The second quarter 2022 earnings season (2Q22) for educational firms begins Thursday night (11) with the release of Cogna (COGN3) results.
XP expects education companies to report neutral results in the second quarter of 22. Analysts point out that the second quarter of each year is usually not very new for higher education companies, since there is no significant enrollment season, therefore, most revenue is generated through a base of Existing student.
However, Covid-19 was a major issue until the middle of the first quarter of ’22, so classes were not fully face-to-face until the second quarter of ’22. Thus, we should see some pressure from faculty costs on the quarter results,” As analyst Rafael Barros says.
Leverage will also play an important role as companies have significant debt in a high interest rate environment. “In general, we expect results without big news — which we don’t necessarily consider bad news,” he highlights.
Bradesco BBI analysts expect mixed results in the second quarter of 22 for education companies in their coverage. Ânima (ANIM3), in the bank’s assessment, should be the positive positive point due to organic growth in revenue and expansion of Ebitda’s margin (Ebitda, or EBITDA, on net revenue) while Yduqs ([ativo=YDU3]) The negative highlight should be due to the decrease in revenue and margin.
ITaú BBA anticipates a greater focus from clients on higher education dropout rates, given a first-quarter track record with strong enrollment numbers spurred by on-campus discounts. Overall profitability is likely to be affected by higher seasonal marketing costs and debt provision (PDA). In K-12 [educação primária e secundária] We expect lower seasonal revenue with LCA [Valor de Contrato Anual] healthier, resulting in stable margins and improved operating leverage,” the analysts note.
Check out the highlights by company:
XP expects Cogna to deliver neutral results in Q222. Expectations are for a decline in revenue year over year due to (i) Kroton’s dropout and graduation rates, partially offset by a slight rebound in average tickets and (ii) school sale Saber.
“In a quarterly comparison, seasonality in both FASTA revenue and in PNLD (National Program for Books and Educational Materials) should also cause revenue to decline. We expect Ebitda’s adjusted margin to increase year-over-year as the company reaps the rewards of its restructuring.” Barros also expects an adjusted net loss of R$27 million given the company’s high leverage, but highlights that it is focusing on several fronts to reduce its indebtedness and cost of debt.
Bradesco BBI generally provides neutral/mixed results. Revenue (adjusted to Saber Agreement, i.e. sale of K12 schools and acquisition of Eleva Education System) should grow 1% and Ebitda margin should improve 1.3 percentage points (pp) year over year.
Kroton’s results should improve in terms of revenue with a smaller decrease in annual variance (3.4% vs. 5% in Q122), but Ebitda’s margin should drop 3.2 points in annual variance, to 34.6% (due to the tougher comparison in costs and increase in SG&A – selling, general and administrative expenses). Vasta revenue is expected to grow 42% year over year (compared to 36% in Q1 22), due to 35% growth in ACV (the cash value being the amount equal to replacement cost minus property depreciation) in 2022 and above on revenue realization (17% vs. 15% in Q221). Vasta’s Ebitda margin should, in BBI’s view, maintain the significant recovery seen in Q122, resulting in a 24-point improvement in annual variance to 7% in operating leverage and cost control.
For Itaú BBA, Kroton should deliver another quarter of decline in volume and revenue for the onsite segment, while the digital segment continues to post solid growth.
Refinitiv consensus forecasts a loss of R$42.10 million, EBITDA of R$294.12 million and revenue of R$1.155 billion in the quarter.
XP expects Yduqs to post slightly negative results in Q222. For the analyst, net revenue should be affected by (1) the high dropout rate per semester due to the high participation of new students in the student base and (2) the seasonality of digital dropout in the quarters The second of the years.
“We expect Ebitda’s adjusted margin to be impacted both quarterly and annually due to higher costs and expenses associated with the return of activities at the site and lower revenue. We expect an adjusted net loss of R$17 million, impacted by the company’s leverage in a higher interest rate environment,” says the analyst .
For Itaú BBA, the company is expected to report a revenue decline of approximately 1.6% year over year, due to the weaker performance in the head-to-head format.
BBI expects negative results due to decrease in net revenue and Ebitda margin. Net revenue (adjusted by R$7 million from non-recurring discounts in Q221) is expected to decline 2% year over year, boosting the first half of the year to grow 3.5%. The poor performance is mainly due to the ticket, driven by pricing in this year’s fundraiser (ticket squeeze only in the first six months).
Growth in enrollment in EAD – distance learning – is also expected to slow to 20% year-on-year, with admissions declining sharply (-35% in the second quarter of 22, leading to 9% growth in the first half of the year). ). Ebitda margin should decrease 3 points in annual variance (compared to a 4 point increase in Q1 22) due to higher costs as categories resume in situ, higher
Marketing expenses and negative operating leverage.
The Refinitiv consensus forecasts Ebitda of R$398 million and revenue of R$1.2 billion in the quarter.
Being educational (SEER3)
XP expects Ser Educacional to post slightly positive results in the second quarter of 22, with an increase in revenue year-over-year due to (1) good funding numbers in the first quarter of 22, and (2) good performance in the re-enrollment season and (3) ) Acquisition of File
On a quarterly basis, revenue is expected to increase as discount programs become less relevant. Ebitda’s year-over-year margin should be affected by the higher share of on-site operations in higher revenues and expenses related to the company’s growth projects. “We expect adjusted net income of R$26 million, impacted by the company’s leverage,” assesses the XP analyst.
The Itaú BBA Foundation expects revenue of R$437 million, given the strong student base year-over-year and ticket growth in the quarterly comparison.
More highlights in the quarter
Bradesco BBI expects good results for Ânima, mainly due to the continued expansion of Ebitda’s margin (up 1.2 points in annual variance, to 29%) despite a more difficult comparison basis.
Analysts expect a slight slowdown in revenue growth (-1% quarterly change in an increasing quarter, eg +1% quarterly change in Q2 2019) due to a higher dropout rate (9% vs. 21, led by the winner).
However, organic revenue is still expected to grow at double digits year-over-year (11.7% in Q1 22), buoyed by ticket and medicine maturity (eg, 7.7% in enrollment in Q1 22).
“Despite lower costs in the first quarter of ’21 in relation to the pandemic, we estimate that Ebitda’s margin improves by 1.2 points in annual variance (3.5 points in annual variance in the first quarter of 22) due to continued efficiency gains in staff costs and a decrease in the provision Bad debts”, assessed by BBI.
Itaú BBA highlights Cruzeiro do Sul (CSED3), forecasts another quarter of strong revenue dynamics for the company, driven by good renewal rates after strong Q1-22 entry volumes and a good ticket
dynamics. “We expect net revenue of R$537 million,” BBA highlights.
In terms of profitability, bank analysts expect efficiency gains from faculty reductions to offset the increase in marketing expenses and personal digital assistants, leading to margin expansion of 2.3 percentage points year-over-year, to 30.2%.
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