Learning Technologies Group (LTG) H1 2024 earnings summary

Executive summary

• Revenue declined 3.8% organically at constant currency in H1 2024, reflecting a tough macroeconomic environment and cautious customer spending, especially in the US, with all major contracts above $5 million renewed and strong growth in LATAM and Leadership divisions of GP Strategies.

• EBIT increased by up to 5% year-over-year to £43.3m, with margin improving to 17.3%, supported by cost control and benefits from the Commercial Transformation Program.

• Portfolio simplification continued with the sale of VectorVMS for $50m and Lorien Engineering for £16.8m, sharpening focus on core learning and talent development.

• Increased investment in AI product innovation, with early positive customer uptake and paid pilots underway.

• 76% of revenues in H1 2024 came from long-term services and SaaS contracts, providing earnings durability.

Financial highlights

• H1 2024 revenue was £250.3 million, down 3.8% organically at constant currency from H1 2023, with SaaS and long-term contracts now 76% of group revenue.

• Adjusted EBIT rose to £43.3 million (margin 17.3%), up from 15.1%–15.3% in H1 2023.

• Free cash flow reached £29.9 million, up from £5.6 million in H1 2023, aided by disposals.

• Adjusted diluted EPS for continuing operations increased by up to 6.2% year-over-year to 3.496p.

• Net debt reduced to £57.5m at June-end, further reduced to £1m post-Vector disposal and voluntary debt repayment.

Outlook and guidance

• FY 2024 revenue guidance adjusted to £473–£493m and adjusted EBIT to £86–£91m, reflecting a softer macro environment, FX headwinds, and revised expectations for GP Strategies.

• Board expects results toward the lower end of guidance, particularly due to current trading at GP Strategies.

• Dividend remains flat at 0.45p, with optionality for the final dividend.

• Adjusted effective tax rate expected at ~27%; full-year finance charge net c5.5% on gross debt.

• Confidence in a return to growth is tied to macroeconomic improvement and US government spending post-election.