CORPORATE PRESENTATION NOV/2019 - Amazon S3
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CORPORATE PRESENTATION NOV /2019
DISCLAIMER The following material is a presentation of general information regarding the Company. The information herein is summarized and does not purport to be complete, and should not be construed by potential investors as a recommendation. This presentation is strictly confidential and may not be disclosed to any other persons. We make no representations or warranties as to the accuracy, adequacy or scope of the information presented herein, which should not be used as the basis for any investment decisions. This presentation contains forward-looking statements and information pursuant to Clause 27A of the Securities Act of 1933 and Clause 21E of the Securities Exchange Act of 1934. Said forward-looking statements are merely forecasts and do not represent guarantees of future performance. Investors are cautioned that said forward-looking statements and information are and will be, as applicable, subject to risks, uncertainties and factors related to the business operations and environments of the Company and its subsidiaries, and the actual results of said companies may differ materially from the future results expressed or implied by said forward-looking statements and information. Although the Company believes that the expectations and assumptions contained in said forward-looking statements and information are reasonable and based on the data currently available to its management, it cannot guarantee future results or events. The Company does not undertake any liability for updating any forward-looking statements or information. This presentation does not constitute any offer, invitation or request to subscribe to or purchase any securities. This presentation and its contents do not constitute the basis of any contract or commitment.
A NEW ERA IS COMING
HISTORY OF CONSTANT EVOLUTION
3.040
7.353
343 15
-3
Year 2009 2019 Year 2009 2010 2019
467% 96%
52,5% 61%
+35p.p
Ibovespa 2019 Year 2010 2017
SUPPORTED BY MAJOR DRIVERS, WHICH
ARE KEY TO CREATING VALUE DIGITAL
TRANSFORMATION
SOMOS
IUNI UNOPAR ANHANGUERA ACQUISITION NEW B2B BUSINESS MODELS
ACQUISITION ACQUISITION ACQUISITION
2010 2011 2014 2018/2019
FOCUS ON SCALE AS A FOCUS ON K -12
DIGITALIZING
EFFICIENCY VALUE EDUCATION AND B2B MARKETS
EDUCATION
AND QUALITY DRIVER
NEW
GOVERNANCE
A
NEW BUSINESS
STRUCTURE
DISRUPTIVE
NEW
ORGANIZATIONAL
STRUCTURE
CHANGE
NEW
WORKPLACE NEW BRAND
ENVIRONMENT ARCHITECTURE
NEW SEGMENTS AND NEW BUSINESS
MODELS ALLOW ACCESS TO A POTENTIAL
MARKET OF R$174 bn
174bn
B2B
K-12
EDUCATION
total education
B2C
K-12 market in Brazil
B2B EDUCATION
7bi
POSTSECON
DARY
EDUCATION POTENCIAL
B2C
POSTSECONDARY TOTAL
POSTSECONDARY
EDUCATION
PENETRATION 9.1% 0.3% 1.2 % 4.0 % 3.9 %
NEW
GOVERNANCE
NEW BUSINESS
...A NEW MINDSET STRUCTURE
REQUIRES A NEW NEW
ORGANIZATIONAL
BUSINESS STRUCTURE
STRUCTURE...
NEW
WORKPLACE NEW BRAND
ENVIRONMENT ARCHITECTURE
EACH BUSINESS HAS DIFFERENT HOLDING MOMENTS AND OPPORTUNITIES
NEW
GOVERNANCE
NEW BUSINESS
AND TO REPRESENT STRUCTURE
NEW IDENTITIES, NEW
ORGANIZATIONAL
A NEW BRAND STRUCTURE
ARCHITECTURE
NEW
WORKPLACE NEW BRAND
ENVIRONMENT ARCHITECTURENEW
GOVERNANCE
FOR THIS NEW NEW BUSINESS
STRUCTURE, WE STRUCTURE
PROPOSE A NEW
NEW
ORGANIZATIONAL
GOVERNANCE STRUCTURE
MODEL
NEW
WORKPLACE NEW BRAND
ENVIRONMENT ARCHITECTURE57% OF
DIRECTORS
ARE
INDEPENDENT
BOARD OF DIRECTORS
STRATEGIC COMMITTEES
STRATEGY & PEOPLE & FINANCE & M&A AUDIT & RISKS
INNOVATION GOVERNANCEB2C POSTSECONDARY EDUCATION
Huge growth potential for the market, proven by latent demand and the
number of students enrolled in the latest ENEM editions
STUDENT BASE IN NUMBER OF STUDENTS WHO
POSTSECONDARY EDUCATION VS. TOOK THE ENEM AND ARE NOT
LATENT DEMAND ENROLLED IN POSTSECONDARY
41,2 PROGRAMS
36,9 38,1 39,1 40,2
33,3 34,5 35,7 17,7
32,1 16,2
13
10,1
7,2
4,9
1 3,6
0,6 2,1
6,1
5,9
5,8
4,7
5
4,1
4,1
8,3 8,5
3,9
7,1 7,3 7,8 8,0 8,0
3,4
6,8
3,2
3,2
6,4
3,1
3,1
2,9
2,9
2,9
2,7
2,3
0,6
2,4
0,4
2,2
2,3
1,6
1,4
2,7
2,3
2,8
1,5
0,7
3
2
1
2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Enrollment Latent demand Students enrolled in ENEM
New enrollments in postsecondary programs
ENEM Prospects
Latent Demand: Population aged 17 to 49 who completed high school (IBGE 2010) plus alumni of
Postsecondary (annual Census E.B. INEP), less graduating students of Postsecondary (annual Census E.S. INEP) Cumulative ENEM prospectsIf the economy picks up, this latent demand will be
activated more intensively, given the influence of GDP
growth on student base
10,0% 9,2%
8,0% 6,9%
6,0% 7,5%
4,9% 4,5%
3,5%
4,0% 3,0%
3,5%
4,0% 2,1%
2,0% 3,0%
1,9% 0,5%
0,0% 1,1% 1,1%
-0,3%
-2,0%
-4,0% -3,3%
-3,5%
-6,0%
2010 2011 2012 2013 2014 2015 2016 2017 2018Despite the change in the financing model for
Postsecondary students in 2015...
733 NEW FIES
CONTRACTS IN
BRAZIL
560
378 -60%
287
204
154 176
76 82
49 33 33
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020...we managed to maintain our new enrollment
numbers, compensating the reduction in FIES
students with students paying out of pocket
1st semester enrollments 1st semester enrollments 1st semester enrollments Kroton On-
Kroton On-campus (Ex Prouni) Kroton On-campus (FIES) campus (Out-of-pocket students + PEP)
+166%
-1.5% +136%
107.597
-99%
101.152
95.939
12.273
110.063 106.554 104.158 108.407 69.700 82.333
102.651 24.754
96.723
34.570
60.791 27.090
41.860
40.363 22.352 95.324
76.398
14.390 55.243 61.369
10.615 40.363 38.439
3.006 810
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
Pagante Out Of Pocket Students
PEPIn the 2019.2 cycle, we were were able to balance
volume, average ticket and cash, delivering growth in
enrollments and intake revenue
Growth in Enrollments in On-Campus Growth in Enrollments in Aligned with Intake Revenue Growth in
(especially Out-of-Pocket) Distance Learning and Total Both Segments
On-campus New Enrollments DL New Enrollments Intake Revenue
Ex-ProUni Ex-ProUni On-Campus
0.6% 2.1% 1.5%
16%
63,626 64,025 111,503 113,792
3Q18 3Q19
3Q18 3Q19 2018/2 2019/2E
New Enrollments Total New Enrollments Intake Revenue
Out -of-Pocket Distance Learning
Ex-ProUni
14.6% 1.5% 1.5%
27%
52,773
46,069
175,129 177,817
3Q18 3Q19
3Q18 3Q19 2018/2 2019/2EAlthough new enrollments have remained stable, the high number
of graduation of FIES students significantly impacts our base.
This dynamic ends in 2020
Student base FIES Base
PEP Base
Out of pocket + ProUni Base
437.633
422.783 412.247
375.413
358.093 353.434
54% 46% 39% 25% 18%
61%
16%
16%
11% 13%
4%
82%
61% 75%
54% 66%
42% 46% 48% 58%
39% 43%
2014 2015 2016 2017 2018 1S19 2020 2021
GRADUATIONS 33,197 59587 68,257 75,289 87,887 60,907Kroton is the company best positioned to compete in the current market, with high quality and operational efficiency to seize market opportunities that arise with the better economic scenario
We have the largest distribution network in the market,
with representativeness across the whole country
OWN UNITS
176
153
112 112 118
2015 2016 2017 2018 2019
THIRD-PARTY UNITS
1.410
1.310
Polos
Polos
Polos
Polos
Polos
1.110
910
678
2015 2016 2017 2018 2019We launched 64 new own units that have surpassed
projected results, proving the quality in selecting cities
and implementing the strategy
STUDENT BASE OF
OPENING OF NEW UNITS IN NEW UNITS
POSTSECONDARY EDUCATION GRF RESULTS
GREENFIELDS AND VS. BUSINESS PLAN
ACQUISITIONS
Net Revenue +7 p.p.
34% 34% Operating Result +12 p.p.
30%
28% 3
20
24% 2
18
3
176
18
112
Same Stores Until
Até18.1
18.1 18.2 19.1 Total 2017 (17.2) 18.1 18.2 19.1
Total Greenfields M&A Latent Demand in cities
Campuses with CampusesOur network of third-party DL centers continues to grow
and, as market leaders, we are focusing on maximizing
REVENUE SHARE and not just on MARKET SHARE
REVENUE SHARE ANALYSIS -
16%
DL - 2018
31%
REVENUE SHARE ESTIMATE APPLYING Outros 6%
WEIGHTED AVERAGE PRICES OF
MARKET. 7%
10%
Competitor E 11%
Competitor D 4% 12%
Competitor C 9%
Competitor B 9% 13%
Competitor A 9%
Kroton
28% Δ8 36%
MARKET SHARE REVENUE SHARE
Source: MEC and Kroton estimatesOur medicine
programs offer an # STUDENT BASE REVENUE
opportunity for (R$ MM)
growing the student HIGH
DEMAND
base and bring high- 2.976 432
quality revenue
+83% +109%
LOW DROPOUT
RATE
HIGH LTV
2019 2026 (E) 2019 2026 (E)
Mais Médicos
Same StoresIn ENADE, we had an increase of 21.5 p.p. in satisfactory
programs. Anhanguera Units made the biggest
progress, demonstrating the quality of KLS 2.0
% ENADE SATISFACTORY EVOLUTION
Increase of
Increase of 67.8% 39,3%
Anhanguera 30.1 p.p.
21.5 p.p. 69.4%
46.3%
55.3%
Other
DemaisBrands
Marcas Increase of
66,0%
10.7 p.p.
2015 2018 2015 2018Year-over-year increases in NPS reflect ongoing operational
improvements and impact of digital transformation
NPS VARIATION OWN UNITS NPS VARIATION THIRD-PARTY UNITS
AUG
+10 p.p. 2019
JAN
AUG
2019 +11 p.p. 2019
JAN
2019
+14 p.p. +32 p.p. +1 p.p. +14 p.p.
JAN
JAN 2018
AUG
2018
2018
AUG
2018
OWN AND THIRD-PARTY UNITS REGISTERED CONSISTENT AND SIGNIFICANT
GROWTH IN NPS THROUGHOUT 2019Digital transformation is accelerating the delivery of new
tools and functionalities
STUDENT FINANCIAL / ACADEMIC
ADMISSION ADMINISTRATION
JOURNEY ANALYTICS
JOURNEY JOURNEY
NEW ENROLLMENT KROTON PAY TUTORING ROBOTS WITH AI NEW DEVELOPMENT, STAGING
PORTAL (PAYMENT MEANS) AND PRODUCTION
ADAPTIVE LEARNING ENVIRONMENTS
NEW CORPORATE SELF-HELP PORTAL FOR EXPANSION
PORTALS STUDENTS PANELS AND REPORTS IN
CONECTA CROWDSOURCING POWER BI
EVOLUTION OF CRM NEW SERVICE WORKFLOW
PLATFORM PLATFORM ENABLERS OF DYNAMIC PRICINGPositive trend in cash conversion
GREENFIELDS OPERATION PEP
Operating result better than Less need for Fewer PEP students vs.
expected recurring Capex out-of-pocket students
Downward Capex Need Less working capital More PEP 50, less PEP30
consumption
Maturation with a better Greater receipts of
operating cash generation installment paymentsB2B POSTSECONDARY EDUCATION
DIGITAL TRANSFORMATION IMPELLED THE STRUCTURING OF
THE DISCOVERY PROJECT, WHICH HAS ALREADY PROVEN
SUCCESSFUL, POSITIONING US FOR A NEW MARKET
DIGITAL TRANSFORMATION
DISCOVERY DISTANCE LEARNING POTENTIAL
RESULTS MARKET
PROJECT TRENDS
Format gaining prominence in New revenue sources for
Segregation and Increase of ~40% in client institutions
autonomy of teams new enrollments Brazil
DL undergraduate education will Market size of ~34bn
New positioning of Kroton Growth of ~30% in
Graduate Programs revenue and EBITDA account for biggest share of
enrollments Potential GMV of ~330bn
68M+ students with
New platform dedicated Higher rating from Secondary Education
to the product users (NPS) Increase in student base
(undergraduate and graduate) + 23M+ students with
Postsecondary Education
2,000+ Institutions without DL
OPERATION AS AN INTERNAL PLATFORM (197 IHL) accreditationINTERNAL ESTIMATES INDICATE TAM OF ~R$330 BILLION, CONSIDERING THE
ENTIRE POPULATION WITH SECONDARY AND UNDERGRADUATE EDUCATION
POTENTIAL MARKET SIZE POTENTIAL MARKET
IN R$ BN IN R$ BN
MARKET
New revenue sources for client
institutions
Market size of ~34bn
Potential GMV of ~330bn
68M+ students with
Secondary Education
+ 23M+ students with
Postsecondary Education
2,000+ Institutions without DL
accreditationBRAZIL HAS 2,000+ INSTITUTIONS WITHOUT DL ACCREDITATION, WHICH COULD
BETTER EXPLORE THE POTENTIAL OF THIS FORMAT IN THEIR REGIONS
DISTRIBUTION OF PRIVATE INSTITUTIONS
WITH AND WITHOUT DL ACCREDITATION Local institutions have greater brand
awareness, both among students and the
POTENTIAL labor market, but lower share in
MARKET distance learning education
New revenue sources for client
institutions
Market size of ~34bn
Potential GMV of ~330bn
68M+ students with
Secondary Education
+ 23M+ students with
Postsecondary Education
2,000+ Institutions without DL
accreditation
Source: 2018 Postsecondary Education Census- INEPTHE POSTSECONDARY B2B MARKET CONSISTS OF 4 LARGE SEGMENTS AND ACCOUNTS FOR
~US$3 BN GLOBALLY, MOSTLY CONCENTRATED IN THE USA
MARKET GROWTH
TOTAL OPM REVENUE, IN US$ BN
2014 2015 2016 2017 2018
Source: HolonIQ, Anatomy of an OPM; MOOC: Massive Open Online CoursesOUR PLATFORM IMPACTS ALL STAGES OF A STUDENT'S ACADEMIC CYCLE, SUITED FOR BOTH GRADUATE AND UNDERGRADUATE EDUCATION
ACCELERATED HISTORIC GROWTH, WHICH WILL BE LEVERAGED BY NEW
EXTERNAL CLIENTS STARTING FROM 2020
GRADUATE NET REVENUE
2017 2018 2019 E 2020 2021 2022
Validation of growth thesis for Kroton graduate education Evolution of the technological platform
Consolidation of internal PS B2B platform Conclusion of other services for undergraduate education
Roll-out for more third-party institutionsB2C K-12
EXECUTION CAPACITY OUR APPROACH IS TO COMBINE ACADEMIC QUALITY AND BRAND REPUTATION WITH A STRONG COMMERCIAL PRESENCE AND OPERATIONAL EXCELLENCE, BASED ON OUR EXECUTION CAPACITY
OUR SCHOOLS ARE BENCHMARKS IN THEIR REGIONS,
EVIDENCED BY THEIR RESULTS IN ENEM
1st 1st 2nd 3rd
STATE CITY CITY CITY
ENEM Caruaru Petrolina
Rio BrancoOUR GO-TO-MARKET ENSURES EXCELLENCE IN
THE FUNDAMENTAL PROCESSES
EXCELLENCE IN FUNDAMENTAL ACTIONSNEW COMPLEMENTARY PRODUCTS AND SOLUTIONS TO CATER FOR
PARENTES’ DEMAND TO EXPAND THE KNOWLEDGE OF THEIR CHILDERN
EXPANSION OF THE OFFERING OF
COMPLEMENTARY SOLUTIONS
TRADITIONAL ACTIVITIES INNOVATIVE ACTIVITIESWE SEE THE FUTURE OF OUR B2C K-12 OPERATION IN 2 MAJOR PHASES
EXCELLENT TRACK RECORD IN K-12 ACQUISITIONS (33 UNITS ACQUIRED OF 16 BRANDS)…
2011 2013 2014 2015 2016 2018
...AND EXPANSION VIA GREENFIELDS (12 GREENFIELDS OPENED)
2012 2013 2015 2016 2018 2019
[2] [2]B2G K-12
PNLD IS A PROGRAM THAT HAS SPECIFIC OPERATING
CHARACTERISTICS
2015 2016 2017 2018 2019 2020 2021 ...CONSIDERING THIS CYCLICAL MODEL, IT IS EASIER TO UNDERSTAND THE
PERFORMANCE AND ACTIONS BEING TAKEN
PRIMARY SCHOOL MIDDLE SCHOOL HIGH SCHOOL
36.5% 41.6% 42.3%
LESS
35.5%
33.0% INVESTMENT, RETURN TO
FEWER BOOKS HISTORICAL
REGISTERED, INVESTMENT
FEWER BOOKS LEVELS TO
APPROVED REGAIN SHAREB2B K-12
We Built The Most Complete and Integrated Platform
of K-12 Products and Services
CORE EDUCATION
Multi-brand, powered by technology platform
Languages delivering high quality content according to each
Continuous Socio-
Teacher student’s profile
emotional
Training
CONTENT &
Digital
Learning Academic EDTECH
P L ATF O R M
(B2B2C) COMPLEMENTARY
SOLUTIONS
Core Diversified solutions used both as core curricula
Content STEAM
and after-school content, transforming the school
into the hub for all students’ education needs
E-commerce Academic
ERP
D I G I T AL DIGITAL SERVICES
Platform offering unified day-to-day
SERVICES administration through a full stack of digital
P L ATF O R M tools and features
Online
Enrollment Financial (B2B)
ERP
Significant opportunities to
Scholarship Digital widen our Digital Services
Marketplace Marketing/ offerings through
Solutions currently
CRM
in-house development,
offered by Vasta
partnerships and
disciplined M&AOUR BUSINESS MODEL CONSISTS OF
A PLATFORM AS A SERVICE (PaaS)
SUBSCRIPTION TECHNOLOGY RECURRENT HIGHLY ASSET- HIGH
MODEL BASED REVENUE SCALABLE LIGHT GROWTHCOMPETITIVENESS
79% OF ALL BRAZILIAN BEHAVIORAL CHANGES
FOR HIGH QUALITY
FAMILIES CONSIDER CONTRIBUTES TO
POSTSECONDARY
STRONG AND EDUCATION
SUSTAINABLE
MARKET
FUNDAMENTALS
SUPPORTING
OUR EXECUTION
FAMILIES ARE
MORE LIKELY TO
OF COST REDUCTION
BY SCHOOLS AND SERVICES
ACROSS BRAZIL IMPROVEMENTDEM O GR APH Y I S F A V O RAB LE F O R P R I V ATE K -1 2 ,
A N D P RO J E CTIO NS P O I N T TO S I GN I F I CAN T I N CR E ASE
O F P A R TICI PATI ON O F CL A S S E S A A N D B . . .
31.9%
PUBLIC 37.9 37.2 Class C 37.9% 38.8% 40.0% 37.6%
36.4 35.6 29.4%
34.9 34.0 33.9 33.6 33.2 27.5%
Class D 22.8%
19.1% 15.6% 13.7% 13.0% 11.7% 8.6%
Class E 26.9% 14.8% 8.1% 9.2% 9.1% 8.2% 5.1%
6.2 6.3 6.6 6.7 6.9 6.9 6.9 6.8 6.8... ALLOWING US TO REACH
AN EXTREMELY LARGE TOTAL
ADDRESSABLE MARKET
Content
& EdTech
Platform
CORE COMPLEMENTARY DIGITAL TOTAL TAM
EDUCATION SOLUTIONS SERVICES
6.0 6.4 12.9 25.3
Digital
Services
PlatformLEARNING SYSTEM OR TEXTBOOK?
A CHOICE OF THE SCHOOL!
LEARNING
SYSTEM
TEXTBOOK
SUBSCRIPTION
THE CHOICE OF POSSIBILITY OF A THE
METHODOLOGY IS HYBRID OFFER: TECHNOLOGICAL
UP TO THE SCHOOL SYSTEM + BOOKS PLATFORM IS
INTEGRATEDSOMOS PLATFORM
DIVERSIFIED PORTFOLIO, SERVING ALL SCHOOL PROFILES WITHIN THE PRIVATE NETWORK:
LEARNING SYSTEMS, HYBRIDS AND PREMIUM SCHOOLS, WHICH USE TEXTBOOKS
TOTAL MARKET
AS A SHARE OF REVENUE
45%
55%
T1 – CITIES >1MM INHAB T2 – CITIES 500K-1MM INHAB T3 – CITIES 150K-500K INHAB T4 – CITIESWIDE PORTFOLIO OF BRANDS WITH UNERRING EXCELLENCE
IN BOTH DIGITAL AND PRINTED CORE CONTENT
LEARNING SYSTEMS
CORE CONTENT
6.0 BN
Our students also
STRUCTURED benefit from an
CONTENT & TEXTBOOK
integrated platform to
access all the content
and other tools available
13% DIGITAL LEARNING
& TEACHER TRAINING
• TECH-ENABLED PLATFORM
• EASY TO INTEGRATE OTHER BRANDS
SOMOS
(PENETRATION) • POWERFUL SOURCE OF DATAWE HAVE THE MOST RECOGNIZED BRANDS, WITH
UNQUESTIONABLE ACADEMIC RESULTS
BRAND AWARENESS ACADEMIC OUTCOME
+65 SOMOS 30%
YEARS
COMPETITOR 1 29%
COMPETITOR 2 10% 504
COMPETITOR 3 10%
COMPETITOR 4 7% TOP 3
102
COMPETITOR 5 4%
SINCE 1959WE HAVE THE LARGEST COMPLEMENTARY
SOLUTIONS PORTFOLIO WITH A LOW PENETRATION
IN A CONSIDERABLE MARKET
Solutions covering the student’s
COMPLEMENTARY entire journey, offering strong up-sell
SOLUTIONS and cross-sell opportunities
6.4 BN
Learning systems in English to 1st social-emotional
develop not only fluency, but also educational program in Brazil
21st century skills
0.5%
SOMOS
(PENETRATION)WE HAVE THE ONLY INTEGRATED
PLATFORM OF DIGITAL SERVICES IN A
VERY LARGE MARKET
LARGEST MARKETPLACE
EXCLUSIVELY FOR K-12 IN BRAZIL
DIGITAL
SERVICES Ties up the entire school’s
ecosystem by delivering
integrated end-to-end
solutions
12.9 BI Cross sell opportunities
related to subscription
services
Countless benefits including
higher intakes, lower dropout
and due payments levels
0.4%
SOMOS
(PENETRATION)O U R P L A TFO RM I S I N TE GR ATE D TH R O UGH TE CH N OL OGY A N D
CU S TO MER CO NTACT, SUP PO RTED BY A RO BUST SA LESFO RCE
A N D U N M A TCH ED GO -T O -MARK E T S TR ATEGY
SPECIALIZED TEAM
LARGEST SALESFORCE AND SERVING AS THE INCENTIVES ALIGNED ENDLESS INVESTMENT IN
CLIENT-DEDICATED TEAM IN SCHOOL’S POINT OF TO WHAT CREATES HUMAN CAPITAL
BRAZIL CONTACT TO MORE VALUE
ADDRESS ALL ITS
NEEDS
PAR, Rede,
Premium,
Complementary Higher Enhanced
Retention Awareness
Commercial, Revenue retention Annual sales conference
Specialists,
Inside Sales Cross-sell capacity Largest area of intelligence and
Higher Increased analytics in content adoption
of the Brazilian Revenue Penetration
Long-term contracts regarding Brazilian schools
states coveredWE ARE READY FOR GROWTH!
INCREASE QUANTITY
OF PRODUCTS AND SERVICES
INCREASE OUR BASE WE POTENTIAL FOR
INCREASE PENETRATION OF OFFER, THROUGH:
OUR CURRENT SERVICES IN OF PARTNER INTERNATIONAL
EXISTING CLIENTS (CROSS- SCHOOLS EXPANSION
1-DEVELOPMENT
SELL AND UP-SELL) 2-PARTNERSHIPS
3-ACQUISITIONSVASTA 2020 ACV EXCEEDING EXPECTATIONS,
WITH SPACE TO CONTINUE GROWING
Annual Contract Value1 ~90% Vasta EBITDA
Subscription Model
+20% Core Content Languages Socio-
Emotional
12.9 BI
New go-to-market implemented
successfully
Expectation of new products and services
to be offered during 2020
2019 Until 12/nov Jan/20
(Actual) (Potential)
1 ACV: sum of annual revenue per student for all students enrolled in our partner schools, in a subscription modelBACKUP
COGNA REAFFIRMS ITS GUIDANCE FOR 2019
Cogna Consolidated
Comments
Guidance
R$ million and % 9M19 % YTD
2019
Net Revenue 5,097 7,353 69.3% 4Q most representative for K-12 Segment
Results
Adjusted EBITDA 2,048 3,240 63.2% 4Q will be positively impacted by:
Adjusted EBITDA Margin 40.2% 44.1% - - More robust Net Revenue, mainly in the K-12 segment (largest part of
receipts under the 2020 PNLD and part of the 2020 ACV), in addition to
EBITDA1 1,887 3,040 62.1% revenues from the robust enrollment and reenrollment processes for
Postseconday Education in 2H19
EBITDA Margin 37.0% 41.3% -
Adjusted Net Income2 720 1,348 53.4% - Continuous capture of synergy and efficiency levers
Adjusted Net Margin 14.1% 18.3% -
Cash Generation After Capex
OCG after Capex 34 800 4.2% Greatest part of 2020 PNLD receipts
Conversion (with IFRS 16) - 26.3% - Lower disbursements with Capex and Other Expenses
Conversion (without IFRS 16) - 31.6% -
1 EBITDA considers interest and penalties on tuition and excludes the impact from Surplus Value of Inventories
2 Net income excludes the impacts from Surplus Value of Inventories and Amortization of Intangible AssetsEMPLOYABILITY CHANNEL
For every 3 interviews, 1 student is hired
GROWTH PARTNERSHIPS
+635k active students (+52% in 12 months)
+420k job openings (+123% in 12 months)
+29k companies (+53% in 12 months)
LARGE COMPANIES ADVERTISE OPENINGS ON CONECTA MOST USERS ARE RE(INTRODUCED) INTO THE JOB MARKET
Profile of new hires
5%
8%
Changed jobs and increased
their income
Were unemployed or got their
first job
Changed jobs with lower salaries to 87%
work in their field of study
66STRONG INCOME GROWTH
As a result of Kroton's Postsecondary Education 198%
INCOME INCREASE BY AREA OF KNOWLEDGE1 162%
133%
102% 111%
95% 98%
80% 82%
Civil Engineering Technical Courses Social & Applied Human Sciences Extra Sciences Agrarian Sciences Biological Health
Sciences Sciences
1 Secondary survey with a sample of ~30,000 students carried out by NeowayBRAZIL’S LARGEST EDUCATION COMPANY
2.3 MILLION STUDENTS¹
41k Graduate 1.2M
825k students 36k students in
Undergraduate 9k On-Campus students enrolled private schools
students 32k DL in our with contracts
58k Unregulated and 54
Own schools and
134k
342k On-Campus Language Courses
managed through Students in
483k DL
27k LFG Preparatory
contracts complementary
Courses education
solutions
1 Base date: 3Q19OUR POSTSECONDARY EDUCATION STUDENTS
61% are women 56% over 24 years old 35% are married
On-campus Distance Learning On-campus Distance Learning On-campus Distance Learning
32% 29% 27%
43% 47%
53% 51% 49%
57%
68% 71% 73%
Men Women ≤ 24 years old >24 years old Married Single
79% have a family monthly income of
88% come from public schools 4 minimum salaries Unemployed Employed
Source: AVALIAR 2018 SurveyREGULATORY INDICATORS
IGC has sustained satisfactory levels above ~95%
97% 97% 98% 95% 96% 96%
82% Public Institutions: 92%
Private Institutions: 86%
61%
2010 2011 2012 2013 2014 2015 2016 2017CULTURE OF MERITOCRACY
31,997 ST Incentive LT Incentive3
EMPLOYEES Bonus Stock Options/RSU
12,750 6,821 Participants 149 Participants
Professors
1,963 96 All corporate managers in N1, N2 and N3 All corporate managers in N1 level and part
DL Tutors (m1) DL Tutors (h2) levels of N2
1,225 All unit directors
Standard vesting4:
Program Coordinators 3 years
149 All program coordinators
Unit Directors
13,306
Administrative Employees - Units
2,508 Aligned with the Aligned with
Administrative Employees - Corporate company’s performance stock performance
Base Date: Jul 2019 3 Considers current and former employees who hold an active SOP/RSU contract
1 Monthly
4 RSU program only
2 Hourlyir.cogna.com.br
INVESTOR RELATIONS
Carlos Lazar Pedro Gomes Ana Troster
carlos.lazar@kroton.com.br pedro.gsouza@kroton.com.br ana.mtroster@kroton.com.brYou can also read
