In the next couple of weeks we will see exactly how much edtech small caps will benefit from COVID-19.

Companies will have to lodge quarterly cashflow reports by close of business on Thursday April 30. So while many edtechs have noted they have seen rising demand for their solutions, we will see if that is reflected in their cash flow statements.

And the early signs do look positive. One of the first edtechs to lodge its financials was iCollege (ASX:ICT), which saw record cash collections of $3.17m.

The company’s focus is on upskilling employees for specific employer requirements. And unlike many Australian institutions it has not relied as heavily on the international student market — which has naturally dried up — as other institutions have.

It also expects to benefit from government stimulus packages worth over $500,000. This includes the JobKeeper wage subsidy, a regulator fee holiday until 30 June 2021, the payroll tax initiative and ATO cash flow boost.

Another edtech to provide financial data was Kip McGrath Education Centres (ASX:KME). It runs some physical centres which have had to close but its online courses have been booming.

Unaudited results for the past three quarters show the company generated $13.3m in revenue, a 13.7 per cent increase over the prior corresponding period.


It won’t all be good news

Inevitably companies will report increased demand. But that doesn’t mean it is business as usual.

Both companies reporting this morning have had to defer capital expenditure and impose a hiring freeze.

Additionally, Kip McGrath reported the shift online had been gradual and while its systems had so far been able to handle the growth, it would need to continue to monitor the situation.

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