Arco Signs Definitive Agreement to Acquire isaac - Seite 2

David Peixoto, CEO and co-founder of isaac

With the Transaction, Arco further consolidates its leading position in the private education segment to become the world’s largest operating system for schools. The Transaction (i) significantly increases Arco’s total addressable market with the addition of a new vertical with high growth potential and strong unit economics, (ii) accelerates isaac’s growth through cross-sell opportunities in Arco’s large school base, (iii) increases Arco’s talent density and strengthens important capabilities such as technology, product, and data science that will complement and foster Arco’s innovative culture.​

A supporting presentation containing additional information on isaac’s business and the strategic rationale underlying the Transaction can be found on Arco’s website at https://investor.arcoplatform.com/events-presentations/presentations/.

About INCO Limited

isaac was founded in 2020 by David Peixoto and Ricardo Sales, as a vertical platform to address schools’ overarching needs with software and financial solutions, having started by tackling working capital management issues.

isaac has delivered rapid growth through a differentiated go-to-market strategy and proprietary technology that provides an end-to-end solution for schools and parents. In less than two years, isaac has grown its annual recurring revenue (ARR) by 10x and now serves over 850 schools and 280,000 students all over Brazil. isaac demonstrates strong retention rates and sustainable unit economics thanks to its compelling value proposition in an underserved market.

Aside from increasing market share with its initial offering, the “revenue guarantee”, in Brazil’s K-12 private market, isaac has multiple long-term growth opportunities as it expands its portfolio with new software and financial products.

Transaction Details

Under the terms of the Purchase Agreement, Arco Platform Limited has agreed to acquire 75.1% of the share capital of isaac through an exchange of Arco shares. Prior to the Transaction, Arco held 24.9% of the share capital of isaac.

isaac’s shareholders will receive approximately 10.4 million shares of Arco, which will equal approximately 15.8% of issued and outstanding equity interests of Arco as of immediately after the closing of the Transaction. The Transaction’s equity value to annual recurring revenue (EV/ARR) multiple as of August was 2.7x².

Of the 10,436,201 shares that will be delivered to isaac shareholders, 1,047,142 will be Arco treasury shares, and 9,389,059 will be newly issued Arco shares. The Transaction will result in a dilution of approximately 14.2% for current Arco shareholders.