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Learning Technologies Group PLC (LSE:LTG), (OTC:LTTHF) highlighted the strength of its software-as-a-service (SaaS) offerings and long-term contracts as it reported half-year results showing increased profit. Despite maintaining its interim dividend at 0.45p per share, the company adjusted its full-year outlook, citing challenges from the broader macroeconomic environment.
Revenue for the first six months of 2024 reached £250.3 million, representing a 12% year-on-year decline, or 3.8% lower on an organic, constant currency basis. However, this figure was still slightly above the £248 million guidance previously issued in the summer. The company pointed to weaker demand in learning and talent development activities, especially in transactional work and SaaS subscriptions, as contributing factors to the revenue drop.
SaaS and long-term contracts now make up 76% of total revenues, an increase from 72% a year ago. Importantly, all major clients with annual revenue exceeding $5 million successfully renewed their contracts during this period.
On an adjusted EBIT basis, profits grew by 5% to £43.3 million, while statutory operating profit saw a significant increase of 65% to £38.3 million. The adjusted EBIT margin also rose to 17.3%, up from 15.3%. This improvement was attributed to the commercial transformation of the GP Strategies talent transformation business, which has more than doubled its profits since its acquisition, along with ongoing cost-optimization efforts.
LTG also completed the sale of VectorVMS for $50 million, aligning with its strategy to streamline its portfolio and concentrate on core learning and talent development areas. A strong cash conversion rate of 70% allowed the company to reduce its net debt significantly, bringing it down to approximately £1 million by the end of August from £57.5 million at the end of June.
Looking ahead, the company trimmed its full-year guidance to £473-493 million in revenue and adjusted EBIT of £86-91 million, factoring in the current sterling-dollar exchange rate. The board anticipates results to come in at the lower end of this range, particularly due to challenges at GP Strategies.
Chief Executive Jonathan Satchell noted that the company has shown resilience, with 5% growth in adjusted EBIT on a like-for-like basis and strong cash performance despite the difficult macroeconomic environment. Satchell remains confident that LTG will return to growth when market conditions improve, supported by strong structural drivers within the learning and talent development market.
