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Learning Technologies helping talent shine through in a digital age

Snapshot

  • Operates in fast-growing e-learning and talent management market
  • Most business undertaken in the US, UK and Europe
  • Has highlighted “good organic momentum” from cross-selling and product development
e-learning

Quick facts: Learning Technologies Group PLC

Price: 163.5 GBX

AIM:LTG
Market: AIM
Market Cap: £1.21 billion
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What Learning Technologies does

Learning Technologies Group PLC (LON:LTG) operates in the fast-growing workplace digital learning and talent management market.

Working across recruitment, performance, learning, compensation, diversity and inclusion, compliance, succession, engagement and technical integration, the firm enables corporate and government clients to keep up with the increasing speed of change in the digital world.

Most of LTG's business comes from the US, the UK and Europe, although it also has some operations in territories such as Australia.

The group comprises a Software and Platforms division which typically sells multi-year SaaS (software-as-a-service) licences which enjoy high customer retention rates.

LTG’s Content & Services division typically delivers shorter-term, fixed price projects to clients.

 

How it's doing

In early December, LTG was on the acquisition trail again, picking up privately-owned eThink Education for an initial cash consideration of US$20mln.

eThink is a North American company operating in the high-growth open-source learning management systems (LMS) market. The newly acquired company will be integrated into LTG’s Open LMS business acquired in April 2020.

The eThink deal follows Learning Technologies' acquisition of eCreators in September 2020 and marks a further step in the group's strategic goal of consolidating the Moodle market – Moodle being the world’s most popular learning management system - building further complementary expertise and geographical reach into Open LMS.

In the financials, the company's half-year report for the six months to June 30 showed an increase in underlying adjusted earnings before interest and tax (EBIT) to £20.1mln (excluding non-cash items) from £19.4mln the year before.

Reported profit before tax fell to £4.1mln in the first half of 2020 from £6.8mln the previous year. Revenue nudged up 2% to £64.1mln from £62.6mln, despite the Content & Services division’s performance being hit by the coronavirus (COVID-19) pandemic.

The group's Content & Services arm’s revenues fell by 22% year-on-year as the pandemic delayed some projects. Software & Platforms saw revenue rise 13% on the same period of last year, driven by the acquisition of Open LMS and growth across the Rustici, GOMO and Breezy HR businesses.

Recurring revenues now account for 81% of the group’s revenues, up from 74% in the first half of last year, while revenue from outside the UK now accounts for 81% of group revenues, up from 79% last year.

Net cash at the end of June stood at £77.8mln, compared to net debt of £13.9mln at the end of June 2019.

The board had previously decided to postpone the payment of the final dividend in respect of 2019 but has now decided the 0.50p dividend can now be paid. It has also proposed an interim dividend for this year of 0.25p, in line with last year’s payment.

 

What the boss says: Jonathan Satchell, chief executive

“Delivering strong results during a global crisis is an exceptional achievement. LTG's combination of excellent cash generation, high margins and a robust balance sheet support the board's decision to pay the postponed FY19 dividend and propose an interim dividend.”

“High levels of recurring revenue, momentum for new sales and an improving order book support the board's confidence of delivering FY20 results in line with market expectations. We have an exciting and active acquisition pipeline and also a robust balance sheet to capitalise on the structural trends in digital learning and talent management. These factors enable us to reconfirm our run-rate target of c.£230 million revenues and c.£66 million EBIT by end 2022."

 

Interview

 

What the broker says

In a note in October, analysts at Berenberg said LTG has a number of potential catalysts coming up that can significantly boost earnings next year.

The broker also said the company had the potential for earnings to grow by 40% in 2021, adding that it has also outperformed its US e-learning peer group and looks undervalued relative to both listed rivals and those acquired recently by private equity.

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