Good evening, ladies and gentlemen, and welcome to Vitru's first quarter 2022 earnings conference call. All participants are on a listen-only mode now. Later on, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this call is being recorded and will be available on Vitru's IR website. Now I will introduce the host for today's conference call, Mr. Carlos Freitas, Vitru's CFO. You may begin.
Thank you, Claire. Good evening, everyone. Thanks for joining us today. It is a pleasure to be here with you all for the release of our fourth quarter 2022 numbers. Here with me are Pedro Graça, our CEO, Maria Carolina Gonçalves, the head of our IR department, and Raquel Suzaki, Luiz Felipe da Silva and Eli Crespo Junior, also from our investor relations team. A slide presentation will be part of today's webcast, which is available at our investor relations site at investors.vitru.com.br. Before we begin, I'd like to make note that as declared in page two of our presentation, safe harbor is in effect for this call. Now I invite you to go to page 5 of our presentation, which I trust you all have in front of you.
Now on page 5, we have the main highlights of this quarter. Again, the number one, as you know, the Antitrust Authority of Brazil, CADE, has approved the business combination with Uniasselvi that we announced in August of last year. We are still in the middle of the 15-day additional waiting period for the transaction to close, which is going to finish tomorrow . The 15-day period will be due tomorrow on seventh of May. After that, on Wednesday morning, we're going to tell you the day in which we're going to invite you for a new conference call and to define the date of the closing.
Still on page five, we reached almost 282,000 digital education students, which was an important landmark . Our intake in the first quarter of this year increased 36% in our core business, which is digital education undergraduate. This was, I'd say, a very important growth, 36%. In the calendar quarter, we don't expect this number to be the same level for the full intake cycle. As you know, last year the whole process was much more back-ended, and then we go back to this. We still expect the intake for this current intake cycle to be around mid-twenties%, higher than what we had last year. On page six, not only we grew a lot, but also we increased average tickets in our digital education segment.
We increased 8.5% on average, comparing the first quarter of this year to the first quarter of last year, which reached more than BRL 300 per month per student, which shows and confirms the resilience of our model and how actually we are positioned different than the other competitors. With that, the net revenue in our core business grew around 30% this quarter compared to the first quarter of last year, while the overall consolidated net revenue was 18% higher than what we had last year. Regarding margins, our margin was stable at 26.7%, sorry, this quarter, which means that our EBITDA grew again 18% compared to what we had last year.
Finally, regarding adjusted cash flow from operations, we had an increase of 20% more or less, reaching BRL 47 million in the first quarter of this year, which means a cash conversion of 115%, again higher than 100% that we had last year. Before we jump into the numbers of this first quarter, let us just remind what we have been doing, what we have been delivering over time on page eight. Just quickly, as you know, we had our IPO in September of 2020. Since then, we have been expanding and ramping up our current hubs. In the last 12 months, we went from 62% of students in expansion hubs to now 70%.
We reached around 980 hubs, increase of 240 hubs more or less in the last 12 months. A big chunk of them in the Southeast. In the Southeast, we have now 258 hubs. Today already our second biggest state in terms of hubs is São Paulo. We are delivering on what we said, which was that we were going to go in the Southeast. Also expanding course offering. Again, nursing was a big revenue contribution this quarter as it was in the first quarter of last year, and we are eagerly waiting for the next authorization to start offering psychology and later on law.
Finally, inorganic growth through UniCesumar, which, as you know, is a major transformational deal for the whole sector. On page nine, more detail on one part of our current hubs. As you know, we are still maturing most of our hubs. More than 9% of our hubs are still maturing. Those are the hubs that were opened the last 2, 3, 4 years. The current maturation index of these hubs is around 37%, which means that if we do not open any more hubs , we still going to grow in these hubs more than 160%, almost 200%. This is growth with limited execution.
This is the most important driver of growth going forward for Vitru is the maturation of the hubs we have so far, which already represents 70% of the sales of all our student base, that we have today. On page 10, the overall expansion of our hubs and student base throughout the country. As you can see, in the last 12 months, we have been growing throughout the country, not only in our, I would say, incumbent region, which is south region of Brazil, in which we grew 16% in the last 12 months. Also, in the center with almost 40%, almost 40% as well in the southeast to 25 to 44% in the north of the country. We are growing throughout Brazil as we have been doing in the last years.
We increased as well by 32% the number of hubs in the last 12 months. Again, the most important region in terms of number of hubs is now the Southeast with 258 hubs. On page 11, just to wrap up again, new courses, we have been offering nursing, and we are eagerly waiting for law and psychology, which are going to be another very important revenue contributors for future going forward. On page 12, just another reminder of what UniCesumar is. They reached 1,000 hubs in December of last year. They have 1,700 medical students, and wrapping up, they are going to reach around 2,500 students in medical education, up from 26 or 27.
They had a 30% EBITDA margin in 2021, with BRL 290 million in just EBITDA and a 32% figure in number of students. This is a major company that we are combined with. As I said, we are going to close this deal very soon once the 16-day period from CADE expires, and we are ready for it. We have gone through a full-fledged preparation for the integration. Once we finish the 16-day waiting period, we are going to invite you all for a new conference call with more details about the integration, about UniCesumar, and of course, the synergies that we expect to have from the combination.
On page thirteen, as you know, we are going to maintain both brands because they do tap into different markets. They attract different people. Here on the right part of the slide, we have updated the chart with the latest figures from the ENADE census, in which we have been growing again more than the market, have been gaining market shares. The whole market has been growing at around 21%. We, within this growth segment, we have been gaining market share on a yearly basis. Now in Estácio plus into the north, we have around 20% of the markets. This is levered on our, I would say, focus and technology and reputation.
On page fourteen, you can see that when you see the public evaluation from our clients, the students, when they evaluate our apps, for example, which go from up to 5, as you know, either in Play Store or App Store, the average rate in the market is 4.7, while the one in Estácio is 4.6, which are the highest in the markets when you see the whole universe of academic apps in Brazil. Also when we look at UniCesumar to see the public reputation of a brand and how we are perceived by our customers, both in Estácio and UniCesumar have the highest grades among the different players in Brazil.
Now on page 15, we start talking about our numbers for this quarter. We grew by 26% in our digital education undergraduate student base, which is 332,000 students, and overall growth to 382,000 students in digital education, including graduate courses. When you see our core business in the intake, as I said, we grew 36%, which in 170.9 thousand students in the first quarter, the first calendar quarter of this year. The intake is still going on. We still have multiple weeks in intake for this current year. What we do expect is, I would say, slightly smaller intake growth this year.
As you remember last year, the whole MM process was delayed, so the whole intake process was much more back-ended than what we had this year. The compression base, the curve, the profile is different. Anyway, we expect to have mid-single-digit growth in intake in the current intake cycle this year. On page 16, just to illustrate that growth has been spread throughout our cohorts. As you know, we define cohorts as the group of hubs that were opened in a given year. In all cohorts, we have been growing as usual. This maturation of the hubs is an important piece in our growth engine, and in fact the multiple driver for our growth going forward.
We expanded from 272,000 people to 342,000 students enrolled as of the end of March of this year. On page 17, we start with financials. Net revenue, as I said, growing at 18%, reaching BRL 178 million in the quarter. A slight decrease in the gross-profit margin, and I'm going to explain this a bit later to you. EBITDA with a stable margin at 27% in this quarter. When you see the performance of net revenue per segment on page 18. As I said, a 30% increase in our core business, digital education undergraduate, which now represents 88% of our overall net revenue.
We had a decrease in continuing education and on-campus undergraduate business, which I'm going to explain to you a bit later. Still on our core business, page 19. A 30% increase in net revenue and a, in fact, 8.5 or 9% increase in average tickets, which is more than BRL 300 , this quarter. This is an illustration or a confirmation of how, let's say, resilient and different we are positioned in a different way in the market, and we have been offering a hybrid academic model which is different from most of the peers. We are seeing overall in the market a much more, let's say, rational commercial approach from all the peers.
Apart from that, we are growing our tickets. We grew about 8.5%. Remembering that last year, in the second quarter of last year, we grew 6%. In the second quarter of 2020, we grew 4%. We are expanding average tickets slightly below inflation, but expanding a lot the student base. Important to highlight that most of the increase in tickets is not due to a mix effect. I mean we all know that there is a mix effect since we are increasing the weight of our student courses, mainly health and engineering, which has an average ticket of a bit more than BRL 400 per month. Those courses amounted to roughly 21% of student base in the first quarter of last year, and now they represent around 25%.
In all of this 8.5% to 9% growth in average tickets, two percentage points is accountable to this mix effect. Which means that 6.5% is due to a apples-to-apples comparison . Anyways, we expect the relative weight of student courses to keep improving over time, not only because of a higher penetration overall in our current courses, but also, as I said before, the near future with psychology and law. On page 20, we have a decrease in revenue of continuing education and on-campus education. Regarding continuing education business, in the last quarter, this has been negatively affected by the reduction in the average duration, the average length of our graduate courses.
This is a market trend which is in fact not only Vitru, but several other players, by the way. Anyway, it's important to highlight most of this shift in our case is over. The reduction has taken place throughout last year. We do expect the momentum shift is over, and net revenue this quarter was already higher than what we achieved in the fourth quarter of last year. We do expect that the net revenue in the second quarter of this year shall be higher than what we achieved now in the first quarter of this year. Looking with a more medium-term view, besides revenue, of course, in this segment, our continuing education business includes technical courses and professional qualification courses.
We believe this has the potential to be quite important in the future, an important additional source of revenue for us. It is part of our overall strategy to extend complementary offerings throughout the student academic journey. Regarding our on-campus segment, our intake in this 2022.1 cycle was 11% higher than what we had last year. That was not enough to avoid the overall reduction in base and net revenue. We believe that the post-secondary on-campus business has become a trend, becoming a secular trend, although we did start a bit low this year, coming from quite low comparison base. Now jumping to page 22. Going into detail about the components of our EBITDA.
Cost of service is slightly higher than what we had last year. Two percent of net revenue, higher than what we had last year. Basically for two reasons. First one was the lower, slightly lower contribution of continuing education, which is a higher margin business. In fact, the higher one we have among the three businesses we have. Also we had last year a BRL 3 million cost recovery that was one-off, which represents around 2% of our revenue. Were it not for this one-off effect, our gross margin would have been quite similar to what we had last year.
When we look at G&A, G&A was more stable to what we had last year, which means that we decreased the G&A as a percentage of net revenue from 8.6% to 7.1%. We are keeping Vitru as lean as possible to be and to remain as agile, and as fast as possible as a company. On page 23, selling expenses and PDA. Selling expenses was slightly higher than what we had last year, increasing 1.4 points compared to what we had last year. The CAC, the cost to acquire a new customer decreased 9% than what we had last year. We increased 24% the cost, of selling expenses, but the intake was much higher than that.
The CAC was slightly lower than what we had last year. For PDA, we decreased PDA in two points from 16.6% to 14.5%, which was a function of a slight improvement in collection. Our average collection time or number of days was slightly lower than what we had last year. With that, we were able to reduce a little bit 2% to 4.6% the PDA expenses. We do believe that going forward this year, the overall PDA for the whole year shall be at least every year and definitely this year shall be slightly lower than what we had last year.
Now on page 24, for net profits, net income, a 66% increase in net income, consolidated net income, reaching BRL 26 million this quarter. Not only because of higher EBITDA in the quarter, but also because of higher financial income this quarter. Finally, regarding adjusted cash flow from operations, we reached BRL 37 million this quarter, increase of 10%. Our cash flow conversion was 116%, which means that we have been again generating cash with not only our volumes, our revenues and EBITDA, but also our cash flow generation. This number here is before CapEx. After CapEx, it was around BRL 10 million this quarter.
This would have been around BRL 36 million anyway, important cash flow generation in the quarter, in line with what we have been doing in the last quarters. That was it from my side. I think that we have delivered a very nice quarter. Now I'm going to open for questions.
If you would like to ask a question, please press star then one. If your question has been answered and you'd like to remove yourself from the queue, press the pound key. Our first question comes from Vitor Tomita with Goldman Sachs. Your line is open.
Hello, good evening, all, and thanks for taking our question. There are two questions from our side. The first is if we should expect selling expenses falling year on year in the second quarter, given that this year's intake cycle was more concentrated in the fourth quarter. Our second question would be if you are considering that smaller M&A deals, if they could be a potential option for increasing your portfolio in continuing education. Thank you.
Okay, I'm going to start with the second one. Yes, you're fully right, Peter. Thanks for your question, by the way. Looking forward, we are going to resume M&A activity. Before the deal with [uncertain] , we were already looking at some potential deals to complement our portfolio, either with graduate courses, either with what's called free courses, either with preparatory courses for jobs.
The idea is that virtually we have, let's say, a longer relationship with the same customer, not only for example doing four years for undergrad, but also after the person leaves high school and engages in preparatory courses to get the first job and then having an undergrad course and then grad course and then a lifelong experience overall for the person. Yes, looking in the near term, we are going to look for more M&A opportunity, including to reinforce our graduate business. For the first question, I could not hear you. I think that you were mentioning about the intake in the second quarter, right?
Actually, the question was about selling expenses in the second quarter, if we should see an increase as well?
Okay.
If that could change given the different seasonality for intake.
Okay, good. Most of selling expenses is related to the intake process. Especially regarding our undergrad business, which is our core one. When you look forward to the second quarter, we will have not a high growth in intake as we had in the first quarter, as I said, because last year the whole intake process was much more back-ended. When you see the overall intake process, we shall have a reduction in CAC for the whole intake cycle, when you look at the fourth and the second quarter together from here. In terms of intake in the second quarter, it will not grow 36% compared to what it was in the second quarter of last year.
Very clear. Thank you very much.
Thank you, Victor .
Our next question comes from Luca Marchetti with Itaú. Your line is open.
Hi, good evening, everyone, and thank you for taking our question. Regarding PDA, the company reported a decrease in the PDA as a percentage of net revenue, which is different from what we saw in most of the companies in the sector. One of the reasons for this lower PDA was the lower contribution from continuing education segment. What should we expect for the PDA for the rest of the year? Should we see an additional dilution, or should we consider this as a new normal level for this expense line? Thank you.
Hi, Luca. There was some noise in the line, but I'm going to answer what I think you're asking, but it's not the right question. You please correct me. Dilution of PDA overall, when you see the whole year, for example, we shall expect a large reduction in PDA overall, this year compared to what we had last year for a number of reasons. The first one is that part of the overall experience of the students is to meet colleagues in the hub. For those classes that do have physical encounters in the hub, those guys, they start to meet again or in some cases to meet for the first time, this year, exactly in April of this year.
By the way, all the results in the first quarter of this year were before the start of the physical meetings in the hub that we started in April of this year. This is an important engagement factor for the class. Our model relies on a number of foundations. First one is the peers. The second one is the meeting in the hub for those that do meet in the hub.
Those guys that have physical meetings in the hub are again or for the first time for the newcomers meeting their colleagues and this engagement with the classmates is important for the overall process, which at the end represents a higher retention rate and as a result, lower PDA ratios. For this year, we do believe that the overall PDA ratio will be more for this reason. The second reason is that last year, in fact in 2020, we grew a lot. We had a 40% growth in the second half of 2020 in terms of intake, which as you know impacts drop off and PDA in 2021.
Now we have a slightly smaller percentage of newcomers that started with us last year than what we had one year before. Of course, the weighted average of the profile of the students is we have less newcomers than what we had one year before. The two factors show me a slightly lower PDA ratio this year as a percentage of net revenue. Can you repeat the first question, please, because I could hardly hear you.
No, that was all. It was all regarding PDA, and it made very, very clear. Thank you.
Thank you, Luca.
Again, if you'd like to ask a question, please press star then one. Our next question comes from Mauricio Cepeda with Credit Suisse. Your line is open.
Hi, Carlos. Hi, everybody there. Thank you for taking our questions. I have two questions. One, I'm going back to the seasonality aspect. We were talking with your competitors during this earnings season, and we noticed that the seasonality in distance learning in general is something that seems to have changed for the industry, right? I know that you are a little bit more accustomed to that because of the modular process and other value proposition you have. How does seasonality change affected competition in. It's the first part of the question.
The second part of the question, how it interferes with PDA or evasion and other parameters that we were much more used to see in kind of a alternated fashion between even and odd quarters. My second question is not related to the operational aspect, but you are close to the closing with the deal with UniCesumar, and we know that the capital structure were thought about before all these interest rates rises in Brazil. How this new interest rate scenario could change the way you were thinking about the capital structure of the newco? Thank you.
Thanks a lot for your two questions. The first one regarding seasonality and PDA. You are so right. I mean, we were already used to this, let's say, with a much more spread intake cycle throughout the year because of our modular academic approach. If we realize our intake goes up to end of May for the first semester of a given year. With this competition which used to finish intake around mid-April, for example, in real life. Now they extend a little bit more, a few more weeks.
At the end there's a limit for that because we do have a modular approach to the extent in which we can affect people in a given month, for example, and that subject that the person did not attend, he or she can attend and will attend later on. When you see the competition, because we do have, for example, 5 parallel subjects in a given semester, we have a practical limit for that. In real life, for us, there was no real change or no important change in our overall intake process and same for PDA. PDA is already reflecting that.
What we had last year was out of the ordinary, which was a much more back-ended intake, which now this year it's, let's say something in between what we had in 2020 and 2021. I think it's the new normal what we're seeing this year. Slightly more back-ended than what we had a few years ago, but not as much as we had last year. Regarding the closing and capital structure, indeed, we are close to closing. We have secured a firm credit line from four top-notch banks in Brazil. There will be a five-year financing from those banks. Of course, we are looking to accelerate the leverage of the company. We're going to start with a quite high leverage.
The company, the new Vitru, so the merger plus UniCesumar, do generate a lot of cash. We can deleverage over time, but we are not going to simply sit and wait for that because we realize, as I said before, we are going to look for further M&A opportunities, and it is not a surprise that the current interest rate is higher than what everybody thought one year ago. We have a number of options. The first one is to go to market and raise capital in the follow-on once the market is open. It's not the case today. Second one, we could also have a private placement. We do have a number of interested parties that are looking for that.
Of course, there's also on the table the potential sale of the medical business that we're going to buy now, which a lot of our people in the market is asking us whether we're going to sell it, medicine, or not. There's no decision so far whatsoever. This type of discussion will take place in the board after the close of transaction. It is a possibility to pack medical education and sell it to other peers that are more focused on that than what we are. We have the three possibilities. We don't have any words for that, but we do have options to accelerate the leverage if need be.
I hear you, Carlos. Thank you.
Thank you.
If you would like to ask a question, please press star then one. There are no further questions. I'd like to turn the call back over to Carlos Freitas for any closing remarks.
Thank you all for your interest in Vitru. Our team here is more than available to answer any further questions you have. Thank you and good night.
This concludes the conference call. You may now disconnect.