And by the CFO that is hearing us, we have also the entire board of directors, and we inform you that we are available for Q&A. These slides are being transmitted in our website of ri-- www.estacio.com/ri. Before I give the word to Eduardo, we start the teleconference that is being simultaneously translated into English. That is why we are keeping the best governance and avoiding losing any information for our stakeholders. All the participants that will only listen to the presentation, and thereafter, we will start the Q&A. You will receive more instructions thereafter. During the teleconference, please, if you have any questions, type asterisk two. This audio conference might have predictions about future events that are subjected to risks and uncertainty, and maybe they are not going to be fulfilled in terms of expectations.
These predictions emit the unique opinion based on data, and we are not obliged to update them should we have any new information. Please, Eduardo, the floor is yours.
Well, good morning, everyone. It is a pleasure to have you here. Thank you for participating in this teleconference. Well, I think that throughout the presentation, we have a few highlights, which is the predictability that we can keep in our operations. You can see all of that in the following slides. And the result of the actions that we have implemented since last year, a very strong effort that results in loyalty pricing supplies. And you have clearly two results in the best capturing of the history of Estácio and the stability of results, that even though we are living a very hard, very difficult part of the economy. Here on page three, we can see here the predictability of the report.
In the top of the slide, you can see the direction, the guidance that has been confirmed in the last quarter, where we had 80% of the capture concluded, and we are within our predictions. Some are better than others. Second issue, also in regards to predictability. We talked about the granularity and the actions that we have in the pricing and the sales process as well. We have, at the bottom, the 187,000 students, total ones that we captured this quarter, which is the highest number captured by Estácio in its history. And the most important thing that we commented with you, the EAD, or the distance learning, which is capturing growth. And you can see the results. Almost 100,000 students captured this semester, a growth of 29% versus the first quarter-- the first semester of last year.
Think about it since the last-- the first semester of last year. Well, we have here the flux. It is double than last year. Well, let us go to slide number four. Let us talk about the highlights of the quarter. Well, once more, predictability is key in our operation. Well, the total base of students is growing in spite of the decrease in the financing of FIES. Everybody knows that FIES is less than 10% of our base of students and a great result for us for growing in the FIES base. We are compensating for this loss. In the top part of the slide, once more, you can remember that in the last quarter, we had a few projects, and the complete result would only be seen this year, of course.
Now, we couldn't expect for better results. We said, no, the result of this project will be actually to compensate the effects that we know that will happen, which is FIES and the increase of PDD. Now, in the bottom slide, we can see a change. Regardless of the change of mix, we have the distance learning growing. With a smaller ticket, we can maintain the revenue stable. In the middle of the slide, you can see the gross margin growing as a result of our efforts, 59% to 60.4%, leading to the greatest margin that we ever had, over 60%. And our great achievement to keep this EBITDA and this margin of 35%, also with a great result of our great effort that we've done with pride and we are keeping on in 2019. Page five. We break down the numbers in the previous slide.
Three main highlights. Total base of students in, well, the on-campus, except the FIES. In the middle, our retention rate, we can see that it's stable. And once again, the distance learning on the right. In the bottom and over the left, we have the biggest achievement, maybe, in this increase of average ticket. With a capturing that was very strong, as you can see, very solid. And here, there is no secret in what we are doing. Reeducation of veterans, I mean, the courses that we introduced and the average ticket. Here is the evolution of our average, and this has led to the 4%, almost, in the on-campus and the distance learning. And on the right, we can see the evolution, of course, of the distance learning, EAD, growing in this operation. Well, we can see the total net revenue, 19% growing.
We are very proud of these numbers. We see people in the markets that we respect a lot. They have difficulties. Some giving up, some are stagnant, but we managed to grow. If you remember, well, we can see a growth of almost 40% in the last two years. Slide number six. For those of you that are just with us, please take a look at the last release, where we talk about the comparison of our quality with the rest of the market. Now, what we can highlight here is the evolution. We have an evolution that is very solid, but we want to continue to evolve. So 53% of our courses are grade 4 or 5 at the Ministry of Education, MEC. It's an evolution, 48% in comparison to 2017. And last year, 84% of the evaluated courses here at Estácio received a grade 4 or a 5.
At the bottom of the page, we can see a flash, a focus in the distance learning. Well, given that one of our guidance of strong growth is. I think that this is due to not just the regulator or the Ministry of Education and the market, and the students. Everybody recognizes our quality that is superior, and that allows us to have accelerated growth, and we can charge for a premium in regards to the rest of the market. Well, we can give you later more details in the finance part of our presentation.
Thank you, Eduardo. Before I start, I wanted to highlight that in this quarter, we didn't have any item that is non-recurrent. Well, let's start with the first slide, page seven.
As a backdrop, we can see the reduction of the FIES base, of the FIES financed students in a macro scenario that is still not favorable. We have the net revenue stable, practically stable, in regards to the first quarter of 2018. The capturing of 2019 also helped to keep the stability in the first quarter. Now, going to the net revenue, we had an economy in the costs, 3.8%, with a highlight for staff and subcontracted services. We guarantee a growth in 2% of the gross profits and the gross margin. We went beyond the 60% margin, 60.4%. We have to highlight it, that at the end of 2018, we had to promote a restructuring of staffing, of personnel at the management and corporate center. This is important to preserve our infrastructure being cost-efficient, so we can have a long-term operation.
Let's keep on looking at the results. Slide number eight, operational expenses. Differently from the costs components that we've seen in the previous slides, the operational expenses, they have a larger weight in the results, specifically the commercial side, due to a growth of the provisions that comes from the programs that are maturing within the portfolio of the company. Our provisioning went from 4.6% in the first quarter of 2018 to 6.8% as a mix of the DIS and PAR services. As you can see in the graph at the right, at the top of the slide. I highlight that this was expected by the company and compensated by the benefit for the growth of the base of students and consequently, the revenue and the EBITDA.
Now, in regards to the general expenses and management expenses, we had a reduction in subcontracted services after we finished the work with the consulting company throughout 2018. Also a reduction of contingencies due to initiatives in the labor front. Well, let's look at EBITDA and net revenue and generation of cash flow. Well, comparison of the EBITDA in the FY. We can see that even though there is an increase here for expenses in publicity, the expenses of D&A did a stability of the EBITDA and the margin. I believe that this maintenance of the EBITDA and margins are important and show independence and resilience of the business. Now we had an increase of 25% in the net revenue. It's important to highlight that a great deal of this increment comes from pro rata, from the first quarter of 2018.
There is the increase of taxes, but it was compensated in the next quarter. Now, let's talk about the operational cash flow. We maintain a good conversion rate, 44.2%. Now, the decrease in the nominal value to BRL 146 million is still the biggest incidence in the accounts receivable. So there is a deadline. There's an increase in the receivables deadline. Well, now I give the word to Eduardo Parente. He can talk about our investments.
Thank you. On page 10, and you can see here, our CapEx has increased from BRL 37 million to BRL 50 million in the first quarter, an increase of 34.2%. As we can see here, we have a year where we have on at the right, we can see that there is the CapEx. The two lines, the non-recurrent. Well, we have the expansion and transformational parts. On the expansion, there is investments that generate revenue.
In the short-, medium-, and long- term, for example, the lab of odontology, we have the medical program and the medicine course. Also the non-recurrent, we have regulatory transformation, digitalization of documents, and updates that we have to do with our campuses to improve on the experience for the students that are on the on-campus segment. What do we expect for this range? It is another, well, over 30% comparison to the delta is over 30% comparison to last year. The expansion and transformational, we do not expect that they are going to be so strong next year. Expansion, of course, should there be an opportunity, we are going to discuss them, but the investments might or not take place. Transformational are point investments at this point. Now, page 11. To close, I believe that taking a look at this quarter, we are very satisfied with the results.
We are on the right path. We can see the biggest capturing of students in the history of the company. Here at the bottom, we see in the on-campus and distance learning, an important growth for showing the future, the financial results, even though we can see all the difficulties in the market and the economy, PDD, CS, financing, decrease in that. The result of the work that has been done since 2018 shows the resilience of the business. We are not just sitting and crying over spilled milk. FIES is a negative impact, but for us to reduce this to less than 10% is important of the total base. It is also a relief. It shows the new reality of the company. We still have a result of 35% of EBITDA. That is very solid. Let us take a look at the future. We see stability.
Finance stability, operational stability, following up on the results that we have been having with this new reality. We are optimistic in regards to the capture of the students. Not only do we have solid tools that we can apply to capture new students that are very good, but we also learn, and we are going to do this better in the second quarter of 2019. Well, looking at the future, repeating what we are saying. These are three areas with growth. The healthcare area, we have one of the best schools of medicine in Brazil, and we might get to 5,000 students in three or four years. At the distance learning, we are still more poles, more courses. Flex is a reality in and on itself, consolidated, and the M&A.
Of course, I cannot get into the details here, but the mergers and acquisitions, taking a look at caution and optimism towards the opportunities that we can see in the future. Well, up ahead, we have the payment of dividends, BRL 153 million in dividends. That represent a dividend that is over 50% if you compare it to the period of last year. Well, now I give it back to Tostes.
Well, thank you, Eduardo. Well, now we can do the Q&A session, please.
Ladies and gentlemen, we will start the Q&A session. If you want to ask a question, please type asterisk nine. To remove a question from the list, type asterisk nine. Please wait while we gather the questions. Well, here is the first question from Bradesco.
Good morning. Two questions. First of all, retention of the students.
That is the number that was expected due to the FIES financing and the distance learning. Looking at the future, how do you keep this rate of keeping the students enrolled, the enrollment rate? What is your expectation? We have seen that there is a lot of publicity marketing. This might be, in the future, keeping you more competitive. The second question, also connected to this issue, is we see the capturing, and how do you see the strategic capturing of the students up in the future?
Luiz, thank you. It is good to hear from you. I am going to give you our expert, Aroldo. He will answer the questions.
Luiz, first of all, the retention is key. As you are seeing, we have the FIES decrease, but we are getting into a stability period, but we have a very young distance learning base.
We have the relationship projects under control with what we predicted with the project. The second point that you raised was the expenses, the commercial expenses, marketing expenses. We prioritize issues of preservation of average ticket, and also we increase the portfolio and the amount of polls, different sites. It was predicted the gain of revenue, and our annual prediction is still the same, which is to keep the standards that we have been practicing, that we have been working with. Nothing outside of what was planned. Last but not least, in the part capturing, this was for students that would come exclusively from the FIES financing, and they would need help. If we can capture the paying student without the use of the part, that would be our priority. This was planned, and this is nothing different from what we have done in the capturing.
It is within our strategy.
Thank you, Aroldo. The marketing expenses is always looking at the scenarios, and this is connected to the strategy of ticket. You are being more aggressive in tickets, and the idea is to dose that.
Exactly, yes. We counterbalance with the ticket.
Thank you.
Our next question comes from Leandro from Citibank.
Good morning. Two questions. The dynamic of gross margin. We were impressed with your cost dilution delivered in the quarter. We see a gain in the staffing. Is that the standard that is recurrent, that is normalized, that we can expect for the next quarters? Or was there an effect of replenishment of teachers throughout this first quarter, making this cost structure still not representing 100% of your new structure? That would be my first question. Second question. This increase in the PMR, the former FIES.
We see a decrease in your finance costs. If you can share a little bit of that. What is the strategy of the company with the renegotiation with the students? Thank you.
Some opportunities to work this line better, increase the productivity of this line. It is difficult to say when and where, but this is something that we are working with. Focusing in PMR, which is your question, we are being more successful in our negotiations. We gave the discount, we did more agreements with less discounts, and that was very successful. If we stratify the PMR for the monthly paying students, we had a lower impact. But looking at PMR, conjugated with the finances, the accounts receivable was really impacted. Especially in the long term, it is about BRL 110 million going to BRL 210 million. This counterpoints the improvement in elongating the PMR.
Now, up ahead, this PMR, we hope that it is not too extended. The cash conversion should improve this intention, and this is the way that we should do things.
Thank you for the answers.
The next question is from Guilherme Palhares, BTG Pactual.
Thank you. There are two questions in regards to distance learning. Can you tell us a little bit about the capturing of the different courses, more portfolio products? Within the structure, I wanted to understand what is the time, the duration of these courses, and what is the horizon for graduation for these students. What is the timeline? What can we see in terms of these graduation rates due to the change of the mix?
The company really focused in the distance learning last year, and we had some news from class entities that are doing something that was given as a certainty, but I wanted to know more about this class entity issue, class action issue, if you can explain a little bit better.
I am going to give the first question to Alexandre, our Distance Learning Director, to answer this, and the second one I can answer.
Hi, Guilherme. Just to make it clear, this evolution of the portfolio, it does not change our course time. We are getting longer courses that should not have any impact in this timeline. Right now, we do not have any pressure about the class entities. We talk to the associations, the ABRAES and ANUP, and we understand that there is no legal base for this contestation, this association.
We are trusting in our legal peers and the lawyers that we have involved in this class action suit, so this is not a relevant concern.
Thank you. Just one more question. The consulting fees. Now, given the time that has passed since the service that was provided, now you have a plan to work with the company up ahead, or will you still need some subcontracted support for the future? Just so we can take a look at the future while looking at the important reduction in the expenses that you have just had.
I think that we have reached at a standard that we wanted. Consulting fees were very important last year. It was in the recurring expenses, but now we will keep on. We might have a few sporadic helps, but we are not going to get a big bunch as we got last year.
Thank you.
Our next question comes from Susana Salaru from Itaú. Good morning.
Good morning. Thank you. I have two questions. First, could you comment a little bit about the dynamic for the competition in the distance learning and also on the on-campus? Is it aligned with what you expected, and do you expect that for 2020, the competitiveness will be the same as today, or it will improve or will be worse? The second question, can you tell us how the medical school opening is impacting the Mais Médicos program?
Hi, Susana. Thank you for your questions. Competition is fierce. I do not think that it is worse or better than the last year. I think that we were better prepared to face well with these pricing and marketing projects that we have done.
They gave us a granularity to compete where we have to compete and getting a little bit more leverage where we actually didn't need. Up to 2020, I think it's very difficult for things to get worse, even though we know that the worst has no limits. I think that it's very unlikely. We have a very difficult scenario, and any improvement in the economic scenario has a positive impact in the industry as a whole. If that improvement will arrive, I depend on you, actually, because you have a lot more depth and you're following up on the economy closer than we are. Competition is strong, but not worse. I think it's a strong competition. But once again, nothing that is a reason for despair. I think that any improvement in the economy, it tends to be better for everyone.
About the Mais Médicos program, more physicians program, he can talk about it later.
Well, if you allow me in the follow-up and to your answer, you mentioned that the pricing really helped in the granularity, the pricing model. Do you understand that the application of the pricing model was done 100%? Or can you optimize this instrument for the next capturing cycle?
I think that we can optimize it more because it was the first time that we used it full. So it's a lot of things that we did with Excel, with the system. We learned a lot about how they're getting the information from the different cities, the different places that we have our operations. We are learning. There is a learning curve, but we have started full throttle, and I have good expectations for the future.
Susana, here is Adriano.
In regards to your question, it's important to highlight that the Mais Médicos is very similar to the previous Mais Médicos program. Well, there was a contestation about the results as well as it was in Mais Médicos one, the first iteration. We want to start that operation as soon as we can.
I'm sorry, you're talking really fast, and I couldn't understand. So you did a contestation in the four campuses, and you can reverse this in the next months?
Well, this is very normal. Since this is very competitive, it's normal that the non-winner will contest the results, and they are being analyzed. We hope that this will be solved the next month so we can start again. You're disputing the gains of other companies. Well, this is normal. The dispute is normal in the Mais Médicos process.
How many places are you trying to reverse the loss?
It's another two. An additional two.
The next question comes from Tiago Bortoluci, Goldman Sachs. You can continue.
Well, good morning, everyone. Thank you for your question. We wanted to talk a little bit more about margins. In the on-campus, you have a drop in the base of the students and the average ticket growing a little bit below the inflation. In that context, is it possible to keep the operational margins of the segment, and what are the leverages for the future?
Tiago, [Viana] will answer.
I think that one of the levers that we've used that is very efficient are the gains and efficiencies. We have more people to work here. Another point which Aroldo already commented is our capacity to work with a better pricing.
And in issues of capturing, we are subjected to the market variables, but we can keep the margins at the standards that we are working with. I think it is important that if you take a look at the presentation of the last quarter, we have the scorecards here that show the projects, their values, and how much have we implemented. So we show that a lot of the things were at the inception, some were in midway. So there are still gains in the lines of cost that are very relevant. That, again, will not produce a bigger margin because they try to offset. I do not know if that word exists in Portuguese, but anyway, they offset the eventual losses that we have of FIES and the disclaimer issues that we have.
Well, are we going to increase the margin?
No.
Our expectation is to be aligned with what we have done with the last quarters, regardless of the disputes and everything.
Well, you are really mentioning pricing. If you could open the drivers of growth and the pricing and the average price in the on-campus, is there any way to tell us how much was that on-campus or how much it was mixed?
Well, it is very important that we do not open that because this is what our competition would like to know. But the pricing has a part that is pricing, that is the market-oriented pricing. The objective of pricing is to keep the largest ticket that we can, of course, but we also have to be competitive and be granular where we have to be. We see the industry in the past with the whole market.
And this is what we managed not to do this semester, and we had a lot of efficiencies. Now, I am not going to answer fully this question because this is what the competition wants.
So it is fair to say that the mix improved, the mix of average costs improved this first year.
Well, yes, certainly. The introduction of healthcare courses, engineering courses. And once again, it is important to highlight the presentation of last year, the big increase in costs, and the presentation that we had, bringing us to a more current reality, current to the work market. And here we can leverage our structure of distance learning, including the on-campus. We have a lot of updates and the content, because it has been born completely digital, the content. So the mix has an important role in this.
Well, thank you.
Next question comes from Mr. Javier Martínez from Morgan Stanley. You can continue.
Good morning. I wanted to ask you, well, about the PAR, and here the quantitative data that you have is not very clear. You have provisioning, the receivables, deadlines. You have a difference in the profile of capturing that is very aligned with what we see, with the reduction of the finance of the FIES and increase of the mix of cost. But the question is qualitative. Now that we have a quarter more of information of behavior of the student, well, what have you been learning from that? Is it still reasonable, the accounting? Are you completely sure of the provisioning levels?
Hi, Javier. I am going to give the word to Zeno.
Hi, Javier. Well, let us start. These two products, they have matured as a base. As you can see, there is a capturing that is even better than last year.
The rate of retention of both products are very much aligned with our expectations. You can see your own numbers. You can run those numbers, and if you compare the distance learning and on-campus, we have retention rates that are lower, but they were expected for these two products. Looking at provisions, the company keeps on following up on the provision levels. You can see on the earnings, page 19. I am not talking the presentation, but the earnings. Here we have the coverage level of PDD, and we see it very satisfactory for the period, for the PAR. There is no changes in the provisions rules.
Thank you very much.
Next question comes from Mr. Guilherme Palhares from BTG Pactual.
Thank you for this additional question. Just complementing the issue of capital structure. You have a cash flow.
You announced the dividends in the second semester of the company. It was very emphatic in the buyback. I wanted to know, how is that working with your capital structure, and where should it converge in the future?
Guilherme, thank you. If you have cash flow, you have opportunities. Last year, we did a distribution that was extraordinary during the buyback, and this is still in our radar.
Do you want to add anything else?
No. I would just like to say, the company today has cash, a very balanced capital structure, and this cash flow is going to be directed towards investments for the shareholders. The access to maximize the values, we have the buyback. We have done that in the past, and if it is justified this year and makes sense, we will do it again.
Thank you.
If there is no more questions, I would like to give the word to Mr. Eduardo Parente to finish the presentation.
Ladies and gentlemen, thank you very much. I hope to hear from you in three months. I think that, as I have told you before, predictability and results is a long-term work that we have been doing in Spain itself. Thank you very much for your trust. Thank you and have a wonderful day.
The teleconference of Estácio Participações is closed. Thank you for your participation. Have a wonderful day.