Good morning, ladies and gentlemen. Welcome to Ser Educacional's video conference to discuss the results for the third quarter of 2022. This conference is being recorded, and the replay can be accessed on the company's website, ri.sereducacional.com. The presentation is also available for download. Please be advised that all participants will only be watching the video conference during the presentation. W e will start the question-and-answer session when further instructions will be provided. Before proceeding, I will take this opportunity to reinforce that the forward-looking statements are based on the beliefs and assumptions of Ser Educacional management and current information available for the company. These statements may involve risks and uncertainties as they relate to future events therefore depend on circumstances that may or not occur.
Investors, analysts, and journalists should be aware that events related to the macroeconomic environment, the industry, and other factors could cause results to differ materially from those expressed in the respective forward-looking statements. The following are present, Jânyo Diniz, CEO, João Aguiar, Chief Financial Officer, and Rodrigo Alves, Investor Relations Officer. I would now like to turn the floor over to Mr. Jânyo Diniz, CEO of the company, who will start the presentation. Please, Mr. Jânyo, you can proceed.
Thank you very much for everybody for being here on our presentation. Let's go straight to slide four, where we present the main highlights of the quarter. We had growth in our total student base and net revenue, which mainly due to recent acquisitions grew 28% in relation to the same period for the previous year. In the same period, we had revenue growth of 20%.
The combined effect of organic growth with acquisitions in the last two years transformed Ser Educacional, which surpassed the 300,000 students mark and started to have a relevant base of digital education students in the company's total base. Digital education now represents 55% of our total students base. Another highlight of these acquisitions was the substantial increase in the share of medical courses in the results. 2022 is also being relevant for better control of receipts after the pandemic, with the average pro forma term for acquisitions falling from 114 days- 110 days, demonstrating that we are growing the students base and revenue, with an improvement in the quality of the students' receivables portfolio. Speaking of quality, our academic results were also a highlight for the quarter.
According to information published by INEP, we showed significant improvement in our last ENADE cycle, solid performance in IDD, and the MEC accreditation scores of our digital undergraduate courses that show the excellence of these programs. Finally, this year we had the first results of our strategy to create a continuing education ecosystem that aims to create revenue streams and increase the use of our educational assets. As you can see in the chart in the upper right corner, our ancillary revenues as a percentage of net revenue represented less than 1% of the total, and today more than quadruple from 2020 to date and will represent more than 3% of the company's net revenue. On slide five, we again show our continuing education ecosystem, which continues to develop rapidly with three highlights for this quarter.
First is that our fintech, b.Uni, the first in the field dedicated to continuing education market in Brazil, today already has more than 16,000 customers, and only this quarter it obtained its license to operate as a Direct Credit Society. We also had a quarter of solid evolution of Peixe 30, our professional social network, which in September broke the barrier of 300,000 users and is having solid growth to consolidate itself in the professional market, offering users a free analysis of soft skills and the possibility of interaction via platform. Starting next year, Peixe 30 will allow recruiters to offer and manage their vacancies within the app through the recruiter function, which is already in the testing phase. The third novelty was the opening of our newest DOK, the veterinary hospital in Maceió. We now have four vet hospitals operating, two by acquisition and another two opened organically.
By the first half of 2023, we will have seven vet hospitals in operation, and we will already be one of the biggest players in that segment in Brazil. On slide six, we present in detail the evolution of INEP's academics quality metrics that demonstrate what is already known by education. We had 11 percentage point improvement by ENADE 2021 cycle compared to its comparable cycle in 2017, which is an improvement in the percent of courses in the grades between three to five of 11 percentage points, making up 58% of courses. Another relevant highlight is our IDD, which represents the added value of our courses for enrolled students. Note that we have 88% of grades between three and five, the best rate among listed companies in Brazil.
Finally, in the last season of reaccreditation of digital undergraduate courses by MEC, 92% of the courses received grades four and five. Undoubtedly, a relevant milestone for any educational institution in Brazil. These were my initial comments now, and I will pass the floor to João Aguiar, our CFO, who will comment on our operational and financial results. I will come back to make our final remarks before Q&A.
Thank you, Jânyo. Hello, everyone. Thank you once again for your presence. On slide eight, we present the results on the enrollment of students in the third quarter, which represent a reduction in volume compared to last year, both in hybrid and in-class teaching. We have some important factors that explain the results of September.
We believe that the sector recovery cycle continues, but some impacts have altered the pace of the trajectory, especially inflation and high interest rates, which ended up reducing the impetus of the middle class to commit to longer-term projects, and this ended up causing demands to lose some momentum in recent months. In addition, we had a very strong basis for comparison, as last year was Ser Educacional's record in funding for the third quarter. T he reduction in funding volume alone does not represent a low volume in funding if we even compare it to the pre-pandemic indexes. These effects associated with more conservative commercial policy ended up causing funding to lose some traction in hybrid learning.
In the case of digital education, we are working on the repositioning of the product as we believe that it's necessary to increase the popularity of the offer of differentiated courses, especially in the health area, which needs more practical classes, which since we believe that in the current price level, 100% online course has become unattractive from the point of view of return to the shareholders, especially due to the nature of operating costs that are practically all variable. On slide nine, we have the evolution of the regulated education student base, mainly due to the acquisition of FAEL, generating a combined student base growth of 28%, which showed that our base was resilient to the lower enrollment of students we had in the quarter.
On slide 10, we have the evolution of the mix of courses, which, as you can see, the health of courses continue to gain space in hybrid learning, comparing 61% of the student base in this segment. In digital education, we had a growth of 100% online humanities course due to the integration of UNIFAEL, which has few students from health course at its base. On slide 12, we present our average ticket, which had solid growth this quarter due to our more conservative commercial policy, offering fewer discounts for attracting and re-enrolling students. It's also worth noting that there was a reduction of funding discounts of the nature were also recognized to a lesser extent in the quarter, which benefited the average ticket, as they are fully recognized in the same period.
As a result, the average ticket for hybrid education in the quarter grew by 11% in the period, which in digital education there was a drop of 1.5% in the case, mainly due to the change in the mix of courses after integration of which in turn has 100% more relevant online course base. On slide 13, we present the results for the quarter, which, as you can see, revenue growth occurred at a slower pace than the growth of expense and costs, resulting in a contraction in operation margins.
This effect occurred because the growth of the student base was not enough to promote the dilution of costs, not promoting an increase in the occupation of real estate properties and an increase in the number of students per class that would be necessary to promote the growth of results and operating margin, and there was not yet been enough time for the synergies arising from recent acquisitions to mature. In this sense, this quarter, we started a cost and expense optimization plan based on reducing the number of properties leased and optimizing resource invested, which will be detailed by Jânyo later in this presentation. On slides 14 and 15, we open our income statements divided by segment.
You can note that the hybrid learning continues to reach low operating leverage, with medicine courses continue to be increasingly relevant in the company's results, followed by digital education, which in turn in time, in the second half of the year, it achieved some stabilization in its shares of results. The new businesses are expanding as a percentage of total net revenue, a relevant move for the strategy of revenue diversification entry into the continuing education segment, but on the other hand, consume part of the operating result. On slide 18, we show how IFRS 16 has an accounting impact on our results via EBITDA, which the cost of rents, in order to allow you to compare us to the market peers at the same basis in which use these metrics.
On slide 19, we show that our average term of accounts receivable, which continues to show a significant improvement compared to third quarter of 2021, demonstrating that the company policy in this post-pandemic period, based on gradually reducing discounts, focusing on a more solid average ticket earning profile of students which better credit quality has shown solid and health results favoring cash generation and with a good balance of dropout rates. On slide 18, we present our pre and post-CapEx operating cash generation, which, as you can see, there was a reduction in the comparison between the two periods accumulated in the year.
This lower cash generation is mainly due to the higher financial leverage and the increase in CapEx, which, as we can see on slide 19, it shows that until the third quarter of 2021, we were gradually resume investments in new units and expansion of course ecosystem. A stage that should, from now on, be reduced to levels closer to 2020, as investments in the expansion are in the final stage, and the focus from now on will be to mature investments in the ecosystem, in the units, and in digital education were mostly carried out this year. Finally, we present our indebtedness on slide 20, which I mentioned earlier, is higher due to the financing for acquisition we made. These acquisitions were relevant to support our growth, such as the acquisition of medical courses at UNESC, UNIFASB, and UNIFACIMED, that helped us to give greater continuity to results.
On the other hand, acquisitions of FAEL and EdTechs and veterinary hospitals are still in the early stages of generating synergies. Now we'll hand the floor back to Jânyo so that we can make final remarks.
Thank you so much, Aguiar. Let's go to slide 22 of this presentation. As you could see, we believe despite the recovery process of the higher education sector taking place, a resumption of demand growth after the reduction of the effects of the pandemic on people's daily lives. There are still challenges in this process, especially due to the impact of inflation on household income and its impact on demand and operating costs. This process should take longer. Our company's operational re-leverage process needs to be induced through some initiatives. To this end, we started to implement, as of the third quarter, some measures aimed at reducing the number of unused accreditations, especially where we have low goals with less ostensible presence.
In addition, we will reduce the spaces leased in cities in the North and the Northeast of Brazil, reducing idle capacity and optimizing our offer of courses, which should increasingly focus on the courses that demand practical classes and higher average tickets. With this measure, we will reduce the cost base, increase the average occupancy of the buildings in use, improve our average number of students, and optimize costs and expenses. These are measures that should bring synergies of at least BRL 35 million a year, and that will be implemented from this quarter until March next year. We understand these measures will be important to better control the offer of courses and optimize our results. We understand that historically, this tripod of balance has always generated success for the company shareholders based on the quality of education, the company's healthy growth, and financial solidity.
To close, we show again the priorities for the year, and as you can see, we are following our planning, adjusting our operations as the macro and micro factors unfold our sectors. We are able to practically complete the integration of FAEL, and we are working to make improvements to our digital education, which have its first summer enrollment now in 2023. We have the return of the growth of hybrid learning. Due to results of the year, we chose to make an offer adjustment in order to provide operational re-leverage in a more agile way. We want to see our continued education mature. In addition to maintaining our financial solidity, a pillar that we consider fundamental for the company to continue to generate value for shareholders in a long term. These were our initial comments. We are available for the Q&A session. Thank you all.
Let's have now the Q&A session. If you want to ask a question, you raise your hand to join the queue of questions. Our first question is from Lucca Marquezini from Itaú BBA.
Good morning, everyone. Regarding the expenses with advertisement, what can we expect on how you do that for the next trimesters? Are we having more expenses on publicity? Is it reasonable to do so? Thank you so much.
Thank you so much for the question. I don't think so. We already have great investments in marketing. Now, as Jânyo's presentation, we should focus more on courses that have a higher average ticket value, more in presence. W e are going to less focus in marketing in the national market. We wish to have to co-opt students for the courses that leverage a higher value. We are going to have more stability in generating revenue. We are going to rationalize and optimize the resources for marketing as well.
Let me complement what he said. Other than online courses and digital learning, we are investing in stronger brands as FAEL. In the past, we had more homogeneous investments, and now we are going to have more investments in FAEL other than the other brands. We are going to optimize the intake result by strengthening the brands regionally.
Perfect. Thank you for your answers. It was very clear.
Next question is from Vitor Tomita from Goldman Sachs.
Hi, everyone. Thank you for answering our questions. I have two questions. First, could you please have an update and provide more details on integration and synergies with FAEL, and how you are going through this process? Second question, could you dig deeper on the academic quality indexers? Do you have any specific brand that contributing for the evolution of the education more? Thank you.
Thank you so much for your question. Regarding the integration and synergies of FAEL, it took longer than we expected because of the difference of the academic model. This process is going fast. We could integrate all administrative and academic activities. Regarding the synergies, we are going deeper now that the models are similar. The model of the latter is easier to be done than FAEL. We are having the synergies for the freshmen students, and we are going to adjust in the Ser Educacional model. About the expense synergies, i n this period of transition of systems and academic models, both of the models are integrated. FAEL and Ser Educacional are being integrated longer, and the expenses will drop.
About the quality indexers, we are developing a project, and part of it was about Ubíqua platform. Ubíqua's results are not still added because the students were having classes in the previous academic model. T he basis of Ubíqua were inserted in the previous model. Quality perception was improved because of the change of courses mix. We had an increase on the courses mix for the higher average ticket, and there was a reduction on students with a corporate loan. W e have a mix on courses and students in this process. There's another case that we are reaccrediting digital graduation courses with a score of five and four. We were considering a program with a higher quality for online learning, online education, and this is being reflected in our assessment through the Ministry of Education and Culture in Brazil.
Thank you. Perfect.
Next question, Lucas Nagano from Morgan Stanley.
Hi, everyone. Good morning. Thank you for answering our questions. We have two questions. First, new businesses segment and continued education, c ould you update this initiative? On slide 22, you talk a bit about it. Are you going to have profit in a short term? Second, about the deaccreditation. I believe it was stronger in Q3, and it is behind the industry segment of other institutions. What are your plans for 2023?
Lucas, we have already adjusted real estate in the years. We had BRL 60 million of real estate debt we dropped from 2017 on. Now we need to have a different adjustment. We need to have a fine adjustment focused in increasing the operational margins. Yearly, the education companies, they try to do something as this.
They decided not to drop real estate and have their gains focused on the student intake, o r we could consider that we are not going to have a higher student intake, and we will have lower margins. This is what we did last year. We are going to operate with a tighter income. We are going to have less real estate, because through the second semester process, we didn't have the same student intake as we had a year ago. I t doesn't make sense to have such large real estate buildings. Would you like to complement, Jânyo?
Yes, other than that, a mature of the micro model allows a kind of structure that needs less buildings. This is going to complement what Rodrigo said, and we can have a change done, and we will be able to work with less buildings and less capacity.
The second question about the new businesses. The planning of the new businesses is following as we planned. We estimated we would have a loss of EBITDA. Our EBITDA is negative, as we estimated. There are many new businesses, and I'm not going to get into details, but the plan, it was that these new businesses would be born and would be in their initial stages, that we would need to have some investments done. Now, while we have the negative EBITDA, this period of having this negative EBITDA will be reduced. Now our university should provide more results. Second, the investments made will have the ROI done. T he last Prova Fácil, new hospitals, o ur bank had a period where we had higher expenses, and now that the release period is ending, we know we are going to have a better EBITDA.
There was a decrease of demand in the second semesters, and we were hoping to have a better leverage on our campi, and we didn't have it. W e need to have a fine synergy done, a fine adjustment to have an effect to reduce our offer. We closed three campi, so that this process could be done faster. We cannot have a company that is working to have a continued education without profitability. We should have a higher profitability when we have these fine adjustments done.
Perfect, Rodrigo. Thank you so much.
Next question, Marcelo Santos from JP Morgan.
Hi everyone. Hi, Rodrigo. Hi, João Aguiar and Jânyo. Thank you so much for giving me the opportunity to ask my questions. I have two questions. First, how can we capture this efficiency project from BRL 35 million- BRL 40 million per year? In Q4, we should have an impact, and the lease of buildings should be larger. How is this evolution being done, as we are going to have this campi being dropped out?
About lease, we have one-off effect there on BRL 4 to 5 million for 2023, first and second Qs. We didn't understand this is something that wasn't going to be recurring due to the nature of the negotiations. They were taking too long. We understood that is something planned for the year to be adjusted. About real estate, they started on this Q2. We knew that we had groups that were formed, and we should do our homework about operational leverage. This is a semestral plan, a six-month plan. We are going to have the real estate returned. We will have some assets dropped off. Between first and second Q next, it is more evident.
When we talk about dropping buildings, this is a wonderful effect. We are going to diminish the need of having staff in every campi. You are having a higher occupation in the buildings, and there are a positive effect in students per class, per group. In September, we are going to have news. For the second semester, this is more netted because we need to obey a six-month cycle.
Will you have a new one-off for next semester? Will we have a million one-offs in these two Qs? What does it mean? The normalizing one-off. What is this?
The minimum lease we are considering the results is the cash effect of the lease with a BRL 4 to five one-off in this third Q. The effect of the devolution of the buildings, this is not considered in the cash flow. This will not be considered for the impact of this. C onsidering the paid lease of the 4 Q, we will see an improvement in the Q4 comparing to Q3.
What you should see as a collateral effect of returning this real estate?
This happened on Q3. We are going to have other expenses as well, and it is the devolution of the buildings. We are going to consider this as a non-recurring effect, and we will provide details about it. They should happen more between Q4 and Q1 2023 where it will be possible to drop off this real estate without having any impact for the students.
This is super clear for me.
Next question from Pedro Caravina from Credit Suisse.
Hello, everybody. Do you guys hear me? Wonderful. Good morning, everybody. Thank you for the opportunity. I have two questions. First, do you guys and other players are thinking about how this commercial aggressivity that you guys had last year is not bringing the numbers you guys expect for? What' s happening? Do you believe that the elasticity, this latency, is according to the circumstances or is structural? How the industry is going to behave? When you talk about onsite courses, which courses you guys are going to focus to reduce the costs?
Hello, Pedro. I understand that there is a recuperation of demand, but it takes time for it to consolidate because we don't have an economical environment that's favorable for the middle-class families. They have to do this long-term investment as educational course. We're doing some operational adjust in this sense. First one, we are working courses with more courses that have this [presidential] structure, like health courses. W e are not focusing on engineering. T he most relevant courses for us is health courses.
Focusing on doing that, offering differences for the quality, different values. W e are opening vet clinics and changing the perception of our practical classes for the market. Also, the opportunity to have internship, so they can understand better their brands. Beyond that, we are being more restrictive giving discounts and focusing on the quality of the market, growing our average ticket.
Now, we 're doing a more concerned work, reducing the offer if there is no demand. If you are not having the demands for some courses, we will not keep the structure for offering those courses. Reducing our real estate costs and not being dependent on the entry of those students. We have less courses on our operational situation. The beginning of the year, we saw that we have a big intake of students. After that, we had the Ukrainian crisis war, and it was worse than we are expecting. This had an effect on the middle class in Brazil. We can expect that.
That's very clear. Thank you very much.
Remembering that to make questions, just raise your hand. Our Q&A session is closed. I'm going to give the floor to Jânyo Diniz so he can make his final remarks for the company.
Thank you, everybody, for being here for our results are difficult. Our investor relation will be available for you to give following questions. Thank you, everybody. Good afternoon.
The video conference is finished. Thank you, everybody, for being here. Have a good day.