By Brazil Stock Guide – YDUQS Participações SA (B3: YDUQ3) swung to a R$1.5 million loss in the second quarter as declining online enrollment and higher financial expenses weighed on earnings. Growth at its premium schools and hybrid programs nevertheless lifted revenue and adjusted EBITDA, according to the company’s earnings release published Thursday.
The Brazilian education group had recorded net income of R$3.1 million a year earlier. On an adjusted basis, profit dropped 54% to R$14 million, while earnings per share fell to R$0.06 from R$0.12.
Revenue increased 1% to R$1.39 billion. Adjusted earnings before interest, taxes, depreciation and amortization advanced 1.6% to R$400.2 million, with the margin edging up to 28.7% from 28.6%.
The slower adoption of YDUQS’s DIS tuition-payment program reduced revenue by R$23 million from a year earlier. The company estimated the change lowered adjusted EBITDA by R$18 million. Without that effect, the measure would have risen 6.2%.
Shift from online to hybrid courses
Regulatory changes and a migration toward hybrid learning continued to reshape the student mix. The online undergraduate population contracted 18% to 443,000, while new enrollment in the segment almost halved to 36,200.
Revenue from digital courses at Estácio and Wyden declined 15% to R$343.6 million. Rules introduced in September 2025 restricted new fully online enrollment in education, health and engineering degrees, prompting YDUQS to expand its semi-on-campus offering.
That format enrolled 165,300 students at the end of June, an increase of 67%. Quarterly revenue from hybrid programs climbed 38% to R$165.7 million.
The expansion was not enough to prevent combined revenue at Estácio and Wyden from decreasing 2.2% to R$945.3 million. Their adjusted EBITDA fell 2.8% to R$214.8 million.
Idomed and Ibmec lead expansion
Premium education remained the main growth engine. Idomed, the group’s medical-school business, increased revenue by 7.4% to R$340.1 million after its student population expanded 12%.
The brand added more than 2,000 students in the first intake cycle of 2026, its highest number to date. Adjusted EBITDA rose 6.2% to R$151.6 million, with a 44.6% margin.
Ibmec delivered the fastest revenue growth among the company’s brands, rising 12.5% to R$106.7 million. Its undergraduate population grew 13%, benefiting from demand at campuses in São Paulo, Brasília and Rio de Janeiro.
Adjusted EBITDA at the business school increased 12% to R$33.8 million. YDUQS plans to open Ibmec’s seventh campus in Fortaleza in the first half of 2027, marking the brand’s entry into Brazil’s Northeast.
Collections improve as finance costs rise
The provision for doubtful accounts dropped 16%, helped by lower exposure to DIS, stronger collection efforts and higher student-renewal rates. The expense represented 11.1% of revenue, down from 13.4% a year earlier.
Net receivables decreased 15% to R$1.21 billion, while the average collection period shortened by 15 days to 78 days.
Those improvements were offset by pressure below the operating line. The net financial result deteriorated 9.8% to a negative R$206.4 million as expenses related to private financing, discounts and contingency adjustments increased.
Management also attributed part of the first-half earnings decline to elevated interest rates. YDUQS said lower DIS revenue and the Selic benchmark rate had a combined negative effect on adjusted profit.
Cash generation and debt
Operating cash flow reached R$298.1 million, down 1.3%, while free cash flow slipped 1.7% to R$193 million. Cash flow to shareholders turned negative by R$75.4 million, reflecting the timing of interest payments during the quarter.
YDUQS closed June with R$721.9 million in cash and net debt of R$2.91 billion. Net debt declined 1.9% from the previous year, and leverage improved to 1.55 times EBITDA from 1.66 times.
The company distributed R$150 million in dividends and spent R$100 million on share repurchases during the first half. Including payments since 2024, capital returned to investors totaled R$780 million, equivalent to 37% of YDUQS’s market value as of July 31.
Management reaffirmed the guidance announced in May and retained its target of cutting leverage to 1 time EBITDA in 2027. It expects the revenue comparison related to DIS to become more favorable in the second half, alongside further operating gains and possible relief from lower interest rates.
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