ReadCloud beats FY26 EBITDA guidance as VET schools drive growth

FY26 EBITDA clears guidance

ReadCloud Limited (ASX:RCL) has beaten its FY26 underlying EBITDA guidance, reporting preliminary unaudited EBITDA of A$1.3 million from continuing operations against a target of more than A$1 million. Sales and fee revenue from those continuing operations rose approximately 4% to A$11.2 million, despite the company completing its exit from industry training.

The result gives ReadCloud a cleaner earnings base heading into FY27. Its earlier FY26 EBITDA target had been set above A$1 million, while the latest filing says the Southern Solutions wind-down was completed during the September quarter.

VET-in-Schools adds students, courses and future schools

ReadCloudVET was the main growth engine. Cash receipts reached A$6.2 million, up 11% on the prior year, alongside a 14% increase in core partnering fees. The division retained more than 90% of its schools, added 55 during FY26, and lifted the number of courses run to a record 775.

Student numbers exceeded 17,000, and the forward pipeline has started ahead of last year's selling timetable. Thirty-seven schools are confirmed to commence in 2027, compared with 35 confirmed by early December in the previous season. A further 13 schools are in advanced discussions and 47 are at an earlier stage of engagement. The figures build on the school division growth reported during the first half, but remain commitments and prospects rather than recognised FY27 revenue.

eBooks remains the weaker division

The eBooks business was considerably less buoyant. Cash receipts held broadly flat at A$5.3 million, while sales and fee revenue fell 3% to A$4.9 million. Customer retention was 89%, and revenue from new and retained schools did not fully replace revenue lost from departing customers.

There are some early signs of renewed sales activity: three domestic schools have been secured for 2027, a large reseller-channel school has been contracted, and a new international school has been won. International revenue rose 40%, but from a low base to just A$73,000. Queensland negotiations and potential direct school relationships in Western Australia provide possible upside, though the division's recent revenue trend remains softer than ReadCloudVET's.

Industry training exit removes a drag

Southern Solutions contributed only A$0.9 million of FY26 customer receipts, down 57% year on year, including a final A$0.4 million payment for New South Wales training delivery. The discontinued operation used A$0.4 million in operating cash, including A$150,000 in redundancy payments.

ReadCloud says the board does not anticipate a negative earnings contribution from industry training beyond FY26. Completing the wind-down should allow capital, management attention and sales resources to be directed to the two school-focused divisions, although the benefit will need to show up in group earnings and cash generation rather than simply in a lower cost base.

Cash position depends on the school-year cycle

The Appendix 4C reported net operating cash use of A$684,000 for the September quarter and A$35,000 for the 12 months to 30 September. ReadCloud separately reported A$400,000 of positive operating cash flow from continuing operations for FY26, offset by A$400,000 used by discontinued operations. The differing figures reflect the continuing-operations and group presentation bases in the announcement.

Cash ended the period at A$1.865 million, with no debt or drawn financing facilities. ReadCloud says it does not anticipate needing to raise capital to fund operations. Its cash profile is seasonal, however: most recurring billings arrive between January and March at the start of the Australian school year, making the next major collection period important for testing whether the growing VET enrolment base converts into stronger cash generation.