Breakout ed-tech stock Schrole Group positioned as the LinkedIn of education
Link copied to
Special Report: The company is leveraging its industry experience to build a competitive advantage in the booming market for global teacher recruitment.
Education-tech company Schrole Group (ASX:SCL) built strong momentum in the second half of the FY18 financial year, with strong growth delivered during the September quarter (Q3 FY19) in which annualised revenues increased by 33 per cent to $2.3 million.
Along with its Advantage software – an online recruitment platform focused on the rapidly expanding market for international schools – the company is also building out complementary product offerings including Schrole Verify for teacher background checks.
Investors rewarded Schrole for its operational execution in recent months, with the company’s stock price tripling since June.
And speaking with Stockhead, Schrole Group managing director Rob Graham says the company is now well-positioned for further growth in the years ahead.
With more than 20 years’ experience working as a principal at high-profile international schools in Europe and the Asia-Pacific, Graham has a unique view of the forces shaping the industry.
In short, it’s about to get a whole lot bigger. “Right now there are around 11,000 international schools globally, and that number is going to double over the next 10 years,” Graham says.
He says growth will be hitched to the growing Asian middle class – many of whom want to give their children English-language education opportunities.
“Currently there are 500,000 teachers employed at those schools. Say you have 20 per cent turnover, that’s 100,000 teachers moving every year. There’s huge demand to improve the recruitment process and it’s growing.”
“Australia as a whole has around 250,000 teachers. Where are the teachers in international schools going to come from? This shortage is a global problem.”
“That’s where a platform likes ours becomes important; schools can pay an annual subscription and get access to a deep pool of candidates in a cost-effective way to try and address the supply shortage.”
Strategically, Graham is positioning Schrole Group as the go-to multi-channel platform for teacher recruitment, alongside the rapid growth of international schools globally.
But, importantly, it’s also a market with high barriers to entry. And that’s where Graham says his industry experience has played a key role in building out SCL’s value proposition.
“I know the market and the people,” he says. “Education is a tough market to crack and international schools are particularly hard.”
“The competitive advantage we’ve got is domain experience about what international schools need. Because I’m not a developer, I’m an educator and a former principal so I understand what customers want.”
It’s also a competitive landscape; the school where Graham worked as a principal in Hong Kong was attended by the children of high profile Hong Kong residents including billionaires such as Li Ka-Shing.
“When we launched the business, I spoke to elite schools in Thailand and Hong Kong and said look, I think you’ve got a problem with hiring,” Graham says.
“And they took my meeting. These schools won’t take any meeting unless they know you, but because of my connections I was able to sign some of the top schools in the world and by the end of the first year, we had doubled the number of schools on our platform.”
Graham has achieved annual growth of “30 to 40 per cent” for the core platform, but the company is also pushing into new verticals.
He says the main focus is an automated background verification service, which will become “critical” as more teachers pursue opportunities in international markets.
In line with its growth outlook, the company has also attracted the attention of external investors in the second half of the year.
Graham attributed some of the recent share price gains to investments from several small-cap funds, who have joined the register with more of a long-term view.
“The feedback we’re getting from analysts and institutional investors is that the stock price is very undervalued, relative to the company’s growth outlook,” he says.
“We’ve got a real business. If you look at Q3 numbers, the company was cashflow positive for the quarter. Our annualised cash burn is far lower than other tech companies, and at our current rate of growth we’re not far from being cashflow neutral.”