Hello. Good morning, ladies and gentlemen. Welcome to YDUQS video conference with the results of the third quarter 2021. This video conference is being recorded and the replay can be accessed at the website of the company, www.yduqs.com.br. The presentation will always be available for download. We would like to inform that all attendees will only be watching the video conference during the presentation. 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, operating and financial projections and goals, constitute beliefs and assumptions of the YDUQS' Board and the current information available to the company. These 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 be aware of events related to the macroeconomic environment, the industry and other factors could cause the results to differ materially from those expressed in the respective forward-looking statements. Present at this video conference, we have Mr. Eduardo Parente, CEO of YDUQS, and Mr. Eduardo Haiama, CFO and Investor Relations Officer. Now, I would like to hand the floor over to Mr. Eduardo Parente, who will begin the presentation. Please, Mr. Eduardo Parente, you may proceed.
Thank you. Good morning, everyone. I hope you're all well and healthy. I'd like to start our presentation. We are proud of the quarter we've had. Something we have had and expected actually happened, and it seems things are quite promising. I would like to start on page three. We have three major messages here, so we make an effort. What are the three things that we think are important for us to take away? The first thing is that we are used. We've always see in our discussions Digital and Premium growing quite strongly. We see the nine months of revenue of both have exceeded total revenue from last year and as we had anticipated to you, so we reached 50% of our net operating revenue.
This is almost the growth everybody's used to. Just to tell you that it continues to happen, strongly helping a lot our business. It helps a lot to transform the face of our business. Second great point, I think this is a novelty that is worth reinforcing, are the clear signs of the On-Campus recovery. Before the previous quarter, we had three quarters with a lower price. We had an increase in the on-site campus. So we had a renewal. So a bit of margin returning to 2020 levels. Increase On-Campus intake versus last year. On-Campus mood, most students are actually back to campus. Since the beginning of the year, we're having in-person On-Campus classes, and we had a quite positive evolution in enrollments for next semester.
This is the second great point. Digital and Premium maintaining strong growth, and the second point is On-Campus recovery. The third is not a novelty. We're clearly known by you as very disciplined in our capital allocation. But I think at this time of volatility, this becomes even more important. Allows us to become seniors of our destination, making better decisions, keeping all the alternatives we had open and equal with what we had. They are three signs and three very important points that I wanted to share with you. Many numbers, many details, transparency on the next pages.
Moving to page four. This is a reference to the estimates that we pointed out last quarter on intake and average ticket. I'm going to show you the left. We have 2019, because 2020 was quite a typical year. When we see On-Campus the growth of 12%, we look at 2020, we had a relative drop. Not only do we have a growth of 12% On-Campus, and it's very much on a basis that has relative success considering a very difficult world we had last 13%. Yes. Digital, we had a 13% growth vis-a-vis a growth that we had that was quite large last year. We're talking about almost 80% growth when we look at the intake of the year.
In the past 12 months, in 2021, 342,000 students, a growth of 60,000 vis-a-vis the previous year. I think perhaps you can count in a handful the number of destinations that had 342,000 students. This is what we had as intake. In a handful of people who have 60,000 students between 2020 and 2021, the growth is quite strong. Below we have our KPIs. We had a reference from 6.2 to 6.6. We had 6,400 students in medicine, and the ticket has increased more than we had estimated for the first nine months of the year from zero to five, we reached 12% of growth. On Digital, the same.
We had an expectation of growth of more than 10%, and the ticket got a little worse, actually it did, but practically stable vis-a-vis the same period previously. On On-Campus, this is something that you get very anxious as to the situation. The final lap, for next semester, we're doing quite well and on any dimension you choose. It's a very small part of the process. On-Campus, on purpose, we put a larger band in terms of intake. We've reached it, over 12% increase in On-Campus intake, and the ticket behaving quite well. Again, the ticket alone is very good news, but along with the renewal indices that we had, along with the NPS and several things, the news is quite good in terms of the soundness and clear sign of recovery.
Moving to page five. What do we have in terms of highlights? I've mentioned on the left here, we see strong recovery. We had the outlook of closing the year of 2,000 YAs in our digital world. We came to practically 1,000 students only on Digital. When we look to the right, on the top part of the page, the revenue of Digital exceeded BRL 1 billion, more than the revenue last year. Same thing with Premium, BRL 640 million, which is higher than the revenue we had last year, the whole of last year. Reminding you that both together in the first nine months accounted for 70% of our EBITDA, 70% of our EBITDA, 50% of our revenue in businesses that have very strong growth.
Below on the left, the evolution of three average tickets. We see quite positive, including Digital. The drop was smaller than what we expected. When we look along with the renewal rate, the three renewal rates were higher than what we had last year. A year ago, we were at a situation and we were giving a lot of discount and increase in PDD and stable tickets. Now we had actually no discount and actually bad debt is dropping and ticket increasing, some strongly, with a renewal rate higher than what we had a year ago. All of this leads to this part on the bottom right. This is closing of 2020, the first year that we've shown the margins per business. Premium closed with 50% margin, 2020.
After all the administrative adjustments, first semester, we closed at 47%, and in this quarter, we get back closer to previous year. Same thing on Digital. Last year, 2020, 45%. First semester, 39%. This third quarter, 47%, getting close to 45%. But the great news I consider the On-Campus. We've had a first semester that was difficult. Now, an intake of first quarter was weaker. First quarter had great impact, and the first quarter, Haiama was going to show you later, but we haven't had it on the third. Neither the second or the third, we see a recovery that is quite strong in terms of margins happening in the following quarters, despite the intake having been smaller than the previous year.
The 24% of EBITDA On-Campus margin is a clear sign of recovery. Lastly, on this little banner below, 80% reduction of non-recurring effects on EBITDA. Nine months last year, we had almost BRL 300 million on recurring effects, and it dropped to 59% because of three ordinances that were dropped in the second wave moment that we're going through. I'm moving to page six. Let's talk about Premium. The great highlight here is the revenue of nine months exceeding last year, with a growth in medicine of 38% over the nine-month period. When we look at the top left n et revenue, adjusted net revenue. We talk a lot about adjusted.
Last year, we were talking about adjusted. It was a moment of a lot of discounts, so the leaps would be even greater. But because of transparency, we trust very much the adjustments we made last year. We believe they were correct. We prefer to maintain the same metrics, the same discussion on the e volution results. What we show in green is the evolution that is quite strong in the number of students in medicine. We see the revenue at the top and the base about 30% OS. And in gray, you see Ibmec that has joined the Premium unit, bringing a lot of value and with a quite important representativeness, practically not impacted by the pandemic, as you can see.
On the top right, what I mentioned previously, we have the third quarter, 48% margin, reaching close to 50% of last year. Most important than that, we only disclosed last year EBITDA by business unit. Closed in the Premium unit, we closed at BRL 310 million last year, EBITDA. And the first nine months, we had BRL 304 million EBITDA. And the colored one, Idomed getting to 6,400 students. Average ticket is 6%. Next, Ibmec, almost 5,000 students with average ticket stable at BRL 2,700 . Renewal rate at 98%, more than 1 percentage point than previous year, with the expectation of up to 450 new medicine seats under the approval process. And the growth of the medicine average ticket exceeding expectations set 2021.
Moving to page seven. We have close to 1 million students, thanks to the integration of QConcursos and 1 BRL billion in revenue. Below, we have the evolution of undergraduate studies. Distance learning. It has strong growth. If we consider in terms of percentage, it's a bit more smaller, but in absolute terms, it's higher than what we had in the previous years. Quite important evolution here from BRL 377 million to BRL 780 million. It's here. We total EBITDA BRL 440 million . We get to BRL 420 million in the first nine months, showing great soundness in the growth, not only in the business.
Below at the left and base of students growing, and this leap in blue, the base of QConcursos joining the students that pay QConcursos, not all users, only the paying ones, getting to practically 1 million students. So you know the growth trajectory. We're getting to almost three times what we had in the third quarter 2019, which makes the base to be very young. A lot of maturing to happen.
On the bottom right, we have a renewal rate growing vis-à-vis previous year. And something that we're very proud of, an improvement of our NPS, quite strong. We have On-Campus and Digital grade transformation of our Digital world, a revolution with the RM method, the way we teach using technology to take quality education to the masses.
Ticket, as I said, very much in line. The rest I have mentioned. We are expecting the expectation of 2022 to getting to 2,500 centers. Talking a bit about QConcursos, we have been growing quite a lot. We ascertained this acquisition not only for the business itself. This growth of 25% year-over-year shows that. We do not disclose detailed results, but it is a strong cash generation, strong revenue growth. On the right, the reason for our great pride. We have Mercado Livre, Americanas, Magazine Luiza. The only education company that is in the largest e-commerce companies is QConcursos, ranking 10th.
What you are going to see increasingly, what we have brought to our family is a group of fantastic people that have this mind of inclusion to teaching, of expanding to people that have more difficulties accessing education and have this mind that is absolutely Digital in a world where engagement is a strong reducer of CAC, a sampling of quality and relationship that you have. We are all learning a lot from them. It is a very good experience for the group as a whole. It is not just a financial matter to have QConcursos.
On page nine, talking about On-Campus, it is interesting to note that when you look at the ensemble of the numbers vis-à-vis the growth I have just shown you on Premium and Digital, these are numbers that do not present growth. On the other hand, the best news of the whole presentation is here. When we look at the revenue, that drops 6% vis-à-vis third quarter 2019, 13% vis-à-vis first nine months of 2019, and EBITDA that is not yet equal to the others exceeding 2020, b ut here we have this clear recovery. First quarter in terms of intake, that was poor, weak considering previous year, impacting less the following quarters.
You notice that on the left, when we talk about revenue quarter-over-quarter, the drop is smaller. When we look at the nine months, we had an impact in the first quarter of this non-intake. Student base vis-à-vis third quarter 2019, it grows a bit. Obviously, it is not oranges for oranges. We had a change here when you compare oranges for oranges. It is a drop compared to 2019, but not great drop. What is important is undergraduate average ticket. We look many people when we had the mandatory discounts, were you going to be able to keep the students? The mandatory discounts were ended, we resumed original prices, and we went beyond them.
In terms of increase, we had increase in most courses above inflation. So trying to recover previous losses and a recovery rate of 83 percentage points vis-à-vis previous year. So previous year, we had program working on discounts, understanding what was happening during the pandemic, forgiving debt, etc . This is not the situation we have today. This is what we used to have. Our management gives two courses On-Campus. So students tell us, "Well, there are institutions that are much more expensive than ours." The recovery has been very praised and it is working quite well. So we resumed with 15% with students in February.
I actually started teaching On-Campus in the second semester. We have more than half, 50% of students, very positive mood. Next week we are starting tests and people are choosing their disciplines for the next semester. It is a very positive atmosphere. NPS reflects that, 19 percentage points of growth. Health courses continue to have greater representativeness, something we did not talk too much. There is something that is very important. We had a reformulation of the semi On-Campus quite strong. The numbers that you see here on the left, 1921, they are very different courses.
We had a semi On-Campus managed by distance learning, almost " as like a favor", students would be there, and we further did this logic last year to have from distance learning to On-Campus. We managed to have a very good evolution and as an alternative. What we had to offer original for those that had no conditions, they were [inaudible], they could not afford BRL 800 rise of On-Campus. They were actually channeled directly to distance learning. We provided an intermediary offer, and this has been quite successful, not only for you to have an alternative for those that can no longer pay, and also for many on distance learning to have a trade of different price. So have a bit of, and this has been working quite well.
On page 10, I think this page is quite important and it talks about the months we are going through. I think you followed part of it. We have had improvement. We have always communicated transparently what has been happening. Just to illustrate this, you see this curve. It is a tragic number of deaths in Brazil to COVID. From March 2020, 13th of March, a Friday, we had the function overall in Brazil of on-site classes. Last year we had enrolled for January of 35%. We went on holidays, we were excited what was going to happen, and what happened was that we had the second wave. We detected it very quickly. We had a very strong reaction, which was very positive despite weak intake first semester.
The intention to get back On-Campus dropped sharply as well as the intention to enroll. What do you see on this chart? We have great drop on deaths and most of the population vaccinated and smaller fear of returning On-Campus. At the top, we see some international references, ones that are Brazilian, are very used to this This is the number disclosed daily by Dr. Maurício Garcia that somebody quickly respect. This shows that we are in line with Germany and other European countries in terms of death per million inhabitants in the past few weeks, and better than some countries that overall have managed this process better than us over the pandemic. I am going to hand over to Eduardo Haiama to talk about our revenue and our results.
Thank you, Eduardo Parente. Good morning, everyone. Well, to show you a bit of the revenue numbers. Eduardo Parente has mentioned previously, if you can remember, our two segments that grow a lot, Digital and Premium, reach around 50% of total revenue. This dynamic in the next years are these segments that should keep on growing, of increasing more this share over time. Another point that is very important on this result, again, showing the chart in the middle, the drop of the impact that we have had of laws and court decisions. Almost BRL 70 million previous quarter to BRL 9 million this quarter. If we consider this our revenue, we would have had 12%, but as we said, it was temporary.
Our adjusted revenue has grown 6%. On the chart, bottom right, it shows a bit why since the beginning of this year, we stopped showing this range of revenue. The variations of YAs. As you can see, it has in the quarter, accounts for only 6% of the global revenue, and tends to reduce in the next quarters. On slide 12, we talk about costs. Here I would like to highlight two main items on the bottom chart. The level of bad debt and discounts dropping regarding last year, we had 11.4%. This year, we have it 10.7%, despite our rate of renewal having improved. Why is this important? Because at the end of the day, it shows that we do not need to provide further discounts to renew our students with better indices.
This is quite good, but considering the quality of the results. On the middle bottom chart, basically, we are showing costs as a percentage of revenue is dropping from 69% to 67% in absolute terms, 4.9%, in line with accumulated inflation. Here I would like to highlight basically a line that is regarding publicity P&M. This quarter has grown a bit more, almost 25% regarding previous quarter, basically on two l ines, because advertising is in line with previous year in absolute terms. But in the part of marketing expenses, one is related to sales commissions that last year was almost in the fourth quarter, and now it is dropping a bit more this third quarter s o we were accounting for this expense.
The other one is related to call centers. Here we have two factors. First, is that depending on what we have. This line over time tends to grow. But the other one has been our fault in terms of call center. On slide 13, we have cost reduction, the impact on EBITDA. In consolidated is in line with better quality. Our non-recurring level was almost BRL 70 million down previous year. This quarter has dropped to BRL 35 million. What draws most attention here is what we have on the right when you look at the reported previous year growing BRL 31 million, and the non-recurring level, when we make all the adjustment, dropping from BRL 300 million to BRL 60 million. All of this increasing our EBITDA margin, growing from the first semester to the third quarter.
On the bottom right, showing what has been brought up, what has been said, that the percentage today within our EBITDA, total EBITDA, the Premium Digital reaching almost 70%. In 2022, the trend is these levels to keep on growing. All and EBITDA, we believe that the intake will be more normalized On-Campus in the first semester. It will have a great impact that will be positive both in terms of the revenue and EBITDA in the On-Campus segment. I would like to talk a bit more why we understand that this result has been very good third quarter. On slide 14, we show the EBITDA ex acquisitions. Why? Digitally, we started consolidating in May last year and Athenas as of August, and more recently, QConcursos from July.
I f we were to make an evolution of EBITDA quarter against quarter, as we are showing here, including acquisitions, the comparison would be fair and would not actually show the evolution of our business. What is this evolution? As you can see, on the left bar our EBITDA in the first quarter 2020 was BRL 351 million. On this first quarter 2021 was BRL 242 million. Why the drop? The drop is basically due to intake. As we mentioned the previous semester, our intake had a great drop, basically in On-Campus. In a normal scenario, previous years, what would we expect the results of a weak intake of the first semester? Well, we would never be able to recover for the second, because second semester seasonally is weaker in terms of intake than the first, b ut this chart shows what actually happened.
In the first quarter, actually, our EBITDA was lower. In the second it was a bit higher than the quarter previous year, reminding you, adjusted. In the third quarter, in reported numbers, we were 7% above and adjusted in line. Why is this number important? Because it shows that our business actually is changing due to the fact and Digital continuing to grow and then leading the results not to be the way they were previously because we had great intake in the first semester On-Campus. The other point important to highlight that Parente mentioned on the On-Campus slide, is everything we have been doing, continue doing in terms of optimization of costs.
This year we returned some units On-Campus to optimize the cost line. Important to mention that these returns were more campus optimization, plus you're in campus, so it's more in line cost impact. The other one in line of revenue On-Campus was this ticket that has been mentioned that has grown. After 18 months of stability year-over-year, in this quarter, tickets are growing On-Campus.
When you combine high ticket with improvement in cost, the margin has helped at the end of the day to despite weaker intake, we had a quarter that was more in line with previous year, which is quite reassuring for the fourth quarter in terms of results, just as not only what is reported, but the adjusted one. Adjusted, reminding you that we expect the level follows in line of what we had in the quarter in total terms and well below the previous year. On the next slide, we have reported income with a growth of 16%. I want to talk about what has impacted income in the past nine months and what kind of adjustments we have been placing regarding what should be analyzed.
Let's look at the first financial result. We have on the bridge between reported from previous year and this one. Obviously, we had a bit of debt, but we had an impact on financial results. The main counter is on depreciation and amortization. The first are the impacts. First line on our table are the leases. On Digital and Athenas we had more rentals and we had more expenses, despite what I mentioned of returning the units that we made. The second line or row are improvements that we make over the years, that we have made actually over the years in the rented properties. Since we are returning some of these assets, well, imagine that we painted a third-party building.
Painting roughly would depreciate over 10, 15 years. We have to paint the building again. When we- how much to keep this property forever? Will I return it in two? Saying, well, let's not keep this property forever, let's return it in two, three, five years. What happens is that the depreciation of the investment made happens according to the contract. So I end up depreciating in fewer years. This is what actually happens. This is why we have an adjustment of BRL 21 million related to that. The third row, we made several acquisitions in the past two years. UniToledo.
Last year, Adtalem, Athenas, and now QConcursos. Some of these acquisitions add some kind of Premium, and there will be depreciation now and in the next four or five years. So it's totally non-cash. Cash has been dispersed, but in terms of income, this has an impact. The other rows are future investments that we are expecting to make in the next few years to improve the units of the part of IT and Digital transformation that we are starting to depreciate. The last adjustment is related to what we have had on the EBITDA and the way it impacts net income. This slide 16 is cash flow and adjusted cash flow is in line with the previous year.
You would say cash flow in the reported result moves from BRL 1 billion to BRL 700 million, which is on the table first line. First, we have to remind you that according to IFRS, I have to consider interest expenses. It was operational this year. We had no doubt and I had debt, and I would consider it as expense. This is capital structure. Nothing to do with the operational health of our business. You have a line here, removing these expenses to compare apples for apples. The second line that calls the attention, the one before last, was a delay in Fies receivables. In December 2019, we were supposed to receive BRL 136 million of Fies reimbursement and due to a problem that we had with the MEC system, it was rolled over to January 2020.
We adjusted, so we had a lower flow of the EBITDA. This has helped companies to postpone payments that would happen over the year to put almost everything for the last quarter. This year, the impact was quite small. To compare apples for apples, we have the adjustment of BRL 680 million. The cost was in line. Where are we investing this in money, which is our CapEx? The chart on the right. We maintained our guidance that 40% approximately should be spent on Digital transformation in IT, and this is what we have been maintained. This growth of nine months, we have been talking for some time that the investment of this year will be slightly higher than the previous year, reminding you that we spent BRL 450 million last year.
This investment that we made to Digital transformation in IT is showing the results, as Parente mentioned on the previous slides, with an improvement of our NPS, retention of students. We understand that post-pandemic period, it will be even more important to keep on investing on this front. On slide 17, we talk about our capital allocation discipline and our comfortable financial situation. We have almost BRL 2 billion on the first line and a level of indebtedness that is low, 1.4x net debt per EBITDA with a profile of credit that is very good. Especially with clients that would give us a comfortable situation. Prepare for the scenario.
In 2018, we had the investments results that were quite stable. At the time, we did not have so many M&As. It did not make sense for the cash flow there. We reduced the level of dividends, and we allocated it to M&A. We have UniToledo, Adtalem Athenas and QConcursos. What multiples post synergy we can affirm there, what will they be? Because the integration that is almost over, the most critical processes and systems is over. Now, basically, we have to do more of the same to attain total synergies.
When you talk about multiples of 4x- 6.5x a fter acquisition compared to our current multiple of EBITDA the past 12 months. Because ex IFRS. Our acquisitions, even in the most lower levels that we are living now because of the pandemic, generated a lot of value. When you combine our discipline to our current situation, the future plan is our plan, and it is flexible. We may amortize the debt over time, gross debt. We may be paying dividends or not. We may possibly have a share buyback as we did in 2018, or looking at interesting M&A operations, we can allocate that. We have this flexibility despite this situation that we see in July. We are at a very comfortable situation for any kind of scenario. With this, I would like to hand over back to Eduardo Parente. Thank you.
Okay. We made a great summary of the main points of Digital and Premium continuing with strong growth, showing the recovery. I think we have this situation that is quite sound financially, that shows that it paid off, the discipline we have had over the years. Just to illustrate that, the growth of Digital, we got to 2,000 centers, BRL 1 billion in revenue, 1,000 students. Revenue has grown the past two years. Intake that we diluted now in the fourth quarter rather than two semesters. Digital has been quite effective, actually helping us to code ticket. We had a growth of 18% year-over-year. Premium, strong growth with revenue of BRL 640 million. Last year, we got to 6.4 thousand students. We practically double revenue in medicine.
The two businesses are half of the revenue, 70% of EBITDA, which gives much more the face of consolidated business with growth, strong growth. As Haiama said, what you see our year with intake owned by the market that was very poor. We have a possibility of upside for the first semester. That is quite interesting for the first semester next year. We recover the MT of intake, and the two businesses keep on growing. The investments in Digital transformation and IT are moving ahead a lot with increasing the engagement of students on Digital and On-Campus, reminding you that On-Campus, students are back to classrooms. The two NPS is growing a lot, which is great. We keep on optimizing our campi, reminding you that we have done what we said. We keep on our campus optimizations.
We have our influence on our ticket and actually the margin dynamics. We get to 24%, well above 10% or 24%. This intake, 12%, is better than the market. When we see the EBITDA of the third quarter, despite hindered by the first quarter intake, it is a good situation. 80% of reduction in the non-recurring effect. I think we see for the first time bad debt and discounts dropping. That was a number that was increasing. We always told you that we would get to the single digits, and now we have. We have a drop compared to the same period last year. As Haiama showed here, this is 1 point for net debt for EBITDA generating cash and having good effect of businesses as the worst part of the pandemic is over, leaves us in a very comfortable situation in terms of option.
I am going to move on to the last page 19. When we look at Premium and Digital prospects ahead, Premium and Digital, they are going to exceed 50% PANAR next year. Our expectation is that it is not 50% of our EBITDA. We have an expectation of EBITDA On-Campus. The growth would be greater share next year in terms of medical students from 7,100 to 7,500 undergraduate medicine students. Expectation of 2.5 DL centers. Expansion of lifelong segments, increasing our portfolio. We have a lot. We have a great potential if we expand. On-Campus, we have student enrollment intention increase with expectation having levels pre-pandemic. Expectation of all units operating with students back on site in 2022. RARA, that was 60%, will reach over 80%, and revenue and EBITDA recovery is expected to happen in 2022.
Digital transformation in IT is becoming stronger. We have an impact on that, but this is something that has been to me, not only a learning, but a way of thinking quite differently about the business. If you tell us where we are today, if three years ago, if we just start today, people would say that we were visionaries, where we gained comfort, improving margin, testing things. You test things and you see they work. If it does not work, you stop and you ask. What we have been able to do, sometimes I take people to attend classes I give. At the end of the class, after you have done the roll call, you have raised the students' grade, and you have a journey that is totally different. I taught last night and people were choosing disciplines for next semester on their app.
All of this has a great influence on NPS, just as it helps the quality of teaching. You can create opportunities that are different for students to prepare for a classroom, or they are absorbing content and learning via distance learning. This is absolutely fantastic. We have been doing this. Last point of this bullet is that we are evolving a lot in terms of using AI to understand the behavior and performance of students. Last year, we had a test that was totally Digital with no teachers touching. It is actually On-Campus, and we are going to do this. Now we are going to have a great pilot for a final Digital exam to understand who has learned what students. What questions work, what questions do not, which measure learning, which do not.
This is a new step that will allow us to take a further step ahead of competition, considering Digital, distance learning with the participation of Digital and On-Campus students. Lastly, we understand that the scenario is extremely favorable for M&A operations, but with the increase in interest, we are going to be more careful than we have been. We have debt under control. We have to be disciplined in capital allocation and focus on the continuous improvement of cash flow conversion. This is what we have had. Again, I think it has been a quarter that has been hard in an environment that has been quite tough, but feels that all our efforts that we have made over this third crisis have paid off. We are much more robust, believing a lot on On-Campus.
This is something I say, I tell people a lot within YDUQS, and pandemic has not shown that distance learning works, and it has shown that everybody is crazy to get back. Obviously, it is not going to be the way it was before. Several adjustments will allow us to have more efficiency using technology in terms of the cost and in terms of teachers contributing a lot, and things are much broader in their task as educators. The Digital content On-Campus has improved greatly. The acceptance and the satisfaction that students have over their journey. NPS reflects this quite clearly.
Again, a result of hard work. It is not simple, but we are confident that we have gone through the crisis well. We have taken care of your money quite well. Those who have trusted us, we thank you very much for your confidence, for your trust. Once again, I would like to thank you for your time and trust, and move on to the Q&A.
Thank you very much, Eduardo. We are going to start the Q&A session for investors and analysts. If you wish to ask a question, please press raise hand button or [Non-English content] . If your question is answered, you can exit the queue by clicking the same button. Let us wait a second while we collect questions. Our first question is from Mr. Samuel Alves. Your mic is open. You can ask your question whenever you like.
Good morning, everyone. Good morning, Parente. Haiama. Thank you. Two questions on my side. The first is regarding On-Campus structure. We have noticed this small reduction of campus operating exclusively On-Campus. The question is, where you see space today for some specific adjustment for the structure of On-Campus or considering this recovery of the segment, this is no longer necessary? This is the first and the second.
On depreciation that Haiama was mentioning during his presentation, amortization of the spread, etc. , do you think the 2022 recurring up ahead could be something between what it was in the beginning of the year and this level now, just to understand if we have had in the third quarter a factor that has been abnormally higher because of the improvements. Thank you.
Thank you, Samuel. I am going to hand over to Adriano and Haiama to answer your questions.
Samuel, good morning. We can continue. With the configuration of our units in Brazil, we have some opportunities of optimizing our units, but it's quite marginal. We have, as Haiama said previously, an improvement in the current configuration of our units with certain returns or some areas when we have greater migration to a more hybrid type of teaching. We see how this is going to be implemented. Semi On-Campus is to meet demands of courses that are less complex, that had an average ticket that was smaller.
Consequently, it's smaller margin as these courses are offered through the semi On-Campus method. Consumption of classrooms is smaller. This leads us to reconfigure our campus. Over the next year, we still have some adjustment to our units throughout Brazil, but precisely aiming at optimizing spaces and the reduction of the operations. This is our main strategy for this year.
Thank you, Samuel. Regarding depreciation, the third quarter, I'd say that basically it's in line of the improvements that may have had a higher level. The number of properties that had a depreciation. In this sense, if you think for 2022, what should remain for some time first is the depreciation that started with Adtalem, then Athenas. We're going to have a bit with QConcursos for the next four, almost five years of amortizing this spread. We have this until it's actually been totally absorbed. This number, I have to give you the specific value. It's well below what we said, probably until 2022, when we expect to end these improvements that we are actually having.
Looking at 2023, not only at this level but also considering this time that should be longer amortization of leasing, etc . So we're going to have. It's grown, actually, with Adtalem. We had other properties and the optimization of the campus. Adriano mentioned well the return, not only the return of the whole campus, it's a partial one, actually makes this to drop. I have to give you details, the changes between positive and negative. The negative fluctuations there, what may be contributing positively, I have to give you for 2022.
Okay? Thank you, Adriano.
Reminding you that if you wish to ask questions, just press the button raise hand . Our next question is from Marcelo Santos. Mr. Marcelo, whenever you like, you can open your mic.
Good morning, everyone. Thank you for taking my questions. I have two. First is on On-Campus teaching. It is a segment that is gaining relevance. It is smaller if you consider with traditional distance learning and traditional On-Campus. Do you think this is growing a lot? What dimension should it have? Do you think there is a greater upselling or downselling compared to distance learning or downselling of the traditional On-Campus? The second question is what is the impact in terms of margin when you have a migration to the semi On-Campus? Actually, the question is on the semi On-Campus. Thank you.
Thank you, Marcelo. I am going to answer both here. Semi On-Campus system is gaining relevance. We believe it is going to grow a lot. It is a very interesting alternative from the standpoint of cost that you have, where you take those that do not have the BRL 681 million but help to fill the room with BRL 350 million, BRL 400 million. It is a way for you to have more people and reduce its cost. We managed to get the product right, so it is quite successful and quite well-accepted. The impact on margin, we think it is quite positive because actually we have this as an upsell. It is not BRL 700 milllion, BRL 200 million. You have something halfway.
Historically, I like to reinforce this. We do not see the migration of the pay distance learning from Fies to distance learning. We have those that join via distance learning, but the On-Campus paying is a base that historically has been growing in the market as a whole. A particular time has been a peculiarity, but we do not see this happening. What we see, actually, are some competitors of ours that had this product, which was intermediary. They managed to capture part of the people that do not have BRL 700 million that would like to have their networking.
This is something that we are benefiting and having great success. We believe this will be quite representative ahead, perhaps with a similar impact that we had when we brought Flex Light, of having an acceleration in a product that has a price above the one that we would pay previously when people were only on distance learning.
Perfect. Thank you.
Thank you, Marcelo. Reminding you that if you wish to ask questions, just press the button, raise hand. Our next question comes from Mr. Javier Martinez. Mr. Javier Martinez, when you want to ask your question, just open your microphone.
Good morning. Thank you very much. Eduardo, our opinion, you are at a very interesting situation today. On one hand, you have 50% revenue, 70% debt, and a resilient business. You have cash flow, and you have possibility of investments in the future. On the other hand, you expect a recovery, and we agree that the business of On-Campus next year. Lastly, you've been lucky, or you were intelligent to maintain a level of leverage that is quite low. This is a very interesting situation that generates lots of options. I'd like to understand what is the strategic framework that you have for options. What are the options? What are the criteria? Help us understand your lessons and your ideas going forward.
Thank you, Javier. Okay. Thank you. I think you depicted it quite well. Many people look at us, and they associate our institution to the past, that On-Campus heavy thing with very high fixed costs. I think this, at some time ago, up to now, people see it quite differently. I think in your valuation, there's a part that is On-Campus, yes, but which is not that heavy thing. We made mistakes in the past, but they were small mistakes. We had the opening of new campi, but we did that. We quickly understood and left this path, and this generated, today, a structure of On-Campus that is quite robust, and I believe the great point is this.
In the first quarter, we were hardly hit by the lack of intake. We were kind of taken aback when you see that. You never thought that poor intake would affect the future for you. The opposite should be the same, but the bad should not impact the whole year, but it did. We see that the dropout rate is quite high. The first semester ends up having a great impact. Students that register, pay, and leave. This helps the economics of first quarter, and this did not happen this year. When you look, we have two businesses with high margin and high growth, and the third, that I believe all the signs here are that we are out from the great crisis.
We had a first quarter margin, price retention, and our own intake within this year, even compared to second semester of last year. The situation we look is that we see is that our situation is much better. There is a risk of upside that is quite relevant for us in the next semester. What do we have looking ahead? I'm going to ask Haiama to help me to talk about capital allocation. We've always told you three things, distance learning, medicine, and M&A. Medical students keep growing, both in distance learning and in the health school. We managed to do something that is like us. We get good results, so we get to center of 33 students per given.
We are at a place that have 53 students given. We can have flexibility of pricing. It's almost flat compared to the previous year. When we look at the price item by item, we're being benefited by a mix. It is smaller, obviously. We're being benefited by an improvement in the mix when we move to the better pricing. That is, that few people have in this market. For medical studies, it's the same thing. All our structure is very streamlined, even delivering many times in higher quality than our competition. M&A changes our minds a bit. We are disciplined. That's why we've had frustrations of businesses we would have liked to have, but haven't.
Looking back, I think today we are quite happy at the conservative level we've had, especially considering two large ones that we've lost, they're being offered this moment that would not have this flexibility. In the short term, we're buying things, so we have to be very careful. Buying things with share is totally different, so you can have a totally different vision ahead. Again, for three years you've known this group, and for three years this group has been telling, distance learning medicine and M&A.
The fourth thing that we're kind of fond of is short-term courses that we believe has a great potential here, but it does not exist if you do not have the correct platform and the correct technology. So we're going to spend or take a lot of effort, money, time when we find the correct way of being extremely competitive in that. Today we believe we're getting close to this formula. Haiama , do you want to add anything?
I'll just add to what Parente mentioned. First, that on the organic side, more than the growth in distance learning and Premium, due to the fact that we have great support and are generating a lot of cash, we should be investing a lot in what we understand will be the future of education, Digital transformation, IT, along with all the improvements that we are making in terms of infrastructure to our campuses. Our mid, long-term plan has not been impacted by the crisis considering these conditions. The second point, which is related more to M&A specifically, considering the interest level when we look at future curve, 12% nominal, 5.5% real interest, and the spread level of companies that are more leveraged, how much they're paying.
The math that we're going to do is how much does it cost to carry this level of debt that is higher, and how long it takes for you to have a turnaround. In the assets that we're looking at with the multiple you understand, we'll get to in the future and see whether things pay off. One thing is doing M&A when interest is 2% or nominal or negative. But even if you pay 2%, 3% spread, you're paying 1%, 2%, 3% real on actually carrying the debt, and you can take three, four, five years to improve your operations. When you carry 20% a year, 15%, 12% real debt, you can expect three to five years to present results. Otherwise, your economic production in the acquisition is lost.
That's why Parente mentioned that we're very careful in this regard, and we're looking at opportunities, which is the most important part. Let me add something to what Haiama said here. When I look at this industry, three years that I've been here, I see a lot of the ideas of the day, wonderful visions that the future will be like this and that. I think from all the visions, wonderful visions I've seen there, Afya is actually admirable. They've seen something there, and they've built something of great value there. The other changes that happen in the industry have been happening gradually. What are those changes? Distance learning, growing a lot, centers opening, and hybrid, and I think this is something.
Well, I'd like to have some credit on it, not being falsely modest. We have been experimenting and trying different things. If you look at our business today and what it was three years ago, our medicine that became national. Actually, we have our internal SISU. We have a single computer medicine property that reduces greatly our operating costs. So generating hybrid teaching people. People said, "Talk about hybrid education," have it. It's there. There was a class I was teaching, it worked, and we made a test, and we went with the Digital tool, and we're here all the time explaining this to students. These years it's grown. You haven't heard us talking about Digital transformation, about the hybrid future. You've seen things happening. I've seen things. [Non-English content].
Our next question comes from Mr. Maurício Cepeda. Excuse me if I mispronounced your name. Mr. Maurício, when you're ready, you may begin your question.
[Non-English content] Let me ask [Gabriel] some more questions for strategic things. I have some other things. Well, the first question is, well, you've shown that the Premium courses they hold well the results are more stable. I'm going to insist on the question on the previous quarter in strategic terms. Do you think about actually, or perhaps going after courses with higher tuition fees, BRL 2,000, BRL 3,000 tuition fees, and increase the offer you have of these more Premium courses.
Second question is in terms of trend, is about distance learning. We see that at least talking to experts, we have a certain trend that the growth rates reach levels that are a bit more normal, more organic. We've seen high two digits in the growth of distance learning, and this may be saturated. My question is, what do you see in terms of growth of segment of distance learning? If you're going to get to levels that are more common in terms of growth. And the third question of trends in terms of prices, you see tickets are still dropping. It seems that there is a certain competition for price. What do you think? When do you think will be the end of this conflict?
I have just another question. Well, two very basic questions. First is, why is your personnel expense growing, not only in absolute terms, but considering net income? And the other one is marketing expenses. I didn't quite understand. It's grown regarding net income, not only 2020, 2019. You talk a bit about the sales commissions. Do you see that this will be normal from now on to get students or this tends to stabilize? Thank you very much.
Thank you, Cepeda. Well, I'll take the fun ones and I leave the expenses one for Haiama. I take a note here. Trends and strategies for Premium and courses. Let's talk about courses with greater potentiality. Well, we go after everything. Everything has to be complete. As Haiama showed, 8.6% EBITDA and pay something of 15%, that will become 8%. This range of 4%-6% is what we seek both synergies within an On-Campus world. It's easier for us to identify quite well where this value comes from, and online is strong. We've been looking at more courses with different prices. It's very crazy. People say 1,000 BRL Premium at Ibmec, they have BRL 2,700, BRL 2,400. Type of ticket that you move into the world that we call Premium here. Obviously, expansion of Ibmec is something that we are at a period of turnaround.
We haven't talked about that, the NPS of Ibmec and medicine is evolving quite strongly. We managed to get, especially in Rio at Ibmec, a very strong branding situation that is quite important. Courses with a higher tuition fee. If it's worthwhile, yes, at a time of crisis, this is very good. At a time of expansion, perhaps not so much, because we believe that the expansion of higher education is struggling in classes C and D. When you fight classes A and B, you're fighting with someone for a student that is already somehow in higher education.
So yes, for our portfolio, it would be very interesting to have more students in this Premium world, expansion of medicine, and Ibmec is still waiting for us to do this, but we do not discard acquisitions that are within reason. With regards distance learning, let me take both together, growth and price. I always say prices are going to drop because they will. Calculations that when we see various large competitors with EBITDA at about 20%, we have to take care in the way people account for that. People consider it transfer, people consider it at the reduction of there. When we see it again, many people are operating around 20%. 20%, when they put rental or that CapEx on that, is relatively small cash generation, and you have 5%-10% price reduction.
People have difficulties of operating within the market. So we believe that 10% is where the price is going to stop. We've been talking about this for some time. It hasn't been happening. But again, this when I'm not happy with the growth, we, having 14% margin, we have this freedom and possibility of making this choice and dropping this price in the market. Growth rates. What happens? You started having much more volume within distance learning. This applies to YDUQS and the market as a whole. For you to grow 50% when you had 500,000 students intake in the market as a whole, it's one thing. But if you have 1.5 to 1 million, you have the same 500,000 students of intake, they are different rate.
I think saturation is far. When we look and we see the number of students with middle school that get a degree, middle school is much higher than higher education students with those degrees. We have a stock of students, so natural candidates for distance learning, people that have degree that two, three, four, five years are going to seek education. That keeps growing. We do not see why stopping growth. What has happened a lot, talking about strategy and trends, is that it has become a fight of big balls or cat to small ones. People start to differentiate equality and content. For the small ones, this is very difficult. You see a lot of people that do not have the On-Campus with the possibility of growing.
This is why the margin is smaller. Sometimes what we charge is less. We have a situation which is different. Then again, we are very well-positioned whatever the future is, but we are far from having a drop in growth that is significant. Obviously, 55% equal to what we had last year or previous year of growth is something that we will not see in terms of intake these two-digit number. Probably starting with two is what we see. Fun part.
Thank you, Maurício. Expenses with personnel this quarter grows in the comparison year-over-year more because last year we had a drop, and with a drop, we were amidst the crisis and our result that was reported was very poor. What we had provisioned in part of the bonus, we sort of reverted that. Only that in the previous year in corporate expenses led to a reversion of BRL 12 million of bonus at the time. Another point that has impacted this year and not last year is what we call LP. Our profit-sharing program, we call it compensation. Why is it important?
Because compensation, whenever we hand shares, we have to consider the expenses of the plan and also labor charges on those deliveries. We account for the charges that the effect on this profit-sharing or LP one year before the delivery. Since we had delivery of shares in September this year, we started accounting for these expenses from October last year of charges. This quarter, which did not happen last year, we did not actually shared or have delivered shares. Despite our having acquisitions, etc. , this part that is a cleaner quarter compared to acquisitions this year as opposed to quarter of last year, that the fluctuation was not an increase. It was more the way we accounted for it specifically.
In marketing specifically, we continue viewing that marketing expenses and advertising as a whole tends to be in line with what we had in the second semester last year. Since we still view these dynamics of growth of our distance learning, we should expect that in absolute terms, it should grow, but we are actually making spending in Digital and IT, so actually to improve our spending. What are those improvements? We have a system today that basically is our educational system. It is our CRM and our billing. Various fronts that we undertake, they are complicated to be happening with systems that is a monolith where everything we make may have further implications.
We are making this investment to break down this part in three. So CRM, which is the heart that will help us have an intelligence and agility that will be much better from now on. This investment has started this year. It should be completed next year. We are going to be having improvements in the way of operating to be increasingly more effective in our actions. Overall, next year, do not expect a drop regarding what we have had this year, but ahead, we should have various benefits.
Okay. Very clear. Thank you.
Thank you.
Thank you, Cepeda. Our next question is from Mr. Vitor Tomita. Mr. Vitor Tomita, when you like, you can ask your question.
Thank you very much. Thank you. Good morning, everyone. Thank you for taking our questions. Most questions we wanted to talk about have been discussed, but there's a topic we'd like to see some color, though, being touched. That's which is strategy or sort of lifelong education strategy. If you can give us some color and some more details on how you have the technology through QConcursos to help on this area. Various segments, so for this line of revenue to become more relevant. Thank you very much.
Thank you, Vitor. I'm going to hand over to Aroldo.
Good morning, Vitor. That's a good question. We've been working, as we do here, calmly, but testing a lot of things. We've been testing things in the past. With the arrival of Q, has accelerated that and brought some new possibilities. I'm going to talk about what we have concrete, some things ahead. I cannot tell you everything because it's part of our strategy of growth. Whilst we're testing the thesis, we'd rather not speak. On the first, we launched the first legal subscription of partnership with Q and Damásio. We try to benefit from the best of what each brand has the best for us to offer new courses overall. So it's a legal subscription, and we take a brand and content of the Damásio with technology of engagement of communities offer courses Q.
We're designing a platform of free courses also by QConcursos to use most the potential of our brand, Estácio or Ibmec, or our local brands to offer courses. This also impacts the graduate studies. Not only free courses, extension courses, but graduate courses. We're short courses that we've launched six-month courses at Damásio that have had great results last year. QConcursos, we also leverage sales of this kind of course of graduate studies that are shorter. We already have some tests. Some things have been proven. Shorter graduate courses, synergy between Damásio and Q products and sales of Q products to Damásio to our other brands in the group. But the fact is that we have a lot of things being tested from platforms, engagement tools, courses being tested now. Q's arrival is recent.
We were using this period, this past six months to test a lot of things, to develop things and adapting things that they have to be able to, in the next year, we can launch many new things to the market. In the short term, we've launched what we already had of quick development. Little was being questioned, so they were shorted. Damásio graduate studies, these partnerships are more obvious. With Vitor, I've been super sure. The fact is that we've been thinking, testing a lot, using brand and content from other brands. It's helped a lot with that, with sales technology and offer of courses that are coming.
Okay. Thank you very much, Aroldo. Thank you, Vinicius.
Our next question is from Vinicius Figueiredo from Itaú BBA. Vinicius, you may ask your question.
Good morning, everyone. Good morning. Thank you for taking my questions. The topics we had sorted here, most have been answered, but the first question that would be about the renewal rate that has improved again as an investment in retention improvement in NPS, you mentioned a lot. To what level makes sense to think about the increase of this rate from now on? The second question would be more specific on expenses, non-recurrent expense. There was a bit more pressure in this quarter for M&A and cost over expenses and transition. We'd like to know what we can expect for the next quarters, if we should see a normalization of these lines.
Thank you. I was looking at your name, Vinicius, as the next. Sorry, Vitor. Thank you, Vinicius, for your question. I'm going to hand over to Marcel, who'll be your marketing VP. Marcel will talk about renewal.
We had pointing to several improvement things and tools and instruments, what we've been doing in-house impacting the students' models to renew that direct things. This has had very good positive results for older students, and now we start working much closer to the freshmen. I believe we have the greatest gap to cover both in terms of On-Campus and Digital. So we have all the efforts here endeavored, both in recurrent and in our base students. We believe the great driver is are going to be happening when we have everything well organized for the onboarding of freshmen and renewal. Well, some advances are generated. The first of them, we again talking a lot about tools and technology.
Now we start taking to the students front and a tool, for example, that we have been implementing within the students portal, the renewal tool that they can view their grades, their invoices. So this has improved greatly students' experience and anticipated all our analysis of renewal and retaining the base as a whole. Our next frontier, as Eduardo mentioned, is that we start having much more analytics of students' journey. We use a part of it, but all those algorithms are integrated here in the renewal tools to support the process. So again, reinforcing veterans or older students. We should always keep an eye on them, but the freshmen are the great focus now.
Vinicius, sorry to ask again, specifically, what lines do you want to understand the evolution on?
Sure. Two main ones. I think one, we actually talked about it in the call yesterday, while restructuring expenses related to integration with M&A.
For M&A, specifically, it will depend on whether there is an operation or not. Overall, it's quite small. If there is almost nothing. As to the restructuring, it is what we have shown. If I'm not mistaken, fourth quarter or third quarter last year, I can't remember. And we showed a table as to how this restructuring cost has been evolving over the years and results it's been bringing. It started in 2017, 2018, and year-over-year has been dropping greatly in terms of expenses. The level of efficiency we've been reaching increasingly has less. Where do we still have opportunities for improvement?
In addition to what I mentioned of the optimizations that Adriano has been implementing in the On-Campus units with return of properties or perhaps a whole building. In general, the spending is quite small. We still have, regarding optimization of classroom, getting to 40% Digital content at Estácio, where the Aura model is that we've implemented. It is possible to get there with great quality. And as I said, considering that we had all the work done, it's more marginal, the spending that we have here at Digitale and Athenas. We'll still have a few years, two, perhaps three years of lower spending to take the whole optimization of cost there. In absolute terms, what should we expect from the non-recurring numbers?
Let's exclude this year. Let's take the third quarter this year, BRL 35 million of non-recurring, BRL 9 million were revenue. So we have BRL 26 million left. Of the BRL 26 million, the great totality was optimizing cost. Which is what I said, that drops year after year. In the next two to three years, and what is left, it depends on having or not an M&A ahead, but it's a residual amount. I don't know if it has helped you in directing it, if that is what you were seeking.
Yes, it has. Very clear. Thank you.
Thank you, Vinicius.
The next question is from Mr. Renan Prata. Mr. Renan Prata, your microphone is open for questions.
Good morning, everyone. Well, I think people covered a lot our questions, but taking this last one, Vinicius, I'd like to know about the integration of Digitale, Athenas synergies, if they are within budget, expected, if it is above, below, if you can share that with us. Thank you.
Thank you, Renan. As I mentioned on that slide, which we showed capital allocation. Now we are very confident that we're going to get at the multiples post-synergy of 4x- 6.5x. The great weakness of any integration system is integrating systems and processes. This has been done. Once you've done that, basically, you have the normal optimizations of your day-to-day that we implement, or what used to be Estácio. And we'll move on like that. What are interesting numbers here?
Great numbers to comment on. We went through a pandemic period, so intakes suffered a lot. So what was the business plan that we had for Adtalem for revenue and cost? Projected in terms of revenue and cost, we more than offset that. When we look at that, we don't put everything and try to be lucky and that we're going to deliver. And we actually have been delivering more than we were planning, so that the budget that we have today for this year is even above what we had in our original plan. As to Athenas, it was a bit the opposite.
It is much better than what we imagined, although we already had this feeling that investing in the North and Midwest, they are marketplaces that are very good in terms of growth dynamics, but this growth actually has proven good and we have got results that have we expected to be. So these two great ones in terms of integration, we should say that we are quite happy with what is coming in line or better to what was initially projected. Going back to On-Campus and Adtalem, this is totally detached in terms of results. We are very happy of what has been delivered and the future risk is negligible because the worst part is over, which is the process integration.
Thank you very much.
Thank you, Renan. Our next question is from Mr. Javier Martinez. Mr. Martinez, you may ask your question.
[Foreign language] No problems. My question has been answered.
I would like to hand over to Mr. Eduardo Parente for his final remarks.
It is very good to see a lot of people attending and very high-level questions. I said we continue to deliver On-Campus showing clear recovery, and we are showing our responsibility of choices thanks to the capital discipline we have always had. I would like to thank you all very much, the effort and dedication to all faculty members and administrative staff of YDUQS, and we have seen the great effort. Thank you for your trust in our performance and our care, taking care of your investment. Thank you very much. We are going to have a very positive fourth quarter. We are very excited about 2022. I wish you all a very good week.
The YDUQS video conference is now closed. We thank you very much for your participation and wish you a very good week.