Vasta Announces First Quarter 2022 Results

May 12, 2022

SÃO PAULO, Brazil, May 12, 2022 (GLOBE NEWSWIRE) -- Vasta Platform Limited (NASDAQ: VSTA) – “Vasta” or the “Company,” announces today its financial and operating results for the first quarter of 2022 (1Q22) ended March 31, 2022. Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).

HIGHLIGHTS

  • Net revenue increased 36% year-on-year in the first quarter of 2022 (1Q22), to R$381 million, exceeding the R$370 million guidance.
  • Subscription revenue grew 37% in 1Q22, driven by the recognition of 2022 ACV, or 48% excluding textbook subscription products (“PAR”). The 2022 ACV has had a superior quality in sources of revenue, as Vasta managed to increase growth in its premium brands and to initiate the migration from PAR to digital subscription products (Textbook as a Service Platform), aligned with the company’s strategy.
  • In the 2022 cycle to date (4Q21 and 1Q22), subscription revenue grew 29%, or 41%, excluding PAR. The different seasonality of new brands (Eleva and Mackenzie) is leading to a less concentrated distribution of subscription revenue along the 2022 cycle when compared to previous cycles. In 2Q22, we expect ACV recognition to range between 16% to 18%, and our accumulated subscription revenue growth should gradually converge to the 2022 ACV growth of 35% by 3Q22.
  • Adjusted EBITDA more than doubled in 1Q22, due to operating leverage gains, cost savings and better sales mix with the growth of subscription products and the contribution of Eleva. In the 2022 cycle to date, adjusted EBITDA grew 41%, with a margin increase of 450 bps.
  • Adjusted net profit increased to R$51 million in 1Q22, from R$21 million in 1Q21, due to the growth in operating profit. In the 2022 cycle to date, adjusted net profit increased 4%, as the increased operating profit was partly offset by the higher financial leverage and interest rates.
  • Operating cash flow (OCF) totaled R$13 million in 1Q22, impacted by the early payment of royalties to content providers. On a normalized basis, the OCF was a positive R$33 million, an improvement compared to 1Q21 figures, which remained close to zero.
  • According to the results released in early 2022, Vasta’s brands maintained the leadership in the number of approvals in the admission tests of Brazil’s best universities (according to The Higher Education ranking).
  • On April 28, 2022, Vasta issued its first Sustainability Report, elaborated according to GRI standards, SASB guidelines and aligned with IBC Stakeholder Capitalism Metrics and World Economic Forum (WEF) guidelines.

MESSAGE FROM MANAGEMENT

This quarter has a special meaning for us. Vasta 1Q22 results confirm that the worst of the Covid-19 pandemic’s impact is behind us: net revenue increased 36% year-on-year (and 29% in the 2022 cycle to date), driven by (i) the 35% growth in 2022 ACV, which we expect to be fully captured within the 2022 cycle; and (ii) the stabilization in non-subscription revenue (up 1% in the cycle to date). After a long period of results being hit by the Covid-19 pandemic, numbers finally attest that the business is back to normal, with predictability and recurrence among its most important attributes. In addition, the quality of our sales improved in the 2022 cycle, with a greater share of sales from premium and digital products in the mix. Subscription revenue represented 87.4% of total net revenue in the 2022 sales cycle, compared to 84.4% in the same period of the previous cycle.

Another key aspect of the quarter is the repositioning of Vasta’s profitability. Our operating margins returned to levels that we believe to be more aligned with the company’s potential. In the 2022 cycle to date, the adjusted EBITDA margin grew 450 bps, to 38.7%, the highest margin for this period in recent periods. Although much of this result came from the normalization of the business and a sales mix of superior quality, it came with certain efforts: we conducted a workforce optimization in December 2021 and reinforced our budgetary discipline. These actions are also paramount to navigating the challenging macroeconomic scenario ahead of us.

But more important than the improvement in our operating results is the success of our students, which is our real purpose. According to the results released in early 2022, Vasta’s brands maintained the leadership in the number of approvals in the admission tests of Brazil’s best universities (according to The Higher Education ranking). The performance of our premium brands was particularly noticeable in Medicine, the most competitive career in the country. Our top-of-mind brand Anglo expanded its leadership in admissions for Medicine at the University of São Paulo (USP), with an increase of 64% in admitted students compared to 2021. The top performance at Brazil’s best universities is among the key attributes considered by K-12 schools when choosing a content partner.

Reinforcing our commitment with the highest ESG standards, Vasta released its first Sustainability Report on April 28, 2022. The publication increases awareness around the work we do, reinforcing the bonds of trust forged with our partners, employees, customers, investors and other stakeholders. Our Sustainability Report is aligned with the guidelines of the Global Reporting Initiative (GRI), and incorporates indicators from the Sustainability Accounting Standards Board (SASB) and recommendations from the World Economic Forum (WEF) publication Stakeholder Capitalism Metrics. The report is available in Vasta’s website and can be accessed here.

OPERATING PERFORMANCE

Student base – subscription models

  2022 2021 % Y/Y
Partner schools - Core content 5,274 4,508 18.7%
Partner schools - Complementary solutions 1,304 1,114 16.8%
Students - Core content 1,589,224 1,335,152 15.4%
Students - Complementary content 372,559 307,941 30.0%

Note: Students enrolled in partner schools.

As we conclude the period of return of collections, we update the number of partner schools and enrolled students for the 2022 cycle. The company added 766 new partners schools compared to the 2021 cycle, serving nearly 1.6 million students with core content solutions. The partners school base of complementary solutions increased by 187 new schools, growing 30% in the number of students served compared to the previous cycle.

FINANCIAL PERFORMANCE

Net revenue

Values in R$ '000 1Q22 1Q21 % Y/Y 2022 Cycle 2021 Cycle % Y/Y
Subscription 333,781 243,371 37.1% 680,624 527,221 29.1%
Subscription ex-PAR 296,713 201,120 47.5% 577,597 410,528 40.7%
Traditional learning systems 251,148 169,138 48.5% 474,299 350,463 35.3%
Complementary solutions 45,565 31,982 42.5% 103,298 60,065 72.0%
PAR 37,067 42,251 -12.3% 103,027 116,693 -11.7%
Non-subscription 46,801 37,461 24.9% 98,217 97,173 1.1%
Total net revenue 380,581 280,832 35.5% 778,840 624,394 24.7%
             
% ACV 33.4% 32.8% 0.5 68.1% 71.1% -3.1
% Subscription 87.7% 86.7% 1.0 87.4% 84.4% 3.0


In 1Q22, net revenue increased 36% year-on-year, to R$ 381 million, which exceeded the $370 million guidance. Excluding Eleva, net revenue grew 28% year-on-year.

Subscription revenue grew 37% in 1Q22, driven by the recognition of 2022 ACV (33.4% of total), or 48% excluding PAR. The 2022 ACV has showed a superior quality in sources of revenue, as Vasta managed to increase growth in our premium brands and to initiate the migration from PAR to digital subscription products (Textbook as a Service Platform), aligned with the company’s strategy. In 1Q22, Vasta recognized 33.4% of the ACV, compared to 32.8% in the same period of last year.

In the cycle to date (4Q21 and 1Q22), subscription revenue grew 29%, or 41% excluding PAR. In the period, it represented 68.1% of 2022 ACV, versus 71.1% in the same period of the 2021 cycle. The different seasonality of new brands (Eleva and Mackenzie) is leading to a less concentrated distribution of subscription revenue along the 2022 cycle when compared to previous cycles. In 2Q22, we expect ACV recognition to range between 16% to 18%, and our accumulated subscription revenue growth should gradually converge to the ACV growth of 35% by 3Q22.

EBITDA

Values in R$ '000 1Q22 1Q21 % Y/Y 2022 Cycle 2021 Cycle % Y/Y
Net revenue 380,581 280,832 35.5% 778,841 624,394 24.7%
Cost of goods sold and services (129,237) (113,982) 13.4% (265,156) (214,000) 23.9%
General and administrative expenses (126,088) (109,876) 14.8% (252,159) (250,475) 0.7%
Commercial expenses (47,933) (49,509) -3.2% (93,332) (98,241) -5.0%
Other operating income, net 933 2,467 -62.2% 4,286 3,813 12.4%
Impairment on trade receivables (8,896) (2,609) 241.0% (19,624) (14,920) 31.5%
Profit before financial income and taxes 69,360 7,323 847.2% 152,856 50,571 202.3%
(+) Depreciation and amortization 64,287 48,585 32.3% 125,951 93,539 34.7%
EBITDA 133,647 55,908 139.0% 278,807 144,110 93.5%
EBITDA margin 35.1% 19.9% 15.2 35.8% 23.1% 12.7
(+) Layoffs related to internal restructuring 1,459 4,936 -70.4% 10,871 4,936 120.2%
(+) IPO-related expenses - - 0.0% - 50,580 -100.0%
(+) Share-based compensation plan 5,904 6,544 -9.8% 12,023 14,447 -16.8%
Adjusted EBITDA 141,011 67,388 109.3% 301,700 214,073 40.9%
Adjusted EBITDA margin 37.1% 24.0% 13.1 38.7% 34.3% 4.5

Note: n.m.: not meaningful

Adjusted EBITDA more than doubled in the quarter compared to 1Q21, reaching R$141 million, due to operating leverage gains, cost savings and better sales mix with the growth of subscription products and the contribution of Eleva. In the 2022 cycle to date, Adjusted EBITDA grew 41%, with a margin increase of 450 bps.

In proportion to net revenue, gross margin grew 660 bps in the quarter (from 59.4% to 66.0%), while commercial expenses and adjusted cash G&A expenses were down 500 bps and 280 bps, respectively. The impairment on trade receivables increased 140 bps in the quarter, reflecting increased provisions adopted in the second half of 2021. As a result, adjusted EBITDA margin grew from 24.0% in 1Q21 to 37.1% in 1Q22.

(%) Net Revenue 1Q22 1Q21 Y/Y (p.p.) 2022 Cycle 2021 Cycle Y/Y (p.p.)
Gross margin 66.0% 59.4% 6.6 66.0% 65.7% 0.2
Adjusted cash G&A expenses(1) -14.1% -16.9% 2.8 -12.7% -13.3% 0.6
Commercial expenses -12.6% -17.6% 5.0 -12.0% -15.7% 3.8
Impairment on trade receivables -2.3% -0.9% (1.4) -2.5% -2.4% (0.1)
Adjusted EBITDA margin 37.1% 24.0% 13.1 38.7% 34.3% 4.5

(1) Sum of general and administrative expenses and other operating income, less: depreciation and amortization, non-recurring expenses, IPO-related expenses, and share-based compensation plan.

Net profit (loss)

Values in R$ '000 1Q22 1Q21 % Y/Y 2022 Cycle 2021 Cycle % Y/Y
Net profit (loss) 20,190 (5,517) n.m. 39,970 16,732 138.9%
(+) Layoffs related to internal restructuring 1,459 4,936 -70.4% 10,871 4,936 120.2%
(+) Share-based compensation plan 5,904 6,544 -9.8% 12,023 14,447 -16.8%
(+) IPO-related expenses - - n.m. - 50,580 n.m.
(+) Amortization of intangible assets(1) 38,693 28,300 36.7% 74,649 56,590 31.9%
(-) Tax shield(2) (15,659) (13,525) 15.8% (33,165) (43,028) -22.9%
Adjusted net profit (loss) 50,587 20,738 143.9% 104,349 100,257 4.1%
Adjusted net margin 13.3% 7.4% 5.9 13.4% 16.1% (2.7)

(1) From business combinations. (2) Tax shield (34%) generated by the expenses that are being deducted as net (loss) profit adjustments. Note: n.m.: not meaningful

In the first quarter, adjusted net profit increased to R$51 million, from R$21 million in 1Q21, due to the growth in operating profit. In the 2022 cycle to date, adjusted net profit increased 4%, as the increased operating profit was partly offset by the higher financial leverage and interest rates.

Accounts receivable and PDA

Values in R$ '000 1Q22 1Q21 % Y/Y 4Q21 % Q/Q
Gross accounts receivable 628,771 517,478 21.5% 552,014 13.9%
Provision for doubtful accounts (PDA) (52,383) (30,986) 69.1% (46,500) 12.7%
Coverage index 8.3% 6.0% 2.3 8.4% (0.1)
Net accounts receivable 576,388 486,492 18.5% 505,514 14.0%
Average days of accounts receivable(1) 198 198 0 190 8

(1) Balance of net accounts receivable divided by the last-twelve-month net revenue, multiplied by 360.

The increase in the net accounts receivable in 1Q22 arose from the growth in collected revenue, which was partly offset by the higher coverage of PDA. Since the beginning of the pandemic, our approach to credit issues faced by our school partners has been to extend payment terms instead of granting discounts, pressuring the PDA level due to aging of the accounts receivable portfolio. With the return of school activities in 2022, we expect a gradual normalization in payment cycles for the years to come. The average payment time of our accounts receivable portfolio was 198 days in the 1Q22, the same level as of 1Q21. By adding Eleva’s last-twelve-month (“LTM”) net revenue, the average time decreases to 188 days.


Operating cash flow

Values in R$ '000 1Q22 1Q21 % Y/Y 2022 Cycle 2021 Cycle % Y/Y
Cash from operating activities(1) 76,855 71,853 7.0% 39,484 (15,662) n.m.
(-) Income tax and social contribution paid (523) - 0.0% (523) - 0.0%
(-) Payment of provision for tax, civil and labor losses (180) (9) 1900.7% (293) (9) 3151.8%
(-) Interest lease liabilities paid (3,750) (4,021) -6.7% (6,878) (7,796) -11.8%
(-) Acquisition of property, plant, and equipment (34,435) (2,481) 1287.9% (45,893) (393) 11577.6%
(-) Additions of intangible assets (19,716) (9,107) 116.5% (38,831) (19,674) 97.4%
(-) Lease liabilities paid (5,654) (4,977) 13.6% (12,344) (8,605) 43.4%
Operating cash flow (OCF) 12,597 51,258 -75.4% (65,277) (52,139) 25.2%
OCF/Adjusted EBITDA 8.9% 76.1% (67.1) -21.6% -24.4% 2.7

(1) Net (loss) profit less non-cash items less and changes in working capital. Note: n.m.: not meaningful

In 1Q22, operating cash flow totaled R$13 million in 1Q22, impacted by the early payment of royalties (R$20 million) to content providers. This compares with the R$51 million OCF registered in 1Q21, which was benefitted by the early receipt of accounts receivable amounting to R$52 million. Therefore, on a normalized basis, the OCF increased from nearly zero in 1Q21 to R$33 million in 1Q22. Likewise, the normalized OCF was a negative R$45 million in the 2022 cycle to date, up from a negative R$104 million in the same period of 2021. We observe that the operating cash flow generation is usually negative in the first half of the cycle, as we invest in the production of materials in preparation for the school year and we receive payment from costumers in arrears.

Financial leverage

Values in R$ '000 1Q22 4Q21 3Q21 2Q21 1Q21
Financial debt 817,516 831,226 812,016 505,951 687,203
Accounts payable from business combinations 570,660 532,313 73,713 65,201 62,973
Total debt 1,388,176 1,363,539 885,729 571,152 750,176
Cash and cash equivalents 449,673 309,893 377,862 335,098 415,093
Marketable securities - 166,349 317,178 81,090 259,581
Net debt 938,503 887,297 190,689 154,964 75,502
Net debt/LTM adjusted EBITDA 3.67 4.87 1.13 0.76 0.30

(1) LTM adjusted EBITDA includes Eleva. Eleva’s LTM adjusted EBITDA prior to November 2021 may not reflect Vasta’s accounting standards.

Vasta ended the 1Q22 with a net debt position of R$939 million, mainly due to the incorporation of Eleva in late October, leading to a net debt/LTM adjusted EBITDA of 3.67x. By adding Eleva’s last-twelve-month EBITDA, this indicator stood at 3.28x.

CONFERENCE CALL INFORMATION

Vasta will discuss its first quarter 2022 results on May 12, 2022, via a conference call at 5:00 p.m. Eastern Time. To access the call (ID: 5859784), please dial: +1 (833) 519-1336 or +1 (914) 800-3898. A live and archived webcast of the call will be available on the Investor Relations section of the Company’s website at https://ir.vastaplatform.com.

ABOUT VASTA

Vasta is a leading, high-growth education company in Brazil powered by technology, providing end-to-end educational and digital solutions that cater to all needs of private schools operating in the K-12 educational segment, ultimately benefiting all of Vasta’s stakeholders, including students, parents, educators, administrators and private school owners. Vasta’s mission is to help private K-12 schools to be better and more profitable, supporting their digital transformation. Vasta believes it is uniquely positioned to help schools in Brazil undergo the process of digital transformation and bring their education skill-set to the 21st century. Vasta promotes the unified use of technology in K-12 education with enhanced data and actionable insight for educators, increased collaboration among support staff and improvements in production, efficiency and quality. For more information, please visit ir.vastaplatform.com.

CONTACT

Investor Relations
ri@somoseducacao.com.br

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others. Forward-looking statements appear in a number of places in this press release and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to of various factors, including (i) general economic, financial, political, demographic and business conditions in Brazil, as well as any other countries we may serve in the future and their impact on our business; (ii) fluctuations in interest, inflation and exchange rates in Brazil and any other countries we may serve in the future; (iii) our ability to implement our business strategy and expand our portfolio of products and services; (iv) our ability to adapt to technological changes in the educational sector; (v) the availability of government authorizations on terms and conditions and within periods acceptable to us; (vi) our ability to continue attracting and retaining new partner schools and students; (vii) our ability to maintain the academic quality of our programs; (viii) the availability of qualified personnel and the ability to retain such personnel; (ix) changes in the financial condition of the students enrolling in our programs in general and in the competitive conditions in the education industry; (x) our capitalization and level of indebtedness; (xi) the interests of our controlling shareholder; (xii) changes in government regulations applicable to the education industry in Brazil; (xiii) government interventions in education industry programs, that affect the economic or tax regime, the collection of tuition fees or the regulatory framework applicable to educational institutions; (xiv) cancellations of contracts within the solutions we characterize as subscription arrangements or limitations on our ability to increase the rates we charge for the services we characterize as subscription arrangements; (xv) our ability to compete and conduct our business in the future; (xvi) our ability to anticipate changes in the business, changes in regulation or the materialization of existing and potential new risks; (xvii) the success of operating initiatives, including advertising and promotional efforts and new product, service and concept development by us and our competitors; (xviii) changes in consumer demands and preferences and technological advances, and our ability to innovate to respond to such changes; (xix) changes in labor, distribution and other operating costs; our compliance with, and changes to, government laws, regulations and tax matters that currently apply to us; (xx) the effectiveness of our risk management policies and procedures, including our internal control over financial reporting; (xxi) health crises, including due to pandemics such as the COVID-19 pandemic and government measures taken in response thereto; (xxii) other factors that may affect our financial condition, liquidity and results of operations; and (xxiii) other risk factors discussed under “Risk Factors.” Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.


NON-GAAP FINANCIAL MEASURES

This press release presents our EBITDA, Adjusted EBITDA and Adjusted net (loss) profit and Operating cash flow (OCF), which is information provided for the convenience of investors. EBITDA and Adjusted EBITDA are among the key performance indicators used by us to measure financial operating performance. Our management believes that these Non-GAAP financial measures provide useful information to investors and shareholders. We also use these measures internally to establish budgets and operational goals to manage and monitor our business, evaluate our underlying historical performance and business strategies and to report our results to the board of directors.

We calculate EBITDA as net (loss) profit for the period/year plus income taxes and social contribution plus/minus net finance result plus depreciation and amortization. The EBITDA measure provides useful information to assess our operational performance.

We calculate Adjusted EBITDA as EBITDA plus/minus: (a) income tax and social contribution; (b) net finance result; (c) depreciation and amortization; (d) share-based compensation expenses, mainly due to the grant of additional shares to Somos’ employees in connection with the change of control of Somos to Cogna (for further information refer to note 23 to the audited consolidated financial statements); (e) provision for risks of tax, civil and labor losses regarding penalties, related to income tax positions taken by the Predecessor Somos – Anglo and Vasta in connection with a corporate reorganization carried out by the Predecessor Somos – Anglo; (f) Bonus IPO, which refers to bonus paid to certain executives and employees based on restricted share units; and (g) expenses with contractual termination of employees due to organizational restructuring. We understand that such adjustments are relevant and should be considered when calculating our Adjusted EBITDA, which is a practical measure to assess our operational performance that allows us to compare it with other companies that operates in the same segment.

We calculate Adjusted net (loss) profit as the (loss) profit for the period/year as presented in Statement of Profit or Loss and Other Comprehensive Income adjusted by the same Adjusted EBITDA items, however, added by (a) Amortization of intangible assets from Business Combination and (b) Tax shield of 34% generated by the aforementioned adjustments.

We calculate Operating cash flow (OCF) as the cash from operating activities as presented in the Statement of Cash Flows less (a) income tax and social contribution paid; (b) tax, civil and labor proceedings paid; (c) interest lease liabilities paid; (d) acquisition of property, plant and equipment; (e) additions to intangible assets; and (f) lease liabilities paid.

We understand that, although Adjusted net (loss) profit, EBITDA, Adjusted EBITDA and Operating cash flow (OCF) are used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations as reported under IFRS. Additionally, our calculations of Adjusted net (loss) profit, Adjusted EBITDA and Operating cash flow (OCF) may be different from the calculation used by other companies, including our competitors in the education services industry, and therefore, our measures may not be comparable to those of other companies.

REVENUE RECOGNITION AND SEASONALITY

Our main deliveries of printed and digital materials to our customers occur in the last quarter of each year (typically in November and December), and in the first quarter of each subsequent year (typically in February and March), and revenue is recognized when the customers obtain control over the materials. In addition, the printed and digital materials we provide in the fourth quarter are used by our customers in the following school year and, therefore, our fourth quarter results reflect the growth in the number of our students from one school year to the next, leading to higher revenue in general in our fourth quarter compared with the preceding quarters in each year. Consequently, in aggregate, the seasonality of our revenues generally produces higher revenues in the first and fourth quarters of our fiscal year. Thus, the numbers for the second quarter and third quarter are usually less relevant. In addition, we generally bill our customers during the first half of each school year (which starts in January), which generally results in a higher cash position in the first half of each year compared to the second half.

A significant part of our expenses is also seasonal. Due to the nature of our business cycle, we need significant working capital, typically in September or October of each year, to cover costs related to production and inventory accumulation, selling and marketing expenses, and delivery of our teaching materials at the end of each year in preparation for the beginning of each school year. As a result, these operating expenses are generally incurred between September and December of each year.

Purchases through our Livro Fácil e-commerce platform are also very intense during the back-to-school period, between November, when school enrollment takes place and families plan to anticipate the purchase of products and services, and February of the following year, when classes are about to start. Thus, e-commerce revenue is mainly concentrated in the first and fourth quarters of the year.

KEY BUSINESS METRICS

ACV Bookings is a non-accounting managerial metric and represents our partner schools’ commitment to pay for our solutions offerings. We believe it is a meaningful indicator of demand for our solutions. We consider ACV Bookings is a helpful metric because it is designed to show amounts that we expect to be recognized as revenue from subscription services for the 12-month period between October 1 of one fiscal year through September 30 of the following fiscal year. We define ACV Bookings as the revenue we would expect to recognize from a partner school in each school year, based on the number of students who have contracted our services, or “enrolled students,” that will access our content at such partner school in such school year. We calculate ACV Bookings by multiplying the number of enrolled students at each school with the average ticket per student per year; the related number of enrolled students and average ticket per student per year are each calculated in accordance with the terms of each contract with the related school. Although our contracts with our schools are typically for 4-year terms, we record one year of revenue under such contracts as ACV Bookings. ACV Bookings are calculated based on the sum of actual contracts signed during the sales period and assumes the historical rates of returned goods from customers for the preceding 24-month period. Since the actual rates of returned goods from sales during the period may be different from the historical average rates and the actual volume of merchandise ordered by our customers may be different from the contracted amount, the actual revenue recognized during each period of a sales cycle may be different from the ACV Bookings for the respective sales cycle. Our reported ACV Bookings are subject to risks associated with, among other things, economic conditions and the markets in which we operate, including risks that our contracts may be canceled or adjusted (including as a result of the COVID-19 pandemic).


FINANCIAL STATEMENTS

Consolidated Statements of Financial Position

Assets March 31, 2022 December 31, 2021
     
Current assets    
Cash and cash equivalents 145,998 309,893
Marketable securities 303,675 166,349
Trade receivables 576,388 505,514
Inventories 208,744 242,363
Taxes recoverable 27,040 24,564
Income tax and social contribution recoverable 9,689 8,771
Prepayments 57,335 40,069
Other receivables 982 2,105
Related parties – other receivables 1,126 501
Total current assets  1,330,977   1,300,129
     
Non-current assets    
Judicial deposits and escrow accounts 177,579 178,824
Deferred income tax and social contribution 129,453 130,405
Property, plant and equipment 222,265 185,682
Intangible assets and goodwill 5,542,991 5,538,367
Total non-current assets  6,072,288   6,033,278
     
Total Assets  7,403,265   7,333,407


Consolidated Statements of Financial Position (continued)

Liabilities March 31, 2022 December 31, 2021
     
Current liabilities    
Bonds and financing 267,568 281,491
Lease liabilities 27,915 26,636
Suppliers 261,219 264,787
Income tax and social contribution payable 16,644 16,666
Salaries and social contributions 75,952 62,829
Contractual obligations and deferred income 44,812 42,179
Accounts payable for business combination 59,296 20,502
Other liabilities 25,350 20,033
Other liabilities - related parties 30,393 39,271
Total current liabilities  809,149   774,394
     
Non-current liabilities    
Bonds and financing 549,948 549,735
Lease liabilities 139,640 133,906
Accounts payable for business combination 511,364 511,811
Provision for tax, civil and labor losses 652,015 646,850
Contract liabilities and deferred income 4,544 3,986
Other liabilities 47,080 47,516
Total non-current liabilities  1,904,591   1,893,804
     
Shareholder’s Equity    
Share capital 4,820,815 4,820,815
Capital reserve 65,614 61,488
Treasury shares (23,880) (23,880)
Accumulated losses (173,024) (193,214)
Total Shareholder's Equity  4,689,525   4,665,209
     
Total Liabilities and Shareholder's Equity  7,403,265   7,333,407


Consolidated Income Statement

  Jan 01, to
Mar 31, 2022
 Jan 01, to
Mar 31, 2021
     
Net revenue from sales and services  380,581   280,832
Sales 374,734 274,884
Services 5,847 5,948
     
Cost of goods sold and services  (129,237)  (113,982)
     
Gross profit  251,344   166,850
     
Operating income (expenses)    
General and administrative expenses (126,088) (109,876)
Commercial expenses (47,933) (49,509)
Other operating income, net 933 2,467
Impairment losses on trade receivables (8,896) (2,609)
     
Profit (Loss) before finance result and taxes  69,360   7,323
     
Finance result    
Finance income 15,269 5,463
Finance costs (57,963) (19,715)
     
Profit (Loss) before income tax and social contribution  26,666   (6,929)
     
Income tax and social contribution (6,476) 1,412
     
Profit (Loss) for the period  20,190   (5,517)
     
Profit (Loss) per share    
Basic 0.242 (0.066)
Diluted 0.239 (0.065)

Consolidated Statement of Cash Flows

  For the three months ended March 31
  2022 2021
     
CASH FLOWS FROM OPERATING ACTIVITIES    
Profit (Loss) before income tax and social contribution  26,666   (6,929)
Adjustments for:    
Depreciation and amortization 64,287 48,585
Impairment losses on trade receivables 8,896 2,609
Reversal of provision for tax, civil and labor losses (6,109) (740)
Interest on provision for tax, civil and labor losses 11,454 5,630
Provision for obsolete inventories 6,780 4,838
Interest on bonds and financing 23,974 6,077
Contractual obligations and right to returned goods (10,732) (6,220)
Imputed interest on suppliers - 1,452
Interest on accounts payable for business combination 13,694 167
Share-based payment expense 4,126 5,271
Interest on lease liabilities 3,596 4,022
Interest on marketable securities incurred (11,459) (3,298)
Disposal of right of use assets and lease liabilities (1,284) 14
     
Changes in    
Trade receivables (79,574) 3,133
Inventories 26,787 4,564
Prepayments (17,266) 1,588
Taxes recoverable (2,434) (184)
Judicial deposits and escrow accounts 1,245 644
Other receivables 1,123 -
Suppliers (3,568) (16,804)
Salaries and social charges 13,153 (6)
Tax payable (5,852) (2,000)
Contract liabilities and deferred income 13,976 (3,128)
Other receivables and liabilities from related parties (9,504) 20,281
Other liabilities 4,880 2,287
Cash from operating activities  76,855   71,853
     
Income tax and social contribution paid (523) -
Interest lease liabilities paid (3,750) (4,021)
Payment of interest on bonds and financing (37,640) (12,215)
Payment of provision for tax, civil and labor losses (180) (9)
Net cash generated by operating activities  34,762   55,608
     
CASH FLOWS FROM INVESTING ACTIVITIES    
Acquisition of property, plant, and equipment (34,435) (2,481)
Additions of intangible assets (19,716) (9,107)
Acquisition of subsidiaries net of cash acquired (8,475) (36,663)
Proceeds from (purchase of) investment in marketable securities (125,866) 234,819
Net cash (applied in) from investing activities  (188,492)  186,568
     
CASH FLOWS FROM FINANCING ACTIVITIES    
Payments of loans from related parties - (20,884)
Lease liabilities paid (5,654) (4,977)
Payments of bonds and financing - (100,000)
Payments of accounts payable for business combination (4,511) (12,378)
Net cash applied in financing activities  (10,165)  (138,239)
     
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS  (163,895)  103,937
Cash and cash equivalents at beginning of period 309,893 311,156
Cash and cash equivalents at end of period 145,998 415,093