ReadCloud Posts Record $10.7m School Receipts and Targets $1m+ uEBITDA

Record Cash Receipts Fuel FY26 Growth

ReadCloud Limited (ASX:RCL) closed the June 2026 quarter with a record $3.5 million in cash receipts from its core school businesses, pushing year-to-date receipts to $10.7 million, a 6% increase on the prior corresponding period. This growth underpins the company’s confidence in achieving full-year sales and fee revenue between $11.2 million and $11.5 million for FY26, up from $10.7 million in FY25.

The company’s cash position remains solid with $2.6 million on hand and no debt, supporting its guidance to generate over $1 million in underlying EBITDA (uEBITDA) from continuing operations this financial year.

VET-in-Schools Division Drives Momentum

The ReadCloudVET division has been a standout performer, delivering $5.7 million in year-to-date cash receipts, a 13% lift on last year. This growth is closely tied to a 14% increase in partnering (auspicing) revenue, reflecting strong customer retention above 90%, a 6% rise in courses offered, and the addition of 55 new schools in 2026. The division now supports over 16,400 students across 775 courses.

Looking ahead to the 2027 school year, the sales pipeline is robust with 15 new schools confirmed, 24 in advanced talks, and another 39 in early discussions. The company has also expanded its sales team to capitalize on these opportunities.

eBooks Division Faces Slight Setback but Builds Pipeline

While the eBooks division reported a modest 2% decline in year-to-date cash receipts to $5.0 million, it maintained a strong 89% customer retention rate and added five new schools in 2026. The decline partly reflects a higher trade receivables balance and a similar drop in unaudited sales and fee revenue.

Domestic direct sales are gaining traction for 2027, with two schools secured and two more trialling the platform. The company is actively engaging schools through conferences, regional presentations, and targeted marketing campaigns. Strengthened reseller partnerships and international pipeline development, highlighted by follow-ups from the Council of International British Schools conference in London, are also key growth levers.

Strategic Exit from Industry Training

ReadCloud has fully exited its Southern Solutions Industry Training business, a move driven by government funding volatility and low revenue visibility. This exit reduced cash receipts from that segment by 71% year-to-date to $0.4 million and contributed to a net cash outflow of $0.7 million, including $150,000 in redundancy costs.

The Board does not expect any negative earnings impact from this business beyond FY26, allowing management to focus resources on the higher-growth school-facing divisions.

Cash Flow and Operating Performance

ReadCloud’s operating cash flow from continuing operations remained positive at $1.3 million year-to-date, despite a 4% dip compared to FY25. The overall group operating cash flow was $0.6 million, down 40%, weighed down by exit-related costs from Southern Solutions. Seasonal billing patterns, with upfront payments early in the school year, continue to support a strong working capital position.

With no debt and a healthy cash balance, ReadCloud does not anticipate the need for capital raising to fund operations.

FY27 Growth Prospects

Looking forward, ReadCloud expects FY27 to build on current momentum, driven by strong customer retention, increased average customer value, and faster new school acquisitions. The company plans to leverage its expanded salesforce and scalable unit economics to accelerate annual recurring revenue growth.

Key to this outlook is the continued expansion of the VET-in-Schools offering, growth in the eBooks direct and reseller channels, and international market development. However, the company’s projections remain subject to typical uncertainties around school funding and market adoption rates.