Cruzeiro do Sul Educacional (CSED3) Q1 2026 earnings summary

Executive summary

• Net revenue grew 4.5% year-over-year to R$702 million, driven by higher average ticket prices despite a reduction in the student base.

• Adjusted net profit declined 28.1% year-over-year to R$62.7 million, mainly due to increased costs and provisions.

• Digital transformation initiatives led to significant operational efficiencies, including improved student service retention and a 40% reduction in operational service costs.

• Operating cash flow remained robust at R$233.8 million, though lower than the R$272.2 million in Q1 2025.

• Leverage reduced to 0.8x adjusted EBITDA (ex-IFRS 16), supported by strong cash generation.

Financial highlights

• Adjusted EBITDA reached R$254 million (comparable), up 1.0% year-over-year, with a margin of 36.2% (-123 bps), while gross profit was R$372.1 million, up 5.4% year-over-year, with a 0.4 p.p. expansion in gross margin.

• Free cash flow to equity was R$142.8 million, with comparable free cash flow at R$116 million, nearly stable year-over-year.

• Net debt (ex-lease) decreased 22.3% year-over-year to R$492.9 million, with net debt/adjusted EBITDA (ex-IFRS 16) at 0.8x.

• Capex was R$10.2 million, down 16.4% year-over-year due to changes in technology investment accounting.

• Financial expenses decreased to R$76.8 million from R$93.8 million, reflecting improved debt management.

Outlook and guidance

• Growth in average ticket prices expected to continue, supported by value maximization strategies and a higher share of students in premium programs.

• Ongoing digital transformation and operational efficiency initiatives are anticipated to further enhance margins and service quality.

• Management is actively adapting to Brazil's new tax reform, with a dedicated committee and external consultants.

• Profitability challenges are expected to be temporary, with continued focus on technology and digital transformation.