Vasta Platform : Earnings Release

São Paulo, November 13, 2020 - Vasta Platform Limited (NASDAQ: VSTA) - "Vasta" or the "Company," announces today its financial and operating results for the third quarter of 2020 (3Q20) ended September 30, 2020. Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).

HIGHLIGHTS

With the completion of the 2020 sales cycle (4Q19 to 3Q20), Vasta reported a subscription revenue of R$692 million, which represents 18% increase in comparison to the subscription revenue for the 2019 sales cycle (R$584 million), or 21% higher than the ACV 2019 (R$572 million), and reinforces the resilience of our business by showing a solid result even during a period of strong socioeconomic instability caused by the pandemic.

The subscription revenue for the commercial year of 2020 was only 3% lower than the ACV 2020 of R$716 million, impacted by the lower volume of orders received by reason of the increase in dropout mainly from pre-K and kindergarten students in partner schools, which also reinforces the predictability of our subscription revenue.

For 2021, Vasta has already obtained, in terms of ACV, R$835 million, which represents an increase of 21% in relation to the subscription revenues of the 2020 sales cycle, ended now, in 3Q20. From this increase, to date, 80% relate to contracts of traditional learning systems and complementary solutions and 20% regarding to contracts of learning system PAR. However, it should be stressed that the sales campaign will last until late December/early January, which should ensure an even higher increase over the coming months.

The offer of a robust and engaging digital platform, as is the case with Plurall, was vital for the company to ensure the stability of its operation and growth for the following year. Since the beginning of the pandemic, Plurall has already reported more than 8 million accumulated live classes, with an average of 72 thousand classes transmitted live per day since August. Currently, Plurall accounts for nearly 50% of the entire educational web traffic of private Brazilian educational platforms, proving to be not only a tool with high engagement and satisfaction rates but also an extremely important tool for the schools.

As regards financial indicators, Vasta reported a net revenue of R$141.4 million in 3Q20 and R$654.1 million in 9M20, which represents a 4.1% and 4.3% increase, respectively. Even with a different seasonality in 2020, with a recognition of revenue more concentrated at the beginning of the sales cycle (4Q19 and 1Q20), the Company managed to have a solid performance this quarter.

Adjusted EBITDA of R$12.1 million was 39% higher than the one verified in 3Q19, due to revenue increase.

Year-to-date, Vasta's adjusted EBITDA was R$138 million (19% above the previous year), with a 21.0% margin (2.7 p.p. expansion).

With the IPO resources, Vasta started to rely on net cash of R$1,025 million, an amount which will be important to accelerate the Company's inorganic growth projects.

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MESSAGE FROM MANAGEMENT

With the end of the 2020 sales cycle, Vasta managed to prove its resilience and the predictability of its subscription revenue by reporting an impact of only 3% in relation to the ACV 20 engaged before the effects of the pandemic on the educational sector and the world as a whole. This was only possible thanks to the strong relationship we have with our partners and the success of our digital platform, Plurall, which has become an essential and transforming foundation for schools to maintain their academic activities, fostering engagement and satisfaction among all stakeholders involved: students, teachers, academic coordinators, school owners, and family members. The development of this ecosystem benefits everyone, and we have seen that, as the months go by, the level of interaction within the platform has been higher and higher, resulting in more engaging classes and a more dynamic and efficient learning process. The pedagogical process itself has experienced a revolution throughout this year, and we managed to offer a system that allowed us not only to help the school in this transition from the analogic to the virtual environment but also enabled the development of new competencies that would not be possible without a fully integrated digital platform. In addition to offering all activities and content related to our learning systems, Plurall allows the sharing of additional content, videos, games, interactive exercises, in addition to the entire network of available online tutors and a series of indicators that allow the follow-up of the academic development of each student, each class and each school, as well as the comparison of this performance in an ecosystem including more than four thousand integrated schools.

All this has generated an ever-growing satisfaction of our partner schools, and what we see right now is one of the highest contract renewal rates ever reported in our history. But Plurall has not been working only as a retention and engagement platform but also as an important hub attracting new schools, and we noticed, during the sales campaign, that many students were helpless throughout this year and could not follow the academic activities planned at the beginning of the academic year.

The combination of a low churn and very healthy sales campaign considering the current circumstances ensures a solid growth prospect for next year. However, a third important variable of this equation must also be mentioned, which consists of the cross-sell opportunities we have in our platform. It should be borne in mind that, when we built the 2020 sales cycle, there were only two options of extracurricular activities, namely, the language solution (English Stars) and the social and emotional solution (O líder em mim [The leader in me]), against the total of six that we currently have. In addition to this, for the sales cycle of 2021, we launched Plurall Store, a Marketplace made to sell generally international third-party digital solutions, in a revenue share model exclusively for the Brazilian market. Fully digital solutions, financially affordable, and in line with the existing demand for this type of service in the Brazilian market. Therefore, there is no question that the complementary solutions will gain more and more relevance in the coming sales cycles, and this is why we are striving to aggregate and bring in even more options for our partners.

In summary, even with all difficulties faced throughout this difficult year, we managed to stand out in the educational market by positioning ourselves as a platform containing the best academic solutions and a digital interface that has made a difference in this virtual environment in which we are living. Therefore, we believe that the growth expected for next year reflects the aforementioned competitive advantages and could be even greater if it were not for the economic scenario currently experienced. In any event, this resilience shown even in a difficult environment makes us confident in the sustainability of our business and the potential that we can still capture over the coming years.

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For 2021, we have already closed to date a total of contracts that accounts for an ACV of R$835 million, which represents a 21% increase in comparison with that which was reported in the 2020 sales cycle. However, it should be mentioned that the process will only end in late December/early January, and we are confident that it is possible to deliver an even more promising result.

Last, but not least, we have projects for expansion through acquisitions. With the resources raised in the IPO, Vasta is committed to allocating 50% of the total captured to accelerate its growth projects and increase the offer of solutions in its platform. This commitment was assumed with all our shareholders, and we are confident that it is possible to meet it even before we expected, as the acquisitions pipeline is hot, and important Core Education and Complementary Solutions targets are in the process of being closed.

In other words, the prospects with the current solutions portfolio are already very promising; the resources raised in the IPO will serve as a catalyst to further accelerate our growth and ensure a sustainable cross-sales rhythm in our ecosystem. This project is only starting, and its legacy will generate an extraordinary result for those who believed in our history from the start.

COVID-19 UPDATE

As discussed in more detail in our September 30, 2020 condensed consolidated financial statements, the Company set up a Crisis Committee and approved some measures composed by actions that first of all safeguarded the physical and mental health of its employees and then preserved operational and financial capacity to face this period. We highlight the main initiatives carried out by Company: (i) Preserve employees' health and safety by implementing measures such as work from home policy, temporary closure of our distribution centers re-opening with reduced operations and the adoption of health and safety measures recommended by government authorities; (ii) Ensure educational content and services delivery through online platforms; (iii) Improve the financial health identifying required measures to ensure adequate liquidity and cash position; (iv) Implement short term restructuring measures required to improve financial health, seeking to preserve jobs and the organization long term plan, including but not limited to temporary reduction in wages and working hours; (v) Plan and execute organizational changes with mid- term impact for the post-COVID world, if required; (vi) Strategic Plan for opportunities generated by the crisis; (vii) Philanthropic actions that contributes to mitigate the impacts of COVID-19 on our Company segment; and (viii) Provide on-line campaigns to promote our products to potential new customers.

Related to sales and services provided to our customers, even though municipality and state-wide governments had taken some measures that could hard hit our business, for example school's lockdown and social distancing, our customers kept their educational services through our virtual platforms. As a result, we have not had interruption in the sales and services levels contracted by our customers.

Despite of the continuity of educational services, the process of social lockdown is pervasive and it is increasing the level of uncertainties over our business cycle and logistics process, thus, it is likely that we will identify some impacts on revenue and profitability through the quarters forthcoming. This characteristic is based on macroeconomic forecasting

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which have indicated unfavorable social and economic indicators to Brazil in the 2020's year-end and during the next year.

REVENUE RECOGNITION AND SEASONALITY

As we release our results for the third quarter of 2020, it is important to highlight the revenue recognition and seasonality of our business.

Our main deliveries of printed and digital materials to our customers occur in the last quarter of each year (typically in November and December), and in the first quarter of each subsequent year (typically in February and March), and revenue is recognized when the customers obtain control over the materials. In addition, the printed and digital materials we provide in the fourth quarter are used by our customers in the following school year and, therefore, our fourth quarter results reflect the growth in the number of our students from one school year to the next, leading to higher revenue in general in our fourth quarter compared with the preceding quarters in each year. Consequently, in aggregate, the seasonality of our revenues generally produces higher revenues in the first and fourth quarters of our fiscal year. In this sense, the numbers for the second quarter and third quarter are usually less relevant. In addition, we generally bill our customers during the first half of each school year (which starts in January), which generally results in a higher cash position in the first half of each year compared to the second half.

A significant part of our expenses is also seasonal. Due to the nature of our business cycle, we need significant working capital, typically in September or October of each year, in order to cover costs related to production and inventory accumulation, selling and marketing expenses, and delivery of our teaching materials at the end of each year in preparation for the beginning of each school year. As a result, these operating expenses are generally incurred between September and December of each year.

Purchases through our Livro Fácil e-commerce platform are also very intense during the back-to-school period, between November, when school enrollment takes place and families plan to anticipate the purchase of products and services, and February of the following year, when classes are about to start. Thus, e-commerce revenue is mainly concentrated in the first and fourth quarters of the year.

KEY BUSINESS METRICS

ACV Bookings: ACV Bookings is a non-accounting managerial metric and represents our partner schools' commitment to pay for our solutions offerings. We believe it is a meaningful indicator of demand for our solutions. In particular, we believe ACV Bookings is a helpful metric because it is designed to show amounts that we expect to be recognized as revenue from subscription services for the 12-month period between October 1 of one fiscal year through September 30 of the following fiscal year. We define ACV Bookings as the revenue we would expect to recognize from a partner school in each school year, based on the number of students who have contracted our services, or "enrolled students," that will access our content at such partner school in such school year. We calculate ACV Bookings by multiplying the

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number of enrolled students at each school with the average ticket per student per year; the related number of enrolled students and average ticket per student per year are each calculated in accordance with the terms of each contract with the related school. Although our contracts with our schools are typically for 4-year terms, we record one year of revenue under such contracts as ACV Bookings. ACV Bookings are calculated based on the sum of actual contracts signed during the sales period and assumes the historical rates of returned goods from customers for the preceding 24-month period. Since the actual rates of returned goods from sales during the period may be different from the historical average rates and the actual volume of merchandise ordered by our customers may be different from the contracted amount, the actual revenue recognized during each period of a sales cycle may be different from the ACV Bookings for the respective sales cycle. Our reported ACV Bookings are subject to risks associated with, among other things, economic conditions and the markets in which we operate, including risks that our contracts may be canceled or adjusted (including as a result of the COVID-19 pandemic).

As mentioned above, Vasta has already captured, to date, a total of contracts that accounts for an ACV of R$835 million for 2021, which represents a 21% increase in comparison with that which was reported in the 2020 sales cycle. However, it should be mentioned that the sales campaign will last until late December/early January, which should ensure even higher growth for the end of the cycle.

OPERATING PERFORMANCE

Student Base - Subscription Models

Student Base	3Q20		3Q19		Chg.%
Partner Schools (Core Content)	4,167	3,400	22.6%
Partner Schools (Complementary Content)	636	417	52.5%
Students (Core Content)	1,311,147	1,185,799	10.6%
Students (Complementary Content)	213,058	133,583	59.5%

During the academic year, schools only adjust their orders according to the effective number of students until no more than the second quarter, and therefore, there is no change in relation to the operating performance in the second half of the year. This situation could have been different by reason of the impact of the pandemic on the sector as a whole, but the effort to offer an efficient and engaging digital platform, added to the Company's capacity to support all academic year activities remotely, ultimately reinforced the resilience of the business and strengthened even further the relationship with partner schools.

Since 2020 was a very abnormal year, we decided to maintain the number of students in Q3, as usually made, although there were drop-outs at our partners schools during the pandemic crises, as can be seen by the 3% reduction in revenues subscription vs. ACV 2020.

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