Cruzeiro do Sul Educacional (CSED3) Q1 2025 earnings summary

Executive summary

• Achieved record adjusted net earnings of R$87.3 million in 1Q25, up 98.1% year-over-year, driven by operational improvements and financial discipline.

• Net revenue grew 10% year-over-year to R$672 million, supported by a consolidated student base exceeding 580,000, up 12.9% from 1Q24.

• Adjusted EBITDA rose 28.5% to R$252 million, with margin expanding 5.4 p.p. to 37.5%.

• Free cash flow to equity reached R$191.3 million, up 121% year-over-year, reflecting strong EBITDA conversion and disciplined financial management.

• Leverage (net debt/EBITDA ex-IFRS 16) decreased to 1.0x from 1.3x in 1Q24, even after acquisitions and dividend payments.

Financial highlights

• Consolidated net revenue: R$671.8 million (+10.0% YoY); Health segment revenue: R$342.0 million (+19.5% YoY); On-campus: R$480.3 million (+13.0% YoY); Digital: R$212.8 million (+4.9% YoY).

• Gross margin expanded 2.7 p.p. to 52.6% in 1Q25, reflecting labor efficiency and Medicine course growth.

• Adjusted net earnings: R$87.3 million (+98.1% YoY), with net margin up 5.8 p.p. to 13.0%.

• Free cash flow to shareholders: R$191.3 million (+120.7% YoY); cash balance: R$812.7 million (+65.6% YoY).

• Net debt: R$573.8 million (-14.8% YoY); net debt/EBITDA ex-IFRS 16: 1.0x.

Outlook and guidance

• Management expects continued growth in student base and further efficiency gains from technology and process automation.

• CapEx expected to decrease as infrastructure projects wind down, with higher disbursements anticipated in 2Q25–4Q25.

• Cost efficiency gains in Q1 are partly seasonal; some cost normalization expected in later quarters.

• Continued focus on efficiency, ticket growth, and improvements in collection and credit management.

• Ongoing investments in Health and Digital segments, with potential for further dividend distribution.