Cogna Educacao SA
BOVESPA:COGN3
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
1.23
3.5
|
| Price Target |
|
We'll email you a reminder when the closing price reaches BRL.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Cogna Educacao SA
Earnings Call Analysis
Summary
Q2-2024
Cogna's financial performance for the second quarter showed promising growth, with net revenue increasing by 4% to BRL 1.441 billion and recurring EBITDA rising by 13.1% to BRL 482 billion. Remarkably, the student base in Kroton expanded by 15.8%, aiding further revenue growth. Vasta also achieved a notable 32.5% increase in subscription revenue and has secured 85.3% of its ACV '24. The company continues to optimize its debt through liability management, reducing costs effectively. Despite seasonal challenges, Cogna expects strong results in the second half, driven by continued student growth and positive adjustments in liabilities.
You don't have any saved screeners yet
[Operator Instructions] We inform you that this teleconference is being recorded and will be available in the RI website of the company, wwwricogna.com.br, where we have available the complete material of this result launch. [Operator Instructions] Before going on, we'd like to clear that event of declarations that could be done during the teleconference regarding the business perspectives of Cogna projection start operation and financial targets are beliefs and premises of the company administration as well as information available for Cogna. Future consideration is not the insurance of performance and involve risks, uncertainties and premises as they refer to future events. Therefore, they depend on circumstances that can happen or not. Investors and analysts must understand that general conditions and other operational factors can affect the future results of Cogna and can lead to results differ materially from those expressed in future conditions. I would now pass on the floor to Mr. Roberto Valerio, CEO of Cogna to start his presentation. Please, Mr. Roberto, you may go on.
Thank you. Good morning, everyone. Thank you for being in this teleconference to discuss the results of Cogna. As usual, I have here with me Federico Villa, Financial Vice President, Guilherme Melega, Director of [indiscernible], Eduardo Honzak, our Director of Investor, Corporate Finance and M&A. We'll take about 1 hour in this call with 40-minute presentation and 20 minutes for the Q&A. I'd like to start this call in the first slide to emphasize main messages. The first one is the growth in the recurring EBITDA and margin EBITDA in the quarter of Cogna show with the ability the company has to go on efficiently and searching for efficiency in the project and changing structures and with the synergy in the process so that we have capability. I also emphasized the Cogna net revenue that grew in the second quarter despite the seasonability of Saber, the second quarter that is a strong Saber, another important highlight is the base of students in Kroton, the first semester, the base grew 15.8%, raising more than 1.2 students when we consider the graduation and post graduation. So this growth will obviously help us keep growing revenues, especially in the second quarter, considering that will have more students, and it will help us in growing the revenue in the second semester. Vasta also presented a 32.5% increase in subscription revenue in the quarter. Remember, this is our strategy to increase the penetration and grow revenue when subscriptions both for core solutions and premium and the complementary ones. I also emphasized that Vasta has reached 85.3% of the ACV '24 and is working in the '25 cycle with a positive perspective. Besides, we constantly are working in liability-managed operations. We have more in the second quarter, changing the old debt for cheaper ones. And obviously, the goal is to optimize the cost and reduce the debt cost. This is the strategy that we are carrying out for a while. And once again, we are having success on that, that the net revenue grew 4%, EBITDA, 13% and the leverage is stable. Fred will talk more about that. The net EBITDA. So we have a sequence of reduction in the net EBITDA, specifically in this quarter, it was stable among other things due to the market. Fred will explain that better, but this is something not cash and specific for the moment. So it give us a lot of trust that will keep reducing the leverage and look into the future, especially in the cash generation of the company. Now going on to Slide 5 of Kroton, I believe the first highlight came in the student intake that was strong 12.7% in new students. I emphasize Kroton growing 12.4% and the also, but presential also had an important involved. This is a modality that isn't growing a lot, but this master grew, which is positive. I think that as highlights to emphasize the support of the growth is the distribution network with our [indiscernible] and distributors, all the commercial team besides the marketing model that is quite focused in performance in digital media with a volume also with acquisition costs quite balanced, and I recourse, making a link to the dropout that this growth is with quality with volume, but with the quality reflecting in the reduction of rollout that we see in the second graph when we see the aggregated reduction and dropout Kroton as a whole improved 4.4% we left from 21.1% in the first semester '21 to 16.7% in '24, both presidential and on-site DL increased and the drop-out reduced, and this is the reflect of many things among which the capture team, bringing quality students and credit and financial quality. They are good payers and also the finalization team that followed the stutter for greater academic engagement and reducing attrition in the experience of the students and here is the reflect of the quality of the work that is being carried out. Obviously, when we talk about recruitment, strong and dropout dropping, it reflects in the student base that grew 15.8% from '23 to '24 and I emphasize especially KrotonMed and DL that are the pillars of our strategy. The on-site is the base of our work, and we focus in high LTV like [indiscernible] and not necessarily the more popular point is because our strategy is focused in DL that is a fixed course that is important. This is the 11th consecutive quarter of growth in the student base. We have some momentaneous speed, but this is a consistent execution. And as I said, when we consider graduation and post graduation, we have more than 1.2 million students studying at Kroton. In Slide 6, I think the first highlight is the revenue growth of 4.9%. You know that seasonality in the revenue is stronger in the odd quarters, it was reinforced by the fact that we have a strategy, especially with the marketing graph as I mentioned in the first quarter that was more concentrated. So when you have a strategy to anticipate the enrollment with more markets in the first quarter, you bring more revenue to the first quarter. So the revenue was growing 15% in the first quarter and 5% in the second one. This is not a point of concern to us because as we said, we moved in fact the enrollment. So we anticipated with more marketing efforts in the first quarter. So when we analyze the semester, we grew 8.2% in the semester. This is the proper way of analyzing it. So for some questions, we had been losing speed of growth. It has nothing to do with that. It has to do with the seasonality of the recruitment, especially of new students in the first quarter, 4.9% in the second quarter quite positive. As a third item of my comments, I emphasized the growth in DL, 12.7% as growth in KrotonMed, as I said, that is the pillars of our strategy. Now Slide 7, I'll talk about the financial performance. The growth was 3.8% in the gross profit in the quarter, different from the other quarter because of the return to classes. So the expenses are greater in the second quarter with allocation of receptors and hours of studying and that's why we have this difference. But according to the normality, this is expected I would just like to emphasize the growth in the gross profit in DL growing 12% in the quarter and 17% in the semester. And remember that DL has the benefit of a high operational leverage that is because the greatest part of the costs are fixed. As our mix of students are going to a greater concentration of DL benefits, obviously, the total gross profit that we bring in the semester with a gross margin of 0.3%, as you see in the slide, just to explain a little bit of defect. So this is an important method. So we are growing gross margin in the operation. Slide 8, cost and expenses. I think the first highlight is the effort of efficiency and economy, the nominal expense considering costs and expenses reduced from 163 to 632 with deflation and growth in the student base to the capacity of gain in efficiency. We grew 0.4% in operation, that is the reduction of fixed costs. The company is graded operation is greater. The second is PDA that we've been talking for more than 3 years, we have more financial quality in the students. We have a more criteria in the negotiation and the PDA dropped once again, 0.8pp as the net revenue which led to a reduction of 5 more days in the payment and the receivables, so it's quite healthy in the correct direction. Operating expenses with the gaining due to many items, especially processes and systems. I would like to emphasize the reduction in marketing. So this is something that was questioned in the first quarter due to change in the strategy and the concentration of marketing. So I said in marketing expenses would reduce in the second quarter. And normally, it did. We are spending BRL 10 million less compared to second Q '23, also as a percentage of the net revenue that dropped 1.4pp forcing the consistency of the strategy that we say will do is what the [indiscernible] looking to the future, our strategy is to invest more in marketing in the bad quarters like the first and the third one with growth in the second and fourth with reduction in marketing expenses. Now Slide 9 as a consequence of everything I said, we have, in the quarter, an important growth in EBITDA, 18.4% with a gain in the margin EBITDA that is quite important as a reduction of costs and growth in the revenue in the semester, we grew almost 10% in the EBITDA with a small gain in the margin EBITDA. This is an operation that, to my understanding, is quite healthy, especially looking ahead with a greater base of students estate semester that is positive from the point of view of results. With that, I finish the explanation of Kroton and pass on the floor to Guilherme Melega to talk more about master.
Thank you, Roberto. Good morning, everyone. I'd like to start on Slide 11 with the net revenue of [indiscernible]. Well, in the second quarter, we have a small matter seasonally speaking. We had BRL 294 million in revenue, 8.5% growth considering the second quarter of '23. And I emphasize our subscription business with ACV that grew 32.5%. As I said, especially, we would have a shift between the first and the second quarter. So we are still in line with the guidance that we had of 12% in the year. Analyzing the cycle the commercial cycle of Vasta that goes from Q4 '23 in June now, second Q '24. We have BRL 1.3 billion in revenue, 11% growth, mainly due to our ACV with 13.8% growth in subscriptions, reaching BRL 1.052 billion. And I emphasize the B2C that is our new business that has BRL 69 million recorded in our cycle of so far. In Slide 12, cost and expenses. We see an overview of the cycle late reaching BRL 886 billion in cost, 8% growth compared to the same period of the previous cycle. Remember, our revenue grew 11% in costs only 8.2%. When we look at the open of the revenue, we see that the total cost in the CMV has less pressure in paper and changing, representing 34 pps than the previous cycle. And operational expenses, key the search for constant synergy and the growth of the company is still helping a lot in reducing the fixed cost. So we can save 2.4%. In fact, we are investing in marketing and sales expenses. So we need to invest in the previous cycle and the one that we have in the contract. So we are investing '24 to have a good year in '25. So investments in marketing and sales this year is greater. So we are investing for the year '25 and the results so far for '25 are quite promising. Slide 13 about the EBITDA. The quarter one reached EUR 22 million. Again, product that is small, but in the cycle of the right, we see that we are reaching BRL 416 million in EBITDA in the cycle so far, which represents 17.4% growth. Additionally, we reached 31.8% of margin EBITDA with a gain of 1% in growth in marketing and we have margins in our company. So I think it's good to invest in growth and gain on margin. So my final message is that we are quite optimistic with what we have for '25. The B2G has a very heated pipeline. We hope for new contracts in the third and fourth quarters. And August is an important month that will have MEC part that is starting the flagship here in Sao Paulo, it Centennial where the launch will be on August 27, when we'll also launch our campaign for '25 enrollment. Now I pass on the floor to Fred Villa to keep on the presentation.
Good morning, everyone. I'll start the presentation on Slide 15, talking about [indiscernible]. I'll start the presentation with net revenue, both in the quarter and in the semester. Note that in the quarter, we had a reduction in the net revenue. This can be explained mainly for the sale of the SaaS business unit. We sold this company. We finished the sales of May 24. If we disconsider the effect of the revenue in June 23 for a proper comparison not with that. The net revenue would reduce 11.8%. This is a market with low margins and with a gradual reduction in size. And we wouldn't like to focus on the fun. So that's why we fail. The positive news is that we see for the quarter is something positive that we are sure about the average growth for the second quarter, that is the result of improvement in educational solutions in the public market, it was better than expected for the quarter and semester. So we kept with the expectation for the second quarter. In the semester, we had a growth of 21.5% in revenue explained mainly by the improvement in educational solutions in the public market. We keep looking ahead and analyzing the seasonality between what happened in the first and second semester. Note in the comparison with the previous years, that the second semester in Tabe mainly due to the national program of books is quite stronger than the second one. That's why we keep reinforcing our first and reaching our [indiscernible]. Now going to Slide 16, talking about recurring EBITDA and EBITDA margin. In the quarter, we've had a reduction in performance mainly in FAC business and a temporal detachment of the national program of books that was pushed to the second semester. However, in the fair comparison of the quarter and semester, remember in '23, we had an impact in our EBITDA in the reversion of suppliers. So if we have this effect, I would have the same basis to compare in the semester. As I mentioned before, in the revenue, we had a growth of 17.4% in our EBITDA in the semester, reaching BRL 37.5 million, which gives us confidence to reach the guidance. As we mentioned in the last Cogna Day, we had a guidance in Saber from BRL 200 million to BRL 300 million. Now to finish the presentation of Cogna, we now have the term of the business explained by Roberto, Proton, and with Guilherme Vasta and what I explained before with Saber. So our net revenue in the quarter, we had a growth of 4%, reaching BRL 1.441 billion. Just remember that we have the growth in all our business in the semester. So in the semester, we grew Kroton 8.3%, Vasta 12% and Saber 21%. So I think the way we are following to reach our guidance is okay, and we are strong in all business units. They all grew consistently in revenue in the semester. And in the quarter, we grew the revenue both in Kroton that was 4.9%, and we grew the revenue in Vasta growing 8.5%, as I explained before. Only Saber the revenue decreased. Now going to the EBITDA and the margin will see on Slide 19 that we had a quarter with a double-digit growth in the semester in the quarter. We reached a recurring EBITDA of BRL 482 billion with a growth of 13.1% with a margin of 33.4%. And in the semester, we reached a recurring EBITDA of BRL 971 billion with a growth of 11.2% and the margin growing 32.8%. So we had a gain in margin of 2.7% and 0.5% in the semester, demonstrating the company's ability to keep growing profitability. On Slide 20, we'll talk about the adjusted net profit we've had here, a positive one, mainly due to the increase in the operational result and the reduction of nonrecurring items that happened with this improvement in '23 to '24. So we have here the quarter reaching BRL 50 million, about that with a growth of 36% in the semester a slight decrease and the adjusted net profit reaching BRL 101 million and a man in the next slide, but the profit was affected by our swaps market of the market with an effect of BRL 53 million. This is a noncash effect, but it passed through the financial results. And here, we had an impact on the net profit, and we didn't adjust the profit. Now in Slide 21, the operating cash generation. So we had a generation in the second quarter of BRL 97 million. In the second quarter '23 it was 171 about a reduction of 43%. What happened that I'd like to explain was that we had more payment of suppliers. So when I look at the cash flow, we see that we paid more supply at about BRL 84 million. So there is an effect between the payment of the suppliers in the quarter, and we also had synergies in the internal teams. So those synergies of internal teams provided a better result in personnel expense in the future, consequently less payment of personnel in the future. However, I have the payment recorded in recurring items of BRL 12.9 million. In the second quarter, we believe and we understand the seasonality of the business, as I mentioned, in Pape. We have the seasonality, and this is historical, our second capacity is quite stronger than the first one. And as Melega mentioned, our second master in Vasta is much better than our first semester. Additionally, I would like to pay the as we increase in recruiting and we have less dropouts, we reinforced our trusting thought on as well. in life when 2, I'll talk about leverage and indebtedness. The leverage keeps constant compared the second quarter of 23 in the first quarter, but now the improvement regarding the second quarter compared to the second quarter '23,that was 1.98x. And now we reached 1.79. And I'd like to mention in our leverage that it was constant mainly due to the effect, as I mentioned, of the market in our slot. The swap of the beds that we have in us, we said for CDI and the impact of the MTM that is the noncash impact. At the moment, we have the debt, we wanted the ADI. So we had a synthetic swap that we have PC, we painted all of them to CDI plus as well. What happened is that this type detachment to the market is reported in our financial expenses in BRL 53 million. Additionally, as we had our liability management project, not considering the results in the short term, but future results, we changed the debt. That is what I will explain in the next slide. However, we have made some anticipation in payment of interest. We anticipated BRL 103 million, as explained in our release. Slide 23, I'd like to bring a case study of our renegotiations of our liability. So with the negotiations that we have, we have all of them in the slides that in 24, we had CDI plus 1.33. And compared to '23, it was CDI plus 1.70, '22 CDI was 2.16, which shows an increase in our cost of capital. And the example that I bring to you that we also have the amortization of that, so we'll let BRL 1.846 billion at the cost of CDI plus 241% and then we had the spread the cost of 1 the difference for 1.44 to 1.53% the that we have with Fwith a percentage of 60% of CDI bringing this cost of capital that is more adequate to the company and I'd like to show you that all this work and effort is considered along the period, it's not only in the first or second or third quarter, but it considers the whole year with the value present of the debt in tens of millions of. Now my last slide, I would like to show you the process of liability management. On June 24, the company has a cash of BRL 935 million with a net debt of EUR 3.33 billion. We had a reduction of net debt of 1.2% compared to the second quarter in the second quarter of 2024. And I'd like to reinforce the message of the agent in this slide, the graph below. So in 24, we needed. The amortization schedule 145 that we reach, we only have to have BRL 180 million of amortization with negotiation and enlarged our debt. So in 25%, we would have BRL 1.5 million, and now it's BRL 900 million in '25 with the displacement in the long term looking to the 7 I had this displacement. I would have the BRL 30 and now BRL 900 million. So the message is that we rebalanced our debt, increasing the time and having the real cost where our generation of EBITDA and operational cash will bring to the company a constant process of leverage with the reduction of interest with more cash and more real interest in the company. With that, I finish my brief presentation, and I pass on the floor to Robert Valerio.
Thank you, Fred. Now going to the last slide with the final messages and analyzing 24, the second most of 24 and also looking ahead in the company's view. Remember that we have the 6 strategic pillars that we follow with a lot of discipline. The first one, obviously, is growth. And what will support the growth of the company and the revenue is the growing of new students and reduce the dropout of bottom that I mentioned a lot, the expansion of subscription business and B2B at Vasta that Melega also mentioned and his trust regarding the growth of the subscriptions for '25 as well besides the positive seasonality, as Fred mentioned in NBP in the second quarter 4, especially the fourth one. From the point of view of experience, we are diligencing searching for constant improvement in the experience, not only of the students but also the B2B clients, the schools as government as we are growing more and more in the segment. We follow the NPS of all clients in all business lines, NPS or undergraduate postgraduate and school that is good with all the processes with the focus and the experience of the client. So we hope that the churn of students is lower and lower over time. That will push the results of the companies. But I would like to emphasize, especially on premium that is quite important, that is the best education company in customer satisfaction by Maths Google. This is something done directly with clients, with Google tools. This is an open survey. It's a great sense, showing how strong what we are doing is, and we are quite happy with this acknowledgment. From the point of view of efficiency, we'll keep investing in innovation. Innovation has not only to do only with innovation also redesigning processes, organization, system conversation, digitalization of things we do manually intensive use of AI. We have more than 50 projects of AI running in the company, bringing not only cost economy but also improvement in the experience to the client with a fast response, and I understand all this investment. Thinking of the financial efficiency and client satisfaction will keep generating profitability. From the point of view of collaboration results and focus on clients, this is something important to us. This is something that we say every day. It's a guidance to our team and we were acknowledged for the third following year. As the great place to work, it's not what we say, it's what the market says. In innovation, we were quite happy that we were recognized at Monday as the most innovative company in the education sector with the most important innovation award in Brazil that is Valore Novation Brazil on is not only the best in the segment of education, but it's among the 30 more innovative in the country. And we know that we are among them when we have all the segments of the company. It's not an easy challenge. We are quite happy to reach that. We reached more than 90% in the ranking from last year to this year. So it reinforces everything we are doing here. And the last highlight is that ESG that we disclosed in the first integrated report assured by an external audit, and this report obviously strengthens everything we are doing from the point of view of sustainability, transparency, governance, so we are quite happy with this delivery. Fan with a quote that Fred mentioned that we reached in the half of the year, aware that we will deliver the guidance of 24% due to 2 factors that is the relevant growth of protathat will push the growth of revenues and results in the second semester Besides the seasonality that historically pitas invest and be especially in the fourth quarter that will push our EBITDA and cash generation to finish the year. With that, I finish the presentation, and we open for questions.
[Operator Instructions] We'll have the next question from Mr. Marcelo, a sell-side analyst from Morgan Stanley.
I have 2. I'd like to know if you could give a little bit of the perspective of intake to the second half of the year in the many segments and mentioned a little the competitive environment that you see both in presidential and the aminos.
I'll take the first question here. We are still in the middle of the pros we have a lot to do, but from the point of view of direction, I can tell you that the presidential and the on-site and the monologs, especially the ones with labs more on-site work. We see good growth. These are product lines that are going on, especially in DL. The digital sales has a little bit more competitivity. Some discount and sales and price reduction offer, but we still have a lot to do in this sense. But as a highlight, I would say that the most positive of on-site and hybrid is okay and more competition in DL.
The next question is from Rafael a sell-side analyst.
I have 2 questions here. First, I'd like to understand because we saw that the average ticket in the 3 segments of Kroton was somehow forgotten and then you mentioned that the biggest share of new students was one of the causes. I would like to understand because the maturation of base should improve this number for the next quarters? And how is the prices being repassed. This is the first question. And the second one, if you can give an idea, an overview of how the company understands the recent discussions of a more strict regulation of DL and how it should impact the company.
Well, regarding the average ticket. I think there are 2 effects that are very important to mention. The first one is as our strategy is more focused in DL. Therefore, with a mix of recruitment that is more focused in DL as you saw in the graph I presented. So it makes the average entry ticket higher than the graduations because the students in the basis have a more mixed on-site. The second effect is that naturally the students that are graduating that are leading the basis has had 3, sometimes 4 inflation readjustments because sometimes we are repaying even more than inflation. So the students are graduated with a higher average ticket. So they enter with a lower ticket due to inflation. They are more concentrated in DL. So it pressures the tickets a little bit more. And this is the general explanation of looking at the future. I think it will keep reducing as the on-site basis will also reduce the burden in our mix of total base. And the price repatriated well from the point of view of recruitment, we have a lot of competition. We cannot request the prices in the recruitment, but we can do that in the enrollment at the moment, these students celebrate their time there. We've been requesting even more than inflation, and it's nothing new for some cycles, we've been doing that. Regarding regulation, we've been following not only Cogna but all the sector with all the associations that we participate with other players, we can see that and we've been quite close to the discussions with the Minister of Education. That was the first meeting of the Sisters (sic) and members of the associations that participated in this meeting with the Ministry of Education and the feedback that we've had is that this first discussion was quite positive with the ministry quite open to open us and even setting visits to know our DL operations in local, which is quite positive, not only for us, but other players invite the Ministry for that and they've been doing that for many years. But in general, the ministry don't visit, but the fact of being there and visiting us, I think, is quite positive. Obviously, it's too early to say what will go on. As we know, the ministry wants to have a new regulation until the end of the year. But at this moment, I don't see any point of attention. I think the dialogue will be very positive. The effect that we've already had is this change in the mix of onsite education forces, and we adjust is not a big base of students and side. The company and especially us, we know how to operate with the hybrid horses and DLs, so I don't see a relevant impact to our results. I think this is what I can tell you at this moment.
The next question is from Mauricio Cepeda, sell-side analyst of Morgan Stanley.
I have 2 questions. The first is trying to understand the cash conversion. We see that the cash conversion was lower this plot. And it generally it is in an absolute terms, far from what Sebar adjusted EBITDA. The point is a little bit more of the factors involved in that and what we can wait for the future if it's a matter of turning capital when I saw variations of the cash and to use more and use less [indiscernible] and the problem is the EBITDA adjusted by noncash item if you have nonadjusted ones that are noncash. So what is in that? And what should we expect for that in terms of cash conversion? And the second question is regarding the ES, you classified that as recurring, but I understand it's a reversion of provision and how does it deal with the cash if you were collecting that somehow additionally or motif there will be some cash effect, what can we expect from that?
I'll answer both your questions. The first question about the cash conversion. Well, in fact, we have a cash conversion that was lower in the second quarter in DL analyzing the working capital. I could pay more suppliers, as I explained before, BRL 84 million. So if you analyze supply plus working capital when considering everything, I have a reduction of the results. So I had to pay BRL 84 million, but our understanding here is that this is temporary we keep using the risk due mainly to the detatchment revenue. So we use that to buy paper and in the graph in printing house is abit informal. So I have that naturally because my revenue and my cash come from the cycle of the second semester, additional. You asked about the additional effect with the nonrecurring events. So we have operational efficiency in the personal and it was about BRL 13 million, BRL 14 million. So it is not in my EBITDA, but it is in my cash. So we are talking about BRL 13 million, BRL 14 million. So these were the 2 big effects that we've had and talking about your first question about the AES system. Well, we these processes that we've had since 2021, and these processes, we've had questions about collecting the money about all the bases and I intrasite with provisions, and it has always gone through our EBITDA in previous years. However, we have a luminary, and we didn't pay for that. So in our EBITDA, we've had BRL 34 million in our lease, we showed that and BRL 6 billion from the period. It's not from the previous period. So 29 would be from the previous period, and this is an effect, a noncash effect. This is an effect of competence. And looking ahead, it was discussed in the Supreme Court port, and from now on, companies are obliged to provision and collect the system. I'd like to mention something important to our businesses that if we remove the effect of the SC from previous periods, we would see that it has always been in our EBITDA. So it's passing through the EBITDA the same way. Same way, it's not projected. I wouldn't have a last system in the second semester or in day of 25 or 26. But it's penalized by EBITDA in the previous years. But I would like to mention something important to you here that is if I look at the EBITDA of Kroton the greatest effect of asset was rose so we've seen a growth in the quarter of 18%. If I exclude the effect of BRL 29 million now have a growth in the quarter of 11.1%. The same, if I did the same for the semester, I keep having the growth and expansion in my business. My EBITDA is growing more than my revenue. And this effect in Cogna is also true, so making the same math. If I grew my EBITDA in the quarter, 13.1% in Cogna, if I exclude and then anyone has their analysis and ours is that I can't penalize 1 year and not be benefit in the other one. So my recurring EBITDA in Cogna would grow 6.3% -- thank you, Fred. Just to emphasize your point about cash generation because I mentioned that we are quite aware about the cash generation in the second quarter. His explanation is perfect. This time effect in the working capital due to the amount of reducing suppliers naturally balances throughout the semester, reaching the levels that we historically have.
Our next question is from Yan Cesquim. a sell-side analyst of BTG Paco.
I'd like to make 2 questions here. The first is a follow-up on Rafael about DL regulation. I understand that the sector as a whole is still trying to understand how this decision will progress with the ministry. But we already have some preliminary decisions until the new regulation is in fact published until the end of the year, among which we'll have the limitation to open new pots and forces and we'll be there until March 25. And I'd like to know if you see any impact in this limitation in the short term, thinking about the recruiting for the second semester of '24 and the first one in '25. If you see something in this answer. And I'd like to ask a question about B2G and try to understand how you can deliver the B2G for the rest of the year, if you believe it will? What can be incorporated in new contracts for this year?
I'll get the first one and Melega on second one. So regarding regulation, you mentioned 3 points that are wonderful for us to give examples because there is some problems in opening new poles and courses and sport for '25. This is not a concern to me regarding '25. Our distribution at work is quite big. We have more than 3,000 holds. We have are where we believe we should be. It doesn't affect our plans, especially because this is temporary, I believe. At some point, we'll be back, but we didn't have ambitious plans for this period. So that related to phone. So about courses, our portfolio is quite broad. Additional courses to be launched are niches, adding marginally in the recruitment. So I understand your portfolio is quite complex complex it doesn't affect. And in terms of openings and the media discusses that a lot. We have a lot of openings in all courses. So there will be no limitation of enrollment due to the small amount of openings. There's no concern about it. So to answer directly your question. I don't see any risk in affecting our recruitment for '25.
Just a little bit more about B2G. Just remember that we work in the B2G with customized solutions, focusing a lot on big public companies. We launched that last year and we won contracts got mature quite fast. We are quite satisfied with the performance. It's in the state of Para. And at the same moment, we started with many prospections, and we have a very strong pipeline in many of these networks, and we've been discussing for more than a year. So our expectation is that we mature new contracts in the second semester. We are quite optimistic about the B2G,and, I believe the cycle of conversion of the contract, we are learning now when we have hit a heated pipeline. So just to explain, expect new revenues in the second the B2G.
Our next question is from Leandro Bastos sell-side analyst Citi.
Two questions that I'd like to ask. First, about marketing because of the seasonality, and I know what the problems you face is especially considering the first semester with the pressure in expenses. I'd like to understand if the idea for the second semester would be the same if you can comment on that. This is the first question. And the fact is talking about recruitment, and I understand the message. If you see a better scenario, if you see more competition in 100% online so what is the relevance of this volume that you see on the line market in the pressure as a whole? And if this competition is still wins lighter volume for online or it's a matter of right competition. That's it.
So I will let regarding marketing reinforcing the point that in the second quarter, we reduced it not and we will have the seasonality with a greater concentration in the first and the third quarters. Our plan would be to invest for the marketing the year it was in our budget. We would bring in this visibility to the market. Our preference is to invest in market with the percentage of the net revenue. And our understanding is that it will be stable. What little expanding marketing is stable with the percentage of net revenue comparing '23 and '24. Obviously, there is some seasonality, but this is our view, especially because marketing, as I've said before, is not only recruiting but creating the brand and consolidating the image perception. So there is some investment in this sense. Regarding DL, I think I can't give a lot of information from the competition point of view. I think the main point in DL is a greater competition, especially because it is a market with more demand, more distribution and is present in more points of sale. So when we see a reduction in prices. It obviously makes the ability of growth of any player reduce it. But I think this is what I can tell you now. It's more competitive from the point of view of prices. We have a lot of the cycle ahead when classes start enrolment speed up, and we started the classes this week. So it's too early to give more information regarding the volume in DL.
The next question is from Marcio Osako, sell-side analyst Banco.
I'd like to ask 2 questions. The first about medicine. If you can tell on how was the relation in candidates and opportunities for this year and last year? And if you can say, please a little bit about how you see the perspective to the future with the increase in the position with the judicial decisions and with basic grades of much. So how do you see this balance and the sustainability of the payments in metforces? And if you are using and if there is a space for financing medicine courses. So this is specifically about medicine. And the second question is for you to talk a little bit about the leverage that you have in the second semester for the division of Kroton. I think you partially responded that because marketing will improve regard compared to the first quarter meter, sorry. But do you have anything else to read the guidance, these are the 2 questions.
We have seen a small drop in the relation in terms of candidates, I think when we analyze the average, there is a small drop because some units have more competition than others. But we are not a big player in this. So maybe my experience by viewing thrust of matches more limited than because we have less units than the competition as our melting units, so at least half of them are quite traditional in them making their present with the strength of the brand in the city and the state. So we don't see a relevant impact of candidates. Some are even growing the relations. But on average, I can tell you that there is a small reduction. Looking to the future, I believe that the mentioned courses will be divided in 2 tiers. One with the reputation course with good locations, the ones that will recast the prices with a healthy relation and the others without those conditions will suffer more. I believe our schools are in areas with a lot of attraction of students and with traditional brands and are in cities with a requested defense in regions of Brazil that make it quite big. But this is a characteristic, and I can strapolate that to the market, and I reinforce my view here once again that our patio is lower than other players. So this is a little bit of our experience regarding proton guidance. The growth and the delivery of results of EBITDA and cost of cash generation in Kroton, come from this greater base of students and the improvement of reenrollment and improvement in under payment and even with the charges in more efficient systems. I think all that will keep pushing out on and bringing this concentration to the second semester. We trust that a lot, and we see that in the result when I mentioned the courses and expenses, we see a lot of gain in efficiency in online. It's not a specific one.
Can you talk a little bit about the financing, funding in getting? Do you think there is a space for more possibilities or private funding if specific.
Well, I'm sorry I forgot this part Yes. We use FIES especially as a mechanism to fund the students. We are using a lot some partnerships with private institutions. We are small with just a few penetration in private funding in metingiven ways for us to potentially explore a little bit where we are analyzing that.
The next question is Mariana Oliviera, sell-side analyst, American Bank.
I'd like to know about the ticket repairs with this better movement? Do you see some margin to repass more so that will be all students in the next semester for us to understand the trend of speeding up or reducing the speed of revenue for the rest of the year? And the second question is regarding the margin in the second semester. What do you see as the main challenges you mentioned, the main upside in the previous question, but I would like to understand the lines of attention.
I'll answer the first and Fred answer the second one. So regarding repassing the price, I don't see space to increase the prices for new students is spaced to do repair some points above inflation to the old students, especially because as our basis is more concentrated in DL and the average ticket is lower. The nominal growth in the payment is lower. So when we look at, of course, student that is ending with BRL 200, it's different from on-site. Of course, that starts with BRL 500,000. Even if we repast or 3 points above inflation to an average ticket that is lower we can repass nominally more so in terms of value of the payment, we can repass. So I think the student can pay that the student who decided to study and is engaged if they have a good experience. It won't be some money more that will make them cancel. As the market is competitive, obviously, the consumers choose for the best price. But when they are in the basis, and they are satisfied with the experience and the product, we can repass above the inflation, and I truly believe we'll keep doing that. And I think Fred will answer the second question.
Yes, talking about the expense as Roberto mentioned about opportunities and you asked about the challenges. Well, not that it's important to mention here that we are not growing the expenses in product. We didn't even grow the inflation. So when I look at the first semester, we have a gain in efficiency, but we don't gain inflation. So our force is gaining the payroll of the factors and all the expenses related to the business. They have the inflation of repairs so it shows our efficiencies, what we had in the first semester, and we see as an opportunity to the second semester. Here, we have internal processes that are reflecting in our nonrecurrent as a whole and personnel efficiencies. So we have in the operator here and in the area supporting Kroton. Our reduction in teams, we don't believe we are forgetting quality, but will also recruit for the second semester. And as an opportunity or a challenge, we have the PCLD, we are talking about that, that reflects is dropout. We don't have a problem in this case today mainly due to recruiting students. There are students who pay, they are in our basis, so we don't see a problem. So we follow that month after month, and we keep trusting that if you analyze from 2020 to 2024, our underpayment that with the metrics that I like to use has some amount close to 10%, 11%, some quarters a little less considering the odd-even quarter, so we have here challenges, but challenges are also opportunities. Our expectation is in the second semester that we convert what we had in the first semester.
Our next question is from Lucca Marquezini, sell-side analyst Itau.
We would like to know about drop out, we would have dropout especially in DL. If you could comment on the drivers for that. If we can consider this new level as a more sustainable one from now on, if you could explore that a little bit more, it would help us.
I guess so you can consider an improvement in dropout over time. The improvement in dropout is the effect of a set of actions that is carried out over time. It's not one product that will structurally make it decrease. But here, the main driver is that we've been talking about that for some years, having a lot of students in credited schools. We want the student to be aware that they read the contract that they said, that they know how much they will pay. It's not that we're analyzing the student credit, but there is a lot of barriers in the conversions that make us acknowledge as a student as revenue, the ones that we know that are in fact, engaged. This is the first aspect And the commercial team is doing that quite well. It's not one period that will make this improvement. And the second important factor is all the improvement of the student experience with the onboarding and how the digital experience of the student is, experience with the professors, the process if the payment is on base, if they can choose the discipline, and we are dedicating a lot to analyzing each process into detail to see what are the aspects we can improve in the students' experience, removing some friction that might be there or anticipating to the students might request due to the progression of the year, and it has increased the academic engagement and more participation to the classes and more constant and daily entries in the virtual environment and less problems financially speaking. So all that has pushed our dropout in a positive way, therefore, improving it, and it's not something specific. It's a trend, maybe that and off to you in more details later on for you to understand if it is your intention.
The Q&A session is over. We would like now to pass on the floor to the final considerations of the company.
Well, thank you for following this call for the results of the third quarter. As usual, I thank the Cogna team, our 24,000 workers that are helping us all the time to improve and search for more efficiency to our shareholders. Our RI team is available to any follow-up you might need. Thank you. Have a nice day.
The teleconference results regarding the second part of '24 of Cogna is over. The Department of relations with investors available to answer the other questions you might have. Thank you very much to the participants. Have a nice day.