Yduqs Participações (YDUQ3) Q1 2018 earnings summary

Executive summary

• Q1 net operating revenue rose 14.2% YoY to BRL 935.7 million; EBITDA increased 53.8% to BRL 330.1 million and net income rose 62% to BRL 197.4 million.

• Results reflected the DIS tuition-dilution campaign, higher average tickets, distance-learning growth, and efficiency gains; ProUni tax-benefit loss and delayed faculty replacement were non-recurring factors.

Financial highlights

• Net operating revenue was BRL 935.7 million, up 14.2% YoY; monthly tuition revenue increased BRL 86.9 million, or 6.4%, while DIS reduced discounts and scholarships by BRL 56 million.

• EBITDA reached BRL 330.1 million, up 53.8% YoY; EBITDA margin was 35.3%, up 9.1 percentage points.

• Net income was BRL 197.4 million, up 62% YoY, aided by a BRL 115.3 million EBITDA increase and BRL 11.5 million lower financial expenses.

• Operating cash flow after CapEx was positive BRL 111 million, up 78% YoY; non-FIES collections increased BRL 106 million.

Outlook and guidance

• No formal guidance was offered; management expected tuition-cost efficiency gains to continue in coming quarters, while Q1's BRL 4.5 million faculty-cost saving from delayed replacement was not repeatable.

• Q2 average ticket was expected to reflect monthly tuition net of usual discounts and scholarships; DIS revenue effects occur in intake quarters Q1 and Q3, not Q2 or Q4.

• The new curriculum matrix was to expand beyond business, administration, accounting, and economics courses through 2018 and 2019, first reaching new entrants and then existing students.