Slide 1: Investor & Analyst Briefing
Investor & Analyst Briefing For the year ended 30 June 2024 Presented: 16 August 2024 by Chairman Matthew Sandblom CEO Jose Palmero 3P Learning Limited CFO Anton Clowes ABN 50 103 827 836
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer The material in this presentation is a summary of 3P Learning Limited’s (“3P”) activities and results as at the time of preparation, 16 August 2024. No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of information
Slide 3: Our Programs
Our Programs Improving student Learning to read Teaching children Where children Writing and maths engagement made fun and foundational maths learn to write with assessment and achievement in rewarding for and problem- confidence and that makes mathematics young children solving skills success progr
Slide 4: Agenda
Agenda • Chairman’s Update • Outlook • CEO Update • Q&A • CFO: Results & Cash Flow • Appendices 4
Slide 5: Chairman's Update
Chairman’s Update Matthew Sandblom
Slide 6: FY24 Highlights and Product Investment
Chairman’s Update FY24 Highlights and Product Investment Key Achievements: • Significant product releases position us well for future growth. • Maintained tight control over costs. Sales Performance: • Sales growth in the school market challenging, especially in North America. • Achieved $110.0m in
Slide 7: Product Releases and Go To Market
Chairman’s Update Product Releases and Go To Market FY24 Product Releases: • Major releases for Writing Legends and Mathletics. • Full curriculum coverage pending for wider adoption in FY25. Sales Strategy Shift: • Transition to selling complete program suites rather than individual programs. • Sale
Slide 8: Future Focus and Outlook
Chairman’s Update Future Focus and Outlook FY25 Focus: • Implementing 3 Essentials product suite and new sales model. • Regional market testing over the next 12 months. • No guidance for FY25 until results of new strategy are clear. Growth Expectations: • Aim for significant growth in Annual Recurri
Slide 9: CEO Update
CEO Update Jose Palmero
Slide 10: FY24 Highlights
CEO Update FY24 Highlights UNDERLYING1 EBITDA REVENUE3 B2C BILLINGS4 B2B ARR $12.0m $110.0m $43.3m $62.1m -25% +2% +6% -5% vs pcp2 vs pcp vs pcp vs pcp UNDERLYING1 CASH FLOW FROM CUSTOMERS PRODUCT OTHER INVESTMENT OPERATIONS BEFORE TAX >5.0m $27.5m $25.0m $11.0m • $23.9m Product development - • B2B
Slide 11: Performance in the Consumer Market
CEO Update Performance in the Consumer Market 6% consumer billings1 growth in FY24 vs FY23, across all key markets and channels. • Reading Eggs, Mathseeds and Mathletics billings were $43.3m, up 6% on pcp, with net billings contribution margin of 52% including direct sales, marketing and platform co
Slide 12: Performance in the Schools Market
CEO Update Performance in the Schools Market FY24 FY23 +/- % +/- Closing ARR1 ($m) 62.1 65.4 (3.3) (5%) The graph below shows school ARR for FY23 and Licences (m) 4.8 5.2 (0.4) (8%) FY24. Exit ARPU2 ($) 12.94 12.49 0.45 4% • Revenue was $66.9m, $0.2m higher than pcp. • Closing ARR was $62.1m, which
Slide 13: B2B model review
CEO Update • B2B model review due to lower sales performance and bigger range of programs. • 3 Essentials combines our evidence-based programs for reading, writing and maths into an integrated solution with SSO, simpler navigation, and consolidated reporting. • Enhance product, marketing and sales s
Slide 14: APAC - 3 Essentials Opportunity
CEO Update APAC - 3 Essentials Opportunity Schools Students 9,000 2,500,000 8,000 New Schools (287k students) 2,000,000 7,000 Expansion in 6,000 70% of existing schools Schools (925k students) 1,500,000 5,000 46% of 4,000 Students 1,000,000 3,000 2,000 500,000 1,000 0 0 Total Addressable Existing 3P
Slide 15: Increase billings per school
CEO Update KPI: Increase billings per school 1 Product 2 Products 3 Products >50% schools ~45% of schools 1% of schools $10,000 $9,000 $8,000 $7,000 Avg $ / School $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Mathletics Reading Eggs Mathletics & Mathletics & Mathseeds & Maths & 3 Products Average of
Slide 16: APAC - 3 Essentials Opportunity
CEO Update APAC - 3 Essentials Opportunity Total Addressable Opportunity $100 $90 New Schools : $12m $80 $70 $60 Existing – Upsell and Expansion : ~$25 - $55m A$m $50 The upsell opportunities overlap. $40 $30 $20 $10 $0 Existing 3P Expansion (more Upsell from 2 or Upsell from 1 New Business students
Slide 17: Our Strategy
CEO Update Our Strategy Markets (AMER, EMEA, APAC) Markets (AMER, EMEA, APAC) 17
Slide 18: B2B Strategy
CEO Update B2B Strategy B2B key drivers for growth Revenue growth Customer retention USA market - improved through 3 expansion Essentials profitability and efficiency ● Prioritise selling complete ● Concentrate marketing spend in ● Review and simplify business online solutions for reading, targeted
Slide 19: B2C Strategy
CEO Update B2C Strategy B2C key drivers for growth Grow revenue Improve user Improve parent homeschool experience – first dashboard and market by touch points reporting focusing on ESA funding ● Enhance critical touch points such ● Redesign parent dashboard and ● Research and pursue ESA funding as f
Slide 20: Product Releases and Improvements
CEO Update Product Releases and Improvements Achieved in FY24 What’s coming in FY25 USA district student-level reporting, Read Aloud Fluency feature, 3 Essentials cross-program SSO and reporting, USA district interface upgrade, WACG accessibility compliance, USA district reporting to standards Map 1
Slide 21: CFO: Results & Cash Flow
CFO: Results & Cash Flow Anton Clowes
Slide 22: P&L Key Drivers
Results Analysis P&L Key Drivers Profit and Loss Statement +/- %+/- FY24 FY23 • B2B revenue was flat against pcp reflecting a below average $m Revenue retention performance across all regions. B2B 66.9 66.7 0.2 0% • B2C revenue of $43.1m, up 6% on pcp, reflecting a reasonable B2C 43.1 40.7 2.4 6% pe
Slide 23: B2C Performance Metrics
Results Analysis B2C Performance Metrics $m FY24 FY23 +/- % +/- $m FY24 FY23 +/- %+/- 1 5 Gross Billings 43.3 40.7 2.6 6% Revenue 43.1 40.7 2.4 6% 2 Licences (k) 290.0 302.0 (12.0) (4%) 3 ARPU ($) 149.31 134.77 14.54 11% Expenses Sales, Marketing & Cost of Revenue 6 (24.5) (23.2) (1.3) (6%) $m FY24
Slide 24: B2B Performance Metrics
Results Analysis B2B Performance Metrics $m FY24 FY23 $m FY24 FY23 +/- % +/- 2 Opening ARR 65.4 64.4 Revenue 66.9 66.7 0.2 0% Acquired business - 1.4 New business 5.5 5.5 Expenses Net upsell/downsell 2.3 1.9 Sales, Marketing & Cost of Revenue 3 (35.8) (30.7) (5.1) (17%) Net churn (10.7) (8.8) Contri
Slide 25: Pro-forma Costs
Results Analysis Pro-forma Costs • Non-cash B2C goodwill impairment expense of $44.5m. Pro-forma expense(after tax) FY24 FY23 $m • Marginal headroom at the start of FY24. Goodwill impairment expense (44.5) - • FY24 cash flow projections adjusted downwards (higher Impairment loss - product (0.6) - In
Slide 26: Cash Bridge
Results Analysis Cash Bridge • Underlying Cash Flow from Operations before tax was $11.0m, up 8% on pcp (FY23: $10.2m2). • Buy back of US schools Distributor Rights was $20.5m. • Pro-forma payments of $2.8m includes $1.0m Brightpath earn-out amount. • Net PPE & intangibles addition of $4.2m, include
Slide 27: Outlook
Outlook
Slide 28: Medium Term Outlook
Outlook Medium Term At 3PL, we have commenced our B2B business model shift to 3 Essentials, increased focus on our US strategy, and identified key factors that we believe will contribute to a positive financial outlook in the coming year and beyond. While we are not issuing specific earnings guidanc
Slide 29: Appendices
Appendices
Slide 30: Glossary
Appendices Glossary Term Definition ARR Annual Recurring Revenue Churn Percentage Churn Percentage is calculated as a proportion of the opening School ARR in a rolling 12 or 6 month period (as relevant). Earnings before interest, tax, depreciation and amortisation, excluding unrealised foreign excha
Slide 31: Q&A
Q&A
Slide 32: Thank You
Thank You