Learning Tech solid on recurring revenues

Management attributed the bump in revenue to its acquisition of BreezyHR and integration of PeopleFluent over the course of last year. Even excluding the PeopleFluent business, its software and platforms division has delivered 11 per cent compound annual growth over the past three years. These acquisitions were augmented by the purchase of Open LMS at the end of March this year, which chief executive Jonathan Satchell said has seen “an astonishing spike in activity” as more students move to remote learning. “We’re winning a lot of new contracts,” he added. 

Across the group, however, new business wins are likely to be affected by persistent market uncertainty. But LTG’s subscription-based model means that 74 per cent of revenue is recurring, up from 68 per cent in 2018, which means that a dip in new wins is unlikely to severely hurt its performance this year.

Indeed despite the pandemic, management said that its current financial year has started in line with expectations and that has not yet seen a material impact on performance so far. The group said in a trading update three weeks ago that it would postpone its final dividend (proposed at 0.5p per share) as well as cash bonuses for directors “until market conditions stabilise”. 

Broker Numis forecasts pre-tax profits of £36.8m and EPS of 4p in 2020, rising to to £41.6m and 4.4p in 2021.