What Learning Technologies does
Learning Technologies Group PLC (LON:LTG) operates in the fast-growing workplace digital learning and talent management market.
Working across recruitment, performance, learning, compensation, diversity and inclusion, compliance, succession, engagement and technical integration, the firm enables corporate and government clients to keep up with the increasing speed of change in the digital world.
Approximately 70% of LTG’s business is undertaken in the US, with the UK and Europe accounting for the majority of the balance.
The group comprises a Software and Platforms division that accounts for approximately 70% of revenues on a proforma basis and typically sells multi-year SaaS (software-as-a-service) licences which enjoy high customer retention rates.
LTG’s Content & Services division typically delivers shorter-term, fixed price projects to clients.
How it's doing
In late March, the company reported profits for its 2019 financial year are “ahead of expectations” as recurring revenues surged thanks to its Software & Platforms business.
In a trading update, the firm reported that for the year ended 31 December statutory pre-tax profit was £14.3mln, 316% ahead of the prior year, while revenues jumped 39% to £130.1mln.
The company highlighted “good organic momentum” from cross-selling initiatives and product development, as well as a return to growth for its content & services arm.
Looking ahead, LTG said its current financial year had “started well” and is in line with management expectations, adding that it has not yet seen any material impact from the coronavirus outbreak on its performance.
However, the company said that while they expected growth in recurring revenues to continue, content projects may be impacted as customers managed their own cash positions and new business wins were delayed.
In light of the potential impact of the pandemic, LTG said it was taking “proactive measures to prioritise the strong liquidity and net cash position of the group”, including the postponement of its final dividend payment of 0.5p per share and the payment of director bonuses until market conditions stabilised.
The company is also reducing its marketing, travel and capital expenditure and has postponed salary increases and recruitment until 2021.
LTG estimates the combined measures will save over £13mln in cash in 2020, with further measures to be implemented if appropriate.
The group has also boosted its cash reserves by another £81.8mln to take advantage of what it said were “numerous attractive acquisition opportunities” arising from the disruption caused by the pandemic.
What the boss says: Jonathan Satchell, chief executive
"Despite the current market uncertainty I'm reassured by the strong and resilient position of LTG. We are well-positioned to further consolidate the digital learning and talent sector as opportunities emerge,”
What the broker says
In a note in March, analysts at Peel Hunt, which rate LTG at ‘buy’ with a price target of 160p, said while a downgrading of forecasts was “inevitable” due to the coronavirus pandemic, they did not believe that it will threaten the existence or the strategic direction of the company.
“We feel this will be a business that will seek to emerge from this crisis on the forward foot. Whilst at this stage many plans are put on hold it will be interesting to see what M&A opportunities will emerge for companies that weather this storm well”, they added.