Good morning, ladies and gentlemen. Welcome to Ser Educacional video conference to discuss the results for the first quarter of 2023. This video conference is being recorded, and the replay will be available on the conference website. The presentation is also available for download. Please note that all participants will be solely watching the video conference during the presentation, and we will proceed to the question and answer session where further instructions will be provided. Before we continue, I would like to emphasize that forward-looking statements are based on beliefs and assumptions of Ser Educacional's management and the current information available to the company.
These statements may involve risks and uncertainties as they relate to the future events, and are therefore dependent on circumstances that may or not occur. Investors, analysts, and journalists should consider that events related to the macroeconomic environment, the sector or other factors may cause results of materiality differ from those expressed in the respective forward-looking statements. Presenting this video conference are Mr. Jânyo Diniz, Chief Executive Officer, Mr. João Aguiar, Chief Financial Officer, and Mr. Rodrigo Alves, Director of Investment Relations. I would now like to pass the floor to Mr. Jânyo Diniz, Chief Executive Officer of the company, and who will begin the presentation. Please proceed, Mr. Jânyo Diniz.
Good morning, everyone. Thank you for attending our results announcements of 2023. We will begin our presentation on slide four, where we present the highlights of the enrollment and the cycle of regulatory education this quarter. We had a good enrollment cycle in both hybrid and digital education, with approximately 8% growth in hybrid and almost 10% in digital. I believe this positive result is due to the success of strategy we adopted this year in dedicating our efforts to offering health and engineering courses, especially in hybrid education. As a result, we reduced the portfolio available to the public in this segment, and consequently improved the sales channel for technology and humanities courses in digital education.
Which in this turn began to reap the first positive results in deterioration of [inaudible], which besides systems involve training our partner centers and invest in laboratory facilities to increase our reach in offering courses. With these, we improved our commercial efficiency, and we've greatly optimized the use of our structure. Another positive aspect of this cycle was the performance we had in controlling attrition, which combined with enrollment growth allowed us to have a good total student base growth this year of over 5%, as well as contributed to the improvement of the average ticket price, since veteran students do not have the same enrollment discounts offered to freshmen.
On slide 5, we present the financial highlights which show that we again had consistent growth in net revenue, and the best news is that this year we managed to stop the decline in adjusted EBITDA that was occurring last year and returned to present solid growth, which demonstrate the first positive signs to implementing of the operational optimization plan we started last year. In this quarter, the most evident highlight of the execution of this plan was the sale of Educred portfolio to Pravaler, which provided a reduction in the average account receivable period, increased our operational cash generation in this quarter by almost BRL 70 million, and allowed for a reduction of average collection period of net debt.
The next two quarters will be the most relevant in the execution of our operational optimization plan, as they will be the quarters in which we will have the highest number of property returns, and the changes that have been made to operation will bring more relevant results. To conclude the highlights of the quarter, in March, we had the disclosure of the CPC and IGC result for the year 2021. As you can see in the graphs below, we showed a significant improvement over CPC, which had 26% of the total evaluation with grades of four and five compared to the 2019 cycle, when we had 13% of the total grades among the highest evaluation index.
Another aspect was the Ser Educacional IGC, which continues to be above the market average as an important aspect to be observed, especially if we consider that more than 9% of hybrid education students based locally in northeast and north regions of Brazil, region less favored than the national average. This result was positive and demonstrates that our ubiquitous academic model is contributing to the continuous improvement of our quality indicators. Ubiquitous, which has already established itself as a market as a positive attribute when it comes to attracting and retaining students during the hybrid difference experience it provides, should continue to demonstrate the ability to improve the academic performance of the students in upcoming evaluation cycles.
Moving to slide eight, we delved into the details enrollment process, with the highlight being the first quarter of 2023, which was practically the largest in Ser Educacional history, totaling around 115,000 students enrolled in this quarter, which positive performance in all segments in the company's operation. On slide nine, we can see that the enrollment results, combined with the successful enrollment season that we had, allowed us to grow our student base to a record level, now surpassing 350,000 students mark.
Slide 10, we provide details on the average ticket price, which, as mentioned at the beginning of the presentation, was mainly driven by the tuition fees in hybrid education, especially due to the positive enrollment season we had this year, and noticing a slightly more moderate market commercially compared to previous year. In digital education, we had a slightly different situation where the enrollment pace of our market remained highly competitive as we observed last year. Additionally, there was increase in the enrollment of students in technology courses, especially because these courses were no longer offered in hybrid education. These two factors led to reduction in the average ticket price in digital education. The combining of these effects turned out to be positive, as we managed to increase our average ticket by 6% at the beginning of the year.
To conclude our comments on operational results, we present the distribution of student space by the field of knowledge. Notice that our strategy of focusing our efforts on health courses continued to yield results. In hybrid education, we once again increased the share of those courses in our base, but the highlight for this year was the digital education, where investments in laboratories at certain centers and training of student owners to offer these courses led to increase from 14%- 15% in the quarterly comparison. These were my initial comments, and now I will hand over the floor to João so he can provide the financial results of the quarter.
Thank you, Jânyo and hello to everyone. Thank you for attending our event. Let's move straight to slide 13, where we show our traditional table summarizing the results of the quarter. We had a positive quarter in terms of operational results, which is translating to our healthy organic growth on net revenue, considering that we are an odd quarter, which naturally has a higher incident of enrollment discounts as we fully recognize these discounts with the quarter. From the perspective of operational margins, in general, expenses and costs stepped pace with revenue growth. We experienced a slight decrease in gross margin, but recurring expense resumed the adjusted EBITDA margin remaining partly stable and compressed between the two quarters. The adjusted EBITDA margin did not improve in this quarter, mainly because most of the operational adjustments were made primarily in March, which has little effect within the quarter itself.
Furthermore, this is a quarter with just over a month of classes, so we had not yet seen the effect of increasing the number of students per class that we are promoting. Similar comments can be made about the financial results since the debt level, despite having decreased compared to December, due to the sale of Educred portfolio to Pravaler, only occurred in the last week of the quarter. Therefore, the effects of this net financial result will be observed from the next quarter. The financial result continued to reflect the impact of higher net indebtedness, given that the eradication in debt compared to the fourth quarter occurred only at the end of March. We were experiencing the highest interest rate since the beginning of the Selic rate hiking cycle.
As a result, the net result has not yet reflected the adjustment being made. Most of them were made during the quarter itself. It's worth noting that with the second quarter, we should have a favorable outlook because the dynamics of the average ticket price will be recognized without enrollment discounts. Cost reduction measures will start to have an effect on the result. In the financial indebtedness, we also begin the quarter with the impact of the cash inflow from the sale of the Educred portfolio. Moving to slide 14, we present the distribution of revenue and adjusted EBITDA by segment. As you can see in the table, our medicine courses extend their contribution to the quarterly results due to increase of 48 seats in Vilhena and the full recognition of the tuition fees in this quarter.
For the other regulated courses in other quarters, we experienced seasonally reduced average ticket price due to enrollment discounts offered to new students during this time of year, as mentioned earlier. This occurs because according to accounting practices, these discounts are fully recognized within the quarter and therefore seasonally, the hybrid education courses in particular have a lower average ticket price, which puts temporary pressure on the margin in the first quarter. In this regard, starting from the second quarter, the distribution becomes more balanced because the season effect of average ticket price does not repeat itself, which naturally increases the margins for the other regulated courses. Additionally, we expect to see clearer and more positive signs from the operational optimization activities, which directly contribute to the results of these segments as well as for the new businesses.
Slide 15 presents the evolution of average accounts receivable period with decrease by 16 days compared to the previous quarter. This is mainly due to the sale of Educred portfolio to Pravaler, which reduced our net accounts receivable by approximately BRL 70 million in this quarter, which in turn was converted into cash for the company. Another important fact is that we are going through a positive period in terms of payment punctuality. This quarter has been one of the best in recent years in terms of payment timelines, which helped control accounts receivable and allowed for the recent reduction of the provision of doubt stats. On slide 16, our pre and post CapEx operational cash generation. You can see the cash generation for the quarter was beneficiated by the improved operational results and the cash flow from the sale receivables, partially offset by increased interest expenses in this quarter.
Nevertheless, it was a very positive quarter for the company, which seasonally had many acquisition commitments and interest coupon payments during this period and still achieved a good cash generation. In slide 17, we show precisely that both gross and net indebtedness have shown positive progress between the last quarter for the previous year and the quarter gross. Indebtedness decreased by almost 8% as our operational results improved, also contributed to a solid improvement in the net debt to adjust EBITDA ratio decreasing from 2.68x- 2.39x . I believe that this improvement in indebtedness may best affect the initial effects of the work we have been doing to improve Ser Educacional results this year. To conclude my comments and hand the floor back to Jânyo, we have the final financial slide that provides more details on investments made this trimester.
As you can see, increase is mainly due to the fact that last year we are still producing normalizing the effect of the pandemic. While this year we are already operating as a normalized pace, an effect that should dissipate through the year. The investments we made this quarter continue to address the same themes that we presented in previous quarter, investing in the improvement laboratory and clinic facilities to better align with the offerings and expand facilities to better align with the offerings and expand the reach of health and engineering courses. Preparations for accreditations for medicine courses and investments in IT to enhance the students' experience in developing digital content. Those were my comments, and I will now turn the floor to Jânyo for his final remarks before we open for question-and-answer session.
Thank you, Aguiar. Let's move to slide 21 to summarize our objectives for 2023. As we have said since the conference call last year, we outlined a more conservative growth scenario for Brazilian higher education, and we have been adjusting our operations accordingly. We remain dedicated to the work of optimizing our real estate portfolio to improve our occupancy rates and enhance our rescheduling. This year has been positive, and the operational optimization and improvements in our course portfolio have been proving to be the right moves. Another important factor is to continue our efforts in integrating sales channels, whether online, partner centers, or campuses, to improve the use of our educational assets and the quality of our sales, regardless of the channel used.
To achieve that, we need to continue developing our continuing education ecosystem so that we have more value-added products and services that can be used across these increasingly omnichannel sales channels. Lastly, our focus on reducing financial indebtedness, which has shown more visible results this quarter with the sale of the Educred portfolio. Along with operational improvements, activities should continue to have a positive impact on our results. Those were my comments. I am available for the question-and-answer session.
Now we have the question-and-answer session for investors and analysts. If you want to ask a question, please press the reaction button and then click on raise your hand. If your question is answered, you can leave the queue by clicking on down hand. Our first question comes from Mr. Lucas Dai Nagano .
Hi, everyone. Thank you so much for the space. I have five questions. The first one is about the optimization plan. Could you review this plan? Are there space for devolutions? And what is the timeline expected for the improvement of rent? The second question is about PDD. There was a relevant decrease this trimester on the receivable portfolio. Do you expect an improvement despite this challenging scenario?
Hi, Lucas. Hi, everyone. The optimization plan, we are getting its peak now on the second quarter. We have a higher volume of real estate being returned on May and June. These are relevant changes, especially here in the north and in the northeast of Brazil. We also are optimizing groups. Groups related to the process itself. We thought on doing so in the first quarter. In the second quarter, we should see the same new movement that will be supported by seasonality. Our first quarter, traditionally, is worse because of discount that impacts the average ticket.
We do so because of our intake campaign, and these discounts are completely in the first quarter. And the work we have done is less visible because of that. In the second quarter, we will have classes 100% of the time, and we will be the effect of that. We will have the conclusion of the return of buildings. In May and June from day two, we already imagine to have a more visible work. In the third quarter, we will have a second part of this process, and we will have a better view because this Q3 will be positively impacted because of the devolutions done in the second quarter. We expect to see progressive results along the year. Now we will see the first steps effectively done, especially in March. Now Aguiar will talk about PDD.
Thank you for the question, Lucas. This PDD in the first and third quarter, because of re-enrollment and late tuition paid, these factors increase our PDD. In fact, we had a good scenario when we look at this recovery regarding PDD. Still, we are on a challenging year, and we expect that PDD will be aligned with the percentage of last year. We had a reduction because of these factors, the portfolio and improvement along the year, but it will be a bit under the percentage we saw last year. In a way, we will have a reasonable compensation of the even quarters.
Okay, João and Rodrigo, thank you so much.
Another question of Marcelo Santos of JP Morgan.
Thank you, everyone. Thank you for making the questions possible. The first one is the gross margin on online education. This first quarter, there was a good recovery versus the same period 2022. We could understand the improvement on online education, and still on online education, could you talk about the competitive environment? If you could talk about these results, I appreciate it.
Hi, Marcelo. The ticket's only about online education? Yes, only in online education. Okay, so online education this year, this first quarter, we celebrated the first year where we integrated FAEL. Our first quarter last year, we had an integration of FAEL in January, and the margin was smaller. When we merge two companies, there's a different impact in its consolidation, and there are some costs of this merging process, so our gross margin is decreased. Along the year, there were a series of adjustments in our operations. We had many integrations of systems, and we removed some redundancies. This, we could improve a bit our online education gross margin. On our average ticket online education, we perceive this.
First, we had a higher volume of our sales of courses with a smaller ticket on technological courses. If you look out on our participation breadth on courses, medicine engineering courses increased their participation, but the technological courses, they have a lower participation. There are campaigns that are more accelerated. As Jânyo said, the market is competitive. As we increased our participation in competitive market on course that has a lower ticket, our average ticket was pressured down on online education. I believe the online education average ticket will be pressured for some time yet, but we are having efforts done on courses with a higher ticket. For example, health courses and engineering courses, and then we will recover prices. It's still early.
The participation is not much higher yet. But with the system integration, campuses, training, labs offer in the countryside of Brazil is relatively recent, and this movement will make us capitalize this mix of courses along the time.
Okay. Thank you so much, Rodrigo.
A question on Renan Prata from Citi.
"Hi, everyone. Good morning. Thank you for this opportunity. It's more of a follow-up question. I would like to understand this infrastructure reduction and return of campuses activity, but what is the recurrency on operation expenses, on OpEx? There are some adjustments to be done along the year, and I believe from Q2 it will be increased. I ask about OpEx, what do you expect along the year? Thank you so much.
" Hi, Renan. How are you? As we announced in October last year, it's about what's going on now. We have been working on synergy generation of about BRL 30 million- BRL 40 million. In this quarter, we did not have substantial gains on our margins. Our margins are flat because of the seasonal average ticket issues. We expect the synergies will be more visible along the year. I consider this increase from second Q, where we will have the other side of an average ticket seasonal issues, which is a control of costs and expenses.
We are already doing so, and it is more visible associated with a higher average ticket. We expect it to have more visible results. On this quarter, it was more visible the reduction of indebtedness because we sold the Educred. This will help with the PDD, because this is a portfolio that had relevant provisioning. The sale was done at the end of March, but we will have more visibility on other effects, including in July, our indebtedness has dropped also.
Okay. Thank you, Rodrigo.
Let me remind you, to ask questions, you click on the Raise Hand button or send via text through the question-and-answer window. To ask questions, click on the Raise Hand button or send your question through the question-and-answer window. Next question comes from Marcelo Santos from JP Morgan.
Thank you for your follow-up. I would like to dig deep on the rounds. To see the impact of the plan, we are talking about rent. Is this about professors' expenses where we would see the results?
Yes. Cost, expenses, and marketing as well. We see in this first trimester the work on portfolio focus, adding the cost on health and engineering costs. This would be transferred to online education, and this will help us diminish some other costs. We also have some work being done on integration of offer, a rationalization on costs, and they will be more apparent from now on. Yes, we will be on every line. The marketing cost would be something general that would be distributed. Yes, it is something generalized. This will be impact on Payroll.
This will have an effect on marketing expenses. We will reduce the amount of ads on social media. This happens with portfolio. We understand we need to do a work to have a general optimization. There are specific points, specific units that has been worked on a more direct way, especially because of the buildings and their occupancy. But the effect will be generalized, especially from the devolution of real estate. This is something that will have consecutive movements.
When we talk about marketing, you had a diminished course when we talked last year. How do you see Should