VistaGen Therapeutics, Inc. Price & Performance (VTGN)

The non IFRS financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with IFRS. I would now like to turn the call over to Cesar Silva, CFO, Please go ahead.

Good evening, everyone, and thank you for joining us in this conference call to discuss VasaPlatform's fourth quarter of twenty twenty four results. I'm Sasa Silva, Vasta's CFO today, you have the President of Kedain Malaga, VASTA's CEO. Who will be joining on the call. Let me now hand over the floor to Gran Malaga, our CEO, to make his opening statement. Thank you, Sergio. Thank you all for participating in our earnings release call. I'd like to cover Slide number three, with some highlights of the 2024 fiscal year. I'm pleased to share our progress and achievements we have made. 2024 has been marked by significant milestones across our business. Reflecting our unwavering commitment to delivering value to our customers, students, shareholders and stakeholders. [indiscernible] 2024 fiscal year, our net our net revenue increased by 13%. To reach BRL1674 million. This growth was primarily driven by the successful conversion of our annual contract value, ACV. Into revenue and achieved $1,000,000,004.06 2,000,000,000 a 14% increase compared to 2023. It is worth mentioning the good performance of our B2G business unit and the continuity of our complementary solution expansion with a 20% growth over 2023. Our focus on operational efficiency and cost savings has yielded results.

The adjusted EBITDA for 2024 fiscal year grew by 13% to BRL580 million. With a margin of 30.4%. These gains were driven by a favorable sales mix benefiting from the growth of our subscription product. Our cash flow generation has achieved BRL215 million, a 14% increase from 2023. The last twelve months free cash flow to adjusted EBITDA rate improved from 41.8% to 42.4%. Reflecting our sustained efficiency measures. And strategic achievements from this year. Our B2G segment continues to be a significant growth avenue, generating R105 million dollars in revenue for the year of for the year, a 29% increase compared to 2023. [indiscernible] We remain confident on our strategy to positively impact public education. As evidenced by the improvement in 2023 diabetes scores for the state of Para. The Starta and Go bilingual school franchise launched in 2023 has also shown impressive progress. We ended the year with 40 signed contracts and seven operational units. With a strong pipeline of over three fifty prospects. This growth reinforce the value generation capacity of our brand and our strategic expansion into new revenue streams. Our technology platform, Puro, has reached a new stage of development. Starting in 2025, it features an intelligent assistant powered by AWS.

Named Brew. [indiscernible] provide personalized learning experience for students and streamline activities for teachers. Enhancing the overall educational experience. I will now turn back to Cedric Silver, who will talk about the financial results of the quarter and twenty twenty four fiscal year. Thank you, Malekan. In this slide, before we present the composition of Vasto's net revenue. On the left side, you can observe the organic year on year growth in total net revenue for the fourth quarter. Which increased by 26.1%. Reaching $699,000,000. Passive subscription revenue achieved in fourth quarter of $20.24 $619,000,000 a 10% increase comparing to the same quarter of twenty twenty three. This increase included some additional revenue anticipated from the first quarter of twenty twenty five. With earlier orders coming from our partner schools in the commercial cycle. Non subscription revenue increased 12% to $44,000,000 And in the government segment in this quarter, we generated $36,000,000 revenues. Moving to the right side of this slide, we analyze the net revenue for the 2024 fiscal year. We achieved organic net revenue growth of 12.6% in this fiscal year. Amounted to 1,667,400,000.0000. The main factors for this exceptional performance were first, the subscription revenue has increased 14% reaching 1,462,000.000.

And continues to be the major contributor to our total revenue. Representing 87% of the revenue share. Non subscription revenue, as expected, dropped million. In the Naturovan North, B2G achieved BRL105 million. An increase of 29% compared with 2023 fiscal year and represents 6% of our overall revenue. [indiscernible] [indiscernible] In this quarter, our adjusted EBITDA amounted to BRL299 million. With a margin of 42.8%. An increase of almost 25% from BRL240 million in the fourth quarter of twenty twenty three. Mainly due to due to higher revenue volume in these quarters in all lines of revenue, presented before. On the right side, we see that adjusted EBITDA in 2024 fiscal year increased by almost 13%. And reached $5.00 $8,000,000 with a margin of 30.4%. Let's now move on to the next slide, explains breakdown of the adjusted EBITDA margin. In Slide number six, [indiscernible] we can observe that the EBITDA margin achieved 13.4% in 2024. 0.1 percentage points higher than 2023. Firstly, our gross margin achieved 61%. A decrease of 0.6 percentage points from the 61.6% percentage 2023. Showing stability in the space [indiscernible] percentage. Provisions for doubtful accounts achieved 3.2% in relation to the net revenue and had an improvement of 0.6 percentage points.

When compared to 2023. [indiscernible] the year was built in a very challenging, high pressure field landscape. [indiscernible] [indiscernible] in the credit scenario for the next month. As a percentage of net revenue, our commercial expenses increased by 0.3 percentage points driven by higher expenses related to the business expansion of the commercial cycle of 2025. And adjusted G and A expenses improved by 0.5 percentage points, mainly driven by workforce optimization budget, IT spend measures. Moving to Slide number seven, seven, we show the adjusted net profit. In the third quarter of twenty twenty four, adjusted net profit totaled BRL140 million, up 18.9% increase compared to adjusted net profit of €96,000,000 in the same quarter of 2023. On the right side of the slide in 02/2004, adjusted net profit reached €8,000,000 There is there has been increase of 34.6% from Vasta adjusted net profit of 60,000,000 in 2023. Moving to Slide number eight, we show the free cash flow evolution. In this fourth quarter of twenty twenty four, the free cash flow totaled BRL69 million, representing a healthy increase compared to minus R0.1000 in the fourth quarter of twenty twenty three. On the right side of the slide, in the 2024 fiscal year, our free cash flow reached [indiscernible] 14.2% above 2023.

This quarter benefited from a different payment settlement with our customers that generated a higher collection different from previous years. Our last twelve months free cash flow to adjusted EBITDA conversion rate increased from 41.28% to 42.4%. 2023. And as we have mentioned it, in the last quarter, we achieved a double digit growth in the free cash flow and consequently improved our commercial rate. Moving to Slide nine, we show the provision for doubtful accounts. Total expense with PDA in the fourth quarter of twenty twenty four totaled $22,000,000 representing 3.1% of net revenue compared to expense of $29,000,000 in the comparable quarter. Moving to the right side, the PGA for 2024 amounted $53,000,000 comparing to $6,056,000,000 dollars in 2023. Provision for doubtful accounts represents a 3.2% the net revenue, an improvement of 0.6 percentage points in comparison to 2023. As explained before, we still foresee some difficulty in the credit scenario. Mainly for the schools related to mainstream brands. Moving to the next slide, we observed the average payment terms of Vasta accounts receivable portfolio. Was one hundred and eighty six days in the fourth quarter of twenty twenty four. Which is seven days higher than the comparable quarter and in line with the business model seasonality Besides consider revenue generating the B2G business and not receive it yet.

Moving to Slide 11, let's take a closer look on the net debt movement. As of the fourth quarter of twenty twenty four, Vasta had a net debt position of 1,000,000,000 million. At BRL37 million decreased from the previous quarter. Free cash flow was higher than financial interest costs and this made possible the reduction in the total net debt in this quarter. Moving to the right decreased by $61,000,000 since last year. This decrease This decrease was driven also by the free cash flow generated in 2024 which was partially offset by financial interest cost and the second buyback program. I will conclude my part of this presentation with Slide 12 explaining some more detail about our net debt composition. Which represents $1,000,000,000 3,000,000,000 AIs. At the end of the quarter. [indiscernible] to the parent company accounts payable for business combinations mainly related to other life acquisitions and almost almost BRL200 million cash that the company owns.

In the lower left part of the slide, we can see that in the fourth quarter, the net debt to last twelve months adjusted EBITDA ratio has decreased 0.35x from the last quarter. Showing a headwind downwards and now stands at 1.97 times. And we would like to enforce our commitment to continuing generate free cash flow and deleverage the company. With that being said, I'd pass the word to our CEO, Guillermo Melegan. Thank you, Sergio. I will give you some exciting updates about Starz Sanglue on Slide 13. Start Sungloo bilingual school, our franchise launched in 2023. Which combines bilingualism and academic excellence keeps the pace and of signing new contracts every month. And we have already signed 40 contracts as of this date. And we have over three fifty prospects negotiation. This strong pipeline underscore the robust potential for further growth and market penetration of Vasta Anglo. In 2024, we concluded the revitalization project of the Lisle Complex. And besides creating an operating unit with more than 1,000 students capacity, We'll preserve the entire historical architecture design and we already started our flagship operation in Sao Paulo. This year, we have five new units in operation. The Lecil Pasteur Complex, our flagship in Sao Paulo Gjergin Manajuara, Grandia Julieta both in the city of Sao Paulo Piracicaba and with Eduardo Magalanes.

And together with San Jose De Ruopreto and Alfavili, we will achieve the total of seven units running and providing a high quality education service for our students. After launching this important avenue of growth in 2023, we already can see solid results and looking forward to see the next years. Having said that, I finished our presentation and invite you all to the Q and A session.

Your first question comes from the line of Luca Marchezini with Itau. Please go ahead. Hey, good evening everyone and thank you for taking our question. So So we saw a significant decrease in PDX expenses as a percentage of net revenue in the quarter. So can you please comment the initiatives that largely decreased And also if we should consider this level as recurring for the next [indiscernible] Thank you, Luca, for your question. We consider in this quarter our reduction of the PGA. Achieving the 3.2% However, despite having improving this indicator, we first foresee a little difficult in the next month. So we cannot provide a guide for this number. But it's we expected some higher than this 3.2%. Probably the historical figure is closest to the forthcoming provision.

Thank you very much.

Your next question comes from the line of Marcelo Santos with JPMorgan. Please go ahead.

Good evening, Helga. Sergio, thanks for the opportunity for asking questions.

I have two on my side.

First one, I wanted to ask about the ACV. Maybe I missed it, but I couldn't find I saw that you increased the core students by some, I think, 12% and the complementary students by 22s. Much more than the increase previous year. So could you give us a range or maybe better view on what that could be if possible? And the second question is regarding the margin outlook for 2025. I mean, in 2024, the margin the EBITDA adjusted EBITDA margin was mostly relatively flattish. I think 10 basis points up. What could we expect for the coming year? Thank you very much. Hi, Marcelo. Thanks for your question.

Let me give you some color about ACV. ACV growth in the fourth quarter was 20% But considering the fiscal year of 2024, we recorded a 14% increase This is we expect similar level for 2025.

We are increasing market share We price increase and complementary products keep moving fast. So the same growth in 02/2004 is expected for 02/2005, keeping the same strategy of growing in complementary products and premium learning systems. Regarding margins, we are operating on the target of 30% Every year, we expect to have slightly improvements due to the fast growth and dilution that it that it brings and the better sales mix. So we are already performing on our target level and you can [indiscernible] Thank you. So just one follow-up. On the first sorry, my phone didn't work so well. So you said ACV growth was 20% in the fourth quarter, It was 14% up in 2024. And then I couldn't hear you said it was expect same number for 2025, that would be '14 or 2020?

No, the '14. The same level of 2025, 2024 year.

Fiscal year. Okay. You said something about price, sorry. Do you mind repeating? Sorry about that.

Sure. I said that we had high single digit price increase So we expect to gain market share with the volume growth. And the remaining part of the ACV growth comes from the complementary products that grew 20%.

Your next question comes from the line of Mariela Olivero with Bank of America. Please go ahead.

Good evening, Cesar, Mel again, everyone. Thank you for the space to to make questions. I have one on G and A. We understand that this line, it's virtually flat during the year. But when we exclude the effects of the contingencies reversal, we see a 20% year on year growth in the fourth quarter. Could you please give us some color on what happened there, if we should expect higher G and A going forward or if it's just a one time expense?

Hi, Mirella. Thanks for your question. When we see SG and A when you see the G and A as a percentage of sales, we actually see pretty flat our G and A around 27%, 28% of in terms of G and A. We did have a slight increase in the commercial expenses following the growth of revenues. In terms of percentage sales, percentage we grew on commercial expenses from 16.6% to 16.9%. But besides that, G and A remained flattish.

Okay. Thank you.

Your next question comes from the line of Lucas DeGano with Morgan Stanley. Please go ahead.

Hey, Malika, Cesar, thanks for taking our questions. We had two questions. The first is related to B2G you expect the contract with Farah to be similar as last year as I think it was around BRL70 million or BRL80 million? And also can you if you could provide some color on the pipeline or other projects in B2G? And the second question is about Start Anglo. Like roughly how much revenue do you expect to generate in 2025, if it's material? Or not yet? Thank you.

Hi, Lucas. Thanks for your question.

Giving some color about PTG. So we renewed the Para contract which is around €80,000,000 So business so far The current contract that we are cooperating We have a very heated pipeline in B2G The prospection is lowered a little bit in January and February. As as the schools and the government is is engaged in the back to school season. But now we do expect to have more and April very heated season. Keep in mind that this year is slightly year, so we do have an examination of Syeb in October. And due to the results in part off, we are bringing lots of discussions to the table and we expect to to have new contracts soon. In the pipeline. Regarding StaatsAngle, StaatsAngle is a reality. We have around 1,000 students enrolled in our seven schools. 500 students out of the 1,000 are proprietary students student in Marseille, Pasteur and [indiscernible] two flagships that we have. The remaining 500 students are franchise students. So in terms of revenues, we we have around BRL25 million of the entire operation of Start Anglo. It's not yet that significant. But in terms of growth for the coming cycle and also in Q4, when we we make the shipments for the teaching materials for the the new opening units in 2025 that's been generate a significant increase in this business unit.

Very clear. Thank you.

I will now turn the call back to Guillermo Malaga for closing remarks.

Thank you all to participate in the Vasta Q4 conference call. 2024 was a very important year for us Not only we grew our operation as we already delivered significant results in B2G, with the accounts that we secured and [indiscernible] This keep us confident that 2025 will have a very interesting year and significant for all our stakeholders. Thank you all for supporting Vasta. Looking forward to see you back in the next call.