Edufocal Gets Bad Grade for Earnings

• Edufocal Limited (LEARN) reported a net loss of $57.97Mn for the twelve months ending in December, due to a decline in revenue and higher costs.
• Revenue for the year 2024 was J$97.17Mn, a sharp dip (63.1%) from J$263.54Mn in 2023. This decrease is primarily due to the shift towards a more predictable and resilient revenue model, which has temporarily impacted topline performance.  The company has started monetising its proprietary technology platforms and is exploring licensing agreements to further expand its revenue.
• Administrative expenses increased by 20.6% compared to the previous year, driven by investments in technology. However, these costs were partly offset by savings achieved through optimized staffing and renegotiated vendor contracts.
• LEARN’s stock price has decreased by 19.4% since the start of the calendar year and has lost 71% percent in market value since being listed in March 2022. The stock closed Tuesday’s trading session at $0.29.
• Throughout the year, the company has focused on expanding into new markets and exploring partnerships to generate recurring income, recognising the limitations of its traditional revenue streams.  The expanded 'Quizzitive' platform, along with strategic partnerships and market expansion efforts, is expected to drive incremental revenue growth, ultimately delivering long-term value for shareholders. However, the shift towards a more diversified revenue base and recurring income is expected to stabilise revenue in the long term.
• While expanding its technology could enable the company to scale more quickly, it will incur significant costs to build out. Additionally, acquiring new customers may take longer than expected, potentially impacting earnings.

(Sources: JSE & NCBCM Research)