Yduqs Participações (YDUQ3) Q2 2025 earnings summary

Executive summary

• Free Cash Flow to Equity (FCFE) reached R$613M in the last 12 months, surpassing 2025 guidance ceiling, reflecting strong cash generation and a resilient business model focused on returns to investors.

• Strategic transition in executive leadership completed, with Rossano Marques Leandro as CEO and Eduardo Parente moving to the board, ensuring continuity and flexibility for future growth.

• Premium brands Idomed and Ibmec now represent nearly 45% of EBITDA and 29% of revenue, with Ibmec achieving a 45% adjusted EBITDA margin in 1H25.

• Technology and AI integration have driven operational efficiency, reducing student acquisition costs by 17% and digital content costs by up to 24% since 2021.

• New legal framework for distance and semi-on-campus modalities reduces industry uncertainty and supports growth.

Financial highlights

• Gross revenue rose 9.1% year-over-year to R$3,241.5M in 2Q25; net revenue increased 4.8% to R$1,378.3M.

• Adjusted EBITDA for 1H25 was R$954M, a 1% increase versus 1H24, but fell 7.3% in 2Q25 to R$393.9M, with margin compression mainly in the Presencial segment.

• Adjusted net income dropped 45.6% to R$30.6M in 2Q25, mainly due to non-engaged freshmen tuition exemption and private financing migration.

• Operating cash flow for the last twelve months increased 65% to R$1,554M; cash and cash equivalents rose 20% year-over-year to R$793M.

• DSO improved to 94 days, a 9-day reduction year-over-year, reflecting improved collections.

Outlook and guidance

• FCFE for the last 12 months already exceeds the upper end of 2025 guidance (R$500M–R$600M), supporting confidence in future cash generation.

• Earnings per share and FCFE guidance for 2025 reaffirmed, with expectations for a strong second half and continued high cash generation.

• Intake and retention improvements, lower bad debt, and G&A control expected to drive stronger 2H25 results.

• Strategic focus on premium segment growth, digital transformation, and operational efficiency to drive future performance.

• Regulatory changes for semi on-campus reduce distance learning risks and increase predictability.