Arco concluded the 2022 cycle with organic net revenue growth of 34% over the 2021 cycle at R$1,561 million (100% ACV recognition) and improved profitability
SÃO PAULO–(BUSINESS WIRE)–Arco Platform Limited, or Arco or Company (Nasdaq: ARCE), today reported financial and operating results for the third quarter ended September 30th, 2022.
“We are concluding the 2022 cycle with 100% ACV bookings recognition, leading to a 48% top line growth and an increase in profitability. Initiatives put in place this year were a great first step in a long path towards improving efficiency and integration, reducing redundancy, and making Arco a more agile company to better service our partner schools and generate greater value to our shareholders. In this context free cash flow is a key success metric for our management team, together with growth, which, with a now comprehensive portfolio that includes pedagogical, financial and software solutions, will be powered by a more mature cross-selling strategy.”
Ari de Sá Neto, CEO and founder
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|
Net revenue |
Cash Gross profit |
Adj. EBITDA |
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|
2022 |
R$1,561M |
R$1,249M |
R$526M |
|||
|
|
+47.7% YoY |
+49.0% YoY |
+58.3% YoY |
|
3Q22 |
9M22 |
||||||
|
Net revenue |
Cash gross profit |
Net revenue |
Cash gross profit |
||||
|
|
|
|
|
||||
|
R$253.9M |
R$206.7M |
R$1,096.1M |
R$858.3M |
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|
|
|
|
|
|||
|
Adj. EBITDA |
Adj. Net income |
Adj. EBITDA |
|
Adj. Net income |
|||
|
|
|
|
|
||||
|
R$37.2M |
R$(61.9)M |
R$294.5M |
|
R$(51.8)M |
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Note: Please see Adjusted EBITDA Reconciliation on page 17 and Adjusted Net Income Reconciliation on pages 17 and 18. |
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Cycle Highlights
Arco concluded the 2022 cycle with net revenue of R$1,561 million (100% recognition of the 2022 ACV bookings provided at the beginning of the year), a 47.7% increase year-over-year (or 33.8% organic top line growth YoY). Net revenue for Core solutions totaled R$1.237 million (+46.9% YoY), while net revenue for Supplemental solutions totaled R$325 million (+50.7% YoY).
Cash gross profit was R$1,249 million (+49.0% YoY), leading to an 80.0% cash gross margin (versus 79.3% for the 2021 cycle).
Integration and efficiency initiatives contributed to an adjusted EBITDA of R$526 million for the 2022 cycle, translating into a 230-basis point expansion in adjusted EBITDA margin to 33.7%.
3Q22 and 9M22 Highlights
Net revenue for the third quarter was R$253.9 million, a 38.6% YoY increase, with Core solutions totaling R$207.1 million (+38.1% YoY) and Supplemental solutions totaling R$46.8 million (+40.5% YoY). For the first nine months of 2022, net revenue increased 42.1% YoY to R$1,096.1 million, with Core solutions increasing 49.8% to R$920.6 million and Supplemental solutions increasing 12.1% to R$175.5 million. Excluding recent M&A1, net revenue increased 19.5% YoY in 3Q22 and 28.6% YoY in 9M22 YoY.
Cash gross margin (gross margin excluding depreciation and amortization) was 81.4% in 3Q22 (vs. 79.7% in 3Q21). For the first nine months of 2022, cash gross margin was 78.3% (vs. 78.7% in 9M21). The positive results from our integration and efficiency initiatives were key to partially offset non-recurring costs resulting from late additional orders of pedagogical materials by our partner schools in the second quarter, as rush printing costs are on average 25% higher than regular printing costs and books were shipped using express tariffs and through more expensive shipping methods (air, dedicated trucks). In the first nine months of 2022, Arco delivered R$33 million in cost savings, above the total amount expected in cost savings for the full year.
Higher selling expenses excluding depreciation and amortization at R$128.5 million in 3Q22 (+42.1% YoY) and R$413.8 million (+47.7% YoY) in the first nine months of 2022 reflect (i) higher investments in commercial activities (identifying and developing leads and cross sell opportunities, intensifying pedagogical support to partner schools, resumption of in-person interactions and events, among others), which are key to fostering strong growth potential opportunities and capturing more market share over time in both Core and Supplemental segments, and (ii) higher inflation for the period (mainly impacting travel expenses). Excluding recent M&A¹, selling expenses increased 35.5% in 3Q22 and 41.3% in 9M22. As a result of the diligent cash collection process and its close relationship with partner schools, Arco was able to improve the quality of its receivables, resulting in a consistent decrease in allowance for doubtful accounts.
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1 Recent M&As refer to businesses acquired in 2021 (Me Salva, Eduqo, Edupass, COC, Dom Bosco) and 2022 (PGS, Mentes). |
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Allowance for doubtful accounts (R$M) |
3Q22 |
|
3Q21 |
|
YoY |
|
2Q22 |
|
QoQ |
|
9M22 |
|
9M21 |
|
YoY |
|
|
Allowance for doubtful accounts |
(1.9) |
|
6.0 |
|
N/A |
|
0.4 |
|
N/A |
|
(8.5) |
|
16.5 |
|
N/A |
|
|
% of net revenue |
– 0.8% |
|
3.3% |
|
-4.1 p.p. |
|
-0.1% |
|
0.7p.p. |
|
-0.8% |
|
2.1% |
|
-2.9 p.p. |
|
|
|
|
General and administrative expenses (G&A) continue to show the trend of a more integrated back-office strategy. In 3Q22, G&A expenses excluding depreciation and amortization were R$70.5 million (-29.1% YoY) and represented 27.8% of net revenue (versus 54.2% in 3Q21). Excluding recent M&A¹, G&A expenses decreased to R$67.7 million (-31.7% YoY) in 3Q22. Share-based compensation plan expenses increased 47.4% YoY in 3Q22 (excluding Geekie’s SOP2 in 2021), representing 8.5% of 3Q22 revenue (vs. 8.0% of revenue in 3Q21). For the first nine months of 2022, G&A expenses excluding depreciation and amortization were R$209.1 million (-4.6% YoY) and represented 19.1% of net revenue (versus 28.4% in 9M21). Excluding the effects of recent M&A¹, G&A expenses decreased 10.7% YoY in 9M22 to R$194.2 million. Share-based compensation plan expenses increased 24.3% YoY in 9M22, representing 3.7% of 9M22 revenue (vs. 4.3% of revenue in 9M21). From a cost savings perspective, Arco surpassed its initial goal for the year, delivering G&A savings of R$59 million in 9M22, above the R$47 million goal for the full year.
Adjusted EBITDA was R$37.2 million in 3Q22 (+135.1% YoY), with an adjusted EBITDA margin of 14.6% (versus 8.6% in 3Q21). As for the first nine months of 2022, adjusted EBITDA increased 42.6% YoY to R$294.5 million, and adjusted EBITDA margin was 26.9% (versus 26.8% in 9M21). We expect the 2022 full year adjusted EBITDA margin to be around the bottom of the 36.5% and 38.5% guidance range we provided at the beginning of the year.
Adjusted net income (loss) in 3Q22 was R$(61.9) million, with an adjusted net margin of -24.4% (versus -11.9% in 3Q21), impacted by higher finance expenses and depreciation and amortization. For the nine-month period ended September 30th, 2022, adjusted net income was R$(51.8) million, with an adjusted net margin of -4.7% (versus 7.0% in 9M21).
A solid cash collection process in the quarter led to an important improvement in the quality of accounts receivable, with a reduction in days of sales outstanding (DSO) to 98 days in 3Q22 from 141 days in 2Q22 and 104 days in 3Q21, and a 2.1 p.p. reduction in delinquency levels to 4.0% in 3Q22 from 5.6% in 2Q22 and 6.1% in 3Q21.
|
Days of sales outstanding |
Sep. 30, 2022 |
|
Sep. 30, 2021 |
|
YoY |
|
30 Giugno 2022 |
|
QoQ |
|
|
Trade receivables (R$M) |
510.9 |
382.3 |
34% |
687.6 |
-26% |
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(-) Allowance for doubtful accounts |
77.4 |
77.1 |
0% |
79.7 |
-3% |
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Trade receivables, net (R$M) |
433.5 |
305.1 |
42% |
607.8 |
-29% |
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Net revenue LTM pro-forma¹ |
1,614.5 |
1,073.2 |
50% |
1,568.9 |
3% |
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Adjusted DSO |
98 |
104 |
-6% |
141 |
-30% |
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1) Calculated as net revenue for the last twelve months added to the pro forma revenues from businesses acquired in the period to accurately reflect the Company’s operations. |
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Arco’s corporate restructuring is ongoing. In October Arco concluded the incorporation of Geekie into CBE (Companhia Brasileira de Educação e Sistemas de Ensino, Arco’s wholly-owned entity which incorporates acquired businesses), leading to estimated future annual income tax savings of approximately R$17million. Future incorporations include Pleno (2023), Escola da Inteligência (2023) and SAE Digital (2024). As we keep incorporating other businesses into CBE, we expect to capture additional tax benefits and therefore further reduce our effective tax rate, currently at 8.7% in 9M22 (versus 17.3% in 9M21).
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2 As part of Geekie’s acquisition, Arco acquired management future stake in Geekie, resulting from the exercise of their existing SOP. The fair value of SOP was calculated using the same valuation method as the accounts payable to selling shareholders for the acquisition of the remaining interest, resulting in the final transaction price, which were updated quarterly for Geekie’s most recent fair value, until was settled in June/2022. |
|
Intangible assets – net balances (R$M) |
Sep. 30, |
Sep. 30, |
YoY |
June 30, |
QoQ |
|||||
|
Business Combination |
2,922.5 |
2,334.6 |
25% |
2,949.9 |
-1% |
|||||
|
Trademarks |
479.6 |
437.3 |
10% |
488.8 |
-2% |
|||||
|
Customer relationships |
246.4 |
261.4 |
-6% |
255.8 |
-4% |
|||||
|
Educational system |
215.7 |
209.6 |
3% |
224.6 |
-4% |
|||||
|
Softwares |
9.8 |
11.4 |
-14% |
8.6 |
14% |
|||||
|
Educational platform |
4.7 |
5.7 |
-18% |
4.4 |
7% |
|||||
|
Others¹ |
15.4 |
16.4 |
-6% |
16.8 |
-8% |
|||||
|
Goodwill |
1,950.9 |
1,392.8 |
40% |
1,950.9 |
0% |
|||||
|
Operational |
279.8 |
206.5 |
35% |
288.1 |
-3% |
|||||
|
Educational platform² |
178.1 |
141.7 |
26% |
200.1 |
-11% |
|||||
|
Softwares |
77.1 |
53.0 |
45% |
77.1 |
0% |
|||||
|
Copyrights |
24.6 |
11.8 |
108% |
10.8 |
127% |
|||||
|
Customer relationships |
0.1 |
0.1 |
-35% |
0.1 |
-35% |
|||||
|
TOTAL |
3,202.2 |
2,541.2 |
26% |
3,238.0 |
-1% |
|||||
|
1) Non-compete agreements and rights on contracts. 2) Includes content development in progress. |
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Amortization of intangible assets (R$M) |
3Q22 |
3Q21 |
YoY |
2Q22 |
QoQ |
9M22 |
9M21 |
YoY |
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|
Business Combination |
(79.2) |
(55.9) |
42% |
(73.5) |
8% |
(213.0) |
(165.9) |
28% |
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|
Trademarks |
(8) |
(6.5) |
20% |
(8.0) |
-3% |
(23.5) |
(19.3) |
22% |
||||||||
|
Customer relationships |
(9.7) |
(8.6) |
13% |
(9.4) |
3% |
(28.2) |
(25.6) |
10% |
||||||||
|
Educational system |
(8.9) |
(8.1) |
9% |
(9.4) |
-6% |
(27.6) |
(24.2) |
14% |
||||||||
|
Softwares |
(0.7) |
(0.9) |
-22% |
(0.7) |
1% |
(2.1) |
(2.1) |
0% |
||||||||
|
Educational platform |
(0.2) |
(0.3) |
-17% |
(0.2) |
24% |
(0.6) |
(0.7) |
-7% |
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|
Others¹ |
(1.4) |
(1.3) |
4% |
(1.5) |
-10% |
(4.3) |
(3.6) |
18% |
||||||||
|
Goodwill |
(50.6) |
(30.1) |
68% |
(44.3) |
14% |
(126.8) |
(90.3) |
40% |
||||||||
|
Operational |
(34.2) |
(22.8) |
50% |
(29.1) |
17% |
(92.8) |
(61.6) |
51% |
||||||||
|
Educational platform² |
(26.8) |
(16.3) |
64% |
(21.7) |
24% |
(70.8) |
(45.3) |
56% |
||||||||
|
Softwares |
(5.6) |
(4.5) |
24% |
(5.4) |
4% |
(16.2) |
(10.1) |
60% |
||||||||
|
Copyrights |
(1.6) |
(2.0) |
-20% |
(1.8) |
-11% |
(5.3) |
(6.1) |
-13% |
||||||||
|
Customer relationships |
(0.2) |
– |
NA |
(0.2) |
-10% |
(0.5) |
(0.1) |
380% |
||||||||
|
TOTAL |
(113.4) |
(78.7) |
44% |
(102.6) |
11% |
(305.9) |
(227.5) |
34% |
||||||||
|
1) Non-compete agreements and rights on contracts. 2) Includes content development in progress. |
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|
Amortization of intangible assets (R$M) |
Impacts |
Originates |
Amortization with tax benefit in 3Q22² |
|||||||
|
Amortization |
Tax benefit |
Impact on net |
||||||||
|
Business Combination |
|
|
(58.8) |
20.0 |
(38.8) |
|||||
|
Trademarks |
Yes |
Yes² |
(2.0) |
0.7 |
(1.3) |
|||||
|
Customer relationships |
Yes |
Yes² |
(2.9) |
1.0 |
(1.9) |
|||||
|
Educational system |
Yes |
Yes² |
(3.3) |
1.1 |
(2.2) |
|||||
|
Educational platform |
Yes |
Yes² |
0.5 |
(0.2) |
0.4 |
|||||
|
Others¹ |
Yes |
Yes² |
(0.5) |
0.2 |
(0.4) |
|||||
|
Goodwill |
No |
Yes² |
(50.6) |
17.2 |
(33.4) |
|||||
|
Operational |
Yes |
Yes |
(34.2) |
11.6 |
(22.6) |
|||||
|
TOTAL |
|
|
(93.0) |
31.6 |
(61.4) |
|||||
|
1) Non-compete agreements and rights on contracts. 2) Amortizations are tax deductible only after the incorporation of the acquired business. |
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|
Amortization of intangible assets from business combination that generate tax benefit – breakdown by type (R$M) |
Businesses with current tax benefit |
Undefined² |
||||||||||
|
2022¹ |
2023 |
2024 |
2025 |
2026+ |
||||||||
|
Trademarks |
21 |
27 |
27 |
27 |
318 |
66 |
||||||
|
Customer relationships |
21 |
25 |
25 |
25 |
59 |
111 |
||||||
|
Educational system |
25 |
27 |
27 |
27 |
106 |
32 |
||||||
|
Software license |
– |
– |
– |
– |
– |
11 |
||||||
|
Rights on contracts |
1 |
1 |
1 |
1 |
3 |
1 |
||||||
|
Others |
2 |
2 |
2 |
1 |
1 |
10 |
||||||
|
Goodwill |
183 |
237 |
231 |
227 |
761 |
355 |
||||||
|
Total |
253 |
319 |
313 |
308 |
1.247 |
587 |
||||||
|
Maximum tax benefit |
86 |
108 |
106 |
105 |
424 |
199 |
||||||
|
1) Considers the maximum tax benefit for full year 2022. In 3Q22 we have benefited from R$17.6 million (totalizing R$44.6 million in 9M22). 2) Businesses with future tax benefit (not yet incorporated). |
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|
Amortization of intangible assets from business combination that generate tax benefit – breakdown by solutions (R$M) |
Businesses with current tax benefit |
Undefined² |
||||||||||
|
2022¹ |
2023 |
2024 |
2025 |
2026+ |
||||||||
|
Geekie |
7 |
42 |
42 |
42 |
279 |
– |
||||||
|
NAVE |
9 |
9 |
9 |
9 |
11 |
– |
||||||
|
P2D3 |
57 |
89 |
89 |
89 |
364 |
– |
||||||
|
Positivo, Conquista, PES English |
170 |
170 |
170 |
169 |
593 |
– |
||||||
|
Other Companies |
10 |
10 |
4 |
– |
– |
– |
||||||
|
Acquired companies not yet incorporated |
N/A |
N/A |
N/A |
N/A |
N/A |
587 |
||||||
|
Total |
253 |
319 |
313 |
308 |
1.247 |
587 |
||||||
|
Maximum tax benefit |
86 |
108 |
106 |
105 |
424 |
199 |
||||||
|
1) Considers the maximum tax benefit for full year 2022. In 3Q22 we have benefited from R$17.6 million (totalizing R$44.6 in 9M22). 2) Businesses with future tax benefit (not yet incorporated). 3) Refer to COC and Dom Bosco solutions acquired in 2021. |
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CAPEX in 3Q22 was R$30.9 million, representing 12.2% of net revenue (versus 21.4% of net revenue in 3Q21). For 9M22, CAPEX totaled R$121.1 million, or 11.1% of net revenue (versus 14.8% of net revenue in 9M21), and within the guidance range of 10.0% to 12.0% of net revenue for 2022 full year we provided in 3Q21.
|
CAPEX (R$M) |
3Q22 |
3Q21 |
YoY |
2Q22 |
QoQ |
9M22 |
9M21 |
YoY |
||||||||
|
Acquisition of intangible assets¹ |
27.0 |
35.0 |
-23% |
41.5 |
-35% |
108.8 |
104.8 |
4% |
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|
Educational platform – content development |
0.9 |
13.4 |
-93% |
4.5 |
-80% |
9.3 |
31.7 |
-71% |
||||||||
|
Educational platform – platforms & tech |
15.2 |
8.5 |
79% |
17.9 |
-15% |
57.7 |
35.7 |
62% |
||||||||
|
Software |
7.7 |
10.5 |
-27% |
16.5 |
-54% |
34.5 |
30.2 |
14% |
||||||||
|
Copyrights and others |
3.2 |
2.5 |
29% |
2.6 |
22% |
7.3 |
7.2 |
2% |
||||||||
|
Acquisition of PP&E |
3.9 |
4.0 |
-2% |
1.7 |
128% |
12.3 |
9.5 |
30% |
||||||||
|
TOTAL¹ |
30.9 |
39.0 |
-21% |
43.2 |
-29% |
121.1 |
114.3 |
6% |
||||||||
|
1) For 9M22 excludes R$14.2 million related to M&A payments (PGS’ and Mentes’ acquisition, being R$5.5 million in 1Q22 and R$8.7 million in 2Q22) from the accounting CAPEX of R$135.4 million. |
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Cash from operations for 3Q22 and 9M22 were R$89.7 million (from R$74.1 million in 3Q21) and R$384.1 million (from R$276.5 million in 9M21), respectively. Free cash flow to firm3 in 3Q22 increased 253.5% YoY to R$55.7 million, representing 22.0% of net revenues (vs. 8.6% of net revenue in 3Q21). For the nine-month period ended September 30th, 2022, free cash flow to firm also presented a significant improvement, increasing 131.9% YoY to R$212.4 million, or 19.4% of net revenue (vs. 11.9% in 9M21).
|
3 Please reference page 19 (reconciliation of free cash flow) for additional details. |
|
Free cash flow to firm (managerial) |
9M21 |
% of net |
9M22 |
% of net |
YoY |
|||||
|
Adjusted EBITDA |
206.5 |
26.8% |
294.5 |
26.9% |
+43% |
|||||
|
(+/-) Noncash adjustments |
(2.4) |
-0.3% |
(12.6) |
-1.2% |
+430% |
|||||
|
(+/-) Working capital |
72.5 |
9.4% |
102.2 |
9.3% |
+41% |
|||||
|
(-) Income taxes paid |
(70.7) |
-9.2% |
(50.6) |
-4.6% |
-28% |
|||||
|
(-) CAPEX¹ |
(114.3) |
-14.8% |
(121.1) |
-11.1% |
+6% |
|||||
|
Free cash flow to firm (managerial) |
91.6 |
11.9% |
212.4 |
19.4% |
+132% |
|||||
|
1) Excludes R$14.2 million related to M&A payments (PGS’ and Mentes’ acquisition, being R$5.5 million in 1Q22 and R$8.7 million in 2Q22) from the accounting CAPEX of R$135.4 million for 9M22 |
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Arco’s cash and cash equivalents plus financial investments position as of September 30th, 2022, was R$1,015 million, while financial debt and accounts payable to selling shareholders were R$2,797 million, leading to a net debt of R$1,782 million. As part of Arco’s balance sheet management strategy, on August 5th, 2022, we announced the closing of a new Debentures issuance amounting to R$1,200 million. Net proceeds were partially used to prepay the Debentures issued in August 2021, and the balance was used to strengthen Arco’s cash position while extending its debt maturity profile. The new Debentures mature on August 3rd, 2027, with principal to be amortized in three equal installments payable on August 3rd, 2025, August 3rd, 2026, and August 3rd, 2027, and bear interest at CDI +2.30% per annum, payable semi-annually on February 3rd and August 3rd.
We had another strong commercial cycle for the 2023 school year, with a new student intake and upsell for both Core and Supplemental solutions indicating healthy organic growth YoY. Retention rates remained consistent with historical trends and average price increase was 2-3 p.p. above inflation (considers expected inflation – IPCA – of 5.88% for 2022 and 5.01% for 2023, as per Brazilian Central Bank Focus Report as of November 18th, 2022). Cross-sell initiatives were again a key driver to our go-to-market strategy, leading to a ~2 p.p. increase in the number of schools in our core base with at least one Supplemental solution to ~17% (from ~15% in 2022 school year). We are providing a 2023 ACV guidance for our pedagogical solutions of approximately R$1,930 million, which represents approximately 24% organic growth versus 2022 cycle net revenues of R$1,561 million.
COC, one of our recently acquired Core solutions had positive results for its first commercial cycle post acquisition, with a 17-point increase in the NPS to 66 leading to a 15 p.p. improvement in retention rate for the 2023 school year to 95%. We were able to implement significant price increases for the 2023 cycle (~4 p.p. above expected inflation). Finally, the year-over-year ACV growth was over 30%.
We are also providing an adjusted EBITDA margin guidance range for 2023 fiscal year for our pedagogical solutions of 36.5% to 38.5%, in line with the range provided for 2022 fiscal year, and a CAPEX as a percentage of revenue guidance range for 2023 fiscal year of 8.0% to 10.0%, below the 10.0% to 12.0% range provided for 2022 fiscal year. The expansion of our adjusted EBITDA – CAPEX as a percentage of revenue metric reflects Arco’s integration initiatives and corporate restructuring in place as Arco paves the way to become a portfolio hub of education solutions and a more efficient company, including (i) strategic sourcing, (ii) supply chain: printing costs & freight, (iii) IT systems optimization, (iv) corporate reorganization, (v) supplemental synergies, (vi) sales & operations planning, (vii) increased cooperation among core units, and (viii) technology integration.
Arco initiated its efficiency and integration agenda in 2021, with the goal of improving our operations, internal processes, and capital allocation strategy, leading to enhanced cash generation and generating more value to our shareholders. Accordingly, free cash flow became a key success metric to management, with three main drivers: (i) continuous margin expansion; (ii) return of capex to pre-covid levels as a percentage of revenue (at high single-digit rates), and (iii) normalization of working capital.
Finally, the Brazilian antitrust agency (CADE) approved the isaac acquisition on November 16th. The transaction is expected to close on January 2nd, 2023.
Conference Call Information
Arco will discuss its third quarter 2022 results today, December 1st, 2022, via a conference call at 5 p.m. Eastern Time (6 p.m. Brasilia Time). To access the call, please dial: +1 (412) 717-9627, +1 (844) 204-8942 or +55 (11) 4090-1621. For enhanced audio connection investors may connect through Web Phone (access code: 7636515).
An audio replay of the call will be available through December 7th, 2022, by dialing +55 (11) 3193-1012 and entering access code 1608874#. A live and archived Webcast of the call will be available on the Investor Relations section of the Company’s website at https://investor.arcoplatform.com/.
About Arco Platform Limited (Nasdaq: ARCE)
Arco has empowered hundreds of thousands of students to rewrite their futures through education. Our data-driven learning methodology, proprietary adaptable curriculum, interactive hybrid content, and high-quality pedagogical services allow students to personalize their learning experience while enabling schools to thrive.
Forward-Looking Statements
This press release contains forward-looking statements as pertains to Arco Platform Limited (the “Company”) within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, the Company’s expectations or predictions of future financial or business performance conditions. The achievement or success of the matters covered by statements herein involves substantial known and unknown risks, uncertainties, and assumptions, including with respect to the COVID-19 pandemic. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the Company’s results could differ materially from the results expressed or implied by the statements we make. You should not rely upon forward-looking statements as predictions of future events. Forward looking statements are made based on the Company’s current expectations and projections relating to its financial conditions, result of operations, plans, objectives, future performance and business, and these statements are not guarantees of future performance.
Statements which herein address activities, events, conditions or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. You can generally identify forward-looking statements by the use of forward-looking terminology such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “evaluate,” “expect,” “explore,” “forecast,” “guidance,” “intend,” “likely,” “may,” “might,” “outlook,” “plan,” “potential,” “predict,” “probable,” “project,” “seek,” “should,” “view,” or “will,” or the negative thereof or other variations thereon or comparable terminology. All statements other than statements of historical fact could be deemed forward looking, including risks and uncertainties related to statements about our competition; our ability to attract, upsell and retain customers; our ability to increase the price of our solutions; our ability to expand our sales and marketing capabilities; general market, political, economic, and business conditions in Brazil or abroad; and our financial targets which include revenue, share count and other IFRS measures, as well as non-GAAP financial measures including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income (Loss), Adjusted Net Income (Loss) Margin, Taxable Income Reconciliation and Free Cash Flow.
Forward-looking statements represent the Company management’s beliefs and assumptions only as of the date such statements are made, and the Company undertakes no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.
Further information on these and other factors that could affect the Company’s financial results is included in filings the Company makes with the Securities and Exchange Commission from time to time, including the section titled “Risk Factors” in the Company’s most recent Forms 20-F and 6-K. These documents are available on the SEC Filings section of the Investor Relations section of the Company’s website at: https://investor.arcoplatform.com/
Key Business Metrics
ACV Bookings: we define ACV Bookings as the revenue we would contractually expect to recognize from a partner school in each school year pursuant to the terms of our contract with such partner school, assuming no further additions or reductions in the number of enrolled students that will access our content at such partner school in such school year (we define “school year” for purposes of calculation of ACV Bookings as the twelve-month period starting in October of the previous year to September of the mentioned current year). We calculate ACV Bookings by multiplying the number of enrolled students at each partner school with the average ticket per student per year; the related number of enrolled students and average ticket per student per year are each calculated in accordance with the terms of each contract with the related partner school.
Non-GAAP Financial Measures
To supplement the Company’s condensed consolidated financial statements, which are prepared and presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board—IASB, we use Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Net Income Margin and Managerial Free Cash Flow and which are non-GAAP financial measures.
Contacts
Carina Carreira (carinacarreira@arcoeducacacao.com.br)
Investor Relations Contact
Arco Platform Limited
IR@arcoeducacao.com.br
https://investor.arcoplatform.com/
