Cruzeiro do Sul Educacional (CSED3) Q2 2025 earnings summary

Executive summary

• Net revenue reached BRL 1.4 billion in H1 2025, up 8.8% YoY, driven by expansion in both on-campus and digital student bases.

• Adjusted net earnings for H1 2025 were BRL 150 million, up 41.6% YoY, with Q2 2025 at BRL 62.7 million (+1.3% YoY).

• Free cash flow to equity surged 121% in H1 2025, converting 64% of EBITDA (ex-IFRS 16) into cash.

• Student base grew 13.9% YoY to 585,000, with digital and health segments showing the strongest expansion.

• Focused on operational efficiency, disciplined expense management, and course portfolio optimization.

Financial highlights

• Adjusted EBITDA for H1 2025 was BRL 452.6 million (+16.8% YoY), with Q2 2025 at BRL 201.3 million (+5.2% YoY); margins were 32.5% and 27.9%, respectively.

• Gross profit in Q2 2025 was BRL 365.5 million (+10.9% YoY), with gross margin expanding by 1.5 p.p. in Q2 and 2.1 p.p. in H1 2025.

• Net debt/adjusted EBITDA (ex-IFRS 16) was 1.1x at the end of Q2 2025, down from 1.7x a year earlier.

• Free cash flow to equity in H1 2025 was BRL 206.5 million, up 121% YoY.

• Net debt decreased 21% YoY, with a strong cash position of BRL 656 million at Q2 2025-end.

Outlook and guidance

• Management expects continued growth in student base, especially in digital and health segments.

• Ongoing focus on operational efficiency, cost discipline, and cash conversion to support investments and dividends.

• Investments are aligned with the annual budget, with higher concentration expected in H2 2025.

• No explicit cash generation guidance, but management expects positive cash generation in H2 2025, considering seasonality and working capital.

• Opportunities identified for further improvement in PDA and ticket pricing, especially in on-campus segment.