Slide 1: Investor & Analyst Briefing
22 February 2021 Investor & Analyst Briefing Half year results to 31 December 2020 Rebekah O’Flaherty — CEO | Dimitri Aroney - CFO
Slide 2: Overview, Strategy Update, H1-21 Financial Results, Outlook, Q&A, Appendices
Overview Outlook Strategy Update Q&A H1-21 Financial Appendices Results
Slide 3: Overview
Overview H1-21 Investor & Analyst Briefing 22 February 2021
Slide 4: Half year results highlights
ARR - royalty adjusted1 $50.9M ↑ 3% on pcp Licences1 Licences 000s 4.7M ↑ 5% on pcp 4,555 4% 4,669 2% 4,747 -1% 4,502 878 Statutory Revenue2 931 856 929 $24.0M ↑ 3% on pcp 1,337 1,269 1,360 1,430 Underlying EBITDA $4.4M ↑ 26% on pcp 2,287 2,377 2,380 2,439 Net Dollar Churn Percentage1 Jun-19 Dec-19
Slide 5: Strategy update
Strategy update H1-21 Investor & Analyst Briefing 22 February 2021
Slide 6: Organisational restructure and operating leverage
▪ At the end of FY19 we completed a 3-year long organisational restructure, including tackling technical debt and investing in scalable sales and marketing systems. We now have a stable cost base positioning us well to enjoy operating leverage as we accelerate sales growth. 6
Slide 7: Product and customer expansion
Product and customer expansion • Like-for-like1 New Business Mathletics ARR growth of 32% • Readiwriter ARR grew 64% and licences grew 51% in the second quarter of FY21 • Licence growth of 5% since 31 December 2019 • Sizeable enterprise sales opportunity pipeline at proposal or contract stage with a
Slide 8: Accelerate profitable sales growth in the Americas
Accelerate profitable sales growth in the Americas • New Business ARR growth of 44% • A$1.1M EBITDA representing growth of A$0.8M or 267% on pcp • ARR growth of 8% in USD • Improved net dollar churn of 15% • Partnership with NWEA providing a connection to their Map Growth assessment which will unloc
Slide 9: Enhance customer experience and retention
Enhance customer experience and retention • Retention improvement for all products of 4% • New customer retention for all products improved by 7% indicating improvements to our onboarding of customers in year 1 of our relationships • Improved net dollar churn of 4%-pts • 25% increase in logins per t
Slide 10: H1-21 Financial results
H1-21 Financial results H1-21 Investor & Analyst Briefing 22 February 2021
Slide 11: H1-21 financial results
AU$M H1-21 H1-20 $+/- %+/- Revenue 23.9 23.0 0.9 4% Licence revenue APAC 13.3 12.5 0.8 6% EMEA 5.6 5.5 0.1 2% ▪ Overall performance of the company has been resilient Americas 4.8 4.8 - 0% during the COVID-19 pandemic and in the background Licence revenue 23.7 22.8 0.9 4% of corporate activity. Other
Slide 12: Licences and EBITDA by segment (APAC)
▪ ARR-royalty adjusted, was up 5% due to retention improvements AU$M HY-21 HY-20 $+/- %+/- from improved product and customer experience. Revenue - Maths & Literacy 13.3 12.5 0.8 6% ▪ Licence revenue included an additional $0.6M of revenue Revenue - Copyright fees, and other 0.1 0.1 - 0% generated f
Slide 13: EMEA segment results
▪ ARR-royalty adjusted was up 3% (7% after adjusting for the AU$M HY-21 HY-20 $+/- %+/- impact of FX) due to improved retention rates during the key back Revenue - Maths and Literacy 5.6 5.5 0.1 2% to school period and a 100% improvement in new business ARR* Total revenue 5.6 5.5 0.1 2% versus the p
Slide 14: Americas segment results
AU$M HY-21 HY-20 $+/- %+/- Revenue - Maths and Literacy 4.8 4.8 - 0% ▪ Licence revenue was up 3% in USD (flat in AUD) despit e challenging conditions in the USA due to funding uncertainty Revenue - Other 0.1 0.2 (0.1) (50%) caused by COVID-19. Total revenue 4.9 5.0 (0.1) (2%) Expenses (3.8) (4.7) 0.
Slide 15: Expenses and underlying EBITDA
▪ Employee expenses have increased by $0.2M as a result of $M H1-21 H1-20 $+/- %+/- improved new business sales generating increased Total Revenue 23.9 23.1 0.8 3% commission expense. Employee expenses (14.3) (14.1) (0.2) 1% Marketing expenses (0.9) (1.0) 0.1 (10%) ▪ Headcount increased from 269 at
Slide 16: Operating free cash flow
$M H1-21 H1-20 $+/- Underlying EBITDA 4.4 3.5 0.9 ▪ $2.2M improvement to operating free cash flow before intangibles was generated from FX and other non-cash (0.2) (0.8) 0.6 improved performance with ARR-royalty Change in working capital (9.2) (9.9) 0.7 adjusted increasing 3% from pcp. Operating fre
Slide 17: Cash and cash equivalents
$M 31-Dec-20 30-Jun-20 31-Dec-19 Cash and cash equivalents 15.0 27.1 12.5 ▪ Trade receivables & contract liabilities have increased from 31 Trade and other receivables 13.6 11.1 12.0 December 2019 due to improved new business & renewals Income tax receivable 0.3 - 0.2 and as more customers in APAC e
Slide 18: Investment split by asset type
Investment split by asset type and accounting treatment ▪ During the period we enhanced Mathletics with the release of a new assessment platform; new H1-21 CAPEX % OPEX % Total understanding practice and fluency content for AU$M additional grades in our key markets; Meritopia, our Mathematics 3.6 80
Slide 19: Corporate costs
Corporate Costs AU$M FY20 H1-21 Total Transaction Phase Phase 1 0.2 0.1 0.3 Phase 2 - 0.8 0.8 Phase 3 - 0.1 0.1 Total Corporate Costs (Pre-Tax) 0.2 1.0 1.2 Transaction Type Corporate Advisory fees 0.1 0.3 0.4 Legal Fees 0.1 0.5 0.6 Other fees and services - 0.2 0.2 Total Corporate Costs (Pre-Tax) 0.
Slide 20: Outlook
Outlook H1-21 Investor & Analyst Briefing 22 February 2021
Slide 21: FY21 outlook
▪ APAC: We expect low single digit licence revenue and EBITDA growth. ▪ EMEA: We expect low single digit licence revenue and EBITDA growth in British Pounds. The timing of the delivery of the ME MOE is uncertain due to the impacts of COVID-19, however the expected delivery of this agreement will gen
Slide 22: Q&A
Q&A H1-21 Investor & Analyst Briefing 22 February 2021
Slide 23: Appendices
Appendices H1-21 Investor & Analyst Briefing 22 February 2021
Slide 24: Revenue by geography
Revenue by Geography Revenue Split by Geography Dec-19 Dec-20 A$M Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Dec-19 Jun-20 Dec-20 Americas Americas APAC 30.1 30.8 31.8 34.4 33.7 12.6 33.8 13.4 21% 21% EMEA 10.3 12.6 13.0 13.0 12.1 5.5 12.2 5.6 Americas 4.4 5.9 7.7 8.0 8.6 5.0 9.1 4.9 APAC EMEA EMEA APAC Tot
Slide 25: Licence by geography
Licence by Geography Licence Split by Geography 000s Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Dec-19 Jun-20 Dec-20 Dec-19 Dec-20 APAC 2,627 2,664 2,704 2,678 2,287 2,377 2,380 2,439 EMEA 1,498 1,660 1,737 1,534 1,337 1,269 1,360 1,430 Americas Americas 19% 19% Americas 903 1,026 1,001 849 931 856 929 878
Slide 26: Group ARR movements
Group EMEA A$M H2-19 FY19 H1-20 H2-20 FY20 H1-21 A$M H2-19 FY19 H1-20 H2-20 FY20 H1-21 Opening ARR - royalty adjusted 52.0 49.9 49.6 49.3 49.6 50.0 Opening ARR - royalty adjusted 12.0 12.6 11.3 11.3 11.3 10.9 Acquired business* 0.2 2.3 - - - - Acquired business - - - - - - New business 2.8 5.2 2.8 5
Slide 27: Reconciliation of segment EBITDA
Reconciliation of Segment EBITDA to Statutory EBITDA per note 3 of the H1-21 financial statements* $M H1-21 H1-20 Mvmt Growth APAC Underlying EBITDA 9.8 9.0 0.8 9% Less : Corporate Costs and Development* (9.9) (8.4) (1.5) 18% Add : Intersegment Royalties & Charges 2.9 3.2 (0.3) (9%) Statutory EBITDA
Slide 28: Definitions
Definitions Term Definition ARR - royalty adjusted is the annualised customer contract value of all active licence contracts in Annual Recuring Revenue - Royalty Adjusted (ARR - effect at a particular date, adjusted for the annualised value of royalties payable to third parties on Royalty Adjusted)
Slide 29: Contact
For further information, analysts, investors and other interested parties should contact: Rebekah O’Flaherty Dimitri Aroney Chief Executive Officer Chief Financial Officer rebekah.oflaherty@3plearning.com dimitri.aroney@3plearning.com The release of this announcement has been authorised by the Board
Slide 30: Forward-looking statements
The material in this presentation is a summary of 3P Learning Limited’s (‘3P’) activities and results as at the time of prepa ration, 22 February 2021. No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of information conta ined in this presentat