Kip McGrath Posts 13% EBITDA Rise Despite $5.3m Net Loss in FY25
Kip McGrath Education Centres Limited reported modest revenue growth and a solid increase in EBITDA for FY25, despite a significant net loss driven by its exit from the US market. The company declared a fully franked final dividend, signaling confidence in its refocused core business.
- FY25 revenue up 1.6% to $31.9 million
- EBITDA from continuing operations increased 13.4% to $7.8 million
- Net loss of $5.3 million due to US operations exit and impairments
- Final dividend of 0.5 cents per share declared, fully franked
- New CEO appointed to lead growth in core APAC and UK markets
Financial Performance Amid Strategic Refocus
Kip McGrath Education Centres Limited (ASX – KME) closed FY25 with a nuanced financial picture. The company posted a 1.6% increase in revenue from continuing operations, reaching $31.9 million, alongside a 13.4% rise in EBITDA to $7.8 million. These gains reflect resilience in its core tutoring services across Asia-Pacific and the United Kingdom.
However, the headline net result was a loss of $5.3 million, a sharp reversal from the prior year’s profit of $1.3 million. This loss was primarily driven by the discontinuation of its US operations, which proved unsustainable and led to significant impairments and exit costs. The company ceased funding its US Tutorfly business and closed its Frisco centres in June 2025.
Strategic Shift and Market Focus
The FY25 results underscore a strategic pivot. Kip McGrath has recommitted to its core markets in APAC and the UK, where franchise fees grew strongly by 13%, and corporate centre revenues increased modestly. The company operates 416 franchise locations globally, with a growing emphasis on Gold Partner contracts that enhance franchise fee margins and support.
Leadership changes accompanied this refocus. Damian Banks took over as Executive Chairman in May 2025, and a new CEO is set to commence in the first half of FY26, bringing fresh impetus to long-term growth initiatives. The company is also integrating artificial intelligence tools to augment its tutoring services, emphasizing that human-led teaching remains central to its value proposition.
Dividend and Shareholder Returns
Despite the net loss, Kip McGrath declared a fully franked final dividend of 0.5 cents per share, matching the interim dividend paid earlier in the year. This move signals management’s confidence in the company’s underlying business strength and cash flow generation from continuing operations.
Risks and Outlook
The company highlighted several risks, including child protection compliance, regulatory changes, cybersecurity threats, and margin pressures amid competitive and economic challenges. The exit from the US market removes a significant drag but also narrows the company’s geographic footprint.
Looking ahead, Kip McGrath aims to leverage its blended learning model and franchise network to drive sustainable growth. The new leadership team faces the task of capitalizing on these strengths while navigating evolving educational technologies and market dynamics.
Bottom Line?
Kip McGrath’s FY25 results reflect a company in transition; sharpened focus on core markets and technology integration set the stage for a pivotal FY26.
Questions in the middle?
- How will the new CEO’s strategy reshape growth prospects in APAC and the UK?
- What financial impact will the US exit have on future earnings and cash flow?
- How effectively can Kip McGrath balance AI integration with its traditional human tutoring model?
