Schrole Group reports a strong growth outlook and improved half-year result, with growth momentum in its June Quarter, record high renewal rates, growing margin outlook, and strong Annualised Recurring Revenue growth.

Provider of global SaaS and training solutions for teachers and educational institutions Schrole Group (ASX:SCL) has reported a significantly improved bottom-line result, driven by both COVID-19 recovery and multiple growth strategies.

Schrole recorded Annualised Recurring Revenue (ARR) of US$3.3m as of 30 June 2021, an increase of 7.8% compared to US$3.1m on 30 June 2020.

The Company reported strong growth momentum, with record high 94% renewal rates in the June quarter 2021, benefitting from new SaaS products, growing global direct sales team in new global markets, growing cross-sales and the global shift to online engagement during the COVID-19 pandemic.


Margin expansion forecast over next year

Schrole is expecting margins to continue increasing through to 30 June 2022, with reduced  commissions to its historical distribution partner, International Schools Services Inc (ISS), as Schrole focuses on direct sales growth.

An additional boost to margins is expected from new Schrole HR SaaS offerings, driving further cross and upsell.

The company can see a visible path to increasing average contract value to AUD$30k as the full Schrole HR product suite is rolled out, and the number of products per customer increases.


Focus on three-pronged sales & marketing Strategy to boost growth

Schrole is successfully implementing its three-pronged sales and marketing strategy including direct sales, cross- and upsell along with Faria Education Group co-marketing.

Its sales and account management teams have grown from four to eight and are gaining traction, selling into new, global markets.

Schrole can now sell directly into Europe and South America for the first time.  Recent successes of the direct sales team include an AUD$85k contract with a UAE School Group and an expanded AUD$134.8k contract with a premier International School in Vietnam.


Product expansion to drive cross- and upselling

Roll-out of the Schrole Human Resources SaaS platform Schrole HR is driving cross- and upsell momentum, increasing volumes and margins.

Schrole HR will expand the Company’s SaaS offerings, to provide a full suite of six HR SaaS offerings, comprising Schrole Connect, Verify, Engage, Cover, Develop and Events.

Furthermore, with new tech SaaS products, the company expects to be consistently generating revenue over a full 12-month period, compared to second-half cash receipts historically contributing between 59% and 80% of full year cash receipts.


Faria partnership provides direct marketing opportunities

Schrole has commenced co-marketing to the customer base of more than 10,000 schools of its strategic partner, US-headquartered Faria Education Group.

Faria is a high regarded global edutech provider, with more than 4 million students in around 155 countries.

Faria’s strategic partnership with Schrole is both through its 19.79% ownership of Schrole and via co-marketing of Schrole’s HR SaaS to its significant customer base.


Annualised Recurring Revenue rises as Schrole focuses on growing SaaS income

Schrole recorded Annualised Recurring Revenue (ARR) of US$3.3m as of 30 June 2021, an increase of 7.8% compared to US$3.1m on 30 June 2020.

The company’s goal is to grow SaaS revenue as a proportion of total revenue. Currently, SaaS revenues comprise approximately 75% of total revenue.

Non-SaaS revenue comprises face to face delivery of Schrole’s accredited qualifications to its blue-chip enterprise and government clients.

The company recorded a 24% improvement in its net loss of $706,755 for H1 2021, reduced from the same period in 2020 with a loss of $934,677, due to the initial shock of the COVID-19 pandemic.

Revenue was around $2.7 million for H1 2021, around 10% lower than H1 2020 of around $3 million. The fall was attributed to lower renewal rates in 2020 and consequently reduced subscription revenues over H1 2021.


Schrole well-positioned to capitalise on growth prospects

Schrole Managing Director Rob Graham said he had never been more excited about the growth prospects of the company.

“We are rolling out a full Human Resources software suite for global educational organisations, we have an expanded direct sales team now selling across the world and we have also commenced co-marketing with strategic partner Faria, who have approximately 10,000 school clients,” Graham said.

“We are capturing the significant growth opportunities across our Schrole Community.”

This article was developed in collaboration with Schrole, a Stockhead advertiser at the time of publishing.

 This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.