Good morning ladies and gentlemen. Welcome to our video conference. Today, we'll be talking about the fourth trimester of 2025. This call is being recorded, and you may access the recording at our website. The presentation is also available for download. We inform that all participants will only be watching the presentation, which will be followed up by a Q&A. Before moving forward, I'd like to say the following. Our declaration is in accordance with our values. The declarations may involve risks and uncertainty. After all, they're connected to unforeseen circumstances. Investors, journalists, and analysts should take this into account. The results could be significantly different from our plans for the future. We have with us Mr. Jânyo Diniz, CEO, João Aguiar, Financial Director, and Rodrigo Alves, Director of Investor Relations. Now with you, Mr. Jânyo Diniz. Mr. Jânyo, the floor is yours.
Good morning everyone and thank you for joining on our fourth 2025 earnings video conference. Let's move to slide 4, where we'll present the highlights of a quarter that closed a very important year for our trajectory. It's filled with positive news that consolidated the success of the operational reorganization strategy implemented over recent years. 2025 was a year of harvesting significant results. We closed the year with double-digit growth in the hybrid education student base, our core business. This growth allowed us to optimize the occupancy of our properties, delivering yet another round of solid expansion in the Adjusted EBITDA margin, nearly 3 percentage points and 22% growth in Adjusted EBITDA.
All this without losing focus on our main objective previously outlined, the reduction of financial indebtedness and leverage, which enabled us to decrease our debt by nearly 30% in just a year, reaching the best financial leverage since the first quarter of 2021. This movement will be transformational for the coming years as it consolidates us as a company with solid cash generation, low and controlled indebtedness, capable of funding its organic growth and resuming shareholder remuneration, even in times of elevated interest rates and in a historical period marked by so many uncertainties. With that, we're expanding our objectives between 2025 and 2026. In addition to maintaining control over indebtedness as we did last year, we're returning profits to shareholders, as exemplified by the distribution of BRL 61 million in dividends announced in today's financial statements. We're also taking care of future results.
We have already initiated an organic growth projected base in the asset-light model, which has delivered positive results. This strategy includes the expansion of existing units in markets where we have identified growth potential with the addition of new floors, classrooms which should generate quick returns. We're now opening new units in models of approximately 5,000 sq m, preferably in shopping malls. The idea is to increase our reach in cities away from capital cities where we operate, making the most of the positive recognition of our brands. With this, we expect to continue generating growth avenues with low capital requirements, advancing our promising markets with high profitability. Not to mention that we already have six new units in operation that starting in 2027 should begin their growth trajectories. We thus have a company with increasingly solid and sustainable results for the few years ahead.
For better understanding, we work on slide 6 and 7. We're going to focus on the net impact accounting income and financial leverage. As the charts demonstrate, today's Ser Educacional is a different company when compared to four years ago, with significant financial strength, profitable, and operationally well-established. We recorded an increase over 40% in the number of our students per unit, even with nearly 10% growth in new units over the past two years. Gross margin grew by nearly seven percentage points. Financial leverage was reduced to approximately 1/3 of what it was before, and the net margin, which at the time had reached -13%, is today nearly 10%. This is without a doubt a relevant turnaround case. We're very proud of it.
Let's move on to slide number 8, where we analyze enrollment results of the second half of the year. The winter cycle, as some like to call it, which is a season for replenishing the student base from the summer enrollment period. During this period, we adopted a somewhat different strategy. Since we had quite high average class size in the first half and a good re-enrollment rate, we chose to operate in the second half with a more conservative commercial strategy. The movement combined a tougher comparison base due to the high enrollment figures from last year, resulting in a decline in enrollment in both the hybrid education and digital education.
This movement can be better analyzed on slide number 9, which presents the performance of our undergraduate student base with a growth of 4.6%. The growth in the hybrid learning student base was partially offset by the decline in the digital learning student base. A shift we view as positive, given that the average revenue per student for hybrid learning is about 4 x higher than that for digital learning. Of particular note is the 12% growth in the medical student base, driven by the growth of new enrollment slots secured over the past 18 months. On slide number 10, we once again present how our student base in healthcare continues to evolve, reaching now 60% of hybrid education and 47% of the total student base.
This reflects on the success of our strategy of positioning our course offerings where there's greater market demand, which contributes significantly to the improvement of dropout rates and payment punctuality. Students who are aware of the value added by the program see completion as an important step in their professional journeys. Slide 11. Since this year, the ProUni base increased substantially. We structured the analysis excluding this effect to normalize the ticket on a semester basis to facilitate understanding. As you can see, it grew by 6%. We improved our mix, and now it represents 53% versus 50% of last year. When we analyze individual ticket, both from medical programs as well as without it, we see that we managed to slightly increase the ticket even while in having increased our cash generation due to improvement in payment punctuality.
This is very healthy because although the average ticket did not necessarily keep pace with inflation, cash generation we've obtained through the punctuality discount we offer and the changes in the punctuality timeline was undoubtedly positive. Now with you, João Aguiar.
Thank you Jânyo. Good morning, everyone. Let's go straight to slide 13. Here we present the evolution of the net revenue for the quarter. In this fourth quarter, we had a 9.4% increase in consolidated net revenue, with the highlight being of 12.3% growth in hybrid education revenue and 25.8% in other revenues. These results were partially mitigated by the already expected decline in digital e-education revenue due to the course portfolio shift favoring the offer of health courses over online courses, aiming to increase the company's overall average ticket and operating margins.
We therefore had a solid quarter in terms of revenue generation, very much in line with our business plans. Slide 14. We present the EBITDA adjusted, which once again showed solid growth for the year when we look at the fourth quarter. The consistent growth in net revenue, combined with positive costs and expense control, especially through the operating leverage provided by the increase in average class sizes and students per unit, resulted in good expansion of the Adjusted EBITDA margin by 2.9 percentage points. It's worth noting that even number quarters generally show a great revenue recognition due to seasonality and comparison basis with last year was also somewhat weaker. With this, we close the year with Adjusted EBITDA slightly above 25%, an important milestone for our margin expansion project envisioned four years ago.
Going forward, we face the important challenge of continuing to expand our operations with healthy and growing margins in the coming years, combining investment and organic growth with the maturation of our units. On slide 15, we present the evolutions of our net income and adjusted net income. We saw a great reversion, moving from a loss of BRL 30 million to a profit of BRL 74.6 million. This is due to two main factors, the improvement of our operating results throughout the year and the absence of non-recurring effects that totaled approximately BRL 66 million last year. Based on these results, the company's recurring growth in this quarter was also significant, practically doubling from a profit of BRL 36 million to BRL 71.7 million. Slide 16. Here we present our operating cash generation net of interest and tax paid.
Similarly, what we observed in the previous slide regarding the bottom line, our cash generation also had significant growth of 94.5% pre-CapEx and 228% post-CapEx. This substantial increase occurred due to two main factors. One, the improvement in the quality of our operations with an increase to payment punctuality due to improvement of our course mix and the new financial communication timeline implemented between 2024 and 2025, and the anticipation of Educred receivables, which generated an additional BRL 31 million compared to last year. With this, we're able to significantly and consistently increase our cash generation, demonstrating that our company has the capacity to finance itself through its own operations.
Furthermore, our student financing operations have liquidity and attractiveness in the market, making them a viable and interesting tool for the company to leverage its operations with a low financial risk. Slide 17. Here we present our day sales outstanding, which continues on a downward trend for the fourth consecutive year. In line with comments on cash generation, the DSO has been decreasing as a result of operational improvement in anticipation of Provale receivables. We have now reached the mark of 84 days in collection paid period, with significant improvement versus last year, more than offsetting the first year in which the Ser Solidário program operated in full, which increased our accounts receivable by BRL 30 million approximately. This shows that implementation of Ser Solidário not only increases our capacity to generate cash per student, but also that our financial communication timeline with students is yielding positive results.
Let's now move to slide 18, discuss our financial indebtedness. In this quarter, we surpassed our goal of reducing the net debt to EBITDA ratio by 1. This is very important for us. In this high interest rate environment, which according to market estimates is expected to remain as such for a long time, this new leverage level places us at an important competitive position as it will help us generate the cash needed to fund our organic growth plan and resume shareholder remuneration. We closed the fourth quarter of 2025 with this major deleveraging program completed. Going forward, our objective is to continue reducing indebtedness, but in a more gradual manner balanced with the new objectives we will pursue from now on. Finally, slide 19. We present our CapEx here, which as observed throughout the year, was more restrained than the previous year.
Our focus on debt reduction and absence of significant investments for accreditation new programs was done in the prior year. As a result, CapEx came in very close to our maintenance CapEx during the year, below even our historical average. This scenario should not repeat itself in 2026 and the following years, as we will proceed with our asset-light expansion plan to expand, create in existing units, building growth channels in the cities where we operate, and increasing our reach areas away from capital cities. These were my comments and results, and now I'll give the word back to Mr. Jânyo Diniz for closing remarks.
Thank you, Aguiar. Let's now move to slide 21, our last slides before we open to Q&A. We'll present a summary of our strategic objectives for 2026. As mentioned earlier. Can you hear me? The idea is to keep. As I mentioned earlier, the priority now is to maintain our operating leverage and improve our day-to-day operations, gradually implementing new technology tools, but we need to pay greater attention to the organic expansion plan. We seem to be having some technical problems with the audio.
We believe markets selected for expanding our current operations are quite promising, especially given the existence of programs already established but not yet matured in healthcare fields in some capitals in the north and northeast regions where we operate. We also continue to develop our medical programs in which they are in the ramp-up phase. For these programs, we're adding this year a new student preparation program, so they can take any quality assessment that may arise going forward, be it ENADE, Enamed or any others. Accordingly, our curriculum has been adapted to align with the new regulatory topics.
We're also committed to expanding our available seats. We have at least three accreditation processes underway, and we continue discussing regarding Rio de Janeiro and Belo Horizonte processes, aiming to resume the entrance exams that we were unable to offer in 2026. The topic of quality and differentiation of the programs we offer is increasingly relevant. With the design of programs aimed at offering even more differentiations, keeping Ubíqua always up to date and unique value propositions. Lastly, we are resuming our consistent shareholder remuneration program. Yesterday, we announced a distribution of dividends equivalent to 30% of 2025 full-year earnings. With net earnings income once again recorded in our balance sheet for a full fiscal year. Our dividend policy, which consists of a semi-annual payment of 30%, is back.
Therefore, starting this year, we expect to have consistency in the semi-annual payment dividends. With that, we're excited about 2026. Focus on continue to add value for our shareholders throughout the gradual and continuous implementation of the objectives. Thank you all, and we're available for the question and answer session.
Now the Q&A session. First question from Renan Prata from Citi.
Hello everyone. I have two questions. One is a little more focused on results. We saw an improvement on EBITDA. I'd like to understand what's expected in terms of dynamics now. Then second point, could you tell us a little bit more about intake for the first trimester? What are the expectations both for remote, hybrid, and in-person? Thank you.
Sure. I'll talk about intake, and then Aguiar will tackle the other question. Online and in-person intake is following according to plan. Remote learning is also following the trend from the second semester. As far as we can tell, the trend is following what we expected. In-person intake is doing well.
Good morning. Thank you for the question. Starting 2024, we've been making a few changes in terms of dynamic and communication with students. This has brought us very positive results. It's true that families have increased their debt, and therefore their greater difficulty to pay. Despite all that, we've been able to help, and we have been able to present a program that have increased the pay rate. It has increased payment punctuality, and this has improved our cash flow. The environment is of high interest rates and high debt rates.
We were expecting it to drop further than it did. This is due to the number of events happening around the world. The expectations is that these numbers should remain so at least in the near future. At least for the year of 2026. Despite our efforts to bring these numbers down, I think in order to be realistic, we can't expect a huge drop for those numbers. I think this is consistent with the factors that we are taking into account for 2026. We don't expect a great increase in terms of indebtedness.
Thank you.
Next question from Marcelo Santos from JP Morgan.
Good morning everyone. Jânyo Diniz, Rodrigo Alves, and João Aguiar, thank you for the opportunity to ask questions. I have two of them. The first one's related to CapEx. What should we expect for the next couple of years? It was very clear that 2025 was an outlier. Second question. What's the ticket environment for 2026? What's your approach? Is it something similar to the second semester of 2025? Are you trying to accommodate for inflation? Thank you.
Thank you Marcelo. Thank you for the questions. You notice how we had a more aggressive CapEx in 2024. We wanted to accommodate the investment in the units that we started.
We had a strong focus in medical programs. We really wanted students to recognize the improvements that we had been bringing about. We held back on some of the investments. The CapEx, in fact, came in a little bit below average. It's going back to 5%-6% in 2026. We have an expansion project. The idea is that the expanding infrastructure will be able to absorb the growing number of students. I'd expect that from now on, we should go back to the historical average of 5%-6% of net revenue.
Hello Marcelo. Now, going back to the ticket. I think Jânyo mentioned something about that at the beginning. The idea is to maximize educational assets. We have a high occupancy rate. Commercially speaking, what we're trying to do is to increase the ticket. We finally have the desired occupancy rate. It would make no sense to increase intake at this point. The focus in 2026 will be in-person part. This should have a higher average ticket. Remote learning is a different story. We are aware of the pressures in the market. The goal of remote learning is also complicated for this year.
Yeah, very clear. Thank you.
Next question comes from Luca Marchesini from Itaú BBA.
Good morning everyone. Thank you for the questions. I have two questions. The first one is more related to remote learning. We are seeing some of the competition moving ahead. Are you already trying to stay ahead of the curve? That's our first question. The second one's more related to results. We noticed that you're trying to anticipate receivables. Is this something that we should expect for the rest of 2026, or is this a one-off?
Thank you for the question. We recognize Barra's strong EBITDA. Once the new regulatory framework came out, we started adapting to it. All our students are already working under the new legislation. That's how we work. That's how we're approaching this.
Thank you for the question, Luca. We are not known for working entirely on the early receivables. This came about from an attempt to generate these assets better. We wanted to be able to focus on other parts of the business in terms of improvement of average ticket, and so on. I'd say that flies a little bit under the radar for us. There's another interesting point that I'd like to remark on. It's how we approach the EBITDA, and how it allows us to be a bit more flexible and more efficient as well. I'm not ruling that out, but we could do something similar in the future.
Again, I just want to reiterate that that's not our focus. Everyone, I'd just like to piggyback on what Aguiar just said. It's about student private financing. When done well, it's very positive. Educred that was sold in 2023 was sold at a price that we quite approved of.
When we take into account the numbers as they are coming in, expected dropout rates.
We did this for the second time already, and this shows that it's possible to have private financing for students and leverage profitability from the companies.
Thank you.
Next question comes from Flavio Yoshida from Bank of America.
Hello Jânyo, João, Rodrigo. Thank you for this opportunity to ask questions. We have two questions. First one is a follow-up. It's related to the first question, related to intake. Jânyo, you mentioned how in-person came very close to the planned expectations. We understand that every campus has its limitations. Are you expecting growth? Second question is a little bit more focused on the organic expansion plan. You've mentioned units of up to 5,000 sq m.
What can we expect for this year and the next few years? Thank you.
Hello Flavio. In terms of intake, here's what we're expecting. Last year we broke a record. We had an ideal occupancy rate for the year. Our goal is to keep the same rate of last year. However, we'd like to improve in terms of ticket. There will be a small shift in our focus. You mentioned expansion. We'd like 2026 to be a bridge between the work from the previous years in terms of operational turnaround, connecting with a good organic growth. Hopefully, moderate CapEx will allow us for a strong growth in the future. Here's what we expect for 2026.
A lesser focus on growth and volume, not that that's not going to happen in terms of paying student, but a greater focus on passing tickets once we have a higher occupancy rate and a more desirable program portfolio. 65% of in-person students are within healthcare and law. Law that's very developed. Very well developed. Med school sign-up rates that are almost done by now, and it looks like we have achieved the better numbers than last year with great difficulty. Now João.
Just following up on what Rodrigo said. We are hoping that between now and the next year we'll have between 3 and 4 new units ready to go. We have 6 new units that are starting to mature. What we don't have is a plan like we had in 2016, 2017 and 2018. We'll start working step by step. We're working in regions where our brand is strong and well-recognized, and we'll take advantage of the strength of in-person learning. Every new planned model will take into account the possibilities of the following year.
Unfortunately, the original audio has frozen. Once again, the original audio has frozen. Pardon me. I don't know. My internet connection's a bit choppy. The idea is to have three new units per year. The idea is that once those new units mature, we can keep growing. That will help us with our organic growth model. Thank you.
Next question comes from Caio Moscardini from Santander.
Hello everyone. I'd just like to start with a follow-up on organic growth. How are you going to balance this strategy, opening new campi versus taking advantage of the fast track in nursing, which allows you to add new programs? Do you think there will be new opportunities there? How do you see that? The second question: What level of leverage are you expecting to for the near future? You have a strong cash flow at this point, despite the growing CapEx. Thank you.
We have an organic growth model. We have a spending cap. It means that the new units have a cap in how much they can use. This should calibrate the new openings based on the performance of existing units. We have some expansion plans in 2026. The focus is for existing units.
That means new floors for the same units, attached buildings, operations where we know that growth is a given. Because it's based on groups of, let's say, I have a dentistry course of three years when we know it should take 5 years, yeah. The reason for that is because I need more room. That's what we're doing now.
There are new units where we know that, for example, we need new nursing programs. We are going to first add in-person courses, and that's where we're going to take advantage of units in shopping malls and so on.
Thank you for the question, Caio Moscardini. We've been working on the leverage. This is part of our three-year cycle plan. The leverage is part of our strategic planning. It's very interesting, actually. It's exactly what you mentioned.
The idea is like, what kind of return this will give to our shareholders? Our goal is to keep that leverage between, I'd say 0.5, 0.6 and 0.8. It shouldn't be much, much smaller than 0.6, but it shouldn't go above 0.8 either. I think that's our range. The expansion CapEx should go back to 5%-6% of net income. There are expectations of dividends to our shareholders like we mentioned before should, as I say, represent the relationship that I mentioned earlier, so 0.6-0.8. Thank you.
Next question comes from Lucas Nagano from Morgan Stanley.
Thank you for the opportunity. I have a few questions for the medical program. The first one is about ticket. What kind of impact did it have on the fourth quarter? What are the expectations for 2026? Second question. This is more focused on intake. Rodrigo said that intake went well for the first semester. Is there any expectations of a slowdown for the second semester? Are there any ways to improve the average grade for next year?
Okay. Med school ticket. We saw two impacts in the fourth trimester. First is transference from ProUni. We chose to incorporate that in our presentation in order to dilute those variations. Third trimester it was a little bit higher, fourth trimester a little bit lower. The idea was to even it out. Why, you might ask, why is ticket not following interest rates? It's related to payment from students.
There is another effect that we prefer that generates an increase in cash flow. I'm going to pass the word to Jânyo. He'll talk a little bit more about the Enamed.
Med school intake for the first trimester was very positive, as expected. The Enamed event was an isolated event. The impositions by MEC started in the second semester. As we saw, Enamed did not have clear rules. In fact, the form evaluation was defined after the announcement of the test. We were already aiming for some changes in our medical program. Our students have eight semesters in a classroom, and then the four last semesters are in hospitals. Now with the current changes, we should bring them back to the classroom for longer periods. The expectation is that these results will improve greatly.
Enamed takes place in September. We don't have the exact date yet.
The students taking it are the students in the eleventh or twelfth semesters already. Is my audio still good? Yeah. I'm going to pause the video. Maybe the audio will improve. Okay. Can you hear me?
We implemented a number of changes in terms of curriculum. Now the two years that they used to spend in the hospital now has mentorship, more mentorship with professors. This new model is starting to be implemented this year.
Thank you. That was very clear.
Just a reminder, anyone that would like to ask a question, simply click on the Raise Hand button. This is the end of the Q&A session. Now Mr. Jânyo Diniz for closing remarks.
I'd like to thank everyone's presence for another result conference. It was very positive. It showed a process of optimization of operations. It showed how these changes have been very positive. We'd like to make ourselves available in case you have any questions. Good afternoon, everyone. The video conference from Ser Educacional now is over. We'd like to thank you, everyone, for your participation. Have a great day.