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Learning Technologies surges as it raises full-year guidance

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

Learning Technologies Group plc -

Learning Technologies Group PLC (LON:LTG) expects underlying earnings for the year just ended will 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.

"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,” said Jonathan Satchell, the chief executive officer of Learning Technologies.

“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," Satchell added.

In a 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.

Analysts at German bank Berenberg were also positive, hiking their target price for LTG to 190p from 180p and retaining their ‘buy’ rating.

The upgraded forecasts sent the shares surging 15.4% to 158.8p in mid-morning trading on Tuesday.

--Adds broker change, comment and share price--

Quick facts: Learning Technologies Group PLC

Price: 122.7 GBX

AIM:LTG
Market: AIM
Market Cap: £904.59 m
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Learning Technologies Group PLC (LON:LTG) chief executive Jonathan Satchell runs Proactive London's Andrew Scott through the firm's 2019 trading update and the precautions they're taking to limit the impact of COVID-19 on its business and performance. For the year ended 31 December 2019...

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