Operates in fast-growing e-learning and talent management market
Approximately 70% of LTGs business undertaken in the US
Half-year revenues came at around £62.5mln, up 85% year-on-year
Berenberg analysts have a 12-month share price target of 180p
What Learning Technologies does
Learning Technologies Group PLC (LON:LTG) operates in the fast-growing workplace digital learning and talent management market.
The AIM-listed firm offers a mix of product and services that focus on partnering with clients to achieve measurable results.
Working across recruitment, performance, learning, compensation, diversity and inclusion, compliance, succession, engagement and technical integration, the firm enables corporate and government clients to keep up with the increasing speed of change in the digital world.
Approximately 70% of LTGs business is undertaken in the US, with the UK and Europe accounting for the majority of the balance.
The group comprises a Software and Platforms division that accounts for approximately 70% of revenues on a proforma basis and typically sells multi-year SaaS (software-as-a-service) licences which enjoy high customer retention rates.
LTGs Content & Services division typically delivers shorter-term, fixed price projects to clients.
How is it doing
In the six months to 30 June, adjusted earnings (EBIT) were ahead of expectations at £19.4mln, up 134% year-on-year, while revenues surged 85% to £62.6mln.
The amount of recurring revenue also rose to 74% of the total from 51% in 2018, with the adjusted EBIT margin increasing to 31.1% from 24.5%.
Revenues had been boosted by 7% organic growth from LTGs software & platforms division, which makes up 68% of the total, offsetting a 3% contraction from the content & services arm.
The company also boasted of “strong cash generation”, with net debt falling to £13.9mln from £15.7mln in the period; since then, it has fallen further to £7.8mln.
As a result of the improved results, the firm hiked its interim dividend 67% to 0.25p per share.
Looking ahead, LTG said trading for the full year was currently in line with expectations, with content & services expected to report 8% organic growth in the year despite its first-half dip.
The firms PeopleFluent business is expected to “return to growth in 2020”, while BreezyHR, a US firm its bought for US$30mln in April, was achieving “significant growth”.
Breezy, whose products are used by 10,000 companies in 72 countries, was bought as part of LTGs drive to boost earnings before tax (EBIT) to a run rate of at least US$72mln (£55mln) by the end of 2021.
What the boss says: Jonathan Satchell, chief executive
"Our first-half performance increased recurring revenues and robust current trading provides great confidence for the year ahead to deliver further organic growth, strong margins and excellent cash generation. On the back of this momentum, we are investing in H2 2019 to drive sales further, as well as supporting organic growth initiatives into 2020."
At the start of 2020 analysts at Berenberg tipped LTG as one of their "top picks" for the technology, media and telecoms (TMT) sector, upping its share price target to 180p from 140p.
Berenberg sees “three avenues through which the company can deliver organic upgrades above consensus figures: upcoming large contracts, better-than-expected client retention; and/or better platform and software margins”.
Furthermore, with its strong cash generation and debt-free balance sheet, LTG has “firepower to pursue M&A even when the stock price is low, at current share levels deals naturally become more accretive”, and with a no major deal having materialised in 2019, the analysts said “Read More – Source