Afya Limited (NASDAQ: NASDAQ:AFYA), a leading medical education group in Brazil, has reported a significant increase in its financial metrics for the second quarter of 2024. CEO Virgilio Gibbon and CFO Luis Andre Blanco presented the company's latest financial results and strategic initiatives, highlighting a 14% rise in net revenue and substantial growth in adjusted net income and EBITDA. The company also updated its full-year guidance and discussed its expansion plans, including a new loan agreement and M&A strategy.
Key Takeaways
- Afya reported a 14% increase in net revenue to R$810 million in Q2 2024.
- Adjusted EBITDA and adjusted net income rose by 28% and 59%, respectively.
- Full-year net revenue is projected to be between R$3.225 billion and R$3.325 billion.
- The company secured a R$500 million sustainability-linked loan from the International Finance Corporation.
- Afya reduced its net debt by R$356 million, with a net debt per EBITDA ratio of 1.5x.
Company Outlook
- Afya expects its cost of debt to remain below CDI until soft bank transactions mature in 2026.
- The company remains optimistic about future opportunities, including a growing M&A pipeline following recent regulatory approvals.
Bearish Highlights
- B2B revenues in continued education have contracted, although this is not a major concern for the company.
- The competitive environment for the prep course business remains unchanged, with sales concentrated in Q1 and Q4.
Bullish Highlights
- Medical student enrollment and revenue from continuing education and medical practice solutions segments are growing.
- The company expects a 20% growth in the medical prep solutions segment, with a positive contribution margin of around 10-15%.
Misses
- B2B revenues in continued education are not growing, but the company plans to maintain its product offerings.
Q&A Highlights
- Afya is confident in its ability to acquire 200 seats per year through M&As, selecting regions strategically and at the right price.
- The company is pleased with the acquisition of Unidom and anticipates synergies in streamlining operations and revisiting costs.
- Integration plans for Unidom include implementing a national curriculum and centralizing back-office operations.
- Afya has restructured its digital and educational segments to improve efficiency and reduce costs.
Afya's financial results for Q2 2024 reflect a strong performance, with an adjusted net income increase of nearly 55% year-over-year to R$461 million. Operational improvements, reduced financial expenses, lower interest rates, and lower effective tax rates contributed to this growth. The company's adjusted earnings per share (EPS) also saw a remarkable 62% increase compared to the previous year.
The company's commitment to enhancing the medical journey through a unified educational system and digital solutions is evident in its strategic initiatives. Afya's positive outlook is supported by its M&A strategy and the recent regulatory approvals that have expanded its pipeline of potential acquisition targets.
Afya's next event is scheduled for October 29th, where they will provide more details on their strategic initiatives and outlook. With a strong financial performance and clear strategic direction, Afya continues to solidify its position in the medical education sector.
InvestingPro Insights
Afya Limited's performance in the second quarter of 2024 has been underpinned by robust financials and strategic expansions, as reflected in the company's latest earnings report. InvestingPro data and tips provide additional context that may be valuable for investors considering Afya's potential.
InvestingPro Data highlights a 20.12% revenue growth in the last twelve months as of Q1 2024, showcasing the company's strong sales performance. The gross profit margin for the same period stands at an impressive 61.9%, indicating Afya's ability to manage its costs effectively. Furthermore, the company's P/E ratio is currently at 18.35, suggesting a reasonable valuation in the market.
InvestingPro Tips point out Afya's low P/E ratio relative to near-term earnings growth, which may be of interest to value-oriented investors. The company's valuation also implies a strong free cash flow yield, potentially indicating a solid financial position and the ability to generate cash. These insights, along with the fact that analysts predict the company will be profitable this year, could provide a positive outlook for the stock.
For investors seeking a deeper dive into Afya's financials and strategic positioning, InvestingPro offers additional tips, with a total of 8 tips available on the platform, including insights into the company's debt level and dividend policy.
These InvestingPro Insights complement the article's analysis of Afya's Q2 2024 performance, offering investors a wider perspective on the company's financial health and market position.
Full transcript - Afya Ltd (AFYA) Q2 2024:
Renata Couto: Thank you for joining us for Afya's Conference Call. I'm here today with Afya's CEO, Virgilio Gibbon, and our CFO, Luis Andre Blanco. During today's presentation, our executives will make forward-looking statements. Forward-looking statements can be related to future events, future financial or operating performance, known and unknown risks, uncertainties, and other factors that may cause Afya's actual results to differ materially from those contemplated by these forward-looking statements. Forward-looking statements in this presentation include, but are not limited to, statements related to the business and financial performance, expectations and guidance for future periods, or expectations regarding the company's strategic product initiatives and its related benefits. These risks include those more fully described in our filings with the Securities and Exchange Commission. The forward-looking statements in this presentation are based on the information available to us as the date hereof. We should not rely on them as predictions of future events, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, management may reference non-IFRS financial measures on this call. These measures are not intended to be considered in isolation or as a substitute of the results prepared in accordance with IFRS. This presentation has reconciled these non-IFRS financial measures to the most directly comparable IFRS financial measures. Now, let me turn the call over to Virgilio Gibbon, the CEO, who will begin with slide number three.
Virgilio Gibbon: Thank you, Renata, and thanks to everyone for joining us today for our second quarter and first half conference call for 2024 results. Let's start with our performance highlights. First, net revenue increased almost 14%, reached R$810 million, followed by an adjusted EBITDA growth of 28% year-over-year, reaching R$344 million, with an adjusted EBITDA margin of 42.5%, an impressive 490 bps over last year. Adjusted net income reached R$210 million, marking a 59% growth compared to the same period in 2023. Meanwhile, our adjusted EPS climbed to R$2.29, reflect a 62% increase over the previous year. We delivered robust cash flow from operating activities, totaling R$610 million, a 21% year-over-year increase, driven by the company's solid operational performance. Operating cash conversion reached 94%, with a robust cash position of R$723 million at the close of the quarter. Moving to our operational updates for the quarter, medical seats reached 3.2000 approved seats. Additionally, our number of medical students has reached 22,661, representing a 9% volume growth compared to the second quarter of the previous year. It's also important to mention that with our recent acquisition of Unidom and the addition of 80 seats authorized at UNIMA in the third quarter of 2024, we have now reached a total of 3,583 approved seats as of today. We also observed impressive results in net revenue for our continuing education business, with the segment growing by over 12% year-over-year, resulting in a net revenue of R$127 million in the first six-month period of 2024. Similarly, our medical practice solutions demonstrated significant progress, with a revenue increase of 13% compared to the first half of 2023, concluding the six-month period with a net revenue of R$77 million. Moving now to Slide number four, we can now observe our new business structure taking shape, comprised of three segments, undergrad program, continuing education, and medical practice solution. I would like to reiterate that notable changes have occurred in continuing education. Entities, previously accounted for as a content and technology for medical education within medical practice solution, are now accounted for in the continuing education segment. Simultaneously, the segment formerly known as digital services was renamed to medical practice solution. Beginning with the undergrad segment, we observed significant progress throughout the quarter, including an increase of over 5.4% in our net average ticket for medical course, organic growth in all segments, and expansion in gross margin and the acquisition of Unidom. Continuing education was marked by an operational restructuring, resulting in growth and an increase in B2B students, boosted by both graduate and prep programs. This segment also benefited from a gross margin expansion due to operational restructuring efforts. Lastly, in our medical practice solution segment, we ended the quarter with a 13% increase in active payers, driven by 11% growth in clinical decision and a 19% growth in clinical management. We have also seen a recovery in our B2B net revenue for this segment, as some of the invoices that were postponed during the first quarter of 2024 are now being accounted for. Moving now to Slide number five. We are pleased to announce an update to access guidance. Following the recent acquisition of Unidom, the addition of 80 medical seats at UNIMA Alagoas, the first half results that have exceeded our initial expectation, and also our robust intake process, which once again ensured 100% of occupancy. Our updates include a new net revenue range between R$3.225 billion to R$ 3.325 billion, and an adjusted EBITDA range between R$1.375 billion and R$1.475, and a CapEx range between R$220 million and R$260 million for our capital expenditures. And now I'll be turning the call over to Luis Blanco, Afya's CFO, to provide more insights into the financial and operational metrics. Thank you.
Luis Andre Blanco: Thank you, Virgilio, and good evening, everyone. Starting with Slide number seven for discussions of key operational metrics by business unit. Our number of medical students increased by 9% over the first half of 2023 to 22.6000 students. We have reached 3,203 approved medical seats due to the 40 seat increase in Guanambi authorized in January, 2024. The net average tickets for our medical school grew by 5.4%, reaching R$8,922 in the first half of 2024. Furthermore, undergrad program net revenue saw an increase of more than 13%, reaching over R$1414 million, 86 of which is related to medicine and 94% from health-related courses. All these efforts highlight one key point. Our medical educational business remains and will continue to be the foundations of our business in the short and medium term, driving consistent growth alongside strong profitability and cash generation. For the next page, I will present our continuing educational metrics. Strategically, we look into our continuing education considering three journeys. Starting from the left to the right with the residency journey, we observe a 33% increase in active payer reaching 13,058 students right at the end of the period. Moving to the graduate journey, we achieved a 22% growth, totaling 8,100 students. Finally, in our other courses and B2B offerings, we saw an increase of 8.2% over the six-month period of the prior year. In summary, our efforts enable the continuing education metrics revenue to reach R$128 million in the first half of 2024 compared to R$114 million in the first half of 2023, reflecting a growth of over 12%. This growth includes a 15% increase from B2B and a 13% decrease from the B2B offering. Moving to Slide number nine, I will discuss the medical practice solutions operational metrics. On the first graph, you can see our total active payer. Those generating revenues in the business to physician segment. With a continuous growth trend, we reached 196,000 paying users, reflecting a 13% growth compared to last year's quarter. As shown in the second graph, our monthly active users, counting [Technical Difficulty] over 57,000 in the first half of last year, mainly due to the discontinuations of PEBMED portal and the launch of the Afya portal. Finally, our last graph displays the net revenue from our medical practice solutions, which grew by 13% compared to last year, reaching R$77 million. Within this revenue, R$65 million come from the B2B and R$12 million was from B2B, reverting the decrease in net revenue in the first quarter as previously postponed B2B invoices were now accounted for. The next slide, we also present Afya Ecosystem. We are proud to present the significant impact that Afya has made on the healthcare community in Brazil. As the end of the second quarter of 2034, our ecosystem includes over 320,000 users who are actively engaged with our service and products. Moving forward to Page 11, I want to discuss our financial overview for the second quarter of 2034. Starting with the next slide, with great satisfactions, I'm pleased to present another robust quarterly result for Afya. Net revenue for the second quarter of 2024 reached R$810 million, reflecting a 13.7% increase over the same quarter of the prior year. And for the six-month period, net revenue was R$1,614 million, an increase of 13.5% over the same period of last year. This growth is mainly driven by 5.4% increase in net average tickets for medical courses, maturations of medical seats, the addition of 40 seats at the Guanambi campus, strong performance in continuing educational intake, and effective execution in medical practice solutions. In the second quarter of 2024, adjusted EBITDA increased over 28% to R$344 million, with an adjusted EBITDA margin of 42.5%, marking an increase of 490 base points compared to the second quarter of 2023. For the six-month period, adjusted EBITDA was R$742 million, an increase of 24% over the same period of the prior year, with an adjusted EBITDA margin of 45.9%, an increase of 380 base points in the same period. The adjusted EBITDA margin expansion is mainly due to gross margin expansions within undergrad and continuing education, completions of UNIMA and FCM Jaboatão integration process in November, 2023. The ramp-up of the four Mais Médicos campus that started operations in third quarter of 2022. Operation restructuring efforts in our continuing educational and medical practice solutions segment. And more efficient in selling, general, and administrative expenses. Moving to the next slide. The year cash flows from operating activities grew 21%, totaling R$683 million, driven by our robust operational performance. The operating cash conversions ratio was 94% in the first half of 2024. Adjusted net income for the second quarter of 2024 amounted to R$210 million, an increase of almost 60% over the same period of 2023. For the six-month period that ended June, 2024, we also saw an increase in adjusted net income, reaching R$461 million, presenting an increase of nearly 55% year-over-year, mainly due to the enhancement of operational results, the reduction in financial expenses due to the decrease in net debt and lower interest rates and lower effective tax rates. Afya increased its tax efficiency by incorporating entities and increasing distribution from subsidiaries. Regarding adjusted EPS, we achieved R$2.29 for the quarter, a remarkable 62% increase compared to the prior year. And R$5.03 per share in the first six-month period, a growth of 57%. On the next slide, we can see a table with the breakdown of our gross debt and our total cost of debt, considering our main debt, the soft bank transactions, debentures, accounts payable to selling shareholders and other financial obligations. We are proud to announce that Afya entered in a loan agreement with international finance corporations to finance our expansion program through acquisition. The financing is IFC's first sustainability-linked loan based on social targets in the educational sector. According to the financial terms, IFC will loan up to R$500 million, which shall be repaid in seven equal semi-annual installments starting in April, 2027. The interest rate is the Brazilian CDI rate plus 1.2%, and may be reduced by 15 bps if sustainability CPIs are achieved. And now, moving to my last two slides, I will discuss our cash and net debt position, also giving more insight into our cost of debt. In second quarter, 2024, our net debt reached R$1,459 million when compared to December 2023, after reduced its net debt by R$356 million. Even considering the [indiscernible] earn out of R$49 million, we were able to reduce our net debt per EBITDA from 1.6x in 2023 to 1.5x in the second quarter of 2024, including Unidompedro business combination. As shown, we also reduced our net debt over R$150 million more compared to the same period of the prior year. This concludes our prepared remarks. We are very proud of our achievements and strong performance across our area. Our commitment to enhancing the medical journey through a unified educational system and digital solutions remains steadfast. This approach supports the growth, continuous learning, accuracy, and productivity of healthcare professionals. Looking ahead, we are excited about the promising opportunities that await for us. I will now open the conference for Q&A session. Thank you.
A - Renata Couto: [Operator Instructions]. The first question comes from Mirela from Bank of America (NYSE:BAC). Mirela, you may now go.
Mirela Oliveira: I have two questions here. The first one, in terms of cost of debt, what should we think about that considering the recent IFC mission and the debt maturity of some of your debt that it's cheaper? So what are we thinking about the cost of debt in the near future? And second, on the triggers to reach the top of the guidance on margins. I imagine that the risk here lays more on the medical practice solution. So could you tell us a bit of how is the margin dynamic in this business, especially for the second semester?
Luis Andre Blanco: Hi, Mirela. It's Luis speaking, talking about the expected cost of debt. I would say that we're going to present our cost of debt below CDI at least until we have the soft bank transactions with us that is due to 2026. So until then, you can expect that our cost of debt will be below the Brazilian 100% CDI, okay?
Virgilio Gibbon: Mirela, this is Virgilio. Regarding your second question, the guidance on how to reach the top line, so we are aiming the range. This commitment here is to reach the range that we are releasing right now. But based on our three segments here, so the execution was above the initial expectation for all the three segments here, so we are performing better. Regarding the medical solution segment, since last year, the second half of last year, when we did all the restructuring process between continuing med education and also the old digital services segment, we are having a lot of synergies here. And on digital solutions that now it's called a medical practice solution, we are delivering a positive EBITDA. We are growing close to 20s. Our growth rates for 2024 expected, and also the positive EBITDA margin around 20. Remember that we were close to zero last year. So it's a quite positive improvement on all products that we are offering under the medical practice solution, but also pushed by undergrad segment and also continuing med education. Both of them are also better than expectation, also better than last year, as you can see on our first half results here.
Renata Couto: Yes, if I may add, Mirela. The main reasons, the main triggers to keep the margins and to achieve what we are delivering the guidance, what we are promising the guidance is mostly the one that we already have. So as we did a study restructuring between the medical practice solutions and continuum education, also the integration of units that comes with a better margin through the whole year. And the four Mais Médicos units that we opened in the second semester of 2022 that are now delivering better margins.
Mirela Oliveira: Thank you. That's super clear.
Renata Couto: Thank you. And the next question comes from Lucca Marquezini from Itau.
Lucca Marquezini: Couple of questions from our side. The first one is the release mentions that one of the reasons for the upward revision in guidance was the performance in the first semester. So can you please comment on which of the segments delivered the results that were above the expectations and led to this revision in the guidance? And then, the second one is we saw an acceleration in the revenue growth for the medical practice solution segment. Can you please provide some more color on which of the products led to this stronger performance? That's it from our side. Please.
Luis Andre Blanco: Hi Lucca, I'll take the questions. The first one regarding the better performance in the first semester, basically come from the other results that we've got from the integrations of UNIMA and FCM Jaboatão to our structure. And remember that we have their business combinations in the beginning of 2023, but we integrated it in November, 2023. So we are now capturing the whole synergies that we have with these operations. Other one is better performance margins that we are doing on the Mais Médicos 2 operations that we've launched in 2022. We have delivered better SG&A with all the zero-budget projects that we have implemented here on Afya. So all that said, we got this performance better. And that performance with the Unidom acquisitions and with the additional seats that we've got from UNIMA made us comfortable to update our guidance for this one that we just released. So we are very confident that we will deliver the guidance as until today, we have delivered all the guidance that we've provided. Regarding the second question, regarding the best accelerations in terms of net revenues in the digital solutions, we have these accelerated mostly with the B2B sites of the solutions. Remember that in the first semester, we mentioned that we have part of the revenue recognitions dropping from the first to the second quarter. We've finalized these service providers for the pharmaceutical industries, and then we could recognize revenue during the second quarter. As these B2B revenues that come during the second quarter make during the semester, the revenues grew more than 20% and accelerating the revenue for the segment.
Renata Couto: And regarding the product, Lucca, the main product that we're selling in the B2B is marketing campaigns for the pharmaceutical industry.
Lucca Marquezini: That's very clear guys. Thank you very much.
Virgilio Gibbon: Lucca, I think just one point I think it's important to mention. Also the new guidance considered all the rhythm that we saw from the new intake on the second half. And we had another strong intake with a lot of candidates proceed close to what we had last year. So it's a very healthy cycle. So it gave us the, again, the right confidence and predictability to upward and update our guidance for 2024.
Renata Couto: Thank you, Lucca. The next question comes from Leandro Bastos from Citi. Leandro, you may now go.
Leandro Bastos: I have two questions more related to regulation. The first one, I mean, we had kind of the approval, the decision actually by the Supreme Court for the injunctions. And so far we haven't seen some approvals. So just wanted to have your perspective on whether you're seeing any changes in competition given those approvals and how many injunctions you think might be approved given the market knowledge that you have. That will be the first part. Then the second also related is whether the recent approvals have been changing your strategy in terms of the regions for Mais Médicos III, the upcoming auction. And if it might continue to change the timeline also that you expect for Mais Médicos III given those kinds of outstanding injunctions. So that'll be my side.
Virgilio Gibbon: Okay, Leandro. So the first part was the intake cycle of this release. So we didn't perceive any changing. We had a very positive and healthy cycle. I think we are differentiating a lot our operation in all cities that we have our campuses for the undergrad segment. I think the approval has been the great majority of them very aligned with the expectation after the definition from the Supreme Court. So it's everything running as expected. We still have some approvals to come also from the increase of number of seats from the normal process that we had in the past still seeing some approvals coming from the Ministry of Education not only based on the decision by the Supreme Court. So everything running as expected. It's very difficult to measure how will be the impact and the speed of them depend on the capacity of the Ministry of Education to approve and also to analyze everything that they have. But based on the idea on the entire Mais Médicos III program is something around nine to 10,000 additional seats including all the expansion for this new capacity wave at least what is based on the idea coming from the Ministry of Education. So it's too early in the process to give more any other detail more than that, okay?
Renata Couto: Yes, and regarding the regions that we are choosing we are not going to compete for the ones that are already in our group. I'm sorry, we are not going to compete on regions that we have injunction.
Leandro Bastos: Great. And just kind of if I may another one in terms of the M&A pipeline this has been changing with the injunction I don't know any companies that won and eventually might become targets. Did your pipeline change with that? Are you seeing more opportunities or not really?
Luis Andre Blanco: Yes, I'll take that Leandro, as a matter of fact with these new institutions being approval. So our pipeline possible top of the funnel has grown, okay? So we have more targets to talk. We are pretty confident that we can keep the rhythm of 200 seats acquisitions per year. And remember that we need acquisitions and we are ahead of the guidance that we provided since 2022. So we still see with very good eyes to do the M&A with the right price. Right now we have more targets on the streets to talk to. And of course we are going to keep the discipline to choose the regions that make sense for us at the right price.
Renata Couto: [Operator Instructions] The next question comes from Marcelo Santos from JPMorgan (NYSE:JPM).
Marcelo Santos: I have two and one clarification. The first question is, could you please comment on the competitive environment on the prep course business? I think that was something that in the past you were having some difficulties just wanted to know how it evolved. The second question is, wanted to understand a bit why the B2B revenues in continued education is contracting and what are the trends there? And the clarification is something that you just said in one of the answers. Did you mention that the margin for the medical practice business is 20% or I didn't understand if you mentioned it was 20 as well, as well as the growth or you're comment just referring to the growth and the margin is positive. Just want to understand better if you really said that. Thank you.
Luis Andre Blanco: Marcelo, I'm going to take the first one regarding the competitive environment for the prep course. The competitive environment in the second quarter it's not relevant at this moment because the second and the third quarters of this market it's not seasonal because the sales are concentrated on the first and the fourth quarter of the year. So did not impact us in the second quarter and will not be a topic for the third quarter. This will be back on the table when the sales come back is the fourth quarter when we're going to launch the 2025 collections that we start sales of it during the fourth quarter. So until this new cycle, nothing we're going to change on that.
Renata Couto: If I may add on this point, you need to remember that the product is not only MedCell, right? When we talk about the residence journey, we are talking about MedCell and [indiscernible]. So our offering today Marcelo is not only the prep course as we had in the past, right? We have also the mentoring that gives a lot of value to MedCell products.
Virgilio Gibbon: Yes, that's very important. It's all the sort of prep course will be better. That's not only the part that initially was being delivered by MedCell. So even considering MedCell traditional products, but as we rebuilt the curriculum, the product, we are seeing a strong enrollment growth coming on the prep course arena here. As you can see on our table tree, some more than 30% of students more than the same period last year. So it's a good sign on our prep and prep course segment. So not only MedCell here, okay, Marcelo. I think your second question here about the B2B revenues on continuing medical education. This is not core. This was something that was leveraged during the pandemic that we were licensing our products here to help other institutions. This will be more than flat. We are not guiding any growth on this type of product or on this type of segment here on the continuing med education, but it's something that we are not shutting down the offer, but we'll continue to offer to our clients. It's around 30 to 40 different institutions that continue to use our products in the education sector. About the clarification. So we're expecting to grow around 20 this year on medical prep solutions. And also the contribution margin, not only the gross margin improvement, but we are seeing that the results after the other, the restructuring process that we run to in the second half of last year, it's delivering a positive EBITDA around 10 to 15, and we are aiming to reach close to 20%, but that's the contribution margin that we are not releasing that on our reports by segment, just up to contribution margin.
Marcelo Santos: Perfect, thank you very much. Contribution will be gross margin. Okay, thank you very much.
Renata Couto: The next question comes from Mauricio Cepeda from Morgan Stanley (NYSE:MS).
Mauricio Cepeda: We have two questions. The first one about Unidom, what do you expect in terms of consolidated margins after the integration, which are the sources of synergy there, which is the timeframe of the integration? So a little bit on the impact of Unidom. And a second one about the medical practice solutions. We understood from the release that there was a simplification there, which helped the margins. So our question would be, if you are narrowing down the services you offer there, if you chose to concentrate in some few digital services, so basically if there is a different strategy or a different positioning there. Thank you.
Luis Andre Blanco: Hi, Cepeda. I'll take this one. Regarding Unidom, and remember all that we closed during the first day of July, we see very good institutions that was with a very lean structure. So we're very happy with the transactions. We have 45 days since the closing. So we're still working on the integration plan. We don't have the integration dates yet defined, but we're very happy with the institution itself. The synergy will come in the same line with all the transactions that we've made as of today. So they are concentrated in top line. We're going to have the fullness of the capacity during this period. We're going to have the stream, the scholarships and some kinds of discounts that were given to family and friends or in institutions. We're going to revisit the cost to provide the service regarding the correct structure for the teachers. We're going to implement our national curriculum over there, and we're going to centralize all the back office operations under our shared service without increasing it. So these are kind of synergies that we're going to achieve in the future, in the next couple of months. So everything is occurring according to the plan that we've announced when we signed the deal in last May. So when we did that, we put that after we got the maturations, we're going to reach maybe a bit down when the institution is mature with 4.2x, the EBITDA. So this is our view and our best view for Unidom for the semester is incorporated in our guidance. So the number is over there. Regarding the restructuring of the digital segment and the educational segment, we've made these in the very, very beginning of the year. So we this year with this restructuring in place. One of the major part of the restructuring is what? To move the old Pillar 1 offerings from the digital to the continued education. And with this movement, each one of the segments, we started to not be a structured pair product or pair family of products, but we started to be organized this segment as a whole. So instead of having a product team, for instance, pair each one of the pillars, we started to have one product team for all the service that we have. We started to have one tech team for all the service practical solutions for all the solutions that we have. So we are lean up our structure for the year. And with that, we gain a lot of efficiency, both in terms of costs and expenses. So we're very happy with that. And we put these movements within the guidance. And as we are delivering better results, we incorporate all these scenarios within [Unidom] [ph] acquisitions to update our guidance for the year.
Mauricio Cepeda: Okay, Blanco, thank you. So the point is that there was no redesign in the offering. It's much more about internal structure for delivery.
Luis Andre Blanco: Yes, exactly that.
Renata Couto: So as we do not have any more questions, I would like only to give you guys an invitation about our after date that will happen on October 29. We'll be online and in presentation mode. And we're going to send more details shortly. Thank you all for being with us today. And we hope to see you next time. Have a good night.
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