viewLearning Technologies Group PLC

Learning Technologies helping talent shine through in a digital age


  • Operates in fast-growing e-learning and talent management market
  • Approximately 70% of LTG’s business undertaken in the US
  • Adjusted earnings for 2019 expected to be at least £41mln
  • Berenberg analysts have a 12-month share price target of 190p

Quick facts: Learning Technologies Group PLC

Price: 133.6 GBX

Market: AIM
Market Cap: £893.95 m


What Learning Technologies does

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

The AIM-listed firm offers a mix of product and services that focus on partnering with clients to achieve measurable results.

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 is it doing

In a trading update for 2019, LTG said it expected underlying earnings to be comfortably ahead of market expectations.

Adjusted earnings before interest and tax (EBIT) are expected to be at least £41.0mln for 2019, up from £26.0mln in 2018.

The circa 58% increase was driven by a continued trend of improved margins across the group and synergies being realised from the successful integration of acquisitions.

Group revenues are expected to be up by around 38% to about £130mln from £93.9mln the year before. The consensus forecast for 2019 revenues is £128.3mln.

Recurring revenues increased to around 73% of total revenues, up from 68% the year before, thanks largely to a strong ongoing performance in the Software & Platforms division, a full-year contribution from PeopleFluent and Watershed, and the acquisition of BreezyHR in April 2019.

Excluding PeopleFluent, Learning Technologies (LTG) delivered organic revenue growth on a constant currency basis in both the Software & Platform and Content & Services divisions.

PeopleFluent delivered revenues of US$93.0mln in 2019, ahead of previously announced expectations of around US$91.0mln, supported by a significantly improved retention rate for its software licences and a good sales performance by Affirmity.

The board remains confident that PeopleFluent will return to growth in 2020.

The group's net cash position at the end of 2019 stood at £3.8mln, compared to net debt of £11.5mln at the end of 2018, and was better than anticipated.


What the boss says: Jonathan Satchell, chief executive

"2019 has been a year of encouraging growth across the group with a strong performance in Content & Services in the second half of the year and outstanding results from our innovative Software & Platform businesses such as BreezyHR, Rustici and Watershed complementing our established PeopleFluent talent and learning business”.

“We are seeing the early successes of the board's decision to make focused investments in R&D and incremental sales initiatives to support sustainable organic growth, driving momentum into 2020."

“In 2019, the group continued its track record of delivering strong margins, benefiting from enhanced leadership positions in our key markets. LTG has proven that it can successfully integrate, improve and grow the businesses we acquire, delivering excellent value for shareholders and comprehensive, innovative and industry-leading capabilities and services for our clients. We have an active pipeline of acquisition opportunities in 2020 and continue to invest in cross-selling initiatives and explore new routes-to-market".


Blue Sky

In late January, analysts at Berenberg increased their target price for LTG to 190p from 180p, adding that the stock was currently trading at a 20% discount to its UK software peers despite its "higher recurring revenues and higher margins".

"While many investors have focused their attention on e-learning packaged content, we believe that other ancillary areas of the industry are being overlooked. Specifically, we feel the backend plumbing that connects and monitors e-learning systems, alongside authoring tools that enable corporates to customise their own materials, displays high growth. LTG is exposed to the faster growing areas of this market", the bank said in its investment case.

In another January note, analysts at Peel Hunt retained their ‘buy’ rating and 160p price target on Learning Tech, saying that they expected to see acquisitions from the firm in 2020 and that contract wins from larger pitches in the company's content & services arm could create “substantial upside” to their forecasts.

Goldman Sachs, house broker, has forecast that global spend on corporate learning over 2018-2030 will grow at a 5% compound average growth rate (CAGR), up from 2.1% CAGR in 2008-18, driven by a rise in automation requiring employees to obtain new skills.

“While lower costs have been the main reason for the shift to eLearning within the corporate world to date, we see the next wave of growth being driven by higher-value bespoke content, aided by more sophisticated HR tech systems,” Goldman said.

In their view, they added, LTG’s business portfolio “is well positioned to benefit from this inflection, given its bespoke content offering, which we see as a key differentiator vs. larger peers.”


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