ReadCloud Limited (ASX: RCL) is a digital content platform for students’ learnings based out of Australia. It is an education technology company that provides eBooks on its online learning platform.
The directors of the company today, on 8 April 2019, announced that the company has entered into a three-year strategic distribution agreement with Australian Training Products (ATP). Innovation & Business Skills Australia (IBSA) and Futura Group merged to form ATP in 2017.
IBSA remained a market leader since its inception in 2004, in developing high-quality vocational education, training learning and assessment resources, which helps training providers to deliver excellent outcomes.
As per the strategic distribution agreement with ReadCloud, the ATP has committed to using ReadCloud exclusively for three years as their digital content encryption, and eReading delivery platform to its customer base, which includes over 1,000 Registered Training Organisations (RTO) in Australia and overseas.
Australian Training Products provides a range of bespoke learner resources for both Australian and international customers across the VET (including TAFE), university and commercial sectors. The major industries supported include Aged Care, Defence (the Australian Navy), Government, Commercial Cookery, Hospitality, Business and Management.
ATP has a customer base, which is largely complementary to ReadCloud’s growing base of secondary school customers. The Executive Director of ATP, Garry Gow said that they are excited to be in partnership with ReadCloud as their technology can protect the digital content of ATP to reduce piracy and deliver seamless integration with its customers’ Learning Management Systems. ATP provides a spectrum of training resources to over 1,000 RTOs in Australia and internationally. ATP seeks to offer its customers the ReadCloud platform to enable secure delivery of their content.
The CEO of ReadCloud, Lars Lindstrom said that they are delighted to have a partnership with ATP as it provides a significant opportunity to leverage the ReadCloud digital education platform across a new and much broader customer base in the VET sector.
With the ReadCloud platform, ATP can reduce piracy through protected digital content and can achieve significant savings in printing and mailing costs. It also demonstrates that the ReadCloud software suite has applications to add value in education outside of the secondary school business that the company currently operates in. Before signing the strategic distribution agreement, ReadCloud’s platform has already been deployed to a small number of users for some of ATP’s customers, including a university, a TAFE and four other RTOs.
ReadCloud will have a significant growth opportunity over the medium term as a result of their partnership with ATP. Management estimates that the roll-out of ReadCloud to ATP customers will occur gradually as ATP transition their RTO customers to digital content. Therefore, management is not able to estimate the potential increase in user numbers at this point.
In an operational update, management has mentioned that H2 2019 revenues will exceed that of H1 2019 and remains confident that there will be significant cross-sell opportunities in the future.
On the price-performance front, the stock of ReadCloud Limited traded at A$0.315, an 5% increase during the day’s trade, with a market capitalisation of A$26.32 million (At market close on 8 April 2019). The stock generated a negative return of 15.49% over the past six months and 3.45% over the past three months. Its 52-week high price stands at A$0.620, and 52-week low price stands at A$0.225, with an average trading volume of 40,494.
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