3P Learning Nearly Doubles EBITDA Despite Revenue Slip in FY25 First Half
3P Learning reports a modest revenue decline but nearly doubles its underlying EBITDA in the first half of FY25, signaling operational improvements amid a transitional phase.
- Revenue down 2% to $52.7 million
- Underlying EBITDA nearly doubles to $6.8 million
- Statutory net loss narrows significantly to $0.7 million
- Annual Recurring Revenue up 4%, including LiteracyPlanet acquisition
- Company expects stronger second-half performance with operational efficiencies
Revenue and Earnings Overview
3P Learning Limited (ASX: 3PL) has released its half-year financial results for the period ending 31 December 2024, revealing a nuanced performance marked by a slight revenue contraction but a substantial improvement in profitability metrics. The company reported revenue of $52.7 million, down 2% from the prior corresponding period (pcp), primarily attributed to the transition of Reading Eggs customers from Edmentum in the US schools market.
Despite the revenue dip, underlying EBITDA surged by 98% to $6.8 million, reflecting effective cost management and operational discipline. This translated into a statutory net loss after tax of $0.7 million, a remarkable $11.3 million improvement compared to the previous half-year loss of $12 million.
Strategic Developments and Market Position
CEO Jose Palmero highlighted that Annual Recurring Revenue (ARR) increased by 4% since June 2024, bolstered by the recent acquisition of LiteracyPlanet, which closed in early January 2025. The company’s business-to-consumer (B2C) segment showed resilience with a 1% growth in billings despite ongoing cost-of-living pressures impacting parents.
Executive Chairman Matthew Sandblom described FY25 as a year of transition, with the rollout of the new "3 Essentials" product suite marking a strategic pivot. Early customer feedback suggests the offering is gaining traction due to its value proposition and user-friendly design, with expectations for more pronounced benefits in FY26.
Operational Efficiency and Outlook
3P Learning is actively simplifying its operations to enhance efficiency, which management anticipates will drive stronger underlying EBITDA and cash flow in the second half of FY25. Underlying cash flow from operations before tax improved to $1.4 million, reversing a $2.4 million outflow in the prior period.
The company has not declared a dividend, signaling a focus on reinvestment and balance sheet strengthening during this phase of transformation. Investors will be watching closely to see how the integration of LiteracyPlanet and the expansion of the 3 Essentials platform influence growth trajectories.
Bottom Line?
3P Learning’s improved profitability amid revenue challenges sets the stage for a pivotal second half as new products and efficiencies take hold.
Questions in the middle?
- How will the integration of LiteracyPlanet impact revenue growth and margins in FY26?
- What are the key drivers behind the expected stronger EBITDA and cash flow in the second half?
- How sustainable is the cost management strategy amid ongoing market pressures?
