Arco Platform (ARCE) 30 Mar 232022 Q4 Earnings call transcript

Good afternoon, everyone, and thank you for standing by, and welcome to Arco Platform’s Fourth Quarter and Full Year 2022 Earnings Call. This event is being recorded and all participants will be in a listen-only mode during the company’s presentation.

After Arco remarks, there will be a question-and-answer session. At that time, further instructions will be given. [Operator Instructions] This event is also being broadcast live via webcast and may be accessed through Arco’s website at investor.arcoplatform.com where the presentation is also available.

conference Carina the Director. Arco’s turn I’ll over Carreira, to IR Now, you presentation. begin Carina, your may

I’m to With you. Ari Roberto full call Thank Otero. pleased we de year quarter Arco’s today, and XXXX and Sa fourth Cavalcante conference Arco’s Arco’s call. have me Neto; the welcome on CEO, you CFO, to

During our will forward-looking make executives presentation, today’s statements.

factors our and events operating performance Forward-looking results or unknown uncertainties, materially statements contemplated financial risks, generally from cause or by statements. relate future that and to differ these other to actual involve known may future those and forward-looking

Forward-looking but financial regarding and benefits, and statements performance, to market. this regarding future statements and and their related related expectations expectations in initiatives for guidance presentation are not the product expectations our business our periods, include, to our our limited strategic

risks set These the in fully the to issued as forward-looking Commission. documents earlier those that us information in The as the Securities our hereof. we the in more based well of on filings presentation with are as Exchange described those today date available forth and this include statements

forward-looking not except law. as rely on any future required of and as disclaim should any to update predictions we by obligation You events them statements

prepared measures accordance In be are results The not a with management considered as in intended IFRS. in reference addition in non-IFRS non-IFRS may for financial substitute to call. this financial measures isolation or

measures directly to We have IFRS most financial measure reconciliation the press non-IFRS a release. in provided these of financial comparable our

discuss to unless year non-IFRS. growth stated. note period G&A, measures operations selling other and are expense, that otherwise cash And gross we from except compared all comparable the margin, are Please flow financial rates prior revenue, from here

year-over-year by our were comparisons that included acquisitions note in that affected also We XXXX financials. not are

CEO. me turn Arco’s to the call now Ari, Let over

ACV for another delivered of and in serve XXXX Carina, today’s resumption more healthy to for profile important everyone flow investors, strong main to evolutions results you, for more The including efficiently way. We clients sustainable across solid growth. thanks, Arco. was commitments grow important a with our and year an continue conference year agenda call. integration our and our joining our and cash Thank operating better in

we cash including lower metrics capital with of on historical all our our generation, flow basis cash effective EBITDA XX.X%, allocation, and showed X% generation, point lower free XXX CapEx tax working higher better to drives taking that On revenues, of finally, adjusted back profitability margin to a levels at capital improvements consumption, rate. expansion

cash history. higher after As Arco’s a the we CapEx of consequence, flow generate

the growth, increase flow can to without growth energy for prove year jeopardizing XXX% agendas a across leading and cycle ACV dedicate a brands growth all strong XX% we price XXXX intake year-over-year to On We billion, commercial organic. that focus generation rates. cash our posted R$X.X to on and

Our two price combined acquired brands in recent high brand rates and COC and retention, in main most terms good growth of Core growth, sustained our at delivered results increase. XX%

successful were solutions to of its cross-selling from originated Supplemental Our intake commercial XX% with such cycle again efforts once key cross-sell. for

and from allocation IT a improved in platform ArcoTech dilution. outcome important and across redundance on the integration to agenda at an had our efficient we in with brands. higher higher reducing organization Finally, process leading more aiming remain capital the quality focused corporate We G&A and

Otero, presentation. to the turn call now Otero will please go will ahead. who I continue the

you Thank Ari. Thank everyone. for time. evening, your Good you,

of XX.X% net revenue quarter and for recognition representing were Moving the the increase a to which of millions, revenues ahead. X, will detail XXXX ACV, few XXXX XX% a a Slide R$XXX slides year-over-year fourth

M&A points EBITDA and organic year-over-year a process. basis XX% is increase paper prices, from the in Despite XXXX contraction when costs increase coming our mainly due to XXXX XXXX excluding pressures versus R$X,XXX growth XX% sales to Net XXXX year-over-year, a in and totaled due revenues XX% margin managed for in efficient million, concluded a or X% G&A on expansion XXX more we deliver in XXXX. to

Slide inflection on structural trajectory. on processes and flow improvements cash as capital. an XXXX our focused in point to by allocating revisited We marks Ari, our X, Moving operations made mentioned our better

at operating a compared As every expansion to line of in of improved we result, a R$XXX when flow flow firm year. last free to our leading to cash cash million million R$XXX

dynamics We with and working to returned delinquency levels. capital days our improved receivables, collection pre-pandemic

XX% went XX%. was the CapEx levels structure take of between as X% XXXX rate optimized and tax And to historical provided in effective XX% at guidance finally, recent XX% advantage of acquisitions. we to our versus benefits back the on in to corporate below the Our of our XXXX tax revenues market

X, to the Slide students dropouts years. we CapEx mention our years showed in On investments, of schools. not due evolution lower heavier were XXXX to slightly of the and XXXX our revenue is recent recognition partner in

to to back also we the In further we years in support integrated our partner to in and to to As Adjusted and to weather CapEx tools integrated efficient levels, schools historical minus believe improve invested a we room in EBITDA more while is returning businesses acquired XXXX, come. pandemic. improved and invested way. there

Moving to bps a in R$X,XXX XX loans time XXXX. multiple to X.X shareholders, of adjusted end a payable to debt from translating EBITDA Slide net down and in we million financing ended accounts year and in with million X, selling R$X,XXX

operations cash to through profitability and and leverage our come. position combined obligations, short-term enough for our cash confident with cover future continue strong cash are we generation to our higher generation We’re is to reducing committed years from the

expansion of of XX% improvement present key impacted in impact the To are the confident using from and and our We SISU students solutions report. highlights conclude metrics in initiatives XXXX XXXX through achievement with had of pedagogical goals. our of our We our ESG Arco our XXXX. universities increased important the on and rates increased an approval education solutions by in Institute the students this Slide session on we X, main

percentage leadership the of women increased of the percentage diversity. We positions and in ethnical

improved points, NPS XXXX. employee percentage versus reduced Our X our and almost points voluntary turnover X

our reduce such the society quality through to we and or we and one committed and measurement We important a first for know Footprint lives committed Finally, concluded for alternatives we’re we are role our to two, continuing sustainable impact have critical and education to in best compensate XXXX, and Carbon scopes in an analyze emissions. business.

Moving XX, commercial results to Slide we of proud of XXXX our the are cycle.

over by Our ACV strong billion million The representing Core X.X reached million, growth. year-over-year, almost R$X.X segment a book year-over-year [indiscernible] is XX% R$X,XXX and XX% students. organic grew

XX%, and had cycle its a under we Arco’s of commercial performance over XXXX brand Supplemental Solutions grew Our to the end of in of first umbrella and Content highlight million [indiscernible] stellar COC, by like R$XXX We’d XXXX. students. XXX,XXX acquired

is to school. points The inflation. XX% point portfolio. lead our XX% of having than number growth, price was XX% of penetration XX Content of of Escola Supplemental Pleno, According intake solution entire retention to school those times the products on Inteligência our Solutions increasing school and and Content improvement from conversion increased inside delivered growth originated Core more more Solutions year, Supplemental the students XX%, cross-sell, da a year-over-year, year-over-year there competency for solution new this XX% are our X delivered churn to for the cross-sell room XX social-emotional relevant percentage and And increase as from in supplemental schools. the strategy reduce a to social-emotional percentage using benefits analysis, a above by confirming the referrals this in XX% Supplemental one Despite by convinced Content increase XX% to of or XXXX still and Solutions Core initiatives.

of our the detailed buildup Slide XXXX we On XX, bookings. ACV

proposition, Our price growth not This to solutions driving always value retrain within increases, ability our new excel our has our schools on attract partner partner clients, schools. different. relied improve and it was our year, our

consolidated Despite XX%. the churn slightly at higher

ACV retention solution more the increase at percentage the we company’s price history sustained Core delivered at rates million. and points was year’s above XX%. main This new of X%, above in than R$XXX contracts X inflation largest Our average

Moving an X,XXX we’d on annual expected of with Isaac Isaac’s top XXXX to line almost a R$XXX is R$XXX million. revenue Slide update concluded to millions, higher [ph] like operation. partner slightly recurring at the than schools and XX, provide quick

go-to-market product unlocked the On position synergies capture we its XX, for call CAC. XXXX, in cross-sell Isaac’s and list improve our leadership priorities scale fully gains, and and enhanced its in with which leading to reduction the to investments through efficiency Slide in market, offerings include main consolidate our

call turn the please I’ll to Ari. back go now ahead. Ari,

On XX, XXXX. Thank you, for main Otero. Slide we our priorities present four

First, on to more Slide our better structure efficiently XX, our we’ll and serve continue clients. improving

to excellence integration and XXXX support the related capital on planning platforms. XXXX, with On internal strategic initiated reorganization educational under and to our of and and IT quality the teams elevate discards our efficiency sales increase corporate structure. inventory improving the our In lead performance, operational roadmap a initiatives. supply optimal between our the have our and initiatives aiming creation logistics capacity, monitoring sourcing, especially single an optimizing on with of we’ll units chain of focus cross systems brand costs, enhancing business in printing sales efficiency We center allocation and

market On After to our reputation platform, became quality increase high We’ll and creation Slide in in central cross-sell solutions this XX, our the growth current the growth of to sales piece our partner our our solution in our use of our share schools. profile. second of is to priority sustain continue of strong penetration growth. years and proprietary process, large a

relationship with other schools So our continue of leverage adoption solutions. we’ll close to partner Arco on the the to expand

Finally, solutions, evolving improving are above updating support able inflation satisfaction we invest to as our to we while continue increases and in levels. price

XXXX our XX, priority is generation. flow Slide for third boost On cash

making do our corporate continue process flow optimizing tax will structure, profile, rate. We by more operation reduce and improving our upcoming efficient our are and in We’ll leaner years. by that and improve structure, confident to we our significantly effective so our cash

also manner. course, diligent investing capital and our more efficient a on Of

questions. Thank can your you we Operator, open for for now time.

open [Operator Marquezini Itau question you. The go Please comes with for now floor is Instructions] with first Lucca The ahead. BBA. Thank questions.

for our you Good Thank evening, everyone. question. taking

provide So initiatives significant that latch Thank on this forward dilution initiatives could in be appreciate saw G&A more And and or call comment if helpful, if can the this provide expect dilution matured if would fourth, so you. youplease a you expenses, in wherewe please. going have also dilution. the a

the own. were fully or that across we okay, integrated previously That brands, centralized not

serve our we located integrating back to been more drives office. been is we not areas still office clients of and This by that can integrating, brand think some differentiation whatever were better we’ve we’ve brands level. applies that the had also our at centralizing the into and We So that holding back okay. level we what think integrating

managed XXXX. to decrease consequence, the some size a of As teams we along

in previously that in we third activities internalizing reason were mean, party a okay. second some from more general, I efficient party party suppliers and third managing hiring relies suppliers The services way and third on,

from look at when will onwards, we the when to a grow slower okay. I much think us XXXX line the this growth, So top was to G&A effect largest in XXXX, allow pace compared

think So in we reduce okay. nominal in G&A what sorry, should is G&A expect terms, I not margins, dilution – absolute to what we’ll we’ll contributing terms, see to

So that’s the expectation.

very That’s Thank clear. Roberto. you,

Lucca. you, Thank

second Santos with go ahead. comes The Marcelo JP question Morgan. Please with

Ari, evening, taking Carina. two I actually. Otero, for good Hi, Thanks question. my have

a on defer the Solutions? you Solutions. between some it’s for I understand Core And The X% initiatives. X% you stopped provided changed question, of first was us of solutions? types small. sales on how in price, one on of these other give decline How two Supplemental the information to on and between changed mentioned second Supplemental some price, of you on quite ACV this better you how churn. the Could some wanted there is efforts just know idea this ACV I does the

initiatives are these you. are on So initiatives, are you those Thank that for which what decline? this responsible changing

so Otero for Hi, you much the Marcelo, Thank here. questions.

similar and Supplemental of this the products is we had increase Supplemental first a comparing for pricing Core, the pricing we would similar when I compare Core with this this pricing, a for more both power not level say or in cycle, performance okay. rate, Supplemental, starting which by to historically saw Supplemental cycle, to we historically Core have a On one, we change did we – to when managed

okay, to reach answer premium to brand This When improvement, for XX.X% comes is this retention, own, would for as for brands, we retention I know. on of rate. the that retention your Core taking or an Core example, most we it example most we brands SAS,S-A-S So at is the you saw point pricing. as in say isstability

Supplemental, okay. in as a So mean, it was in still general, Supplemental retention for performance I are good very lower compared when know, to you rates Core,

Supplemental mostly deterioration last So the because in of year, share okay. look it that’s at combined to the why higher when the of churn, shows ACV, base you a compared of

aspect this first So the is there.

and point in retention to this is a still brands. Core the price other And also the share has second one, is which Core overall Conquista, rate compared slightly ACV lower gaining lower saw in we when cycle, Conquista

effect, So last it this be which year. was mostly okay, shows X% a mix to higher churn, driving than

But look rate most And cases stability. in we the year SAS, to last we [Indiscernible] retention saw regards Supplemental segment, okay. the increasing. actually to for to – you compared some such are when saw In communication on tax other brands were those of to, and there example as in them, tools that we yes, and other services players, offering some mostly some extent

services only customers decided to we our outside of base clients. to offer those to So base of schools, in-house our

to services that do those to base not of our belong clients sell schools. to interrupted we So

focus what business to was keep them services those to the literally it base in-house moves reduce of and to and on schools our decided okay. we complexity – clients, so stop Okay, a outside selling that So needle? decision

much. Okay. Perfect. Thank you very

Martinez The go comes with Please Stanley. next Morgan question ahead. Javier with

Yes, four have you. may. thank questions I I if

The first on is margins. one

You And math was I on are points, the prices trying range those math, to to increasing basis back XXX a envelope flat you guiding to numbers, of margins XX.X% increasing and of maths, X%. from are XX.X%. do for

So more than this is inflation.

a logically was the some less losing that of have you probably churn I are of profitable guess, Paper price year. guidance. last pressure You X%.

impact million but guidance? margins? in you to is increasing. small that least of around Have this that still conservative be the should number Isaac, Printing, leverage, R$XX you So negative in to similar one. in because hopefully improve. behind is call why No. the you or – should mentioned of So have Operating from margins year what been be at scale. flat increase That’s going improve

to here. Javier, to speak Good you. Hey, Otero

saw established in Remember year on So we we the the prices negotiations quite early we for last affected printing year, content process. effect this that on start and margins, the that Javier. that paper producing the

start So last sometime July process year. we around this

quite negotiations place those still when level during the contracts, was So high. majority of actually okay. XXXX, happened And of the in remain those XXXX for paper prices they

price We the different for with a process XXXX completely are of level, prices cycle for the in already okay, negotiating printing.

for least with when why profitability, deal to But the of see some are price not first So we’ll we gross the of I’d the, there this especially actually. see we our of year But say, that’s next margin XXXX, not margin reason at mean, you the that So still based we print we component should margin. effect increasing EBITDA a the half single are okay? look And in have at on other range. place. would contribute negotiations to half quite you’re higher advanced in still content, But right, pressure, the they higher I year. mean, I the a

is only you, Thank may the Understood. second Very clear. Otero. If Isaac. for go I

already scale. reaching So – it’s than No, more in you a to are quite or growing pretty double just fast. double go reasonable

breakeven go use when maybe is think distribution a to marketing going is not that it into this growth prices? reasonable Core what to the be is I in prices, strategy a the of reason is quite Because you already in profitable. because margin are scale you the still or have expecting strategy – subsidize you in the why to be just you’re to as or why cost to not negative do breakeven, So or guess,

you’re expect Yes, right. the able model when company year. breakeven mean, by the we reach next I of we Javier. be Thanks, a to end to Isaac,

So the expectation. that’s

this A breach terms the company the inflection is downsides, reach There the of in to the assumption. So okay, for upside, should that XXXX, in to XXXX, be profitability. end considering evolve of terms example, is potential upside speed point will scale and could at of beginning that of supposed be cross-sell.

but We pedagogical cross-sell percentage right. our assumption this product. be this incremental is the a to a cross-sell, conservative, prove products, of on are to basing with because especially growth certain we And assuming Isaac are could experience come from not pedagogical

see see we So there, could upsides could but also eventually, downside. we

XXXX, think a it’s realistic we assume to breakeven okay. cross think and I So as to it’s assume, I reasonable

fair. that’s Okay,

is okay. money make idea So the eventually, to

So to Otero, is fantastic obviously The another a have going so XXXX. on you’re bookings Supplemental. growing, they’re question

my misunderstand XX%. comment. don’t So only growing But you’re

And quite than growing Core. similar you’re on volumes Core. and price growing to more You’re less

are be happening – selling? to the cross-sell? cross complexity is the of there? shouldn’t penetration, also double why what grow So than we So lower, is you Supplemental to given having reason more expecting difficulty Core are that’s prices And the or what part

Yes. you. Sure. Thank

I your performance with think school, if XX%. overall the would we have grown at close opinion excluding I we XX% Javier, agree above to international look Supplemental

completely once think saw own. performance this impact We stronger bilingual are other we performance. company I we a sure growth performance products will managing in for – So this that

So from can to that that other think market So I would say brands, we probably performance, a from, again, mean, think school, those we’ve I benefit we school, already, more processes managing applying to exclude scale international and we’ll considering also XX% to cross-sell international be fully once are we products and growth, go mean, been okay? okay. I the think solid about performance which the when very I it’s of I strategies

XX%, years to a we to difficult will drivers, be did and our products we I learning think one it’s okay. of – in XX%, curve, right? because international school I in can but only, of of So above was growth smaller, not also is rates do the what of three, scale the better but than XXXX, think those having portfolio cross-sell much four compare So the again, ago

to we a internally, learning room something It’s a It’s improve think curve. cross-sell see processes okay. still I new.

should in of also this by Supplemental. be we’re improvement doing step rates for think but growth a there, I step source

X, the ago. why question Can the so bit? the you, happening a us on Ari, Thank long is little four December you was is there? taking offer, on to for months final have view? update Okay. offer a board What for And Otero. my So

Thank question. you your Hi, for Javier.

regarding last the I that in this intakes coming the Supplemental, we had year, from to Supplemental for question on the of new clarify XX% Just just want cross-sell.

been cross-sell XX%. as the a International improving more process, the from you So said, solutions, growth we posted Otero have as Supplemental than of we exclude and School

are schools very Core We one at our in from coming low went from use we we still products from that XX% the XX% new a have least have of but solution not Supplemental growth of also And to Arco. brands. that do penetration,

growth Supplemental higher throughout we in solutions we than years have larger expect solid Core, a on of to is course, the have a So business. a level which of

Regarding that your say, update we you second communication, to the and now. a the have on – last I market. question, it’s for we through communication that with the any did what right unfortunately, don’t gave we was written last have The update formal that’s

But we’re Board, right? for supposed from to be answer the waiting an

Yes, so. I believe

Okay.

Okay. you, Thank Ari.

Javier. you, you. Thank Thank

next The Cepeda comes Mauricio with go Credit you. Suisse. question Thank with ahead. Please

here. to – for having debts two Thank Hello. itself. the Hello, guys. questions, have you to opportunity one for the the I related put questions

understand leverage. relying the cash to operating given I of level the if But on it’s flow high – a other to kind you a you in options maybe the decrease that to So lots considerable from there detect now. if speech are level you could are that

of that Isaac delinquency even if of adverse it’s Isaac. related one problems in the second PDA a are are selection to dealt there Isaac macroeconomics the interests or rates And that to are more wallets you up. would could risk the be and be or there Thank by If related deteriorating now

the Otero for thanks It’s Cepeda, here. Hi, questions.

will this mostly for continue will think I we EBITDA the that be as okay, leverage by during said, year. assured mean, you This driven So okay? XXXX, actually we expansion,

ended times XXXX, expect XXXX times the be of X.X to end we So X at below okay? we the that

This I in still both to obligation, still relevant of contractual year, But as said, is School International As sellers the know, the a financial we under arbitration. okay? amount presentation but we notes have and this is you more continue mean, a as this coming due we as you short-term a statements obligation. book show

a okay? the only definition will International we that of should So scenario we can – based scenario beginning in next come terms to information happen and of the likely outflow, that only is will in the course, expect next year. of this will the not year, outflow most have change that on And School today, become

we’ll loans from to balance of terms sellers to sheet what we’re in the American is negative market, the with and us, or of So will what do – do, to is year, a appetite, to ability with in not replace attract us sheet Still as a we’re impact this okay? along seeing banking event year, okay, probably okay? terms conditions negative for lines probably in notes and probably replace in do those this management seeing terms balance offer appetite we’ll to institutions management, loans, financial not Despite those notes again impact so okay? add this the sellers in this of our lines banking those our impact

will we that incremental to the of – year. that be source the liquidity this of So would seek single source plan

expansion and right enrollment Aside collection between important. terms is of leverage will from In after actually the for from the March January of at completion finishing quite period come EBITDA cash the the is actually that, Isaac So so flow and Isaac mostly, schools, generation now, process okay? operating right? period the

the It’s actually of the Isaac. for cycle what result drives

the not in much interest Isaac. than performance It and at was how the of say this performance it market was macro despite to by terms collection rates So the collection NPLs point, collect in see including for very the was in deterioration the the the prior in we that than that So affecting the can good. cycle, several driven performed ability Isaac’s okay? general did better factors, or environment better we

is giving in should the for to contracts better have how of the schools, specific is renewed liquids implication year, specific the can okay? numbers and Still So is average to moment than of use business. performances and the seeing better situations, moment last again, cycle, we’re it to be, for than and the okay? in reprise business rate this some course, can of [ph] The where given all genetic the and portfolio, the the use – are much renewal performing. contracts the market contracts the I’m bring and they mean reprise Isaac next profile this to to NPLs performing different Again, negative general I point, at those any of not you the back but information

Do you like see of any the or a seeing kind potential little parents risk worst up more client worst selected, of let’s paying the could end bit adversely say the now schools with Isaac?

I put think to a bad it’s generalize to difficult school.

I school, families think at is client, XXX that the for selection very benefits from have the families this is at a you polarized business adverse one paying there. XXX, right? a of the client base have end, fact you end the the the actually So but of you base single

So risk selection mitigates adverse general, this the okay? in

at end, the proprietary on families. leverages their performance a I historical Isaac think payment lot schools, data for of for

either So if case a strategy, school okay? have pricing to at backing data is of price different or that will the decide this intelligence will the completely a level school they their So to okay? relative they bring portfolio, they that lot not

schools, information to okay? technology combine combined also the that those risk based and to price schools school because appetite their individually, Isaac the individually with Isaac lot proprietary rely the contracts to can for completely ideal for not that okay? figures collect its its on low pricing the those is So and necessary is pricing through done data they supply on historical it’s bring So a

you. Great. Thank Okay.

with question Yan Please with The you. Cesquim comes BTG next go Thank Pactual. ahead.

Two our everyone. here questions Good side. evening, on

also capital scenario and And hit similar is revenue higher our first We of by capital the concentration dynamics. The we see the regarding of this revenue is recognition that dynamics, wars these because especially had in usually QX working a especially quarter. working time, we saw because concentration.

reason But working we working other just or reason normalization wonder see one. that there the and if dynamics these capital should the the first for of if right? capital in this is saw, That’s soon, I we print the is any

clients? you that what just breakdown we with the us imagine share I the ACV historical regarding in couple was this was is if if the and levels? you the rate, probably you that should ahead gave wonder one second run the or run what on improved I seeing price here very the us a could new the guys. you, nice rate increases we for splitting, churn to compare churn And – That’s years, at churn And lot. if see okay? a improving just I healthy if space it it. last wonder normalized level are Thank continue churn if this And

questions. here. Yan, for Hey Otero Thanks the

did see or higher seeing on in DSO, more that, in the okay? okay? So we for solutions in for a the when an said to a have compared the brand So when is I recognition not Core, different okay? we’re recognition revenue profile. Supplemental QX, in a revenue quarter, okay? revenue there DSO has first the key mean we a compare by brand a different concentration But it’s they quarter, as reason Supplemental relative you Supplemental higher solutions but profile than to one, higher year, higher okay, last a revenue And recognition So increase

kicks collection okay? posted see point, and started. already better those levels we quite that well, it So should see a delinquency we with We So general off, should So normalization okay? there, before are performing is COVID. has as we at running than this in delinquency

school recovering okay? that the this in it’s the general in I processes a pandemic, several improvement during COVID that we market driving combination collection combined but implemented internal after think of also

In the range the as to normalizes, and this as actually portfolio, churn in went we that is all we I think churn added here, as see moved, whole the mix the revenue we around up normalizing between reason ACV see cycle the key combined after more So cash is Again, to churn or X% the And Supplemental the [indiscernible] of used in at X% cycle the terms look IPO, churn churn, IPO DSO we you did we solutions. also to it and and X%. recognition the provide for the a X%. out posted deterioration the an should solutions when not to a level, okay? this levels is before

the lot have And impacts mix we So a here. two components.

is a still which Core. first compared churn The one Supplemental, to higher is

should I don’t higher structurally not it is that we and think not today. it higher magnitude be than think structurally the should be at here Core. higher, It but

it room outgrew cycle. Core think brands to and to still improve higher I mature in this some compared – here, is ones, churn they and more with there when the So also

combined couple as levels higher those a posted years we a that consequence, than So the ago. churn looks

our on we So whole, reduction churn. looking efforts in almost still Supplemental with ahead, high. have churn what extremely reduce to should as brands okay? drive XX% XX% is a It’s a Supplemental churn

there room improve. to So is

And in or brands challenging retention expect with positive the close as That’s to least. previous retention all above that’s combined we COC the churn X% less bring And posted those their example, to that okay? rates of rates XX%, drive brands, them SAS levels for So Core the close to to to in to we challenge. at years mature goal.

Thank you, clear. Otero. That’s

rest no your [Operator earnings time, we fourth call. full you in further much. you and quarter queue. a the and Thank Thank have this day. very participation, Well, much At This questions for thank Arco you. nice Instructions] of have your concludes XXXX very year