Vitru Limited (NASDAQ:VTRU) Q3 2022 Earnings Conference Call November 10, 2022 4:30 PM ET
Company Participants
Carlos Freitas – Chief Financial Officer
Conference Call Participants
Lucca Marquezini – Itau BBA
Mirela Oliveira – Bank of America
Vitor Tomita – Goldman Sachs
Lucas Nagano – Morgan Stanley
Mauricio Cepeda – Credit Suisse
Operator
Good evening, ladies and gentlemen, and welcome to Vitru’s Third Quarter 2022 Earnings Conference Call. All participants are in a listen-only mode now. Later on, we will conduct the question-and-answer session and instructions will follow at that time. As a reminder, this call is being recorded and will be available on Vitru’s IR website.
Now, I would like to introduce the host for today’s conference call, Mr. Carlos Freitas, Vitru’s CFO. You may begin.
Carlos Freitas
Thank you, operator. Good evening, everyone, and thanks for joining us again. It’s a real pleasure to be here with you all for the release of our third quarter 2022 numbers. Here with me, I have Pedro Graca and William Matos, our two co-CEOs; Maria Carolina Gonçalves, the Head of Investor Relations; and [indiscernible] from our Investor Relations team. A slide presentation, as you know, will be part of today’s webcast, which is also available on our IR website at investors.vitru.com.br. So, I trust you all have the presentation in front of you. And before I begin, I’d like to make note that as detailed in Page 2 of the presentation, safe harbor is in effect for the call.
So, now I’d like to invite you all to go to Page 4 of this presentation. Here, we show some important highlights of the last months. First one is, as you remember, we announced an investment agreement with Crescera Capital for an amount of R$300 million, fully primary capital increase, which, by the way, was closed today. Today was the closing of the primary capital increase of Crescera into Vitru for a total consideration of roughly $58 million to around R$300 million, which was closed today. So as of today, Crescera is already a shareholder of Vitru.
So, another reference shareholder in our capital table. We also announced a few weeks ago that we were going to launch a Rights Offering that we indeed launched a few weeks ago in October 24, allowing our current shareholders to subscribe for new Vitru common shares at the same price – the USD price – paid by Crescera – so $16.02. So, this process is still ongoing. The deadline for shareholders to accept this and subscribe for the new shares is next week, 17, closing of the transaction will be in the following week on 23. So, I do expect an additional capital increase between R$100 million and R$150 million.
So, now in November, we are going to receive around R$400 million to R$450 million of new capital that is going to be used fully or basically fully for the repayment of debt, aligned to our plan when we financed the business combination with UniCesumar.
On the right part of the slide, we also had another very solid intake cycle for 2022.2, the second semester of this year. We grew around 30.8% – 31% combined between Uniasselvi and UniCesumar. It was around 23% for Uniasselvi and around 50% for UniCesumar, and I’m going to give you more details on that a bit later. And also, we had this quarter in September, the acquisition of Rede Enem, which is a leading educational platform, focused on secondary education students. So our niche clients, especially those on preparing for the Enem exam. So it’s a nice, I’d say, distribution channel for us as well to generate leads and to be closer to our future clients.
On Page 5, I have here the main financial indicators for this quarter. Both the organic numbers – I mean, without the consolidation of Unicesumar – to your comparisons, and also on a consolidated basis, meaning with the contribution of the Unicesumar results since the closing of the business combination on May 20 – I mean, with four months and a half of Unicesumar. So, throughout this presentation and in the release material as a whole, we are going to provide information on an organic basis and on a consolidated basis to be as transparent as possible, so that you can make your appropriate analysis.
So here on Page 5, we highlighted the increase first in net revenue in our core business, which is Digital Education Undergraduate segment, which was up 124% this quarter compared to the third quarter of last year, while the consolidated net revenue was up 170%. It’s even higher than the net revenue growth in Digital Education Undergraduate segment because of the, as you know, the strong business especially of medicine within Unicesumar. We also grew our adjusted EBITDA by 271% this quarter.
So, we reached a very strong growth, not only on an organic basis in which we grew by 28%. But with Unicesumar, we grew 207% and our adjusted EBITDA margin is now at 35.8% in the third quarter of this year. Just as a reminder, on a pro forma basis, when you look at last year numbers, we had around 34.5% of EBITDA margin. It was around 29% for Vitru ex- Unicesumar and 39% for Unicesumar. So the pro forma average was 34.5% for a full year of last year. Now this quarter, we had 35.8%.
So, we are already seeing the first effects of our synergies in function of our integration. As we announced a few months ago, we had some levers for synergies arising from the integration. The first one – the most important one – is personnel costs, and part of our increase in margins now part of it is already coming from these synergies. Adjusted cash flow from operations increased even more, 290% in the third quarter with a cash flow conversion of 110%, and the adjusted net income was up 386% this quarter. So it is a clear, always accretive transaction the business combination with Unicesumar.
On Page 6, I’m going to go quite quickly here on the slides, but I always like to highlight what we are delivering and what we had before the IPO. So as you know, we had four growth avenues, four themes for growth – the ramp-up of current hubs, the opening of new hubs, the increase in cost offering, and inorganic growth, and we are delivering the four growth avenues. So, now we have around 745,000 students, including the ones from Unicesumar. So, on an organic basis, we grew by around 100,000 students between the second quarter and the third quarter of 2022 within Uniasselvi.
We went from 600 hubs to now more than 2,100 hubs, being more or less 1,000 in Uniasselvi and 1,100 in Unicesumar, and we have now a strong presence in the Southeast with more than 700 hubs in the Southeast. We start to offer nursing last year, as you know. We are going to start offering psychology in short-term once it is finally approved. And with Unicesumar, we are now the number one player in digital education in Brazil with the two brands, Uniasselvi and Unicesumar.
On Page 7, just to give us some more details about some of these growth avenues. Here, we show the growth in the maturation curve of our hubs. This is in itself the most important driver for growth in revenues. It is the maturation of the hubs that we have already in place. So here, we showed the same old curve in comparison within each brand with differentiation from one year to the other in each of the years for hubs that we have. So here, we have a 41% maturation index, meaning that we could grow our student base in 1.5 times to reach 100% with the same hub we have today. So, it is important growth with limited execution risk.
On Page 8, the breakdown, the distribution of our digital education undergraduate students throughout the country. So, important growth in all regions, especially, as I said, in the Southeast. Southeast now have 182,000 students. That is already the second most important region in the country with a 340% growth year-on-year. On the right part of the slide, the breakdown of the geographic presence of hubs with, again, the Southeast now being the most important one with 700 hubs, meaning 200% increase from what we had within Uniasselvi one year ago.
On Page 9, the growth in the course offering. It’s also important to show here that recently, we increased the number of allowed seats in nursing. So this is what – here on this slide, we show that now within Unicesumar and Uniasselvi, we are able to offer even more seats and increased intake to have as a possibility in the past. But this is an important growth avenue for us. And in the future, hopefully, soon, we’ll be able to offer law, psychology and in the short-term even dental care.
On Page 10, this is a number of indicators and I’d say, KPIs that we monitor as a way to show and to measure the satisfaction of our clients. In terms of technology, focus, in terms of satisfaction with our support for them. So we – within Unicesumar and Uniasselvi, we have the two top brands for digital education in Brazil when we see, for example, the grades for our app on the left part of the slide, or the Reclame Aqui grades on the right part of the slide. So this is to show the why – why we are growing – in the competition? Why we are having a better performance? The intrinsic, the underlying reasons for that is, our focus on our clients, our focus on technology, our attention to detail within the operations of Vitru as a whole.
On Page 11, just to finish this part, again, the huge geographic complementarity of our hubs throughout Brazil. As you know, the nice fit between Uniasselvi and Unicesumar. And we have today an important synergy lever, which is the penetration – the faster penetration of hubs in cities in which only one brand is present. So in the cities, we have already a partner that knows the local reality, then understands the local market. So we have today around 750 small to medium cities, which had only one of our two brands.
So the financials on Page 12, here we show that we have reached an increase of 130% in our student base in digital education undergrad students year-on-year organically, it was around 20% within Uniasselvi. So now we have 672,000 students in digital education undergrad segment. And as I said, a strong growth in intake this year, 23% for Uniasselvi, 51% for Unicesumar. As a reminder, Unicesumar grew 55% in the first half of this year. Why was that for a number of reasons? One of that is that Unicesumar used to grow in steps, installments and expansion of hubs differently from Uniasselvi, which usually has been opening a number of hubs, a given number of 150 more-or-less on average per year. Unicesumar opened a lot of hubs in 2018. And now again, in 2021, beginning of 2022, open again, another huge round of new hubs. So, they had a huge increase in intake in the first half of this year. And now we have, again, this performance with 50% increase in intake this year.
On the right part, bottom right of the slide, we have the average ticket for this segment for our core business, which is digital education undergraduation. For Uniasselvi, we are increasing by 7%. So the same trend that we have seen in the last years in the rest of the semester, we have a unique hybrid model – here, the differentiation aspect is the academic model.
So we have been able to more-or-less increase tickets aligned to inflation, sometimes slightly higher, but a slightly lower but more-or-less over time, in line with inflation. For Unicesumar, there was a decrease of 7% year-on-year, and that was basically because of the huge intake this year.
As you remember, in the first half of this year, the decrease for Unicesumar was 2%. Now it is 7% because of this second semester of a huge increase, the first and now the second semester of this year. So this is basically a matter of mix. As you know, the average ticket of new students is lower than the average ticket of a senior person in the fourth year of graduation, for example, has a higher ticket than the one that has just joined the company. And why is that? Because we – through all the course, we increase tickets above inflation.
So now, as of now, a person in the eighth semester of Unicesumar or Uniasselvi had a higher ticket than the one who has just joined our courses. So this is a matter of mix. And going forward, we have a number of best practice that we are already started to implement in both brands. For Uniasselvi, it is the pricing management as a whole, which is going to be important for Unicesumar going forward. So over the middle term, we expect to have, I’d say, a nice pro forma here as well in Unicesumar.
On Page 13, net revenue, gross profit and adjusted EBITDA. So again, a 170% increase in net revenue, 190% increase in gross profit and 271% increase in adjusted EBITDA. So our margin went from 26% last year to now 35.8%. On an organic basis, this went from 26% to 27%. So there was already an organic growth within Uniasselvi as we have been saying in the past through the maturation of hub, through the gains of scale, et cetera. And now with Unicesumar, huge jump in margin to 35.8% now.
So, on Page 14 and 15, we have here the numbers – the contribution of each segment. I’m not going to go through details out in the slides. I’m going to jump now to Page 16 to show the breakdown and the contribution of Unicesumar. So here, you can see that in this quarter, more than half of our net revenues is coming from Unicesumar, and within Unicesumar, you can see here the breakdown as well, so it’s more-or-less 55% or 60% in digital education, being 57% digital education undergraduate and 3% continuing education, mostly digital. So 60% in digital and 40% in on-campus, being 25% medical and 15% on-campus (ex-medical). So those are the big numbers for the breakdown of the revenues of Unicesumar.
On Page 17, we have the breakdown or some more details about our core business. And here on the right, the breakdown of our current student base. So here, it’s important to highlight that already today, we have more or less 25% of health courses within Uniasselvi, which is higher than what we have within Unicesumar, only 21%. So there are some courses that are just now starting to be offered within Unicesumar in health – so going forward, we expect as well the weight of premium courses, which have a higher ticket to gain weight within the overall portfolio of Unicesumar. And with that, to sustain the average ticket.
Page 18, medical business growing within Unicesumar, reaching now R$55 million in the third quarter. So it’s around 15% of the overall net revenue of the company with a premium course with average ticket of more than R$10,000 per month and still in maturation. There are some seats, both in Maringá and in Corumbá that are still maturing.
On Page 19, the other two segments, on-campus (ex-medical) and continuing education. So on-campus (ex-medical) huge increase with the consolidation of Unicesumar, given the weight and the size of this business within Unicesumar, but with a slight decline for Uniasselvi from 9.8% to 9.1%. This is aligned to our vision that going forward, the market trend is the continued increase in the relevancy of digital education in the country. You all have seen the latest census numbers that were released last week that basically confirmed what we all knew that the digital education was growing a lot last year.
So, it grew slightly more than 20% last year already coming from a very high base, which was 2020, while the on-campus segment lost steam. So, we do believe that going forward, this trend will continue. It is intrinsic. It is a secular trend of digitalization of the whole economy and the digitalization of preferences of customers throughout Brazil.
On the right part of the slide, continuing education. Our continuing education business in the last quarter’s has been negatively impacted by the reduction in the average duration of some quarters. This is a market trend, as I explained in the past, which impacted us and all other players. But anyway, it’s important to highlight that most of the shift is over. So when you see the organic numbers for Uniasselvi, net revenues this quarter are already higher than what we had last in the third quarter of last year.
So, on Page 20, just to show here to numbers. As I said, the margin – organic margin of Vitru went from 26% to 27.7% this quarter and now 35.8% with Unicesumar. Regarding costs and expenses on Page 22 – cost of service on a quarter and nine-month basis, there was a gain here as well, in margin on an organic basis, clearly, given the gains of scale of Uniasselvi. The quarter margin gross margin went down a little bit in the nine months, because of the weight of the on-campus business of Unicesumar. This is more than compensated by the G&A and by reduction in PDA and sale expenses.
So G&A here on the right, you can see that we went down from 8.4% of net revenue to 5.7% in the quarter, and from 7.8% to 6.4% in the nine months of this year with 4.5 months only of Unicesumar. So this is to show that we have a quite lean structure. This is part of our G&A to maintain the agile structure and to be – to have a very, let’s say, lean mentality.
On Page 23, sale expenses, as I said, going down as well from 16.3% to 13.9% in the quarter with Unicesumar already. On an organic basis, there are also a slightly lower CAC this year, down more or less 3% this year within Uniasselvi. So, this is also an important measure to support margins over time. It is the contribution of Unicesumar to our sale expenses. The same value for PDA.
On the right, PDA, when you see the organic numbers of Uniasselvi is slightly lower in the nine months of this year, slightly higher in the third quarter of this year. But when we see Unicesumar contribution, this is down from 16% to 10.4% on a consolidated basis this quarter. So, going down a lot because of the way that Unicesumar manages collection over time and bad debt. But this is also – as I said, for Uniasselvi and Unicesumar, there are some best practices to be exchanged. Unicesumar is going to benefit from the price and management expertise of Uniasselvi and Uniasselvi is going to benefit from the bad debt and, let’s say, dropout management of Unicesumar.
Finally, on Page 24, net income and cash flow from operations. So, an important growth in adjusted net income. So, the adjusted net margin going up in the quarter from 9% to 16%, and so this is just to show that even with the debt that we raised for the business combination, overall, it is already accretive transaction. You can see these numbers in the quarter. And so going forward, we expect in the following quarters an important growth in the net earnings of Vitru as a whole.
And finally, on the right part of the slide, adjusted cash flow from operations also with a huge, huge increase in the quarter of 290%, R$147 million in one quarter of cash flow from operations. And it is important to highlight the business cash flow from operations, which is before CapEx, of course. But when you look at for CapEx, our cost CapEx this quarter amounted to only 6.5% of net revenue down from 11.6% in the third quarter of last year. So even when CapEx into account in the cash flow, there is an important gain of scale here with Unicesumar.
So, that was it from my side. Now I’d like to open for questions.
Question-and-Answer Session
Operator
Thank you. The floor is now open for questions. [Operator Instructions] Our first question comes from Lucca Marquezini with Itau BBA. Please go ahead.
Lucca Marquezini
Good evening, everyone, and thank you for taking our question. We’ve got a couple of questions regarding average tickets. So first, Uniasselvi’s average ticket increased 7% on the digital education undergraduate segment. So can you please comment on the competitive landscape and what we should expect in terms of ticket dynamics going forward, especially considering the deterioration in the macroeconomic scenario? And then secondly, we observed a decline in Unicesumar ‘s average ticket in the quarter. Can you please provide more detail on the strategies that the company will implement in order to increase the ticket going forward? Thank you.
Carlos Freitas
Lucca, thanks for your questions. So the dynamics of the market and then what we’re going to do about it. The market is competitive, as we all know, it was competitive and is still competitive today. It is not today more competitive than what it was in the past. It is a very, I’d say, competitive markets. There are some players more resonant than others, but it is a market that is, I’d say, consolidating within fewer names, fewer and stronger names. So the trend is that smaller players are being wiped out while the growth is being concentrated within five or six main. So, this is a trend that we have today, we had last year, and expect as well to have next year.
So, when we look for the ticket dynamics of Uniasselvi, the big reason for our, I’d say, differentiation in ticket is that we have a very granular approach to ticket. We have a lot of inputs from our local partners and we have systems here in the house – incentives as well – to manage tickets appropriately. So, this is stuff that we have been doing for a few years in Uniasselvi that we – and with that, we have been able to increase tickets over time. So the first reaction is because of our model – which is also true – but our model was already differentiated in the past as it is today.
The reason why we have been able over time as well to improve tickets is that we have methods and skills and knowledge in-house for that, which we are going to apply for Unicesumar. We have already started to change now for the current intake cycle that just has started now in November, we are making a few changes in the pricing methodology, and the price incentives, and the granularity of pricing for Unicesumar as a whole, that we expect to have a positive outcome next year for Unicesumar.
Lucca Marquezini
That’s very clear, Carlos. Thank you.
Carlos Freitas
Thank you, Lucca.
Operator
Our next question comes from Mirela Oliveira with Bank of America. Please go ahead.
Mirela Oliveira
Hi Carlos, thank you for taking my question. So, there are two questions here from my side. So, this quarter, we saw an increase in dropout ratio for both Unicesumar and Uniasselvi, I’m just trying to understand here if this is an effect of the new regions you guys are entering or if it is a new trend we should start seeing from now on? And the second one, if you guys could comment a little bit on the performance of these new regions you guys are entering, this has been a different price strategy if we should expect any impact from that on tickets going forward?
Carlos Freitas
Can you please repeat your first question, Mirela. I could hardly hear you on the first question.
Mirela Oliveira
Yes. Sure. Can you hear me better now?
Carlos Freitas
Yes.
Mirela Oliveira
Okay. So, the first question is about the dropout ratio. We saw that both for Unicesumar and Uniasselvi, dropout ratio had an increase. So I’m just trying to understand here if this is an effect of the new regions? Or if this is a new trend we should start seeing from now on?
Carlos Freitas
Okay. So, starting with your first question. Indeed, the dropout increased in both brands, but for different reasons. The first – I mean for Unicesumar, it is clearly a matter of mix. So as you know, most of the drop out is concentrated within newcomers. So we had a 55% increase in intake for Unicesumar in the first half of the year.
So because most of the dropout is with newcomers, this is translated in an overall higher average dropout ratio for Unicesumar. Now, in the third quarter when they have to renew their enrollment now in the middle of the year – so, this is for Unicesumar. For Uniasselvi, there is a slight increase in dropout, not a big number, but just a very slight increase in drop out, which it is basically due to the macroeconomic environment. So it is – that’s why – now in the third quarter of this year, our PDA number for Uniasselvi is slightly higher than what we had in the third quarter of last year. But for the full year, it is slightly better. But it is true that for what we saw is a slight increase in the dropout ratio of Uniasselvi.
The price dynamics for the new regions are as we expand – I mean, we don’t have an overall, I’d say, trend here because there are different expansions in different regions. So for Unicesumar it is increasing a lot outside of Southeast, while Uniasselvi decrease a lot in the Southeast, we always have a more aggressive pricing when we enter a new region, especially, not even city, but new region. And then once we – this is the penalty to pay the price to pay to have your first step into a new region. And so after two or three semesters, when we are already more known in the region and once we have our recommendations working in our favor and word of mouth working in our favor, and then we started to slightly increase prices over time.
We have done this in a lot of regions. We have done this, for example, in Minas Gerais in the past when we entered there in 2018. So, now it’s normal price for Minas Gerais. And so the new regions that we are ending we were slightly more aggressive than the average prices that we have because it is the price to pay to enter a new region. It is part of the game, and it’s also part of the game that we – over time, we – in this region for once we have more mass, more scale and more brand recognition in these regions, we price normally.
Mirela Oliveira
Okay. Perfect. Thank you, Carlos.
Carlos Freitas
Thank you, Mirela.
Operator
Our next question comes from Vitor Tomita with Goldman Sachs. Please go ahead.
Vitor Tomita
Good evening, all, and thanks for taking our questions. Two questions from our side. The first one is related to the – a bit of a follow-up on some of the previous questions, which is just how much of an effect has the current macroeconomic scenario or any macroeconomic pressures actually been having on pricing, dropout rates and other metrics. Are you seeing these macroeconomic trends, any macroeconomic pressure become relevant at all? And are you seeing any different trends for students so far in the fourth quarter? Or is macro more of a bit of an issue, but not a main driver for anything that you are seeing?
And the second question would be a bit of a longer-term one. If there is – assuming that there is any announcement of an expansion in FIES or any new government programs targeting specifically on-campus education. How could that change our factor strategy for the on-campus segment, if it affects it at all? Thank you.
Carlos Freitas
Hi, Vitor. Thanks for your questions. I mean the macro, coming back to the question of Mirela about dropout ratios. When we saw the dropout ratio of Uniasselvi for example, and here, we have the [indiscernible] have in our spreadsheet that we have included in our website a few – a couple of hours ago. Our retention rate of Uniasselvi, which is always much higher in the second and in the fourth quarter and lower in the first and in the third quarter because of the renewal of the enrollment.
So, in the third quarter of 2022, our retention rate is down 0.3%. 0.3% comparing the third quarter of 2021 to the third quarter of 2022. So, I think that, currently, the macro situation, with high interest rates, high inflation, et cetera, is not usual. And even in this scenario, the retention rate of Uniasselvi – just to compare apple to apples because the one of Unicesumar is not comparable because we have much, much higher weight of newcomers. But when we look at Uniasselvi which has more or less the same performance what had last year, it went down 0.3 points. So macro, of course, it is important, but we have been able to surf these waves and to perform nicely.
Of course, if the macro continues to improve, it’s going to be good for the whole sector for the whole economy and of course, for Vitru, which brings me to the second question about FIES. I mean we have no clue about whether there will be a new version of FIES, if this is going to be for digital location students or one for on-campus, et cetera. What we do believe is that now digital education is much more, I’d say, present and much more base case solutions than it was in the past when FIES was created.
So, if there is a new source of public financing for education, we do believe here in the company that it will be for the whole sector as a whole because it is now most of the students, they are enrolled in digital education portals. So, digital education is the way the – to maximize penetration of higher education in Brazil going forward. So, if the government wants to foster this penetration with FIES, for example, in our vision, it makes sense to include the whole sector on-campus and digital.
And the consequences of FIES, for us, we see this as positive because what we saw when FIES was, I’d say, changed in the last years, we saw an increase in project financing, we saw reduction in prices as a whole. So if there is a new version of FIES for the whole sector, there will be, in my vision, more sustainability for practice as a whole in the sector for prices for the on-campus and for digital as a consequence. Because today, as you know, there are an overall price pressure for the whole sector as a whole, slightly different in our case. But for a second whole, there is a price pressure that with FIES could, I would say, be lighter than without FIES.
Vitor Tomita
Very clear. Thank you very much.
Carlos Freitas
Thank you, Vitor.
Operator
Our next question comes from Lucas Nagano with Morgan Stanley. Please go ahead.
Lucas Nagano
Good evening, I have two questions on our side. The first one is related to Slide 11. You showed the number of cities with only one or two brands. And my question is if you were able to start opening hubs in cities with only one brand? And how was the reception from the current partners? The second question is related to Unicesumar intake. There was a deceleration this quarter to numbers a little bit behind the industry levels, and could you comment – and from what I understand, you haven’t changed the pricing strategy as of the third quarter yet. So could you comment on what could have impacted this metric?
Carlos Freitas
Thanks, Lucas. So, on Page 11, indeed, we’ve shown the number of cities with only one brand. And we have – we are already opening hubs in cities that have a partner for a level of Unicesumar that is now opening or preparing the opening of hubs of Uniasselvi. It is already occurring. So part of our synergies – we have the faster acceleration, the faster opening, sorry, of new hubs opening, especially in this types of cities. So this is already happening.
So we are opening hubs in the cities, but we are also opening hubs in smaller cities in which none of the brands are present. But, you’re right, it is now one of the most important levers that we have for expansion – is to have the same partner, which today offer only one brand to now offer the second brand in a different location, in a different store, if I may call the hub a store, but already knowing the local market and understanding the dynamics of the local community.
For the intake of Unicesumar, you’re right, we didn’t – the changes in the pricing, this is starting now in November. So the pricing that was followed for the second semester of Unicesumar was the same one that was already starting when we closed the view. So in May, when we closed the business combination, the second intake cycle was already starting at summer. And because of anti-gun-jumping provisions, we were not discussing, I’d say, commercial issues between Uniasselvi and Unicesumar before the closing of the deal.
So going forward, there will be some changes in the pricing, but not what we see now in the second semester of this year. So the performance of the intake of Unicesumar, the most important driver was, as I said, the huge increase in the number of hubs that we had in Unicesumar now compared to what we had one year ago.
Lucas Nagano
Perfect. Thank you.
Carlos Freitas
Thank you, Lucas.
Operator
[Operator Instructions] Our next question comes from Mauricio Cepeda, Credit Suisse, via webcast.
Mauricio Cepeda
Thank you for disclosing Unicesumar data stand-alone. What were the main reasons for the decline in tickets and retention rates year-over-year in DE undergrad there?
Carlos Freitas
Hi, Mauricio. Those questions were the ones that I just answered. The reason for decline in tickets and retention rate, it is basically the huge intake. So, the average ticket is a matter of the weight of newcomers and seniors. So, now we have a huge increase in the weight of newcomers, new students within the whole student base of Unicesumar, and newcomers have lower tickets than seniors. And most of the dropout is concentrated within new students. So, that’s the main reason for the reduction in prices and in the retention rate.
So, going forward, for prices, as I said, we are starting to work on the repricing, using the methodology and the skills of Uniasselvi, and for retention, the retention itself of Unicesumar is better than the retention itself of Uniasselvi. So, when you look for the previous year’s numbers, we can see that. So, going forward, the mix of students would be also an important driver for this overall weaker average calculation.
Operator
Thank you. [Operator Instructions] This concludes today’s question-and-answer session. I would like to invite Mr. Carlos Freitas to proceed with his closing remarks. Please go ahead, sir.
Carlos Freitas
So, once again, thank you all for your interest in Vitru. And now I’d like to invite you all for our first Vitru Day. We are organizing our first Vitru Day. It will take place in Maringá next year in January. It will be on the 19 of January in Maringá. More details to come, so for save the date for our first Vitru Day. Thanks a lot, and good evening.
Operator
That does conclude Vitru’s conference call. Thank you very much for your participation, and have a great evening.
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