Learning Technologies to beat earnings expectations for 2020

Digital learning and talent management software company Learning Technologies said on Friday that it was expecting revenues for 2020 to be at least £131m, compared to £130.1m in 2019.

The AIM-traded firm said recurring revenues increased to around 80% for the year ended 31 December, from 74% in the prior year, driven by the ongoing performance in the software and platforms division and the expansion of its business in open-source learning management systems through the acquisitions of Open LMS, eCreators and eThink Education.

As expected, content and services saw a revenue decline due to the impact of Covid-19.

However, sales momentum had increased throughout the second half of the year, giving the board confidence that the division’s revenue would recover to pre-pandemic levels.

Adjusted EBIT was expected to be ahead of consensus, and no less than £40m, down slightly from the £41m it reported in 2019.

The board said that demonstrated the resilience of the company amid wider market disruption, and its ability to adapt its operating model in the face of significant changes in demand across the business.

Learning Technologies’ net cash position as at 31 December was £70.2m, significantly ahead of consensus expectations for £59.6m, which the board said was driven by strong operating cash conversion and additional net cash balances of £1.6m from the acquisitions of eCreators and eThink.

The firm’s “robust” capital position would enable it to continue its track record of acquisitions that add to its capabilities in the market, including the recently-announced acquisition of Reflektive, which would complete on 29 January.

Learning Technologies said it was actively pursuing a near-term pipeline of opportunities to deliver further organic and inorganic growth across both the software and platforms and the content and services divisions, helping to achieve its strategic goal of run-rate revenues of £230m and run-rate adjusted EBIT of £66m by the end of 2022.

“Learning Technologies ended 2020 on a high, with strong momentum across our divisions continuing into the new year from mid-market customers and large enterprises,” said chief executive officer Jonathan Satchell.

“The group is well placed as businesses continue to look for best-of-breed technologies and services to develop their talent and enhance their workplace learning.”

Satchell said that amid the disruption of the past year, 2020 also saw an acceleration of structural trends towards digital learning and talent management.

“This underpins the board's confidence in the group's near-term and long-term prospects and, further to the growth we expect to deliver in the year ahead, we will continue our disciplined approach to acquisitions that bring additional benefits to our stakeholders.”

Learning Technologies said it would announce its full-year results for the year ended 31 December on 25 March.

At 0944 GMT, shares in Learning Technologies Group were up 6.93% at 173.01p.