Janison Education flags positive free cash-flow as revenues climb

Half-year revenue on track to hit $15-16m in six months to December
Bulk of revenue still driven through online assessments platform for schools
JAN flagged September quarter revenues of $7.6m, positive free cash flow of $900k

Education technology platform Janison Education (ASX:JAN) found some momentum at the opening bell today, as markets responded to its Q1 trading update.

The company flagged strong operating cashflows and a pick-up in revenue for the September quarter, ahead of its annual general meeting this Thursday (October 1).

Janison’s core product is a software service that allows schools to run secure examinations offsite — a tech offering with a strong 2020 narrative around it given the restrictions enforced due to COVID-19.

On the back of its Q1 (FY21) update, shares in the company rose as much 15 per cent in morning trade before easing back.

Cash is king

Around 37c this morning, shares in Janison have climbed from COVID-19 lows of around 24c.

However, despite the need for at-home learning solutions, shares in ASX edtech stocks have so far failed to match the torrid growth in sectors tied to the ecommerce boom.

Janison said it expects to book $7.6m of revenue for the September quarter, led by its school customers which will contribute $5.1m (a gain of 137 per cent on Sept-19).

Revenue growth for higher education was flat, while government clients fell by 24 per cent. The net result was an increase across the group of 50 per cent compared to the prior year comparative period.

The company now forecasts half-year revenue to the end of December of between $15-$16m (up >30pc from the prior half-year).

Janison said it generated $2.7m of revenue in Q1 from Educational Assessments (EA), a platform it acquired in May from the University of NSW.

Full-year revenues from EA are expected to top $4m, Janison said (up from previous guidance of $3.5m).

EA’s core product is the ICAS assessment program, a recognised skills-based competition that runs through 15 countries across the Asia Pacific, including China and India.

While school assessments make up the bulk of Janison’s income, the company said it booked three new client wins in its learning services division in Q1, “reversing a downward trend experienced in prior years”.

Topline revenue flowed through to net positive cash flows from operations — a key metric for ASX small caps — which is expected to top $2m for Q1.

Janison said it spent around $1.1m on “internally generated software development and other capex investments” in Q1, leaving it with positive free cash flow or around $900k.

The company said it expected to have $11.8m of cash on hand at the end of September with no debt, following a $7m share placement in late-April.