3P Learning Limited reported a modest revenue decline but dramatically reduced its half-year loss, while strategically acquiring Intrepica Pty Ltd to bolster its literacy offerings.
- Revenue down 2.4% to $52.5 million for H1 FY2025
- Loss after tax narrowed sharply to $666,000 from $11.9 million
- Underlying EBITDA nearly doubled to $6.8 million
- Acquisition of Intrepica Pty Ltd completed in January 2025 for $1.4 million
- B2B segment recovery driven by cost efficiencies and direct US sales
Financial Performance Overview
3P Learning Limited has delivered a significant turnaround in its financial results for the half year ended 31 December 2024. Despite a 2.4% decline in revenue to $52.5 million, the company slashed its loss after tax to just $666,000, a dramatic improvement from the $11.9 million loss recorded in the prior corresponding period. This improvement was underpinned by a near doubling of underlying EBITDA to $6.8 million, reflecting operational efficiencies and cost control measures.
The revenue decline was primarily driven by a 4% drop in the Business-to-School (B2B) segment, attributed to the transition away from Edmentum in the US and lower retention rates in the Europe, Middle East, and Africa (EMEA) region. However, the Business-to-Consumer (B2C) segment remained stable, with slight growth in Reading Eggs and Mathseeds billings on digital platforms.
Strategic Acquisition Enhances Literacy Portfolio
In a strategic move to strengthen its product suite, 3P Learning completed the acquisition of Intrepica Pty Ltd, the creators of LiteracyPlanet, in early January 2025 for $1.4 million. LiteracyPlanet, launched in 2009, is a well-regarded educational platform focused on improving English literacy skills for students in school years 2 to 10. This acquisition complements 3P Learning’s existing offerings and positions the company to expand its footprint in literacy education globally.
Operational Highlights and Segment Performance
The B2B segment showed marked improvement in profitability, with underlying EBITDA increasing by over 370% to $4.2 million. This was driven by the full-year impact of a $5 million cost reduction initiative, enhanced cost efficiencies from direct sales to US schools, and a higher capitalisation rate of product development costs. Meanwhile, the B2C segment’s underlying EBITDA remained flat at $3.7 million, reflecting increased distributor costs from Apple and Google billings offset by reduced marketing expenses.
Management also highlighted the successful buy-back of US distribution rights for Reading Eggs from Edmentum, which was fully expensed in the prior year but has since allowed for direct control over US school sales channels. The company’s net cash position improved to $5.3 million, supported by a $9 million borrowing facility and $5.6 million in restricted cash, including funds held in trust for the Intrepica acquisition.
Outlook and Market Positioning
While the company did not declare any dividends, citing the need to reinvest in growth initiatives, the financial results suggest a stabilising business with a clear path to profitability. The integration of LiteracyPlanet is expected to enhance 3P Learning’s competitive positioning in the education technology sector, particularly in literacy products for middle school students.
Challenges remain, including addressing retention issues in the EMEA region and navigating the competitive landscape of educational software. However, the company’s improved cost structure and strategic acquisitions provide a foundation for renewed growth momentum.
Bottom Line?
3P Learning’s sharp loss reduction and strategic acquisition signal a cautious but promising pivot towards sustainable growth.
Questions in the middle?
- How will the integration of LiteracyPlanet impact 3P Learning’s revenue growth in FY2025?
- What strategies will management deploy to improve retention in the EMEA B2B segment?
- Can the company sustain its improved EBITDA margins amid rising distributor costs?