Vitru Limited

00:34 Good evening, everyone, and thanks for joining us. It's a real pleasure to be here with you all for the release of our third quarter numbers twenty twenty one numbers, as well at the numbers for the first nine months of this year.

Hope all of you are doing well and healthy. And here with me I have Pedro Graca, CEO of Vitru; Maria Carolina Gonçalves head of our Investor Relation department; as well as Raquel [indiscernible], also from our IR team.

01:05 A slide presentation will be part of today's webcast, which is also in our Investor Relations website at investors.vitru.com.br. Actually you'll have the presentation point of view, but as usual before we begin, I'd like to make note that as detailed in page two and three of the presentation Safe Harbor is in effect for this call.

01:32 So now I like you to go to the page five, the first page of our presentation with the highlights for the quarter. So the first highlight, it is not new, it is the announcement of our agreement with Unicesumar for business combination with them that we announced three months ago, but we are never tired of reinforcing the beauty of the view.

They are the leading institution in Brazil in terms of quality indicator for distance learning in the digital segments. Besides having a sizable and growing business of Medicine and other health related courses.

So later on, I'm going to go back to this information and to show you more figures about Uniasselvi. 02:22 We also had this quarter as expected in the past, we launched new course, specifically the course of nursing were start to be offered in August of this year and in a couple of monthly -- in two months already we gained the number one course in our current intake cycle in our portfolio of great courses.

But we saw a huge success and it reinforces our speech and our belief that the digital education segment is going to increase even further throughout the country. 03:01 We have reached almost two hundred and sixty thousand digital education pivot with twenty seven percent increase in intake in the current intake cycle compared to the same cycle I think period of last year with a less relevant growth in the Southeast region, which, as you know, our new growth frontier.

The net revenue in our core digital education undergraduate segment increased by around twenty percent this quarter with a consolidated net revenue growth of around seventeen percent. 03:35 The EBITDA increased twenty six percent in the first nine months of this year, it's always better to show the EBITDA numbers on a year-to-date basis, because of certain seasonality we have in our business.

So the nine month EBITDA growth is twenty six with adjusted EBITDA margin of twenty nine percent growing as well one points compared to the same period of last year. 04:06 And finally, last but not least, cash flow from operations reaching one hundred and thirty million reals in nine a months with a adjusted cash flow conversion from operations of ninety two percent.

So, we not only grew our revenue end of the day, but also generated a lot of cash from our operations. 04:26 So now before we move forward to show what were the main figures of this quarter.

Let me show to you on page six a brief reminder, a refresh of what we have been delivering over the left twelve months. We have now -- we had the first anniversary of our IPO in September of this year and at that time one year ago when we were going through the IPO discussions with you guys we said that we would grow in four growth avenues, three of which organic and one inorganic.

And now we have been delivering what we promised over the last year. The first one was a ramp up of current hubs, we said that this was going to be the main organic growth driver in our revenues, which is been delivered.

05:25 We have now more than two-third of opportunity in new hubs, next phase of hub, the hub that were opened in the last four years, while one year ago this number fifty nine percent. Today we have more than ninety percent of the hubs still in ramp up phase, still maturing over time.

We increased our student base also by one point five percent in this twelve months. We opened more than two hundred and forty hubs, of which, one hundred hubs in the Southeast, of which has fifty in Sao Paulo.

So we are growing in the Southeast as we were announced before. 06:11 And also we expanded the course offering.

So as I said, first a new a big course was nursing. So nursing already -- again the number one course in the current in taking cycle.

It is a premium course, it is a course with a ticket that is fifty percent higher than our normal ticket. And hopefully soon we will have offerings also in law and psychology.

And for example in law, we have already the [indiscernible] the great valuation for [indiscernible] mix of location with a grade five, the higher degree possible and the portability offer twenty two thousand seats per year in the case nursing and psychology is eleven thousand seats per year. 07:03 So this will be important growth avenue going forward as well.

And an important lever to sustain ticket as well. And finally inorganically speaking we announced, as I said, the deal with Uniasselvi which is the best deal we could ever consider.

We always consider them to be the Benchmark company in Brazil, when we speak about quality indicators in digital location of the country. So with this transaction it allowed to be controlled and closed by antitrust authority in Brazil.

We will become the number two -- the second largest digital learning player in Brazil with the best growth indicators. 07:48 So now on page seven, some more information about Uniasselvi before we come back to Vitru.

So this combination will create disruptive player, I reference player when you think about high-growth business in the higher education segment in Brazil. Uniasselvi has site close to ours, so as of June of this year, before June that had obviously less than eight hundred hubs, today they have about nine hundred hubs, such as us, so if combined, we will have around today eighteen hundred hubs, more than seven hundred thousand students, combined with it.

They had -- last year suffered -- they had in last four years a CAGR of forty nine percent and last year net revenue of six hundred and ten million reals with a forty percent adjusted EBITDA margin, so it is higher than our margin with around thirty percent and the main driver for that, the main reason for this is the business of medicine. 09:01 Here on the bottom left part of the slide, you can see some information about their medical business, they are fifty percent of medical course in Brazil among private institutions, which is a high demand course, as you all know, there is a eleven to one ratio of applicants for this with an average ticket of more than nine thousand reals per month.

So on top of that, they -- here on the right, I show some quality indicators that's from Unicesumar, they have IDV of three point seven five, which is forty three percent above the average of the market, even above ours. And our IDV is three point three in the last cycle, which is the highest IDV in distant learning among all listed players in Brazil.

We have -- we still have the highest IDV in digital learning among all listed players in Brazil and Unicesumar has even higher exit ratio. This is [indiscernible] contribution is a value added that you bring to the students when you compare the Indian grade within another grade.

10:15 And they are ranked by the [indiscernible] when we see the IDV of that courses raise, they are among the two percent of educational institutions in Brazil, but really be reference player and together with them we are going to be, I believe a reference player. 10:34 So on page eight, we have more information about the portfolio of students and why we believe that we are going to keep growing hand in hand once the deal is approved.

So here on the left, you see that the student profile is slightly different, that's why we intend to maintain to keep both brands, because they set different markets and the students that usually go to [indiscernible] has a lower income and someone who appreciate the local tutor, the human touch and meet the local, I'd say presence of a person who is going to provide hand holding for the student. So this local support from a tutor is very important for these courses.

And Unicesumar on to the other hand, it is a -- they have a higher average income students, slightly higher, and also a more tech-oriented and tech savvy students because they are -- they have a lot of -- much more tech-oriented learning experience than the peers. 11:51 So it is a different product to attractive for people.

In the middle we have a huge potential for commercial synergies. Today we have more than six hundred cities today -- in June that has either a hub of Uniasselvi, but not Unicesumar or vis-a-vis.

So here we have a huge potential to quickly deploy and offer both brands throughout the country. 12:22 And on the right part of the slide, the whole lifetime we're are growing at around ninety percent in the last year these are the information coming from the Senate made by the MEK and together we have built Unicesumar gained eight point in market share between sixteen and nineteen.

As a reminder, in the last available -- latest available information we have. So we went from ten point five combined with them to eighteen point five in twenty nineteen.

12:56 And why was that on page 9. Because we have intrinsic competitive advantages.

On page nine, we compared the models that we have in review for digital learning. Uniasselvi is a sole player who focus on the hybrid model with a local tutor, so tutor centered hybrid model with weekly meeting lectured by the local tutor, someone who provide the hand holding, someone who is also playing a role model for the class and you have this sense of belonging with our model.

So these will be our competitive advantage. It is the model, which is complex to create, but we know how to play it.

13:37 Unicesumar on the other hand offers the hundred percent online product, but they are, as I mentioned before, they are direct player in terms of quality. So they have a much more tech-based methodology with nice hubs as well as we have.

So that's why they are the reference player when we think about digital learning in Brazil. That's why both companies with this intrinsic competitive advantages are growing faster than competition.

14:04 And on page ten, I have here some public information to conform the reputation and to conform our, I'd say, competitive negative. Here on the left, [indiscernible] Commission conformed an Apple Store and Play Store.

If you go with the cellphone at Apple store, for example, you see that the app of Unicesumar has higher ranking highest rate among all competitor in Brazil four out of five. The second highest ranked is Uniasselvi with four point three [indiscernible] are between two point seven and one point eight.

So this is, I'd say, a perfect information to show to reinforce our tech-oriented approach and our culture. I'd say our mindset is much more oriented, much more concern and much more -- delivering a much better technological experience for our customers or students.

15:10 On the right, you see Reclame Aqui, also public information. Reclame Aque, if you go now to Reclame Aqui to see Uniasselvi you see that we have a seven point six rating, which is the highest score among all Brazilian digital peers.

Unicesumar has an eight point two ranking, even higher than ours. They are the best in Brazil.

So this is -- for your information, this is official information from Reclame Aqui and from Google and Apple store. So this is why we are -- on which we are leveraging our reputation to build it for the business to create value for shareholders and to grow faster than competition.

15:58 So on page eleven. Now back to Vitru and Uniasselvi.

Again we are offering new premium courses to expand the market and improve ticket, so nursing already was eleven thousand seats covered in three months, which represented eight percent of the current in taking cycle, our big cycle was hundred and thirty eight thousand students, of which eleven thousand in nursing. And hopefully we will be allowed to offer soon law and psychology.

Those three courses, as a reminder, represents around one third of the public -- the private on campus market in Brazil. So there is huge opportunity for a player as us, which have a hybrid remodel.

17:10 This was up in eleven, sorry. On page twelve, the growth in our base was led by digital education segment.

So we grew twenty percent year-on-year [indiscernible] And this growth was -- it was I think also important to highlight that, this was coming from a very high comparable base. So we grew last year in the second cycle of intake, we grew forty percent and now we grew -- on top of this -- of this base twenty seven percent.

So that's important growth of twenty seven percent in the intake year over year even though the comparison base is higher. And one hundred and thirty eight point six new student in the second semester of this year, of which over one hundred and thirteen thousand only in the third quarter of this year.

17:55 On page thirteen, growth was spread throughout Brazil. So even in our play -- original base, recently in the south of the country we grew thirty percent year-on-year, again even knowing that the comparison base was high last year.

And in the Southeast fifty percent here on the left. On the right, the special hubs, as I said two hundred and forty two new hubs in the last twelve months.

18:26 On page fourteen. The focus on the Southeast regional review, we opened there almost one hundred in the last twelve months and increased the student base by fifty percent.

So we opened very recently a lot of new hubs in the last, I'd say, three months. So we are preparing the base to accelerate even further the growth that which represent forty percent of the total market in Brazil.

18:58 On page fifteen the maturation of our hubs. Again, the most important organic driver for growth, which is growth with limited execution risk, we keep expanding our maturation of hubs that it would feel all the new hubs that we opened in the last four years , we are still around thirty one percent of the potential of those hubs and also important to highlight here on the bottom left part of the slide, the share of new comers and the share of intake in the overall student base, this is something I mentioned already two times in the past, but now we're showing you the numbers, if you see that, we reached now in the first half of this year, what we believe to be the peak ratio between intake and overall base.

19:58 And why is that important. First, because this -- the slight decrease over time of this ratio as we mature more hubs, as more and more hubs get filled up and we increase faster the percentage of seniors compared to the presentation of newcomers.

We are going to increase margins over then, we are going to decrease dropout ratio, we are going to decrease DBA ratios. Why?

Because as you know new comers and freshman dilute margin. Most of our selling expenses attract new students, newcomers they drop more than seniors.

And hence DBA ratio are also higher among a few newcomers. So over the last four years we have been increasing the ratio, but now according to our forecast and from the first half already of next year we are going to slowly but steadily increase more the percentage of seniors compared to newcomers.

So this is important driver of margin going forward. 21:15 So on page sixteen, before talking about margins, net revenue growing at around twenty five percent, twenty percent in the quarter, twenty five percent the nine months period of this year, driven by the expansion of base as I’ve shown before, twenty percent year on year plus a two percent increase in ticket.

This is all also I’d say something that's different – that differentiates [indiscernible] competition because we offer a different product. Because we differentiate ourselves from the competition.

We have been able to more or less maintain ticket over time. So there was an increase last year, there was decrease in the first half of this year, now increased again.

So more or less we are maintaining our tickets and in fact increased two percent year on year on year, if we see the third quarter number and this is confirming the resilience of our model. 22:19 Now page seventeen, some more financials.

So the consolidated net revenue growing at around twenty two percent on a nine month period. EBITDA growing twenty six percent and gross margin growing thirty one percent.

I’m going to show each of them now in detail. 22:38 So page eighteen.

If you see the cumulative number for nine months, for example, the growth of twenty two percent driven by the digital education business under graduation and graduation, namely continue education, both segments growing quite a lot in the – over the last year as was the case over this year. And on [indiscernible] decreasing over time, seventeen percent which is here on page nineteen.

So on page nineteen you have more details about the continued education segment and on cancelled segments. So in continued education the growth was driven by our digital graduation courses, which expanded a lot this year with more offerings and also levered on digital marketing.

23:36 On the other hand, on campus segment is declining overtime in line with our view for the sector, because [indiscernible] decline in the interest of on campus education and correspondent increase in the interest of digital education, which we don't believe will once the pandemic is over. 24:01 We have a lot of questions about it, whether there will be a decline in interest in digital education once the pandemic is over hopefully next year.

We don't believe in that, we do believe that there was a shift in mindset [indiscernible] about buy from home, working from home and also study from home. Nobody believes that e-commerce will go down one the pandemic is over, because people now have experienced a step up of studying experience.

And the mindset, the interest of digital education has also grown a lot and will continue to grow in future. 24:48 So Margin EBITDA on page twenty.

Again, let's hope here on the nine month period, an increase of twenty one percent to twenty eight to twenty nine percent of margin one points. That was – the decrease was mostly driven by reduction in the cost of services as a percentage of revenues, which I'm going to show in the following slides.

25:16 So page twenty one. Cost of service, there was an important increase in efficiency over time, a four point increase so thirty five percent to thirty one percent decrease in cost of service as a percentage of net revenue.

This was driven mostly by two reasons. First, the overall [indiscernible] in personal costs as we optimize the ratio between a [indiscernible] sorry, students thought by tutor and the overall growth of the business as the grow quarter it is easier for us to optimize ratios of [indiscernible] ratio and the besides segmentation of the Flex Course that we mentioned in the beginning of this year and we created this new concept of Flex Course through which we gathered non optimized classes that we were offering in small cities, for example.

We have a very much more optimized ratio now with students per tutor, enhance leadership driven driving as well, this expansion is gross margin. 26:37 On the right, we see G&A also an [indiscernible] reflecting our focus and maintain to be leading company.

A digital oriented company. We have now less than eight percent of our net revenue in G&A.

This is a reflection of how we operate. this is a compliment of how we drive the business.

We're much more I’d say agile and lean than the competition that’s why we react faster to change in the market and that's why we have been growing faster than competition as well. 27:21 On page twenty two.

Selling expenses and PDA, so net impairment losses on financial assets is what we call here the PDA. So selling expenses increased.

Sorry I again, in the nine month period there was an increase of thirty six percent this year and again, two points from sixteen point eight to eighteen point eight of net revenue. This was caused by, first, as we said before overall throughout the year, an increase in online medium as we did on the pandemic.

So last year, a big chunk of our intake in the first semester of last year was made before the pandemic. So when our first order opened and the hubs are an important piece in our steady machine.

So because we have its [indiscernible] sometimes – not sometimes, it usually goes to the hub to understand how [indiscernible] experience and then there in the hub here decides to really to enroll. 28:32 So now hubs are closed, so we had to invest more in online medium.

The second reason was the strong intake cycle which is natural. And all the commercial efforts in new courses, , such as nursing, but there's still a ramp up now in the curve for new courses such as Nursing.

28:51 So there was this increase of thirty percent, but we could see the customer exiting cost is increased only three point six percent in nine month of this year compared to the first nine months of last year. 29:10 PDA on the right, there was a decrease in PDA this quarter if you compared to the third quarter of last year of zero point nine points despite the – let me consider, despite the strong presence of Freshman, a new comer that I’ve said before.

At the end, we had reached the peak in this rational in the first half this year. And also despite to the current crisis in Brazil which did not help at all the delinquency ratios.

29:41 Now on page twenty three just to finish. Net income, we have an increase when you see quarter numbers and a decrease when we see the nine month numbers.

So this was due to two things. The first one was a number -- a couple of nonrecurring items we had last year.

So the first one was in the first quarter of last year. We recognized for the first time before tax assets.

So this was an amount of around eighteen million reals that's was the first time we recognized [indiscernible] last year, so which improved our net results last year. 30:30 And also, in the third quarter of last year, we had as well FX gains related to the IPO so we raised funds in dollars last year, and brought dollars to Brazil at a higher rate.

So we gained thirteen million reals last year. So these two event represent thirty one million reals.

And together with the increase in expenses – financial expenses this year due to the increase the PDA and IPCA, we have a reduction on a yearly basis of our net results. 31:12 To finish on page twenty four.

Cash flow here also a bit I'd say impacted by extraordinary events of last year. So fourth one was again the thirty million reals FX gain.

I mean for accounting reasons, this FX gain is accounted as part of course of our net results. And as well as part of our cash flow from operations, don't ask me why, but it is the way the rules are.

So we have – we recognized a last year this thirteen million FX gain as part of our cash flow from operations. 31:54 And on top of that, we have as well in the third quarter of last year of some group prepaid expenses, sixty million reals that we had already prepaid [indiscernible] of our IPO that when we executed the IPO in with September, these were reclassified to transaction cost of the IPO.

So when you see the cash flow from operations, they increased as well improved the cash flow from operation of last year of sixty million. 32:26 So here on the right, we put a table trying to reconcile this number.

So when you reconcile, when you normalize this cash flow from operations you see that we have when you say for example, the third quarter number, an increase of twenty eight percent in cash flow from operations and thirty one percent increase in cash flow from operations in the nine months. When you see the cash flow from conversion, we went from ninety eight percent last year to one hundred and twelve this year in the quarter and from six sixty percent to ninety two percent in the nine month period of this year.

So a very important update [indiscernible] cash flow generation perspective. 33:16 So that was it, on page twenty five, just to wrap up.

We are that leading pure play digital education in Brazil before Unicesumar , we are going to just consolidate the reference player in digital education in the country. Delivering what we had promised in the IPO, which was expansion of market, continue organic growth, and now with the best [indiscernible] which is the transaction with Unicesumar.

33:49 So thank you very much. And now I'd like to open for questions.

34:21 Hello. Good evening all and thanks for taking our questions.

Two questions from our side. The first is, if you could give an update on how you see your strategy for medical and healthcare programs following the Unicesumar combination and following that approval of the digital Nursing program.

And is this strategy could include potentially further acquisitions on the [indiscernible]. 34:46 Second question from our side is, if you could give is some more detail on how you [indiscernible] non-renewal rates evolved in the third quarter and on how you expect those metrics to trend going forward?

Thank you very much.

35:05 Hi, Vitor. Thanks for your question.

So the first one about medicine with Unicesumar. We're going to wait for the closing of the transaction, so that we can further – have further conversation with them about how to deploy this business in the future.

Because right now as you can imagine, we cannot have the conversations with them. 35:31 What we know now is that, they have this, I’d say, very healthy and growing and high margin business, which is medicine.

And we will not play a very investing indications, but they are and they know quite well how to play in this segments that’s why the medicine in school in Brazil among the best institutions. So let is still open for discussions and we are going to have this visions together with them, but only after that deal close.

36:09 On the – your second question about dropout. In fact, we had a slight increase in dropout this quarter when compared to our expected numbers.

And the reason for that – we have two for that in fact. The first one was the intake profile of the first half of this year.

So because the intake in the first half of this year was much more back ended, a big part of our new students joined us in the second quarter of this year, second and fourth quarter of this year. So – and that's why the reason why our dropout rate in the second quarter of this year was much better than the dropout rate in the second half -- the second quarter of last year.

So because most of them arrive late in the intake cycle. So those guys that dropout instead of dropping out during the semester, during the second quarter, for example, some of them dropped now only in the third quarter.

So the intake profile improved the dropout ratio in the second quarter, but deteriorated in the third quarter. That's the first reason.

37:41 And the second one was as I mentioned before, the ratio between intake in seniors, the intake in students as a whole. So as I showed before in the presentation, we have reached -- we believe that we have reached the peak in the race between intake and base.

So we have a lot of new comers, lot of students that are joining us for first time in this first half this year. So this translates into a slight higher dropouts, because as you know, freshmen and new comer drop more than seniors.

38:23 Very clear. Thank you very much.

38:26 So going forward Vitor, we expect a normalization of this ration. First, because we expect to have a more normal intake curve in the next years.

Second one also just to bear in mind that part of our intake experience is built around the presence in hubs. So, because only today we are still not in our full capacity [indiscernible] .

Once we are allowed to have again, live classes in our hubs we believe we are able to improve the retention rate, because the user experience will be fulfilled.

39:16 Thank you for the opportunity.

39:36 Hello guys. Thank you for the space for the questions.

I have just one question. It's motivated by one of the statements in the release.

That says that the cost has improved because the penetration of the Flex Courses. And it caused attention to the point that if it's not -- if you consider this as a way going forward, exactly to, let's say optimize costs, right?

So if you consider this is a way to do so. And if the flex course itself was able apart from the cost to also increase the demand, so increase the student base for this model specifically.

Thank you.

40:29 Hi. So about Flex Course.

Just as a reminder, I invite you to go to page thirty one of our presentation. So just as a reminder, the flex course was top as per the pandemic.

So the idea of the Flex Course appeared to us after the pandemic that we realized that we had the opportunity to optimize the ratio and to offer new quarters for new student inventory with Flex Course. And why was that?

Before, I'd say until last year – one and a half ago we has a group of students a number of students that were not optimized in terms of students per tutor, because it was either in tomorrow we see in a core that you didn't have enough demand So instead of having let's say, forty people per tutor, you had twenty for them. 41:41 And now what we started to have the weekly meeting in a virtual way because of the pandemic.

We had the idea of why not instead of offering this flex courses that are not optimized. And sometimes, either not -- even not with the tutor that is specialize in your own field.

Because sometimes time, we didn't have enough I’d say skill to have a tutor, for example that fits in accounting in particular. I have a tutor that was difficult for people who are from different courses.

So it was not ideal. So the Idea of the Flex Course was to optimize it.

So those classes that were not optimized with the tutor, for example, that was not someone specialized in your field. Instead of offering this configuration while not offering then in a Flex Course with a tutor that was giving a class to forty people but online, but still online class with a live class from someone from your region, instead for being from your city for a reason for example.

So this was an optimization that we made in the first quarter of this year, which had two effect. The first immediate effect was improvement in efficiency, which is here to stay.

So the fact that we reorganized those non optimized classes around some flex courses is actually here to stay, so this is going to change after the pandemic. 43:32 So once the pandemic is over, the normal Uniasselvi class will return to weekly live meeting in hubs.

But the Flex Course will continue to be provided in virtual environment, but with a tutor from your region. So that was the first immediate confidence was improvement of efficiency through good optimization in this ratio between students and tutor.

44:02 The second confidence of Flex course and this is more medium term is a possibility to enter into smaller cities. The cities that do not have the scale for a full-fledged normal Uniasselvi hubs.

But you can have there a smaller hub, basically for students to go there as you’re – for your monthly exams for example. 44:30 So it is a possibility to accelerate penetration throughout Brazil within smaller ticket.

So that was the [indiscernible] fourth one, immediate consequence in terms of course and [indiscernible] . And that was executed without any I’d say impact in satisfaction, because before that you had a tutor that was from your specific area, for example.

So if you are studying accounting, if you have someone that was -- someone from [indiscernible] , for example, providing classes to people that were not from business education. 45:16 So here now with the Flex course you have someone from your field.

So it is someone – and we have made researchers and services on that to see whether the student is happier with this Flex Course and they are happier of course. So this opportunity increase opportunity to penetrate further our view and to improve the overall user experience.

45:46 I see. So it was something that was designed for the pandemic, but part of it will continue, right?

Part of it will continue and this is allowing you to address the cities that are, let's say, sub scaled right for the tutor model right? So it's both of costs and revenue combination if understood correctly.

46:10 Both the cost and revenue combination. So after the pandemic, the normal Uniasselvi product which is a hybrid tutor centered live event in in hub, we return to be live events.

So physical encountered in the hub. Without any, I'd say, any impact in terms cost, because now we already have the same tutor online now, next year there will be again meeting students face to face.

The same will be with the Flex Course. So today, they are [indiscernible] next year, they will continue to be [indiscernible] with the same tutor.

46:59 Is there a risk that the cost increases when you get back to the physical one, to the physical model, the tutoring model?

47:09 Not in our case so the digitalization segment, you won't see this because today we don't have specific temporary savings when we think about tutor. We already have today tutors that are meeting [indiscernible] online is instead of physically.

But the ratio is the same. What we will have next year, but it is a minor effect is in our [indiscernible] segments, we as anybody else once the classes return, there will be an expected increase in cost there.

But in our case, because we view as smaller piece of our overall results, it won't be a major amount.

48:03 Very clear, Carlos. Thank you.

48:06 Thank you.

48:36 Good evening everyone. Thanks for taking our questions.

So we have two questions from our side. First is regarding average ticket, So the average increased two percent on the digital education and the grad segment.

Could you please comment on how the breakdown was for freshmen and veterans? And then the second question will be regarding PDA.

So big increase in the nine month period due the change in the mix of students. Could you please comment on how this should evolve going forward?

Thank you.

49:13 Hello, Luca. I’m going to answer your first question first.

So regarding ticket, we had two percent increase in the overall average ticket. When you see the intake ticket and the ticket that we are now getting with new comers this is more or else in line with what we had last year.

So that was on average same number that we had last year when you see the [indiscernible] . 49:51 When you include nursing for example and then this figure decreases.

So when we see the overall intake in the current intake cycle we had a slight increase in ticket when you compare to the last year. And that was driven by new courses, which we expect in the future.

So in the future, we expect to increase over time the percentage of premium courses such as Nursing. Again, we have only today around eleven thousand students in a row in Nursing and which today is eighty percent of the intake, but when you see that we had three hundred thousand students in digital education, it is three percent -- three percent, four percent So it is natural that the percentage of premium courses such as nursing and in future, hopefully law and psychology for example and other that we offer today in health office, such as nutrition by start to be offered more weekly those are going to be important drivers over time to sustain the ticket over time.

51:13 I'm sorry, what was your second question? I didn’t get it.

51:16 The second question is regarding PDA. The increase was due to the change in mix of students.

Could you please comment on how this would evolve going forward. Should we see like an increase in PDA level?

A - Carlos Freitas 51:35 Okay, Great. Yes, the PDA is impacted by a number of new -- certainly change or hopefully change next year, some will not.

So the first thing that PDA is a mix of – is a function of the mix of students. So, again, because we had in the first half of this year, when we see the overall intake we had in the third intake cycle year, and you compare it to the overall base we had in the first half of earlier year, we reached the peak in the region.

So we had in the first time year at a higher than ever presentation percentage of new comers in our base. 52:21 So -- and those new comers, they have higher dropout rates and hence higher PDA.

So they are contributing to higher PDA on a consolidated basis. Over time, as we mature the hubs, and we fill out the hubs and hence as we increase further and faster the bottom page of seniors compared to new comers, the way they average PDA will then to go down.

That's the first thing. 52:57 The Second thing about PDA is the fact that we are still not in our full user experienced mode, which is the fact that we have the hotel closed.

So part the user experience, is the fact that you meet your colleagues in hubs. And so the fact we have – have closed and hence we are still not in full potential to exploit our model and benefit a student with our full user experience is not helping in the PDA.

So, hopefully, next year once we are allowed to open again hubs we shall have a decrease in PDA, because the overall engagement will tend to increase because it's an exceptional level and overall engagement will again increase and this has a high correlation with dropout enhanced PDA. 54:01 And the third reason and that's -- I mean we are all on the same page here, the current economic crises, which does not help at all about liquid rate.

Hopefully it has got improvement here, but what we see throughout this year and last year was a clear effect of delinquency, driven by the current crises.

54:30 Very clear colors. Thank you.

54:33 Thank you, Luka.

54:49 Thank you, operator. I want to read now a couple of questions that came from – through web.

First one from [indiscernible] from BTIG. 54:58 Hello, everyone.

Just two quick questions here. You have reported a resilient average ticket in digital education undergraduate courses this quarter, should we expect this trend to continued over the next year.

That was the first question that we just entered. We expect to see a positive contributions of premium courses.

So, we expect to see a stable ticket that we have been delivering in the last years. 55:28 Second question from Pedro was the new PDA policy should continue to provide improvements as seen this quarter.

What should we expect at an ideal PDA level when we relate to net revenue of [indiscernible] in third quarter. 55:43 And I mean, ideal is a complicated word.

What we see is that, sixteen percent is not a view that's clear, because we're not in ideal context. What we see that going forward.

We still expect improvement in PDA with the mix to this, with improvement in the overall user experience and [indiscernible] . 56:13 The second question is now from Javier from Morgan Stanley.

Quite consistent price growth one more time average deal on the red ticket up two percent since last year, I guess part of that was have to do with the mix and embark with your current model. But on the other side, [indiscernible] reduced.

So in fact, mix was not of course the correct driver. 56:40 So, I think there's a computer about the maturation index.

The maturation index is basically the ratio between the total numbers of students we have in the new hubs divided by the potential – the number of students in maturity. So -- and this for the overall portfolio of hubs.

So for example, if we open tomorrow, let's say, one thousand hubs the metric will drop a lot. Because have lot of new hubs and because we open two hundred and forty hubs over the last four -- twelve months.

And a big chunk of them in the last three or six months. Our maturation is more or less the same.

It was thirty two percent, seventy two percent few months ago, not it’s thirty one percent, but not because we are not growing, but because we are opening a lot of new hubs and that way. 57:43 And the final question Javier is, how much have you increase net prices in intake and [indiscernible] ?

So, I just answered, so the in taking price, there was an it's slight increase as well this quarter compared to third quarter. When you see the overall intake including nursing for example.

58:08 And for [indiscernible] , what we applied, what we applied was a minor increase this quarter, but nothing meaningful. The no controlling increasing price is with executed in January of this year.

58:29 So those were the questions we had from the web, I think you all from you -- anyway, my myself, Carlos Freitas and [indiscernible] , we are fully available for any further questions. Thank you and good night.