Good morning everyone, and thank you for standing by. Welcome to Vitru Brasil's Fourth Quarter and Full Year 2024 Earnings Release Video Conference. I would like to highlight that for those who need simultaneous interpretation, this feature is available on the platform. To access it, simply click on the interpretation button using the globe icon at the bottom of your screen and select your preferred language, Portuguese or English. For those listening to the conference in English, you have the option to mute the original audio in Portuguese by clicking on mute original audio. Please note that this video conference is being recorded and will be available on the company's Investor Relations website, investors.vitru.com.br, where the full earnings release material can also be found. The presentation is available for download via the chat icon, including the English version. During this company's presentation, all participants will have their microphones disabled.
After that, we will begin the Q&A session. To submit a question, please click on the Q&A icon at the bottom of your screen and type your question to join the queue, the line. When your name is announced, a prompt will appear on your screen, and then you must enable your microphone in order to ask questions. We kindly ask you to ask all your questions at once. We emphasize that information contained in this presentation and any statements that may be made during this video conference regarding the business outlooks, projections, and operational and financial goals of Vitru Brasil constitute the beliefs and assumptions of the company's management, as well as information currently available. Forward-looking statements are not guarantee of future performance. They involve risks, uncertainties, and assumptions since they refer to future events and therefore depend on circumstances that may or may not occur.
Investors should understand that general economic conditions, market conditions, and other operational factors may affect the future performance of Vitru Brasil and lead to results that differ materially from those expressed in such forward-looking statements. Today, we are joined by the company's executives, William Matos, CEO of Vitru, Gabriel Lobo, CFO and IRO of Vitru, and Maria Carolina, Head of Investor Relations. I now turn the floor over to Mr. William Matos.
Good morning everyone. It is a great pleasure to have you with us for this 2024 year-end earnings webcast. I would like to start by thanking all of you for being here and for your continued interest in Vitru's education journey. Today, by my side are Gabriel Lobo, Vitru's CFO, Maria Carolina, our head of investor relations, and our IR analyst, Luis Felipe.
Together, we will walk you through our financial and operational results, highlighting the numbers from this past year, which has been extremely important for our company and representing a new milestone in this next phase of our company. We will begin with the main highlights of 2024. Slide four shows us that the total enrollment in our undergraduate distance learning programs, EAD, which is group 13.3%, with a highlight on the 10.6% increase in the enrollment of engaged students. This clearly demonstrates that the competitive advantages of our brands are being reflected in the choices of our students. In other words, the students choose us because of what we have been building in terms of quality and innovation. The consolidated net revenue grew 9.1% compared to 2023, driven mainly by the solid performance of our distance learning programs, 7.5%, which remain our main source of revenue.
In addition, we have the medicine segment that saw a 12.5% revenue increase and a continuing education segment, a key growth front for Vitru that evolved practically 34% a year. Vitru's adjusted EBITDA reached BRL 793.9 million in 2024, a growth of nearly 10% in relation to 2023, with a slight expansion in the EBITDA adjusted margin, which totaled 37.1%. This result is in line with the guidance that we disclosed at the beginning of the year and reflects our commitment to delivering high-quality products to our students, allied with strong operational efficiency. The adjusted net income grew 15.1% in the year, totaling BRL 300 million. This growth was driven by a strong EBITDA delivery and also by the anticipation of a key corporate reorganization of simplification project.
In this quarter, it allowed the company to recognize deferred tax assets related to its operations. Gabriel Lobo will go into more detail on that project later. Another important highlight of the year was our recurring free cash flow generation, which reached BRL 157.5 million, an impressive 25.7% increase. Generating cash and staying on our deleveraging path is our major focus at this moment. We had a great year in that regard, especially in the second half with the revision of several strategic financial revisions by our financial area. These strong results show that we remain firmly aligned with our strategy and reflect Vitru's strength with sustainable, high-quality growth, even in a challenging macroeconomic and political landscape that required our teams to adapt. But once again, we achieved what we set out to do.
I'd like to take this moment to recognize our team and all our leaders who work day by day to create a positive impact in the lives of thousands of students. Moving on to slide number five, we see that we closed 2024 with 744,000 students enrolled in our distance learning program, already accounting for the new harmonization criteria for our student base. For a more accurate comparison, if we exclude 85,000 non-engaged students from 2023, the adjusted base in the period would be 718,000 students, representing an annual growth of approximately 3.5%. This performance in 2024 was within the company's expectations, as we explained throughout this year. Since the first quarter of 2024, the non-engaged students from UNIASSELVI have no longer been included in this total student base.
Today, we are the largest distance higher education company in the country, and we remain very confident in the potential of the segment. It will continue to be a pathway to quality education in a country like Brazil, with significant income inequality, political complexity, constant inflationary fluctuations, and as well as quick technological advancement that contributes to, as we often say, the deep Brazil, allow it to evolve and develop. It's important to note that currently, the distance learning is more than 97% of our total student base, so it means that we have here in-house a statistically significant sample of our target audience, the interest of our target audience in this learning model. Continuing with our presentations on slide number six, we highlight on the left-hand chart the growth of 13.3% in total undergraduate distance learning enrollment during the second half of the year.
This intake already reflects our new students' activation criteria. In this sense, it is worth noting that the enrollment performance for engaged students was positive in the second half, showing an increase of 10.6%. Our enrollment growth is aligned with our expanding national presence. We already have a strong presence in every state, and our network of learning hubs grew by nearly 11% in 2024. We ended the year with 2,707 hubs across 1,437 cities in Brazil. Those are meaningful numbers that make us proud of the impact we have made on so many families around this country. We continued to grow in many regions, expanding more densely populated areas and with many opportunities for expansion for both our brands. It proves our capacity as Vitru of executing our strategic plan with excellence.
Now, moving on to slide number seven on the left, we see that the course mix and enrollment remains consistent with previous periods. Many courses like pedagogy and similar fields, along with technological programs, technology programs, continue to represent a significant portion of our enrollments. Those courses have a lower average ticket price, but year after year, Vitru has managed to maintain its consolidated average ticket at healthy and sustainable levels. This demonstrates the success of our pricing strategies, even in an extremely competitive environment. It is important to highlight that ticket performance is shown on the right-hand chart.
In the second half of the year, we saw a 9.5% increase when compared to the same period in 2023 with a CAGR of 5.8% over the past three years, an increase that went above inflation, which confirms the advantage of the differentiation of our products and our positioning as a quality player in digital education. We believe the key way to pricing strategy success lies in attention to product quality and the retention of high-performing students. The quality of students entering our base is a key indicator to see our business health, ensuring long-term sustainability. Also worth noting that in 2024, the ticket evolution also reflects the changes in our student activation criteria, with fear free and discount intake policies, which resulted in a more robust net revenue, a student mix healthier and a lower PDD at that provision.
Now moving on to slide number eight, shows that Vitru consolidated net revenue grew by 9.1% in 2024. This performance was primarily driven by the continued expansion of our distance learning program, which grew 7.5% and remained the most relevant segment for Vitru's growth. But also talking about how much of the market that Vitru holds, that is over 20% of private higher education students, a leading position that reflects the strong performance of our brands. Looking forward, we believe that distance learning and the graduate segment in Brazil still has room for sustainable growth. Brazil is a continental country, and looking from a structural perspective or even secular perspective, we all know that quality distance education is the solution for closing the gap in higher education access in Brazil. Segment is already consolidated as the students popularize, becoming more digital and tech driven.
Time passes by, just like in many other sectors of the economy. As the regulatory environment becomes more transparent for the market, the stakeholders will be more confident in regard of the unmatched opportunities in our segment. Evolution continues, in our medicine segment as well, where we emphasize the advantages of our course that comes from methodology to structure, the structure of the city of Maringá. The year revenue grew 12.5%, a fruit of a combination of the maturation of the Corumbá unit with a good performance of the average ticket to product. Here I'd like to focus on the unit of continuing education that is formed by technical courses, professional courses, and also the post-graduate programs. In this segment, we have an extraordinary opportunity, many opportunities, thinking about the future of the company. Currently, the country graduates 1.3 million university students per year.
It's a potential target audience for the post-graduation courses that in addition to the other professionals that constantly seek for improving their knowledge through new specializations and academic training. The students that came from high school, the numbers are also significant. Almost 8 million students, young, above 17 years old, that are in the brink of entering the job market, and through the technical and professional courses, they find an entry door to the first job of their dreams. We keep growing in high rates in the continuing education segment, and we're looking at the segment, investing and thinking about this future avenue of growth. We imagine that this segment, in the near future, may represent 20%-25% of the revenue of our company. Let's move on to slide nine. I'll now invite Gabriel Lobo to provide further details on Vitru Educação's financial figures.
Thank you, William. Well, good morning everyone. I think William Matos has already covered the macro view of our revenue line, but I'll bring a few more detailed points here in slide number nine. We present a breakdown of revenue by segment, showing both quarterly and annual perspectives. We grew in this quarter, 4.2% in our consolidated net revenue and 9.1% a year. With the exception of the continuing education segment, which William Matos rightly highlighted as a key growth avenue, which grew 32% in Q4, we faced a slightly more challenging quarter in the distance learning segment, grew 4.5%. Medicine performed very well throughout the year, but in the fourth quarter, the performance was flat. This was mainly due to a one-off adjustment in Q3 2023 related to the accounts receivable control, in the year before, which inflated the comparable basis.
If we excluded that effect, we'd have seen a year-over-year growth in the medicine segment as well, consistent with the 12% annual growth achieved in 2024. On a full-year basis, as William Matos mentioned before, all segments performed very well, demonstrating the resilience of our brands, UNIASSELVI and UniCesumar, across various segments. We have an active basis of students. We talked about that over the past few quarters. We talked a lot about the qualification and engagement performance in the space, and we clearly see those efforts delivering results in 2024, and we expect this to become even more consolidated throughout 2025. Moving on to slide 10, we provide more detail on our gross margin. It's a key line in this quarter. We've previously mentioned the gross margin under the slight short-term pressure due to the ramp-up of the hybrid health programs.
However, looking at this quarter isolatedly, it might appear a bit concerning, and the purpose of this slide is to provide some reassurance regarding that line. Throughout 2024, we have improved several internal processes, especially how we allocate provision for contingencies that were previously fully concentrated in G&A. Thinking about aligning the cost origin with P&L allocation, we decided to start allocating contingencies based on the scores. For example, for everyone to understand, if we have a labor-related demand connected to direct workforce activity, it will now be booked as cost of goods sold. That's the adjustment we made in Q4. If it comes from the back office staff, this provision will remain under G&A.
From now on, this new allocation logic had a one-off impact this quarter, and we will see more about that a year from now up to the moment we could normalize the comparable base. But the focus here is to allocate the expense in the correct. In Q4, I think it's important to reassure that the delta from this reallocation amounted BRL 13.3 million compared to Q4 2023 to Q4 2024. Without this effect, the gross margin drop would have been way closer to 2.5 percentage points instead of the reported 5.3 percentage points. This 2.5 percentage points drop reflects a genuine provisional pressure, primarily related to health courses. Here we have the older students beginning to incorporate the cost structure, including the in-person practices. On a full-year basis, we delivered a growth margin of 69%, a decline of 130 basis points compared to 2023.
I'd like to remind you that the same effect of reallocation also includes in the picture of this year. Additionally, when we see the picture of the year, we see a slightly more pressured revenue in this quarter, which had a de-leveraging effect costs remaining. The revenue was slightly lower than we expected, and because of that, we had a more pressured margin. Looking ahead to 2025, this is the most important point here. Our expectation is that gross margin will stabilize, remaining flat or slightly below 2024, as hybrid courses cohorts continue to mature. I'd like to remind you that most of those courses were opened in 2022 and 2023. As they mature, they naturally carry more costs related to that. From a business model standpoint, it's not a point of concern. It's the basis of our business.
On slide 11, we bring a breakdown of the company's costs and expenses. I've already commented on costs, but I think it's important to put some color on the combined cost and SG&A, the global SG&A. The left-hand chart shows that the total costs and expenses grew 7.8% over a year. We continued to invest in the company's internal structures, and we keep strengthening operations to support future growth. As William Matos mentioned before, we were operating with a very lean structure in the recent years. We've now been investing in people, infrastructure, and process optimization. Naturally, this leads to more pressure in the short term, but always at level below revenue growth, which is what matters the most. We see net revenue growing 9.1%, while total costs and expenses grew 7.8%.
It means that even with this investing scenario, we deliver operational leverage, which at the end of the day, translates into margin growth at that level. As I talked about in the slide before, showing in the table on the right, excluding the contingency reallocation, cost variation would have been only 0.6 percentage points year-over-year. Regarding SG&A, I think it's worth highlighting the solid cost control in Q4. Despite the more pressured revenue scenario, the natural would be seeing some operational deleveraging. But on the contrary, we managed to keep SG&A in check, maintaining a percentage of revenue compared to previous. Finally, I think the key highlight here for both the quarter and the year is our PCLV or the famous PDD. That's one of the main highlights for this moment of the company.
We ended the year with a provision of BRL 232 million in the year, reflecting a significant nominal reduction compared to 2023. That's nearly 3 percentage points drop. When we look at 2023 as a percentage of net revenue. In other words, the PCLV of the company dropped from 13.4% of net revenue in 2023 to 10.8% in the net revenue in 2024. This improvement was driven by two main factors. The first one, as we discussed it extensively before, the improved quality of our student base resulting from the revised activation criteria introduced in the new practices of activation that we introduced in January 2024. That really brings to our basis a more qualified student that is less likely to generate default on PDD. Secondly, better management of our accounts receivable.
We know that we had many opportunities, and we started to capture part of those opportunities along 2024 with a better management of the default in PDD and better processes, more connected to our students. We see further, more opportunities in the future. We've been integrating some legacy systems between UNIASSELVI and UniCesumar, and the last phase of integration connected to this combination between UNIASSELVI and UniCesumar will bring even more efficiency in this journey of credit and collection. So those upgrades are already showing results, and we expect that they're even stronger in 2025 in comparison to 2024. Moving on to slide number 12. We have the adjusted EBITDA bridge in the year, as William briefly mentioned earlier.
We're at BRL 793.9 million in 2024, almost 10% growth in relation to 2023, and it translates into an EBITDA margin of 37.1%, a gain of 30 basis points, 0.3 percentage points compared to the same period last year. It's important to emphasize that as William said before, we had provided a clear guidance to the market of 36.5%- 37.5% of our EBITDA margin. We delivered above the midpoint, successfully hitting our original guidance. The strong EBITDA performance was driven by the top-line growth and the performance of the company along the year and significant improvement in our PCLV. That is, we grew our student base, we increased the quality of the student for that base, and that brought us better students and helping ensure healthier margins and preserving long-term capability when we think about the future.
Moving on to slide number 13, we show the company bottom line, the adjusted net income for the year. We reached the important milestone of BRL 300 million in 2024, representing 15.1% growth year-over-year. It's crucial for us to detail the movements in our new EBITDA lines, particularly in Q4, which had material impacts on our financial results. First, it's important to highlight that in the financial results slide, we had a number of non-recurring impacts and one-offs that at the end of the day, we did not adjust from net income. That's very important to highlight because we executed in the second half.
This agenda started in the second half but extended out to the fourth quarter when we included a debt reprofiling system by the end of the year, and we changed it in the way we account for financial expenses following the issuance of the fourth and fifth series of the debentures that were issued in the middle of the year. The fourth was at the end of the first semester and the fifth at the end of 2024. Essentially what we did was the full prepayment, the integral prepayment of the first and second series of issuances. Going forward, we started to account the expenses using the amortized cost method. We start to do the real interest accrual for the period. The real interest that we could see at that moment, we accrue in our financial expenses.
We don't do the other method anymore that brought uncertainties and lack of visibility for our accountable results. Our point here is to have something way more controlled and predictable when we look at the future. Another highlight was replacing expensive debt with cheaper, longer-term debt. In Q4, we issued the fifth series of debentures totaling BRL 1 billion at CDI + 1.75%, pertaining debt that carried rates above CPI over 3%. This will naturally bring some economy when we look at the cash. But when we look at the future, thinking about results, we'll have a company way more stable and healthy when we look at the P&L statement. Another line that's worth detailing is income tax and social contribution. We have an effect here that's very important. That is, we recognize the deferred tax assets at the Vitru Brasil's holding level.
We'll include it as a highlight of the quarter, but I think we can go deeper when it comes to technical aspects. Both in 2025 and in previous semesters, we did not recognize the deferred tax assets. Since the end of 2023, the company was not recognizing that, but from now on, we started to recognize deferred tax assets because we will start a project in 2025 that is the reorganization and simplification of the societary profile that will simplify the tax shield from financial expenses that are currently allocated at the holding level. We have Vitru Brasil and the two branches, but 100% is allocated at Vitru Brasil, and we have in this a sponsoring entity, a low volume compared to the total revenue of the company. This project is still on track and will be concluded up to the third quarter of 2025. This is our expectation.
It's a very complex project involving several stakeholders of the company, and it captures value from the moment that we go live. From a bias of result and looking at cash, we start capturing cash from the moment we execute this reorganization. It's worth highlighting that for adjusted net income, we excluded the positive impact from previous results. We left only 2024. Moving on to slide 14, on the left-hand table, we show that we ended the year with strong cash generation. Cash conversion of the company, the operational cash conversion, surpassed 62% for the year, an increase of nearly 8 percentage points compared to 2023. Recurring free cash flow after CapEx and debt service reached BRL 167.5 million for the year, an important evolution of 25.7% versus 2023.
This performance shows, obviously, Vitru's ability, as a company, to accelerate deleveraging in the short term, opening room for potential events in the future, like dividend distributions. This is the main goal here. We position ourselves as one of the highest cash flow yields in the industry, and it might allow dividend distributions, recurring distributions from 2025. We don't want to obligate ourselves to do it, but if the deleveraging agenda happens as we imagine, we will start distributing dividends from the next year on. On the right-hand side of the slides, we show Vitru's CapEx. CapEx of BRL 135 million in 2024, which, higher than previous year in nominal terms, remained flat as a percentage of net revenue. Most of those investments are concentrated regarding fixed assets, when we look at the statement, including works on the Corumbá and campus in Ponta Grossa, Arena, the structure of UniCesumar.
Important new acquisitions were made, like new labs aligned with our strategy to strengthen the hybrid courses. Finally, moving on to the last slide, we present our debt and leverage metrics. Vitru ended Q4 with a net debt, excluding IFRS of BRL 1.9 billion. The net debt-adjusted EBITDA ratio closed the year at 2.6x, comfortably below our covenant of 3x . On an annual basis, we reduced leverage from 2.9x at the end of 2023 to 2.6x at the end of 2024. So we reduced 0.3x year- over- year. It's important to highlight that we recognize that future interest payments as liabilities due to the prepayment of earlier debentures. We recognize that the delta that was like in model of market and the effective payment that we will perform in December of 2024.
We can see at the slide and in the chart that our descendant trajectory of leveraging, a consequence of our free cash flow generation. One of our biggest commitments in our strategic agenda executed for the year of 2025, that is to the downwards leverage trend, through operational performance and opening the door to new value-generating initiatives for all shareholders. It might be regarding dividends or repurchase of stocks or movements of profitability when we think about capital allocation in organic lines to keep the growth healthy, the future. Just to close that, we find our debt amortization and interest payment schedule, which clearly shows that our debt maturity profile has been extended with the no commitment in short term. In a challenging macro environment with the recent spike in interest rates, we delivered meaningful progresses in the agenda of 2024.
Our average debt maturity increased from 2.8 years in 2023 to 3.8 years in 2024, like one year extension. In addition, our average cost of debt dropped from CDI + 2.9% at the end of 2023 to CDI + 1.99%. We see room for improvement. We will always keep following the stream, but I conclude my presentation for it to open to the Q&A session.
We will now begin the Q&A session. I would like to remind you that in order to ask your questions, you should click the Q&A icon at the bottom of your screen and then type your question to join the line. Once your name is announced, a prompt will appear on your screen asking you to enable your microphone. Please accept the prompt so you can ask your questions, and we kindly ask you to address all your questions at once. Let us move on to our first question. It comes from Lucca Marquezini from Itaú BBA. Lucca, we will now open your microphone so you can ask your question. Please go ahead, Lucca.
Good morning, everyone. Are you okay? I have two questions. The first is regarding the intake on the first quarter. If you could divide and regarding the trends that we could follow regarding volume and protective scenario and environment for the pricing. Secondly, it was the marketing expenses we saw solution on this Q3 and Q4. Looking at 2025, the commercial policy, is it a benchmark for the year? It would help us. Thank you.
Hey, Lucca. Thank you for your question. I will answer that. Gabriel, please feel free. Sure, Lucca. It is a big challenge for 2025. We can see clearly a scenario that today is way more competitive or more challenging when it comes to intake. When we talk about Q1 2025, everyone could follow the call, other companies, and you have some guidance from some negative results. We can see that because of this very challenging scenario with lower income, increasing interest rates.
It is a high level of uncertainty that reflects at this great challenge we have here that we have been living in this quarter. But we have to remember that Vitru comes from a strong growth in 2022, 2023, and 2024, which brought us a very big basis. Our comparable basis is so big. It is also challenging that it is a challenge to keep growing at those rates.
In 2025, if I may say, we aim at growth mid-single and the intake over the biggest basis in the market. It shows the capacity of Vitru as always being a company that grows above the market average when it comes to distance learning education. Even in this very challenging environment, we keep growing and keeping our differential. Regarding the ticket, we also have this challenge, and it is a reality, as I said before, the challenge environment. When you ask about marketing, Lucca, we keep the same percentage aligned with revenue. Last year in the first quarter, we had a high investment that was predicted. But this year we will keep that aligned with what we have been performing on the percentual regarding revenue. Thank you.
Thank you so much.
Our next question comes from Flavio Yoshida from Bank of America. Flavio, we will now open your microphone so you can ask your question. Flavio, please go ahead.
Good morning, everyone. Thanks for the opportunity. I have two questions from my side. The first is regarding PDD. We could see that PDD was a positive highlight in the results. But on the other hand, we saw that the covering of receivables that was 8% in 2023 went to 42% this year. I would like to understand the rationale behind that. Are we going to work with this covering or we will go back to a higher coverage? The due bonds also decreased, so why?
The other question you mentioned before is regarding costs. They have been increasing, especially with tutors and professors, and part of it is the hybrid, the maturation of the hybrid courses, as you said. But looking forward, this pressure will keep going, and besides the maturation of hybrid courses, was there any other effect on the costs, looking forward, just to understand. Is that only connected to the hybrid courses maturation or you are preparing yourselves for a new regulatory scenario?
Good morning, Flavio. Let me take this one. The first question regarding PDD. I think it was important to highlight that it was a strategic agenda of ours. It is like to qualify the student bases that entered our funnel. This agenda was perfectly executed. We had courage to face the market, because sometimes the market flees from the movements that may seem hard, because when we look at the comparable basis, we saw the free student space.
It is not easy to make a decision like that, but it was the correct thing, the right thing to do, and this is the best way to steer business. Regarding PDD, we talked about that briefly, but in spite of looking at a 8% to 42%, I do not know if you took into consideration the discounts. Up to 2023, we had the anticipation of receivable every quarter, but we stopped doing that because we understand that this is not a good way to work our capital structuring. Capture capital cheaper and longer than a short-term agenda anticipating receivables. We are very clear about how much we anticipated in the previous quarters, and it was something the market, as we would like. Look, the market does not put so much light on that.
But I think we have to see the operational cash, real cash companies, and I think we should look at that this way. When we see the agenda in 2025, we will not anticipate receivables. It makes no sense. We are a very healthy business. But when we look at PDD, just revisiting the good point here, we looked at that in an inverted way. It is on the contrary. It is not a bit of concern. We have been putting a series of strategic actions in place as I said in the call, in comparison to the last movement, by the integration of the legacy systems connected to the students. It is very important to observe that we align the legacy systems of UNIASSELVI and UniCesumar. We take from UniCesumar to UNIASSELVI. That is the model for what systemic reason, the best model.
And we understand that using all the technological apparatus, credit and collection, and everything tends to reverberate on a better PDD for the future. Our default levels are decreasing, and we see that there is room for improvement for the future. But answering your second question regarding costs, this was our yellow flag in this quarter. We tried to bring in more color on that. But here we have two effects, and we talk about that in the call and in the releases. We have a change in the allocation. So up to the third quarter, we used to allocate on contingencies, the provision for contingencies in the line of SG&A consolidatively. But now we started to allocate that based on demand, and I could explain that briefly during the call.
We used to allocate everything in SG&A, and I do not think that is the right way to look at the business. We need to look at the gross margin as it is. So we changed it. So when we see the recurring, we had a cost intake that had been higher before, and the revenue was a little challenging. So it created some pressure on the gross margin and cost percentage points over revenue. So we see that our gross margin will be flatter for 2025. We might see some pressure in gross margin, nothing sensitive. It all depends on our revenue levels. But we will work. And if we do not see the revenue the way we expected, we will look for solutions that do not affect the profitability of the operation. So we predict the gross margin in a flat C, and we hope not to be.
Thank you, Gabriel. It was clear.
Our next question comes from Leonardo Revezan of Quantitas. Leonardo, we will open your microphone so that you can ask your question. Please go ahead. Leonardo, you may proceed.
Hi, everyone. Can you hear me? Yes. To understand a little better, as you said before, about the simplification, the society simplification. I would like to understand that a little better. How is it going to happen? You talked about accounting gains, deferred tax assets. Can you quantify that, please?
Thank you, Leonardo. Well, I will try to bring some details during the call. But what does this movement represent? Because it is a very strategic movement for 2025, and I think it is good to put it into context here. Today we have a societary structure that is, from the operational standpoint, not as efficient as we could be.
We have Vitru Brasil as a holding or an umbrella holding. It is almost a non-operational holding because it brings a low volume of revenue in the agents. And we have two subsidiary companies below that are the operational subsidiaries that are UniCesumar. So today, 100% of our debt is at Vitru Brasil. And we would generate. You could see that previously, losses after losses in the structure at the appeal of the sponsoring entity. On the other hand, you could see clearly paying income tax when it comes to subsidiary structure. The subsidiaries pay tax income, even with all the subsides that we have in the industry, PROUNI, et cetera. But what we are seeking here is the operational simplification.
We take part of the operations from the bottom to the top, and with that, we reach our goal, that is to simplify operations, have a more aligned operation, and of course, capture the value of carrying in our statements a bigger debt. Today our tax shield is not a shield. We do not have any protection when it comes to tax payments, when it comes to the financial expenses. In the future, we are going to start using, after we execute the plan, we will reduce a lot of payments, tax income taxes due to this upload to Vitru Brasil. This is not our goal to reach zero, but we have a premium at Vitru Brasil. We have tax losses that accumulated, so from cash flow, we start using an important volume for a reduction of income tax in the future.
This is the goal of the operation. It is not only about taxes. I am not talking about the taxes reorganization. This is a consequence of making the operation leaner and much more well-structured for us in the future.
Thank you.
The Q&A session is now concluded, and we would like to invite the company to share its closing remarks.
Thank you everyone for the participation, for the questions. I would like to close it saying that, regarding the whole year of 2024, not only the quarter that we reported, Vitru has undoubtedly moved forward in its own trajectory. Company has been consolidated as the leader, its position as leader in distance learning, and we delivered the growth agenda year after year. We continue to establish ourselves as one of the major players in the industry and increase the market's confidence in our ability to generate value as Vitru.
It is also worth highlighting that, as a company, we will keep honoring the vision and the purpose of the brands that we carry, UniCesumar. To us, to keep delivering the education of quality is our main call. For all the students that believe in each one of us, I would like to quote the British economist, Arthur Lewis, that said that, "Education has never been an expense, it has always been an investment guaranteeing returns." We, as Vitru Educação, we truly believe that. In our case, the return is always as we like to say, in those moments with the markets, it is always twofold return. First to the students who unlock new, open new doors and new opportunities for them and their families, for them to dream about a different future.
Second, to our investors who have placed their resources in a serious company, efficient, innovative, resilient, that seeks to be ahead of its time. We will not miss the point here. I would like to say that we are confident in the company's ability to deliver another year of quality in 2025 with the same level of commitment, with a responsible and sustainable growth for the year. Even if we have to find alternatives to absorb the occasional challenges that are external, that come from the external world.
I would like to finish that and remind you that Brazil is home to millions of young people who still have not accessed higher education of quality. There are other millions of young people who need technical or vocational training to open the doors of the job market. This is our purpose, our commitment, and we will keep working every day to deliver that to the market. Once again, thank you for the time we have spent together here. Best regards to everyone.
Vitru's earnings release video conference for the fourth quarter and full year of 2024 is now concluded. The investor relations team remains available to address and answer any further questions or inquiries. Thank you all for your participation, and have a great day.