Arco Platform : Q1 2021 Earnings Presentation

1Q21 Earnings Presentation

May 2021

Disclaimer

This presentation contains forward-looking statements as pertains to Arco Platform Limited (the "Company") within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. All statements other than statements of historical fact could be deemed forward looking, including risks and uncertainties related to statements about our competition; our ability to attract, upsell and retain customers; our ability to increase the price of our solutions; our ability to expand our sales and marketing capabilities; general market, political, economic, and business conditions, and our financial targets such as revenue, share count and IFRS and non-IFRS financial measures including gross margin, operating margin, net income (loss) per diluted share, and free cash flow.

We undertake no obligation to update any forward-looking statements made in this presentation to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.

The achievement or success of the matters covered by such forward-looking statements involves known and unknown risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management's beliefs and assumptions only as of the date such statements are made. Further information on these and other factors that could affect our financial results is included in filings we make with the Securities and Exchange Commission from time to time, including the section titled "Risk Factors" in our most recent Forms 20-F,6-K and our Rule 424(b) prospectus. These documents are available on the SEC Filings section of the Investor Relations section of our website at: https://investor.arcoplatform.com/.

We prepared this presentation solely for informational purposes. The information in this presentation does not constitute or form part of, and should not be construed as, an offer or invitation to subscribe for, underwrite or otherwise acquire, any of our securities or securities of our subsidiaries or affiliates, nor should it or any part of it form the basis of, or be relied on in connection with any contract to purchase or subscribe for any of our securities or any of our subsidiaries or affiliates nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever.

We have included in this presentation our Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Net Income Margin, Free Cash Flow and Adjusted Free Cash Flow, which are non-GAAP financial measures, together with their reconciliations, for the periods indicated. We understand that, although Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Net Income Margin, Free Cash Flow and Adjusted Free Cash Flow are used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations as reported under IFRS. Additionally, our calculations of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Net Income Margin, Free Cash Flow and Adjusted Free Cash Flow may be different from the calculation used by other companies, including our competitors in the education services industry, and therefore, our measures may not be comparable to those of other companies.

2

Key messages

HEALTHY OPERATING RESULTS

DESPITE THE TURBULENT

ENVIRONMENT

ARCO IS PAVING THE WAY TO FURTHER ACCELERATE GROWTH

WE CONTINUE TO EVOLVE IN OUR

ESG AGENDA

• Net revenue was 27% higher in 1Q21 versus 1Q20, representing a strong 28.5% recognition of the 2021 ACV
• Adj. EBITDA margin was 35.7% and we are maintaining the 2021 adjusted EBITDA margin guidance (35.5% - 37.5%)
• FCF should increase along the year due to collection of receivables, decline in CAPEX and reduction in the effective tax rate
• Second wave of COVID-19 potentially leading to a revenue recognition for 2021 slightly lower versus ACV
• Commercial cycle for 2022 school year continues to show encouraging results
• Strengthening our Core segment with top-of-mind brands
• Successfully launching cross-sell initiatives
• Leveraging our superior value proposition
• Entering the huge and promising B2C market
• Materiality assessment points to greater relevance of themes related to impact on education and team as an asset, in line with business strategy

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Solid operating results, with healthy revenue recognition in the quarter

In R$, mm

Net Revenues	Cost of Sales	Gross Profit
28.5% of 2021 ACV recognized		Cash gross margin¹ of 78.7%
in 1Q21 vs 27.2% in 1Q20		(+160 bps YoY)

+27%

331.7

261.6 67.1

40.9

	264.6						+30%
220.7						87.1
	67.2
			15.3
				8.0
					71.9
		59.2
1Q20	1Q21		1Q20	1Q21

Core solutions Supplemental solutions Gross margin

+26%

244.5

194.4 51.8

32.9

73.7% 74.3%

161.4 192.7

1Q20 1Q21

4

1) Excluding depreciation and amortization.

Adjusted EBITDA margin level confirms resilience of the business profitability

In R$, mm

Selling and G&A expenses¹

Selling expenses

G&A expenses

+22%

162.3

Adjusted EBITDA²

Adj. EBITDA

Adj. EBITDA Margin

+22%

Adjusted Net Income³

Adj. Net Income

Adj. Net Margin

+9%

133.4

68.1

63.6

96.9

118.4

21.5%

18.4%

69.8 94.2

1Q20 1Q21

37.1%35.7%

1Q20 1Q21

56.2	61.1
1Q20	1Q21

1) Excluding depreciation and amortization. 2) EBITDA adjusted for share-based compensation plan, M&A expenses, non-recurring expenses and effects related to COVID-19 pandemic. Detailed explanation on our Financial Statements for the period ended March 31st, 2021.
3) Net income adjusted for share-based compensation plan, amortization of intangible assets from business combinations, changes in fair value of derivative instruments, changes in accounts payable to selling shareholders, share of loss of equity-accounted investees, changes in
5
current and deferred tax recognized in statements of income applied to all adjustments to net income, foreign exchange gains/loss on cash and cash equivalents, interest expenses, M&A expenses, non-recurring expenses and effects related to COVID-19 pandemic. Detailed
explanation on our Financial Statements for the period ended March 31st, 2021.