Ladies and gentlemen, welcome to YDUQS Video Conference to discuss the results for the third quarter of 2025. This video conference is being recorded, and the replay can be accessed on the company's website at www.iduqs.com.br. The presentation is available for download also on the company's website. Please be advised that all participants will only be watching the video conference during the presentation, and then we will start the Q&A session when further instructions will be provided. Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, projections, and operational and financial goals are beliefs and assumptions of YDUQS' Board of Directors based on the current information available to the company. Those statements may involve risks and uncertainties as they relate to future events and therefore depend on circumstances that may or may not occur.
Investors, analysts, and journalists should take into account that events related to the macroeconomic environment, to the education segment, and other factors may cause the results to differ materially from those expressed in their respective forward-looking statements. It is important to stress that for a better view of the presentation, we recommend enabling full screen mode. Present at this video conference, we have Mr. Rossano Marques, CEO of YDUQS, Mr. Alexandre Aquino, CFO, Mr. Marcel Desco, Vice President of Sales and Marketing, and Mr. Bernardo Lobão, Director of Investor Relations. We would now like to give the floor to Mr. Rossano Marques, who will begin the presentation. Please, Mr. Marques, you may proceed.
[Foreign language]
Good morning, everyone. Thanks for participating in our Q3 Earnings Results Call. I'm very proud of our results, right, Aquino? It's a pleasure to be with you today here. We're opening this new format. I hope you'll like it. Our results were very strong, showing the quality and consistency of our results. We have our trademark. We'll continue with that, shown in several ways. Again, cash generation, the great focus, strong cash generation, enabling us to reach our goals. The main one is reduced leverage. We're very strong in this way. We have intake that is very good, all segments: medicine, Ibmec, and also the three segments, you know, the semi-on-campus, on-campus, and distance learning. We follow this path. Also with margin growth, with quality of results shown in various aspects.
This improvement in margin is benefited by the improvement of bad debt that derives from the better quality of revenue in the past quarters. Let's see the slides, and we'll go into details. On the highlights, we have looking business to business, a very strong semi-on-campus. Okay, over 50% intake, excluding nursing, we have a very important growth of 33% intake growing at the various hubs, so 98%. This lever continues with the framework. We have over 100,000 students, very symbolic for the whole of YDUQS. Ibmec is very strong in all lines of intake, not only with our campuses that are maturing, all performing very well.
Pre-courses, there is a growth leverage for Ibmec, so it's very consolidated on undergraduates, so we can actually have a long way throughout the life of many to bid the margin growing very strongly in a sustainable way, showing the strength, the operating leverage, and the ability we have of generating results for a long time in Ibmec. IDOMED, again, with strong quarter, over 60 medicine seats with uniform entry, we are waiting for CADI's approval to close this, the increase of 30% in FIES ceiling, very important for the intake, especially in this quarter. The increase in FIES allows us to bring more students, and we capture higher revenue from the students. EBITDA margin of IDOMED is very high, at 52%.
Intake as a whole growing by 14% vis-à-vis what we saw, what happened in the results of second quarter, with very positive outlook for this quarter and getting to what I think is the strongest brand of this quarter, proving our cash generation capability. You see the evolution of cash generation of the company, reaching its top over BRL 600 million, operating above our guidance. This generates, with the previous actions, yielding above 18% of our share price, showing the strength of the business ability of generating cash. Again, on the quality of revenue generation, this has been at a time in which we increased the quality of cash generation from the first quarter. We had a provision for the non-engaged students. This reduces revenue with no accounting impact or cash or final outcome. This is a complete cycle of dropout, etc.
You receive the results of bad debt dropping. We have positive results in the fourth quarter, first quarter. This is actually influencing several others and smaller penetration of GS, showing the high quality of intake we have. Another quarter in which we have a dispenetration below previous years. We believe that as an intake tool, we're showing more transparency to students and have a balance. Students, they use this, they use it intelligently, but overall, this addition is dropping, improving the quality of revenue. How do we see that? Reducing bad debt in the third quarter, and this will continue to happen in future quarters. Our way of recognizing revenue and using cash and private funding, we see the results here dropping of eight days of DSO. The quality of our results, once again, making us to be very proud.
On the slide, we see intake and student base, as we talked about that, 14% as a business as a whole. Of course, this is a great lever of the company. We continue with that. An important highlight is on campus with the growth on student base. We saw intake in on campus from FIES that was dropping with negative trend during the pandemic. We saw the curve stabilizing. We show what's happening, and we have a growth in intake on campus and digital also showing a growth, a quarter having a trade-off that is big to semi on campus and showing an increase in intake. When we look to the right in the student base growth, important point, we talked about that on campus stabilizing intake, it's growing, and you see that stabilizing, and it is clear the trade-off from digital to semi.
Semi to us, the ticket is almost twice as much as digital. It's a tool of growth for us, and it has been made official by the legal framework. There was a gray zone in the legal framework. In the new framework, it's a way of actually delivering teaching officially, making it clear to students, offers are more comparable and should strengthen our growth in this modality. Here again, talking about the quality of revenue, we see two charts on the left, drop of addition to DIS, the percentage actually dropping in the total revenue. This will actually lead to a lower bad debt. You see the cycle and then the negative impact to revenue. We saw that in the first semester. We will see that along the year. We always say that it's a cycle of 15 months.
You know this, and then you go start seeing that a relevant drop of bad debt associated to that. On the right, we see our total net revenue. We see we were conservative, provisioning 5% of engaged students, and it will translate into better bad debt. This impacts revenue. We had a revenue growth, you know, apples to apples, 5% year-over-year. When we put this provisioning, it would drop to 3%. The correct way of comparing them would be 5%. Another factor that will lead to a reduction in bad debt, showing the quality in intake, the results of year, and cash generation. Over this process, we improve the percentage of cash conversion. Now we move on to the on campus.
We see the strength YDUQS has in the on-campus market in Brazil, present in all states practically of the federation, all capitals, very strong with very known and renowned brands where we operate. We see on-campus had this trend of a turn since the pandemic, since the drop of FIES, the pandemic. We saw the curve turning, and we have a demonstration of this curve being proven, the growth of net revenue in the quarter driven by intake and ticket. This is very good. You see the model happening all over. Let's start on the right. Renewal, 31%, and you see a difference between 0.05 versus previous year. This is very important when we talk about both areas, you know, on-campus, semi-on-campus. When we have semi-on-campus, renewal is a bit below.
It's a newer course with more presence of freshmen. It impacts, but we have a very high level of renewal in this business, showing the quality of product deliverance and resilience of business with our students adjusted a bit of similar margin. With first quarter, we are going to suffer part because there is revenue recognition, and we see now, and we reap those benefits, especially through lower bad debt. The results we have of the efficient policies we've been implementing over the year yielding results. We increase our ability to generate value and EBITDA actually stabilizing. We see very similar moves to last year's, you know, positive trend on the on campus. When we look at digital learning, the highlight is margin, margin book growth that is important, reducing in the first semester.
We pointed that this was very much related to the revenue recognition model used, and we see digital, so 2.5 percentage points regarding Q3, especially for what we are reading, lower bad debt and more efficiencies. When we look at revenue, something that has an upsell. The whole business is actually reaping the benefits of upselling between distance learning, semi-on-campus, higher ticket with great growth power, and its digital actually loses base in a net to the benefit of a business with greater margin. It is very stable in terms of student base with small fluctuation on undergraduate, but very much influenced by the upsell. Ticket is stable, and you suddenly have questions after the call on the ticket development. We had more pressure on ticket because of the courses, actually with some restrictions due to the framework.
They had certain restrictions on the intake because of the framework and nursing on the semi-on-campus. Those courses, since it was the last intake in those modalities, so we had the whole market influenced. This certainly resulted in a positive way for our LTM because we had an increase in intake. We do not see that happening in the fourth quarter. Ticket overall, taking those specific courses that had certain pressure on the last intake, ticket is behaving in a very rational way. From the fourth quarter next year, we are going to see that. This will be stable year-over-year, even in a business with a pressure on ticket in this business. Looking at IDOMED, again, only good news, growth in revenue above to 11% with a growth 10% in the quarter. We have maturing, you know, the undergraduate base.
This quarter again, a quarter of good news to highlight an item that is a great opportunity. We see undergraduate being a great base of revenue of IDOMED, and this is medical school. When you see that for undergraduate the whole life, and this is a small business to us, and this has penetration very below our fair share of the business. This is a great opportunity of YDUQS part over the strategy that we have for next year that has started to be implemented. This is very relevant to whole life in medical. This has great potential. We saw the growth of seats growing a lot in the past two years. This will generate a higher number of doctors graduated, and this will influence residents. We have more search of specializations in private education. We're very well prepared to face, to tap into this opportunity.
This obviously is a chance that has to be tapped into by IDOMED, and we're prepared to tap into that in the prospect of growth. When we look to the right, we see highlight of 55% of margin stable year-over-year. Even with the maturing of the base, when we get to other years, you know, cost structure is higher. This would tend to put pressure on margin, but the growth, operating leverage of the business, and the ways of efficiency that we find in structure as a whole help us keep margins that are very high, certainly benchmarks for this market. Average undergraduate ticket growing by 4% coming from the Mais Médicos in the States, Brazil. We know Rio de Janeiro, we have the highest ticket of our business, and it is a business that is stable.
You do not have base maturation with the whole base growing in places that you have higher and lower tickets. This should put a pressure on the ticket, but we see again the ticket reasonably steady, stable, growing year-over-year, even with the factor of negative ticket caused by cause. We follow with readjustments above others in medical schools. Going to Ibmec, it is difficult to see what we can. Everything is so positive at Ibmec. We only have a source of good news to us with revenue growth, 23% year-over-year. Same thing when you look at the past nine months, and this growth coming from various avenues. The most important is the maturing of the campuses, Faria Lima, Brasília. Regular intake, we see major growth in the business, but our business having a growth in intake, very strong for Ibmec in all the undergraduate areas.
When you look at graduate studies, we mentioned that IDOMED. IDOMED, we had great opportunities. It's small in terms of revenue coming from other courses that are not undergraduate. At IDOMED, it's different. We have relevant participation at graduate, but great potential for growth. Growth is strong in this new avenue. Pre-courses, graduate studies, marching for that and capturing lots of things. From as of next year, we have a new campus in Rio de Janeiro. We're going to move from downtown to Botafogo. Great growth in the city. Ibmec in the south zone that will actually release things. Very relevant brand for the city with an additional campus that will be a flagship for us in Botafogo. For margins, only joy as well, 6 percentage points year-over-year.
We see a sustainable margin, not only this operating leverage for the campuses, but not only the new ones. We talked about the older ones, all the efficiency process and intake of or actually capturing better tickets of Ibmec. So growing, you know, average ticket growing by 7% again. São sempre vindo níveis muito altos. Great results for Ibmec. Very high operating 90% at renewal, but very high levels. You know, we're very proud of the product that we deliver and the satisfaction students have. You know, Ibmec's presence and quality is huge, and we're actually having super qualified students coming from that. Now let's talk about our revenue in a consolidated way. We've grown in comparable ways, 4% compared to the previous years. This could be 60% if we had the same addition to DIS as we had in the similar quarter last year.
Again, Ibmec and IDOMED grew very strongly, 10% Ibmec, 23%. When we look at in retrospect the past four years, the growth is even more important. The two brands combined moved from 19% of total share of our revenue to 31%. The great advantage is that looking ahead, we have a lot to grow in both brands, both in undergraduate. We have several points that are still maturing, several campuses, and we have great growth opportunity in graduate studies. We have the expansion of the portfolio, has been a very strong brand in the business, quite strong in law and also technologies. Speaking of our costs and expenses, as we mentioned, when we close the second quarter, we must have margin gains in the second semester this year when we compare to the results we had second semester last year. This margin gain is showing already.
The best improvement that we had actually embedded that. Great margin improvement. The gain came, you know, 3.2%. We had the percentage of renewal very linked to the more engagement of our students and better conditions and NBS, et cetera. Another important part of that, the reducing by that is less participation of the DIS revenue, a drop in its share. This last share of DIS revenue helps us reduce by that, and not only this quarter, but the future ones. We have this positive variation of our by that was we had sales of our receivable. We sold 50%, 20% of our portfolio. That was 100% provision. Looking at the other lines, we said the increase of GNA happened to more variable causes because of the intake we had this year. Last speaking, of course, we basically had two effects that represent that.
One third of this variation was the increase of actual collection of the hubs for better quality of revenue and intake. The collection is what links to the transfer we make to our hubs. With higher collection, we have lower bad debt, but we have greater transfer. The other two thirds of this variation are related to lower dilution of fixed costs due to two factors. One is provision of engaged students, and the other is less addition to DIS. The increase we had in our margin allows us to lever our better results comparably. We grew 9% compared to the third quarter last year, even with lower addition to DIS. We see again that our premium brands are shining. We had a growth compared to the past four years, 26% of total results to 43% of our EBITDA in our quarter.
Those two brands are those that grow the most in revenue. We have EBITDA margin of 50%, and looking ahead, they'll help us navigate those moments of restlessness in terms of regulations, even with a negative impact of BRL 64 million in our results with the increase of SELIC in our results. We had this growth in the first nine months of the year compared to previous years. Most important, it was the growth in earnings per share. We grew 23% regarding equivalent period closed in the third quarter, 2024. We are very much levered by the excellent buyback program at the end of 2024, early 2025, showing the great value given to shares with a buyback, as Luciano mentioned, José mentioned previously, cash generation for shareholders is an excellent result for this year as it was in previous quarter.
We have BRL 559 million of our FCFE, which is above our guidance. When we look at 12 months of close in third quarter 2025, we get BRL 610 million in FCFE, which is a great growth compared to the previous period. We have the yield of 18%. This was very much supported by the drop in the average term of receivables of eight days. That happens this quarter and is happening recurrently in the past quarters due to the way we receive private funding and also collection. This is supported by measures that have a negative short-term impact for our EBITDA, revenue, or net profit, but do not generate cash. That is why we have the improvement in our days of sales outstanding of the non-engaged, a lower addition to DIS. Very good, Aquino. Why is it important to talk about cash generation this year?
As we said, we've had very solid results even with these policies of recognizing revenue that are more conservative. Immediately, you have 5% from one to the other, one year to the other without changing your business. If you have the performance very strong and you see that in cash because we said this move that we made of provision would not impact cash. This is shown. This is why it's an important year, even this year when we're making those adjustments to increasingly improve the quality of our revenue, of our results overall, cash is where it is clear that we are on the right track. Talk about debt. We closed the previous quarter with the cash position, very strong BRL 1,054,056,000. We had a spread of over a bit over BRL 1 billion. Very low, smaller of the educational industry.
We took very strong cash generation to reduce our leverage, improving from 1.7 times at the end of secondary to 1.5 at the end of this third quarter. If we did not have the buyback and not pay dividend, we would be close to 1.3. We follow strongly our goal to get one time net debt EBITDA. This is our priority number one for capital allocation. That is where we are moving towards. When we said at the YDUQS Day last year, we talked about our capital allocation. We talked about opportunistically, and we took a great opportunity fourth quarter last year, first quarter this year with a buyback generating great value to shareholders. Next slide. We can see the overall. We stop to look at a snapshot of what is happening. Very important for public companies. We cannot lose track of this broad view of companies.
We should see the historical evolution of the business. When we look at net revenue, it's hard to say that this is high volatility. You see a CAGR at constant 7% growth in revenue. When you look below, very stable margin. It's good to remember that in 2019, from 2019 to 2025, we had the pandemic. In the middle, we had a growth in revenue, high EBITDA margin, and paying dividends. A company that since it was founded, it pays dividends every year. Halfway through with very successful buyback programs with relevant growth in cash generation for two shareholders. We see 2021, mid-pandemic, burning cash, negative cash generation, and we have BRL 6 million cash generated a year of 18% on the share price. Looking at long term, it's hard to classify this company or the industry as a whole, but we are standing out here.
Very constant, very quality results showing every semester, every year the ability of generating value to the business. On our slide on the regulatory framework, the market is talking a lot about that. It's a fear and it's a burning topic that we have with analysts. We heard the calls of our colleagues. We felt it would be important to bring an update on our view that we talked about the market on that. Let's reinforce our view. We see the framework with several opportunities. It's a new regulation that will strengthen a lot of players that can deliver quality. Basically, it's a restriction process of digital offerings. It seeks greater on-campus reach. We have the ability of being a winning player in this new model. It brings two restrictions. Looking at the restriction of revenue because it restricts certain courses in some modalities.
As an example, nursing cannot be offered on the hubs in a semi-on-campus. It can only be on campus. We remove the offering of nursing at the hubs. We have an impact to the revenue over the year. We are going to tap into that. We will talk about opportunities and we will actually tap into those opportunities. Other courses, as health, engineering, they cannot be offered on distance learning. They can only be offered on semi-on-campus. We have a greater restriction of the students, several markets that can have an impact to revenue. We see the impact in 2026 of around 1% of our revenue, but the impact is about 1% of total revenue of companies. We see spending. We have to offer more. This increases cost. This will only happen in 2027.
We have adaptations in 2027, but the growth will be 0.7% of cost in 2027 in cost. We have a long time to work on that until then and see how the tickets offset that. The right impact in cost is a 0.7%, especially because you have more synchronicity, more on campus, and you have some structures that have to be adapted. This will all impact our NOR. When you see the positive side, we see great opportunities for the players of good quality. Main of them, competitiveness, this framework will actually strengthen those that have more ability or capability on on campus. We believe we will be winners in this environment. There will be more stable competitive environments, reducing offerings and players that will privilege those that are better positioned. We believe YDUQS will be a great winner.
Second point is semi-on-campus was a modality that was actually fit into digital, was not an independent one. Now the ministry officialized the semi-on-campus modality. It was actually growing the most within YDUQS. We have great opportunity of growing there, and it is clear for students. What exactly it is, we believe we have the product with greater growth potential. We will be very well positioned to capture the whole potential. Lastly, capillarity we have on on-campus reach. Spread throughout almost all states of Brazil, 90 units across the country that will bring advantages to YDUQS and with the reduction of offering that we have in the other two modalities. YDUQS once again will be a great model or winner in this model. Let's move into technology. Okay, we'll be right back. AI is a great lever of growth for our company.
I called Marcel to help me with that. Tell us, are we getting lots of results there? [Foreign language] . We've been investing in AI for a long time, and there's a lot happening. People are suffering to explain results and show gains. At YDUQS, we have certain cases that are well consolidated, where we can count and tell more to the market. I selected four cases. All the AI efforts follow the three poles: improving quality of teaching, improving operating efficiency, see our students graduating in a more complete way for a labor market that is changing every day. Of these four cases, taking the first, we had a great evolution in digital marketing.
When we talk about studying the prospect, the way they arrive, and how we can adapt communication to improve conversion, and also the way we approach prospects. This is something we've been doing with tools that allow us to have a production at scale of creatives to talk based on the history of the students during the selection of the course. We can have a remarketing that can be even stronger. We can do that with generative AI or GenAI tools. This gives a scale that would be impossible to do with human and with conversions that are increasingly higher. This is two and a half times the conversion rates that we had in terms of personalization. We've been working a lot in developing internal skills to scale new products.
This was born with sales, for example, working with no-code, low-code tools, lovable GitHub, Copilot, and ChatGPT. We've been working hard on that because we can have scrubs that are increasingly smaller and launch products at record times. We launched the tutoring tool recently in a term that was below two months with a very, a much higher service level compared to a tool that we bought from a third party. Going to the line of equality of teaching, operating efficiency, we have our personal assistant tasks working in a multi-agent model. We are very advanced in the part of service of the, you know, red tape, 1,600,000 interactions of students, very high resolution rate, and very high satisfaction rate of students. This is evolving to help students in the part of education and tutorials and more academic answers.
We are in this evolutionary process, and it's actually linked to other service channels that our students use today. To close, as I mentioned, labor market training our students. We have our matchmaking that uses all the tools to do a match between vacancies and the courses they have been attending, you know, an adjustment recommending, you know, certain vacancies to students. We have over 1 million students registered in this career portal, 130,000 openings, and we have a very high satisfaction rate and actually access is very high to this portal. Great joy to see this because YDUQS had technology as its basis of everything we do. Technology is a very strong base of everything that we did in technology that is on a hype today. You see efficient results that are efficient and effective to our students.
We talked about several things highlighting the ability we have of delivering a new digital product in two months. I know this is just an example. We're not talking about everything we do. This is incredible. In service format, the new platforms of customer service, platforms that deliver efficiency. You can resolve 71% of resolutions without having to overflow the volume and 70% satisfaction using technology not only to deliver efficiency, but with higher quality and more satisfaction to students. We feel proud to look at these results. Sure, to do all of it with so much, you know, cost responsibility. People talk a lot about that as to how those tools, if they're not well worked, they can be not efficient. We've been able to do that basically in all our student journeys. Thank you, Marcel. Thank you for taking part of our call.
I'm going to call Lobão to wrap up. Moving on to the next slide. Before I call Lobão, let's talk about ESG. I'd like to highlight this award that we got of the best company for people management. We have Camila, our VP of People Management. We know sustainable results are only attained with a very engaged team, very highly qualified as YDUQS, with a very high level of engagement. We're very proud to see this award that we won and thank the whole YDUQS team for this impressive result. I'd like to call Lobão. Let's talk about this vision that we have to the year end. Great challenge to us. The guidance we've attained is we're very well positioned in the guidance of cash flow, 93% of the guidance we gave in the past nine months, moving very well.
As we've seen by the conservative view on revenue, we have certain glitches or impact to the accounting results. We saw the fruits that we're going to reap and how this was going to lead us to the, you know, earnings per share. Tell us about our view to the end of year of the four levers and the result of the second quarter. The first was intake and the retention. We said that a strong cycle of intake that we envisaged for the second quarter, more retention students would lead to stronger revenue. We have delivered that in this quarter. This is something that we started driven. The fourth quarter is strength is going to be stronger because this quarter was impacted by a lower addition to DIS that impacts the quarters that are strong in terms of intake.
For the fourth quarter, we see the growth even stronger of revenue and this lever working. The lever has been checked third quarter and we see even more positive for the fourth. What about bad debt? We're capturing this benefit. Bad debt was the great highlight of the quarter with strong reduction of bad debt, as Aquino has explained the reasons. A good renewal task, the good renewal rate, and also intake and effect of reduction, the reduction of this revenue penetration. For the fourth quarter, we should, in effect, an effect and additional contribution to the provision of non-engaged students that has an effect in the fourth quarter and even stronger next year. This is a lever that has been working very well in the third quarter. Another check, what about contingencies?
Contingencies, we had mentioned that tends to be reduced vis-à-vis the level of second half of last year. We had delivered one well below compared to previous year. We have a reduction for the fourth quarter GNA that we have not delivered in the line we expected. What is the view for fourth quarter? It is very optimistic for GNA. We saw the whole restructuring process of the corporate restructuring process. We see full by the fourth quarter. We are very optimistic of being able to deliver the GNA as an important lever that will work for us to deliver our earnings per share that we have delivered this year. You know, positive outlook. We have the guidance of earnings per share that we gave earlier on our final slide, final considerations. Remarks, we are very happy with the results we have been delivering.
You're seeing the consistency of the company over the past years. This is important. Our results are cleaner, more predictable, easier for everyone to understand with greater quality. This is shown throughout the way. The most obvious thing, we have lower revenue year-over-year comparably. Considering non-engaged students, this does not impact cash. This is just an accounting view different from in a year to year, but more quality in the quality of revenue. When we see reduction to this addition, it brings better quality of the predictability of revenue because it actually brings better results and a margin that is going to improve as you reduce things and you improve your bad debt. Yeah, there are highlights here of the quarter. Very strong intake, 14% year-over-year. We see this risk view on the industry, sometimes stronger than positive things.
It's very good to have very positive third quarter. We see we're very well prepared for the regulatory framework. Any regulatory framework brings surprises. We know that we're going to be winners in this new ecosystem of the new framework where we have adjusted the better, improving along, you see Ibmec expanding margin, keeping very high margins. We have positive margins all over. This company keeps growing, generating cash and expanding margin, very healthy business following our path of reducing leverage points to 1.52 times. This was 1.52 times. This was to be 1.3 if we hadn't had the buyback and distribution of dividends. We'll keep that on our radar. Our priority of capital allocation is deleveraging. We have FCFE and net income. We are operating above the guidance and the nine first months of 2025.
We generated 93% of the top of the guidance for this year. Again, a quarter of the high quality keep making us very proud. Thank you very much for your participation. We're going to close our conference. We're going to start Q&A session. We'll be happy to answer your questions. [Foreign language] We will now start the Q&A session for investors and analysts. If you wish to ask a question, please press the raise hand button. If your question is answered, you can leave the queue by clicking on the same button. Wait until we collect the questions. Our first question is from Samuel Alves from BTG Pactual. Samuel, your microphone is open. [Foreign language] . Good morning, Rossano Marques, Marcel. I have two questions on our side. First, I'd like to talk about all this cash generation trend.
You mentioned the guidance revived for this year. You mentioned the LTM dynamics. What do you imagine for next year? Can you keep the pace? Can it be a bit higher? I know you're starting to discuss budget. If you can give me some flavor on cash generation, that would be interesting. Second question is a bit about the trend of non-recurrent. You had some adjustments in the structure that impacted the third quarter. Do you have any visibility of structure addressments for Q4 in administrative and faculty? Will it be a cleaner quarter? If you can shed some light on that, it would be of great help. Thank you. Thank you, Samuel. Good questions. For cash generation, our view for next year is at least stable compared to this year. We're going to work to have stronger cash than this year.
This year, we had this turn for the receivable private fund financing in the same quarter of the payment of the interest of students. That helped a lot this year. A great part of this result is recurrent. Part of it will be stronger this year, especially previous payments that keep on being made this year than next year. Different difference that is small that will be offset by the growth that we estimate of a better improvement of other results. We'll actually work on the same level as of cash generation this year and try to improve even more. Good point of non-recurring. All the items that we have been allocating as non-recurring restructuring of campuses, a reduction of cost in personnel has been reducing quarter after quarter and it continues in Q3. We have a corporate restructuring.
We know there has been a change in the executive management of the company. We had a broader corporate restructuring. All the cost of restructuring was allocated in Q3. Nothing is left for Q4. It is cleaner. And we see Q4 recurring even lower than previous year. Following the trend of being smaller than previous year, this should be one of the positive ones compared to Q3 to Q4. Good questions. Thank you. Thank you. [Foreign language] . Our next question is from Flávio Yoshida from Bank of America. Your mic is open. [Foreign language] . Good morning, everyone. Thanks for the time. I have two questions. The first is on the slide that shows on the new regulatory framework. Quite an interesting one. I would like to understand, Rossano, well, you have shown this impact of 1% on revenue. I would like to better understand where this impact comes from.
If it's a demand reduction, I'd like to understand the assumptions, how you got to this number, and also the part of expenses. You've shown the impact of 0.7. I'd like to understand the assumptions and how much we should expect for 2026. How much would that be seen in 2026? My second question is regarding the economics of prevaler, of anticipating prevaler as the base matures. This has the receivables that is of a longer cycle to you. You know, are you concerned about the structure of your cash for the company from now on? Thank you. Thank you, Yoshida. Good questions. I'll start with the second, and I'm going to share the first with Rodolfo. As I mentioned to Samuel, you know, we start having a cash conversion that is constantly structured for next years, and it will be better.
It's still benefited, and we have a reduction over time. We are only anticipating the new contracts. New contracts, they start having immediate revenue. You're not creating long-term expenses. So you receive it over the years. In 2025, it's still higher. At 2026, it reduces and even smaller, and this reduces over time. The proportion of the benefit that we had that is not recurring, that is stronger in 2025 is small, right? So easily, the normal growth of beta, growing that, it's above this specific benefit. Caixa de 2026. We are very optimistic with 2026 cash. It will be a highlight for the company. All the framework has been a hot topic in most calls, and all of our colleagues, etc., were being answering a lot to market. We made a slide to show things clearly on actually NOR. This 1% is a reduction of offers.
You stop offering a specific course, which is nothing, can only be on campus, and you lose the offer at all units. Just the same way, other courses offered in the distance learning can only be semi-on-campus. You have a limitation of offers. This is an estimate that this limitation of offers will cause on our NOR. We estimate a slight change of choice of courses, of upselling chases to certain modalities. We know it's difficult, so there is an impact to NOR to 2025. We see opportunities on the right-hand side of the slide. It will be a more controlled competitive environment. We have a semi-on-campus project that is very strong. There will be super valued under the new framework. We have on-campus reach throughout Brazil.
Practically in all states of Brazil, we'll be prepared to have this migration to on-campus that we start seeing. We are very positive regarding this. As to cost, the cost increase for 2027, we have that. We have this time to get there basically from various aspects. On-campus and adaptation to the units. What will be partial in 2026 is that new courses, changes of hubs or units that we're going to make, those new courses or new units have to be adapted. Part of the 2027 cost will be realized in 2026, a small percentage, less than half of this impact happening in 2026. Again, we think that we'll have several opportunities with a new framework, and we'll be very well prepared for that. Rodolfo, would you like to add anything? Good morning, everyone. Good morning, Flávio. Thank you for your question.
I believe Rossano covered this quite well. The impact on this line points from 0 to 0.3 to 2026. And Rossano put it quite well. We're very well structured despite the challenges of the framework of on-campus synchronicity. The challenge that naturally over this transition period is our dedicating time and energy. We have a work team that has been for over a year looking at this, and we're very confident that the process will be very smooth over this period and the impacts will be relatively small. Thank you, Rodolfo. Just to close on your point, Flávio, we are increasingly confident on the attained structure. So having, you know, presidency of on-campus and Rodolfo focused on partnering operations, looking at the whole operation of 2,500 units we have in Brazil, we have several opportunities to be open. So we have a great growth lever.
You see the growth in all the semi-on-campus units, and this reinforces our good positioning in this new model. Thank you, Flávio. Thank you. [Foreign language] , do JP Morgan. Next question from Lívia Mizobata from JP Morgan. [Foreign language] . Hi, everyone. Thank you for taking my question. First is more for medicine. I know it's early to talk. I'd like you to comment on how you design the entrance examination for 2026, if still any change in competition, intensity for 2026. A point you I'd like you to help us think is how can we balance a greater seat offer and the increase in the FIES ceiling when we think about 2026? The second point I'd like to address is the strategic plan for graduate studies.
Considering the comments you made, what do you see as the potential of the segment? What is the target population to have to get the fair share of the market? What do you have as outlook for 2026 in the mid-long term? Thank you.
[Foreign language]
Thank you, Lívia. Excellent questions. Medicine is a very important business to us, and increasingly more, quarter after quarter shows there is strength of positioning of the IDOMED brand throughout Brazil. I'll answer a bit more superficially. I'll ask others to go deep. Our, you know, positioning, we have a sampling in the intake of second half, and, for 2026, it's hard to say. What we had of, you know, 26.1 makes us feel excited. It's a challenge, a relevant number of seats that are offered. This impacts the competitive environment that we bet on our positioning.
This has been proven. Steelville has been talking about the impact that are regional changes from region to region, depending on the volume of seat offerings that we have. We know that initially it's stronger and the positioning. [Foreign language] . It's reinforced over time. We see some marketplaces that have been negatively impacted by 25.1. When we see the intake, 26.1 is recovering. The quality positioning is proven very quickly. The courses, they have a long way to run. We have decades of building IDOMED that have a lot of value. Sometimes students with a new offer, they are sensitized with some offers that are more competitive. They may initially test the new offerings, and again, we are sure that the quality is vastly proven, especially in medicine. They're on campus. Quality is proven very quickly.
We're sure that will be very well positioned in this market. I'll let Silvio answer later for the FIES. Increase of ceiling is very good news. It brings more students that will be able to pay our tuition fees with a higher ceiling. The students that we had with social FIES that are not able to pay the additional, they are covered by FIES. This has helped a lot in the intake of 25.2. This is a trend you see that, you know, the intake of 1.2. Students usually start the first half. 25.2 FIES, as it happened in a cycle that is later, it's a good period for us to lever FIES, leverage FIES, and we've done that this time. It's a trend that should continue, you know, lifelong is one of the strategies of the company.
We have several opportunities for growth. A company that usually talks about things after having made and done them. We see several growth avenues that we have for the company. You know, lifelong medicine is one of them. Yeah, we have great penetration regarding graduates, so fair share should be natural. We have a very relevant market to be captured, and we are positioning ourselves very well to be a great winner in this market. Let me allow Silvio to add to that. What else can we say that? Thank you, Lívia. Thank you for the question. I'll start with the Vidatoda, and then I'll go back to the entrance examination. You know, graduate studies in medicine should be structured. It's about BRL 5 billion, BRL 6 billion, but it's actually under-penetrated. Those that grow the most will graduate to BRL 200 million-BRL 300 million at most.
Actually, it's something that we must build very high-quality products so that the graduate students can actually take private vis-à-vis a residency that has increasingly fewer seats and more people that are graduated. The fair share part, we understand that we must build it, build this market to be able to move forward, increasing our representativeness in the segment. We and the industry as a whole. We have a great blue ocean ahead, and there's a bubble that has to be burst. People are going to seek residency, which is a very, 60 hours a week of dedication that is quite intense, very low compensation. You asked about strategies, we build a product of very high quality, enabling professionals, specializing professionals. We see the more specialized doctors are, the better is their income. We believe very much in building a robust portfolio.
Half percent of our revenue comes from graduate studies, Rossano has shown that. We understand that the market as a whole is benefited. We are very well structured. We set up a structure that is more robust, expanding our portfolio with new partnerships and agreements with the goal of being stronger in this segment of graduate studies and with our strategic plan, with a very fast growth, increasing by threefold year-over-year in this segment. For graduate studies, this is it. We would not have here a number to share of the fair share. It is very under-penetrated, so few to grow, not only for us, but all the others that are acting in this industry that provide quality products can be benefited by this.
We know that since we are actually spread throughout Brazil with good agreements, we are well positioned to be able to capture more of this market than competitors. As to the entrance examination of this shibboleth, we see the impact of the injection of new seats is very regionalized. It is not linear. Each one of the marketplaces has gone through a different behavior. Not necessarily where we have more seats is where we are going to have more pressure. Some places, the quality and the knowledge. I speak of Teresina, a market that is very impacted by injection of new courses. We have a course of medical schools, universities. We have exceptional seats or opening students. We have to see the quality of offering that you have to keep ensuring a good intake.
Some marketplaces where we notice higher impact, the recent initiatives of ours have been using good results. Some marketplaces we saw that were more challenging, they are kind of turning not only in the second half of 2025, but for 2026 they will have a lot of search. Another point you brought up and Rossano brought up, some candidates go to newer programs that lower tickets, and we see a great move of transfers, reopenings, showing that lower ticket of the tuition does not deliver what the premium audience expects. You know, we are able to resume this competitiveness. FIES has been helping a lot. The higher FIES ceiling is very important that you have mentioned. You know, upperclassmen about 12, 13, this FIES ceiling going to BRL 13,000 is very close to the average ticket of medical courses, better positioned.
That brings the important recovery of what could be the loss when you have a mixed higher number and FIES. Just to wrap up, we have 2,600 seats a year. We have more for the second half, less for the second half, trying to get higher revenue. We do the balance in the second half. As Rossano said, we are more aggressive in FIES to be able to bring and to capture as much result as the year in this balance in the mix between those that pay our tuition fees and those that use FIES. It has to be an important lever because the FIES students have a better renewal rate. The retention is higher, so it is healthy for us to have a FIES base that is high, especially in marketplaces that need most. In those that do not need most, we are less aggressive in FIES.
We fill the seats almost totally with students that pay their own tuition fees. Excellent. Thank you very much. Very clear. I'd just like to follow up on the IDOMED part. Considering the investment in quality, robust portfolio, should this have some impact on CapEx and margin? And even thinking about, can you help us think about structuring elements that would make the margin of graduate students to be different from undergrad? [Foreign language] . Good question again, Lívia, not for CapEx, for where we have super differentiated structures, well positioned. We had a bit of leverage in M&A. We see the VM of the company as a whole more or less stable regarding this year. It shouldn't be anything that is relevant. For Vidatoda, we have a tighter margin than undergrad.
The company as a whole will have a dilution and we have additional revenue. It will be a little relevant in terms of tightening margin. We have more generation. The general margin for graduate can be below. It depends on the portfolio. It depends actually a bit more on M&S. It depends on the type of dynamics. Some of them have more intensive dynamics, others less. You produce new content. We have a cost curve that is tighter, but very little significant for next year, especially. Thanks for your question. Thank you. Excellent. [Foreign language] Eduardo Resende, do UBS. [Foreign language] Eduardo. Next question, Eduardo Resende from UBS. [Foreign language] . Good morning, everyone. Thanks for the time. Two questions on my side. First, I'd like to have some flavor on the dropout rate, what you expect from 2026.
We should actually have an increase in dropout with the regulatory framework. Students would not be able to enter again at this course in the same modality, whilst this program now of tax exemption for families that up to BRL 5,000 could be positive to control dropout. Any color that it can give us in terms of dropout would help us. Also, the impact of income tax exemption regarding dropout. Where would you have, you know, better, more, you know, impact? It would be dropout, intake. I'd like to have your views on those things. Eduardo, thank you. Interesting question. Dropout dynamics. You're right. Every time you have freshmen, dropout rates are higher than upper class. Students in this course as well, they are restricted. If they drop out, they are not able to join again. I believe we should have higher retention than normal.
Potentially, it should be good news. Regarding dropout, we have been improving year-over-year, even higher growth in graduate and [STEMIN]. This has been improving, so I believe that potentially it's good news. I hadn't even thought about that. You bring up a good point. It should be more positive than normal for freshmen because of this restriction. Great point. On the 5,000 tax exemption, we don't, we have to make certain estimates internally on your point where it should impact three things. More income available, this should facilitate intake. It should reduce delinquency and also improve renewal. We should have a positive impact on the three points. We see very good signs for intake for 2026. We haven't talked about this, but we had great growth on the interest now of ENEM, much stronger. I think it was 11% above the ENEM examination.
Those are positive aspects that may have a benefit in this more positive outlook for the year. A good point. We have estimates here, but certainly we have to wait until things happen. They seem to be positive points for next year. [Foreign language] , Rossano. Obrigado. Very clear. Thank you. Our next question is from Luca Marchesini from Itaú BBA. [Foreign language] . Good morning. Thank you for taking our questions, too, on our side. The first would be a distance learning ticket we saw drop, impacted by the exemption program for non-engaged students and lower penetration of this. If we exclude those two impacts, if you could comment on the competitive dynamics that you've seen in this intake cycle.
Second point, on semi-on campus, we saw this strong growth over the nine months of 2025, impacted, of course, by, you know, the transition, the regulatory framework for 2026, thinking about a more sustainable rate recurring in the segment. What do you expect in representativeness for semi-on campus next year? Those are my two questions. Thank you. Thank you, Luca. I'll open here and then I'll ask myself to help starting with the semi for next year. You're right. It's been a strong lever in 2025. Third quarter was even further driven by the last chances of nursing. We showed in the presentation since, you know, the number with or without the intake in nursing that was most influenced in the third quarter, we grew above 30% in the semi.
You remember that we still have a long way for semi-on campus and the on-campus giving change to our competitors' level. We are starting a bit later. That is positive. We have a catch-up phase happening. Great room for growth of offering of semi in the units. This adaptation will enable a greater offer and new framework of specializing semi-on campus as a modality that is isolated and well-defined, facilitates the comparability for students. They know what they can expect on a semi-on campus. They demand more quality, more on-campus, and we can totally offer that. That should be another very strong year for semi-on campus. I will let myself to complement and talk about this ticket dynamics that we have seen in the third quarter. Thank you, Rossano. Thank you, Luca.
On the ticket, distance learning, we had this rush in Q3 because of this last chance, because of the regulatory framework. Our interpretation here is that it was more acute, I think, very much moving the whole market. Everybody followed, but it should not be something that will remain. Everybody has gone through this stage. After it was published, we see everybody adjusting for levels closer. I am talking about 100% distance learning of what we had before that and semi-on campus. Apparently, everybody following this line of quantifying that is similar to what we expected of a semi-on campus with the deliveries the way they are. I believe that it seems that it is something that has been very specific on this opportunity seen by the market.
Just to add, Rossano, on semi-on-campus, the great point here is that we're maturing very much our offering with the regulatory framework being more transparent as how the delivery, the offering will be the product. We are very optimistic regarding the portfolio that we have set for the fourth quarter of distance learning and also for semi-on-campus. Everything is positive in this regard. Muito obrigado. Thank you. [Foreign language] Leandro Bastos, do Citi. Next question is from Leandro Bastos from Citi. Obrigado. [Foreign language] . Thank you. Thank you, everyone. Good morning, everyone. Two questions. First, on distance learning, can you comment a bit on what you see in terms of volumetrics for intake for the Q4? It's always rolling, if I understood correctly. Competitive dynamics has improved from September.
If you could talk a bit about what you see in terms of volume and environment for intake and distance learning for year-end. Good point. Second is also distance learning regulatory framework, more specific to 1,500 units. Do you have anything regarding adjustment number of closings that you have in your studies? You talked about the effect of revenue or cost. Do you have any effect on CapEx? Anything you can share in this sense? Thank you. Obrigado, Leandro. Thank you, Leandro. Good questions. On 2,500 units, potential impact, we have different sizes: small, medium, and large. You know, the unit is small towns with smaller demand. We have to look carefully to the sustainability. Overall, we looked at the revenue. The impact is minimum. We can have certain units that we have to revisit locations, some places that may be more complex for their sustainability.
Overall impact, if they're not sustainable, they're very small. Impact that have very little relevance to our results on CapEx. No, because the adaptations are on partnering units there, you know, or because they go into the transfer line. We don't do the CapEx directly in these partnering hubs. Those were the two questions. Have I missed anything? Volumetrics on intake, on distance learning, yes. Q4. I'll ask Marcel to help me. [Foreign language] Okay. As to volumetrics, add to what was said before, we made a fast migration of all the courses that were being offered in distance learning that were actually planned. And we started the immediate offering for Q4. It is very much in line to what we had last year. Obviously, we don't have nursing there, but we see Q4 moving sideways year-over-year.
This is good news because a great part of that is migration to a semi-on-campus product that has a slightly higher price. This is a very positive indicator to us, as Marcel said. We had the impact of 1% of NOR on the offer, and you have Q4 in line. So we have full. I cannot offer any of the courses that have been banned. The volume is coming in line. This is good news for the mix, as Marcel said, not only for Q4 next year. Keeping this trend, we should have a positive mix. You are migrating courses of modality that are less on campus that are cheaper for courses that have a higher ticket. Very positive. Thank you for your questions, Leandro. Thank you. Our next question comes from Lucas Nagano from Morgan Stanley. [Foreign language] . Good morning, everyone. Thanks for taking our questions.
We have two questions. First is on bad debt. About 8% this quarter, you have the effects of one-off selling the portfolio at BRL 80,000, Q3, Q4, excluding that we're good for 9.5% of revenue. So I'd like to see this recurring level of bad debt, is this benefit of conservative view of revenue for Q4 next year. I'd like to better understand the sustainable level. Second question is on Ibmec. With strong results, and we know it's a bit, it's an audience that is greater if you have opportunity of expanding to other regions, considering the success of the present units. Thank you, Lucas, for the questions. I'll talk about the effect of bad debt in Q3, and then we're going to talk about the outlook. Let's start with Ibmec. Thank you for your question. Ibmec is one of our jewels, many times overlooked.
We had a Q3 that was very strong in terms of results in all aspects. Your question is super interesting because where are the new opportunities? For strategic reasons, we do not talk so much. We prefer to talk about what we have done rather than talking about outlook. It is an important strategic project for us, especially considering this growth in Vida Toda. Lifelong. Ibmec, Vida Toda or Lifelong is important at Ibmec and has greater possibility because it is less restricted to, you know, a brick-and-mortar campus, considering all the possibilities that we have, a greater digital presence, and allows you to have expansion nationwide, another level of expansion where the courses are outside the traditional areas of business. You have courses that are very strong, traditional, and Ibmec, etc. You have grown a lot with a portfolio that is close to the business. We launched technology courses.
We have an AI portfolio of Ibmec for Vida Toda. They're very praised in this topic that is very much sought. We connect this to the business. They are not just technology for the sake of it. Technology geared to professionals and business people. It has been very well received. We have the law course, very strong in practically all the marketplaces, law more connected to corporate business and allowing students to develop several careers. We study potential expenses on this topic. We'd rather not talk about it. It's quite delicate from the competitive standpoint. We're very happy with Ibmec. We'd rather keep some gemstones to us. I will turn over to Reginaldo so that we do not open up on our gemstones. We are very excited about Ibmec. On bad debt, we see in the bad debt very positive results of the more conservative view on revenue.
We're reaping these fruits or benefits. You know, we have better quality of revenue when we have less long-term revenue since we have lower penetration of DIS, especially second half. DIS is more long-term. You have immediate impact on bad debt reduction. This has been happening since early this year. We have a provision for non-engaged students. This reduces revenue, especially in the quarters of intake where we have that NOR comparability. The accounting view of revenue suffered. This does not impact cash. This influences bad debt, the complete cycle of intake and of renewal and dropout is also neutral. You see this variability when you compare the NOR slower, especially in intake quarters, and you see better bad debt, small in the Q3, this goes stronger in Q4, and very strong first quarter 2026. We'll see that very favorable in bad debt year-over-year.
In this Q3, we had some other specific supports. While selling the portfolio, we believe it will be recurring. So we are only selling 20% of the portfolio, 20% of the students that are inactive. We had a provision of 100%. We did the write-off. It should be more constant historically, but for one reason or another, our recovery rate is higher than what we had in the market. That was not natural. We expected this to stabilize, started stabilizing now, and we are going to start making those constant procedures. This base of inactive students is accounts receivable with write-off. It grew 20% a year. So we have 20% of this portfolio. It should be a stable process of selling a small share of this inactive portfolio and should happen, you know, throughout the year. It will be recurrent.
It went off a vision of Q3, but on a year view, it will start happening. It happened normally because this was revenue I recovered over the time, and it will have a specific effect when I make the sale. We see that as the recurring and structuring benefit. When you have an isolated view of Q3, it's specific. All the bad debt cycle is positive, and you should expect a positive outlook for 2026, right? It's good to have a CEO that was CFO that can better explain that. Looking ahead, we see this outlook of improving bad debt. It was a Q where we had a higher reduction than we're going to have on the consolidated next year, specifically due to what we commented selling. The portfolio is something that we're going to do recurrently since it was concentrated in this quarter.
It had an effect on the quarter that was stronger than if we actually make the sale next year. In addition, it reinforces the point that we had commented, which is, we had a more conservative view of revenue, more quality of revenue. First, linked to the provision of non-engaged students. Second, due to less addition of DIS by students. These two factors will feature in our bottom line. For our bottom line, we'll see reducing our receivables average time. It will reduce our bad debt next year. Just to tell you that, certainly, this is the effect that is expected, very much linked to what we had planned and the difference of recognizing our revenue. We have year-over-year, we see bad debt very much below compared to this year.
It's good to see, you know, humble CFO as his preceding CFO, but he put it quite well on the [BEDET]. Thank you, Luca, for your question. Any other questions? Thank you. Very clear. I agree. I agree, you know, the point on humbleness. The Q&A session is closed. We'd now like to turn over to Mr. José Marquez to make the company's final remarks. You may proceed, Mr. Marquez. Thank you all very much for taking part. As you've seen, it's a quarter that makes us very confident regarding the next steps of the company, and we're very strong in all lines. Cash generation that is very consistent to what we've been talking about and sustainable, showing again the ability that we have closing this year. Very reassured regarding the guidance that we gave and the operating results. We're doing very good, doing very well there.
You know, intake in Q3 is better than looking back. It's looking ahead. The outlook is very positive. All of that followed by a very engaged team. You saw the award that made us very proud of best prepared companies, best companies to work for of Sami Magazine. See great satisfaction internally, our academic quality improving in all segments. Ibmec, IDOMED, Estácio. This is our business in all modalities, teaching our students to ensure our excellence in academia. Very happy in all outlooks. I thank the whole team, super team of YDUQS. They've met some of them. Some are not here, but are very happy and proud with the result. Thank you all very much for taking part of our calls, and we'll be open for questions. Thank you very much. Video conference of YDUQS is closed.
We thank everyone for their participation and wish you all an excellent day.