Ser Educacional (SEER3) Q3 2024 earnings summary

Executive summary

• Operational optimization and portfolio repositioning led to improved revenue, profitability, and margins, with net revenue up 13.5% to R$474.6 million and adjusted EBITDA up 38.7% to R$93.7 million in 3Q24.

• Adjusted net income turned positive, reaching R$19.4 million in 3Q24, reversing prior losses and marking the highest adjusted net profit in five years.

• Expansion in medical course offerings, supported by favorable legal developments, increased annual seats by 80.6% to 941, with health courses now representing 64% of the higher education base.

• The Ser Solidarity/Solidário Program was implemented, supporting new student intake and changing tuition discount structure, positively impacting revenue recognition.

• Hybrid and digital education segments saw strong enrollment growth, with hybrid undergraduate intake up 11.2% and digital up 6.2% year-over-year.

Financial highlights

• Net revenue rose 13.5% to R$474.6 million in 3Q24; adjusted EBITDA margin increased by 3.6 p.p. to 19.7%; adjusted net margin reached 4.1%, reversing prior losses.

• Operational cash generation surged 206.4% to R$85.3 million, with EBITDA to cash conversion rate at 91%.

• Net debt/EBITDA (LTM) improved to 1.76x, positioning the company as one of the least leveraged in the sector.

• CAPEX increased, focused on licenses, equipment, and campus maintenance, totaling R$37.4 million in 3Q24 and R$96.8 million in 9M24.

• Sale of loan portfolio contributed BRL 12.9 million to cash flow.

Outlook and guidance

• New medical course seats and the Ser Solidarity Program are expected to be fully implemented in 2025, supporting a new growth cycle and providing new revenue streams.

• Focus remains on further reducing leverage, enhancing cash flow, and preparing for recurring dividend payments after debt reduction.

• Continued operational and financial optimization is expected, with a young student base and digital integration supporting future growth.