Morning, everyone, and thank you for waiting. Welcome to the video conference on the results for the third quarter of 2025 for Cruzeiro do Sul Educacional. I would like to point out that for those who need simultaneous translation, the tool is available on the platform. To access, simply click on the interpretation option via the globe icon at the bottom of the screen and choose your preferred language, Portuguese or English. For those of you listening to the video conference in English, there is the option to mute the original audio in Portuguese by clicking on mute original audio. Please note that this video conference is being recorded and will be available on the company's IR website, ri.cruzeirodosuleducacional.com.br, where you can find the complete material from our results announcement. You can also download the presentation from the chat icon, including in English.
During the company's presentation, all participants' microphones will be disabled. After the presentation, we will begin the Q&A session. To ask questions, click on the Q&A icon at the bottom of your screen and type your question to join the queue. When your question is announced, a request to activate your microphone will appear on the screen, and then you must activate your microphone to ask questions. We recommend that all questions be asked at once. We emphasize that the information contained in this presentation, and any statements that may be made during the video conference regarding the business prospects, projections, and operating and financial goals of Cruzeiro do Sul Educacional, constitute the beliefs and assumptions of the company's management, as well as information currently available.
Forward-looking statements are no guarantee of performance, as they involve risks, uncertainties, and assumptions as they refer to future events, and therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, market conditions, and other operating factors may affect Cruzeiro do Sul Educacional's future performance and lead to results that differ materially from those expressed in such forward-looking statements. With us today are Renato Padoveze, CEO, Felipe Negrão, CFO, and Luis Felipe Bresaola, IR Officer. I would now like to turn the floor to Mr. Renato Padoveze, who will begin the presentation. Mr. Renato, you may proceed, please.
Good morning, everyone. This is Renato Padoveze, CEO of the company. Thank you for participating in our call to discuss the results for the third quarter of 2025 and the results for the last nine months.
Before getting into the numbers, I would like to emphasize that this quarter was marked by important advances, both financial and operational, and also by a very special moment in our history. On September 27th, Cruzeiro do Sul Educacional celebrated its 60th anniversary. That's six decades of fulfilling our purpose of transforming student lives, always with sound, sustainable, and disciplined management. Since our inception in São Miguel Paulista, we have evolved to become one of the largest educational groups in Brazil, preserving the essence of the founding families and ensuring consistent results for our stakeholders. This combination of purpose and responsible management reinforces our ability to generate long-term value. Now, turning to the financial results and shareholder value creation. In the third quarter, net income was BRL 113 million, up 82% over the same period last year. For the nine months, net income grew 70%, reaching BRL 262 million.
Another relevant point is cash flow to shareholders, which demonstrates our discipline in management and focus on value creation. In the quarter, we reached BRL 221 million, 35% above the third quarter of 2024. Year-to-date, it totaled BRL 428 million, a 66% increase year-on-year. Our leverage decreased by 51% to 0.7x net debt to EBITDA ratio. The consistency of our strategy, long-term vision, and focus on quality are important components in face of yet another regulatory challenge with a new framework announced for distance learning education. Although we are still in the early stages of this process of transformation in the way we educate, we understand that a financially sound and purposeful company tends to reap benefits in times of changes, as we have seen throughout our 60 years of existence, reinforcing our commitment to quality.
During the third quarter of 2025, we received visits from members of the Ministry of Education at two of our eight medical courses, the Unicid and Unifran, both of which received the highest rating. As a result, we now have seven grade five medical courses highlighting the academic excellence that underpins our trajectory. With this, we remain confident in our ability to deliver sustainable growth, robust cash generation, and value creation for all of our stakeholders. Well, thank you very much. Now I'll give the floor to Felipe Negrão, who will provide more details on the results.
Thank you, Renato. On the next slide, I will talk about the operating performance of our on-campus program. We posted a 2% growth in our student base, reaching a total of 169,000 students.
This mark is the result of a one percentage point increase in retention rate, the re-enrollment rate reached a record 92% of the eligible base. We also present the data for the ticket of the third quarter of 2025, which showed a 6% increase over the same period last year, driven by the mix of courses with a greater concentration of courses in the healthcare area. In the first nine months of 2025, the average ticket was up by 6% compared to the first nine months of 2024, reflecting the increase in the concentration of students in the healthcare area, especially in medical and dentistry courses. In the next slide, we show the operating data from digital. We ended the period with a base of 406,000 students, representing a 13% increase when compared to the same period last year.
This growth is the result of an 11% increase in intake due to the early enrollment that occurred as a result of the regulatory change that occurred in mid-September. In addition, the re-enrollment KPI reached 80% of the eligible base. As for the average ticket for the quarter, there was an increase of 4% when compared to the same period last year. The growth in the period is mainly related to the greater presence of students enrolled in higher value-added courses offered in hybrid and on-campus modalities. Hybrid courses continue to expand and now account for 26% of the digital base, an increase of 1.3 percentage points when compared to the third quarter of 2024. In the first nine months of 2025, the average ticket was down 2% compared to the same period last year.
Moving on to the financial details, I will comment on net revenue for the quarter, which totaled BRL 694 million, up 11% compared to the third quarter of 2024 as a result of the larger consolidated student base. The first nine months of 2025, net revenue stood at BRL 2 billion, 12% higher than in the first nine months of 2024. In the on-campus segment, net revenue for the quarter grew 9%, reaching BRL 478 million, reflecting the evolution of the average ticket and the larger student base. In the first nine months of 2025, growth was 9% when compared to the same period last year, reaching BRL 1.5 billion. Revenue from healthcare courses in the quarter grew 10%, driven by revenue from medical courses as a result of the acquisition of FAPI and the 180 new seats authorized in 2024.
In the first nine months of 2025, we grew 15%, reaching BRL 1 billion. These courses already represent approximately 71% of the on-campus revenue. In the digital segment, we saw a 17% increase in revenue for the quarter, reaching BRL 238 million as a result of a larger student base and higher average ticket. In the first nine months of 2025, revenue grew 11%, reaching BRL 702 million. The next slide shows the gross margin for the quarter, which was up 3.9 percentage points compared to the third quarter of 2024. This margin growth mainly reflects operating efficiency initiatives without impacting quality added to the contribution of growth in the medical and digital courses. In the first nine months of 2025, the gross margin was up by 2.7 percentage points.
Next, we present the adjusted EBITDA for the quarter, which totaled BRL 278 million, up 29% compared to the third quarter of 2024. The chart shows the composition of the adjusted EBITDA margin, which was 40.1% versus 34.6% in the previous year. The margin increase in the period reflects the 3.8 percentage point increase in PDA, provision for doubtful accounts, with three percentage points related to the seasonal intra-quarter effect of the new provision curve implemented in the fourth quarter of 2024, and 0.8 percentage points of efficiency gains added to the 3.6 percentage points increase in gross cash margin when compared to the third quarter of 2024. Marketing expenses in the period were 17% higher in the third quarter of 2024 as a result of a higher volume of campaigns aimed at mid-year customer acquisition.
The increase in investment in people represents the strengthening of corporate teams, in line with the company's sustainable growth plan and the creation of long-term value for shareholders. In the first nine months of 2025, adjusted EBITDA totaled BRL 731 million, a 21% increase over the same period last year. The adjusted EBITDA margin was 35%, an increase of 3.3 percentage points in the adjusted EBITDA margin for the period, reflecting a 2.5 percentage point increase in gross cash margin and a 1.9 percentage point expansion in the provision for doubtful account with a 1.1 percentage point improvement in credit and collection actions implemented over the last few quarters and 0.8 percentage points related to the intra-quarter seasonal effect of the new provision curve implemented in the fourth quarter of 2024. Moreover, marketing expenses showed a 0.4 percentage point gain in efficiency.
Now moving on to the next slide, we show the update in delinquency estimates made in the third quarter of 2025. As disclosed in the fourth quarter of 2024, throughout the year of 2024, in addition to reviewing its processes, the company updated its receivables portfolio provision model by conducting an analysis that considers a 24-month horizon from January 2023 to December 2024. The work was carried out with a view to establishing greater match to the portfolio profile in the post-pandemic period, when there was a more accelerated expansion of the digital student base, which went from 62% in 2020 to 69% in 2024 in relation to the total student base. In addition, the company revisited its policy for writing off past due accounts receivable, reducing the term from 720- 360 days.
On the right, we present a chart comparing the predate and post-update PDA in delinquency estimates and a pro forma table illustrating the effect of the PDA on EBITDA. Due to the PDA update throughout 2025, we will see time differences in relation to the PDA presented in 2024, with more pronounced variations between even and odd quarters. Continuing with the presentation, we show the company's costs and expenses as a percentage of revenue, excluding non-recurring effects. In the quarter, costs and expenses, cash effect, total 61.2% of the company's net revenue, 5.3 percentage points below the third quarter of 2024, with emphasis on efficiency gains in personnel and other adjusted costs, which show a reduction of 3.7 percentage points versus the third quarter of 2024. It is also worth mentioning that the PDA line was impacted by the update of delinquency estimates implemented in the fourth quarter of 2024.
The next slide shows the evolution of the company's adjusted net income, which was BRL 113 million, representing an increase of 78.3% year-on-year. In the first nine months of 2025, adjusted net income was BRL 263 million, 55.3% higher than in the first nine months of 2024, with a margin of 12.6%, which was 3.7 percentage points higher than last year as a result of EBITDA growth in the period. The next slide shows the average collection period for the third quarter of 2025, which stood at 29 days, representing a reduction of six days compared to the same period last year as a result of several factors, including better management of payment means, the elimination of proprietary financing, the increased share of fixed, among others, implementation of credit analysis for financing operated by third parties, but with risks borne by Cruzeiro do Sul, improved collection, updating of NPL estimates.
Next, we represent investments made by the company, which in the third quarter of 2025 were approximately BRL 33 million, 15% lower than in the third quarter of 2024. In the nine months, investments totaled BRL 72 million versus BRL 107 million in the same period last year. Moving forward, we show the cash flow to shareholders in the third quarter of 2025, which was BRL 221 million versus BRL 164 million in the same period last year, impacted mainly by the positive variation in EBITDA. Year to date, cash flow to shareholders was BRL 428 million, which is a 66% increase versus the first nine months of 2024. In the last slide, we represent the company's net debt, which stood at BRL 472 million compared to BRL 781 million in the previous year, representing a 40% reduction compared to the third quarter of 2024.
Cash generation in the period added to the reduction in debt from acquisitions were the main factors influencing this reduction. To better illustrate the company's debt profile, we present below the amortization schedule segregated by type of debt and also highlighting that the current cash level allows us to honor all debts until the end of 2027. I conclude my comments and turn the floor to the operator to begin the Q&A session.
Thank you very much. We will now begin the Q&A session. Please remember that to ask questions, you must click on the Q&A icon at the bottom of the screen and write your question to join the queue. Once announced, a request to activate your microphone will appear on the screen, and then you must activate your microphone to ask questions. We kindly request that questions are asked all at once.
Our first question comes from Samuel Alves with BTG Pactual. Samuel, you may proceed.
Good morning. Good morning, Renato, Felipe. Good morning, everyone. I have two questions. My first question is about dividends. The company generated a lot of cash, and you are de-leveraging. There is also this new legislation that may tax dividends to residents in Brazil and foreign funds. Whether the company is thinking about an extraordinary payout by the end of the year, or at least an announcement, or whether the company could run with a slightly higher leverage because of that opportunity. My second question is about your gross margin. Gross margin is quite strong, probably one of the last levels since the company's IPO.
I would just like to understand whether this should be a new standard going forward, or you will have more initiatives on the people side that are yet to be captured. I would just like to get a feeling of your recurrent level of gross margin. Thank you.
Good morning, Samuel. This is Felipe speaking. On dividends, we will discuss that topic in the coming days. As you said, our cash position is very sound. We have our own policy where we look at our leverage level, and I think we are in a very comfortable position. But we also look at the outlook for the coming years. T his is something that we will discuss in the next coming days, and possible acquisitions that could be on the horizon.
If the Selic rate is down a bit next year, maybe it will be easier for us to make acquisitions. We are always looking at M&As, but we are also very disciplined because we have to find something that generates results. But with a lower Selic rate, we see a possibility of having enough cash, and having cash in the bank is always good. There may be a dividend payout, but this is still being discussed. The second point, it was gross margin. It's important that we say that since the beginning of this year, we've been paying closer attention to efficiency. One important aspect is that we never tempered with our faculty staff. Faculty is something very important to us. W e look at the admin aspect, all of the campuses, how we pay for inputs, how do we control these, power or energy.
We still have more things happening next year, but unfortunately, we cannot give any guidance because there are changes in the mix that could happen. Maybe distance learning can grow more. We do not give any guidance in that regard.
Thank you, Felipe. Good morning to you all.
Next question comes from Mirela Oliveira with Bank of America. Mirela, you may proceed.
Good morning, and thank you for taking my question. I have two questions. The first question is about the competitive landscape. This quarter, we noticed the growth on the average ticket of the company, both for long-distance learning and on campus. You also mentioned the importance of the mix. Could you comment on this ticket of the same courses and same products for each BU, and how do you see competition performing? My second question is about capital allocation.
As previously mentioned, I think your leverage was way below your peers, and this is drawing attention. The company has been posting positive intake cycles in the on-campus segment. What are your allocation plans going forward, and whether you see the need to invest in some organic expansion of your units to support the growth going forward? This is what I have now. Thank you.
Good morning, Mirela. Let me talk about the competitive landscape. In general terms, if you compare courses for ongoing students and newcomers, there was an increase on your average ticket. The major impact comes from change in the mix. Hybrid courses, on campus, healthcare courses, but there was a ticket increase in all segments.
In terms of our strategy, this is a change that I have been referring to for quite some time, and this is something that I would say that we want to change the value proposition of the courses, charge a little bit more rather than engaging in a price competition. In the future, we will focus on our value proposition, brand image. We will also focus on technology investments to add more value, to create value, and to increase the ticket. This is a different strategy when compared to what we have been doing in the past, where in the past, we were maximizing revenue. At the end, ticket was deteriorating. But since Renato arrived, we are pursuing a new strategy. As for capital allocation, we have a lot of cash, as you know. As we posted in our results, we have to bring investment.
I think we want to pay out dividends, but at the same time, the priority is to invest as long as there is good return. There might be some excellent acquisitions, but we will do them if there is good return. We are always pursuing new acquisitions, but they have to bring value to the business. Even on the IT front, we are making changes to the way we operate in technology, and we are constantly looking at the value because we have to set up priorities and what we can wait and do later.
Perfect. Thank you very much.
As a reminder for questions, just click in the Q&A icon in the lower part of the platform, write your name and company and language. Our next question comes from Lucca Marquezini with Itaú BBA. Lucca, you may proceed.
Good morning, and thank you for taking our questions.
We have two questions. The first question is on marketing expenses. There was a slight increase as a percentage of revenue, I just want to understand what is in the company's mind in terms of your marketing strategy and advertising, and whether you feel the need to invest more in marketing given the competitive scenario. Also thinking about the new regulatory framework. This was my first question. Second question is a follow-up related to capital allocation. I know you already mentioned that, but I would just like to understand the acquisition front, whether you have any specific focus, whether it still makes sense to acquire medical courses or what is your focus now. What are the assets that you have in mind for possible M&A?
Good morning, Lucca. I will start with your second question. We look at all the views we have, both healthcare on campus and digital.
As for digital, it is a bit more difficult because there are not that many companies that make sense to us. But in terms of on-campus and healthcare, we are always looking at that since the IPO and even before the IPO. Even the IPO, we grew a lot through acquisitions. But as I said, with the current interest rate, it is tough. Medical courses might make sense for us, but it depends on the campus and the location of the campus. We certainly believe in our strategy. We are located in sites with good per capita income and good demand. F or any acquisition that we have in mind, it has to make sense. It has to be in a good location with good demand. This is quite important if you talk about medical courses. Your first question was on marketing expenses.
Due to the regulatory framework, we anticipated market expenses just because we wanted to have a good student base to support us in the coming year, but I think we were much more efficient, and that is an important aspect. We looked at all of our marketing expenses, and we were able to gain a lot of efficiency. We are working diligently to retain students, and that will allow us to spend more in marketing if need be. I f we have good students, it pays off to spend more. As I said before, we are investing a lot in technology. We are very much focused on the students, both in intake and student experience at Cruzeiro do Sul because this can help us with intake. I think the marketing strategy goes through all of these points that I mentioned.
Very clear. Thank you very much.
Next question comes from Caio Moscardini with Santander. You may proceed.
Hi, and thank you for taking my question. I just have one question related to intake. You mentioned that there was an 11% increase in intake, mostly attributed to anticipation of enrollment given the new regulatory framework. M y question is, what was your observation and what was this difference to led to anticipated re-enrollment? What was the intake of courses that were not affected by the regulatory framework versus the ones that were part of it? These were the questions. Thank you.
Good morning, Caio. Okay. We think, we spend more in marketing. The digital volume increased above expectation. That is what we realize now, that there was some anticipation of enrollment, but now we have to wait and see what will happen with the long-distance education.
We do not know with the new regulatory framework how the market will behave. On campus, this is pretty much in line with what we expected. No major surprises. It is within our expectation. The same thing goes for healthcare courses. We have no problem in filling up all the seats because, as I said, we are located in geographies with a very good per capita income. We hear that in some locations some companies are having a difficult time in fulfilling all the seats, but this is not our problem because we are located in good geographies.
If I could have a follow-up question, I would like to get a better understanding about intake growth in the courses that were affected by the new regulatory framework versus the ones that were not affected by that.
We will only know that in the beginning of next year. We do not have visibility yet. I think we have to wait until the end of the quarter to be more aware of the development.
No, but I am just referring to this cycle, what happened in the third quarter.
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What changed to us was nursing courses that we stopped growing, but that was not very relevant to us. I think this was the only change on the digital side.
Okay. Thank you.
As a reminder, for questions, please click in the Q&A icon in the bottom of the screen. Write your name, company, and language before you join the queue. The Q&A session is now concluded. Now I will turn the floor back to Mr. Renato Padoveze for his final remarks. Sir, you may proceed.
I would like to thank you all for joining us this morning. We remained confident with our long-term view, sustainable growth, robust cash generation, students in the core of the business, and value creation to all stakeholders, transforming stories and transforming the future. Thank you very much.
This video conference relating to the third quarter results of Cruzeiro do Sul Educacional is now concluded. The investor relations team is available to answer any further questions. Thank you all very much, and have a very good day.