, percentage of women in leadership position, percentage of ethnically diverse people in leadership positions, inclusion of LGBTQIA+, among many other goals. As I mentioned, we also have public goals which our society can monitor and follow because it is our commitment to evolve in our environmental, social, and governance practices. Let me now hand it over to Roberto Valério, today, Kroton CEO, and on Monday, he will be Cogna CEO. He'll talk about Kroton operating and financial highlights. Roberto, over to you.
Thank you, Rodrigo. Good morning, everyone.
I'll begin on slide five to summarize Kroton highlights. In 2020, we started actions to restructure our operations and strengthen our operations and Kroton's balance sheet. These initiatives paved the way to resume profitability, and now in 2021, we've began to capture efficiency gains from these efforts that began in 2020. From the operating viewpoint, our student base grew, pushed by distance learning. Student base grew 5% and distance learning grew 15% compared to the previous year, which more than offset the drop we had in on-campus. Now, it's important to highlight that the profile of our growth, growing distance learning is in line with our strategy to focus on hybrid and digital programs and also to prioritize higher lifetime value programs, as Rodrigo mentioned. Our goal is to increase profitability from our operations with higher LTV programs.
Our learning centers, we've implemented almost 1,000 new units, which represented a 63% growth compared to Q4 2020. Now we have 2,500 units. If we were a franchise network, it would be one of the largest in Brazil. We've also expanded hybrid programs and only digital programs, and that has helped pave our way towards future growth. Why? Because they are the basis of pre-contracted programs. Not only the programs, but also the use of our learning centers. They're still maturing, and they will be able to potentialize our growth. Another growth avenue for Kroton is medical education. On Cogna Day in 2021, we announced KrotonMed carve-out. This operation, I mean, this transaction, our goal was to provide more visibility to the market on this business.
Now, as of Q1 2022, sorry, we will begin to report some KrotonMed operational and financial indicators separately. In December 2021 and February 2022, our medical programs were approved in the Mais Médicos program in the cities of Codó and Bacabal. Activities have already started, and the idea is for us to attain 636 medical seats in 2022, and that will help us grow organically this operation in more than 75%. I mean, we can have 5,250 students. Now let me speak a bit more about our turnaround. We now have a total number of probably 5,000 units. I think it's important to remind you that all of this is in line with our goal. We want to become an asset-light operation, and we are going to optimize other operations.
We continue to be present in these cities, but in many cases, we have partners. Now, we've had great discipline in cost control, and that has helped our numbers. Looking for more operating efficiency, we've had a reduction between 13% and 23% in our cost and expense lines. We have also been able to improve collections by 6.2 percentage points even during this challenging environment, and this improvement has helped us generate cash during this period. We have improved collections. We are more efficient in timely collections, and we believe that as we can understand our students better, as we can understand student engagement, then we will have, we'll be more efficient in timely collections. Finally, our financial result had a significant improvement in EBITDA margin going from 3.7% to 28.7% in 2021.
BRL 788 million improvement. Above all, and as Rodrigo mentioned, the most important thing is that this growth brought strong cash generation. This is quality growth. On slide six, we can see some of our student base indicators. Total undergraduate and graduate student base grew 5.2%, especially led by digital, following the same trend of the last few quarters, growing 15% during this period. On the other hand, because of our strategy, we had a reduction in our on-campus student base. Now let me also highlight our average ticket, both segments, distance learning and on-campus. They remain stable in the second half of 2021, despite the fierce competitiveness we've had based on price. I mean price competitiveness on the market. It means that we have been very careful in our trade cycle.
We've had a bigger penetration of digital, so a slight reduction in the average ticket of digital and a slight increase in on-campus average ticket, showing we are being able to prioritize higher lifetime value programs.
This of course offsets some of the other students. With this, I would like to turn to slide seven, in which I will cover our efficiency in enrolling new students. This is the result of our very consistent efforts, and it's a sign of the sophistication of our digital marketing strategies. We have other initiatives. In the year, we were able to succeed in two actions. We had growth of 16% in total student intake while decreasing marketing expenses used for attracting students. This led to a reduction in 35% of the student acquisition cost, the so-called CAC. Even in this highly competitive scenario, we were able to do this, and I believe that we have reached the lowest student acquisition cost in the industry. Now moving on to slide eight, in which we'll discuss.
Rather slide seven, he corrects himself. We will talk about the consistency of our accounts receivable. The coverage ratio reached 59.9%, a high level that enhances our security, and the average time for receivables in out-of-pocket amounted to 60 days, a reduction of 14 days. This is very consistent with the improvement in this economic scenario, a reduction of 14 days overall. Several initiatives seek to improve the quality of our student intake. We used analytics during the enrollment re-enrollment period, and as we have mentioned before in previous conference calls. With the increase in efficiency in collection in the last quarters, we had an increase in timely payments of 6.2 percentage points starting in the first quarter 2020. Consequently, PDA was reduced. In spite of the effect of out-of-pocket, our PDA decreased BRL 379 million.
That is 67% in the annual comparison. With this, the message I would like to highlight to you is that timely payments show a positive trend, and we have sound numbers in our figures. Next on slide nine, I would like to share with you some more detail on working capital and accounts receivables management. We monitor the level of engagement of our students very consistently. This is done to prevent dropout tendencies and also to recognize a dropout as soon as it occurs. Because like this, we drop the student from our base to avoid deterioration of our accounts receivable. As we have said in previous quarters, we are now using a new provisioning model. This model was developed with the support of an international consultancy and shows accuracy of 88%.
It's also important to underscore that none of the model's criteria were changed in 2021. Finally, on our financing programs, it's important to remind you that coverage rates are stable and that we have discontinued PAP in the beginning of 2021 for new students. We see in the graph that there is this increase in accounts receivable, but this is the maturing of the students that were already with us. In addition to this, in the first quarter 2021, we have implemented a change in the PMT model. We are now offering a payments plan along the school year. That is, along the students way they pay instead of paying at the end of the program. As a result of this, they are paying in proportion to the number of months they have studied with us.
This decreases default rates and has been helping us a lot with the numbers in PMT. Moving on to slide 10. Net revenue reduced 12.2% in comparison with the same quarter in the previous year, owing to the reduction in on-campus undergraduate students, which was partially offset by growth in DL. Year-to-date, net revenue was down 13.4% in the fiscal year. Even with this reduction, the changes in hybrid and digital programs, in spite of this reduction of revenue, have a very positive impact on margins, because both digital and hybrid premium are more profitable than on-campus programs, as I have mentioned before. Moving on to my last slide, I would like to highlight that recurring EBITDA in the company had an increase of BRL 486 million in comparison with 4Q 2020, in the comparison.
We have reached growth of BRL 78 million and margin EBITDA of 28.7. Since we are trying to recover our margins, this is something that shows that Kroton is back on track. 28.7% of margin is something that's 25 percentage points higher than in the previous year. Even disregarding the PDA adjustments in the fourth quarter 2020, growth represents 59% in EBITDA, with a margin evolution of 12.5% in the quarter. The evolution on recurring EBITDA and EBITDA margin show that we have put Kroton back on track. We are pursuing the profitability route after the most significant turnaround in our history. We completely restructured our campi. We expanded our partner centers and invested in a strong digitalization program.
With this, I close my presentation and cash generation, and EBITDA shows the quality of the work that has been done. With this, I hand it over to Mário Ghio Junior, Vasta CEO, who will now present on the operating and financial results of his company.
Good morning, Roberto Valério. Good morning to all. I would like to start on slide 13, in which we discuss the Vasta results. Since the fourth quarter, 2021, a new tender cycle began, and we're starting to reap positive results with revenue up 16%, of which 22% coming from growth in subscription products and services. In non-subscription, if we do not consider PAR growth amounted to 34% in the comparison with the same quarter in the previous year or BRL 72 million more in revenue.
In line with fourth quarter 2020, the non-subscription business is losing weight because we follow this strategy, and Vasta is becoming ever more resilient and predictable, with subscription business reaching 87% of our revenue. In recurring EBITDA, Vasta grew 15.4% in the comparison with the same quarter in the previous year as a result of the growth in net revenue and reduction of marketing and corporate expenses. I would like to finish this slide by saying that 2021 was a very challenging cycle, especially the first quarters. However, we have demonstrated excellent revenue performance in fourth quarter 2021, pointing out to a positive 2022 trade cycle and a guidance that the first quarter 2022, whose guidance will be given next, indicates even stronger growth. Now moving on to slide 14. I would like to dedicate a few moments to ACV.
As I said, 2021 was one of the most challenging years in Vasta's history, but we closed the trade cycle with ACV of BRL 1 billion, representing growth of 35% in relation to the subscription revenue recognized in 2021. 22% of this growth driven by organic growth. Here I am referring to the acquisition of Eleva in the other 13%. Complementary solutions had the highest growth rate among all products. We have captured cross-selling potential strongly, something that we derive from our large customer base in the core business. However, only 1/4 of our clients are using one or more products through cross-sell. Our ACV has grown consistently since 2019, an average 20%. We have an average growth of 20%, so from BRL 573 million to BRL 1 billion this year.
This growth is the result of the maturing of our go-to-market together with the qualification of our multi-brand portfolio and the strength of the Plurall platform, which is now the leader in traffic in Brazil and in support to K-12 schools in Brazil. Moving to slide 15. Well, for the first time, we'll give some guidance on the next six months. Net revenue for the first quarter of the year, 2022, will reach BRL 370 million. The overall growth represents 32% when compared to 1Q 2021. However, unlike previous years, ACV is not as concentrated in the fourth and first quarters. We have new products. All the PAR products that were transformed into digital platforms, they are only recognized from the second quarter on.
As a result, there is less concentration in these two first two quarters, and this is very positive for our revenue. There's a better dilution along the year. With this, I close my contribution, and I hand it over to Fred Villa.
Good morning, everyone. We'll start on slide 17, and I'll try very brief in discussing our operating results. In the chart, the fourth quarter, well, we had BRL 203 million in net revenue, so our growth represented 56%, BRL 50 million or approximately 25%. This was driven by the growth in sales in the National Textbook Program that grew BRL 34 million, or in the comparison with the previous month.
Looking at recurring EBITDA, we also see the effect in our EBITDA with growth in our recurring EBITDA of around 40% and a growth of 3 percentage points in margins. Our business is growing very significantly in revenue and also in margin. This demonstrates the strength and resilience of our business in Cogna and especially in the National Textbook Program. Now moving on to the last part of my presentation. I will talk about Cogna. Cogna net revenue. Net revenue both in the quarter. Looking at the comparison with the fourth quarter and the year of 2021, there was a reduction in our revenue. This was the result of the change in mix in undergraduate with more participation of hybrid and digital and less on campus.
Something that also helped Cogna was the strong ACV in the beginning of the 2022 trade cycle. By looking at our figures in the fourth quarter 2021, it was a very tough year for Vasta, but at the same time, very strong for Kroton. 2021 is now behind us, and it is the inflection point. Looking to 2022, we expect our revenue to resume the growth cycle. Now moving on to slide 20. I would like to talk about recurring EBITDA. We see in the two charts recurring EBITDA and thinking of both the fourth quarter and the year of 2021 recurring EBITDA grew BRL 524 million. We started with a negative EBITDA of BRL 1 billion, and we're now at BRL 524 million.
If we disregard the effect of BRL 415 million, our EBITDA grew and reached 27 percentage points in recurring margin. This happened. I have already mentioned that there was a change in the undergraduate mix with a focus on digital. We also work very hard internally to improve our timely payments rate, starting with an improvement in an adjustment to our PDA and also reduction of the corporate and marketing expenses. This, once again, is a sign of our resilience and strength with a strong EBITDA growth, delivering BRL 1.355 billion in EBITDA with a margin of 25 percentage points. Now moving to slide 21. From revenue, we start discussing adjusted EBITDA with the important focus on operating cash generation.
We have reached BRL 494 million in the year. We actually grew twice as much than in 2020. We started with BRL 240 million. We reached more than BRL 900 million. The conversion here reached 36.5% in 2021. Operating cash generation was the focus in 2021. It will continue to be our focus in 2022. Now with this OCG, we would like to reaffirm our guidance of BRL 1 billion in OCG for 2024. As a consequence of revenue, adjusted EBITDA and operating cash generation, let's now turn to leverage. The message here is that leverage is under control. We are feeling very comfortable with the leverage level we have. Net debt over recurring EBITDA ratio reached 2.16x.
This is in line with 3Q 2021, in which we had 207. Just to remind you, in the fourth quarter, we are not having any waiver adjustments on our covenants. We have approved as well a strong buyback program in February 2022, maturing with a due date February 2023. The program is ongoing, is in execution. We believe that, because of the EBITDA delivered and our commitment to operating cash generation, everything is now balanced for next year. Now, on the topic of cash flow and indebtedness, on December 31, 2021, we had a solid cash position amounting to BRL 4 billion. We have enough to amortize our short-term debts.
We have amortization of debt, as you can see in the chart of August 2022 of around BRL 2 billion, and we're feeling comfortable about our ability to meet these obligations. We can also obtain additional financial lines if needed. Since we have such a strong cash with strong cash generation, our net debt represents BRL 3 billion. We have maintained net debt in line with the last four quarters. In spite of the interest rate increase, the average interest rate was around 2%, and now we are close to 12%. Our average cost of debt is the interbank deposit rate + 1.78% with a term of 28 months. Our leverage is in very healthy levels. We have a solid cash position and also a commitment to generate operating cash.
With this, I close my presentation, and I turn it over to Mr. Rodrigo Galindo.
Thank you very much, Fred. Now moving on to slide 24. Well, in this slide we have a summary of the highlights year to date, and it shows everything that happened in 2021 in the company. You can see clearly that, you know, the only downside we have noticed is the revenue from on-campus undergraduate students. This is a result of our strategies, because we're giving more priority to hybrid and digital and courses with high LTV. Now, I think that this highlight shows that, well, net revenue declined 10.5% in the comparison with 2022, but this was expected. This decrease has also been dwindling. The trend is for this to reduce.
Since we have had some student intake cycles with growth, the tendency is that Kroton will resume growth by 2023. Looking to the left, what we can see, it's on campus that's driving this. Now in hybrid and digital, we see revenue growing. Vasta even stronger, 32%. The volume of intakes is going to continue growing with a stable ticket. This is the message. Now looking at recurring EBITDA. Even with the decrease in revenue, we grew from BRL 690 million to BRL 1.4 billion, and the reasons are listed below. Increase in hybrid and digital education, and this brings higher profitability. Also lower PDA and higher cash conversion. Also the new digital marketing strategy that reduced expenses and also improved our financing efficiency, and also a reduction in corporate expenses.
Here we're talking about post CapEx OCG, which amounted to BRL 494 million from a base of BRL 240 million, as we saw in Fred's presentation a few minutes back. This was also driven by some relevant factors. Positive impact of our operating results that I just mentioned. Lower consumption of working capital and higher discipline in capital allocation, and also reduction of lease costs. We have lower revenue but with much more EBITDA and much more OCG, which is very consistent with our plans. Now on slide 25, we talk about our outlook, the outlook for our business units. Let's start with Kroton. What do we envision? We envision double-digit growth in student intake, both in DL and also on campus. This is what we expect.
We won't be disclosing the numbers right now, but, you'll get them in the first quarter 2022, as we have done in the past. We're talking about growth in volume and revenue. Another trade cycle with very healthy growth. Looking at our student base on campus should show a small reduction while digital and hybrid will continue growing steadily. On the fourth bullet, we see KrotonMed growing strongly. As of the first quarter, we'll start disclosing some operating data to the market just to show its strength. Finally, at the outlook for Kroton, we expect that the positive cash generation will continue on the rise. Now Vasta. As of this quarter, we have the beginning of the trade cycle 2022, and we are now at March 25.
The data has been showing that we have resumed our growth curve. Just to complement, we have another source of growth, the B2C platform for young people and adults, to which we'll be adding new products and services. It's also a very attractive addressable market, and we will be announcing those new products very soon. We're feeling very confident that 2022 will be a great year for Vasta. On slide 26, we will talk about Cogna and its outlook. I would like just to highlight a few points. First of all, the B2C platform for young people and adults is moving ahead according to schedule, as presented in Cogna Day. Other services are being developed and everything is moving according to plan. The balance sheet will continue to be sound with leverage at healthy levels.
All of our practices in managing working capital will be driving this. In addition to this, we have started the buyback program, the stock buyback program, and will continue on. We also have the main officers individually invested. Operating cash generation reached almost BRL 500 million in 2021, and we expect that cash generation will continue growing. This gives us the comfort to say that our guidance of BRL 1 billion by 2024 will be reached. Finally, as you know, starting on March 28, Roberto Valério will take over the position as Cogna CEO, and I will become Chair of Cogna.
It was a succession program that started in 2018, in which I communicated to the board that I would like to leave management and focus more on the board issues and also the digital development of the company. There was a development program. We discussed the topic in 2019. We started defining successors, and it became clear to us that Roberto Valério was the right person for the job. He was invited in May. We did not have a specific date, but we had been expecting something in the first quarter, 2020. The pandemic hit, and we decided that it was not the time for changes in the administration. Only when the results were positive and only when the future outlook was positive, this would be the time for change. The two premises were met recently.
We have the positive environment for the implementation of the change, and we announced it in January to the market. It is with a great deal of satisfaction that I give my position to Roberto Valério, such a great officer of the company. I would like to express how happy I was along this journey. There were highs and lows, but the journey was amazing. I can show you this by two facts. Our revenue was BRL 600 million, and our revenue increased 9x or 22% CAGR for 11 years in a row. EBITDA grew even more. It grew 26%, 34% a year for 11 consecutive years. With high peaks and lows, it was a very successful strategy.
We impacted the lives of over 1.7 million students that are taking undergraduate programs in Brazil. It's been an honor to participate in this. I would like to thank our 20,000 employees who dedicate their lives to education and who made it possible. Roberto, welcome to the new position, and please know that you can count on my support as Chairman of the Board to lead this organization through another very successful cycle. With this, I close the presentation, and you're all invited to participate in our questions -and answers-s ession.
We will now start our Q&A just for investors and analysts. If you would like to ask a question, please dial star one. If your question is answered, you may leave the queue by pressing star two. The questions will be answered in the order they are received.
Please take off the headset from the hook as you ask your questions. Like this, we'll have better sound quality. Please wait while we collect the questions.
Our first question comes from Vinicius Figueiredo from Itaú Bank. Vinicius, you may begin.
Good morning. Thank you for taking my question. I'd like a bit more color on average ticket for 2022.
We have seen Vinicius' line dropped. Let's move on to the second question. Our next question comes from Marcelo Santos from JP Morgan. Marcelo, you may begin.
Good morning, everyone. Thank you for taking my questions. First, Galindo, congratulations for your 12 years building Cogna. I wish you great success in your new function. Now, my first question is about the distance learning competitive environment. What do you see around in the market? How are the competitors behaving? Next, I'd like to know about out-of-pocket students at Kroton. What do you expect on this front? You've had a significant improvement in on-time payments, so what do you expect from now on?
Hello, Marcelo. This is Rodrigo. Thank you for your comment. I'll give the floor to Roberto Valério. He will talk about the competitive environment.
Hello, Marcelo. Thank you for the question. Well, it is a competitive market. It has been for a while. Maybe more recently, it's become more competitive in terms of pricing. You know, you see price offers that are very aggressive. It doesn't mean we will move from what we've been doing successfully. We want to become more sophisticated, and we will reduce price and do promotions only when it is absolutely necessary. I confess to you that it is a difficult context. We will have to continue to work week after week to maintain our average ticket at the level we want. We've been successful so far. The competitive environment was already fierce in the past. You know, to add some more color, I'd say that, yes, I see we will see.
I believe we will see more aggressive price offers in the second quarter and third quarters.
Hello, this is Fred. This is your question about PDA. Well, I think the answer is that we are improving on-time payments, and the PDA is just a result of that. As we improve on-time payments consistently, last year, 6 percentage points, and in the last two years we've improved 8 percentage points. Therefore, the effect of this improvement translates into cash. If you look at operating cash generation, 2020, BRL 240 million, and in 2021, BRL 484 million, it shows that we should not be more concerned about PDA. Of course, we need a more conservative criteria. This is what we have.
We look not only at on-time payments, but we look at the whole credit score of that student, the whole credit profile of the student. We began to do this in the end of 2020. Every day, we monitor the credit quality of our students. From now on, we will continue to see improvements in on-time payments, and so therefore PDA will necessarily be lower. Now I'm just looking at the first two months of the year. We're keeping the same level of on-time payments, which generates operating cash, and so that effects can be seen on PDA.
Right. This is Rodrigo. Let me add. Talking about on-time payments, this was not something we got for free. If we had continued with the same practices as before, we would have higher default levels. However, we've conducted a number of actions.
We now have a much more sophisticated process, more accurate systems for collections and for credit profile analysis. Our policies, our renewal policies is now more conservative and accurate, because otherwise we could see a lower quality of student payments. Many times you have revenue that does not translate into cash. Now we have very strict criteria for renewals. Most important, in my opinion, we now quickly identify, detect students' engagement. If the student is no longer engaged, we can exclude from the student base faster. Otherwise, I mean, if we don't recognize that quickly, then it may take months. After some time, when the student is not engaged, it's much more difficult to receive payments on time. Now we have a system to identify student engagement and then exclude that student from our student base.
What is the effect of this practice? Lower revenue, lower EBITDA, but a much healthier accounts receivable. Our focus on cash generation is about this. That is why we feel comfortable, and we have a lower PDA, which is only natural.
Yes, thank you. Very clear.
Our next question comes from Vinicius Figueiredo from Itaú Bank. Vinicius, you may begin your question.
Hello, good morning. I'm sorry, my line dropped. Now I just wanted to hear some more about the last question, talking about average ticket for 2022. You mentioned that inflation is being included in payments for senior students, but what do you foresee in terms of pricing? Because as you expect more volume growth, and I mean, historically, sometimes students, they join because of a more aggressive price policy, and these are more prone to drop out. I'd like to hear you on this.
A second question, if possible. Would you please talk about, again, prices or average ticket, especially for KrotonMed. When you talk about 2022, what do you see in terms of base scenario? Are you going to be able to pass inflation rates on to senior students, or what's going to happen to these medical programs in terms of pricing and average ticket?
Hello, Vinicius. This is Roberto. I will answer your question about average ticket. I think there are two important aspects. When we decided to move digital, we did it knowing that potentially there would be more price competition, and therefore we have much lower cost for distance learning, so we have more flexibility to work. Even if we have a lower ticket, we can have a higher profitability when compared to on-campus students because of the cost, basically. This is the first important aspect.
Although price competition is greater on digital, it's also fierce on campus. We have more flexibility on digital because of our lower cost structure. In terms of our strategy, we want to bring students that we believe will be able to pay for the average tickets that we already have on our student base, and who will also be able to bear inflation rates. I mean, because if I provide very aggressive prices for them to join, and then in the second semester, I change my strategy, and I want to include inflation, which is about 10%, and also recover the average ticket. Knowing the profile of our students, then we believe we would have a much higher dropout rate. We've done this before, and for us, it did not work.
That is why we prefer to have maybe a lower volume, but students that will come in paying a reasonable price, so they will be able to bear inflation effects and also average ticket recovery without dropping out. That's our rationale. It does not mean that we will grow 1%, 2%, 3%. We want to grow double digits also in volume. This is a daily giant challenge, but we're working for that.
Well, the second point, I think that our brands are very strong regionally. There is a candidate or applicant-seat ratio that's very positive. We are able to introduce increases. There is only a slight change in our more traditional units, such as Uniderp and other more consolidated brands in regions that are wealthier. As a result, the average ticket is higher than the regions where we're breaking new ground. Since we're a new entrant, of course, a long time we'll be able to introduce price increases, but it's only natural that as we enter this market, we will not have the same prices as more established players. We have been able to transfer inflation in our prices as well, and we don't expect any difficulty in doing this, at least for now.
Thank you very much.
Thank you.
Our next question is from Yan Cesquim from BTG Pactual. Yan, you have the floor.
Good morning, everyone. I have actually two questions, if I may. The first one is a follow-up from my colleague's question. Focusing on the intake volume, I would like to understand and considering what you are allowed to say, we would like to have a little more granularity on the student intake cycle. We understand that the volume is growing in DL, and you wrote on the presentation about on campus that there is, in the end, an ultimate decrease in the total base. I would like to understand a little more about the dropout rate with more detail as well. My second question is about margin expectations for the year.
There has been a very significant improvement year on year in spite of the smaller base in 2021. What can we expect for 2022? Margin expansion, or are you feeling the pressure of inflation in costs? And as a result of this, will margin be more stable in 2022?
Hi, Yan. I am Rodrigo. I'll start, and then I'll turn it to Rodrigo and the impact. Well, yeah, unfortunately, we cannot give you much color on the student intake cycle. We have disclosed some information on the release, but we're expecting double-digit, both on campus and DL. Even stronger DL than on campus, but with the same price discipline. We don't want to erode our volume. This is the most we can tell you.
With the first quarter results, we'll also give you more color on this. The student intake is growing well, and it's important to underscore that revenue will grow. This is what we believe in. Yeah. In a student intake cycle, the important thing is that revenue is always growing. With a higher ticket, with a little more volume, well, this will depend on the conditions of the different locations. The driver is always revenue growth. This will happen in the first semester of 2022. Now, let's make a distinction between Kroton and Vasta. In Vasta, 32% growth. We've talked about seasonality. The second and third quarter will have a stronger weight. With revenue growth comes increased margins and increased cash generation.
In Vasta, we expect significant growth in margins in the comparison with last year. At Kroton, I'll leave it to Roberto to comment. We made many restructuring changes. We still have digitalization bringing in more students, so digital will be even more important because it's attracting more students, and this will drive bigger margins. There is some pressure on revenue in Kroton, very slight, but starting in 2023, when the revenue starts stops declining, we envision stability or some increase in profitability in Kroton, in spite of all the difficulties that Roberto will explain now and that cause an impact on this challenge. We want to maintain profitability in Kroton. Roberto, could you please tell us a little bit more about the pressures and what we can do to offset them?
Yes.
Just to complement Rodrigo's answer, at the end of the second half of the year, we were feeling more bullish in relation to Kroton's margins. We believe that we would be able to continue growing consistently. We still believe that this is possible. As you know, the economic conditions are more adverse, with inflation going up. We still believe we can pursue some growth in margin, rather than a decrease or at least stability, but we will have to fight three pressures. First of all, inflation, as you said. Nobody was expecting inflation to be as persistent, and especially looking to the future. Point number two, a small decrease in revenue with a recovery expected for 2023.
Finally, now that students are going back to campus, there will be more pressure in our unit costs, with an increase in utilities costs in general and cleaning. We'll have to fight those effects in order to deliver our results. But as Rodrigo said, our structure has been reviewed, and we know how to maintain our conditions, but we have those three factors to fight against, as I said.
Thank you very much for your answers.
Our next question is from Vitor Tomita, Goldman Sachs. You may proceed, sir.
Thank you very much. I have two questions, in fact. Firstly, could you give us a little more color about the Ampli partnership? And what about the perspective for other partnerships that will help you with your student intake?
Also about leverage, considering the current conditions in this industry and possible consolidation moves and the level of indebtedness at the company, how do you evaluate potential opportunities or other possibilities of buying new companies? Thank you very much.
Rodrigo here, Rodrigo Galindo. I'll start with the second question on capital allocation. Then we'll try to explain the partnership to you, the partnerships. Well, Cogna's history has been characterized by M&As as a value driver, so this is part of our DNA in the company, but we're very disciplined. We only go after an acquisition if it will really add value. You know, if it's just buying for buying, it's not something that we will pursue. We believe that some opportunities may appear in the horizon.
However, our focus is in consistency of growing organically, generating more cash, delivering our guidance of BRL 1 billion by 2024. This is our basic script, right? Now, if an M&A can add value to shareholders and then we might consider it. There are some assets that are underpriced right now in their valuation, but we also have this perception of our business. This gives us some room for exploring those opportunities, but at the same time, we cannot really use equity for this. So of course, we are now with a buyback program because for us, the best way we can allocate capital right now is investing in ourselves. It may occur, but nothing will really deviate us from this idea of generating value with the assets that we have in-house already. I'll hand it over to Valério.
Vitor, to answer your question about Ampli, it's going very well. We are very satisfied with the results. First of all, because it's a disruptive brand in which we conduct several product tests, and if it works, we can translate this into other brands. It's our brand with a lot of technology involved, and we're doing extremely well. I'll try to give you a little more color about the first quarter in terms of volume, but I can assure you that Ampli was able to close with several new students. We have a team dedicated to the project. They benefit from the information we have accumulated. We have very good communications channel through SMS, and a network or chain of stores and everything creates very good learning opportunities.
Now, the challenge is to find the students who want to take an undergraduate program within this base of 60 million. It's important to find the best approach to talk to them, and this is something we have been working on every month. But from the student intake perspective, it's going very well, and we think that the results will be even better in the first quarter. I cannot give you any further details, but. Well, all I can say is just wait for the next earnings call.
Thank you. Thank you, Galindo. Thank you, and good luck to Galindo.
Thank you, Vitor.
Our next question comes from Vinicius Ribeiro from UBS. Vinicius, you may begin your question.
Hello, everyone. Good afternoon. Thank you for taking my questions. I've got two. You mentioned about pricing strategy. Now, could you provide some more details about the impact that hybrid programs have on your strategy? You have been using hybrid programs as a moat, as a system to defend your student base. I'd like to see some more color on that. I mean, what is the impact of hybrid on revenue and also on cost and margin? About Vasta, this question goes to Ghio. In 2020, we saw an interruption in the growth trajectory that had been designed by the company. Because of external factors, we know.
Now, looking at the next trade cycles, what do you expect in terms of behavior change? Do you think that programs that have more technology embarked, do you think they could gain more momentum in the next trade cycles? What can we expect in terms of organic consolidation on that front?
Nice. Very good question. Thank you. Talking about hybrid, we believe hybrid is a nice alternative. I mean, the perfect alternative for on-campus when a student cannot buy on-campus programs. Let's look at the nursing program. Almost 70% on-campus activities in the hybrid model. But of course, we have better margins. It's a lower revenue than on-campus, right? Let me see if I find some numbers. Hybrid between 20%-30% lower cost or lower price than on-campus.
In terms of cost, it has a much lower cost compared to on-campus, especially when you have small classrooms, small groups in each classroom. A few meetings ago on Cogna Day, I showed you a chart with two curves, one showing margin evolution, so the effect of having more students per class on hybrid and also on-campus. The conclusion is that when these two curves cross each other, that is when I have too many students in each, like 60 students in each classroom, it is much more profitable to work on-campus because the average ticket is higher and the cost is fixed. However, when you have only 15 or 30 students in a classroom, hybrid is nicer because we have a lower cost. Although the revenue is lower, you have less cost that will dilute that revenue.
Now translating into our market, the demand is not so high as it was in the past when we had lower inflation and no economic crisis. On average, our classrooms have fewer students than historically. Hybrid is the most profitable solution because students can pay for that. The price is 20%-30% lower, and it's profitable for us, especially when you have small classrooms, which is the current reality. If you wanted some more color for hybrid, this is our reasoning. Let me just remind you that in general, our strategy, I mean, we provide on-campus and hybrid programs in each marketplace. We monitor the demand, we look at the number of students per classroom, and then we will try to guide students to hybrid or to on-campus, depending on the numbers.
Roberto Valério, I think there is something really important which has not been touched, and we hear questions about this. When you can be profitable with a cost, even when your average ticket is lower. I mean, look at the number of people. How many people can pay BRL 1,000 a month for the nutrition program? How many people can pay BRL 500 for the hybrid model? You see? It is not directly one for the other. We have a lower average ticket, but higher margin and a much bigger addressable market. You have to consider addressable market.
Thank you. It was a very nice question. First, I want to agree with you know, in terms of the impact. The schools in general have felt this impact.
I mean, if you look at our operating indicators in terms of the number of students per school, we've grown consistently, but many of these schools ended up having fewer students, and so we had a lower revenue. I think we now are going to overcome this problem in the current cycle. About the future, Vinicius, what do we expect? First, you have to know that we take students from small and medium-sized players who cannot really react and face the technology challenge that schools need and that family needs, you know. This is not a dogfight between the two big players on the market. What we see is that smaller players who had nice products and nice history, they can no longer compete in the current scenario.
We are prepared not only to grow organically using, you know, our own efforts, but please consider that we're ready for cooperation, which is, you know, competition and cooperation at the same time. Fibonacci is a good example. Mackenzie is a good example. We will soon see other partners, you know, who will be using our platform for them to grow. That's good for us as well. That's why we have perhaps less appetite for consolidation. We don't really have to buy anyone to continue to add value. Even, you know, we add value from the competition. Now in terms of growth, I think that considering the number of students, you know, a bit less than half of the existing student base is still in small and medium-sized players. We will still need some time before we have them.
This is now our second year of supplementary solutions, and this is the segment or the arm of our operations that are growing the most. They're growing fast. We have only reached 1/4 of our client base with only one product. There is a lot of room for growth as we prepare for the third cycle, which will be our digital products. That is, we will be using our huge ecosystem to provide private tutoring, adaptive platforms for reinforcement classes, also therapy. We will begin to provide therapeutic services to schools and families. Some of them might even need financial services. Why not provide these financial services to them? Buying competitors does not really make any more sense now because we already have access to their students and we can provide our platform so that our competitors will grow, you know, in this competition collaboration.
In the other trade cycles, as I mentioned, we feel very optimistic. We believe that the growth we've seen this year will continue to be seen in the future as we originally planned.
Our next question comes from Luiz Ubeda from Credit Suisse. Luis, you may begin your question.
Hello. Thank you. Thank you for the information. Thank you for taking my questions. I have a somewhat different question. Thank you for this opportunity. As you say, you know, the company is now concentrated on post CapEx operating cash generation, excluding M&As, CapEx that you have, you know, in operation seems to have been reduced. EBITDA is lower compared to revenue, and it's also nominally lower. My question is, I mean, behind these numbers, you are also generating cash. You have conducted the turnaround.
Now, do you believe it might be possible to update your assets?
I mean, make changes in your learning centers or your campuses?
Hello. Thank you for your question. This is Rodrigo. Yes. There is some fluctuation, you know, comparing the investment of 2020 and the investment in 2021, but it's not really significant. I mean, first we have optimized the use of our capital, capitals invested in the company, and we're using capital more smartly and also more in line with our strategy. We never invested so much in technology, for example. Let me give you some more color. The whole digital transformation process we announced in late 2017, I mean, not only has it changed the culture of the company, we now have a company that works in education technology. 30% of our employees are technology professionals or product professionals. It shows we are a technology education company.
Now, in terms of technology, the whole digital transformation, all of the improvements in student experience are based in legacy systems and a poor architecture. Technology architecture, we built a technology backbone that can receive and host new applications for the whole student journey. I mean the financial journey, the academic journey, and we are already testing and experimenting with these journeys now. In July, all freshmen have actually tested these journeys. This is not something we're planning for the future. Obviously, there's a whole process to migrate students from one system to the other. We don't do that all at once because we don't want to run those risks. This is the type of investment we're making in line with our strategy, which is to provide the best experience of digital education. This is our goal.
We set that in 2019, and now we have been successful by replacing our systems and the investment we need to do that is being made. I mean, we did not stop any investments just because we wanted to have a good post CapEx cash generation. We are now more in line with our strategy. I think this is the message. Thank you.
Thank you. Very clear.
One more time. If you have a question, please enter star one. Please wait while we collect more questions.
Thank you. If there are no further questions, I would like to hand it over to Mr. Rodrigo Galindo for his final remarks. Mr. Galindo, you may proceed.
Thank you. This is my last earnings conference call at Cogna as a member of the administration, but I'm very pleased to hand over the staff to Roberto Valério, and I would like to acknowledge my gratitude to the financial market. We've always shown great respect for the financial market, so we would like to thank the sell- side, buy- side analysts and other members of this market. Thank you very much, and we'll see you in other events of the company when the board is involved. Thank you so much.
Thank you very much. The earnings conference call is now closed. Please disconnect your line.