Cogna Educação (COGN3) Q2 2024 earnings summary

Executive summary

• Net revenue grew 4.0% year-over-year in 2Q24 to R$1,441.8 million, with semester growth of 9.7% to R$2,980.3 million, driven by Kroton and Vasta, offsetting a 16.5% drop in Saber due to seasonality.

• Recurring EBITDA increased 13.1% year-over-year to R$481.6 million, with margin up 2.7 p.p. to 33.4%, reflecting efficiency gains and structural changes.

• Adjusted net profit reached R$50.5 million in 2Q24, up 359% from 2Q23, aided by higher operating income and lower non-recurring items.

• Leverage improved, with net debt/EBITDA at 1.79x (down from 1.98x YoY), and net debt reduced by 1.2% to R$3,323.5 million.

• Operating cash generation after Capex was R$96.9 million, down 43.3% YoY due to higher supplier payments and working capital effects.

Financial highlights

• Recurring EBITDA margin expanded to 33.4% in 2Q24 (+2.7 p.p. YoY); semester margin at 32.8% (+0.5 p.p.).

• Adjusted net margin improved to 3.5% in 2Q24 (+2.7 p.p. YoY); semester at 3.4%.

• Operating cash generation after Capex and debt service was negative R$104.6 million, impacted by debt prepayments and anticipated interest payments.

• Total Capex in 2Q24 was R$96.3 million, down 10.2% YoY, with reductions in technology and expansion investments.

• Free cash flow was negative R$845.8 million in 2Q24, mainly due to liability management actions.

Outlook and guidance

• Management remains confident in achieving 2024 guidance, expecting stronger results in the second half due to seasonality and new intake cycles.

• Second half expected to benefit from seasonality, especially in Vasta and Saber, supporting operational and cash growth.

• Focus remains on growth in student intake, subscription expansion, and efficiency through innovation and digitalization.

• Optimistic about B2G contracts and Vasta’s 2025 subscription growth.