Nine months after announcing a strategic review, edtech OpenLearning (ASX: OLL) has kicked its turnaround strategy into gear as more education providers embrace its Service-as-a-Software (SaaS) platform.
The Sydney-based company announced its SaaS customer base grew by almost a quarter year-on-year to 245 in the December half, while revenue for the segment rose by 15 per cent to hit $1.64 million.
As part of its overhaul, the group is focusing on growing its subscription platform in new and existing markets, in addition to capitalising on a partnership forged four months ago with the Education Centre of Australia (ECA), which pumped $1.1 million into OLL in exchange for a 10.7 per cent stake.
Other strategic measures include cost optimisation, helping soften the company’s loss after tax to $5.6 million compared to $6.7 million the year prior.
“We are pleased with the continued growth in platform SaaS revenue and the results of the cost optimisation exercise,” OpenLearning CEO, managing director and founder Adam Brimo said.
“We appreciate the support of our team and stakeholders as we completed the strategic review and restructured the business.
“It will take time to fully realise the results of these initiatives and deliver on our turnaround strategy but we are confident that we have the right foundations in place to grow revenue while managing our cost base with the aim of reaching break-even.”
Founded in 2012, OpenLearning provides an online learning platform to education providers that covers short courses, micro-credentials and qualifications, as well as a global marketplace of courses for learners. To date, more than 3.2 million students from 190 countries have accessed a course through its 184 education provider partners.
The group’s gross sales, which includes its program delivery and design services, fell by 12.9 per cent $3.6 million. After deducting revenue shared with education providers, sales declined by 9.7 per cent to $3.1 million.
Launched with the UNSW Transition Program Online, OpenLearning’s program delivery saw revenue decline by 35.7 per cent to $1.03 million due to a lack of demand for Australian international education from its partner's target markets.
The result comes four months after OpenLearning completed a $2.3 million capital raise, comprising a $1.1 million strategic investment from ECA – a global education group with offices across seven countries and partnerships with Australian education providers that enrol over 7,000 students per year.
As part of the investment, ECA Group CEO Rupesh K. Singh joined OpenLearning’s board and is helping the company explore a number of potential partnership opportunities.
Following the deal, ECA now holds a 19.9 per cent stake in OpenLearning.
“ECA’s track record of profitable growth in the Australian and international education sector will provide OpenLearning with the expertise it needs to retain and grow its core Platform SaaS business, improve efficiency and capitalise on opportunities to accelerate revenue growth,” OpenLearning said to shareholders four months ago.
OpenLearning discontinued its low-value educator and personal plans in Q1 FY22, introducing a usage-based SaaS model that requires all education providers to pay roughly $1,000 per year.
The company noted the change in its pricing led to a shift in customer mix, with some opting to upgrade their plans while others cancelled.
“The impact of these initiatives on the group’s results were not immediately evident in FY2022; however, the group has already begun to see an improvement in Q4 FY2022 and in early FY2023,” OpenLearning said.
“With these initiatives in place, the company is confident that it will be able to reach break-even by growing revenue while closely controlling its costs.”
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