Yduqs Participações (YDUQ3) Q3 2024 earnings summary

Executive summary

• Achieved highest net income and free cash flow to equity since the pandemic, with net income up 26% year-over-year for 9M24 and adjusted net income rising 52.9% in 3Q24; Premium segment led growth with Ibmec and Medicine brands, and share buyback program repurchased 13 million shares and canceled 20 million.

• Free cash flow to equity reached R$298 million in 3Q24 (+177% vs. 3Q23), and cash flow for shareholders tripled year-over-year.

• Premium segment student base grew 22%, revenue up 16% in 9M24, and adjusted EBITDA margin reached 48%.

• On-campus segment expanded student base for the third consecutive quarter (+2% vs. 3Q23), while digital segment managed pricing amid weaker demand and maintained a 71% renewal rate.

• Received ESG recognitions, including MSCI AA rating, Gold Seal in GHG Protocol, and inclusion in TEVA Women in Leadership Index.

Financial highlights

• Adjusted net income for 9M24 was R$418.2M (+26.4% vs. 9M23), and adjusted EBITDA reached R$1.42B (+3.9% vs. 9M23), with a margin of 34.7%.

• Net revenue for 9M24 totaled R$8.67B (+5.4% vs. 9M23); 3Q24 net revenue was R$1.31B (+0.7% vs. 3Q23).

• Free cash flow to equity was R$298M in 3Q24 (+177% vs. 3Q23), and operating cash flow reached R$464M in 3Q24 (+18.5% vs. 3Q23).

• Capex for 9M24 was R$329.5M (8.1% of net revenue), focused on digital transformation and selective expansion.

• Net debt/adjusted EBITDA at 1.56x, with average debt cost reduced to CDI + 1.25%.

Outlook and guidance

• 2024 guidance reaffirmed: adjusted net income per share between R$1.6 and R$1.9, with 291 million shares in circulation at the guidance date.

• Capex for 2024 expected at R$470M, with plans to stabilize Capex at 7–8% of revenue from 2025.

• Management confident in continued margin expansion, cash generation, and higher dividends, supported by portfolio diversification and operational efficiency.