Good afternoon, and thank you for holding. Welcome to Cruzeiro do Sul Educacional's earnings conference call on the first quarter of 2024. If you need simultaneous translation, this tool is available on the platform. Simply click the interpretation button and the globe icon at the bottom of your screen and select the language you prefer, Portuguese or English. For those listening to the conference in English, there is also the option of muting original audio. We inform you that this conference call is being recorded and will be available on the company's Investor Relations website at ri.cruzeirodosuleducacional.com.br, where you will also find a complete set of materials for our earnings release. During the company's presentation, all participants will have their microphones disabled. After that, we will begin the question and answer session.
To ask a question, click on the Q&A icon at the bottom of your screen and write your question to join the queue. When your name is announced, a request to enable your microphone will appear on your screen, and you should then enable your microphone to ask your question. Please ask all of your questions at that time. Note that the information in this presentation and statements that may be made during this conference call relating to Cruzeiro do Sul Educacional's business prospects, projections, and operational and financial targets are based on the company's management's beliefs and assumptions, as well as on currently available information. Forward-looking statements are not a guarantee of performance. They involve risks, uncertainties, and assumptions as they refer to future events and hence depend on circumstances that may or may not occur.
Investors should understand that general economic conditions, industry conditions, and other operating factors may affect the future performance of Cruzeiro do Sul Educacional and lead to results that differ materially from those expressed in such forward-looking statements. Here with us today, we have Mr. Fabio Fossen, Chief Executive Officer, Felipe Negrão, Chief Financial Officer, and Luis Felipe Bresaola, Investor Relations Officer. I would like to turn the floor to Mr. Fabio Fossen, who will begin the presentation. Mr. Fossen, you may begin.
Good afternoon. This is Fabio Fossen, Chief Executive Officer of Cruzeiro do Sul Educacional. I would like to start our earnings call by reminding you that in this first quarter of 2024, we celebrate three years since the IPO, and we have many reasons to celebrate.
Comparing the first quarter of 2021, when we did the IPO, with the first quarter of 2024, our undergraduate student base in on-campus education grew consistently every year, totaling about 28%, 9% annualized, while our student base in digital grew about 67%, or approximately 19% in annualized terms. In both segments, we recorded growth both in enrollment and student base over the period, even in face of the significant reduction in on-campus enrollment in Brazil. Net revenue increased from BRL 421 million in the first quarter of 2021 to BRL 611 million in the first quarter of 2024, a growth of around 45%, 13% CAGR. IFRS EBITDA also rose from BRL 121 million to BRL 191 million, registering an increase of approximately 58%, 16% annualized. Net earnings grew from BRL 16 million to BRL 39 million, a jump of approximately 137%, 33% CAGR.
We achieved these results despite facing a more challenging economic scenario with the Selic rate rising from 2.75% in the first quarter of 2021 to 10.75% in the first quarter of 2024, impacting our students' financing capacity. In addition to improving business indicators, we have also gained greater commitment from our students. Re-enrollment rates are consistently high in both on-campus and digital, and our delinquency rate, one of the lowest among companies in the sector, remains under control. Receivable cycles have maintained stable at around 42 days, the shortest in the sector, despite the variations in the Selic rates during this period. Another important milestone for all of us was the achievement of the Great Place to Work certification in the first quarter of 2024, recognizing the satisfaction and alignment of more than 8,000 employees.
Finally, I'd like to highlight our academic achievement that fills our hearts with pride and guides the future of our institution, which was achieving the leadership in the ranking of publicly traded companies for the ongoing general course index, IGC, reaffirming our commitment to offering quality education to our students. It is important to highlight that our performance continues to show robust and consistent growth also in this first quarter of 2024. The first quarter was marked by a relevant achievement for Cruzeiro do Sul Educacional. We reached more than 500,000 students enrolled in our institutions. This number highlights the potential attractiveness of our institutions in the regions and modalities in which we operate. We continue to break records in on-campus intake with 59,000 new students and more than 119,000 students in digital undergrad programs.
In addition, we maintained high re-enrollment rates, reflecting the quality of our educational services, which requires renewal at least 7x over the four years of the courses. For us, these indicators reflect the alignment between the demand from our students and the company's commitment to offering excellent education and training increasingly qualified professionals for the labor market. As for the operating details of the on-campus segment, after two years of significant student intake with growth of 26% in the first quarter of 2022 and 11% in the first quarter of 2023, we ended the quarter with slightly higher numbers than last year. Following the strategy of maintaining high re-enrollment rate, we achieved a 7% increase in the on-campus undergrad student base.
We also recorded an increase in the average ticket of 1.9% compared to the first quarter of 2023, reflecting the progress of the new pricing policy adopted in mid-2022. In the digital segment, we closed the undergrad base with 315,000 students, representing an increase of 18% compared to the first quarter of 2023, despite a stable intake compared to the previous period. With the same proactivity as in on-campus courses, we've responded to the challenges of a competitive market, differentiating ourselves by expanding our hybrid products, which now account for 23% of our digital education, three percentage points higher compared to the first quarter of 2023. A strategy that has proven successful due to the 8.7% growth in the average ticket of our courses in this period.
Also noteworthy is the increase in the retention of our senior students, up 1.3 percentage points compared to the first quarter of 2023, an improvement directly linked to the investments in digitalization and automation of processes initiated in 2023. In addition to the increase in the quality of the student experience, reaffirming our commitment to educational excellence. Now, I will turn the floor to Felipe Negrão, who will talk more about the quarter's financial results. Have a great day.
Thank you, Fossen. Going into the financial details on slide seven, I'll comment on net revenue in the quarter, which reached BRL 611 million, a growth of 15% versus the first quarter of 2023 as a result of the larger consolidated student base. In the on-campus segment, revenue grew 9%, while in courses focused on the health area, it expanded 7%.
In digital, we had a relevant revenue expansion of around 28%, reaching BRL 203 million as a result of the larger student base and the continuity of the expansion of the hub base. On slide eight, we show the gross margin for the quarter, which reached 49.9%, 3.2 percentage points higher than the first quarter of 2023. The increase in margin in this period reflects the operational leverage as a result of revenue maximization initiatives, as well as the efficiency gains. Moving on to slide nine, we bring the adjusted EBITDA for the first quarter of 2024, which was BRL 196 million, a growth of 20% versus the same period as the previous year. The increase in gross income, in addition to the optimization of the back office, better management of marketing expenses, and better efficiency in billing, mitigated the impact of the increase in administrative expenses in this period.
The main reason for the increase in administrative expenses is technology expenditure. Several investments in technology started in 2023 were concluded, and as a consequence, we had, on the one hand, an increase in technology expenses such as licenses and cloud, but on the other hand, greater operational efficiency presented in other lines of the results, as well as more satisfied students and employees. In terms of administrative expenses, we also had non-recurring expenses with initiatives such as Mais Med Suite. Moving on to slide 10, we show the evolution of the company's adjusted net income, which reached BRL 44.1 million, 3.7 x higher than in the first quarter of 2023. The increase in net earnings is the result of a consistent expansion of revenue in addition to the better management of costs and expenses, which resulted in the expansion of EBITDA.
In the next slide, we show the evolution in accounts receivable, which in the last 12 months stood at 42 days, stable when compared to the same period of the previous year. Moving on to slide 12, we present the investments made by the company in the first Q of 2024, amounting to approximately BRL 38 million, up 37% compared to the first quarter of 2023 as a result of the improvements made on our campuses, in addition to the progress of the company's digitalization projects. With an excellent execution capacity, we seek to accelerate our investments in order to obtain gains later this year. On slide 13, we show the progress of operating cash generation, which reached BRL 174 million, a growth of 22% versus last year. The strong cash generation in the period is mainly the result of the evolution of EBITDA.
Finally, on slide 14, we present 673 million BRL of net debt, excluding lease liabilities. During the first quarter of 2024, we were very assertive in our goal of reducing our financial leverage, measured by the net debt over EBITDA ratio from 1.6 x in December of 2023 to 1.3 x in March 2024. Additionally, in 2024, taking advantage of our solid results and balance sheet, we concluded another debt renegotiation, expanding the maturity of the debentures with Bradesco in the amount of 173 million BRL from 2025 to 2029, with a minimum increase in the rate from CDI + 1.4% to CDI + 1.54% per year. I close my comments here and turn the floor to the operator to start the questions and answer session. Thank you.
Thank you. We will now begin the questions and answer session. Once again, in order to ask a question, click on the Q&A icon at the bottom of your screen and write down your question to join the queue. When we announce your name, you will see a request to enable your microphone. You should then activate your microphone and ask your question. We kindly ask you to ask all of your questions at that time. Our first question, Mirela Oliveira, Bank of America. Mirela, we are going to enable your audio. Please go ahead. Mirela? Mirela, can you hear us? You should already see your enable microphone request.
Good afternoon, everyone. Thank you for this opportunity for questions. I have two questions. First, about CapEx. We saw an increase in this first quarter regarding the technology investment. If you can talk a little bit more about the CapEx level for the year, if it should remain at a slightly higher level. Also the administrative expenses, SGA, also related to technology. Will these expenses be a new level for the company, or do you see a margin to reduce that over time? Thank you.
Good afternoon, Mirela. This is Felipe Negrão. In terms of CapEx, we don't provide a guidance, but there's some comments to make. First, CapEx from last year was slightly higher in the company's history. We don't expect to invest as much as last year. Last week, there was a growing in the quarter considering that guidance, but our expectation for the year is to remain at that level. In terms of expenses, all expenses in technology generate benefits in the other lines of the results.
From intake revenue, install personnel, I mean, all of the other lines have a great benefit from technology. Considering that, the technology line itself won't have as many gains in terms of technology expenses will be at around this level. It was in line, more or less in line with last quarter. When we compare quarter-on-quarter, there's expressive gain. But if we compare what we spent on the last quarter of last year, it remains stable.
Great. Thank you.
Thank you, Mirela. Next question, Lucas Nagano, Morgan Stanley. Lucas, we are going to enable your microphone. Mauricio Cepeda also has asked us to let you know that Lucas has disconnected, and he can ask the question as he's from Morgan Stanley as well. Mr. Mauricio Cepeda, please go ahead.
Excellent, thank you. Sorry for this logistics glitch. Thank you for the opportunity. We have two questions here. One is related to the intake. We see that the growth on the quarter was more influenced by a comparison basis that was more complicated. Our question is on the sense of what you believe will be a recurring growth level for on-campus and distance learning, since it seems that the environment is a little bit more normalized now, or if you expect these recurring levels to start appearing in the second half of this year. The second is about ticket. The on-campus ticket expanded again. It resumed expansion, but it was on average below inflation. We would like to understand if the effect here was an effect of the mix or if the ticket became more pressured by discounts. Thank you.
Hello, Cepeda. This is Fabio Fossen. I do not think that the current intake levels are where they could be. We improved a little bit in the end of the quarter, especially on digital. We see next quarter in a more positive light. There were some decisions here of not to follow certain promotions to preserve the entry ticket for our students. We can understand that when we look at the growth in the tickets for digital. We did not follow the promotions that our competitors applied.
On campus, we believe intake tends to be better. We have a very strong comparison basis for our intake last year. We have two following years of very strong intake. Here we repeated the success of last year, and we do not see that with precaution. What is important is that we are being able to hold on to the seniors. Because every six months they decide to continue buying our educational product because they see it is worth it.
It is a differentiated pricing strategy over the years, and all of this reflects in the total revenue at the end of the day. In that sense, I am optimistic in terms of future intake and the pricing continuing with the mechanisms that we are developing along the way. Part of the success is connected to what Felipe mentioned in terms of CapEx, in that initiative that appears as Opex and what is CapEx. Based on the evolution of our processes and our evolution as a company, it reflects on a series of changes that we have been doing to the way we operate.
Excellent, Fossen. Thank you. Very clear.
Thank you, Mauricio, for your question. Once again, to ask a question, please click on the Q&A icon at the bottom of your screen and write your name and question to join the queue.
When you are announced, you will see a request to enable your microphone, which you should do and ask your question. We received a question in writing from Bernardo Fuzato from Artica. There are two questions. Congratulations on the results. The first question is: What is the evolution of the digital back in the first quarter of 2024 compared to 2023? Should we expect lower margins on digital because there is a bigger mix of hybrid, or does it make up for the higher cost of service? The other question is about the 15 [audio distortion] for the medical course seats. Is there any new perspective you can share?
This is Fabio Fossen. In terms of the improvement in the market, it has been helping us be more productive in that sense, in the TAC, CAC, and part of the technology investment we've made for us to take more or better decisions and work better in this sense. In terms of the hybrid modality, it is a more productive model for us. Looking at the future, I can't forecast in this sense today because we're waiting for the Ministry of Education's decisions. They've pointed to a number of different directions in that sense. There's an aspect of having to wait a little bit longer to understand what's really going to happen in terms of the initiative to improve quality of distance learning that the ministry is going to propose to the industry. That will affect the entire dynamic of the industry.
The proposals on the table are the ones that will be permanent. The second question about the seats in the medical course, in the medicine course, we remain confident in what's going to happen. It seems that the right on your side, our side is quite sound, and the demands made in the injunctions, I believe it's the same set of arguments. What's important on our side is the seriousness of our institution, the quality of our education, and the training of teachers that we take to all of our courses, all areas of knowledge, has been very relevant. We were graded five in all of the evaluations that we had from the ministry, and one of them was 5.00, so that was the complete top score. That makes us very confident.
Whatever the Supreme Federal Court decides, we believe that the guidance of the good law, the rights, will be on the front of the line, actually, to benefit from it. But it's something that we need to wait for the next steps to develop. The topic of educational quality is what's being discussed, but there are other topics around it. Whatever was on our hands to guarantee that we're a serious institution with quality that delivers value to students has been done, and it has been done greatly on our side.
Thank you for the answers. Once again, to ask a question, please click on the Q&A icon at the bottom of your screen, ask your question, and join the queue. Once we announce your name, you will see a request to enable your microphone, which you should do to ask your question. The questions and answer session is now concluded. I'll turn the floor to Mr. Fabio Fossen for his closing remarks. Mr. Fossen, please go ahead.
I would like to thank you all for attending, and my final remarks, I would like to thank the slightly over 8,000 employees of Cruzeiro do Sul Educacional. As I mentioned in the opening remarks, it's been quite a journey since the IPO and the change in the company's management. Replacing the founder is not an easy feat for anyone. It involves not only the board to organize the company, but it involves all of the company's employees to understand the timing and engage within a new perspective.
It is a big victory for everyone who has been with us for all this time, and it has been important to all of us to gain increasing confidence in the growth, almost irrespective of the difficult conditions that may come up in the market and so on. We are prepared to be resilient in different situations. I would really like to thank all of our employees, because our business is made by people, to people, and it has been essential for the numbers that you see in our releases and numbers. Have a great day. Thank you so much
. The conference call for the earnings of the first quarter of 2024 of Cruzeiro do Sul Educacional is now over. The investor relations department remains available to answer any questions you may have. Thank you very much, and have a great day.