Cogna (COGN3) has a 70% drop in adjusted losses in the 3rd quarter; CEO highlights cash generation


Cogna (COGN3), the education group that owns Vasta, Saber, Kroton, announced an adjusted net loss of R$44,056 million in the third quarter of 2023 (3Q23), a drop of 70.1% compared to the adjusted loss of R$147,472 million registered in the same period last year, the company reported this Wednesday (8).

In unadjusted terms, Cogna had an annual drop of 51.5% in net loss, going from R$211.313 million in 3Q22 to a negative result of R$102.585 million in 3Q23. The average projection of market analysts, according to LSEG consensus, was a loss of R$110.51 million.


Net revenue, in turn, registered an annual increase of 19.3%, to R$1.27 billion, practically in line with the LSEG projection of R$1.234 billion.

During the period, recurring earnings before interest, taxes, depreciation and amortization (EBITDA) grew 31.9% and reached R$305.76 million. Year-to-date, the number is R$1.1842 billion, growth of 19.8% compared to 2022.


As a result, the recurring Ebitda margin (Ebitda on revenue) rose 2.3 percentage points (pp) year on year, to 24.1%.

“It is very strong growth not only for a company in the education sector. Few companies are growing that much. Ebitda is growing by more than 30% and last quarter also recorded very strong growth. We also continue to gain in profitability because the EBITDA margin grew 2.3 percentage points. So, despite the cost pressure on face-to-face service at Kroton and paper and printing at Vasta and Saber, we have managed to gain efficiency”, said Roberto Valério, CEO of Cogna, when InfoMoney.

He also highlighted that the most important thing to highlight is cash generation, which has already exceeded the total value recorded in 2022 in the first three quarters of the year.


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Operating cash generation (GCO) after capex totaled R$254.79 million in the quarter, an increase of 36.6% annually. In the first nine months of the year, the company highlights, GCO after capex was R$652.7 million, compared to R$540.3 million in the entire year 2022.

“This result is a consequence of the strategy asset lightwith an increase in the conversion of recurring Ebitda into cash (+2.8 pp) and growth in Recurrent Ebitda, between the quarters”, pointed out Cogna in the results release.

To the InfoMoneyValério also highlighted that there is a positive expectation of cash generation for the fourth quarter, which is usually a positive quarter for Saber, with revenue from the National Book and Teaching Material Program (PNLD).

With this scenario, Cogna’s liability management actions, added to cash generation and Ebitda, allowed the reduction of leverage from 2.15 times to 1.88 times the net debt versus Ebitda ratio between 3Q22 and 3Q23. “3Q23 is the fourth consecutive quarter of a reduction in this multiple. This is the lowest level of leverage in 18 quarters, since 4Q18”, pointed out the earnings release.

“We say that the company excelled because all the numbers were good, across the board, despite the context of high interest rates. The main indicator is cash generation, which is important for us to continue to grow and invest and at the same time reduce our debt”, reinforces the CEO.

In this context, he sees the beginning of the interest rate reduction cycle by the Monetary Policy Committee (Copom) in August this year as positive. “Each point of Selic reduction represents R$33 million more in cash generation, so it is also relevant,” he states.

Kroton, Vasta and Saber

At the Kroton higher education unit, net revenue grew 8.4% in 3Q23 versus 3Q22, reaching R$829.4 million and representing the fifth consecutive quarter of growth.

This increase reflects the compound effect of growing harvests, states the company, pointing out that it deserves to be highlighted as it is a growth above a base that had an increase of 11.7% in the previous year.

Cogna also points out that, in February 2023, the education sector began to have larger deductions from FIES, given the default in portfolios. In August 2023, an injunction was granted to the company that determines a ceiling of 25% on such retentions.

Roberto Valério, CEO of Cogna
Roberto Valério, CEO of Cogna (Photo: Rafael Almeida)

As a result, in 3Q23 the company began to remove additional retention from net revenue, negatively impacting this line of Kroton’s results by approximately R$10.0 million. The amounts retained in the first half were provisioned in the Provisions for Doubtful Credits (PCLD) at approximately R$21 million, with the biggest impact of this movement being on Kroton Med, a segment that has the largest share of FIES.

For the next quarters, the provision will be 27.5% due to the sanction of law 4,172/2023 which, for the CEO of Cogna, despite being relevant in absolute terms as it “represents a few million in cash generation”, it will not be as significant compared to the company’s revenue generation as a whole.

The total volume of students recruited in Kroton’s second semester 2023 cycle showed growth of 5.3% compared to 2H22, reaching a total volume of 303.3 thousand students. This growth is concentrated in the Low In-Person mode, in accordance with the company’s strategy of increasing revenue share from digital courses in order to absorb gains from operational leverage and taking into account changes in the market’s consumption profile.

The volume of funding in Low Presence grew 6.6% between 2H23 and 2H22. This growth is made up of: (i) 11.4% growth in the volume of students enrolled in the Blended-in-Class subsegment and; (ii) growth of 5.9% in 100% online. The volume of enrollment in High In-person was almost stable during the period, as a consequence of the strategy of rationalizing the offer of the in-person submodality, focusing on courses with higher Life Time Value (LTV, being an important indicator of value during the study cycle), and the asset light strategy.

Kroton’s dropout rate decreased by 1.4 percentage points (pp) in the comparison between 3Q23 and 3Q22, with a reduction of 1.1 pp in Low Presence and 1.8 pp in High Presence. According to the company, the movement is “a reflection of the quality of enrollment, improvement in the level of student satisfaction (NPS) and the evolution of our processes and improvement of systems”.

Kroton’s recurring Ebitda in 3Q23 grew 17.6% in the quarter, reaching the mark of R$243.9 million, with a margin expansion of 2.3 pp (29.4% versus 27.1%), with the improvement in Provisions for Doubtful Credits (PCLD), greater dilution of operating expenses, in addition to the improvement in gross margin, which offset the increase in Sales and Marketing Expenses in previous quarters with the aim of consolidating the Anhanguera brand.

The Provisions for Doubtful Credits (PCLD) line in 3Q23 totaled R$78.6 million in 3Q23, a reduction of 22.4% on an annual basis, resulting in a reduction in the ratio between PCLD and ROL (net operating revenue) of 13 .2% to 9.5%.

“With the current macroeconomic scenario, we hope to maintain the PCDL/NOR indicator at the same level as the indicator released in 2Q23 (11.2%). We continue to focus on consolidating the Anhanguera brand and therefore, the ratio between Sales and Marketing Expenses and NOR grew by 3.9 percentage points”, he pointed out.

At KrotonMed, net revenue grew 11.5% versus 3Q22, reaching R$149.1 million. “Highlighting the strength of the brand of KrotonMed units, which continues to have a positive and stable candidate/vacancy ratio, in addition to a very high re-enrollment rate”, states the company.

The Vasta division, of products for primary schools, showed growth of 21.7% in the number of students adopting complementary solutions, reaching 453.6 thousand students in the 2023 cycle. “This growth is driven by the greater penetration of partner schools that adopt one or more solutions”, he pointed out.

The number of students in solutions core reduced by 3.2% between the 2022 and 2023 commercial cycles, in line with the strategy up sell (that invites you to consider/purchase more expensive items, upgrades or other add-ons to generate more revenue) that focuses on increasing the penetration of premium solutions in the customer base (Anglo, PH and Fibonacci), generating larger tickets and longer relationships, says company.

Net revenue reached R$257.9 million in 3Q23, growth of 36.6% compared to 3Q22.

For Saber, Cogna emphasizes that the second half of the year is very important for the division, as it is when the National Book and Teaching Material Program (PNLD) is defined.

“This year the purchase was made for elementary school II, where Saber gained 7 percentage points of market share versus the 2019 purchase, reaching 33%. As a result, we are the leader in the purchase and repurchase market for the next 3 years for elementary school II. The result of the initial sale should be recognized in 4Q23, according to the book delivery schedule”, highlighted the company.

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The article is in Portuguese

Tags: Cogna COGN3 drop adjusted losses #3rd quarter CEO highlights cash generation



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