14August2020
Investor &Analyst
Briefing
Fullyearresultsto
June2020
RebekahO'Flaherty- CEO | DimitriAroney- CFO
Our Agenda
Overview Outlook
Q&A |
FY20 Financial | Appendices |
Results |
Full Year 2020 Investor & Analyst Briefing 14 August 2020
Overview
Full Year 2020 Investor & Analyst Briefing 14 August 2020
FY20 Overview
ARR - royaltyadjusted1,3
$50.0M ↑ 1% onpcp
Licences2,3
4.7M ↑ 3% onpcp
StatutoryRevenue
$55.1M ↑ 1% onpcp
UnderlyingEBITDA
$14.6M ↓ 18% onpcp
Licences
5.1 | -10% | +2% | 4.7 |
4.6 |
0.9
0.9 | 0.9 |
1.5 | 1.4 |
1.4 | |
2.72.32.4
NetDollar ChurnPercentage3
15% | 2%-ptsimprovementonpcp | Jun-18 | Jun-19 | Jun-20 | ||||
APAC | EMEA | Americas |
Cash
$27.1M ↑ 5% onpcp
pcp - prior comparison period
- Royalty Adjusted Annual Recurring Revenue (ARR - royalty adjusted), excludes any value from the ME MOE deal announced on 23 June 2020 which will begin in FY21.
- Licences excludes 200,000 licences relating to the ME MOE deal announced on 23 June 2020 which begin in FY21.
3 Refer to Appendices for definitions | Full Year 2020 Investor & Analyst Briefing 14 August 2020 | 4 |
Full Year 2020 Investor & Analyst Briefing 14 August 2020 |
4
Strategy update
Full Year 2020 Investor & Analyst Briefing 14 August 2020
2020-2022 Accelerateprofitablegrowth
▪
▪
Attheend ofFY19 wecompleted a3-yearlongorganisationalrestructure, includingtacklingtechnicaldebtand investing inscalablesalesand marketingsystems.Wenow haveastablecostbasepositioninguswelltoenjoyoperatingleverageas weacceleratesalesgrowth.
Our 20:22 AccelerateGrowth strategyannounced inAugust2019 isunchanged howeverwehavemoderated ourgrowth expectationfortheAmericasduetofundinguncertaintyintheUSAasaresultofCOVID-19.
Full Year 2020 Investor & Analyst Briefing 14 August 2020 | 6 |
2020-2022 AccelerateProfitableGrowth
Plan(Year 1)
- Secured aMOE MiddleEastcontractvalued at$10MUSD recognised inFY21 and builtanEnterpriseFunnel forFY21 (MATS,District,Ministryand CorporateSocialResponsibilityandSponsorship).
- SignificantrefreshofMathleticsactivities(30K newactivities), TeacherUXandnewinteractiveModern LearningEnvironmentwhichsupported new businessbillingsinFY20.
- Strengthened our7-10 Mathleticsexperiencereadyforincreased marketshare.
- LaunchedMathleticsSpanish(May2020).
- LaunchedRW Spelling(November2019).
- CommencescopingofRW WritingourB2C productportfolioforlaunch inearlyCY21.
- ChallengingconditionsintheUSAasdistrictandschoolbudgetsimpactedbyCOVID-19.
- Licencerevenueup inFY20 vsFY19.
- MathleticsSpanishwilldrivegrowthinbothLatinAmericaand selectUSAstates.
- PartnershipwithleadingassessmentproviderwillunlocknewcustomersforMathletics.
- Continued tobuilddigitalautomated customerjourneystoimproveCEX and costto serve.
- Continued toimprovetheB2C acquisitionand retentioncustomerjourney.
- Addressedrootcausetoservicecallvolumes.
- Retentionimproved inAPAC andEMEA.
- NetDollarChurnPercentageimprovedby2% points.
Full Year 2020 Investor & Analyst Briefing 14 August 2020 7
FY20 Financial
results
Full Year 2020 Investor & Analyst Briefing 14 August 2020
FY20 ResultsSummary
- Overall performance of the company has been relatively resilient during the COVID-19 pandemic. Our people and services have not been impacted to date and we have experienced an increase demand for our products, albeit with regional market dynamics.
- Licence revenue was up 1% to $51.4M, with Americas up 11% and EMEA up 1%. As flagged at our announcement on 23 June 2020 the agreement with a Ministry of Education from the Middle East will only start contributing to revenue from FY21.
- Other revenue increased 12% due to an increase in Copyright Revenue offset by a reduction in other income due to the impact of AASB16 Leases on sub- lease income.
- ARR-royaltyadjusted, grew 1% from 30 June 2019. This excludes the Middle Eastern Ministry of Education deal announced on 23 June 2020, which begins in FY21.
- Expenses were up 11% due to increased average headcount in the Americas and increased product development headcount to support our growth agenda. Headcount is expected to stay reasonably level into the future and is well placed to support a higher volume of business into FY21.
- NPAT was down $4.3M to $1.6M.
AU$M | FY20 | FY19 | $+/- | %+/- | ||||||
Revenue & other income1 | 55.1 | 54.4 | 0.5 | 1% | ||||||
Licence revenue | ||||||||||
APAC | 30.4 | 31.1 | (0.7) | (2%) | ||||||
EMEA | 12.2 | 12.1 | 0.1 | 1% | ||||||
Americas | 8.8 | 7.9 | 0.9 | 11% | ||||||
Licence revenue | 51.4 | 51.1 | 0.3 | 1% | ||||||
Other revenue and other income | 3.7 | 3.3 | 0.4 | 12% | ||||||
55.1 | 54.4 | 0.7 | 1% | |||||||
Mathematics | 39.4 | 40.4 | (1.0) | (2%) | ||||||
Literacy | 12.0 | 10.7 | 1.3 | 12% | ||||||
Other Products | - | - | - | 0% | ||||||
Other | 3.7 | 3.3 | 0.4 | 12% | ||||||
55.1 | 54.4 | 0.7 | 1% | |||||||
Expenses | (40.5) | (36.7) | (3.8) | 11% | ||||||
Underlying EBITDA | 14.6 | 17.7 | (3.1) | (18%) | ||||||
Underlying EBITDA margin (%) | 26% | 32% | (6%) | |||||||
Underlying Net Profit After Tax | 1.7 | 5.9 | (4.2) | (71%) | ||||||
Corporate advisory costs (after-tax) | (0.1) | - | (0.1) | (100%) | ||||||
Net Profit After Tax | 1.6 | 5.9 | (4.3) | (73%) | ||||||
54.0 | ||||||||||
Revenue vs. FY19 under AASB16 | 55.1 | 1.1 | 2% | |||||||
Expenses vs. FY19 under AASB16 | (40.5) | (35.1) | (5.4) | 15% | ||||||
EBITDA vs. FY19 under AASB16 | 14.6 | 18.9 | (4.3) | (23%) | ||||||
ARR - royalty adjusted | ||||||||||
30-Jun-20 vs. 30-Jun-19 | 50.0 | 49.6 | 0.4 | 1% |
1 Interest revenue of $0.3m (FY19: $0.3m) is not shown in revenue and other income as per the statutory full-year report.
Full Year 2020 Investor & Analyst Briefing 14 August 2020 | 9 |
APAC
- ARR-royaltyadjusted, was up 7% and licences were up 4% reflecting increased H2-20 sales driven by improved FY20 retention, improved back to school new business and COVID-19 demand.
- Licence revenue was down 2% due to FY19 churn issues impacting H1-20 and as H2-20 performance improvements are only partially recognised as revenue in FY20.
- Copyright fee revenue was up $0.8M due to increased usage of our materials by teachers during the school year.
- Expenses were up $0.6M mainly due to increased variable costs needed to meet the COVID-19 demand during H2-20.
Focus & Outlook
- Driving new and renewal sales with our refreshed Mathletics offering and improved customer experience.
- Build on the FY20 Readiwriter-Spelling traction and expand our literacy offering with Readiwriter-Writing.
- New opportunities outside ANZ to increase licences with an aim of driving Enterprise Sales.
- We expect H1-21 revenue and EBITDA to be behind prior year due to accelerated timing of 3rd party revenue as a result of billing in Q4-20 rather than Q1-21. Over the FY21 full year we expect single digit revenue and EBITDA growth.
AU$M | FY20 | FY19 | $+/- | %+/- | |
Revenue - Maths & Literacy | 30.4 | 31.1 | (0.7) | (2%) | |
Revenue - Copyright fees, and | |||||
other | 3.4 | 2.6 | 0.8 | 31% | |
Total revenue | 33.8 | 33.7 | 0.1 | 0% | |
Expenses | (8.4) | (7.8) | (0.6) | 8% | |
EBITDA before corporate | |||||
overheads* | 25.4 | 25.9 | (0.5) | (2%) | |
EBITDA margin (%) | 75% | 77% | |||
ARPU ($) | $12.93 | $12.12 | $0.81 | 7% | |
Full Time Equivalent (number) | 58 | 56 | 2 | 4% | |
ARR - royalty adjusted | 30.7 | 28.6 | 2.1 | 7% |
Licences 000s
2,627 2,664 2,704 2,678
2,287 2,384
FY15 | FY16 | FY17 | FY18 | FY19 | FY20 |
- The change in licence numbers from FY18 to FY19 included the sunsetting of Spellodrome and IntoScience legacy products (~60k) and cessation of selling licences by volume bands and move to the sale by exact student numbers (~110k)
Full Year 2020 Investor & Analyst Briefing 14 August 2020 10
EMEA
- FY20 revenue increased 1% in AUD (6% decline in GBP). H1-20 was impacted by Brexit uncertainty; however, H2-20 showed 9% growth on H1-20.
- Readiwriter Spelling performed well contributing to the strong H2-20 performance.
- Expenses were impacted $0.4M by variable cost accrued on the agreement with the Ministry of Education from the Middle East and a $0.3M FX loss vs a $0.1M gain in FY19.
Focus & Outlook
- Delivering on the Middle Eastern Ministry of Education agreement in FY21 to improve our prospects of renewal and expansion.
- Continuing to build our enterprise sales through large Ministry of Education or Department of Education deals and Corporate Social Responsibility partnerships.
- Driving new business and retention improvements from enhanced product and customer experience.
- Leverage our installed base with our expanded and stronger product portfolio, including Readiwriter Spelling, improvements to Reading Eggs which better meet UK curriculum needs and significant content related enhancements to 7-10 Mathletics.
AU$M | FY20 | FY19 | $+/- | %+/- | |||
Revenue - Maths and Literacy | 12.2 | 12.1 | 0.1 | 1% | |||
Revenue - Other | - | - | - | NM | |||
Total revenue | 12.2 | 12.1 | 0.1 | 1% | |||
Expenses | (5.7) | (4.7) | (1.0) | 21% | |||
EBITDA | 6.5 | 7.4 | (0.9) | (12%) | |||
EBITDA margin (%) | 53% | 61% | |||||
Full Time Equivalent (number) | 48 | 52 | (4) | (8%) | |||
ARR - royalty adjusted | 10.9 | 11.3 | (0.4) | (4%) | |||
£M | FY20 | FY19 | $+/- | %+/- | |||
Revenue - Maths and Literacy | 6.3 | 6.7 | (0.4) | (6%) | |||
Total revenue | 6.3 | 6.7 | (0.4) | (6%) | |||
EBITDA | 3.2 | 3.8 | (0.6) | (16%) | |||
EBITDA margin (%) | 51% | 57% | |||||
ARPU (£) | £4.66 | £4.67 | (£0.01) | (0%) | |||
Licences 000s | 1,737 | ||||||
1,660 | 1,534 | ||||||
1,498 | 1,366^ | ||||||
1,337 |
FY15 | FY16 | FY17 | FY18 | FY19 | FY20 |
- ARR-royaltyadjusted excludes amounts from the Middle Eastern National Ministry of Education deal announced on 23 June 2020 which will begin in FY21.
^ Licence count excludes 200,000 licences which will be activated in FY21 on the
Middle Eastern National Ministry of Education deal announced on 23 June 2020.
11
Americas
- Licence revenue was up 11% (5% in USD) despite challenging conditions in USA market due to funding uncertainty caused by COVID-19.
- ARR-royaltyadjusted, has been impacted by product mix and discounts offered through multi-year retention strategies.
- Other revenue declined due to the adoption of AASB 16 Leases1.
- Expenses up as previously flagged in our 31 December 2019 Half Year Investor briefing, due to higher average sales & marketing headcount during H1-20 versus H1-19.
Focus & Outlook
- Pivot USA sales team to optimise go-to-market in post COVID-19 market conditions and be ready to execute if additional USA federal funding is made available.
- Outside of USA, we have a pipeline of enterprise opportunities that are well placed to close in H1-21.
- Growing new and renewal sales with a refreshed Mathletics; including Mathletics Spanish to drive enterprise sales into the LATAM region and expanded common-core aligned content and activities.
- We expect billings growth in H1-21 however revenue growth will come through H2-21 due to our revenue recognition policy on licence revenue.
1 Refer to appendix for further information.
AU$M | FY20 | FY19 | $+/- | %+/- |
Revenue - Maths and Literacy | 8.8 | 7.9 | 0.9 | 11% |
Revenue - Other | 0.3 | 0.7 | (0.4) | (57%) |
Total revenue | 9.1 | 8.6 | 0.5 | 6% |
Expenses | (9.5) | (8.2) | (1.3) | 16% |
EBITDA | (0.4) | 0.4 | (0.8) | (200%) |
EBITDA margin (%) | (4%) | 5% | -195% |
Full Time Equivalent (number) | 47 | 51 | (4) | (8%) | |
ARR - royalty adjusted | 8.5 | 9.7 | (1.2) | (12%) | |
US$M | FY20 | FY19 | $+/- | %+/- | |
Revenue - Maths and Literacy | 5.9 | 5.6 | 0.3 | 5% | |
Other revenue and income | 0.2 | 0.5 | (0.3) | (60%) | |
Total revenue | 6.1 | 6.1 | - | 0% | |
EBITDA | (0.3) | 0.2 | (0.5) | (250%) | |
EBITDA margin (%) | (5%) | 3% | (8%) | ||
ARPU (US$) | $6.33 | $6.25 | $0.09 | 1% | |
Licences 000s | |||||
1,026 | 1,001 | 931 | 932 | ||
903 | 849 | ||||
FY15 FY16 FY17 FY18 FY19 FY20
Full Year 2020 Investor & Analyst Briefing 14 August 2020 12
FY20 Incomestatement
- Employee expenses have increased by $3.7M due higher sales- related costs in the Americas, variable selling costs accrued on the Middle Eastern Ministry of Education deal and variable selling costs that arose from increased demand as a result of the COVID-19 pandemic.
- Headcount increase from June 2019 of 255 to 265 FTEs.
- Marketing expenses increased $0.3M across all regions to accelerate growth.
- Technology and occupancy costs have decreased by $1.2M due to $1.5M reduction to occupancy expenses from the adoption of AASB 16 Leases offset by $0.3M increase in licence fees and other system costs.
- Other expenses includes a $0.7M swing in FX losses ($0.1M FX loss in FY20 vs. $0.6M gain in FY19).
- As previously flagged in our 31 December 2019 Half Year Investor briefing, $1.0M of increased depreciation & amortisation is due to the impacts of adopting AASB 16 and $0.9M is due to the amortisation of Readiwriter Spelling which begun this year.
- There are $0.1M corporate advisory costs after tax which have been excluded from underlying EBITDA, underlying EBIT and underlying NPAT.
- The effective tax rate is impacted by the contribution of the Americas carryforward tax losses which were not recognised, and due to the full utilisation of blackhole expenditure in FY19 which arose from the 2014 IPO.
$M | FY20 | FY19 | $+/- %+/- | |
Total Revenue1 | 55.1 | 54.6 | 0.5 | 1% |
Employee expenses | (29.9) | (26.2) | (3.7) | 14% |
Marketing expenses | (2.1) | (1.8) | (0.3) | 17% |
Technology and occupancy | ||||
expenses | (4.8) | (6.0) | 1.2 | (20%) |
Other expenses | (3.7) | (2.9) | (0.8) | 28% |
Expenses | (40.5) | (36.9) | (3.6) | 10% |
Underlying EBITDA | 14.6 | 17.7 | (3.1) | (18%) |
Underlying EBITDA margin (%) | 26% | 32% | (6%) | |
Depreciation & amortisation | (11.4) | (9.1) | (2.3) | 25% |
Underlying EBIT | 3.2 | 8.6 | (5.4) | (63%) |
Underlying EBIT margin | 6% | 16% | (10%) | |
Net interest | - | 0.1 | (0.1) | (100%) |
Profit before tax | 3.2 | 8.7 | (5.5) | (63%) |
Tax benefit/(expense) | (1.5) | (2.8) | 1.3 | (46%) |
Tax rate | 47% | 32% | 15% | |
Underlying NPAT | 1.7 | 5.9 | (4.2) | (71%) |
Corporate advisory costs (after-tax) | (0.1) | - | (0.1) | (100%) |
NPAT | 1.6 | 5.9 | (4.3) | (73%) |
Underlying EPS (cents) | 4.24 | (3.03) | (71%) | |
1.21 | ||||
Statutory EPS (cents) | 1.11 | 4.24 | (3.13) | (74%) |
1 Interest revenue of $0.3m (FY19: $0.3m) is shown in Net interest here and not in total revenue as per the statutory full-year report.
Full Year 2020 Investor & Analyst Briefing 14 August 2020 13
FY20 Cash flow
- FX and other non-cash has increased due FX differences, increased share-based payments and increase in non-cash customer contracts.
- Improved working capital due to improved H2 billings in EMEA and APAC combined with supplier focused working capital management.
- We have released a significant amount of new product in FY20. Our capitalised product and system development costs are $1.6M higher than FY19 due to a higher proportion of later stage development work carried out, in line with our product release roadmap.
- Repayment of lease liabilities and receipts from sub-leases occurred as a result of adopting AASB 16 Leases. In the prior year these costs were included in EBITDA.
$M | FY20 FY19 $+/- | ||
Underlying EBITDA | 14.6 | 17.7 | (3.1) |
FX and other non-cash | (0.5) | (0.9) | 0.4 |
Change in working capital | 0.3 | (3.2) | 3.5 |
Operating free cash flow before intangibles | 14.4 | 13.6 | 0.8 |
Investment in product development & other | (10.6) | (9.0) | (1.6) |
intangibles | |||
Operating free cash flow after intangibles* | 3.8 | 4.6 | (0.8) |
Net interest paid/received | 0.0 | 0.1 | (0.1) |
Repayment of lease liabilities | (1.4) | 0.0 | (1.4) |
Receipts from sub-leases | 0.5 | 0.0 | 0.5 |
Income tax (paid)/refunded | (1.3) | (1.6) | 0.3 |
Net cash flows before investments | 1.6 | 3.1 | (1.5) |
Purchase of PP&E | (0.1) | (0.4) | 0.3 |
Net cash flows after investments | 1.5 | 2.7 | (1.2) |
Cash flow conversion1 (before capital | 99% | 77% | 22% |
expenditure) | |||
Cash flow conversion2 (after capital expenditure) | 26% | 26% | 0% |
Impact of AASB16 | |||
*Operating free cash flow after intangibles | 3.8 | 5.2 | (1.4) |
- Cash flow conversion calculated as operating free cash flow before capital expenditure as a percentage of EBITDA.
- Cash flow conversion calculated as operating free cash flow after capital expenditure as a percentage of EBITDA.
Full Year 2020 Investor & Analyst Briefing 14 August 2020 14
FY20Balancesheet
- Cash of $27.1M is up $1.3M with no bank debt.
- Lease receivable, Right-of-use assets and Lease liabilities are a result of adopting AASB 16 Leases accounting standard in FY20. Refer to appendices for further details.
- Increase in intangibles due to continued investment in product development.
- Trade and other payable increased due to the VAT deferral relief scheme implemented by the UK government in response to the COVID-19 pandemic and due to higher 3rd party royalties accrued at year end.
- No dividend declared with cash being retained to support working capital and growth opportunities.
$M | 30-Jun-20 | 30-Jun-19 |
Cash and cash equivalents | 27.1 | 25.8 |
Trade and other receivables | 11.1 | 10.8 |
Lease receivable* | 0.6 | - |
Total current assets | 38.8 | 36.6 |
Lease receivable* | 1.2 | - |
Property, plant and equipment | 0.6 | 1.0 |
Right-of-use assets* | 2.8 | - |
Deferred tax assets | 4.8 | 5.0 |
Intangibles and goodwill | 20.9 | 19.6 |
Total non-current assets | 30.3 | 25.6 |
Total assets | 69.1 | 62.2 |
Trade and other payables | 8.2 | 7.2 |
Income tax payable | 0.2 | 0.4 |
Contract liabilities | 23.9 | 24.3 |
Lease liabilities* | 1.6 | - |
Provisions | 1.7 | 1.6 |
Total current liabilities | 35.6 | 33.5 |
Provisions | 0.7 | 0.7 |
Lease liabilities* | 3.2 | - |
Contract liabilities | 3.3 | 3.4 |
Total non-current liabilities | 7.2 | 4.1 |
Total liabilities | 42.8 | 37.6 |
Net assets | 26.3 | 24.6 |
Contributed equity | 34.5 | 34.4 |
Retained earnings | (16.2) | (17.8) |
Reserves | 8 | 8.0 |
Total equity | 26.3 | 24.6 |
* Impact of AASB16 Lease accounting standard
Full Year 2020 Investor & Analyst Briefing 14 August 2020 15
Investmentinproducts&technologyassets
- We exit FY20 with a stronger product portfolio having launched Readiwriter Spelling, and enhanced Mathletics with Spanish language, 700+ Problem Solving & Reasoning activities, created 30,000+ new Understanding, Practicing and Fluency activities addressing global curricula; and improving the overall teacher and student experience.
- In FY19 we had lower proportion capitalised as it related to early stage R&D investment. In FY20 our focus returned to later stage development activities and therefore capitalisation rates were higher, and more consistent with FY18.
- From May 2020 we started using a lower cost external provider to assist in developing our products. This investment was achieved within the same cost envelope and is expected to provide additional development efficiencies into FY21.
- Software and curriculum content are amortised over 3 years.
- During FY21 we expect capex to increase to $12.0M to enable development of features which open up new markets or expand opportunities within existing markets.
Investment split by asset type and accounting treatment
$M | CAPEX | % | OPEX | % | Total | |||
Mathematics | 7.8 | 85% | 1.4 | 15% | 9.2 | |||
Literacy | 1.9 | 83% | 0.4 | 17% | 2.3 | |||
Digital Systems | 0.9 | 36% | 1.6 | 64% | 2.5 | |||
Total Cash | 10.6 | 76% | 3.4 | 24% | 14.0 | |||
Investments | ||||||||
FY19 | CAPEX | % | OPEX | % | Total | |||
AU$M | ||||||||
Mathematics | 6.3 | 72% | 2.4 | 28% | 8.7 | |||
Literacy - WIP | 1.5 | 75% | 0.5 | 25% | 2.0 | |||
Digital Systems | 1.1 | 52% | 1.0 | 48% | 2.1 | |||
Total cash | 8.9 | 70% | 3.9 | 30% | 12.8 | |||
investments | ||||||||
Product and systems balances | ||||||||
$M | Opening | Add | Amort'n | Closing | ||||
Value | Value | |||||||
Mathematics | 10.4 | 7.8 | (7.0) | 11.2 | ||||
Literacy | 2.6 | 1.9 | (1.0) | 3.5 | ||||
Digital Systems | 1.6 | 0.9 | (1.0) | 1.5 | ||||
Total Product and Systems | 14.6 | 10.6 | (9.0) | 16.2 | ||||
Development Assets | ||||||||
Full Year 2020 Investor & Analyst Briefing 14 August 2020 16
Outlook
Full Year 2020 Investor & Analyst Briefing 14 August 2020
FY21 Group Outlook
▪
▪
APAC: We expect single digit revenue and EBITDA growth for the full year.
EMEA: Significant revenue and EBITDA growth are expected in FY21 following the closure of our MOE agreement as well as other enterprise opportunity in the funnel.
- Americas: We expect continued market uncertainty in the USA due to funding challenges; however, we have a pipeline of enterprise opportunities in the Americas and expect license revenue growth for the full year.
- On a group basis we expect double digit revenue and EBIDTA growth in FY21.
- Our cost base is now set, our mix of cost is optimised and we expect to deliver revenue growth with increased operating leverage.
- We enter FY21 with strong operating leverage allowing our existing headcount to drive significant revenue growth at high margins similar to other SaaS businesses.
Full Year 2020 Investor & Analyst Briefing 14 August 2020 18
Q & A
Full Year 2020 Investor & Analyst Briefing 14 August 2020
Appendices
Full Year 2020 Investor & Analyst Briefing 14 August 2020
Revenueby geographyand product family
Revenue by Geography
A$M | Jun-15Jun-16Jun-17Jun-18 | Jun-19 | Jun-20 | |||
APAC | 30.1 | 30.8 | 31.8 | 34.4 | 33.7 | 33.8 |
EMEA | 10.3 | 12.6 | 13.0 | 13.0 | 12.1 | 12.2 |
Americas | 4.4 | 5.9 | 7.7 | 8.0 | 8.6 | 9.1 |
Total | 44.8 | 49.3 | 52.5 | 55.4 | 54.4 | 55.1 |
Revenue split by Geography | |||
Jun-19 | Jun-20 | ||
Americas | Americas | ||
16% | 17% | ||
EMEA | APAC | EMEA | APAC |
22% | |||
22% | 62% | 61% |
Revenue by Product Family | Revenue split by Product Family | ||||||||||
Jun-19 | Other* | Jun-20 | Other* | ||||||||
A$M | Jun-15Jun-16 | Jun-17 | Jun-18 | Jun-19 | Jun-20 | ||||||
Mathematics | 32.9 | 36.9 | 39.6 | 40.9 | 40.4 | 39.4 | Literacy | 6% Literacy | 7% | ||
Literacy | 7.9 | 8.9 | 9.3 | 9.8 | 10.7 | 12.0 | 20% | ||||
22% | |||||||||||
Other* | 4.0 | 3.5 | 3.6 | 4.7 | 3.3 | 3.7 | |||||
Total | 44.8 | 49.3 | 52.5 | 55.4 | 54.4 | 55.1 |
Maths | |
74% | Maths |
71% | |
* Other revenue includes STEMscopes, copyright fees, workbook sales, IntoScience and sponsorships |
Full Year 2020 Investor & Analyst Briefing 14 August 2020 21
Licencesby geographyand product family
Licences by GeographyLicences split by Geography
Jun-19 | Jun-20 | ||||||||||||||
000s | Jun-15Jun-16 | Jun-17 | Jun-18 | Jun-19 | Jun-20 | ||||||||||
APAC | 2,627 | 2,664 | 2,704 | 2,678 | 2,287 | 2,384 | Americas | Americas | |||||||
EMEA | 1,498 | 1,660 | 1,737 | 1,534 | 1,337 | 1,366 | 20% | 20% | |||||||
Americas | 903 | 1,026 | 1,001 | 849 | 931 | 932 | |||||||||
Total | 5,028 | 5,350 | 5,442 | 5,061 | 4,555 | 4,682 | APAC | APAC | |||||||
Legacy | 50% | 51% | |||||||||||||
contract* | 185 | 185 | 0 | 0 | 0 | 0 | |||||||||
IntoScience** | 99 | 117 | 85 | 15 | 0 | 0 | EMEA, | ||||||||
Total | 5,312 | 5,652 | 5,527 | 5,076 | 4,555 | 4,682 | EMEA | ||||||||
29% | |||||||||||||||
30% | |||||||||||||||
Licences by Product Family | Licences split by Product Family | ||||||||||||||
Jun-19 | Jun-20 | ||||||||||||||
000s | Jun-15 | Jun-16Jun-17 | Jun-18 | Jun-19 | Jun-20 | ||||||||||
Mathematics | 3,606 | 3,818 | 3,953 | 3,583 | 3,271 | 3,214 | Other | Other | |||||||
Literacy | 1,422 | 1,532 | 1,489 | 1,478 | 1,283 | 1,455 | 0% | ||||||||
Literacy | Literacy | 0% | |||||||||||||
Other*** | 0 | 0 | 0 | 0 | 1 | 13 | 28% | ||||||||
31% | |||||||||||||||
Total | 5,028 | 5,350 | 5,442 | 5,061 | 4,555 | 4,682 | |||||||||
Legacy | |||||||||||||||
contract* | 185 | 185 | 0 | 0 | 0 | 0 | |||||||||
IntoScience** | 99 | 117 | 85 | 15 | 0 | 0 | |||||||||
Total | 5,312 | 5,652 | 5,527 | 5,076 | 4,555 | 4,682 | Maths | ||||||||
* | Legacy Middle East contracts for Mathletics licences | Maths | |||||||||||||
72% | |||||||||||||||
** | IntoScience product not actively sold from February 2017 | 69% | |||||||||||||
*** STEMscopes sold from late June 2019 |
Full Year 2020 Investor & Analyst Briefing 14 August 2020 22
ARR Analysis | ||||||||||||||||
Group | EMEA | |||||||||||||||
A$M | H1-19 | H2-19 | FY19 | H1-20H2-20 | FY20 | A$M | H1-19 | H2-19 | FY19 H1-20H2-20 | FY20 | ||||||
Opening ARR - royalty adjusted | 49.9 | 52.0 | 49.9 | 49.6 | 49.3 | 49.6 | Opening ARR - royalty adjusted | 12.6 | 12.0 | 12.6 | 11.3 | 11.3 | 11.3 | |||
Acquired business* | 2.0 | 0.3 | 2.3 | - | - | - | Acquired business | - | - | - | - | - | - | |||
New business | 2.5 | 2.7 | 5.2 | 2.8 | 5.5 | 8.3 | New business | 0.7 | 0.7 | 1.4 | 0.7 | 1.1 | 1.8 | |||
Net upsell/downsell | 0.8 | (0.9) | (0.1) | 0.4 | (0.7) | (0.3) | Net upsell/downsell | 0.2 | - | 0.2 | (0.1) | 0.1 | - | |||
Net churn | (3.7) | (4.7) | (8.4) | (4.0) | (3.4) | (7.4) | Net churn | (1.6) | (1.6) | (3.2) | (1.0) | (1.0) | (2.0) | |||
FX impact | 0.5 | 0.2 | 0.7 | 0.5 | (0.7) | (0.2) | FX Impact | 0.1 | 0.2 | 0.3 | 0.4 | (0.6) | (0.2) | |||
Closing ARR - royalty adjusted | 52.0 | 49.6 | 49.6 | 49.3 | 50.0 | 50.0 | Closing ARR - royalty adjusted | 12.0 | 11.3 | 11.3 | 11.3 | 10.9 | 10.9 | |||
Net dollar churn % | (17%) | (17%) | (17%) | (15%) | (15%) | Net dollar churn % | (25%) | (25%) | (22%) | (18%) | (18%) | |||||
Exit ARPU (A$) | 10.25 | 10.89 | 10.89 | 10.95 | 10.68 | 10.68 | Exit ARPU (A$) | 8.25 | 8.45 | 8.45 | 8.91 | 7.98 | 7.98 | |||
APAC | Americas | |||||||||||||||
A$M | H1-19 | H2-19 | FY19 | H1-20H2-20 | FY20 | A$M | H1-19 | H2-19 | FY19 H1-20H2-20 | FY20 | ||||||
Opening ARR - royalty adjusted | 29.8 | 30.6 | 29.8 | 28.6 | 29.7 | 28.6 | Opening ARR - royalty adjusted | 7.5 | 9.2 | 7.5 | 9.7 | 8.2 | 9.7 | |||
Acquired business | - | - | - | - | - | - | Acquired business* | 2.1 | 0.2 | 2.3 | - | - | - | |||
New business | 1.1 | 1.6 | 2.7 | 1.2 | 3.8 | 5.0 | New business | 0.6 | 0.5 | 1.1 | 0.9 | 0.6 | 1.5 | |||
Net upsell/downsell | 0.2 | (1.0) | (0.8) | 0.2 | (0.9) | (0.7) | Net upsell/downsell | 0.3 | 0.1 | 0.4 | 0.2 | 0.1 | 0.3 | |||
Net churn | (0.6) | (2.7) | (3.3) | (0.3) | (1.9) | (2.2) | Net churn | (1.5) | (0.5) | (2.0) | (2.7) | (0.5) | (3.2) | |||
FX impact | 0.1 | 0.1 | 0.2 | - | - | - | FX Impact | Investor | 0.2 | 0.2 | 0.4 | 0.1 | 0.1 | 0.2 | ||
August | ||||||||||||||||
Closing ARR - royalty adjusted | 30.6 | 28.6 | 28.6 | 29.7 | 30.7 | 30.7 | Closing ARR - royalty adjusted | 9.2 | 9.7 | 9.7 | 8.2 | 8.5 | 8.5 | |||
Net dollar churn % | (11%) | (11%) | (10%) | (8%) | (8%) | Net dollar churn % | (27%) | (27%) | (35%) | (33%) | (33%) | |||||
Exit ARPU (A$) | 11.23 | 12.51 | 12.51 | 12.49 | 12.88 | 12.88 | Exit ARPU (A$) | 10.53 | 10.42 | 10.42 | 9.68 | 9.12 | 9.12 |
* In FY19, AMER acquired $2.3M upon gaining the Mathseeds distribution rights. Value has been estimated based on 3rd party information.
Full Year 2020 Investor & Analyst Briefing 14 August 2020 23
StatutoryEBITDA
Reconciliation of Segment EBITDA to Statutory EBITDA per note 4 of the FY2020 financial statements*
$M | FY20 | FY19 | Mvmt | Growth |
APAC Underlying EBITDA | 25.4 | 25.9 | (0.5) | (2%) |
Less : Corporate Costs and Development | (16.9) | (16.0) | (0.9) | 6% |
Add : Intersegment Royalties & Charges | 6.2 | 6.9 | (0.7) | (10%) |
Statutory EBITDA* | 14.7 | 16.8 | (2.1) | (13%) |
EMEA Underlying EBITDA | 6.5 | 7.4 | (0.9) | (12%) |
Less : Intersegment Royalties & Charges | (3.8) | (4.2) | 0.4 | (10%) |
Statutory EBITDA | 2.7 | 3.2 | (0.5) | (16%) |
Americas Underlying EBITDA | (0.4) | 0.4 | (0.8) | (200%) |
Less : Intersegment Royalties & Charges | (2.4) | (2.7) | 0.3 | (11%) |
Statutory EBITDA | (2.8) | (2.3) | (0.5) | 22% |
Group Underlying EBITDA | 14.6 | 17.7 | (3.1) | (18%) |
*Statutory EBITDA as disclosure in Note 4 of Financial Report as at 30 June 2020.
Full Year 2020 Investor & Analyst Briefing 14 August 2020 24
Impact ofAASB16 Leases
FY19 income statement, notionally adjusted for the FY20 impacts of adopting AASB16 Leases
AASB16 | Pro | |||
FY19 | Leases | forma | ||
A$M | Actuals | impact * | FY19 | Change |
Total Revenue | 54.4 | (0.6) | 53.8 | (1%) |
Employee expenses | (26.2) | - | (26.2) | - |
Marketing expenses | (1.8) | - | (1.8) | - |
Technology and occupancy expenses | (6.0) | 1.6 | (4.4) | (27%) |
Other expenses | (2.7) | - | (2.7) | - |
Expenses | (36.7) | 1.6 | (35.1) | (4%) |
EBITDA | 17.7 | 1.0 | 18.7 | 6% |
EBITDA margin (%) | 33% | 35% | ||
Depreciation & amortisation | (9.1) | (1.0) | (10.1) | 11% |
EBIT | 8.6 | - | 8.6 | - |
EBIT margin | 16% | 16% | ||
Net interest | 0.1 | (0.1) | - | (100%) |
Profit before tax | 8.7 | (0.1) | 8.6 | (1%) |
Tax Benefit/(Expense) | (2.8) | - | (2.8) | - |
Tax rate | 32% | 33% | ||
NPAT | 5.9 | (0.1) | 5.8 | (2%) |
- The above income statement shows the impact of adopting AASB16 Leases on the FY19 results, based on leases in existence as at 30 June 2019. Sub-lease income would decrease $0.6M, lease expense would decrease $1.6M, depreciation would increase $1.0M and net interest expense would increase $0.1M.
Full Year 2020 Investor & Analyst Briefing 14 August 2020 25
Definitions
Term | Definition |
Annual Recuring Revenue - Royalty Adjusted (ARR - | ARR - royalty adjusted is the annualised customer contract value of all active licence contracts in |
effect at a particular date, adjusted for the annualised value of royalties payable to third parties on | |
Royalty Adjusted) | |
that contract. | |
Licences | Licences reported reflect the number of indivdiual students using 3P Learning products. It excludes |
any teacher or administrator users. | |
Net churn represents the ARR - royalty adjusted value of licences which were not renewed by a | |
Net Churn | customer at the end of a subscription period, offset by the value of recovered subscriptions |
previously churned. | |
Net Dollar Churn Percentage | Net dollar churn percentage is calculated as a proportion of the opening ARR - royalty adjusted |
value in a rolling 12-month period. | |
Licence revenue includes all statutory revenue recorded on the sale of online education products. | |
Licence Revenue | Specifically it includes first party products recognised as "Licence fees" and 3rd party products |
recognised as "Net commission revenue" in the statutory financial statements. | |
Average Revenue per User (ARPU) | ARPU represents the rolling 12-month Licence Revenue divided by the average licences. Average |
licences are calculated as (opening licences + closing licences) / 2 | |
Exit Average Revenue per User (Exit ARPU) | Exit ARPU represents the closing ARR - royalty adjusted divided by the closing number of licences. |
Full Year 2020 Investor & Analyst Briefing 14 August 2020 26
For further information, analysts, investors and other interested parties should contact:
Rebekah O'Flaherty | Dimitri Aroney |
Chief Executive Officer | Chief Financial Officer |
rebekah.oflaherty@3plearning.com | dimitri.aroney@3plearning.com |
The release of this announcement has been authorised by the Board of 3P Learning Limited
Full Year 2020 Investor & Analyst Briefing 14 August 2020 27
ImportantNoticeand Disclaimer
Thematerialinthispresentationisasummaryof3P LearningLimited's('3P') activitiesand resultsasatthetimeofpreparation,14 August2020.
No representation,expressorimplied,ismadeastothefairness,accuracy, completenessorcorrectnessofinformationcontained inthispresentation, includingtheaccuracy, likelihood ofachievementorreasonablenessofanyforecasts, prospects, returnsorstatementsinrelationtofuturematterscontainedin thispresentation('forward-lookingstatements'). Such forward-lookingstatementsarebytheirnaturenotbased onhistoricalfactsand aresubjectto significantuncertaintiesandcontingenciesandarebased onanumberofestimatesandassumptionsthataresubjecttochange(and inmanycasesareoutside thecontrolof3P and itsDirectorsand officers) whichmaycausetheactualresultsorperformanceof3P tobemateriallydifferentfromanyfutureresultsor performanceexpressed orimplied bysuchforward-lookingstatements.Relianceshould notbeplaced onforward-lookingstatementsand exceptasrequired bylaw orregulation3P assumesnoobligationtoupdatetheseforward-lookingstatements. Tothemaximum extentpermitted bylaw, 3P and itsrelated corporations, directors, officers, employeesand agentsdisclaim anyobligationorundertakingtoreleaseanyupdatesorrevisionstotheinformationinthis presentationtoreflectanychangeinexpectationorassumptionsand disclaimallresponsibilityandliabilityfortheforward-lookingstatements(including withoutlimitation, liabilityforfaultornegligence).
Thispresentationprovidesinformationinsummaryform onlyandisnotintended orrepresented tobecomplete. Further,itisnotintended tobereliedupon asadvicetoinvestorsorpotentialinvestorsand doesnottakeintoaccounttheinvestmentobjectives, financialsituation, orneedsofanyparticularinvestor.
Duecareand considerationshould beundertakenwhenconsideringandanalysing3P'sfinancialperformance. Allreferencesto $ aretoAustralian$ unless otherwisestated.
Tothemaximum extentpermitted bylaw, neither3P noritsrelatedcorporations, directors,officers, employeesandagents, noranyotherperson,acceptsany liability, includingwithoutlimitation,anyliabilityarisingfrom faultornegligence, foranylossarisingfromtheuseorrelianceonthispresentationoritscontent orotherwisearisinginconnectionwithit.
Thispresentationisnotand should notbeconsidered asanofferorinvitationtoacquiresharesin3P and doesnotand willnotform partofanycontractforthe acquisitionofshares.
Thispresentationshould beread inconjunctionwithotherpubliclyavailablematerials. Furtherinformationisavailableon 3P'swebsiteat: www.3plearning.com/investors
Full Year 2020 Investor & Analyst Briefing 14 August 2020 28
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3P Learning Ltd. published this content on 13 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 August 2020 10:25:10 UTC