Slide 1: Investor & Analyst Briefing
68) 3P Learning Investor & Analyst Briefing Full year results to 30 June 2021 « ‘4 25 August 2021
Slide 2: Agenda
Chairman’s Update Q&A Strategic Overview & Appendices Business Update FY21 Financial Results Full Year 2021 Investor & Analyst Briefing 25 August 2021
Slide 3: Chairman's Update: much longer presentation due to merger
This investor presentation is much longer than what we plan to do in the future but with the merger of Blake eLearning (‘Blake’) having recently taken place, the newly combined business is very different to what 3PL was. It is therefore important for us to give investors as clear as possible underst
Slide 4: Chairman's Update
Full Year 2021 Investor & Analyst Briefing 25 August 2021
Slide 5: The merger with Blake is a transformative event
The merger with Blake that completed on 28 May 2021 is a transformative event for 3PL. It forged a combination that embodies key attributes for success in EdTech: ✓ Edtech founder, entrepreneur chair and shareholder led ✓ Merger integration on track, synergies realised ✓ FY21 YoY revenue up 4%, unde
Slide 6: Key items to note
Key items to note: • The results for FY21 include only 5 weeks of trading for the merged group so the overall results are not an informative guide to the future prospect of the business. • There were significant costs of $5.5m related to this transaction and other transactions for corporate advisory
Slide 7: FY21 financial results summary
• Financial results for FY21 show revenue of $57.4m (up 4% YOY), Underlying EBITDA of $10.4m (up 9% YOY) and Underlying EBIT of $1.1m (before extraordinary items that total $11.6m after-tax) which results in a net loss after tax of $9.4m. • The focus of this presentation is to help investors better
Slide 8: The merger means two important changes
The merger means two important changes: 1. 3PL now owns all the IP for all of its products, including its fastest growing Reading Eggs and Mathseeds. IP Pre-Merger IP Post-Merger B2B income 24% from 3PL products Income from MergeCo B2B income 76% 100% products from Blake products 2. 3PL will now mak
Slide 9: School billings trajectories for the main products
• The graphs below show the trajectories of school billings for the 3 main 3PL products for the last 3 years and forecasts for FY22 which demonstrates the strong growth of Reading Eggs and Mathseeds while Mathletics has declined in recent years (how we are addressing improving Mathletics is dealt wi
Slide 10: Large-scale enterprise deals and Mathseeds expansion
• Doing more large-scale deals with educational bodies at the state and national level, and with corporates as part of their CSR programs. We have a healthy enterprise sales opportunity pipeline at proposal or contract stage with further leads in progress. We have not included enterprise sales in ou
Slide 11: Improving Mathletics
• The team that produced Reading Eggs and Mathseeds, and helped create Mathletics originally, is now focusing on making significant improvements to Mathletics. While there are small, quick wins that can be done, it will be an 18-24 month project to fully revamp the program so that it can grow its ma
Slide 12: Essential ingredients for consumer subscription success
The three essential ingredients for our success in the consumer online subscriptions market are: • A good product that has ‘sticky’ monthly renewal rates (in the school market the yearly renewal rate is key but this is not realistic in the consumer space because maintaining engagement with kids with
Slide 13: Scale benefits in consumer digital marketing
• The more customers you have, the more data you have on customer behaviors and the stickier you can make your product. • The bigger your digital marketing team, the more market specialists you can afford to employ. This includes specialists in different social media platforms, content producers for
Slide 14: Consumer billings for Reading Eggs and Mathseeds
• Below is the consumer billings performance for Reading Eggs and Mathseeds for the last three years and the forecast for FY22. Billings by Platform ($m) Billings by Geography ($m) 35.1 35.1 3.3 27.9 27.9 12.3 2.2 7.3 12.8 20.3 20.3 0.6 11.0 5.1 9.6 13.9 7.3 6.6 13.9 4.0 3.6 4.3 2.1 19.0 14.7 13.3 1
Slide 15: Web free trial changes and growth in US and UK
• In the last nine months we have changed our web free trials for parents from no credit card required to credit card required, like what we do with Apple App Store and Google Play Store. This has increased our web paid conversion rate by at least 50% in all markets. Web sales have typically made up
Slide 16: Capitalisation and product impairment
Capitalisation and product impairment: • 3PL, under the new leadership team, is committed to making its accounts as simple to understand as possible. In a business like 3PL, where usually it gets paid in advance of delivering its services, the level of cashflow should be higher than the reported EBI
Slide 17: Capitalisation and product impairment
Capitalisation and product impairment: • This includes: • $6.5m1 in investment in the Readiwriter program which to date has only delivered $0.5m in revenue. We have stopped further investment in this program and will sunset it. • $7.2m1 investment in other programs and software over the last 3 years
Slide 18: Revenue recognition
Revenue recognition: • The integration of the Blake business with 3PL has resulted in some significant changes in the accounting treatment of how Blake's revenue will be recognised. Previously 3PL as the distributor recognised its share of sales to schools (generally 60%) at the time of invoice. In
Slide 19: FY22 guidance range
• The tables show a range of potential outcomes in FY22. AU$m Low High Licence revenue • The performance in FY22 versus prior year and future years B2B 57.8 60.3 B2C 31.8 34.0 will be significantly impacted by transitional accounting Total Licence revenue 89.6 94.3 matters explained on the previous
Slide 20: FY21 Financial Results
Full Year 2021 Investor & Analyst Briefing 25 August 2021
Slide 21: Group financial results FY21
Growth ex FY21 ex FY21 Growth Acquisition ▪ Licence revenue was up $2.3m to $53.8m. Blake AU$m Licence revenue Acquisition Acquisition FY21 FY201 % % contributed $3.4m to licence revenue. This was offset B2B 49.0 1.1 50.1 50.0 - (2%) by $1.2M due to B2B revenue on Reading Eggs & B2C 1.4 2.3 3.7 1.5
Slide 22: B2B segment results
Growth ex ▪ Licence revenue on an ex-acquisition basis was down 2%. FY21 ex FY21 Growth Acquisition This was impacted $1.2m by the B2B revenue on Reading AU$m Acquisition Acquisition FY21 FY20 % % Eggs & Mathseeds post acquisition being recognised on a Revenue 49.0 1.1 50.1 50.0 0% (2%) straight-lin
Slide 23: B2C segment results
Growth ex ▪ Licence revenue is down $0.1m on a like-for-like ex- FY21 ex FY21 Growth Acquisition AU$m Acquisition Acquisition FY21 FY20 % % acquisition basis. Revenue 1.4 2.3 3.7 1.5 147% (7%) ▪ Blake contributed $2.3m of revenue to performance, Cost of revenue 1 (0.1) (0.3) (0.4) (0.1) 300% - gener
Slide 24: Cash flow conversion
▪ Cash flow conversion (before capital expenditure) is 79% AU$m FY21 FY20 $+/- Underlying EBITDA 3 10.4 9.5 0.9 and was impacted adversely by a decline in working capital. Other non-cash items (0.6) (0.5) (0.1) ▪ The decline in working capital was due to the timing of large Change in working capital
Slide 25: Balance sheet
AU$m 30-Jun-21 30-Jun-20 ▪ Cash of $24.9m with no bank debt. Cash and cash equivalents 24.9 27.1 Trade and other receivables 13.8 11.1 ▪ Accounts receivables have increased $1.7m from the Blake Inventories 0.3 - acquisition with the remainder due to increase in sales. Lease receivable 0.7 0.6 Total
Slide 26: Q&A
Full Year 2021 Investor & Analyst Briefing 25 August 2021
Slide 27: Strategic Overview & Appendices
Full Year 2021 Investor & Analyst Briefing 25 August 2021
Slide 28: Synergies: annualised savings and costs to enact
Time to Annualised Cost Incurred to AU$m Realise (2) Description (1) Enacted Savings Enact Savings (3) (months) Consolidate and simplify 0 – 18 3.4 (0.5) - Simplify marketing approach and leverage joint sales, marketing and experience through B2B and B2C channels business processes - Streamline busi
Slide 29: Transaction costs by phase
AU$m FY20 FY21 Total Transaction Phase Phase 1 0.2 0.1 0.3 Phase 2 - 0.8 0.8 Phase 3 - 4.6 4.6 Total Transaction Costs (Pre-Tax) 0.2 5.5 5.7 Transaction Type Corporate advisory fees 0.1 2.8 2.9 Legal fees and legal due diligence 0.1 1.4 1.5 Other fees - 1.3 1.3 Total Transaction Costs (Pre-Tax) 0.2
Slide 30: Blake eLearning transaction summary
A summary of the fair value of identifiable intangible A summary of the transaction between 3P Learning Pty Ltd and determined on assets acquired under the Blake eLearning Pty Blake eLearning Pty Ltd on 28 May 2021 is below. Ltd transaction is in the table below. Fair Value Summary Asset AU$m Asset
Slide 31: Product & Technology investment
Product & Technology Investment ▪ Technology and product spend has remained consistent at 19% of revenue. AU$m FY21 FY20 $+/- %+/- Revenue 57.4 55.0 2.4 4% ▪ Product strategy has been revised to focus on hero Product & Technology products. Readiwriter will sunset resulting in a write-off of Expense
Slide 32: Guidance parameters
Guidance is based on the following significant parameters: ▪ B2B ▪ Allowed single-digit growth on core school market. ▪ Seasonality of school sales for all products are mostly recorded in H2 meaning only approximately 40% of the sales will be recorded as revenue in FY22. ▪ Excludes upside from any e
Slide 33: Segment results FY21 and FY20
FY21 FY20 Corp & Corp & AU$M B2B B2C Prod Total AU$M B2B B2C Prod Total Total Revenue & Other income 50.1 3.7 3.6 57.4 Total Revenue & Other income 50.0 1.5 3.5 55.0 Cost of revenue (7.8) (0.4) - (8.2) Cost of revenue (8.1) (0.1) - (8.2) Gross Profit 42.3 3.3 3.6 49.2 Gross Profit 41.9 1.4 3.5 46.8
Slide 34: Group ARR movement
Group AU$m FY18 H1-19 H2-19 FY19 H1-20 H2-20 FY20 H1-21 H2-21 FY21 Opening ARR 51.5 53.4 56.6 53.4 55.3 55.0 55.3 56.1 57.9 56.1 Acquired business* - 3.0 0.3 3.3 - - - - 6.7 6.7 New business 5.3 2.5 3.2 5.7 3.0 5.5 8.5 4.1 3.3 7.4 Net upsell/downsell 2.0 0.8 (0.9) (0.1) 0.4 (0.6) (0.2) 0.6 0.9 1.5 N
Slide 35: 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 36: Contact
For further information, analysts, investors and other interested parties should contact: Jose Palmero Dimitri Aroney Chief Executive Officer Chief Financial Officer jose.palmero@3plearning.com dimitri.aroney@3plearning.com The release of this announcement has been authorised by the Board of 3P Lear
Slide 37: Important notice
The material in this presentation is a summary of 3P Learning Limited’s (‘3P’) activities and results as at the time of preparation, 25 August 2021. No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of information contained in this presentation,