Last checked at 2 Feb 2024 07:00
2 February 2024
Tribal Group plc
("Tribal" or "the Group")
Trading Update and Notice of Results
Cloud expansion driving growth in ARR and results ahead of market expectations
Tribal (AIM: TRB), a leading provider of software and services to the international education market, is pleased to provide an update on trading for the year ended 31 December 2023 ("FY23" or "the Year").
Trading performance
The Board anticipates a solid trading performance in FY23 with adjusted EBITDA and net debt expected to be comfortably ahead, and revenue marginally ahead, of current market expectations1. This incorporates the Nanyang Technology University ("NTU") provision release disclosed in the Group's half year results.
Tribal's performance in the Year demonstrates the strength of the business, with its established customer base and enhanced SaaS product set. This was achieved despite the backdrop of the lapsed offer for the Company by Ellucian (the "Offer") and the termination of the contract with NTU.
Closing Core Annual Recurring Revenue (ARR)2 is expected to have increased by 13% to £51.1m (2022: £45.3m at constant currency), subject to audit, reflecting growth in the Group's strategic products. Overall ARR is expected to have increased by 9% to £54.5m (2022: £50.2m), reflecting the anticipated decline in the non-core Software and Services segment.
While initial exchanges have taken place with NTU, they have not yet reached a resolution and the potential outcome remains uncertain. An update will be provided as and when appropriate.
Net debt
The Company closed the Year with a net debt position of £7.2m (2022: net debt of £3.4m), which reflects a net cash outflow as a result of continued investments in its product portfolio, the issues surrounding the NTU contract and exceptional costs in relation to the lapsed Offer and restructuring of the Education Services business, as discussed below.
The Company has renewed its banking facilities for three years, with the option to extend for a further two years until December 2028, which consists of a £20m multicurrency loan facility. The Board is confident it has sufficient funds to execute on its growth strategy.
Sales performance
The Group achieved a solid sales performance during the Year, especially in the first half, including one new SITS:Vision customer (ARR value of £0.5m) and four major Tribal:Cloud migrations (ARR value of £1.7m). Sales momentum slowed in the second half of the Year, as customers awaited the outcome of the proposed offer for the Company.
Education Services (ES)
The Board conducted a strategic review of the ES division during the Year and concluded that the best way to drive further growth in revenue and profitability, and deliver value to shareholders, was to establish ES as a standalone entity within the Group, with its own company structure. The business continues to make progress against its strategy, resetting its operating model and strengthening its business development and marketing functions.
Outlook
As part of the transformation of Tribal to a pure SaaS business, the Board has instigated a restructuring of the core software business and, together with associated headcount reductions, expects this to support future profitability levels.
Whilst sales cycles are still extended, the Group has a significant pipeline across the business, and the Board is confident in the effectiveness of its cloud strategy and continued growth in 2024.
Notice of Results
The Group expects to announce its audited full year results on 21 March 2024.
Mark Pickett, CEO of Tribal Group, commented:
"Notwithstanding the various corporate developments during the year, the Group's positive performance reflects the enduring strength of our businesses, the team's ability to retain existing customers and win new ones, and the effectiveness of transitioning customers to the cloud. We have been, and remain, focused on delivering an outstanding service to our customers, and with high levels of recurring revenues, the Board is confident in its ability to evolve Tribal to become a global pure-play EdTech SaaS business."
Notes
1 In so far as the Board is aware, as at the point of this announcement, consensus market expectations for FY23 were for Revenue of £84.2m adjusted EBITDA of £12.6m, excluding share based payments, and Net Debt of £9.5m.
2 'Core ARR' = Foundation, Cloud and Edge product sets.
Enquiries: Tribal Group plc |
Tel: +44 (0) 117 311 5293 |
Mark Pickett, Chief Executive Officer Diane McIntyre, Chief Financial Officer | |
Investec Bank plc (NOMAD & Joint Broker) | Tel: +44 (0) 20 7597 5970 |
Virginia Bull, Nick Prowting, Tom Brookhouse | |
Singer Capital Markets (Joint Broker) | Tel: +44 (0) 20 7496 3000 |
Shaun Dobson, Tom Salvesen, Alex Bond | |
Alma Strategic Communications | Tel: +44 (0)203 405 0205 |
Caroline Forde, Hannah Campbell, Will Ellis Hancock |
About Tribal Group plc
Tribal Group plc is a pioneering world-leader of education software and services. Its portfolio includes Student Information Systems; a broad range of education services covering quality assurance, peer review, benchmarking and improvement; and student surveys that provide the leading global benchmarks for student experience. Working with Higher Education, Further and Tertiary Education, schools, Government and State bodies, training providers and employers, in over 55 countries; Tribal Group's mission is to empower the world of education with products and services that underpin student success.