Goals
Insights into higher education today in Brazil
Understanding the current stage, barriers and opportunities for those wishing to enter higher education, through different perspectives, such as income, academic evolution, technological trends and public policies.
Our brands’ performance in this context
Identifying academic, efficiency and market communication strategies that open up growth paths for YDUQS' various educational brands.
Our strategic plan
Understand the bases of YDUQS’ strategic plan for the coming years: sustainable practices, iconic, highly efficient marketing, cutting-edge technology and a well-designed capital allocation strategy.
On May 21, 2024, YDUQS held another of its communication events with shareholders, investors and market analysts, YDUQS Day. In addition to a panel with external experts, which investigated different aspects of higher education in Brazil, our executives introduced the guidelines and strategic plans that will enable the group to continue encouraging innovation, inclusion and lasting transformation, with superior economic and financial performance.
The all-day event was live streamed on YouTube. Access the playlist with some highlights of the program. Check it out!
Watch the following video and discover the great growth potential of the C class, their desire for quality, and their perception of value for education.
The consulting firm Plano CDE, which has been studying the behavior of classes C, D, and E in Brazil for 20 years, presented the vision of a "great middle class" at Yduqs Day.
100 million Brazilians live in families with a monthly income that varies relatively little, between R$ 2,000 and R$ 7,500.
The middle of the income pyramid in Brazil deals with fluctuations (informality, high turnover, and various sources), but has historically been increasingly accessing segments in terms of desire and consumption. Observe the advancement of middle-class consumption over the years.
Access to food consumption widely leveraged.
The era of electronics and durable goods.
Expansion of services: leisure and private education, two of the most representative of this phase.
Brazilian families mainly dream of owning their own home and their children's education. Many are, for the first time, accessing new categories of services, such as:
- Bank accounts
- Healthcare
- Private education
- Purchasing apartments and vehicles
Despite these achievements, these people face a lack of references to understand purchasing processes and rights, needing support in acquisition. For this group, service is crucial and should focus on differentiation through experiences, not just products.
Education and the CDE public
Many young people are the first generation to attend higher education or complete high school. Currently, 35% of young people do not finish high school, and most parents in this class did not complete elementary school.
Given this reality, many opt for technical education, which should not be seen as an alternative to higher education but as a pathway, especially for the "real" middle class, who work to study. In fact, the mother's education level is the greatest predictor of the children's education level.
Education at the base of the pyramid is non-linear, with studies interrupted and resumed at different stages of life.
Another important piece of information is that the income of those who finish high school is similar to that of those who drop out. Based on this, there are new opportunities to expand access to higher education. Check out some of them below.
Creation of full-time schools
These schools serve 1 million students and show better indicators compared to single-shift schools.
Inauguration of the new high school
This program includes a technical-professional pathway and has the potential to increase employability.
Creation of the Nest Egg Program
This program offers scholarships to those who finish high school, which can reduce dropout rates in schools.
The lecture by Breno Barlach, director of Plano CDE, highlighted important behavioral aspects of young lower-middle-class individuals—such as the need for references and effective support—and revealed important insights into life perspectives concerning high school, technical, and higher education, particularly regarding the projection of income gains. In the following graph, you can see the relationship between hourly wage and education level. These data were extracted from the 2019 PNAD.
Median hourly wage according to level of education _PNAD 2019.
Antônio Gois, journalist, author, and education researcher, presented at Yduqs Day his perspective on how we have historically articulated quality and expansion in the Brazilian educational system.
The author demonstrates that there have been significant advances both in terms of inclusion and quality of education in Brazil, although not enough to equalize the country's situation on the international stage.
His research supports the findings of Plano CDE regarding the importance of higher education for income and professional stability.
Students sharing knowledge in a laboratory.
Watch the following video to understand how Brazilian education has evolved in recent decades regarding inclusion and quality.
During the event, Antônio Gois discusses the perspectives on education in Brazil, focusing on higher education. He argues that despite the common belief that public education was of higher quality in the past, the Brazilian educational system has historically had high dropout rates, especially in elementary education. Check it out!
1940s
The 1940s, considered a golden age for education, had a school dropout rate of more than 50% between the first and second grades of elementary school. Only 10 out of every 1000 children reached higher education.
1960s
In the 1960s, grade repetition was a common practice: children would repeat school years multiple times until they gave up on continuing their studies. The Brazilian educational system was predominantly selective, operating under the logic that only those who "deserved" it would pass. This model created a significant segregation machine, abusing grade repetition without resulting in an improvement in the quality of education.
Gois presents a historical series on higher education data from 1965 to 2022.
In the 1960s, under the military dictatorship, there was a significant expansion of higher education, with Brazil surpassing the mark of 1 million students for the first time. However, he points out that this prioritization of higher education occurred at the expense of basic education, a problem that persists to this day.
In the 1990s, during the Fernando Henrique Cardoso administration, there was an expansion of the private sector in higher education, accompanied by the creation of an evaluation system to ensure quality. This model remains in place.
Undergraduate Enrollment in Higher Education
Number of Undergraduate Enrollments by Administrative Category - Brazil 1980-2022
With over 7.3 million students, the private sector continues to grow, with a 6.6% increase in 2022. The public sector, after a significant decline observed in 2020, has returned to pre-pandemic levels, although there was a slight decrease of -0.1% in 2022.
Distance education, in particular, has become the primary, and perhaps only, driver of expansion in higher education in recent years, as shown in the following graph.
Enrollment in Higher Education Undergraduate Programs
Number of enrollments in undergraduate courses, by type of education - Brazil 1980-2022
If the current trend continues, the number of students in distance learning courses is expected to surpass the number of students in face-to-face courses.
Despite advancements, Brazil still lags behind the OECD average in terms of enrollment rates. The country has surpassed Argentina but remains significantly behind Mexico, while Colombia and Chile are advancing at a faster pace.
The trajectory of educational indicators in Brazil has shown insufficient progress. The country needs much more growth, especially in secondary education, where only 14% of young people were enrolled in 1985, compared to the current 75%.
Population with completed higher education (ages 25 to 34)
The Organization for Economic Cooperation and Development. Education at a Glance 2023: OECD Indicators. Paris: OECD Publishing, 2023.
Even with its expansion, Brazil continues to rank lower in the PISA, an international assessment that primarily compares developed countries. Gois emphasizes that performance in the PISA is mainly influenced by the socioeconomic level of parents rather than the efforts of students or teachers.
Gois also analyzes the functional illiteracy rate, noting that the increasing elderly population contributes to higher rates. However, the data shows that even among those who have completed high school, the functional illiteracy rate is high, particularly among the population aged 50 to 64 years old.
Percentage of functional illiterates (completed or incomplete high school education)
Source: INAF
Gois addresses the issue of employability, showing that the unemployment rate is significantly lower among those with completed higher education. In Brazil, a college degree means more than doubling one's salary.
Salary premium (in %) of a college degree compared to a high school diploma (ages 25-34)
Source: OECD/Education at a Glance 2023
The expansion of education in Brazil has had a positive impact on reducing fertility rates, decreasing early pregnancies, and improving health indicators such as infant mortality rates. However, this expansion has been insufficient, and Brazil needs to continue investing more effectively in education.
One of the mentors and implementers of the Mais Médicos Program, a public policy that today delivers trained professionals to society, Minister Jorge Messias, Attorney General of the Union, discusses the challenges and the importance of medium- and long-term policies to overcome the challenges in the education sector. Watch now!
The Future of Education
In the following video, you will witness a historic opportunity to use educational technologies to bring elements of the exclusive world to millions of students.
Box1824, a think tank focused on technological trends, developed an extensive mapping of future opportunities for higher education for Yduqs.
The content presented was based on a study conducted for YDUQS in 2023, with the primary objective of identifying future territories for Higher Education in Brazil and designing opportunities for innovation.
Basically, three main models of value proposition have been developed over time in Brazil. See what they are!
High prestige, multiple pathways to employability. With restricted entry, exclusive dedication to studies, and a strong emphasis on social capital and culture.
This model originated with the emergence of higher education schools in Brazil, starting in 1808. At that time, schools were a place of social distinction.
Less competitive access, evening and more flexible courses, more social groups included, and a strong emphasis on job training.
In recent years, the revolution in technology and information and the networked life logic have brought new learning possibilities.
Thus, Expansive Education emerged, characterized by learning in modular and scalable networks that can be accessed in parallel with formal education.
The integration of these models can generate innovative value propositions for students.
To create perceived value, it is essential to offer higher education focused on large-scale employability and highly individualized, leveraging the possibilities of the network, data science, and generative AI.
Innovation & Technology
Considering the needs for academic support and excellent service, as well as the main trends in using digital technology for higher education, Yduqs has developed, in recent years, the infrastructure, expertise, and a clear strategy for the next innovation cycles. This is what Ricardo Tiecher, Director of Digital Products and Innovation at the company, presented at Yduqs Day. Watch the video and see what we have already achieved and our next steps in the areas of personalized learning and the use of AI to enhance the employability of our students.
The synergy between Inclusive, Exclusive, and Expansive Education has already been explored at Yduqs through innovation and a technology adoption strategy focused on student value. We are on a journey and believe we are the best-positioned player to generate value by accelerating the adoption of innovation and AI. Below, we highlight what we have already built.
Robust support for new technologies, ensuring high performance. Additionally, extensive expertise in digital and a team with a culture of innovation embedded in our DNA.
Integration of the student journey to offer exceptional experiences. This also allows us extensive knowledge about student behavior, as well as autonomy and efficiency in platform evolution.
We believe that a complete digital ecosystem enables greater engagement and progress, which is directly correlated with lower delinquency and higher student retention.
Solutions to support faculty and generate vital insights about teaching on a national scale and in real-time.
An agile culture has been fundamental in the intelligent and secure adoption of AI in our services. There are over 300 solutions scaling AI across the entire business.
The pillars we have built make us better prepared to address the innovation and technology strategy ahead. As future pillars of what we will deliver, we highlight:
Understanding the uniqueness of each student by integrating data into a 360º view. This requires gathering data on engagement, professional experience, and more.
Offering exclusive learning experiences.
Connecting students with ideal career opportunities.
Our leadership in innovation and technology distinguishes us as catalysts in fulfilling students' career dreams.
Our educational institutions are not only prepared to cater to any student profile, from exclusive to inclusive education, but together they form the most comprehensive portfolio on the market. Watch the video to understand how this synergy protects Yduqs during periods of low demand and boosts the company's results in scenarios like the current one, where all businesses are showing a positive trajectory.
YDUQS stands out for the strength of its portfolio, which has undergone significant transformation in recent years. In 2017, the majority of revenue came from government sources and FIES (Federal Student Loan Program). However, the company invested in new businesses, diversifying its operations and creating a portfolio with greater growth potential.
We have built a diverse portfolio that is crisis-proof.
The result is a portfolio composed of:
Digital and Premium
Two businesses with accelerated growth and higher margins, driving the company's expansion.
On-site
A business with slower growth that, despite having gone through a contraction phase, is already showing signs of recovery.
This strategy enabled the company to achieve positive results even in a challenging scenario. In 2023, the company achieved significant growth, driven by the strong performance of all its businesses.
In addition to diversification, the company also stands out for its ability to analyze and compare its results with those of its competitors, ensuring a strategic and competitive market insight.
YDUQS has the best profit margin, the strongest brand, and high operational efficiency.
Annual revenue has grown by more than 30%, and the company has been paying uninterrupted dividends since 2007, demonstrating its ability to generate value for its shareholders.
Growth with sustainable returns to shareholders
With this solid foundation and a diversified portfolio, the company is positioned to continue growing sustainably, investing in market opportunities, and optimizing its resources.
YDUQS views the postgraduate and lifelong learning segment, which we call "Vida Toda" (Lifelong), as a source of opportunities and growth potential. In addition to expanding the presence of our brands, this segment allows us to extend the student lifecycle, increase engagement and loyalty, and leverage the extensive portfolio of products from the group's institutions with added value.
In this video, Marina Fontoura, VP of Growth and M&A at YDUQS and CEO of Ibmec, presents our vision for this segment. Check it out:
The YDUQS Lifelong Learning Operation has achieved a significant CAGR of 18% in recent years and closed 2023 with a 5% share of the group's total ROL (Revenue from Operating Activities). This growth has been driven by two main strategies:
Independent operational strategy
For the segment of non-regulated courses, such as preparatory and non-degree programs, YDUQS adopts a strategy of niche acquisitions while maintaining independent operations. An important example of this approach is the groupQ.
Focus on the strengths of undergraduate brands
For regulated courses, YDUQS employs a strategy focused on leveraging and utilizing the strengths of its undergraduate brands. In this context, the presence of Ibmec Online and Estácio stands out.
The Lifelong Future
The future of Lifelong Learning is shaped by a strategy focused on strategic growth, driven by four main pillars:
High leverage potential in premium postgraduate education (the largest market in postgraduate studies).
Diversification of product offerings from investments, driving increased average ticket size and market share.
Strength of our brands to enter adjacent markets such as vocational training and certifications.
New opportunistic acquisitions of solid niche companies to complement our presence in the non-regulated segment, aligned with capital allocation strategy.
Ibmec
Ibmec is strategically positioned to grow with high quality and margins in the premium market, a relevant and attractive niche. In this video, Marina Fontoura presents the institution's results and positioning.
With a differentiated value proposition, Ibmec has achieved excellence in its segment, delivering strong results since its acquisition by YDUQS, which has led to gains in market share and a leadership position.
Attention!
Ibmec operates in the premium segment of undergraduate education, with an estimated TAM (Total Addressable Market) of R$ 6 billion. This segment is characterized by regulatory stability, high resilience of enrollees, and renewal rates exceeding 95%, resulting in real increases in average ticket size.
The excellence of Ibmec is sustained by:
- Integration with the market
- Academic excellence
- Socio-behavioral development
- Entrepreneurship and innovation
Since its acquisition by YDUQS (2021 to 2023), Ibmec has shown significant growth. Check out the numbers below.
Student base and average ticket size
The student base grew at a CAGR of 7%, reaching 6,300 students in 2023, while the average ticket size had a CAGR of 10%, exceeding inflation.
Net operating revenue
Net operating revenue had a CAGR of 17% from 2021 to 2023. Meanwhile, EBITDA reached a margin of 50% in 2023.
Moreover, Ibmec has several growth drivers. Check them out!
More incoming students than graduates, increasing market share. This is feasible due to larger incoming classes.
Maturation of the new units in Faria Lima and Brasília.
Strengthening in the Tech segment with a new portfolio focus.
O Ibmec is prepared for a promising future, with continuous and solid growth in the premium market.
Watch the full presentation by Aroldo Alves, CEO of Estácio and Wyden, at Yduqs Day 2024.
Yduqs is a leader in inclusive education nationwide, primarily serving students with a family income between 1 and 4 minimum wages. Most students are between 20 and 29 years old, with a strong presence in the job market.
At Estácio, 67% of graduates progressed in their professional trajectory within 6 months after graduation, with 44% experiencing an increase in income. At Wyden, 65% progressed, with 58% experiencing an increase in income.
With an extremely efficient structure across all dimensions and a well-known capacity for operational leverage, products such as Live and Hybrid represent a great opportunity for the upcoming cycles.
The Estácio and Wyden product portfolio enables this strategy of catering to all student profiles. Below, you can follow the variety of teaching models offered by Estácio.
3 to 5 days a week of on-site activities + digital content.
1 to 2 days a week of activities, up to 30% on-site and the rest Digital.
100% live classes. Real-time interaction with professors and classmates.
Online classes and practical activities in virtual workshops.
Online, with content and platform designed for all kinds of devices.
Yduqs is well-positioned for a promising future, with a focus on quality education, operational efficiency, and close engagement with students. Check out the reasons for its commitment.
Efficiency and Quality
We focus on cost reduction and the use of data intelligence for optimization, with emotional support and welcoming programs for 160,000 students annually. This has allowed us to reduce costs across all metrics year after year. Data intelligence also enables us to ensure quality and retain our faculty.
Growth will come from products that have closer interaction with the student.
The demand for both in-person and digital education is growing, supported by FIES and strategies to increase penetration in new markets. Yduqs continues to lead with innovation and quality in higher education. Even after significant expansion of digital products that foster closer student engagement, such as Hybrid and Live classes, we still see ample potential given Yduqs's market share in medium-sized cities.
Estácio and Wyden have shown continuous, sustained improvement in their teaching quality indicators. Below are some of the contributing factors.
Innovative Approaches to Faculty Support and Development.
Programs for Welcoming and Developing Socioemotional Skills.
Innovative Use of Digital Teaching, Regardless of the Teaching Method.
Estácio and Wyden have a significant opportunity for growth in products and formats that have not yet reached their fair share relative to the weight of these brands across various regions nationwide. Wyden's distance learning (EaD) is a unique case in the country, being the only new brand in this modality in nearly a decade. The local strength and academic reputation of Wyden institutions will continue to be the primary leverage for the coming years. Estácio, on the other hand, has been achieving very solid results with blended learning, which also supports the sustainability of its face-to-face courses. In important markets and in areas where Estácio is a reference, market shares are still relatively low. There is ample room for expansion of this product.
Digital products with closer interaction (Blended Learning and Live).
In this video, Silvio Pessanha, CEO of IDOMED, presents the brand's exceptional results and its powerful expansion.
IDOMED is the best-positioned and most prestigious medical school in the country, with exceptional results, alignment with public policies, and a brand synonymous with excellence. You can see the reasons below.
IDOMED showed sustainable growth, with a compound annual growth rate (CAGR) of 11% in authorized vacancies, 16% in student base, 29% in net revenue, and 25% in adjusted EBITDA. In Q1 2024, the adjusted EBITDA margin was 51%, contributing 28% of YDUQS's EBITDA. Additionally, we have a young course, with only 68% of vacancies matured.
IDOMED has a high approval rate for additional vacancies under the Mais Médicos program, with 72% of additional vacancies approved. Currently, 55% of vacancies come from this program.
IDOMED is recognized for high-quality teaching, advanced technology, and superior practical experiences. The expansion of vacancies is regulated by public policies, with a significant increase expected in the coming years.
Collaborations with renowned institutions such as USP, Harvard, and Tel Aviv University, as well as various specialized projects and programs, strengthen the continuous training and development of doctors.
IDOMED invests in the career-long development of doctors, with initiatives such as technology hubs and postgraduate programs, ensuring high value throughout doctors' professional lives.
With organic growth, new vacancies, premium pricing, and a track record of success, IDOMED is poised to continue leading in medical education, maintaining high margins and a reputation for excellence.
ESG
In the following video, Cláudia Romano, Vice President of Government Relations, ESG, Careers, Regulation, and Communication at Yduqs and President of the Yduqs Institute, presents some of our ESG goals and diversity and inclusion journey figures. She also introduces the pillars of the Yduqs Institute.
With over 1.3 million students, YDUQS positively impacts more than 1.5 million people through the YDUQS Institute, prioritizing diversity and inclusion. Learn about actions that are part of YDUQS's sustainable future.
54% of students are black, 74% come from public schools, and 7 out of 10 graduates work in their fields of study.
MESG goals include increasing the representation of diverse groups, such as black faculty (35%) and women in leadership positions (56%).
Initiatives such as scholarships, trainee programs for black people, and reducing constraints among employees demonstrate a commitment to diversity.
Investors like Santander, Zurich Re, and Instituto Phi expand inclusion programs, benefiting over 100,000 high school students.
The pillars of action encompass Sports, Health, Culture, Citizenship, and Education, including the commitment to literacy and education for over 1,300 people.
With 80% of employees being alumni and a favorability and engagement rate of 87% in 2023, YDUQS's success is driven by the commitment of its team.
Sales and Marketing
In the following video, Marcel Desco, VP of Sales and Marketing at Yduqs, presents, among other topics, media investment allocation, portal launch, and campaigns with a 360º view of the student.
Regarding sales and marketing strategies in education, we highlight our differentiated approach:
Utilization of advanced technology at all stages, from attraction to retention of students.
Integrated campaign planning to attract and retain students.
Unique narrative focused on creating value for students.
Our diversified portfolio includes leading brands in different educational segments.
We invest in technological infrastructure to enhance the student experience:
- Efficient data organization.
- Intelligent media investment models.
- Student support tools and customizable portal.
Our campaigns are personalized, aligned with a comprehensive view of the student, and tested for continuous optimization.
At Estácio, our narrative highlights experience and value creation, solidifying our position as the largest brand in Brazil in education.
In the following video, Rossano Marques, CFO of Yduqs, presents the company's financial outlook.
In the coming years, we have three main messages about our financial horizon. See below!
We are forecasting a significant increase in our Earnings Per Share (EPS) in the coming years, indicating substantial growth in the company's financial results.
We are projecting a strong cash generation capacity, expecting to accumulate up to BRL 10 billion in the next five years, demonstrating our financial strength and investment capability.
We will implement a clear and transparent system for allocating our capital, prioritizing debt reduction, dividend payments, and strategic acquisitions.
Additionally, we are focused on achieving substantial growth in our Net Income (NI), with a forecasted increase of over 250% in the coming years, driven by a robust Compound Annual Growth Rate (CAGR) in Revenue and Adjusted EBITDA, in the mid to high digit range.
Our capital allocation strategy will be directed on three fronts. Check it out!
Sustainable debt reduction, targeting leverage of 1.0x NET DEBT/EBITDA.
With the stability of low leverage, we believe in positioning ourselves as strong dividend payers.
Opportunistic or related acquisitions in Lifelong Learning with high technology and strong cash generation, or any assets that are accretive.
We believe in the potential for value appreciation resulting from a significant merger, highlighting opportunities for operational and technological synergies, especially in a market with depreciated valuations and low concentration.
Our commitment is to maintain strong financial performance, with clear growth targets, leverage reduction, robust cash generation, and the pursuit of transformational opportunities, such as a potential merger, to further enhance value for our shareholders.
Our key messages about the strategic horizon address the brands that make up our portfolio.
We prioritize understanding who our students are and the value we generate for them, highlighting the importance of efficiency combined with quality and our focus on growth through close student relationships.
We highlight our exceptional results, our alignment with public health policies, and our brand recognized as synonymous with excellence in medical education.
We emphasize our pursuit of excellence in the educational segment, our consistency in delivering results that have led to market share gains, and our optimistic outlook for the future.
We present a clear and focused strategy, highlighting our history of growth with high profitability and our enthusiasm for the future of our initiatives.
As market leaders, we are confident that our cash generation will exceed expectations. We recognize the opportunities present in the industry, including the potential for income growth for millions of people, the adaptation of in-person teaching to the digital environment, and renewed interest from foreign investors in the country and the sector.
Our relative positioning is very strong, with a resilient portfolio, consistent growth, healthy margins, and transparent and disciplined management. Cash generation provides us with flexibility, with rising margins, accelerated deleveraging, and a clear capital allocation strategy, enabling the acceleration of dividends.
With a continuous focus on technology, academic quality, socio-environmental responsibility, and established brands, we are well-positioned to face challenges and seize the opportunities that the future holds.
A diversified company, connected with students and the market, well-positioned to capture triggers in the sector's horizon. Check out, in CEO Eduardo Parente's final analysis, what these opportunities are and why Yduqs is the best option in the sector when we look at the coming years.
Yduqs is not only prepared for the future – it is actively building, in a disciplined and engaged manner, the higher education of the current generation of Brazilians. We thank all of you for your support as we embark on this journey together.