Slide 1: Investor & Analyst Briefing
Investor & Analyst Briefing Half year results to 31 December 2021 24 February 2022
Slide 2: Agenda
Agenda Chairman’s Update Q&A CEO Update Appendices HY22 Financial Results Half Year 2022 Investor & Analyst Briefing 24 February 2022
Slide 3: Half year results highlights
UNDERLYING EBITDA REVENUE B2C BILLINGS3 B2B ARR1 $3.7m $44.3m $18.2m $65.0m +106% +85% +12% +3% vs pcp2 vs pcp2 vs pcp2 vs pcp2 PRODUCT OPERATING CASH IMPROVEMENT CUSTOMERS $14.4m $8.0m 6.0m +$10.9m internal product development expense +$20.2m Cash Balance +5.7m (+21%) B2B Licences4 vs pcp2 +$2.5m W
Slide 4: Chairman's Update
HalfFull YearYear 20222021 Investor Investor & Analyst & Analyst Briefing Briefing 252022 24 February August 2021
Slide 5: Integration of operations with Blake completed
• Integration of operations with Blake completed - Good progress in all key areas of the business. • B2C billings1 has grown 12% against prior comparative period On track to achieve double-digit billings growth for B2C in FY22. Medium term goal is for B2C to contribute equal revenue to B2B. • B2B An
Slide 6: Acquired writing skills program, Writing Legends
• Acquired writing skills program, Writing Legends, to complement our product suite for Fundamentals of Learning (3Rs: Reading, wRiting, aRithmetic). We have developed a Product Roadmap for Writing Legends to include more comprehensive content coverage. First major release expected 2H FY23. • Develo
Slide 7: CEO Update
HalfFull YearYear 20222021 Investor Investor & Analyst & Analyst Briefing Briefing 252022 24 February August 2021
Slide 8: Operational integration with Blake now completed
• Operational integration with Blake now completed; achieved annual synergy savings of $9.5m, headcount reduction aligned with product simplification and US Sales strategies. ReadiWriter sunset effective July 2022 for Northern Hemisphere. • B2C revenue 1H FY22 was $18.8m, with billings1 up 12% on 1H
Slide 9: Consumer billings performance for Reading Eggs and Mathseeds
• Below is the consumer billings performance for Reading Eggs and Mathseeds half-on-half for the last 2 years. Billings by Platform ($m) Billings by Geography ($m) 18.2 18.2 16.3 16.3 1.7 16.3 16.3 1.3 1.5 4.7 14.1 14.1 0.6 4.3 3.9 7.6 3.3 5.1 7.6 7.4 4.4 4.2 4.5 3.0 8.4 8.9 9.1 7.4 7.4 7.8 7.8 7.9
Slide 10: Gross billings, licences and ARPU
Dec-21 Jun-21 ▪ Gross billings has grown 12% in the last 6 H1-22 H2-21 +/- % +/- months (to 31 December 2021). Gross Billings ($m) 18.2 16.3 1.9 12% Licences (k) 294.1 263.7 30.4 12% ▪ Billings growth driven by strong parent ARPU ($) 123.76 123.62 0.14 0% subscriber licence growth whilst maintaining
Slide 11: Trajectories of school ARR
• The graphs below show the trajectories of school ARR for the 3 main 3PL products half-on-half for the last 2 years. 63.3 63.0 65.0 61.5 4.9 5.4 6.1 6.9 33.6 33.4 32.2 32.0 23.0 24.5 24.7 26.1 Jun-20 Dec-20 Jun-21 Dec-21 H2-20 H1-21 H2-21 H1-22 Reading Eggs Mathletics Mathseeds (1) The chart includ
Slide 12: Core school market delivering single digit growth
Core school market delivering single digit growth with smaller more efficient sales team. Dec-21 Dec-20 H1-22 H1-21 +/- % +/- Closing ARR ($m)*^ 59.2 57.9 1.3 2% Sales & Marketing Costs - 6 months ($m) (9.5) (10.3) 0.8 (8%) ARR to Annualised S&M Ratio 3.1 2.8 0.3 11% Licences (m)*^ 4.7 4.7 - 0% Exit
Slide 13: Product ideation and research completed for Writing Legends
• Product ideation and research completed for Writing Legends, including integration plan and content plan to cover Primary School grades (1-6) for planned release in 2H FY23. • Product strategy and research completed for Mathletics, including integration plan and prototype for Mathletics New Course
Slide 14: HY22 Financial Results
HalfFull YearYear 20222021 Investor Investor & Analyst & Analyst Briefing Briefing 252022 24 February August 2021
Slide 15: Half-on-half revenue and EBITDA profile reflects transition
The profile of half-on-half revenue and EBITDA in FY22 now reflects the transition in revenue recognition approach on sale of Blake products to the School (B2B) market. • Since the merger completed on 28 May 2021, school sales of Blake 60 20 Products have been recognised to contract liabilities on t
Slide 16: B2B revenues increased by 11% to $25.5m
▪ B2B revenues increased by 11% to $25.5m due to a $6.6m contribution made from Blake B2B operations despite the AU$m H1-22 H1-21 1 $ +/- % +/- Licence revenue transition in revenue recognition approach on sale of Blake B2B 25.5 23.0 2.5 11% products. B2C 18.8 0.9 17.9 1,989% Total Licence revenue 4
Slide 17: Cash flows from operating activities
AU$m H1-22 H1-21 $+/- Cash flows from operating activities ▪ Net cash inflow from operating activities has improved Receipts from customers1 44.0 22.6 21.4 $8.0m due to the positive contribution made by the Blake Payments to trade suppliers and employees 2 (39.1) (29.5) (9.6) business, the realisati
Slide 18: Q&A
HalfFull YearYear 20222021 Investor Investor & Analyst & Analyst Briefing Briefing 252022 24 February August 2021
Slide 19: Appendices
HalfFull YearYear 20222021 Investor Investor & Analyst & Analyst Briefing Briefing 252022 24 February August 2021
Slide 20: B2B: Continue to refine high-performing sales and marketing
▪ B2B revenue was up 11% due to a $6.6m contribution made from Blake B2B distributors. AU$m H1-22 H1-21 $ +/- % +/- ▪ B2B revenue and EBITDA would have been $6.6m Revenue 25.5 23.0 2.5 11% higher had 3P Learning been treating sale of Blake 1 products made prior to the merger on a straight-line Cost
Slide 21: B2C: Keep growing beyond the COVID-19 sales bump
▪ Blake contributed $18.0m of revenue to performance, generating gross margins percentage of 96% and AU$m H1-22 H1-21 $ +/- $ +/- contribution margin of 36%. Revenue 18.8 0.9 17.9 1,989% 1 Cost of revenue (0.8) - (0.8) (100%) ▪ Contribution margin is calculated after Sales & Marketing Gross Profit 1
Slide 22: Balance sheet
AU$m 31-Dec-21 30-Jun-21 31-Dec-20 Cash and cash equivalents 20.2 24.9 15.0 ▪ Cash of $20.2m with no bank debt. Trade and other receivables 13.9 13.9 13.7 Deferred contract costs 2.8 - - ▪ Current and non-current contract liabilities have increased by Inventories 0.3 0.3 - $19.8m to $42.6m since 31
Slide 23: Operating free cash flow
AU$m H1-22 H1-21 $+/- Underlying EBITDA 3.7 1.8 1.9 FX and other non-cash - 0.2 (0.2) Non-cash customer contract (1.5) (0.5) (1.0) Change in working capital 2.6 (8.3) 10.9 Operating free cash flow before intangibles3 4.8 (6.8) 11.6 Investment in product development & other intangibles (1.0) (3.2) 2.
Slide 24: Segment profit and loss H1-22 and H1-21
H1-22 H1-21 AU$m B2C B2B Corporate Total AU$m B2C B2B Corporate Total Licence revenue 18.8 25.5 - 44.3 Total Licence revenue 0.9 23.0 - 23.9 Other revenue and other income - - - - Other revenue and other income - - 0.1 0.1 Total revenue and other income 18.8 25.5 - 44.3 Total revenue and other incom
Slide 25: ARR movement by half
AU$m H1-19 H2-19 FY19 H1-20 H2-20 FY20 H1-21 H2-21 FY21 H1-22 Opening ARR 53.4 56.6 53.4 55.3 55.0 55.3 56.1 57.9 56.1 64.4 Acquired business* 3.0 0.3 3.3 - - - - 6.7 6.7 0.4 New business 2.5 3.2 5.7 3.0 5.5 8.5 4.1 3.3 7.4 3.4 Net upsell/downsell 0.8 (0.9) (0.1) 0.4 (0.6) (0.2) 0.6 0.9 1.5 1.7 Net
Slide 26: Blake acquisition fair value of identifiable assets
A summary of the fair value of identifiable intangible determined on assets acquired under the Blake eLearning Pty Ltd transaction is in the table below. Fair Value Fair Value 30 Jun 21 Adjustment 31 Dec 21 Asset A$m A$m A$m Net working capital (0.3) 0.2 (0.1) Tangible fixed assets 0.1 - 0.1 Product
Slide 27: Definitions
Term Definition School ARR is the annualised customer contract value of all active licence contracts in effect at a School Annual Recurring Revenue (ARR) particular date with any B2B school customer. B2B Licences reported reflect the number of individual students using 3P Learning products. It exclu
Slide 28: Contact
For further information, analysts, investors and other interested parties should contact: 3PL Investor Relations Investors@3plearning.com The release of this announcement has been authorised by the Board of 3P Learning Limited. 28 HalfFull YearYear 20222021 Investor Investor & Analyst & Analyst Brie
Slide 29: Disclaimer
The material in this presentation is a summary of 3P Learning Limited’s (‘3P’) activities and results as at the time of preparation, 24 February 2022. No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of information contained in this presentatio