Learning Technologies revenue falls, earnings rise in first half

Digital learning and talent management specialist Learning Technologies Group said in its half-year results on Tuesday that despite a subdued macroeconomic backdrop affecting overall spending on learning and talent development, it recorded healthy profit growth and strong cash generation.

The AIM-traded company said organic constant currency revenue declined 3.8% to £250.3m, impacted by reduced spending on transactional and project work, as well as softness in software-as-a-service (SaaS) subscriptions.

Specifically, the content and services division saw a 2.9% decrease, while software and platforms experienced a 5.9% drop.

Despite the revenue decline, adjusted EBIT increased 5% to £43.3m, with the adjusted EBIT margin improving to 17.3% from 15.3% in the same period last year.

That growth was attributed to the successful commercial transformation of GP Strategies and a focus on cost optimization.

Statutory operating profit saw a significant rise, of 65% to £38.3m.

The company reported a strong cash performance, with a cash conversion rate of 70%, up from 65% previously.

Its balance sheet remained robust, with net debt reduced from £57.5m at the end of June to approximately £1m by 30 August, following the disposal of VectorVMS for $50m.

A voluntary debt repayment of $25m was also made in July.

Operational highlights included a resilient performance in a tough economic environment.

SaaS and long-term contracts now accounted for 76% of total revenue, up from 72% in the first half of 2023.

All major clients generating over $5m annually that were up for renewal were successfully retained.

The LATAM and Leadership divisions of GP Strategies showed strong growth, and profits at GP Strategies had more-than-doubled since its acquisition three years ago.

LTG said it had increased investment in artificial intelligence product innovation, launching initiatives like GP's Content AIQ Learning Platform and the Human+ AI Learning Series.

Early customer uptake was described as encouraging.

In regulatory developments, GP Strategies said it was continuing discussions with the US Defense Counterintelligence and Security Agency to resolve issues related to certain approvals.

A new subsidiary focused on US government contracts was being established, and was expected to become operational in the first half of 2025.

Existing classified contracts were not up for imminent renewal, and were not material to the group's overall revenue and profit, the board explained.

LTG declared an interim dividend of 0.45p per share, consistent with the prior year.

Looking ahead, Learning Technologies adjusted its full-year revenue expectations to between £473m and £493m, with adjusted EBIT projected to be between £86m and £91m, accounting for currency fluctuations and the sale of Vector.

The board said it anticipated results to be toward the lower end of those ranges, particularly due to current trading conditions at GP Strategies.

“LTG has delivered a resilient performance, with growth in adjusted EBIT of 5% on a like for like basis, and strong cash performance in a macroeconomic backdrop which remains challenging,” said chief executive officer Jonathan Satchell.

“Whilst the lack of revenue growth is disappointing, the structural drivers of the learning and talent development market remain intact and support our belief that LTG will return to growth when market conditions improve.”

At 1315 BST, shares in Learning Technologies Group were up 7.29% at 75.1p.

Reporting by Josh White for Sharecast.com.