We will be talking a bit more about this partnership during the day today. We're happy to see we have quite a few market analysts, and we're always trying to innovate. Not only the place where we hold the meeting, although it also helps to hold the Kroton Day in this building. We always try to innovate in content and talk about topics that are currently being discussed by the market, and we did it again this time. I tried together with our investor relations department. I tried to look for topics that are being discussed in the market, the issues that the market is discussing, what you want to know about Kroton or what you don't want to know sometimes. The answers, they were not really far, because I asked the same question inside the company as well as outside.
Of course, the answers helped, but they were not enough. We tried to find who to ask this question. We said, "Maybe we need to ask an organization." I asked Siri. "Siri, how can we have an innovative Kroton Day?" "Hello, Carlos. My participation in Kroton Day is already a good first step. Additionally, I would suggest executives would tell analysts about the main news and opportunities the company will have in the next few years." Thank you, Siri. Yes, we do have lots of content about this. What about the agenda? Of course, the agenda. First, we'll have Rodrigo Galindo talking about Kroton's position. Next, Mario Ghio will talk about opportunities in primary education. Roberto Valério will talk about undergrad. Then Júlia Gonçales will talk about expansion in undergrad. Rodrigo Galindo will talk about digital transformation.
Great content, and we will also open the floor for Q&A in the end. We expect to close our day by 6:00 P.M. More than this, we want to know if with all of this content, will the stock price go up? "Yes. Kroton's stock prices are extremely low right now, meaning the market is not doing their homework." I agree, Siri. I couldn't agree more. Siri, what else can we do to make it happen? "Carlos, I recommend you call Rodrigo Galindo to begin his presentation. We wish you all a good Kroton Day." All right, you have the floor. Hello, everyone. Good afternoon. Thank you for being with us. One more Kroton Day. We don't have a lot of time, and we want to talk about many things.
The first presentation will have 30 or 40 minutes to give you a strategic view, a general view about our 3 big lines of business. We tried, more than talk about details about each line of business, we wanted to tell you the big messages. What can we expect for our 3 lines of business, and then talk about the opportunities we see ahead in undergrad business, in continuing education, and also in K-12. We feel highly optimistic about the 3 lines of business. You will see that during the presentations. Every slide we show will give you more details about our business. Please feel free to take note of your questions. We will open the floor after each presentation, and also in the end of the day, we will open for a specific Q&A session. Let's begin. Kroton's positioning.
As of the Q1 2019, we will have a few changes in our reports with the onboarding of Somos. We will make analysis on 2018 so that we have comparable numbers. We will provide the highest possible transparency, showing the company the way we view it strategically. Today, on this Kroton Day, we will be showing the company in this way that we look at it. We will talk about three lines of business. First, undergrad. In 2018, the revenue expected would be 69.2%, representing 69.2% of our net revenue. Continuing education in 2018 would represent 3.4% of our net revenue, and K-12, 27.3% of our net revenue. Continuing education, we already have continuing education from Kroton, plus that piece of Somos we call SET, technical education, and Somos Higher Education, which is now included in continuing education.
Kroton plus Somos together represent 3.4% of our net revenue, we have a lot of room to improve this share. In K-12, we have Somos, except for SET, plus Kroton K-12, that adds up to 27.3% of the net revenue. Let's begin from undergrad. What can we expect? It is the most relevant business for us, represented almost 70% of our net revenue in 2018. What can we expect from now onwards? First, accelerated growth. We will be talking about how this growth will take place. 2017 and 2018 were years when we sowed the seeds for this growth. We will talk about the new units for on-premise learning and also the new distance learning poles. We had growth, new units that were set up in 2017, 2018, and projections for 2019, so you will see how many seeds we sowed.
The harvest will begin as of 2019 and 2021. We feel very comfortable with this strategy. Growth will come. The first results are really positive. Júlia will talk about growth, showing the first results. We feel really happy with the early results of our organic growth strategy. We will talk about our new units, the ones we have built, and the ones we will build now. Together with accelerated growth, we expect to have margin stability in same stores. The accelerated growth will come from new stores, which, of course, consume margin in the first months. In the same store concept, we will deliver margin stability. We still have pressure on margin in same stores. For example, students from FIES that have left and who will still leave.
The percentage will be smaller than in 2018, it is still relevant, it exercises pressure on our margin. We will show the opportunities to gain efficiency so as to neutralize this margin reduction. We expect to have margin stability in same stores. As we add new stores, we will have pressure on the margin. We will tell you how much this pressure will be, as they reach maturity, we expect to have the same undergrad margins we delivered in 2018. What do we expect? We expect to grow our top line and deliver stable margins in same stores. This is the short story of what we expect in undergrad. Let's talk about the accelerated growth. In 2017, we had 112 units. In 2019, we already have accepting enrollments 183 units, a growth of 63%, 71 new units.
These 71 new units have brought to us approximately 3,000 new students. It is more than 200,000 students as they reach maturity. We are very comfortable that this growth will generate a lot of value. Of course, it has some initial impact, and we always want to make it really clear. Ever since we implemented the Greenfield project, we want to generate value in the mid and long term. We want to create value for our shareholders, and this strategy was sowed in 2017. We knew it would not generate value in 2017. It would consume cash, it would consume EBITDA, it would consume operating cash because the new units have a negative cash in the first year, but we knew they would generate value in time. This is a summary. What is the impact of the Greenfield? What is the profile of the Greenfield?
Break even for EBITDA will be in the third year. In the first two years, it will consume EBITDA. In the third year, it will reach the break-even point in EBITDA, reaching the same level of margins of post-secondary education and maturity. That is, as these projects mature, they will no longer hurt the margins of undergrad, and they will begin to generate cash, positive cash, as of the fourth year. The first three years, it will consume cash. As of 2018, without considering the past impact, it will generate an impact between 100 and 300 basis points in the undergraduate business in the first three years up until maturity, because at maturity, the margins will go back to 2018 levels, the same we have in same stores. However, we have the IRR above 35% in perpetuity, it really generates value for shareholders.
It is a combination of projects that will bring value in the first moment, in the short term, and strategy that will generate value in the long run. Of course, we had to pay the price for that in 2017 and 2018. 2018, we are already seeing some Greenfields in the third year, the ones that were implemented in 2017. The negative impact on operating cash is less, and as of 2020, we will begin to have a positive cash generation impact. The first results are above the numbers that we expected. They are above the basis points that we provided to you. Júlia will give you some more information on that, this is the growth potential. That is, we feel happy and very optimistic about the revenue growth in undergrad in our own units without hurting the margin.
That is, they will hurt the margin only up until maturity, but at maturity, they will deliver the same margins undergrad delivered in 2018. Partnerships. In 2017, we had, I mean, before 2017, we had 910 centers, and we were limited to growing 200 centers in 2017 and 2018. This was the regulatory bonus. Now we have recently received approval. The evaluation has been approved. We still don't have the final decision, but two distance learning institutions with concept 5 or grade 5, and we believe this will soon have final approval. We will have the possibility of opening 950 centers. It doesn't mean we will open all of them, but we will have this opportunity. Why is this important? You might counter-argue and say, in the five last interactions with you said that one thing is for us to have an accredited center.
Something really different is to have a well-implemented center with the right partner, trained partners, sustainable growth as part of the same network of centers so that the management will have support. This is what we mean by having an implemented center. This is what we do. We implement centers in a satisfactory way. What is the value of having 950 new centers? While we were implementing 200 centers a year, our competitors could implement many more centers than we could. Now we can grow at the same pace as the competition. However, we will grow protecting the same quality as we implement new centers. The differentiator in distance learning is no longer the regulatory barrier, but the quality of the product and the quality of the network of partners.
We feel comfortable we have the best product on the marketplace and the best structure of partners. Marcelo will talk a little bit about partners, and he will give you some color on the management quality of our partners. We've spoken about this in previous Kroton Days, and the numbers truly show the high quality of our partner structure. Although we tripled the number of accredited centers in Brazil, 3,000 or 4,000 centers in 16 years from 2000 and 2016. In 2017 and 2018, we attained 12,000 centers. We had a huge growth of distance learning centers, and we were able to increase the absolute number of enrollments. The strategy was right. Our partners were solid. Our product was well-structured. We have all the necessary features to differentiate our product, providing distance learning in the new scenario of more regulatory flexibility.
Now, good news, we can also grow at the same pace as competitors. The scenario is much more comfortable for Kroton as of 2019. This is about our expansion, the accelerated growth in undergrad. Many more units, many more distance learning centers. Of course, there are many other elements of growth we did not mention. They will also contribute for growth. For example, portfolio in the on-premise program, portfolio also in distance learning, premium distance learning. Many strategies that will also contribute. The two main strategies will be more capillarity, more units for on-premise learning and more DL centers. This is the strategy to grow. The second thing we said about undergrad is margin stability in same stores.
Now, how are we going to attain margin stability in same stores if we still suffer pressure because FIES students are still dropping out even in 2019? First, let's talk about this issue of FIES students dropping out. You will see this scenario. You will see that the year we suffered more pressure was 2018. We will hit the guidance. Then, 2019, we feel very comfortable because we are already considering this dropout rate in the budget, and we know 2019 will be a good year. As of 2020, there will be no more strong pressure on this. Yes, FIES students dropping out generated a lot of pressure, in 2018, we were already capable to neutralize the impact, and we still have a little bit for 2020. What are these levers that I mentioned?
Well, Kroton will now have fewer opportunities to gain efficiency. Other companies still have more opportunities for that. Let's see if this is true. Here we try to organize. When we talk about efficiency, cost comes to mind, but it is not the only metric. We looked at efficiency in 3 blocks: cost efficiency, commercial efficiency, and retention or loyalty efficiency. Cost efficiency, I think the information is correct. We started in 2010 when we started to integrate Kroton and Unic. We captured lots of synergies and efficiency up until 2018. We still have some efficiencies to capture. You see this blue line below the pink curve. We still have opportunities to capture cost efficiency through digital transformation, but it is not a big portion. Look at commercial efficiency.
Here we still have a lot of efficiency to gain, but the main lever to improve our efficiency will be loyalty or retention. We started to capture this efficiency as of 2016. We already have a few results in terms of retention, but this is the great value that we will attain by improving the retention rate. In all of these projects, digital transformation will be the great engine for us to harvest benefits. How is digital transformation going to impact this challenge? Look at the column on the right. Beginning on the pink from cost efficiency, you remember the PO, the operational research per student. We are now going into the 4th phase of this research. It is a true revolution. We are rerating most of the system, we are breaking the concept of class, and now we will have operational research per student.
We actually had to rerate the system because we are now adopting this concept of operational research per student, which we did not have in the past due to system limitations. But now we can do that. Strategic sourcing in wave 5, a whole array of activities that come from digital transformation, they can be summarized by saying we will centralize and automate activities in the units and also corporate. Pervading self-service, this is now being implemented in all the waves of PIs in development, this will improve or increase the level of self-service, it will also improve our efficiency. This is how we will capture this final portion of cost efficiency, through automation and centralization. The same thing applies to commercial efficiency. Technology is the name of the game here again. We have 6 exclusive teams of development.
We will talk about this in more details later on. 6 teams to look at the students' entry process. We now have the new PUC, the unified enrollment portal. We will talk about the performance of this new portal compared to the previous portals, which were already good, but now we are at a higher level, a higher level of system architecture. We were able to do this only because of the digital transformation, which has provided integration between technology and business. The optimized model for offering disciplines, which will again improve our revenue. We will be reselling disciplines to students. Maybe they were transferred and they need some disciplines. Again, it is technology helping us be more efficient, also commercially. This is true, more than true again, when we talk about retention efficiency.
While we have 6 exclusive teams working on commercial efficiency, of the 50 teams we have in our model, all of them are somehow working directly or indirectly in retention, all of them. Everyone has retention as one of the main drivers. None of our teams can develop solutions which are not considering the students' perspective and the students' retention perspective. Of course, this will have a great impact. We've just implemented CX and UX, customer experience and user experience, to think about the students' journey. A new model of evaluation, which is disruptive, it is changing the concept of evaluation, also based on technology, and it was again made possible because of the digital transformation. Now we are replacing all of our transaction systems using a decoupling methodology.
We're adding module by module on new platforms with new languages, new system architecture, so that the students' experience will be much better than today's experience, so that we will be able to retain more students. If you ask me, what is the size of this opportunity? In the agile model, it's difficult to measure all the opportunities because ideas happen during the development. You do, you have an idea, you test, you pilot, you test the value. If it's adding value, you implement and roll it out. If you test and it didn't work, you test another option. When it works, you bring it to the whole organization. It is no longer the old model where you have a project, you test, you need a year and a half to roll it out. No, agile is really agile.
It conducts tests and pilots, you do all the time prototyping and testing. This is already happening. We have seen that in all cases, all the prototypes we've tested so far and all the retention ideas that we prototyped on the system and implemented, they're all generating more value than expected. Dropout predictive models. All retention projects are generating better results than expected. If you look at the dropout results of the third quarter compared to the previous year, we had a reduction of 0.17%. The number of students of FIES is much lower than the number of FIES students we had a year ago. The dropout should have grown dramatically. Not only have we neutralized the effect of the FIES cluster, we were so efficient that the dropout rate overall was reduced.
This is, of course, a result of our retention projects, technology has been a great ally. That is why we have this huge opportunity in blue. We do have elements in-house to be more efficient and thus neutralize the dropout of FIES students in 2019 and still a bit in 2020. This was the message on undergrad. Margin stability in same stores. 1,000 stores that will create an impact of 300 basis points until maturity and revenue growth, because we will have more units and more centers. This is a long story cut short. It represents 70% of our business. Continuing education, 3.4% of our net revenue, bringing together Kroton plus SET from Somos. Of course, we have a huge potential to tap. This business is going through transformation and digital transformation. Let's understand more of this business.
Well, basically, we have lots of opportunities to capture synergies as we bring together these two worlds, Kroton and Somos. We have an opportunity to gain market share by segregating operation and gaining focus. Two years ago, we decided to do this. That is, to take continuing education, separate this business, and provide more autonomy to continuing education. At that time, it represented only 2% of our net revenue, and it was never given priority, to improve the systems or to change its processes or services. It didn't grow very quickly. We started a project called Discovery, and we detected that continuing education needed more autonomy. We did that. Actually, we created almost like a company. They have commercial autonomy, marketing autonomy, process autonomy. They can choose their own technology. They can work with academic issues. They now can grow, and the results can already be seen.
We're very happy with the results, and now with SET, we will only accelerate this opportunity of growth.
We have another great opportunity in digital content and new opportunities for vocational schools and high schools. The education council has just approved the curriculum for high school, and now the state boards can approve 20% of the digital content for high schools in daytime and 80% for high schools with classes for youth and young adults. If the state implement the curriculum, Kroton will be ready to step in as a very important content provider because we are the largest content and education provider in Brazil and also the largest digital player. We'll be able to offer this service with top quality to the schools that need it. We, of course, have no influence on the definition of public policies, but once a public policy has been defined, we can provide several different services. What can we expect from continuing education?
Growth of top line with growth of margins. In one slide, let's see the picture of continuing education at Kroton. We have six main areas. We have post-secondary and post-graduate. Here we're talking about 1,300 points of sales, an NPS of 40%. We have an area of technical schools and undergraduate schools, Saraiva Educação, with over 80 institutions. I mean, 2 million students use Minha Biblioteca. Content provision, and all of the brands that came together with Somos, and we also have a technology area that's dedicated to B2C with free courses and with the course labs, and also preparation for competitions, public examinations. We do a lot of work. There is a whole segment in B2B under the concept of platform-as-a-service and B2C with customized services offering technology solutions directly to our consumers. Everything's supported by our digital transformation process.
Our technology department is making very good progress in this endeavor. Today, 100% of our development is agile and can be put into production in any given moment. We have several cloud applications, data analytics and cloud services are being offered to our students, and our customer experience focuses on the learning experience. Everything that we're implementing in our undergraduate courses has already been implemented in continuing education. It's very interesting to keep track of their progress. Here, once again, we have an NPS of 40% in post-grad. It's something that's very uncommon to find, with a recurring NPS. This is much more prevalent in sporadic consumption activities. Let's turn now to K12. I think that the first message to give you is that we're feeling very satisfied with our strategic decisions and also with the integration of Somos.
Gil will give you a presentation on this integration. I would like to discuss not the integration per se, but rather the meaning of this Somos and what is its current status quo, how it compares to our expectations, and how it compares to the perceptions in the market. Let's take a look at Somos and what it might represent and what we're going to build it to be in the future. We had some very interesting findings in this process. By the way, we actually ratified some of the perceptions we had, and we built our strategic positioning in a completely brand-new way. In our view, this is a very disruptive positioning for the K12 segment in Brazil. This is what we wanted to show to you. Gil will give you all the details, but I would like to restrict myself to the strategic considerations.
Let's take a look at it. K12. What can we expect? Just to summarize everything at a glance. The synergies are higher than the ones originally announced, especially in terms of revenue. Gil will give you some guidance on the synergies we have mapped out. We drilled down into the operations, and we are very comfortable in announcing that the synergies we found are better than expected. When I say that the synergy is higher, we confirm what we have said previously. Besides that, we have found other points of synergy, and we're happy to announce them too. Somos, together with the K12 operations that we have, such as Saber. Well, what we see is that there is a perspective for growth in top-line margins and an excellent operating cash generation.
We can also expect some organic and inorganic growth opportunities to emerge, which in turn will revert into better top-line and margin. As you can see, we have several opportunities to grow our top line and margins going forward. Let's take a look at the strategic aspects of Somos, this K12 education platform. More than detecting opportunities, what we did was to develop a new strategic vision on K12. This was really a building process. From the very beginning, we had this perception, and we started working on it even before we made the proposal to acquire Somos. What we saw is that this company was far better than the market was able to see. In this building process, what we saw is the potential for creating a brand-new disruptive process. How was Somos seen up to now?
This, of course, based on hundreds of exchanges we had with analysts in the market. Somos was seen as a company with three different lines of business, a publishing house, a group of schools, and also an educational system. We saw it in a different way. We didn't see that structure. In fact, we thought that Somos was much more than that. For us, this is an antiquated, old-fashioned way of looking at the company. It's broken down by products. As any company undergoing a digital transformation process, you shouldn't look at your business thinking only of the different products. You should look at the company based on the eyes or the perception of the customer in line with customer centricity. Based on that, Somos is not simply a combination of three lines of businesses. It's much more than that.
We see a company operating in two major markets with three important lines of business. In our understanding, they work in the public market and in the private market. In the public market, they provide content for official programs. This represents 28% of their net revenue, with stable cash generation and the potential for growth margins. This, of course, represents 28% of their revenue. What about the private market? This is where we have more potential for growth. This represents 72% of the net revenues, 30% in classic B2C in education, and 42% in K12 integrated solutions for K12 schools. Let's turn now to their business in schools. This represents 30% of the Somos revenues. This is a BRL 106 billion market where Somos has just 1% of market share. Kroton in higher education has a 14% market share.
We're not saying that we're going to expand all the way to 14. What we're saying is that between one and 14, there is a lot of room for growth in schools. Always maintaining the same strategy we like to emphasize. We should have different models for K12 and for higher education. In K12, we tend to stay with the same corpus and the faculty, and we just integrate the back office of these schools when we acquire a new school. We have 46 owned schools now in K12, 17 language schools, 32,000 students enrolled in our own schools, 28,000 schools and language schools, and 3,000 teachers. Great potential for expansion, either through Greenfield or brownfield operations. This is a market we master. We know how to integrate different schools. We know the distinctions between higher education and K12, once again, this is a high potential market.
Let's see now our strategic possibility in Somos. We have K12 representing 42% of the revenues in Somos in the B2B or B2B2C. This is a market in which you provide services to schools or to students through schools. What do we have in place at Somos? What can we offer as integrated K12 education solution? When we say it's ready, it's ready indeed. We have those solutions at Kroton, and those solutions are being offered perhaps not under the concept of an integrated platform. This is a concept that we are now refining, and we're going to implement in 2019. There will be a very important change in the go-to -market. Those were solutions that were sold piecemeal. Our concept basically is to create an integrated platform, including all services schools need. For example, if they want integrated technology, they can go to Somos.
If they want textbooks, they can go to Somos. If they prefer a system, an educational system, they can come to us. If they want pedagogical support, they can come to us. If they want teacher training, they can come to us. If they want to buy, make purchases on the marketplace, fine. If they want a solution for the off-peak hours in their schools, they can come to us as well. It's the school, the client schools that decide what to buy from us. We're completely indifferent to the fact that they want teaching or textbooks. As you know, there's this discussion on textbooks and that they are losing a lot of ground to educational systems. For example, they say technology will replace print materials. We have the technology to make it happen.
We are the platform where our clients can find everything they want, and this is the concept we're going to implement as of 2019. In terms of textbooks, what do we have? We have digital textbooks and also print textbooks comprehending lines, educational systems, bilingual teaching, and also pedagogical and In terms of integrated solutions, what do we have? We have, for example, technology platforms to support learning, Trilha do Saber and Stoodi. We also have technology platforms for evaluation of students and also Studiar, our technology platform in adaptive education. Teacher training, we have Profs. This is a platform from Somos and also KU, our platform of corporate education that will be made available for K12 teachers as well. In terms of marketplace, well, we have our physical and virtual stores that sell both to families and schools.
As for the counter shift, we have language options and also social-emotional skills solutions as well. What do we want to be? We want to be the one-stop partner powered by technology to all schools. Why technology? Technology is going to bind all of these solutions together, and our premise is that when we structure the go-to -market, no schools will be receiving services or products from Somos without some technology in the package. We want to receive all information we can from the offering. For example, if somebody buys a textbook from one of our solutions, we'll get information about it. Based on this information, we'll be able to tell schools and to reveal to them other needs they might not be aware of. Based on the use of the platform by the students, we'll be able to have findings.
For example, we can say, "Oh, there is a deviation in terms of the cognitive performance in your students, and maybe this cognitive problem could be solved by our adaptive platform." Technology will be the basis for everything. In all solutions we deliver to companies will have onboarded information and information technology, because this will be the secret for us to drive even more demand for our services. Well, in this chart, we tried to summarize the penetration in our schools. For example, they can buy a spot textbook or the PAR, which is the kit, the textbook kit, and also with some services that go with it, and also the educational system. With this, we increase Kroton penetrations in the different schools. Any schools can also hire, for example, marketplace or teacher training or countershift solutions independently.
Let's imagine, for example, if this is a school that's not as driven to content, they can choose educational system with a lower price tag and with all the technology that goes together with it. If they want, for example, to invest more in teacher training, they can also select to do so. This one-stop partner concept for us is key, and it really changes the equation a little bit. In the previous concept, we were seen as an educational system partner, a textbook partner. When we sold books to school, well, of course, this is part of a publishing house. Publishing houses don't grow very fast, and the multiples are low. This was, of course, the financial proposition. Now I can see what is the school that gives me the greater potential?
Is the school where I can sell one book because I can sell from one to 30 to 50 different books. I can sell the whole package of solutions, and I can have many cross-selling and upselling opportunities. Selling one-off book to a school is not a problem. It's an opportunity. The more opportunities we'll find will be in the schools in which we sell less products. It's a definitely huge opportunity for penetration that we have in the schools with whom we already maintain business relationships. I'm not talking even about the 36,000 schools with whom we have no relations yet. This is what we have in-house and what we are reorganizing ourselves to become a one-stop shopping platform. What else is in store? What are we developing for beyond 2019 and that can really create disruption in the K-12 market?
It's the concept of the allied school. This is what we are betting on. It's what is clearly added value. It was not in the original plans, and it's an added value that we found in the operations. What does it mean? It means to leave time for schools to do what they like to do and were born to do, and we offer as a service to those schools the things in which we excel and what we do better than they do. For example, we have the transactional ERP, the finance and administrative ERP, shared services, accounts receivable, accounts payable, human resources, invoicing, billing, all administrative processes. AVA, a virtual environment for learning. All services that are additional to the core business of schools, including student recruitment and full support to management. Do you know how much schools spend on this?
Usually, they spend up to 35% of their net revenues in these administrative services. Because of their lack of scale, they cannot deliver on all of this with high quality. The process, as I was saying, can be very disruptive because it can make possible that schools with a lower number of students become viable financially. They will be able to manage their activities at a much lower cost, at much less than 35% of the net revenues they used in the past. For example, when they hire accounts payable from us, they will benefit from a scale that includes 8,000 other schools, or when they get ERP services from us, it's the same proposition. A lot more scale. All of this at a cost that will be far inferior to the 35% of net revenues. This will completely revolutionize the industry.
It's an asset-light project for Kroton, and the ROI will be extremely high for us. Why do I say it's an asset-light project? Because I would have had to develop this platform for my schools at any rate. I need state-of-the-art ERP. I need shared services in the state-of-the-art administrative and accounting processes that are state-of-the-art to run our 46 schools. As such, the investment would have to be made anyways. I can sell these services to the schools that are interested in hiring services like that. This will free up their time to manage the schools and their activities academically, which is what they like to do the most. This concept, the allied concept, was not born in Brazil. It's found in other segments, and even in the educational sector of other countries in Latin America, we see that this model is prospering.
We want to set up this alliance model, and we are feeling very sure that it's a relevant opportunity to tap. The secret here is in perfect execution. I think that Kroton now has the skills to accomplish this and to completely change the face of K12 education in Brazil, introducing a product that is unprecedented in Brazil, and that will benefit all schools, students with higher quality service and higher quality education, and also shareholders, generating high return on invested capital. This is a project where all stakeholders will benefit, and it's the kind of thing we like to go after. I will now just like to close the presentation. What do we expect? Undergraduate, we expect top-line growth with stability of margins in same stores. New stores should use up 300 points of margin until they don't reach maturity.
Continuing education, top line growth with growth in margins. K12, growth in top line with growth in margins, and a new strategic positioning for the organization. As you can see, opportunities abound in Kroton. We're feeling very optimistic. We planted the seeds in 2018. We still have some planting to do in 2019 and in the future, but the harvest will come, and it will be abundant. Now let's turn the presentation to Gil.
I t's an honor to be here. In the last Kroton Day, we brought you this message that we would love to invest once again in K12, and this is what we did. First of all, with the acquisition of some of the Saber units, and all of this gained gigantic traction with the acquisition of Somos.
For all purposes and intents, when, of course, I talk about Somos, I'm referring to the integration of both all K12 assets of the company, with the exception of technical school and higher education, which is now under our continuing education VP. Along my talk, I would like to show you a little bit about the prospects for education in the world, what learnings we can get from the American market. Also, I want to say a few words about the potential for growth in K12 in Brazil. Education. Education worldwide. According to all projections, the growth in spending will be above the growth in the economy, with several trillion USD being spent. Including, of course, all public systems. It's interesting to note that 63% of all the spending are being channeled into preschool and K12.
To the right on the second chart, this is very interesting for us. This is the educational content market. Textbooks with a very broad concept, including books and technologies that support learning. Here, the CAGR projections are very high. They should be gaining a lot of traction in coming years as a result of the higher spending in technology in high school, and also the enrollment of millions of children in preschools. This is, of course, the worldwide situation. In the U.S., there are a few phenomena taking place that I would like to call your attention to. The American market for didactic content was not really going very well until 2009 and 2010, when the United States instituted the Common Core Curriculum, meaning that all American states should get organized to offer the Common Core in the school districts.
Brazil is going through a very similar time, what we call it. However, is the BNCC, Base Nacional Comum Curricular, but it's the same thing. With the introduction of the Common Core between 2008 and 2009, there was a jump of 42% in the availability of educational content all the way through 2014. Let's remember one thing. In the American market, public education has much higher penetration. The market is far more sensitive to regulatory changes than Brazil, where we have 15%-17% of students enrolled in private schools. It's important to know that the American Common Core was something that really propelled the growth of content. At least all books that were printed from this year backwards are obsolete. Everything that will be used next year on have become obsolete because they are not compatible anymore with the core Brazilian curriculum.
This is a turnover that happens just a few years in a lifetime. Very interestingly, in the Obama administration, the new policy was set up, No Child Left Behind, supported by the Common Core. In the Obama administration, a new policy was developed in the U.S., All Children Have to Learn.
Each child will have to learn. Now, states and districts had to focus on buying products and services that could be customized, that could evaluate each child, and then propose individual routes for them to learn. What happened to the content market? Well, it had a drop, 11% between 2014 and 2016, because now with this new policy, states and districts in the United States started to buy different things. Many of these initiatives were not successful. Therefore, today, and I'm going to talk about that in the next slide, districts and states that were able to provide the Common Core using additional technology, these were able to deliver the desired quality. Now the projection is that $8.2 billion will be spent until 2020 in the U.S., but these will be spent in an integrated solution.
We are no longer discussing whether it's going to be software, textbook, but we're talking about fully integrated educational content using technology. The teaching materials market grew 42% after the implementation of the Common Core in the U.S., and personalization initially made the revenue decrease. It is already returning to the previous level. Talking a bit about the consumption profile, of those billion dollars which were spent by states or districts in the United States. In 2005, we had essentially the orange portion on the left. It was traditional educational content printed on paper and a small penetration of additional materials. The additional materials were also print. For example, when they were preparing for the SAT, families or schools would buy this service, but again, it was print materials, print exercises, print tests. This was the scenario in 2005.
2010, five years later, we could see a reduction in traditional content, an increase of the penetration of digital contents in the dark blue, and a growth in all kinds of supplemental materials, be it print or digital. The last portrait we have is almost a balance. This is 2015, where you have almost the same level of traditional disciplines plus supplemental materials. Again, we see almost a balance between print and digital. As an example, it means that the winning suppliers are those that can integrate the Common Core to supplemental content, providing all digital solutions if the school so wants. Of course, if the school still wants to use print solutions, the supplier has to be able to provide that too. This is the name of the company that won the game in the U.S.
If you want to look at an interesting case on K-12 of a U.S. company that was truly able to understand the scenario and make the most of these trends, that was McGraw Hill. McGraw Hill is a case of success that's going to help us understand the phenomena that happened in the U.S. The dominant or prevailing player must combine the Common Core with complementary technologies, and paper will still be used for a long way ahead of us. This is the U.S., where access to hardware and internet connection is much easier than it is in our country. Maybe here in Brazil, paper will still survive longer than in the U.S. Of course, it still accounts for half of the market. If a prevailing player must combine educational content and technology, well, we have just described our own company.
Somos and O Saber assets use different technology solutions integrated to the educational materials. Educational materials we can provide in the media that the school wants, in the methodology that the school wants. If the school wants to use textbook, fine. If they prefer e-learning systems, fine. If they prefer that we identify class by class what the group needs, okay again. If the school wants to have more flexibility, and I'm not going to tell the teacher what to do each day, but what to do perhaps in a week or in a month, okay too. All of these products are available. Players training everyone who comes into contact with students, because we're always talking about teachers training.
If you want to have a successful school, you also need good coordinators, good directors, so the content of Kroton universities can be applied, and it's very useful. We were already using that in partner schools of Pitágoras and quite successfully. Also, solutions for countershift. The supplemental portion in the U.S. is related to technologies, of course, but also countershift solutions. They don't call it countershift there because students study for a longer period in the U.S. This is when students stay longer in school, for another one hour, for another four hours. We call it countershift in Brazil. In the U.S., they call it supplemental education. We already have languages, English, which is priority number 1 for children's education. That is why our portfolio today is very much concentrated in English as a second language.
We have to expand this portfolio, including computer science, coding, robotics, and many other opportunities. The marketplace Rodrigo mentioned, and I'd like to add a few comments. Having our own marketplace is somehow a vaccination for things that may happen in the future. Have you seen what's happening to Brazilian bookshops? Well, we all know that this channel of distribution, bookshops as a channel to distribute books, is now going through a crisis. We have our own channel. Big schools in São Paulo such as Porto Seguro or-- I forgot the name. What's this name? Also in Morumbi, Santo Américo. Large schools in São Paulo already have their own marketplace called Livro Fácil or Easy Book, to sell contents, educational content, even school uniforms. This, of course, makes sense for big schools. The fact is that smaller schools also need a solution.
This is good for us because we can have direct contact with the families and students without any intermediaries. It's also good for the school, because part of these sales is converted into a rebate as benefit for the schools. It is truly a win-win model. What Rodrigo's just described-- the marketplace is perfectly aligned to the successful companies in the U.S. This is about penetration. Rodrigo's shown this slide already, but I wanted to add that, yes, a school that uses only one book is extremely important for us. The most important school for us when we talk about growth potential is that kind of school that doesn't buy anything from us. There are many who still don't buy anything from us. A school who buys only one book from us will have access to this technology.
We will know who the students are who are using that book and who are the teachers who are using that book. We will begin to be able to identify their needs. If we do that, if we have information and data, we can bring information to the teachers, to the directors, to the families, and we can start to uplift this relationship so they can begin from one book in Spot, then they may move on to PAR. Yes, bless you. I have a video I wanted to show you about PAR, and I'm going to show it to you in a couple of slides. In short, if I wanted to summarize this, PAR is an education system using textbooks. Of course, we have the learning system using our own textbooks. Brazil was actually a pioneer in developing these learning systems. PAR is similar.
However, it uses books. It is a more flexible solution because teachers can look at the catalog of books and choose the books they would like to use in their school. The video will talk more about PAR. The learning systems market is very well known here in Brazil. Today, I'm not going to talk a lot about this market because I believe that you are following information on this already. From one book or only a few books, we can grow this partnership based on textbooks in PAR. PAR has a minimum 50% of all contents must be adopted by the school. Otherwise, the school will not receive the benefits from PAR. In the future, of course, the school may decide to migrate to a learning system where they would adopt 100% of our contents.
They may also decide to be a hybrid school where they will remain in PAR for primary education. For high school, maybe they want to use a learning system. Both PAR as well as learning systems can transform these schools into allied schools. That is a brand new market. A colleague of ours asked me a couple of months ago. He said, "Ghio, do you think that this business of allied schools can be successful?" Look, I believe that if schools love to teach, if schools love to educate, to choose methodologies and resources to teach, and if they already choose us as a partner. In things that they love, they already choose us as a partner. That is, they're already giving to us. Through the services we provide, they give to us part of their methodology.
I believe that to do things that schools don't really like to do, they want to have a partner. I always make a joke. I say, "I never met any school who was in love with accounting." I've never seen a school that conducted a meeting saying, "Those who are in love with collections." No, that doesn't happen. Schools don't like to do that typically. The world of private schools here in Brazil without having any kind of stigma, because of course we have many different types of schools. The average Brazilian private schools are family concerns where you have a portion of the family who loves education, and this is what they do.
Other members of the family who are not actually into education, they end up taking on G&A to manage the school. I see a great opportunity because many schools are struggling in a market which is increasingly more competitive. Yes, maybe they can concentrate in their core business, which is education, and they might accept partners and allies to do the other activities. They will be able to improve their margins, they will provide a better service in providing educational services. This is the concept of allied schools. Now thinking about penetration, schools where we have less penetration when they buy only one book from us, up until our own schools where we have full penetration. We own the schools, right? Now, I'd like to show you the penetration opportunity we have.
I mean, how much we can still grow even in what you already see in our reports, in our IDRs. Each one of these bars is a histogram looking at the number of books that each school uses from our ecosystem, Saber and Somos. Let me add some explanation to you about Brazilian schools. If you look at INEP census, Brazil has 34,000 private schools. If we subtract nursery schools or pre-K, those which are located on farms and technical schools, because these are very specific niches, then Brazil has 20,000 private schools which concentrate 95% of all Brazilian private students. I have a chart showing these 20,000 Brazilian private schools. 10,000 are in the bar you see on the left. 10,000 of these schools do not use any materials from Somos, nothing at all.
Half of the Brazilian market, the private market in Brazil uses no contents from Somos, and this is the most spectacular market share because everything we can get will be a gain. Of course, on the right-hand side, we have a large number of schools and a large number of students who use lots of materials from Somos. Our growth opportunity is on the left-hand side. Actually, we painted in pink so you can see that 60% of all Brazilian schools today have used less than 10% of our contents. Their contents do not come from Somos, which means we have a huge opportunity to grow. Obviously, if you look at the number of students and divide that by the total number of books, then we will have our 27.5% market share.
However, 27.5% market share, which is the weighted average, then the story is not complete. Why not? Well, because 60% of the schools, half of them have nothing and 10% have only 10% of Somos content. 60% of all of these schools have less than 10% of our resources. We have a great opportunity to grow, beginning from one book and ending with allied schools. PAR will help us on this journey. Let's understand PAR a little deeper. The world has changed, but what about your school? The way we deal with education has to change, too. Now, today, we're going to help you with this task. PAR is an educational platform that combines textbooks, high-quality textbooks, digital tools, and support tools. It is a complete solution that will make your work easier, thinking about the objectives of your school. How do we do that?
Together. Through the implementation of the education management cycle in four steps, planning, development, continued evaluation, and pedagogical intervention. Together, we will create a personalized cycle including the ideology and the pedagogical proposal of your school, ensuring autonomy and freedom. More than 800 titles of renowned authors, plus many benefits that will be available so as to educate creative students that will be prepared to face the challenges of the future. A complete platform to support the students' studies. Continued education and perfectioning for teachers. Also English teaching in a flexible and accessible way. A development of social and emotional skills for students. Consultancy from experienced educators who will help the school work with these solutions. We believe in the strength of building these bonds and the power of transformation towards a more humanized education. Come talk to us to know more about PAR.
Our experts are at your service. I think that it's easier to connect to what I said before, combining the Common Core plus technology today. We have reinforced PAR as a solution to sell textbooks. However, the same technology can be present in all of our learning systems. Actually, part of them already have their own platform. We can integrate that so the school will be able to choose whether they want to work using textbooks or learning systems in each part, in each portion of their school. PAR is not a project. PAR is a reality already at Somos. In 2015, when we bought Saraiva Educação, we already had in mind this idea of setting up a broad catalog so that it would be impossible or almost impossible for a teacher not to find the right solution in that catalog.
Let's understand here the PAR journey. This is the journey of a school who is already in PAR. Schools which are not at PAR, this is a market share of 30% on average. I showed you that in 60% of all Brazilian schools, we have almost nothing. On average, 30% of the private market are schools which are not included in PAR. The minimum level would be 50%. For a school to be a member of PAR, it has to use 50% of its contents from PAR. Of the 420 schools that are already in the PAR system, 420 schools, this is equivalent to a mid-size educational system. It's already grown 21%, as you can see here, on top of the average use of PAR materials, which is 30%.
Almost immediately after the school signs this agreement named PAR Simples, they convert into the full PAR. This has already happened. 51% that was the minimum level to be a PAR member, to be a PAR Simples member, these schools have decided to be full PAR members. The 420 schools today, 67% of all the resources they use come from PAR. You have 3% gains that we may have, if we can reach 70%. As of the second year in the contract, we believe we can reach 75%. These are all the resources, the academic resources that schools use coming from PAR. At least, if we didn't have all of these opportunities, we would go from 30% to 67%. That is not so difficult.
We see a great opportunity to gain share, to increase our relationship with these schools. This is another solution I'd like to show you. It is supplemental to PAR. This is a school that will say, "Guil, I don't want to use printed materials in my schools. I no longer want my students to carry books. I may use some physical books in the library." We will sign a contract. You send me some physical books to my library. Students who want to use paper books can go to the library, but everything else will be digital. This is named the PAR Library. It is an evolution of our relationship with PAR because if you want to be a PAR Library member, 100% of your teaching materials have to come from Somos. In the traditional PAR, you can use 50% up to 70%.
If you want to be a PAR Library member, you have to use 100% PAR materials. It's interesting. If you compare spot books that families buy anywhere. In a group of 30 students of high school, the family pays BRL 2,471 for the sellout. The family pays two to the retail stores, BRL 2,400. We have 30% market share. In each distribution channel, we have 30% share. Of course, you have the cost of paper, cost of printing, but the spot book brings a margin of contribution of BRL 11,000 in a group of 30 students. In the PAR Library, look at that. The family will pay to our marketplace, to Livro Fácil, the family will pay only BRL 1,079. The conversion rate is 97%. Didn't you say it was 100%? Yes.
3% of these students, they are teachers' children, so we donate these materials to these kids who are the children of teachers. Our conversion rate would be 97%, and the contribution margin is BRL 21,494. It's good for the family because they're spending less than half. And why is it good for the school? It's good for the school because in PAR and much more in PAR Library, schools will receive consultancy, training. They also have a rebate when they sell. Let's remember that many Brazilian schools adopt learning systems because they need the markup that the learning systems give them. The PAR Library is recognizing that the other half of schools, they may not want to use learning systems, but maybe they also want the markup. They also have the physical books.
We can even donate these books to the library sometimes, if they have no connection, if the connection is not working, they can study in the library. It's good for us, and we can double the margin of contribution of any school, as you can see here, from BRL 11,000 to BRL 21,000. It generates a lot of value for us. This, again, is a project that requires low investment because all the technology is already up and running. About allied schools, what are the non-core activities in a school? I think Rodrigo's already mentioned. These are things that schools can buy from us, paying to us part of their G&A, and then the systems we will use to provide these services. I think Rodrigo has already mentioned also. In my final slide, I'd like to talk about the size of this opportunity because it's huge. Okay.
There's one thing, though. Journalists asked about that in the previous meeting. They were asking us whether this is already working. It depends. Most of these systems are already being used in our own schools. In Anglo, for example, there is a partnership between Anglo and the schools for marketing and students attraction. Many schools in the Anglo system, they pay for this service, and we conduct the service for them. When we talk about schools, we have schools scattered throughout Brazil. This is important for our company's ecosystem. Schools are good business. Schools that have a good reputation, they have top line, they have good margins. In addition, they allow for us to build solid systems, which we can then offer to other schools, too. Today, we have 46 schools. Brazil has, as I told you, about 20,000 schools.
If you can imagine that there's going to be a process of consolidation of the schools, this is not possible. We want to have good schools with a good reputation, creating value, generating quality, increasing the number of enrollments. We must have robust transaction systems that can be used by these schools. To talk about what happened after the last Kroton Day. Talking about Saber. Regardless of Somos, Saber was already doing this strategy of buying flagship schools and then build other units in the area of influence. This is the Leonardo da Vinci school in Espírito Santo. This is a true gem, a champion in its state. These are some photographs of the school. The school has 72% of its students studying morning and afternoon, which is, again, a very important lesson. Remember this number.
Only 3% of Somos students are studying morning and afternoon. Here you have an example of a school that has 72% of their students morning and afternoon, whereas we have 3%. Look at the size of this opportunity, and we know we can do it. Leonardo da Vinci started its expansion already. These are some photographs of the new architectural building of the new unit, the new greenfield unit. Some pictures of the process revitalizing the building. Enrollment will be open in September, and this first greenfield project of Leonardo da Vinci will begin classes in February 2020. This is in Manaus. We acquired this school, Lato Sensu, which is a champion in the national exam. If you compare Lato Sensu ranks second, and the first, who's always the first school, there are 7 times more students.
The national exam is taken by students in the third grade of the high school. This school that always ranks first has 7 times more students. Not every year, but many years they are the national champion. Here we have the expansion of Lato Sensu, one brownfield ready in the north of Manaus. It's a neighborhood named Cidade Nova, and the new project, the Greenfield project, named Ponta Negra. It's a beautiful neighborhood in Manaus. We're already building this Greenfield. You can see some photographs of the building site last week, and on the right-hand side, you have the project. Let me go back one slide, and I could comment that the educational quality of Lato Sensu is not really reflected in the building architecture. I mean, the building architecture is not up to the quality provided by the school.
Now, the school is going to go through this expansion. Talking about integration and synergies, I have another four minutes. I'd like to thank Júlia, our great partner in this integration, who's doing an incredible job. We've obtained this approval from CADE, the Brazilian antitrust authority, which was quicker than expected. Now we know what to do. The first thing we did was to conduct 87 meetings with the main leaders of Somos saying, "The reports will not change," or "Yes, the report will change." Next, we had this event, this meeting you can see in the center. It's called Pre-Day One. It was on Teacher's Day. I think this was a good sign. The first day of the new combined company was October 15, which is Teacher's Day.
We brought together all the leaders of Somos, we spoke about these contents that we're discussing here today.
This is how the integration ended with day one, 1,500 people. The top leaders of both Somos and Kroton meeting in São Paulo, the other 28,000 employees participating through our distance learning tools or the Somos communication platform. The feedback was great on these conferences. We discussed who we are, what we want, and the different roles in this structure. Going to the synergies, what Rodrigo referred to in his talk. Based on the knowledge we have about the company after the deep dive we did in the different verticals, we feel very comfortable to be showing you 20% more in synergies than the ones we had previously identified. Those are synergies coming from all of those lines. Many of those synergies are in the area of cost and expenses. Other are clear revenue opportunities.
This is all broken down, I ended up mentioning in the comparison between Leonardo da Vinci and the Somos schools that we also have a potential for top-line synergy. If we have schools where more than half of the students study in the countershift and some schools in which only 3% of the students take the countershift, of course, we have a lot of expertise, we can capture this opportunity related to the countershift in these schools. Let's take a look at where we can or what we can achieve. By the way, I have a side comment. I had actually asked for permission from Júlia to make this comment. The pool of synergies I was referring to in the previous slide. More than half of this pool of synergies are to be expected between 2019 and 2020.
How far can we go? This is the question. This is, of course, not a promise. It's an exercise in trying to outline the potential for the combined company. I didn't talk much about our VL&D. It's a very stable program. We believe that all governments, from Fernando Henrique to Lula and Dilma, in all of these programs, we saw growth in penetration in the number of students. We have 23% of revenue share in this program, while the average, we have 40% of share. We believe that by making wiser investments, we'll have the same share that we used to have in the past. This, of course, means that we have an opportunity. As for the K12 content, we have a golden rule that I would like to share with you, something we learned after 32 years operating in the K12 market.
How much does a school spend on textbooks? This is the golden rule. Usually, what is equivalent to one month of tuition. If the cost of this tuition is BRL 1,500, usually they will adopt textbooks that will cost around BRL 1,500. If the tuition is BRL 3,000, BRL 3,000 in textbooks. Based on the total revenue of the schools, you can define the size or quantify this possible K12 cost. For example, the total tuition paid in Brazil represents BRL 60 billion and one twelfth of this is what families spend on K12 content, BRL 5 billion, we have 28%. We believe that the fair share, considering all of the content options, plus PAR, plus the PAR Library, should reach 40%. Just K12. In K12 content today, we should have a company as large as Somos is today.
To manage the school, Rodrigo mentioned that we have 14% of the private school students in Brazil, with 4% of the students in this projection, with just 4% of the K12 students. Today we have just 1%. This is not daydreaming to believe that we can reach up to 4%. Countershift. This is a market worth BRL 40 billion. There is another golden rule that is very clear in the mind of everyone who works with it, and it was proven by several studies. If the family spent BRL 40 billion, 10% of this is spent in countershift content. For example, English as a second language or the other share with the service itself. That's why I can break down the countershift column, the countershift services, and also the materials on the countershift are the textbooks we use in the countershift.
Of course, we have both lines of activity. Since 4% of the students will be attending our schools, 4% of the countershift should be the minimum fair share for us. If we were able to capture 2% more in the countershift from students attending other schools, we could reach the service at 6% of the countershift revenue once again. Just in this column, we would have a company with a revenue just as big as Somos is today. If we have 40% of fair share of textbooks in Brazilian schools, maybe half of this, when we are providers of countershift content, we would have over BRL 600 million in opportunities. We have the allied schools. If BRL 60 billion is the revenue in these schools, 35% of this revenue is spent by schools in general administrative expenses. This is an expense that is already being made.
Based on our due diligence, this is the average in the Somos schools, in the Saber schools, and of all schools in the pipeline that Somos and us have considered. 35% of everything that is captured as revenue goes to SG&A. If we are able to capture 20% of this market in our allied school concept, in this very improvised market, the allied school business could be just as big as Somos is today. In 2017, we see a company of BRL 2 billion in revenue, we believe that the potential market to be pursued, and those columns are indeed our priorities. We could actually have a revenue that's six times as big as that. Thank you very much. Now, who's next? Roberto Valério with you. Thank you. [Foreign language] [Foreign language] Good afternoon, everyone. It's a great pleasure to be here once again.
Now to talk about our leadership, the leadership in undergraduate. Going back to what Rodrigo presented, I think that one of our missions in the undergraduate team is to grow revenues while maintaining margins. Rodrigo made a list of our strategies, cost efficiency, commercial discipline, and also loyalty, higher loyalty among our student base. Since he was focusing on strategy, let me turn now to our strategy in terms of the tactics we're going to use. Well, Rodrigo talked about the major impact factors, the pressure we received on margin and revenues. We know that unemployment in Brazil is a great pressure we're feeling. A lot of students are thinking twice before they start an educational project. Finally, the reduction of the availability of FIES financing. Just to give a little more color on this, you can observe the penetration of students in December 2017.
We lost 14 percentage points from the 2018 base. This is a challenge that is very significant. It will be overcome. We will beat the guidance, delivering results in spite of all the pressure. We have finished our budget, and we have found the ways of taking this next leap of 12 percentage points. We'll have a challenge all the way through December 2020 of five percentage points more, which would take us to 8% of penetration in the FIES-funded students. 2018 was challenging. For 2019, we found the path to follow, and from then on, everything will be much easier. Just to make sure that you feel reassured that what we said two years ago, that we would be able to overcome the FIES pressures is, in fact, come to reality.
In the light of what Rodrigo presented and being aware of our strategic map that's based on delivering a student experience, what is it that we expect? How do we work on these focuses on the undergraduate unit? First of all, we're responsible for delivering great student experiences. This goes through loyalty, engagement, and finally, will result in re-enrollments. In a very simple way, we are the orchestrators of the resources available in the organization that will create the best possible experience for our student base. As you know, the student recruitment team works with me and marketing as well. I'll give you an example of the level of sophistication that we use in student recruitment. This actually has a strong link with loyalty and margin optimization. Of course, this requires optimizing those three clusters: costs, commercial, and also loyalty.
The three pillars we have to emphasize. This may sound like a cliché, but in fact, the purpose of the slide is to show you how everything has to be very well orchestrated. I'll show in practice how it works, how we work, and make sure that re-enrollments occur. If you've seen me talking about distance learning before, you know the operation itself is very simple. It's a simple concept that needs proper execution. It's all about the details, about the sweat and blood you put into the execution. We know that there are three very important pillars that will sustain operations. First of all, intelligence. I need to have access to information. I need to be fed with data to be sure I can take the best decisions. Also, I need a management model.
If I am not able to transform information into actionable data, I won't be able to manage an operation that's as complex as Kroton's, with so many opportunities involved. Finally, development. What I cannot execute on a daily basis through my plans has to go into projects and initiatives so that in the next cycle, in the next student recruitment wave, we'll obtain better results than in the past. Of course, based on the current operations we have at Kroton, we know that our revenue is also growing as a result of the expansion Júlia is going to talk about. Little by little, these units are also being transferred to our area. Well, intelligence tools. Until not very long ago, we tried to recruit as many students as possible. We were trying to drive greater values with higher tickets.
This is still valid for us, for us now, this is only the first step. If I am able to recruit a good student, that is a good student, meaning a student with a lower likelihood of dropping out, I can have different tickets depending on how long they will stay with us. I'll give you an example of that. Our industry uses the ENEM grade as a proxy for the academic quality for the student, academic engagement, and also as a reference for the probability of re-enrollment. A student that has a high ENEM grade can have totally different performances in the first or second cycle. For example, a student with a very high ENEM that enrolled after classes have begun show a lower performance than the cluster of ENEM students who enrolled by December in the previous year.
Well, it makes sense if you stop to think about it. It's somebody who is better organized, who enrolled earlier, all of this is an indication of the quality of the student. This is, of course, a piece of information that isolated doesn't mean much. When used with data intelligence, we can make better decisions in terms of how to address the student at what point of the cycle. Once again, our decisions are not only based on price and volume of students. We try to analyze the potential of the student along his lifetime or her lifetime, the lifetime value along the program, and considering also the cycle they are enrolling in. The second item, what I call the student experience.
Let's imagine a student enroll in a four-year program that will enroll several times, up to seven times, in fact, if they go all the way through graduation. At every new cycle, there is a fee. Here, this fee doesn't vary according to the ENEM grade or any other variables. Why is this important to remember? Because in my student recruitment definition, if I know what's the probability of converting a student early on, I can act more aggressively on a lead, or I can try to secure better conversion rates along the enrollment cycle to offset something. For example, the CPMatric, this is what we call the cost per enrollment in a unit of Niterói, where it's a very expensive location with expensive rents, et cetera. This cost can be twice as high as a smaller town, such as Sertãozinho.
Along time, how can I really optimize the lifetime value of the student? I can use the tools I have available. For example, re-enrollment is one of these tools, this, of course, depends on delinquency rates, it depends on engagement, and everything under the background of loyalty. When I look at loyalty from the beginning of the cycle, from the first time I get this lead with a phone number, I can say, for example, in this chart, I can tell how much value I'll gain in terms of cost synergies because that student, depending on where he enrolls, can be worth more depending on the grades they obtain.
For example, if this is a student that will be on campus for most of the courses, maybe I can offer them a better scholarship to be sure that they enroll because I know that this is an exceptional student, regardless of the type of class he attends. Like this, I can optimize the first part of my chart. Secondly, the commercial aspects. If I know that this is a student with the potential to increase his lifetime value along the life cycle, of course, I can act more aggressively. As I was saying, the intelligence tools are very important. For example, to decide many things. For example, how much I'm willing to pay for a keyword in Google, and how to optimize some of our programs that have reached maturity level and that have no specific recruitment needs right now.
I think it's very important that we spend a little time on this so that you really understand all the details. Once again, to avoid the cliché, those of us working with analytics and machine learning, we have to avoid using clichés. I am, of course, talking about vision and execution at the same time. What do we use today? We use external and internal data besides student information, potential student information. We do an alchemy with this data. I won't tell you the details, I'll give you some practical examples of how much we're willing to pay for this lead. For example, how do we work with the external factors for each of our 70,000 courses? Why 70,000 courses?
If we were to consider those courses as SKUs, because multiplying the number of courses by the number of units and by the number of centers, we have around 70,000 courses. Some of them are flagship programs that will just fill up no matter what, and in others, it's difficult to obtain the minimum number of students to hold the course. This is, of course, one of the criteria we use. First of all, I need to know, what is the portfolio of my competitors? Do they have similar programs? What are their pricing policies? Also, what are the offers? Many times what you see being announced on a website is not what is eventually charged after all discounts and everything.
First of all, we use a robot that checks 13,000 prices, the prices of our competitors that are being announced not only on competitors' websites but also in Educa Mais Brasil and other marketplaces. This, of course, is very helpful as a reference. We also have our Salesforce app. For example, if I have a question about a price, I use this app just to do spot checks. I also have my call center when I really need to be sure that this is solid information, reliable information, thinking that, of course, we're always trying to maximize revenue and the average ticket of that specific student. Of course, the basis for everything is competitive intelligence. This is just the first step. In terms of the external information, what about the internal information?
By using analytics and forecasting, I need to define the value of that student, considering the 70,000 SKUs, the 70,000 courses. How much is the student worth in terms of the historic enrollment levels. In simple terms, we use several tools, but analytics here are critical. I have the external information, the internal information, in addition to this, I need to know who is this applicant. If they are a little better or a little worse, of course, this will have an influence on my need to pursue this student. Once I get the tax registration number of the student and her name, I can check if it's a student with a high likelihood to drop out, I can have closer contact through WhatsApp and other messaging tools. Secondly, how can I create incentives in terms of offers depending on the potential of the student?
I can be more aggressive or not in the offering of scholarships. Sometimes people say, "Well, your policies for scholarships are very aggressive in some locations." This is not a specific or rather a widespread policy. It's always very specific to that specific program and city. It's very important that our sales force be properly compensated, and we also have variable compensation for our sales team tied to the life cycle value of the student. This is a graph that shows our curves, permanence curves. Let me give you a practical example. We know, for example, that in agreements, they have a re-enrollment rate that is better than just giving out leaflets.
When you have an agreement with, I don't know, a union in a specific city or it's a union with Ford do Brasil, you're going to get totally different students in terms of the type of student you get. K360, this is the tool that orchestrates this student recruitment dynamic, always based on value. Let me show you in the video. The ability to customize and replicate statistic models. This is the contact field where you'll find the applicants using the filters available in the platform. Besides that, you can search for a specific applicant by typing her name, tax ID, and other data. By selecting an applicant, you'll get access to the full history and information such as email and phone number. You can also check in what campaign this applicant is inserted, and you can continue with the next steps.
You can also drive offers, the offers that best suit each different audience. More efficiency for you, more productivity, and higher enrollment conversion rates. In the offer field, you map out the profiles of the applicant to see what is the best offer for this specific customer. Remember, the higher the value of the student for Kroton, the best it will be for you in terms of your compensation. To find the ideal offer, you have to check the tool with information about different programs, the different units. For example, here we see an agreement with Ford Motor Company. If the available offers will be presented to you can be sure that the proposition will be a success. Finally, the payment slip with the proposal will be generated and delivered to the applicant.
In very simple terms, we have all of this intelligence in-house in the K360. We can find out a lot about the student. There is also, I am not really sure, but if you saw that we also have different scripts that are used because I know the information about the student, if they have a good ENEM grade. In this case, we discovered it was a Ford employee. In this case, for example, the scholarship is more attractive than it would have been offered if it was just an ENEM student. Just imagine how this would work in thousands of combinations. We are making a lot of progress in this area. K360 is just one of the tools that makes part of this digital transformation journey. Recruiting students with higher retention propensity is something that we pay a lot of attention to.
With this, I close my presentation on recruitment. I was trying to demonstrate to you the meaning of recruiting quality students. Now let us talk about loyalty.
We started to measure NPS a couple of years ago. So it is more than the institutional evaluation we had, because now we measure monthly. How do we measure? In all possible ways. We measure seven main dimensions, academic on-premise, service on-premise, service online, service to students, and the brand perception. We measure by brand, by mode, whether it is on-premise or distance learning, if it is in a partner unit or our own unit. We measure all of this monthly. We can clearly identify everything that happens during the year so that we can take action. This is a deep dive to work on these initiatives. Then set up action plans. For us, this is so serious that in our management rituals, we have monthly rituals in all units. Rodrigo actually participates in this committee, the Student Success Committee.
I will show you in a while how we do this. Rodrigo mentioned that 22 areas are involved. The whole company is somehow involved. To give services to the students, we've made 14 PIs, an initiative that helped increase NPS by 13.5 percentage points, which is huge, especially in a context where students need to accumulate different experiences to change their perception. A large number of meetings, 300 work meetings. Talking about projects focusing on retention, what is retention for us? In simple terms, it has three steps. Embracing. After the student is enrolled, how is the student welcomed? 50% of the dropout rate happens usually in the first year, 75% of the dropout happens in the first term, in the first semester, or between the first and third semester. Embracing is extremely important.
Retention per se, where you identify problems in the student's journey to allow for re-enrollment. Re-enrollment doesn't happen if the student paid for the enrollment and then had difficulty to pay for the second bill, then he will not be able to pay for the third bill, so he will not be able to re-enroll. If we have this information, what do we do to help that student be able to re-enroll? Talking about the first phase, embracing, it seems like something simple, and it would be if we had a school with 400 students. The headmaster would go there on the first day or at the time of enrollment, would introduce the school, would explain everything, welcome the student. We try to replicate this in our large scale. Yes, we've been able to harvest good results. The first item is very similar.
We have a team using a new platform. This is a team dedicated to welcoming these students at the call center or in the units. This team will call the student, will explain the school, will tell him how to use the virtual environment, provide him his login, explain how the academic model works, how the evaluation model works, because we work with continued evaluation. This team prepares the student so that the student will remain engaged between enrollment and the time when classes begin. As classes begin, we also have a whole ritual as we welcome the students, the opening class. Because we know that it is worth to invest in this first moment. Of course, I don't have time to talk about all the actions that we take, but the result is clear.
We started to do this in January 2018, and we already see seven percentage points. It is a lot. We enroll about 450,000 students a year. 400,000, 450,000. Seven percentage points improvement in the first semester of this initiative is huge, and it shows a big potential for the future. We also see this is consistent. The student not only re-enrolls more, but the student is in fact more engaged in pre-class, post-class activities. Retention. During the semester, because embracing is early on as classes begin. During the semester, we provide reactive service and proactive service. I'll give you just two examples. Reactive service at the unit. What is this? This is a team, a dedicated team, using a platform with different arguments, academic depths, relationship depths, plus tools to make it easier for the student.
Sometimes the student needs to have equivalent disciplines acknowledged, or the student is facing some financial difficulties. Since we implemented this retention action, the retention level, students who were proactively asking for enrollment cancellation, we've been able to retain 30% of these requests for cancellation. Of course, this is the result of the last semester, 2018, the second half of the year. The first half of the year, we had 22%, and in the second half of the year, 32%, I mean. We also used the same tool, the K360, which is our CRM tool. The same intelligence we use to attract students, we also use it for retention. That was reactive service. What about our proactive service? Today, we have a good predictive model.
We hope to have an even better model, but this one has 74% assertiveness, so it's a good model, although we think we can still improve. The model points at students that may drop out. We cross that information with other information to evaluate the accuracy of this model. Why is it important to have this model? Because of course, we cannot talk to 800,000 students at the same time, so we have to be selective and know who we will talk to. This model helps because it saves 50% of the efforts. We make a personal contact with the people that are appointed by the model. Looking at the results, today, when you look at the control group and the group of people under this initiative, we've been able to retain eight percentage points.
8% more enrollments among the group that received a contact by our team compared to the control group. All of them were appointed by the model as inclined to cancel the enrollment. In a very simple way, we can look at the student's full journey. Of course, it has to be managed. How do we support the student's journey? You have probably heard my talk on distance learning, and we always talk about Mondrian, which is one of our tools. However, we have many more. A financial model, indicators book, operations map, zero fault. Whenever we see a failure in operations, especially, well, Rodrigo mentioned about cost. For instance, what is the cost of energy per student? What is the cost of energy per square meter? What's the cost of the kilowatt hour? What is the consumption of energy along the year?
Many times, the Porto Alegre unit, just to give you an example so you see the level of depth. The Porto Alegre consumption of energy is very close to the consumption of energy in Maceio. This is, of course, in the summer. What happens in the winter? We want to look at the holistic picture to see how we can optimize the picture. This is the level of detail where we work. The basis here is the Mondrian system. I'll tell you how it works. I brought a video so you will easily understand. Mondrian helps identify opportunities, but they have to be part of an action plan. It is a list of the things that have to be done for us to be able to detect and tap an opportunity. How do we control the execution of these action plans?
Those of you who work in operations, you know how it works. The big challenge is how to execute that. Mondrian sets up comparable units, identifies the opportunities, and sets up action plans. This is the cover of Mondrian with links to 20 panels where we evaluate our centers. The main panel compares the performance of these centers on financial indicators, and also operations and academic performance. Let's look at Cerejeiras Center in the south of Rondônia. We can see on the chart that it is in a good position compared to the national average. We want to compare that with other similar units. SK3M, a segment where we include smaller towns that had a lower level of development where Kroton has a monopoly. Still, Cerejeiras has a good position. Let's see how this center has evolved year after year. They have improved on the financial commercial axis.
On the conversion panel, we see the reason why. There was a perceptible improvement in attraction of students, better conversion rates based on a smaller number of students. Re-enrollment, we could see a high retention level. This center delivered more than expected. Here, the center had a drop. It was made up by payments on date. This center, therefore, has a high level of delivery in many of our indicators. This is a quick and clear diagnosis of the Cerejeiras Center. If this center continues with the same performance, it will grow and have the right level of productivity. This is what Mondrian does. It detects opportunities and sets up action plans. Let's look at default, for example.
If I know that a unit is facing collection problems, or a center that does not have a collection team, I can attach priority to that using my corporate collections team to support that center. We write an action plan to be able to set up a collection team in that center. This is a simple example. If I don't know that, if I don't have the information, I cannot set up an action plan. As I said in the beginning, I don't want this to be a cliché, what I need to do is to use Mondrian to orchestrate our resources. Mondrian helps us in that. I think we had a problem in the screen. No, it's back. Mondrian, as you could see the clusters, it has basically four pillars, which we call FOCA, financial, operational, commercial, and academic.
That's why is it important, because this is the way we set up our action plans by segments. This is a clear example of our evolution. Look at the axis. You can see the evolution between 2017 and 2018. That is, all of this group of units have made progress going towards the blue quadrant, which is the highest quality. In some examples, this center had difficulties in operations, in commercial, finance. They set up action plans, and in six months, they were able to move to the blue quadrant. It's very simple now because the center looks at the cluster and asks, "How am I performing? What do other people do better, and how can I improve?" This is what we need.
We want directors who ask this question, who are interested to know how to improve, and then they can set up an action plan. Just to give you an example, this is not done easily. Only in 2017, we conducted more than 1,600 visits with more than 2,000 plans. In 2018, we have more than 6,000 action plans. You can imagine the average number of action plans we have. It's no easy task, but this is how we have managed to evolve to improve our revenue. I'll give you an easy example, a simple example. Let's say we're facing difficulties in attracting students for a healthcare program. One of the questions is, but does your unit have an agreement with hospitals or diagnosis clinics? No, we don't. Oh, well. The benchmark of your category says that you should have these partnerships.
It's easy to do. It's easy to implement. FOCA is an app. I'm going to show you a video so you see how it works, but it is an app where we include action plans. The field team includes the action plans in the app, so we know what the action plan is, and we can monitor progress. I'll show you the video. After you download FOCA, you have an icon on your mobile phone. In the first screen, the manager can see the centers and the date of the last visit. Let's select Americana Center to see the details and to have the route to visit that unit on Google Maps or Waze. Again, in the first screen, if we click on Actions, the manager can see what actions were listed to be executed in that center.
In addition, the manager can check the dates and cross out the activities after they are done. Here again, in Visits, on the first screen, there is a history of visits to that center and the actions that were agreed upon in each visit. You can also provide more information about the visits, about the topics that were discussed, and the actions that were listed. These visits will then be converted into weekly reports that will be tracked by business directors. Now you have seen the app, and let's see how we use that information. Managers visit the units and centers. We're now implementing this also in units. They will track the action plans, and every week, the regional director will look at the action plan performance.
The person responsible for the channel will look at the outliers and have a meeting with me, a monthly meeting with me, so that we can discuss about the outliers and detect what action plans have to be executed. My role is not really to track performance. What I do is to identify actions which are not being executed, usually because we have some kind of obstacle. They depended on an action by corporate, by a corporate team. This concept, Ms. Afini knows that really well. It's a concept that is very similar to the agile methodology. We also do that to say, "I did not make progress because I need such and such." Somebody has to release such and such so that I can make progress. Here, we have a similar methodology.
We track daily, then weekly, and monthly with me so that we can make progress as agreed. What I said in the beginning, this is not rocket science. You've seen how these things work, how they are executed and monitored. Because of the size of our operation, we need these platforms. What we cannot do in action plans, what is not under the control of unit directors, for example. I mean, let me open parenthesis here. Also I've become the leader of Campi. We have built the Mondrian tools for the campus teams. If you find a unit director, you will see how enthusiastic they are, because now they can clearly see where the opportunities are and how they can tap these opportunities. We're now setting up the action plans for each campus.
When it is not enough to have an action plan, sometimes we have to develop a strategy or change something, or redefine concepts for these actions to be executed, or even review processes. Let me give you an example. Well, I understand that for me to improve my revenues, I need more transfers. Just to give you an example that can be confidential or strategic. I cannot do that myself. We need a team to redesign the processes, because the processes have to be simplified. Maybe you need systems to be developed. To close my presentation, this goes back to what Rodrigo said, which is this connection between our digital process, which is helping us to evolve faster. I'm going to show you some examples.
K360, which is the CRM tool, can give us a practical example of the six agile teams working in student attraction. One team works only with the K360. The other one would be evolution of the leads generation. More than the digital transformation as an opportunity, Rodrigo also spoke about our new sales portal, and I'll give you some more color on that. Here, most of what we do in terms of student attraction and recruitment have the well-known actions in schools, distributing flyers in the streets, using media. There is something which we find really important, especially for Somos, which is visits or leads generation different from the media. What am I talking about? I'm talking about examples we had in-house. You choose your job. This is a vertical we have. It's a website.
People can have their profile analyzed and a profession will be suggested to them. We recently had more than 5 million searches. We have a website to prepare students for the national exam with 51 million searches. Conecta, 65 million searches. These are actions whereby we provide content to students, content that students are interested in. In this case, in this example of the last 12 months, it's generated more than 500,000 leads. In addition to the traditional actions we take that we continue to take. This has a huge potential, and of course, it uses our digital base so that we can do this quickly and with high quality. The last example, this one, vestibulares.com.br, the new sales portal. We had, and we still do. We used to have quite a few portals. Anhanguera had, a few other brands had.
We consolidated this sales portal, and you can see the result here, a 25% conversion growth. This is a lot. Up until we launched this new portal, after we launched it, we grew 25%, and in some clusters, even more than that. Look at mobile, for example. We grew 66%. More importantly, if we have now a responsive website for mobile phones, the percentage of calls we receive from notebooks or desktops and mobile, we received many more mobile contacts. It means that if we make it easier, we can improve the number of students we can convert. We are talking about 250,000 enrollments a day, minus 20%. Look at the number of leads that we generate, we have 20% conversion rate.
It is a very high efficiency, especially considering I have to do all that process of data intelligence to use the best tools to convert these students. Now just to close my comment, Rodrigo mentioned about strategy for undergrad. I think that the growth via new units is clear, also new centers for distance learning, we cannot have good operations and attract more revenue and improve our margins, especially in this business that has this pressure without us having an operation that is running smoothly. We wanted to tell you how our operations work. Thank you very much. I wanted to show you this, I now thank you. Okay, thank you. Let me now invite you to have some coffee. We will break for 15 minutes for coffee. We will have two more presentations plus the Q&A after the coffee break.
Good afternoon. Well, my mission is to make our share price go up today. We have several expansion projects underway and same -store as Paulo is leading an important project in higher education and continuing education. Today, the focus will be on something I spend most of my energy, our own units, both M&A and greenfield. Why is it that we feel so confident that expansion is the right choice for Kroton? Last year, we shared with you what the addressable demand in the market is, we believe that we have 32 million prospective students, people who could be taking our undergraduate programs. We know that not all of them are inclined to study. We conducted many analysis, broken down by different categories, market, location, programs, we believe that the addressable market is 5.6 million, in fact, in terms of prospects.
Based on this, we have designed our growth thesis. This growth thesis is based mostly on organic growth with the complementary support of inorganic growth. The greenfield organic expansion is twofold. First of all, we have to think of when the expansion started. We did not enjoy any regulatory bonuses at the time, we were starting our operations based on campus mostly. In order to mitigate risks or to find new partners, we used this methodology based on something new. We chose locations, cities with the necessary indicators where we would be the first player to enter the market. Then in 2017, we started using protocols from the Ministry of Education to start our student recruitment activities. Then we started using the fair share model, which is somewhat different. Here we use a different model.
We start with distance learning, this, of course, creates a much more profitable equation for us. We use the fair share based on the pent-up demand, cities with high pent-up demand, we always analyze the more suitable programs for the different cities we are introducing our programs in. We also have the inorganic growth model based on strategic cities with high pent-up demand and also high fair share. We believe that it only makes sense to go into these markets when we have a small operation. This starts usually, with the competition that doesn't begin from scratch. We always try to find an asset that would like to be acquired. We look at the market share and other elements.
Another M&A model we use is when we have already started operations in a certain town and there is an opportunity for acceleration and we acquire the available assets of interest. I remember that last year we mentioned that we were starting this project dedicated to expansion, and the results are starting to crop up. Between 2017 and 2018 first half or starting operations in the first half of 2018, we have 77 new units. This represents 85% of the cities in which we operate of this growth. 71 new units are based on organic expansion, and five of them are already with us and three in the process of closing. Just to give you a little flavor of what we have been doing in the last 12 months. We acquired five units, one in Maranhão, two in Ceará.
One is being accredited, the other is already with its door open, plus Paraíba and Piauí. Just for you to understand why we think it really makes all the sense and why we think we can deliver a lot of value through this acquisition. You are familiar with our history of integrations, and for small acquisitions, it's no different. We have a dedicated team. They work exclusively with the integration, and we ensure that in at least six months time, we'll have all processes and systems completely integrated. It could be done in a shorter time, we like to respect the academic cycle. We only change around the systems at the end of the school year.
Of course, the cash has already been taken over by the company, and in three months, all back-office activities are integrated, and we just wait for the end of the term for the turnaround in academic systems. Fábio is the leader of M&As and all small acquisitions, both in undergraduate and K12. Let's turn to greenfield expansion. I explained the two models, the brand new model and the fair share model. What I would like to highlight in this slide is that regardless of the model, costs evolve or have to evolve in tandem with the number of students in our base. In some cases, we have to do a little hold back or put a curb on the growth of the unit.
In terms of brand new, we have some operations that start in partner centers or in other schools, and for about two years they, of course, stay in that way and then they go into operations with us in a block, and then we also have our own units with two more blocks. This starts with accreditation for our on-campus programs. Usually, this is how it starts, and since we are in this period of regulatory bonus, we usually also start with a distance learning center when the case applies. In the fair share model, we start with dedicated operations and we start especially with distance learning. Then on-campus follows. We file for accreditation. We launch the unit with the entire DL portfolio and four programs that are considered premium. Why is this model so good?
Because it improves all economic performance indicators in the unit and also marks strong cash generation from the very beginning. You're all interested, of course, in finding out more information about fair share and greenfield. Here we see a greenfield fair share. It's a unit with almost 3,000 students where we'll have a turnover of almost BRL 24 million in this unit, in fact, net revenue. It's going to be very similar to a Kroton unit with 48% margin. As of the third year, this unit shows a positive cash flow and over 75% of the CapEx is spent on the initial three years, just to give you an idea of how everything unfolds. It's time to break down these numbers. In the new maturity, we would be adding BRL 750 million in EBITDA and BRL 636 million to our cash flow.
EBITDA in these units will be positive on the third year. That is, as of 2020, it will become positive, and cash flow will also reverse as of the third year, that is 2021. How can we make sure this will happen? Of course, this could be seen as a dream or projections, but what are we doing to really reach those numbers? Valerio talked a lot about the way we work, the difference between what is planned, the execution, and the execution discipline. We have a dedicated team that ensures proper execution and sound planning for everything. Everything is based on routine management and on three very strong pillars that I'll be explaining to you. First of all, the first thing that makes sure that we have a very efficient operation is the team.
We understand that the people who work in our units make all the difference in terms of achieving what we have committed to in terms of results. We have a training program. We train our staff for 300 hours. We use the best instructors and the top performers in our existing units. We provide them theoretical training and also on-site training, which is very important. The principals go to the different units, and they try to understand more about their role. Those who participate in trainee programs also enjoy the benefits of spending time with the principals that come from other units, and like this, they can gain a new perspective on their activities. This is a model that has been very successful. 29 of our principals have been allocated to new units or same-store units.
Besides that, this is a program that's not restricted to the principals of our units. It also goes and includes our commercial teams. The commercial teams, they are trained in our units, and they are moved to the units at least 15 days before the student recruitment phase. We also try to skill up our human resources team. They are the pioneers in the new regions where we're breaking the ground. We also have the academic coordinator. This is a key figure for us. One of the leading actors that's going to ensure quality in our academic model. He receives training. They come to São Paulo, they get a great deal of support so that we can all start on the best footing. We also have the IT team, and they are very helpful for the operations, and also the service team that's key for the student recruitment phases.
Just for you to understand, most of our strength in the expansion is derived from the talent we have in our team. Conquest of locations. We work very hard when we open operations in a new city to be known and recognized. Most of the times, the brand is not well-known in the region. We only have some DL offerings. It's very important that we start on the best footing. Many times, those cities are really small towns, very tiny locations. We start, for example, by hiring PR services. The communications officer talks to the local press, somebody who knows the mayor, all principals in the government schools and in private schools, who is familiar with the influential people so that we can start a relationship in the city. We use media, visual communications as a way of reinforcing our brand more tangibly.
We start using visual marketing and also promotions. First of all, we try to learn about the city, and then we really do the visits we have to do, and we keep in touch with Valerio's team a lot. The new cities are always different from the large cities because in the small towns, usually student recruitment comes from the commercial team. In larger cities, up to 50% of the new students come from the digital channels. These are small channels and the buzz and you really making the visits and paying calls makes all the difference, and we believe that this is a very important way of gaining market share, and it's very important that we have discipline in our commercial teams. Here you can see some of the facades. We have Franca, Nova Iguaçu, Erechim, and Palmas.
Some of the towns, Serra, Santarém , Santo Antônio de Jesus, Assis. Once again, the units. We're going everywhere in Brazil. We really are very particular about the visual communications. What are Kroton's differentiating edges? We always focus on transformation. When we start selling our products, we talk about our academic model and employability. Employability is shown as a very important tool for our student body. We have the Canal Conecta. Canal Conecta for them shouldn't be seen only as a promise, but as a truth, something that will support them greatly in their quest for a job. Routine management. Everything I was saying is very nice in theory, but we also have meetings and a daily and fortnightly routine. This is the plan, but how do we go about this? We have the daily meetings on which we discuss things we have to do.
For example, I should have recruited 50 students yesterday. Why didn't it work? What should we do to reach that goal? We have daily meetings and also weekly meetings, together with meetings every 15 days, and also monthly meetings. In case we detect a non-performance issue, we can work on the planning to make sure that we hit all the targets in terms of the economic performance, financial outcomes, and also academic quality. We know that dedication is needed for expansion to work. Roberto Valério has 113 units plus the centers, representing those BRL 5 billion, so it would be impossible for us to have just a few units with a handful of students. For us, it would make sense that this unit was separated.
The team stays in the unit for at least one year, and we follow up on everything until two recruitment cycles have been completed, and then we hand over the operation to Roberto Valério's team. As for the positive impacts. Of course, we did a little summary about all units we have implemented so far. If we look to September, how are we doing? They are up 38% in net revenue. We cannot say that this is going to last forever, but if you think of it, 38% up in net revenue is very significant. Also, 16% less cost and expenses, and student recruitment is up 25%. Either because we have more students per class or because we're paying less in rent and in utilities and other services. In all, we have 5% more in DIR. It's an operation that makes all the sense for us.
Everything we were saying about execution, of choosing the right location, everything's working just fine. I have a case study to share with you. It's a unit in Ceará State. This is a location from 200,000 to 500,000 inhabitants. We chose the best location in town, a beautiful building. We made a beautiful facade. We worked with a very qualified team, and the results have been excellent. When you look at the unit, we have an IRR of 18%, 39% in 10 years, and 43% in perpetuity. Let's take a look at this case. What about projects that are not as successful as that? Sometimes it happens. The first recruitment cycle is not as successful, but very quickly we can address the problem and correct course. This is a unit in Minas Gerais. It was an old model. We had a partnership with the school.
The location was not the best. I'm not sure if you can see it. In blue, we see the location of the unit. It was a large avenue with very little visibility, and we thought that maybe this was the reason why student recruitment was not taking off. Sometimes the partner didn't let us use the front of the building for advertising. We thought this was a very attractive location, but we wanted to improve student recruitment. Of course, we eventually hit our targets, but we had to put a lot of effort into it. Eventually, we also found another property with high flow of cars. We are moving the unit to another building, a building that used to be a school, a separate building. It's not going to be very expensive to revamp the building, and it's in the best location in town.
We believe that student recruitment levels will improve, and additionally, the IRR in 10 years will be 25%, and in perpetuity, 37.4%, and BRL 227 million in net revenue in maturity. This is the analysis we do every day. Every day, we try to see whether the units are performing as they should. There are many, most of them hit their targets, but those who are not meeting the targets need a little push from us. What if the unit doesn't recover or doesn't improve? As you know, there are several waves in terms of real estate price increases, and unless we do what we have to do, the asset will remain healthy in terms of costs. Just as a few of our final numbers, we are going to generate BRL 1.8 billion of ROI on maturity and over BRL 600 million in cash flow in 2027.
Thank you, Júlia. All right. You can see that we feel pretty comfortable. We are doing better than the business plan, and we feel very comfortable this project will generate the value we desire. However, a success is always a combination of different factors. Since the last Kroton Day, we have said this. In a journey of digital transformation, this is a journey. It is a journey that has no return, but it is a journey. We started the digital transformation project in April 2017, a bit before we started Kroton's strategic planning cycle. We asked ourselves whether the formula that gave us success, from the academic viewpoint, operational and financial, if that would also lead us to success in the future.
The answer to that question was no, because we needed to develop some digital functionality so that we could be ready to enjoy success in this new moment of the organization when we had digital challenges. Not only digital challenges, but we had to adapt to the new digital frame of mind. We studied, we dedicated a lot of energy to understand what the digital transformation was and how it could impact our company. I think I said this in the last Kroton Day, but we spoke to 25 people and companies that had gone through or that were going through digital transformation, either successfully or not, in Brazil and abroad. We had Brazilians, Brazilian companies, CTOs, CIOs, Brazilian and foreign companies that had had an experience in digital transformation using different solutions.
Some did the big bang concept, others decided to go for a phased transformation, and then we designed our own way. We had consultancy to help us, but above all, we engaged in the digital transformation process. I would say that today, we have not yet won. This is the beginning of our journey, but I have no doubt whatsoever I can state that the company is fully engaged in this process of digital transformation. All of us know it is important. All of us are engaged and living through this experience in a relevant way. We do have some signs of this. In the process of integration between Kroton and Somos, one of the surveys we conducted is related to organizational culture. At that time, it was not related to digital transformation.
We just wanted to understand cultural characteristics of Kroton and Somos to identify similarities and differences so that we could have a smooth integration process. Now, one of the questions that was asked among many in this culture survey was a cloud of words. Each person says a word that translates his or her company, and the one word that was mentioned more times was innovation. Well, we had conducted the same survey one year before while we were planning to integrate another merger that finally did not happen, and innovation was not one of the words mentioned. We included this topic of digital transformation, talking about innovation, and in the last survey, innovation was the word that translated our company. We've overcome the challenge of engagement.
We have many others, today the company is highly engaged in the digital transformation, we now know what we mean by digital transformation. It all starts by saying that today we believe the winning model, the winning company. We don't want to transform our company into a digital company. No. We want Kroton to be also a digital company because we want to have a platform of physical digital services. This combination of physical and digital strengths is the secret of success for an operation such as ours. The concept is platform as a service. Let's first talk about other cases that have generated values by combining physical and digital assets. Some digital companies that walked towards digital and some digital companies that walked towards physical. Amazon, for example, as they bought Whole Foods.
They said that Amazon's move is pretty clever if you think about the luxury it will give the online company to reinvent and re-engineer the process of buying, moving, and selling foods. They were digital. They became physical. Domino's is the opposite. This was traditionally a company of brick and mortar, and it is now moving towards digital in a segment which is not obvious to participate in a digital transformation. Again, it's a combination of physical and digital assets. Kroton already has a track record from the physical world with great edges. Why do we believe we already have strengths from the physical world, and what we're doing to also build strength in the digital world? First question is, how can we build a surface platform that can combine the best of the physical and the digital worlds?
First, we believe we already have a good track record from the physical world, a strong digital transformation process ongoing. We still don't have a strong track record on the digital world, we're building it. On the physical world, we have distribution and physical presence in more than 1,000 cities, proven academic solutions with high quality and large scale for both K-12 and post-secondary education, strong expertise in organic and inorganic expansion, and sophisticated and efficient management systems. We already have distance learning, which is on the border of digital. On the digital front, we already have digital products. Half of our base operates on the digital world. We have a robust program of digital transformation. It's no longer just a goal. We can tell we already have delivered concrete results. Agile has been implemented in 100% of the company. We'll talk more about that.
We are developing digital capabilities such as analytics, customer experience, digital platform architecture. We are building a program for open innovation, for example, the partnership we have in Cubo Education and above all, the cultural change and the digital mindset is already starting at Kroton. People now think digital at Kroton. It's difficult to describe that, but I'll try to give you some examples of how the digital culture changes the way people think. First, let's talk about the physical world. What are the proven competencies that create competitive edge for us in the physical world? In post-secondary education, we have more than 143 units, 1,310 centers, and we will reach 2,000 at the end of 2019, over 1,000 cities. This is not a franchise. These are partners. If we were a franchise, we would be the fifth-largest franchise in Brazil.
This is a value we have in the physical world, a huge network of partners, which certainly helps when we move into the digital world and to bring this value from the physical world. 1 million students impacted every year. Now, in K12, 4,000 partner schools, more than 178,000 public schools working with PNLD, and more than 25 million students in this program. Now, in post-secondary education, 12,000 professors, 2,000 tutors, 1,300 coordinators. Also, learning assets that nobody else has in the country, 3,600 labs and clinics scattered throughout Brazil, more than 1,000 computer labs, more than 100 libraries, and more than 1,000 libraries in partnership. Over 30 hours of video produced per year. Our processes are highly solid.
KLS, the Kroton Learning System, has 11,300 model classes for quality on large scale, 330,000 hours of professors training at Kroton University, and a recurring communication channel to communicate academic strategy to units and centers. We have our network, we have assets, and we have processes structured for the physical world. What about K12? We have complete solutions. 17 solutions for teaching materials and educational support, four solutions for counter shift, two solutions for teachers' training, 46 own schools, and 17 language schools. Plus relationship. A huge network of educators, the largest in Brazil. In terms of relationship, we have a relationship with over 500,000 teachers in private education and more than 1.5 million teachers in public education. Our network of relationships is unprecedented. Nobody else has that, and we have to know how to use it in benefit of the country and our company.
Digital will help us do that. We also have a methodology for the efficient management of these operations. That's proven efficiency, our SGK methodology, the Kroton Management System we've been using since 2012. Again, it's not rocket science, but it's a set of tools and governance models which are structured so that the whole structure will generate value to our stakeholders. Initiatives to develop our strategy, another set of tools to plan our strategy, tools to align and plan for our operations, and then tools to monitor, learn, and adapt. We could spend many hours discussing each one of these boxes because each one is filled with contents. All of these tools, they are management tools or governance tools we use at Kroton.
We have overcome this challenge, and we are very well prepared to face the challenges in the physical world. We knew we had to be prepared for the digital challenge. How to win the game in the digital environment. This was the initial question. If we say that we were not part of the game, part of the digital game, this was not true. We already had a relevant digital presence. Let me show you some data. The LMS, we had 65 million online activities per year, 240 million page views in our LMS, our virtual learning environment. 30% of the sessions carried out can be used on mobile devices as well. Self-service, 60,000 requests for academic and financial self-service per month, 15 million page views in students' portal per month, and 49 different types of services can be requested online.
Of course, we now have a lot of opportunity to grow this. Employability, 210,000 jobs announced in Conecta, 20,000 companies registered, and 2.5 million page views per month in our employability channel. Adaptive learning, 1.8 million users using our adaptive learning solutions, 150 million questions answered, and algorithms that use deep learning are running in our structure. We already have a lot of knowledge in how to do and how to apply adaptive learning in our organization. Recruitment portals, more than 4.5 million active users per month. 20% compound growth CAGR between 2016 and 2018, 500,000 leads captured via digital channels per year. Marcelo mentioned this number already. We already had a relevant digital presence, but it's different from being a true digital company.
That's why we're showing this slide again, because of everything we read and heard and learned about digital transformation, this slide truly shows what is digital transformation. Everything we said in the previous slide is related to this axis here, the vertical axis, which is how to digitalize the students' experience, the go digital. All companies are doing this. All companies are building apps, providing self-service, trying to digitalize customer experience. If you're at the top of go digital, you have 100% of your user experience digital, it doesn't necessarily mean your company is digital. Why? There is another perspective of digital companies, which is the organization itself, which is what we call the be digital. That's related to the culture of your organization, the mindset of the people who work there. This is something you do not change by decree.
You change that when people begin to think digital. It's related to process. It's related to leaner governance structure, faster decision-making processes. This is also related to accepting errors. Innovative companies have to accept error. This is a huge cultural transformation. Of course, errors that generate lessons and learning, but first you have to learn how to accept the error. You imagine a startup that will not accept errors, they will never innovate. If you know that this procedure leads to that correct result, you will never innovate because if you innovate, you may make a mistake. You may have an error. All of this is related to the company's mindset, to the organization culture. Then we started to think how we can take concrete measures to change our mindset and build a digital culture in our company.
It's beautiful to say, "Yes, digital transformation is a mindset change. It's a cultural change." Yes, right, but it has to happen. You need concrete action so that the company begins to view things in a new way and will begin to think in a new way. That is, you have to help the organization develop this new digital mindset. One of the ways we found was to completely change the way technology relates to the other areas of the company. We defined our digital transformation platform with three main deliverables. We must have agility and scale, agile development and scale. We have to develop digital capabilities, and we need an open innovation platform. All of that will lead to cultural change. If we can implement a new way to develop technology in the organization, the agile model.
If we have digital capabilities, if we have an open innovation structure, if all of that works together, we will have the cultural change, and then we will be ready to face the digital challenge. That is to be that platform of services combining the best of the physical world with the best of the digital world, which we are now building. Let's look at agility in scale. Traditionally, how do development structures work? Well, they have a technology department that provides services to all the other areas. It's a clear service delivery. The area that needs a system writes a request, sends it to IT. IT evaluates and then executes, provides the solution. The solution is tested. It goes back and forth for eight months until that is ready. When it's ready, the requesting area no longer needs it.
You have a technology department always concerned about developing solutions, and you have a business area that is dealing with technology as a cause of problems and not as a problem solver. Now, we changed the equation. We did not reinvent the wheel to find a solution. The solution already existed. It is the agile model that came from startup. You have the CEO of the startup, and you have the CTO sitting at the same table. You have the two commercial guys, the three people who work in systems development, everybody working around the same table, thinking together, prototyping, going to market testing, bringing it back, control, it worked, implement, go to market, and pilot. Focused on the customer-centric, listening to customer, all decisions are centered in the customer. This is the agile development model. Everybody thinking together and very quickly.
Not to say, "Well, I need an ideal plan for in five years. Let's begin from phase 1." This is not how startups work. This is not how the agile model works, and this is not how digital companies work. These large companies said, "Come on, these startups are much faster to solve business issues. I also want an agile team." They did it, and it worked really well. Now they had two agile teams, then 30 agile teams, and now it doesn't work anymore. Why? Well, you need a methodology to have so many agile teams working together in the same organization. You have one system and then 50 people developing the same system. You have a single architecture, and many times you still have legacy in your architecture. All of that has to be structured in a methodology.
We chose SAFe, Scaled Agile Framework, to help us organize the implementation of agile teams in Kroton, and we did it in a very aggressive way. For example, international banks operating in Brazil, it was one of the companies we surveyed for benchmarking. They are trying to implement SAFe. This is a 2.5-year project. Well, their technology team is three times bigger than ours, but they've been into the implementation process for two and a half years, and now 80% of their teams are already working using agile. We started the agile implementation in April, and we finished in October with 100% of the development teams working on agile. Very aggressive. It was our strategy.
You have, of course, other more phased implementation models, but we didn't want that because we did not want to have the old world living together with the new world because we would lose some people who were still in the traditional world. They would feel they had been left behind. Today, it doesn't matter if people are developing the most current program or if it is a new module or if they're still using Olimpo in Delphi, which is a legacy system. We always use SAFe. The methodology is SAFe and the team is agile. We no longer have technology teams or technology development teams. Everyone is in an agile team. What is an agile team? It is a team that has 10 people, four or five developers, one system architect, one scrum master, who's the person responsible for methodology, and three people from business, finance, marketing.
This team has a business challenge to solve. For example, a team that is working in the students' attraction and recruitment, another team that will do the conversion. The indicator for this team is, of course, conversion rate, number of enrollments. People will be compensated. There will be variable compensation to the people in the team based on the business indicator. It doesn't matter if the person is the developer or the marketing analyst. If the conversion rate was good, if the number of enrollments is high, they will be compensated. It doesn't matter if the problem is in the code or if the matter is in a go-to-market strategy. What matters is whether the business challenge was met or not. This is what we want. We don't want technology to be a means.
We want technology to be the end, and we want business to appropriate, to own the technology. This is how SAFe works. This is how we generate value, bringing together technology and business. Technology is now more business and business is now more technology. This is how we build a digital company, and this is how we change people's mindset. You no longer have IT people, technology people. Now you have business challenges and everyone is responsible for meeting business challenges. This is how we're changing the mindset. This is how we're bridging the abyss between the physical and the digital world, and it's really rewarding to see. Every 10 weeks in this methodology, we have a PI meeting where we evaluate the deliverables of the last few weeks and we plan for the deliveries in the following 10 weeks.
The business owners, VP or senior directors, they go upstate. We have 550 people in a hotel. All the participants of all teams, all agile teams and the business owners, they know all the developments that were delivered in the previous 10 weeks, what they will be doing in the next following 10 weeks, and they can provide guidance to the teams so that the teams will know what the priorities are for the following 10 weeks. I have never seen the business area or business experts so involved in technology. This is how we're changing the culture of our organization, and we embarked on this project head-on, and the results can be seen here. 50 agile teams up and running, distributed in 15 value streams, 8 delivery trains, 550 people involved. We have 550,000 hours of development every 10 weeks.
100% of the development team is already structured into agile teams. Now look at the trains. You have the incoming student, then the administrative journey, the academic journey, an analytics train, an analytics with a financial journey, one with continuing education, and one with corporate processes. We have many other support teams. System teams, shared services, user experience, customer experience, architecture, office, and LACE. When you have a large system delivery, we split that into different features and each feature is broken into stories. Each story is a development to be executed in 2 weeks, and it is the team that will decide what has to be developed. What is the story that will generate more value and which is less complex to develop?
It's not me, it's not Roberto, it's not Roberto's director, it's the team themselves who will say, "Well, with this story, I will spend 25 hours for development and it will generate X return. This one will generate twice as much value and I need only 2 hours. Let's do this one first and the other one we can do later on." This is a digital company. This is going to help us do what the startups did when they were all together sitting around the same table. This is SAFe. This is the way we think digital. Now look at the delivery. The first one, 77%, then the second 81%, and now 86% of the stories are ready.
From 500 to 1,500 stories, we are evolving with a lot of success, and we believe that this is key for us to continue in our digital transformation successfully. We already have data for continuing evaluation. We were only able to do continuing evaluation because it was done by an agile team. We are talking about the admission exam, the automation of the syllabus. As the student makes academic progress, then his CV, his curriculum vitae, is receiving all of this information. His curriculum vitae is always updated. And now the new user experience, which created additional revenue to us, just providing more visibility to students, what disciplines they can study before the suggested calendar. These are only a few examples that have generated true value for students. More features that have already delivered value to the business.
Eight features that have generated much more recruitment and retention, 13% improvement in NPS, 19% more students completing all online activities, 70% increase in the matching of students and job openings, and revenue, BRL 70 million more revenue from adjusting classroom hours and BRL 100 million with additional cash generation. This is concrete value. When you say, "Wow, digital transformation prepares you for the future," yes, it's true, but it also generates value in the present. What we want to show you here is hard data. You shouldn't idealize the digital transformation journey. It's not something you're going to plan today to reap the results in 10 years. If we didn't take this journey, we would regret it greatly in 10 years. The value is being generated today, real value, and we're capturing the benefits and we're feeling very happy about it.
In addition to all the technology models we are developing, it's important for us to develop other digital capabilities, and we have a few of them that we consider as key for our business: data and analytics, customer experience, and digital platform architecture. We must have full mastery over data, the ability to analyze data and to act on the customer's experience based on a systems architecture that is compatible with the digital challenge we face and that will give us the flexibility needed. Let's talk now briefly about the three pillars. Data and analytics. We are creating a large augmented intelligence feature capable of predicting and working towards student success. We correlate dropout rates.
We have 4 billion digital learning events that can be used, the data records that can be used to understand student behavior, 300,000 competencies demanded by the job market, millions of data points in on-site exams, absences, et cetera, thousands of behavioral items and questions answered by students. All of this serves as a source of information. Many of the retention efforts we have done are based on data like this. In other initiatives, we are certain that the data will be paramount. There's no question that all companies that live on data today knew 10 years ago why they were collecting their data. There was a premise, of course, that information would be valuable 10 years ago. Now we are collecting data in a very structured way, the best way we can.
In many cases, we know how to use the data already, or in other cases, we have to discover in time what is the potential value of the information. As for customer experience, I think that more than detailing this to you, it's important to give you the message. Any digital company mandatorily has to be a customer-centric company. This is a prerequisite for any digital company
It's absolutely essential to understand how the service is delivered in the eyes of the customer. Of course, we are a digital company with digital competencies, so we set up a center, a user experience center. We have 22 areas participating with the involvement of the leadership. We have the academic success committee, in which VPs also participate. They want to understand the customer experience, the student experience, and improve on it. We hold monthly forums to build the actions and granular and detailed monitoring of the students' NPS. This may sound obvious for the digital native companies among us, but we only started understanding the importance of NPS early in 2017. We used to measure NPS, but using Avaliar, a manual tool that measured it just once a year. This is not enough.
Today, we measure countless data points, countless student journeys, both digital and non-digital, on a monthly basis. Like this, we can tell immediately what's working and what's not. UX and UI are very important for us. We have groups dedicated to these disciplines in the organization. Finally, we have our digital platform architecture. What's the concept here? Well, here we have the benefit of being not an expert. We keep on this business perspective above everything. We took a very important decision. For us, our two transactional systems architectures, we found had to be replaced. They were not suitable for the digital transformation we were embarking on, and they are written in languages that are not of interest. We have different modules written in up-to-date language and using the ideal architecture. All modules in the system are now being decoupled.
There is a digital decoupling of these modules, we're creating isolated modules so that the systemic migration can naturally take place. We're not going to have a systemic big bang. We're not going to see this change. We're going to spend two years developing a new platform, we have to cross our fingers and hope it will work out. We're going to move in steps, little by little, decoupling systems and creating a brand-new architecture. This is already taking place. We did this with the continuous education evaluation module, all of them based on microservices, all of these changes. This is the basis for our discussion on digital transformation, everything has to do with digital capabilities, as expected. Now let's talk to open innovation. If we think back to the customer perspective and the company perspective, the go digital and the be digital.
Digital capabilities, they drive innovation from within. Well, we want to develop capabilities in the company so that we can foster innovative thinking. For a company to be truly innovative, they have to be open to innovation coming from outside. Our open innovation model tries to act as a catalyzer for the experiences in technology and education that happen outside of the walls of the organization. We're working very hard to create innovation within our walls, we keep the radar on to detect what are the new trends emerging. For our open innovation model, we chose Cubo. First of all, we want to drink from the source. Cubo is a very important digital and cultural transformation hub holding 600 events, it's a very important startup center in Brazil. We want to build the largest transformation hub in Brazil.
We are responsible for the education vertical at Cubo. All startups that want to go into this area, they have to talk to Kroton because we're responsible for this area. First of all, we have some criteria for selecting the edtechs. First of all, they have to serve a demand of the Brazilian public education. They have to solve one of Kroton's problems or issues. If Kroton has a pain, if the startup can fix it, then they are eligible for Cubo. Finally, they have to be able to create a potential disruption in education. Those are the three criteria that we use for selecting edtechs for Cubo. We also have a funnel selection. For now, we have talked to 126 potential startups that are interested in working with us in Cubo.
We have partnerships bank with 21 opportunities. We also invested in small startups. We have 35 first approaches with companies. In 73 cases, we are still in leads and validation. There is a growing proximity with education companies that not necessarily want to join Cubo, even though Cubo introduces them to us, but we are serving as a catalyzer for startups in the area of education. At the end of the day, you end up fostering a whole ecosystem around you. It's almost automatic. When we started developing a relationship with Cubo, some companies also approached us. When you realize that you are at the center of an ecosystem that you created yourself and that you help feed, you exert influence, and you're close to what is good for you. That's why we are working with a selection of edtechs.
In parallel to education, as you know, Cubo has 14 other floors dedicated to other industries. We have 16 ambassadors of innovation from other areas of Kroton. They visit Cubo to identify opportunities for partnering with the Cubo startups in other areas. For example, finance, payment means, collections, administrative processes. Cubo can be harboring many potential solutions of interest for us. We have 96 projects now in pilot phase, all of this driving digital transformation and also overhauling the culture of the organization. As we see it, the secret sauce for success and the destination of this journey of innovation is adopting the platform-as-a-service concept, combining physical and digital.
We want to be a platform that's capable of serving the entire education chain with direct and indirect business models from B2C to B2B2C, with a physical structure that has been proven and that gains in efficiency every day, but it's backed by the digital resources we're building. We feel certain that in a very short time, we'll be the company that will be able to deliver this platform of services. Thank you very much. Carlos, you're next.
Thank you very much, Rodrigo. Okay. Could you please bring over the chair so that we can start the Q&A? We're a little behind schedule, unfortunately. Director present. We start with Mario Ghio. He is the K12 officer. Valerio from higher education. Jamil Marques, our CFO. Carlos Lazar, our VP of digital transformation. Paulo de Tarso , VP of continuing education. Júlia, our VP. Our star, Gislaine Moreno, institutional development officer.
Rodrigo, so that we can get the Q&A started. Fabíola— Sorry, my bad. Human resources, VP, and operations. If you have any questions, we have some roving microphones in the room. Just please raise your hand. I see that we have a question in the corner. Can we please start with you? Okay. Just please say your name and company, if you will.
Hello, I am Rodrigo from BTG. Rodrigo, I have two questions for you. First of all, just a clarification. Let me see if I got this right. In the beginning of the presentation, you talked about a pressure of 300 this in margin. I want to know if it's based on the Greenfield margin, adjusted or not. Finally, could you please explain to me, everything you discussed, and the top-line growth and flat margins, how is this reflected in cash generation?
I think that this is something we've been discussing. I know that you are under pressure to generate cash because of PEP and other funding lines. I think that very soon we will see a relief with PEP paying off part of the debt. What is converted in cash considering everything the company is facing? A question to Gil. Gil, could you please share with us in this process of M&A of schools and screening of potential targets, what has been the most difficult for you when you have to close a deal? What did you imagine in the past, and what you found different during the actual M&As? Can you share it with us, please?
Thank you very much, Rodrigo. Let me start with the first question about margins. When we talk about 100 to 300 basis points in reduction, it's in the same stores.
From 2018 to 2019, it's basically flat, when you look at the consolidated business in 2019, it's 100 or 200 basis points down or up. It's the relationship between consolidated and non-consolidated. I think that it's become clear in the materials that Júlia showed you that cash generation evidently will be felt more strongly as the expansion projects mature. Now, specifically in the short-term horizon of 2019, the only effect, the only headwind that is negative comes from PN 23, but for the coming year, we see nothing but tailwinds. We also have, for example, the FIES issue. In this year, it was BRL 400 million. We have some working capital detractors that we're working on, but they're smaller than this year. When we think of PEP, we are not expecting to receive a PEP installment for next year.
It's going to be in 2020 or 2021, but it's something that's not linked to the revenue 2021, but actually that relates to the graduating students. In the out-of-pocket world, we know that collection initiatives take a while to really gain flash and become mature. Last year, we started some of those initiatives. There was some improvement. We are not considering improvements in the macroeconomic scenario, but it's something we've been feeling as well, a deteriorating macroeconomic scenario with an impact on unemployment and also on consumer trust. Just as a reference for you, for 10 days of receivables for us represents BRL 10 million. In terms of recurring CapEx, we are focusing on several initiatives. We were really working on cost discipline, now we are rolling out with a greater focus on CapEx, seeking efficiencies.
Expansion was also more limited. Rodrigo said that CapEx next year will be better, especially when you consider the whole picture and the tailwinds. Non-recurring will drop as well. This will happen next year. Looking more to something that is not operation, we have around BRL 600 million of future receivables from the sale of Uniasselvi that will be received in five installments. In terms of conversion, we have a deterioration based on P23, but this is going to be offset by this list of elements I have just mentioned. I think that Fábio and Ítalo are better qualified to answer you because they lead acquisitions. Something that came as a positive surprise for us was the openness of schools. Even the more prestigious schools are undergoing succession processes, and this created an open door for us in terms of discussing the potential acquisitions.
I don't want to sound critical, but something that also struck us was the level of disorganization in terms of tax and ownership structure. It's very difficult for them to be acquired by a large corporation such as Kroton because they are disorganized. This also indicates how important it is for them to seal alliances with companies like ours. When we make the alliance, the next step in this acquisition, it's a company you know. You know their finances. Many times you are responsible for their human resources. This is something that is going to really ease the transition. Maybe, Fábio, agree with me. It's difficult for these smaller schools to show themselves as a potential target for a large corporation in terms of M&A. This, of course. Do you agree with me? Do you think I am right?
Yes, I think we still have time for yet one last question. In the back.
Marcelo Santos. First question to Valério and maybe to Jamil about the margins in post-secondary. It was very clear on the Campi side. There is some pressure on FIES, and this will be made up for by gaining efficiency. What about distance learning? Do you believe you will also suffer pressure on margins in the next few years, because of new competitors? How would you make up for that? Also gaining more efficiency, or you believe the current margin is sustainable and it will be no need to make up for any margin loss? Next to Mario Ghio about the BRL 40 billion revenue on Countershift. What is behind this revenue? Would that be more than language schools? Is that a revenue that already exists? Is this money being spent already in Brazil?
Where is this revenue going to come from? Are we going to steal share from somebody else, or are we going to have more education spending?
Okay. I will try to answer about margins on distance learning. Well, as we did in post-secondary on-premise, we will be able to sustain these margins. The initiatives are oriented, as Rodrigo mentioned. Cost efficiency, expense efficiency. We will continue our strategic sourcing, also digital transformation will help us a lot, especially in transactions.
Commercial initiative and retention initiatives will also have an impact on distance learning, a positive impact. Marcelo, yes, these BRL 40 billion are already being spent by Brazilian families. The BRL 12 billion is not really an estimate, because BRL 12 billion is only English as a second language. All the spending of families for children to learn English in franchises, this is already BRL 12 billion, 30% of the overall amount. As we remember that many families also take their children to Kumon so that they will learn more mathematics, that is also a share. Also education on coding, robotics, families also spend money in that kind of education. This is how we came to the overall number. Now, in addition to these, in this number of BRL 40 billion, we also have reinforcement classes. Families should not spend that.
If the school is paying attention to the performance of each student, who is better to reinforce knowledge for students? The school, because they take the exam, they know the student, the student is there already. We believe that all the amounts spent by families today with reinforcement tutors should be done in school, because that's more convenient, that's more comfortable for the families. The message here is that we do not estimate that families will spend additional BRL 40 billion. No. We just say that families prefer to spend these BRL 40 billion where they can trust, in the school, for example, that they trust.
Next, Roberto Otero from Bank of America.
I like to follow up on Marcelo's question. I think it was really clear, the size of the potential revenue, thinking about product and the size of the addressable market.
What about the challenge in the sales process itself? What is the diagnosis you have of your strategy, your sales strategy, the strategy of Somos? What changes, what initiatives will you make in Somos sales strategy?
That's a very good question. Thank you. Let me go back to what we heard before. Somos sells a history, actually, we had a very compartmented history because if you sell books, you don't sell learning systems. If you sell learning systems, you don't sell books. Now the challenge we have is to reorganize the company based on the strategic guidelines that we shared with you today. We will no longer have this discussion whether I'm selling textbook or whether I'm selling learning systems. No, we are just meeting specific needs of our clients.
By the way, it is this client who will decide whether they want a single solution, a combined solution on paper, in print, or digital. Talking about that is easier than actually doing it because you have to train your sales force that has hundreds of people, and we have to retrain them. This is something we have to execute really well. It seems to me also that every time we understand that we are becoming a service provider mediated by technology instead of a content provider with some technology, then our leadership should be of people who deliver services. Let me give you an example to make it clear perhaps. Our commercial directors should be someone who comes from a market consulting. Why? Because we want to provide services to the schools. Our leaders should be much more oriented to providing services.
Integrated services that can add value much more than selling isolated product. I always say that our traditional educational market, which we want to change, is very similar to the pharmaceutical market based on samples, deliveries, purchases that you don't really know where they come from, and we have to know more about the market. Why? Because we need to have partnerships with physicians, hospitals, in this analogy of healthcare. Yes. I think the question was really good. I'd like to add because most of what we've shown today, it's very difficult to tell how this integrated platform. The platform is quite complex. You need to align compensation. You need to create aligned incentives. Today, people who know about books know nothing about adaptive learning, for example. All of this has to be questioned. The commercial cycle does not wait for us to reorganize the company.
It simply happens. What have we done? After the first step of the IMO was concluded, we hired external consulting to help us rethink about the commercial structure, the company's go-to-market, and how we're going to present ourselves to the market. This new style, this new way, will be concluded until March 2019, when we begin the first commercial contacts for the sales cycle of 2020. Because 2019 has been concluded already with the sales force we already had in the company. Now we are getting prepared to have the right go-to-market with the new strategy, which will be ready in March to work for the commercial cycle or the academic cycle of 2020. These are long cycles. That's why we have to be very well prepared as of March.
Your question is key because at the end of the day, as everything we said here, the challenge will be to execute well this strategy of service platform that we're creating. Any more questions? We still have time. Just one more.
Rodrigo, the question. Could you explain? A question we had is where will this equation of price versus volume go? You have FIES, you have other types of financing mechanisms. Out of pocket, the income is shrinking for families in Brazil. Internally, in the company, what will happen? Will there be cannibalization of on-premise programs because of distance learning? I'd like to understand a bit more what's going to happen to the average ticket and margins. This is something we always try to understand, and it would be really important to hear from you.
The first adjustment in the price volume relation has happened. FIES is no longer there in terms of its relevance in the definition of pricing and the offering. FIES no longer exists. It represented 3% on premise in the last cycle and 1% in the company overall. The impact of FIES today is negligible in terms of new students, which is the moment when you define the pricing as the students come on board. A good portion of the equation has been answered already, I think. We do receive a lot of information in our structure, but I think Kroton has responded really well to this impact. That is, we maintained a very good price volume equation after the end of the FIES financing program. Of course, we had to allocate capital for that BRL 1 billion in terms of net working capital to finance our students.
I think it was a smart move because we were able to keep our price level and grow our number of students between 2014 and 2018. We're happy with our strategic decision to allocate capital in post-secondary, which is what we know how to do. Roberto, do you want to add, to talk about 2019?
Have you finished, Rodrigo?
You can talk about that.
In general, I think that what is really important of all the details that I explained, we do have pricing pressure in some units, and we also have pricing opportunities in other programs in other units. Our challenge is to be able to tap these opportunities of upside tickets in some programs to make up for other environments that can be more competitive in programs where we would have to lower the price.
The second thing is that we have to understand deeply what our competitors do. Today, our teams know precisely what the competition is offering. You have players that provide a rebate in the first semester, then they make an adjustment in the second semester, or they move students to the evening programs, or they provide a very cheap enrollment fee, but instead of having a four-year program, then they have a five-year program. The beauty here is that you have to talk about which program, which unit, what is the competition, what is the competition price, and this is how we will use our competitive edge. In K360 that I showed you today, you have attributes and differentiators. For example, you have ENADE four in a certain city in the business program, that's an attribute.
It can be a differentiator if all my competitors had ENADE three. How am I going to use this information to be able to convince a student to come to us? This is just an example. Then I talk about my lab versus the competitors, how many students we have graduated compared to the competitor. It's easy to say, you have pricing pressure or you don't. You do. You do have pricing pressure, but you also have price opportunities, and you have to detect in more details where the opportunities are and where the challenges are. We have proven we know how to do this so we can detect these opportunities and capture them. This is exactly what I was going to say. In the short term, we know that we responded well to this change in FIES, which was very relevant.
We had the impact. This year, the financing model changed completely. This has been overcome. Now you have the competition in a scenario where public financing is still very low and actually negligible. The increase in competition will be phased, will be gradual. How are we going to respond? Well, first with information. We have a lot of information, and we are very well-prepared to respond in each location, in each program. Because every time we have a pricing model, if we don't have the right level of granular information, then we're not being able to tap all the opportunities. We're leaving opportunities behind, or we are reducing the price when it's not really necessary, or we're not reducing the price where it is necessary.
Granular information and being able to manage this information at the right granular level and have dynamic pricing is really important in our industry. We will learn in time. Yes, we are prepared to give this response. Now, we live in a regulated world. We don't really know what will be the relationship between on-premise and distance learning. Maybe this blended learning will become a reality. We still don't know. It's difficult to predict. As a company, our duty is to be prepared for a world where on-premise and distance learning will live together, and they can become hybrid anytime.
We have a portfolio which is increasingly more premium for distance learning and the same margins on distance learning as we do in on-premise programs to ensure that for us, it doesn't really make a difference if the student is going to study on-premise or distance learning. We think this can be a student's choice. The quality has to be the same, the disciplines have to be the same, the number of practical classes have to be the same, and the margins are the same. It is up to the student to make his choice or her choice. Within the regulatory framework, we are preparing ourselves to meet students' needs regardless of their choices. It doesn't really matter if there will be cannibalization for us, because we have this portfolio also in distance learning.
We are building mechanisms for this cannibalization to really make no difference for us. There's no easy answer, there is a whole set of actions that have to be taken. As we are prepared for this new world, which we cannot predict, we need information to make assertive decisions on pricing and quick decisions, dynamic decisions on pricing. We need a capacity to have complementary portfolios on premise and distance learning so that the student will make his or her choice. If one day the regulations change, we will be ready for that. A student can study some disciplines on premise, some disciplines in distance learning. We will be ready for that. While the regulation still separates these two worlds, we can provide the same disciplines and the same programs in the two options. Okay, thank you.
Do we have another question?
Hello. Yes, it is a question to Gislaine about regulatory update on the distance learning workload that is allowed when you have an on-premise program. I forgot your name. Sorry. Marcelo Santos.
Yes, there is a threshold which was imposed last year by a decision, 30%. 30% on-premise and distance learning programs. Immediately after that, as we were discussing with the education department, trying to understand this limit, the ministry said that it did not include the practical classes. Today you have this 30% limit, but it doesn't include the residence. In healthcare, for example, the nursing program. You can work with distance learning 30%, and the student has another 20%, which is residence. Overall, you have 50% practical activities or on-premise activities and 50% distance learning.
Because we were already working to meet students' demand and we believe that in healthcare, it's important for them to have a portion of the program on premise, we did not have any impact really, because the new regulation is very well-aligned to what we are already doing. I think he was talking about the limit for distance learning in an on-premise program. Your question was the opposite, right? Okay. To date, it's 20%. This is the legislation since 2004. There is a strong trend to increase from 20% to 40%. Since this hasn't been published, we cannot tell for sure whether it's going to happen. Yes, it is a trend according to discussions with the ministry. There was this discussion in the National Education Council, but there are some differences.
For example, on-premise, you can have 20% distance learning, provided that you have a distance learning program recognized by the ministry. You can only offer 40% distance learning in an on-premise program, provided that the school is accredited for both things. The school has to be accredited for on-premise program and also for distance learning. It has to be the same program, right? The same program has to be accredited. It does not apply to centers, only in the school, I mean, in the university. It is news, but technically, if you are already accredited for on-premise and distance learning in the same program, then, well, you can provide it. Otherwise, you cannot do that. Did I answer the question? Yes. We have one more question here. Can you raise your hand again? I think she didn't see you.
My name is Guilherme Palhares from BTG. Question to Gil about learning systems. Today, Somos has a few brands. My question is first, if the company will unify the brands or if it will include other brands in the portfolio, and also in the supplemental business of the counter shift. You have English, also social emotional skills. What other lines of business in the counter shift?
Very good question. Thank you. I'd like to refer to the second part of the consulting services that we hired. We are already surveying all the market stakeholders, asking them, of all our portfolio of solutions, which ones do you believe are redundant? Which ones are the most powerful? Which ones could be perhaps candidate to a merger of brands? As we stand, we're completely open to receive the results of this survey.
Yes, we want to simplify our portfolio of brands. One of the levers we've seen that generates value, and I think we lost a bit of that, is to invest more in our brands, really. Part of the synergies that we have identified, and in some synergies, we are consuming to invest in the brands that will stay, that will remain in our portfolio. The second part of your question, we have many things to do. Social emotional skills, for example, we only have that for the early years. In English, we have a whole span of needs in schools, to have a bigger load of English until proposals that are fully bilingual. Today you have all shades between these two options. Again, robotics, computer science, we still don't have that in-house.
Everything else that families invest in terms of artistic education, music, painting, et cetera. These are needs that families had. They would like their children to have these additional activities also in school, and also many important partnerships with sports brands. Children would love to participate in sports activities that would actually have this reference of big international sports brands. These are only some ideas of many we can implement. We are now setting up a team who will take care of the counter shift portfolio. Today they are isolated activities, and now we are setting up this team with great people to develop the whole portfolio. Yes, Carlos will close in a while, but I have a comment.
We spoke a lot about Somos and change the approach, change the go-to -market, have a new vision in the company, have a new way to present ourselves, no longer be a segmented company. I have to record the high quality of the people we found in Somos. The integration effort was so much easier. Of course, we need tactic, strategic adjustments. It's much easier when you have such high-quality people who have technical competencies and people who have a clear purpose. This is what we found in Somos. That makes it a lot easier. It's much more difficult to make a small strategic change with people who don't have a purpose or who don't have the necessary technical skills. Even a small change is difficult.
Sometimes you have a big strategic change. The people are committed, they have a purpose and technical skills, it's much easier. This is what we found in Somos. Thank you, Rodrigo. Thank you, our Kroton staff. Thank you all for being with us. All the presentations are already available on our website. You can also contact our investor relations team. They will be ready to answer your questions. Thank you all very much. Have a great evening.