CSED3

Cruzeiro do Sul Educacional, traded on B3 under the ticker CSED3, is one of the largest private education groups in Brazil, with a predominant focus on higher education and a relevant presence in K-12 education. The group’s origins date back to 1965, with the founding of Colégio Cruzeiro do Sul in the eastern zone of the city of São Paulo, created by a group of young teachers in borrowed classrooms at the back of a church, initially focused on preparatory courses for the then highly competitive entrance exam for middle school in the public system. The company was formally incorporated in 1970 by the same founders and, in 1972, began operating in higher education with the creation of Faculdade Cruzeiro do Sul. Over the following decades, the group gradually expanded its activities, adding elementary and early childhood education, until it was accredited as Universidade Cruzeiro do Sul in 1993 by the Ministry of Education, which consolidated its position in Brazil’s private university segment.

From the 1990s onward, Cruzeiro do Sul Educacional systematically incorporated distance learning into its business model. In 1997, it began research in distance education (EAD) and the use of information technologies in teaching, creating in 2000 the Distance Education Center and, in 2006, its first platform dedicated to this modality. In 2001, it professionalized academic management by structuring the Office of the Rector and Pro-Rectory, a move that preceded a cycle of growth via acquisitions that began in 2007. In this process, the group incorporated traditional regional institutions such as Centro Universitário Módulo, on the northern coast of São Paulo state, and Centro Universitário do Distrito Federal (UDF) in Brasília, expanding its geographic reach and diversifying its on-campus higher education student base.

Inorganic expansion continued with the acquisition of well-regarded institutions in different regions of the country. In 2012, the company took control of Universidade Cidade de São Paulo (UNICID), with a strong presence in healthcare courses, and obtained reaccreditation as a university and authorization to offer distance undergraduate programs. In 2013, it acquired ACEF S.A., the sponsor of Universidade de Franca (UNIFRAN) and Colégio Alto Padrão, strengthening its footprint in the interior of São Paulo state. In 2015, it expanded operations in Salto and Itu with Sociedade de Educação Nossa Senhora do Patrocínio, sponsor of CEUNSP and local schools. From 2018 onward, the group accelerated its expansion into other regions, entering the South through Centro Universitário da Serra Gaúcha (FSG), CESUCA and other institutions in Rio Grande do Sul, and the Northeast with the acquisition of Centro Universitário de João Pessoa (UNIPÊ), reinforcing the network’s multiregional profile. In 2020, new acquisitions, such as Centro Universitário Braz Cubas in Mogi das Cruzes and Universidade Positivo in Paraná, further broadened the portfolio of brands and campuses.

Cruzeiro do Sul Educacional’s business model is centered on providing educational services as its single operating segment, generating revenue mainly through tuition fees in higher and basic education, both on-campus and distance. As of December 31, 2024, the company reported net revenue of about R$ 2.6 billion and a base of 526,000 students, distributed among K-12, undergraduate, lato sensu and stricto sensu graduate programs, as well as technical and extension courses, served at 28 on-campus locations and 1,672 distance education hubs. Its internal structure is organized into three education verticals – On-Campus, Digital and Health – but for reporting purposes, management is treated as a single educational services business, with higher education predominating in revenue and earnings generation.

In on-campus higher education, the group operates 14 institutions, including universities and university centers, with a broad portfolio in exact and technological sciences, humanities and social sciences, biological sciences, health, environmental and agricultural sciences. Undergraduate degrees include bachelor’s, teaching degrees (licenciaturas) and technological programs, with hundreds of active courses across all units. At the graduate level, the company offers lato sensu (specialization) and stricto sensu (master’s and doctoral) programs, with twenty graduate programs, including doctoral and postdoctoral courses, recommended by CAPES. The company also sells non-degree and vocational short courses aimed at upskilling and developing specific competencies, which complement its regular undergraduate and graduate offerings. These educational products make up an integrated learning ecosystem, with different course levels and formats tailored to diverse student profiles.

Distance education has become one of Cruzeiro do Sul Educacional’s key pillars, mainly through the Cruzeiro do Sul Virtual brand. In 2024, approximately 340,000 students were enrolled in 262 distance undergraduate courses, representing about 65% of the total student base, with hubs distributed across all Brazilian states and the Federal District. The company uses multiple digital delivery methodologies, including fully online programs, models with live classes and hybrid formats that combine online activities with on-site meetings. Its academic infrastructure uses virtual learning environments, virtual libraries and labs, web conferencing tools and media platforms for lecture streaming, along with subject tutoring and career mentoring throughout the program, highlighting a technology-intensive education operation, while the company is not characterized as a software firm.

Beyond higher education, Cruzeiro do Sul Educacional maintains a presence in K-12 education through four schools: Colégio Cruzeiro do Sul in São Paulo; Colégio Alto Padrão in Franca; Colégio CEUNSP Itu in Itu; and Colégio CEUNSP Salto in Salto, all in the state of São Paulo. These units offer early childhood, elementary and high school education, using structured teaching systems and sharing infrastructure with the group’s higher education institutions on some campuses, such as labs, clinics and sports complexes. In addition, the company also operates in vocational technical secondary education through BRAZTEC in Mogi das Cruzes, accredited by the São Paulo State Board of Education to offer mostly distance technical programs. The student base is highly fragmented, and no individual client accounts for more than 10% of net revenue, underscoring the retail-like nature of the education business.

From a regulatory standpoint, Cruzeiro do Sul Educacional’s operations are mainly subject to Ministry of Education regulations, which govern accreditation, reaccreditation and course authorization for both on-campus and distance learning. The regulatory change in 2017, which allowed modality-specific accreditation and gave institutions autonomy to create distance-learning hubs through their own acts, was a key factor in the expansion of the company’s hub network throughout the country. In addition to education regulation, the company is subject to the Anti-Corruption Law, the General Data Protection Law and other applicable legal frameworks, and has implemented a compliance program with specific policies, a code of conduct and a whistleblower channel to monitor compliance risks. In governance, the presence of significant institutional investors in the controlling block and the trading of CSED3 shares on B3 reinforce the corporate nature of management and adherence to governance practices typical of publicly traded companies in Brazil’s education sector.

From a sector perspective, Cruzeiro do Sul Educacional is positioned in the consumer discretionary segment, focused on private education, and exposed to household income, student credit conditions and public financing policies. The company pursues a national, multi-brand strategy, combining organic growth – through new course launches, seat expansion, creation of new hubs and development of new digital offerings – with inorganic growth via acquisitions of recognized regional institutions. CSED3 shares on B3 thus represent an interest in a business of services that is intensive in human capital and educational technology, whose revenue generation is directly tied to the number of paying students, average tuition ticket, dropout rate and the ability to maintain quality indicators in line with MEC requirements and with its competitive positioning in Brazil’s private higher education market.