Forward looking statements are based on our management's belief and assumptions and on information currently available to our management. These risks include those set forth in the press release and we are issuing today as well as those more fully described in our filings with the Securities and Exchange Commission. The forward looking statements this presentation are based on the information available to us as of today. You should not rely on them as predictions of the future events. And we disclaim any obligation to update any forward looking statements except as required by law. In addition, management may reference a non non IFRS financial measures on this call. The non IFRS financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with IFRS. Thank you. And now I would like to turn the call over to Sever Silva, CFO. Please go ahead. Good evening, everyone, and thank you for joining us in this conference call to discuss Vasta Platform's first quarter of twenty twenty five results. And Cesar Silva, Vasta's CFO And today, we have the presence of Guilherme Malaga, Vasta's CEO, who will be joining on the call.

Let me now hand over the floor to Grahamelegar, our CEO, to make his opening statements. Thank you, Cesar. Thank you all for participating in our earnings release call. I'd like to cover Slide number three. With some highlights of our 2025 sales cycle. I'm pleased to share our progress and achievements made so far. This first quarter also represents halfway through the 2025 commercial cycle. Which runs from October 2024 September 2025. In this quarter, we have continued delivering strong economic and financial results. With a particular highlight in our free cash flow. In the 2025 cycle to date, our net revenue increased by 11%. To reach $1,129,000,000 This growth was primarily driven by the successful conversion of our annual contract value. ACV. Into revenue and achieved 10,000,000,000 a 17% increase compared to 2024 cycle to date. Complementary Solutions continue to present the highest growth rate among our business segments with a 24% expansion in the cycle to date compared to the same period last year. Moving to the company's profitability. Our focus on operational efficiency and cost saving continued to bring results. Adjusted EBITDA for the 2025 cycle to date was BRL420 million. With a margin of 37.2%.

It has been an increase of 5%. From BRL402 million performed in the last cycle. These gains were driven by a favorable sales mix benefiting from the growth of our subscription products. Finally, our cash flow generation was the main highlight of the quarter. Totaling BRL144 million, in the 2025 sales cycle. Which represents 176% higher than the same period in 2024. The last twelve months free cash flow to adjusted EBITDA conversion rate improved from 42.5% to 50.8%. Reflecting our sustainable efficiency measures. These measures include improvements in the collection process, such as process automation, reminders and past due notifications, customer segmentation, [indiscernible] faster renegotiation and delayed of delayed receivables. Additionally, implemented several initiatives to achieve better discipline on the payment side. Including rigorous financial planning, centralization of payments on a single monthly basis and negotiating longer payment terms with suppliers. In addition to the financial highlights, I would like to emphasize our continuous development of our technological platform. [indiscernible] Which enables us to provide better service to our customers. Starting in 2026, our schools will use Plural AI with many new tools. Focusing on the concepts of inclusion, diversity and equity in continuous education, [indiscernible] towards creating a welcoming educational environment for our students.

With the creation of an individualized education plan. The AI generates personalized pedagogical recommendations and assist teachers and schools in inclusive practice. Providing an innovative solution to help educators transform challenges into opportunities for growth. I will now turn back to Severus Silva to talk about the financial results of the quarter and the sales cycle to date. Thank you, Malaga. In this slide number four, we present the composition of Vasta's net revenue. On the left side, you can observe the organic year on year growth in the total net driver for the first quarter. Which decreased by 6.6%. Reaching R430 million dollars Cost of subscription revenue achieved in the first quarter of twenty twenty five, BRL400 million. A 12% increase compared to the same quarter of twenty twenty four. Subscription decreased by 27% to 25,000,000 as expected. And in the government segment, in this quarter, we generated $5,000,000 revenues. Coming from five new contracts. Compared to $69,000,000 for first quarter of twenty twenty four when the totality of Para contract first and second semester, was booked all at once. In 2025 cycle, the first semester of Para contract was booked in the fourth quarter of twenty twenty four and second semester is a expected to be performed throughout the year.

Moving to the right side we analyze the net revenue for the 2025 sales side to date. We achieved an organic net revenue growth of 11.3% in the 2025 sales cycle date. Amounting to [indiscernible] The main factors for this performance were: Firstly, the subscription revenue has increased 17% reaching 1,092,000,000.000 and continues to be the major contributor to our total revenue. Representing 90% of the revenue share. Non subscription revenue dropped 6% to million. And the net revenue of V2G reached $41,000,000 a decrease of 40% comparing to 2024 sales cycle. Moving to Slide five, In this quarter, our adjusted EBITDA amounted to 121,000,000 with a margin of 28.2%. A decrease of 25% from $162,000,000 in the first quarter of twenty twenty four. Mainly due to a lower revenue volume in this quarter and a different product mix. On the right side, we see that adjusted EBITDA in 2025 sales cycle increased by 5% to reach $420,000,000 with a margin of 37.2%. Let's now move on to the next slide, explain the breakdown of the adjusted EBITDA margin. [indiscernible] we can observe that the adjusted EBITDA margin achieved 37.2% in the 2025 sales cycle. 3.2 percentage points lower than the same periods of 2024.

Firstly, our gross margin achieved 63.7%, a decrease of 3.2 percentage points. From 66.9% in 2024 sales cycle. Due to a lower revenue in the sales cycle and a different product mix. Provisions for doubtful accounts PDA achieved 3% in relation to the net revenue. And had an improvement of 1.2 percentage points when comparing to 2024. Quite showing improvement in this indicator, year has been performing a very challenging and strategic criteria landscape for nonpremium brands business. And we still foresee some challenges in the credit scenario for the next month. As a percentage of net revenue, our commercial expenses increased by 1.2 percentage points. Driven by higher expenses related to business expansion of the commercial cycle of 2025. And finally, adjusted G and A expenses improved by 0.8 percentage points mainly driven by workforce optimization, budgetary discipline measures. Moving to Slide number seven, which shows the adjusted net profit. In this first quarter of twenty twenty five, net profit totaled $26,000,000 a 49% increase compared to adjusted net profit of $50,000,000 in the same quarter of twenty twenty four. The right side of the slide in 2025 sales cycle, adjusted net profit reached 140,000,000 That has been a decrease of 4.4% from adjusted net profit of 146,000,000 in 2024 as a result of the topics commented before.

Moving to Slide number eight, we show the free cash flow evolution. We continue to observe the growth of the company's cash flow generation. In the first quarter of twenty twenty five, the free cash flow totaled $774,000,000 representing a relevant increase comparing to $52,000,000 in the same period of 2024. On the right side of the slide, in the twenty twenty twenty five sales cycle, our free cash flow reached 144,000,000 an increase of 176% from 2024. This quarter and the first semester of 2025 will benefit from early collections regarding 2025 sales cycle, which will be normalized throughout the year. Together with consistent efficient measures implemented in the collection process in the payment balance I'll read details by Guilherme in his initial remarks. On another metric, our last twelve months free cash flow to adjusted EBITDA conversion rate increased from 42.5% in 2024 sales cycle to 50.8% in 2025. Despite having an expressive results in the sales side to date, we expect to keep this conversion rate in the following quarters. Moving to slide number nine, we show the provision for doubtful accounts. Total expense with PDA in the first quarter of twenty twenty five totaled $12,000,000 representing 2.9% of net revenue.

The same level as comparable quarter. Moving to the right side of the slide, the PDA for 2025 sales cycle amounted to 34,000,000 compared to the 42,000,000 in 2024. Provision for doubtful accounts represent 3% of net revenue in 2025 sales cycle. Improvement of 1.2 percentage points comparison to 2024. As explained before, we still foresee some difficulty in the credit scenario, mainly for the school to mainstream brands. Moving to the next slide, observe that the average payment terms of Vasta's account receivables portfolio was one hundred and eight days in the first quarter of twenty twenty five. Which is eight days higher than the comparable quarter and in line with the business model seasonality. Moving to Slide number 11, let's take a closer look into net debt movement. In the first quarter of twenty twenty five, Vasta had a net debt position of $9,103,000,000 decrease from the previous quarter. This achievement is due to the positive cash flow generated during the period in the amount of 74,000,000 which surpassed the impact of interest accrual. Of €34,000,000 Moving to the right side of the slide, the net debt position decreased by $777,000,000 since last year. This decrease was driven also by the free cash flow generated in 2025 sales cycle, which was partially offset by financial interest costs.

I will conclude my part of this presentation with Slide 12. Explaining some more detail about our net debt composition, which represents million dollars at the end of the quarter. This amount is composed of $777,000,000 on debentures issued to the parent company in addition to 4,000 hundred and 49,000,000 on accounts payable for business combinations. Mainly related to OfferLab acquisition. Offset by $257,000,000 in cash and cash equivalents that the company owned. In the lower left of this slide, can see that in the first quarter of twenty twenty five, the net debt [indiscernible] last twelve months adjusted EBITDA ratio has increased 0.09 times. From the last quarter. This slight increase was expected and when compared to the fourth quarter of twenty twenty two or the first quarter of twenty twenty four, the interest shows up relevant downwards and now stands at 2.06 times. We would like to reinforce our commitment to continuing to generate free cash flow and deleverage the company. Having said that, I finished our presentation and invited you all to the Q and A session.

Thank you. We will now begin the and answer session. Session. If you are called upon to ask your question and listening via loud speaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. And your first question comes from the line of Jessica Miller of JPMorgan. Please go ahead. Good evening, everyone. Thank you for taking my question. Actually I have two. So first, how do you see margins for 2025 comparing to 2024? This is my first question. And second, what is the strategy in terms of mix What is the expectations for the BTG business? How much this business can going forward? Thank you.

Thank you, Jessica. I'll take your questions. I will start with the margins. We expect stable margins for 2025. So we ended 2024 slightly above 30%. We forecast similar margins. Although Q1 and Q2 will have lower margin due to some concentration in marketing spending. And mix We expect mix to catch up in Q2. And now I will jump to the second question about strategy mix and B2G. Because it also compounds with the margins. So we have last year in 2024, we had a concentration in B2G because the Para contract was entirely recognized in Q1. This contract this year on the sales cycle of 2025 was partially recognized in Q4 twenty twenty four. And we expect to perform the remaining of the contract in Q2 and Q3. Additionally, already noticed new contracts in where we have five new contracts in Q1. And we have definitely more contracts to file up in q two. So this will enhance mix, in terms of segment mix. In terms of B2B product mix, we expect to be very similar to last year with complementary products growing high double digits. Actually, above 20%. And core content in double digits. That's what we expected and we expected to have similar margins in 2025.

Very clear. Thank you. And your next question comes from the line of Lucas Nagano of Morgan Stanley. Your line is now open.

Hi, good evening, Malaga, Cesar. Thanks for taking our questions. I have just one and it's related to the B2G. You mentioned that part of the the contract was booked last year. So do you expect a lower ETG revenue this year? Or should there be a seasonality this seasonality of the product contract should be kind of the same in which part of it is booked on the fourth quarter of the previous year. Just a question to assess the the potential growth of BTG this year. Thank you.

Thank you very much Lucas. Yes, it's I really would like to have more data to [indiscernible] to have a a confidence seasonality in terms of B2G. But this year, I would say that for instance, in Para, we are having a more normal seasonality because first semester should be recognized in late Q4. When we start classes in January and February, you already have the material. So it's quite similar to the B2B distribution process. So we expect to have the same distribution in 2025. So we do not expect any any difference in terms of fiscal year on 2025. Additionally, we have a very heated pipeline. We have we are prospecting several new contracts that will pile up in the contracts that we already signed. So we expect growth in the B2G. We will not give a guidance about that. But we are working to have it a sound growth for 2025.

Very clear. Thank you.

There are no further questions at this time. I will now turn the conference back over to Mr. Guilherme Malaga, our CEO. For closing remarks.

Thank you all very much for participating in the Vasta platform Q1 conference call. We have very happy with the beginning the year with ACV recognition. With the start of sales campaign of ACV for 2026. We just finalized the Baixa Ducar fair last week. That generated a significant pipeline for us in B2B. And B2G. So both segments with heated pipeline And additionally to that, we already see very positive signs in free cash flow. That we will remain perform positively throughout the year. So thank you very much. Looking forward to see you on our Q2 earnings release call. Thank you.

Ladies and gentlemen, that concludes today's call.

Thank you all for joining. You may now disconnect.