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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
  • Approximately 70% of LTG’s business undertaken in the US
  • Has highlighted “good organic momentum” from cross-selling and product development
e-learning

Quick facts: Learning Technologies Group PLC

Price: 136.3 GBX

AIM:LTG
Market: AIM
Market Cap: £1.01 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.

Approximately 70% of LTG’s business is undertaken in the US, with the UK and Europe accounting for the majority of the balance.

The group comprises a Software and Platforms division that accounts for approximately 70% of revenues on a proforma basis and 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 a trading update for the six months to June 30, 2020, the digital learning group said it expects to report revenues of at least £64mln, 2% higher year-on-year, with a small decline in its underlying business offset by a contribution from the recently acquired Open LMS business in the second quarter.

Learning Technologies also predicted underlying adjusted earnings (EBIT) for the period of £19.9mln, up from £19.5mln the year before.

The group said it had derived 75% of its revenues from recurring multi-year contracts compared to 67% in the prior year, and while some enterprise software procurement processes had been postponed it was seeing retention rates in its PeopleFluent and other software businesses hold up well.

Sales and revenues in the Rustici and the Open LMS business were also increasing, and despite an initial downturn in mid-March, new sales from the company’s Breezy HR business have also seen a “marked uptick” since mid-May.

Meanwhile, the company said it's content and services division has been subdued in the second quarter as some client projects were curtailed as a result of the pandemic, however, Learning Technologies said it had also won some “prestigious projects” including a US$1mln virtual-reality healthcare project for PRELOADED and the conversion of a number of classroom training programs to online and blended learning for LEO, which will be delivered in the second half of the year.

Learning Technologies also said its operating cash flows were ahead of its expectations, with net cash of £77.9mln at the end of the period.

Looking ahead, the group said it is continuing to pursue “a number of acquisition opportunities” and that it has repaid all furlough payments received from the UK government and will not make any claims under the job retention bonus scheme for bringing backed furloughed workers.

 

What the boss says: Jonathan Satchell, chief executive

"The resilience of our people and our business has enabled the group to deliver strong results in the first half of the year, in the context of unprecedented challenges as a result of the [coronavirus] pandemic. During this time we continued to serve our customers in the rapidly evolving environment for corporate learning and talent management and prioritise the safety and wellbeing of our customers and staff."

"With several major project wins to celebrate across our content & services business and resilience in our software & platforms division, LTG enters the second half of the year in a robust position, with demand in line with management expectations and a cash position to enable us to expand our business with strategic value-enhancing acquisitions."

 

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What the broker says

In a note in March, analysts at Peel Hunt, which rate LTG at ‘buy’ with a price target of 160p, said while a downgrading of forecasts was “inevitable” due to the coronavirus pandemic, they did not believe that it will threaten the existence or the strategic direction of the company.

“We feel this will be a business that will seek to emerge from this crisis on the forward foot.  Whilst at this stage many plans are put on hold it will be interesting to see what M&A opportunities will emerge for companies that weather this storm well”, they added.

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Learning Technologies Group reports 'robust and resilient performance' for...

Learning Technologies Group's (LON:LTG) Jonathan Satchell says its half year results to June 2020 were 'robust and resilient'. The six month period saw an increase in underlying adjusted earnings before interest and tax (EBIT) to £20.1m (excluding non-cash items) from £19.4m the year...

on 24/9/20

4 min read