ARCE - Arco Platform trades lower with late orders impacting Q2 results

Education sector technology company Arco Platform ( ARCE ) is trading ~5% lower after reporting Q2 results, impacted by late orders from schools.

The company reported Q2 non-GAAP EPS of -R$0.41 (vs. R$0.37 Y/Y) and revenue of R$412.1M, up 61% Y/Y. The revenue figures reflect higher enrollments and high level of late orders placed by schools.

"The typical high level of late orders placed by partner schools in the beginning of the year led to part of such content being delivered in early April, therefore explaining the strong revenue recognition in the quarter," CFO Roberto Otero said .

Core solutions totaled R$367.3M (+83% Y/Y), while supplemental solutions stood at R$44.8M (-20% Y/Y).

Gross margin was 67.7%, compared to 73.4% Y/Y. When excluding depreciation and amortization, cash gross margin was 75.8%, vs. 78.1% in the year-ago period.

Adjusted EBITDA was R$110.7M, +53% Y/Y. Adjusted EBITDA margin came in at 26.9%, compared to 28.2% in the prior-year quarter. FY22 adjusted EBITDA margin guidance was maintained at 36.5% to 38.5%.

The company's cash and cash equivalents plus financial investments position as of Jun. 30 was R$753.9M.

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