Discl: Held IRL

In Year 1 of its “Transformational”, go-back-to-basics year, JAN's 1HFY25 financial results were decent against this context - sustained revenue, GP, EBITDA and better NPAT - running while chewing gum, essentially.

Need to work through the Appendix 4D to work through how cost “reshaping” has changed the cost base - quite hard to see from these high-level numbers.

1 new contract - Australian Christian College, unlikely to be material in value - but its a start.

Management is doing what it said it would, under-the-hood, to get back to the basics in JAN’s core competence of the Assessments Platform:

• Reshape the cost base
• Build AI capabilities - operating, now in trial mode with customers
• Improve business operating processes to improve operating efficiency
• Restructure the organisation and bring in the key Executives - CTO, Chief Growth Office and new Board Member have come onboard very recently/about to come onboard
• Refocus and rebuild sales pipeline
• Continue to deliver against existing contracts including the new NSW DoE contract

These actions, together with +$1.1m positive operating cashflow, $10m cash on hand and $2m undrawn facility, sets JAN up nicely for growth investment vs the market opportunity assessment digitisation

Ingredients for the next phase of growth are almost fully in place, the actual cooking is happening, but there is no food on the table just yet.

Need to give management time and have a lot of patience for these efforts to transform into revenue growth - market reaction yesterday (up ~8%) and recent increase in funds shareholding (see earlier post) suggests that JAN has shareholder support and appetite for this. But like everyone else, really need to see this growth ambition translated to real financial growth.

No burning reason to exit now as JAN is well into the turnaround, but I also have no immediate full-on strong conviction to top up now either as my portfolio allocation for JAN feels about right.

Hold and reassess in the next 6M

Interesting and pleasing fundie moves in the past week, ahead of the 1HFY2025 results announcements today.

• Ryder Capital increased its stake by 1.17% from 9.76%
• Australian Ethical Investment increased its stake by 3.04% from 8.34%

Attended this morning's call and am working through the results now - the phrase running through my head to sum up the earnings is "running while chewing gum".

It was a decent, solid result in the context of a lot of "going-back-to-basics-under-the-hood" progress. Reminiscent of EML 12-18M ago, EOS 12-18M ago and CAT 3+ years ago ...

From today's price action and these fundie moves, the market seems keen to give Sujata the time and lattitude she needs to work things through - promising from my perspective.

Will posts thoughts later today ...

Discl: Held IRL

Small 0.2%, $31k increase in stake @$0.2207 from W Houlden the founder.

Spare change for him and likely to be a planned signal to the market. But clearly better that he be buying than selling, thats for sure.

Following Aust Ethical adding 1.8% to its stake earlier this week, these are good and welcomed data points on the confidence in the trajectory of the JAN turnaround.

Discl: Held IRL

Have just reviewed the JAN FY2024 AGM slides and my action plan yesterday. Was not planning to post my thoughts as there is probably no interest in JAN, but seems like I may not be the only one planning on giving JAN more runway with this accouncement this morning:

My thoughts from yesterday:

KEY TAKEAWAYS

FY24 was clearly a “holding pattern” year while waiting for Sujata to come onboard.

Pre-FY24, JAN was all over the show, getting into areas outside of its core Janison Assessment Platform and losing focus.

FY25 Strategy has been reviewed and refreshed, org structure changes have mostly been made - at the core of it is the Janison Insights Assessment Platform, which is a world-leading platform in a big ~$21bn growing market for the digital transformation of global education.

Strategy is reinforcing the Assessments Platform as the asset and everything is built around maximising/leveraging that asset - consolidating current capabilities and going back to basics.

POSITIVES

Positive but tentative start to 1QFY25.

The turnaround is under way - what Sujata said she would do has been done and delivered - good start to earning credibility.

The Strategy refresh is underwhelming on the one hand, but the question then is, “what else could be expected” - the main asset is still the Assessment Platform, so going back and making that as the centre of JAN’s universe does make good business sense, even though it comes across as underwhelming.

The NSW DoE contract is a good opportunity to cement the strategy and further enhance the reputation of JAN’s Assessment Platform.

Sujata is under water with her stake at $0.25, so she is absolutely incentivised to grow the business.

Exiting now does not give the strategy and re-focus back to the basics, a chance to work .

The turnaround now has, in place:

• Leadership 
• Ownership by Sujata and the Board 
• A refreshed strategy with clear goals, aspirations and timelines
• New org structure with renewed sales focus 
• Re-focus on the core product, a world class digital assessments platform
• The DoE contract which buys management some time to get new contracts 
• Renewed focus on innovation and the adding of new capabilities into the platform - whether it is “AI” or not is really not that important so long as the new capabilities enhance the value of the platform for customers
• EBITDA positive 
• Cash on hand 
• Increasing push in education to digitise - TAM is still there

Can’t think of any turnaround ingredient that is NOT in place - what is needed is some contract wins to confirm that the refreshed strategy is working.

ACTION

Stay invested for another 6M and see if the revised strategy gains traction as all the ingredients for a successful turnaround appear to be in place. It just needs time now.

Discl: Held IRL

Feeling underwhelmed by the JAN Strategy update. 

SUMMARY OF THOUGHTS

On the one hand, it was probably not realistic to expect too much - the platform is world class, but JAN seems to have been sitting on its reputation and current cohort of customers, has been all over the show, lost focus etc.

So, the New CEO is going back to basics, leveraging on the core strength, and actually SELLING JAN to the broader market. Not sure there is anything wrong with this approach - not sure what else she could do really. 

There was a lot of use of big buzz phrases, particularly "AI", but there were no specifics as to what this actually meant from a new capability, area to focus efforts on, cost estimates etc. 

What was needed, and was conspicuously missing, were clear measurable numbers/targets as to what good looks. That is troubling. I get that Sujata is 4M in the role, but she would have known that shareholders would be clamouring for something tangible to re-focus their investments on. While she has lived and breathed Assessments in her career, I am concerned that this was in a private company setting (OET is what her Linked-In profile says, 11 years+, decent length).

That she did not pro-actively address shareholder anxieties with more specifics could be telling of her lack of experience in a public company environment and the additional expectations management requirements that go with it.

BUT

The platform is still world class, is robust and there are some big contracts already in play and coming into play - there is a decent base to work from.

The actions, while lacking specifics, all make sense - going back to basics, repositioning the company, selling the company and its capabilities etc. All are needed, regardless of who ran JAN and what other things it does/does not do.

WHAT TO DO

Unlike my other turnaround holdings (EML, EOS, CAT etc), other than the CEO coming onboard, I can't quite see all the ingredients to make JAN successful being in place today. 

But to be fair to JAN, I ignored those turnaround holdings while the new CEO got its ducks in a row and only revisited after they were in place for some time. So perhaps I should give Sujata the time to really get going rather than exit now - it could well be too early.

JAN is only 0.6% of my portfolio and I have too much cash as it is today, so crystallising the loss to raise more cash, does not help things.

The JAN price is already rock bottom - the only way from here is up really. But it will be an uncertain 12M or so until Suhata puts out clearer markers AND show tangible progress that we can see in the financials. 

Going to sit on this for a few days before working out what to do.

Discl: Held IRL

STRATEGY SUMMARY

We've got a great assessments technology platform, not many know what we do, we have undersold ourselves - we need to double down on our core strength, let the market know who we are, what value we can deliver

We want to "AI" the platform - lots of "AI" thrown around, no specifics in terms of scope, timing, cost

Market is growing to USD21b by 2030, 10-12% CAGR projected, AI is driving assessment innovation/disrupting the assessment industry, the competitive landscape is evolving

Blueprint for Growth, the 3 Horizons

YEAR 1 FY2025, PRIORITIES AND OUTLOOK

I have been very patient with Janison, a serial underperformer in my RL portfolio. My reasons for liking the company are well summarised in @jcmleng 's previous post.

However after reading through the FY24 annual report documents and presentations there are numerous disclosures that I find unsettling:

• Despite ostensibly having a seasoned and well experienced board of directors, despite the business founder still being on the board, and despite the recruitment of a new CEO with "20 years spent in global education and assessment", the company has retained the Nous Group to advise on a new strategy. "In July 2024 a significant reshaping of the business was implemented to create capacity to invest in capability to drive long-term growth." Create a capacity to invest in capability??? This sounds like bullsh*t - I hoped for better communication from the new CEO.
• There is a bit more detail in the full annual report: "More specifically, we have created two new senior enterprise sales positions and engaged external professionals to assist in building the foundation for growing our pipeline of deals and establishing the processes and support necessary for the best chance of success in winning new business." So they don't know how to sell the value proposition of their assessment platform despite having been trying to do so since inception, and need some more expensive consultants to tell them how to do it. It sounds like Janison lacks the skills internally to grow the business. If nothing else, I expect operating costs to swell in FY25 due to this dependency on external consultants. Let's hope that revenue grows to compensate.
• The company has ceased working with Singapore Exam Board, allegedly this is an intentional choice because it required a lot of bespoke work, but this marks the end of a long term relationship and one that helped shape the current Insights platform. This is perhaps not a material loss - worth maybe $0.5 million in revenue pa.
• Alarmingly, the much vaunted 5-year contract with the OECD to be the platform for delivering the PISA for Schools program has not been extended. Instead for FY25 onwards "ETS has been selected as the international digital delivery platform provider for the OECD’s PISA-based Test for Schools (PBTS) digital assessment through 2029 pending final signature. In this role, ETS will design, develop, and maintain an international digital delivery platform for the PBTS." (https://www.theewf.org/news/2024/ets-expands-its-longstanding-work-with-oecd-becoming-the-international-digital-delivery-platform-provider-for-pisa-based-test-for-schools-pbts-digital-assessment-through-2029). It sounds like ETS don't even have a delivery platform the PISA test, so Janison must have done something seriously wrong to lose the OECD contract to them. This represents a loss of at least $2.5m pa.
• "In August 2024 a company-wide restructure was completed resulting in the loss of approximately 40 roles and an annualised savings of approximately $4 million – to be realised across Opex, Capex and Cost of Sales." Since they had 190 full time staff at the end of FY24, this means that 21% of the employees have been sacked.
• "Acquisitions in the Assessments business over the past 3 years have proved challenging and not performed as initially expected."

Against the backdrop of a 5 year $45m contract win with the NSW Dept of Education, none of the above may be material from a financial perspective, but at the end of the day a business is a collection of people and I'm afraid these people no longer convince me that they deserve my support. So I'm out.

Had a closer look at my JAN position these past few days.

Discl: Held IRL

SUMMARY

• Thesis appears intact but short-term headwinds to growth aspirations have appeared and are still being battled
• New CEO Sujata Stead is well regarded in the Assessments world, likely to be the catalyst to restart the growth engine - much will depend on how she views the business and her strategy going forward
• The Janison Insights platform is still a formidable moat and allows JAN to rapidly scale new contracts, but contracts need to be won

ACTION PLAN

• Stay invested as a turnaround from a decent base of average growth appears on the cards
• Opportunistically top up position from current 0.90% to max 1.25% if price falls below $0.25, ahead of results, on the expectation that 2HFY24 meets expectations and slightly improves on 1HFY24 and pcp, indicating that gains thus far in terms of platform enhancements, customer stickiness, cost containment can be sustained
• This sets up the platform for the new CEO to present the new strategy for the business
• Takes advantage of current prices at historical lows to average down cost
• This approach may well be too early to take, particularly as the new strategy is unknown - this is the risk, but the reward is higher upside for a thesis that appears very much intact, subject to understanding the new strategy. 
• Risk mitigation is that the price is at all-time low levels, so downside and losses is expected to be limited from here
• Progressively top up to 2.0% max if the new strategy makes sense
• Review position after the FY24 results are announced and again when the new strategy is announced

EXIT PLAN

• The new CEO’s strategy does not make sense and/or lacks ambition or aggression to return JAN to a growth profile
• Loss or non-renewal of big contracts

ORIGINAL THESIS IN MID-2022

JAN’s Moat

• Janison Insights is JAN’s Digital Online Assessment platform - proven ability to deliver online assessments globally, at scale, (eg. National NAPLAN assessments)
• End-to-End capability in design, implementation and delivery of assessments for school-based clients

Competitors

Digital Assessment Platforms:

• Inspera Assessment
• Local Government- City of Lund, EICOM Institute, Norwegian Directorate for Education & Training, AQA Global Assessment Services
• Higher Education - Oxford University, UNSW, University of London, University of Cambridge, University of Queensland among others
• No national government clients highlighted
• JAN delivered 5x more assessments, 33m, this is significantly bigger delivery scale

• Caveon Scorpion - mostly corporate clients
• Rest appear to be much smaller assessments software

Others - much smaller competitors competing against individual product offerings

Review of Thesis

WHAT HAS HAPPENED SINCE

• Price fell to all-time low since listing of $0.24, still languishing ~$0.275

• Evolving into (1) an end-to-end Assessments provider with Assessment-related services to Janison Insights Assessment Platform and (2) a stronger JAN-parent relationship in its direct assessment product offerings - International Competitions and Assessment for Schools (ICAS), Academic Assessment Services (AAS), RISE+ etc
• CEO change - Sujata Stead replaced David Caspari in May 2024
• Revenue is a mixture of organic and acquisition-driven growth, margins around 63%

Negatives

• Still growing but growth slower than projected - growth aspirations/aggression seems to have eased off, could be one of the reasons for David Caspari’s departure
• Headwinds from (1) ICAS revenue flatlined in 1HFY24 (2) OECD/Pisa Based Test for Schools did not quite take off
• Acquisitions have made sense, but have mostly been smallish and lack the step-change ambition required to resume growth trajectory
• Going forward strategy is in limbo until Sujata develops the new strategy, expected in 1QFY25

Positives

• Reached cash flow positive goal in FY23, sustained into 1HFY24 - cash on hand $9m, no debt, significant improvement in free cash flow vs 1HFY24 Capex coming under $1.5m
• No immediate concern of capital raising, particularly as share price is not raising-conducive - no capital raising since Jul 2021, which raised $3m @ $0.82
• Further extension of NAPLAN contract to 2030, $24m across 6 year contract
• Big $45m over 5-Year win with NSW Dept of Education for 5 Year Selective Education Placement assessments, on track to a May 2025 startup
• Cost cuts have occurred in FY23/FY24 - $2m annualised cost taken out
• The products that JAN has acquired and launched have made sense and been well integrated - ICAS, AAS, QAT, RISE+ - product offerings appear clearer

Financials

My digesting of the clarification announcement from JAN this morning.

The biggest takeaways for me was (1) the change in the role of JAN in DOE services - from implied "sub-contractor", to prime contractor (2) the significantly expanded scope of services (3) the implementation of the JAN digital assessments platform and hopefully start of longer-term "sticky revenue" (4) 3x expansion of FY23 DOE revenue, once fully operational.

Agree with @lankypom on the JAN issues. There is a Trading Update this Mon 12 Feb, which will provide the next data point. And then there is the new CEO Sujita to lock forward to.

• Deal appoints JAN as the Lead Contractor to deliver the state’s selective education placement tests as computer-based tests via JAN’s digital assessment platform - prior to award, JAN delivered some DOE services (1) towards the paper delivery of the NSW Selective High School and Opportunity Class Placement Tests, but not as prime contractor (2) ran the physical services component only ($3.2m revenue in FY23) - deal is thus a big change in scope and role
• 5-year deal + option to extend for a further 5 years - hoping the implementation of the platform will make it a thy-kingdom-come customer ...
• Revenue profile:
• Year 1 - Transition, Implementation & Pilot commencing 2HFY24, $5m revenue across CY2024, will begin recording a portion of the total contract value as new platform license income from 2HFY25 onwards
• Year 2 - Initial Placement Test cycle on the JAN Digital Platform, May 2025 delivery, $10m revenue
• Years 3-5 - Subsequent Placement Test cycles for May 2026, 2027, 2028 , $10m revenue in each of the FY’s
• Revenue includes (1) services to develop, deliver and manage the tests and (2) digital technology platform to run online digital tests on JAN’s examination platform
• No material conditions precedent to proceed, termination clauses are standard

Looking back, I bought into both JAN and CET at the same time with similar portfolio allocations. Decided that JAN had a better chance of growing from the PISA deal and stayed with it, but it fell flat. Thought CET would struggle given economic headwinds impacting customer spend and sold out at ~$0.80 but CET took off instead. Can't win them all, but the sharp contrasts of fortunes is still painful each time CET spikes up, like it just did!

Perhaps this DOE deal is the boost of energy that JAN has long needed to move forward decisively.

Disc; Held IRL

JAN signed an agreement with the NSW Department of Education (the department) and Cambridge University Press & Assessment (Cambridge) to deliver the state’s selective education placement tests as computer-based test via Janison’s digital assessment platform 

• Won via competitive tender
• Largest contract signed in JAN’s history
• Estimated 30,000 students take the test each year
• Scope includes delivery of: (1) Placement Tests (2) Computer-based test platform (3) Managing Test Centres including invigilation
• Extends 20+ years relationship with the NSW Dept of Education and bolsters JAN’s relationship with Cambridge
• Up to A$45m over the initial 5 year term, with option to extend a further 5 years
• Work to commence on new platform and services in early 2024, pilots to be concluded in 2024, full rollout of the digital assessment platform for the department will be completed in 2025

Very nice win and good to have some good news. Market popped 50% today!

Discl: Held IRL

I've always been disappointed on how this company communicates. A lot numbers engineering (swapping around divisions, dividing things into core and non-core, etc, etc) and opaqueness.

This is a new low. Slipped it into a non-price sensitive AGM chairman's address

The company released unaudited financial highlights today, in advance of the end of year results due to be published on 21st August.

It looks like they were keen to get the good news out:

FY23 Financial Highlights

• The company achieved record group revenue of $41 million, an increase of +13% compared to FY22. 
• This growth was driven by a 21% increase in Janison Assessments and a 17% increase in Janison Solutions core growth (9% Solutions combined growth including Learning and PBTS IPP).
• Gross profit margins remained strong due to improved pricing, scale benefits, and efficiency, reaching 63%, a 28-percentage point increase since FY19. 
• Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) grew by +111% to $4 million compared to last year, driven by improved operational leverage and strong gross margins.
• The company generated a positive operating cashflow of $5 million showing a combination of disciplined cost management of operational expenses and solid revenue growth.
• Net cashflow was positive for the year and improved by $11.5 million compared to the prior year, to finish the year with a cash balance of $12 million as of 30 June 2023.

Janison is the most speculative holding in my RL portfolio. I had kept it to a small position size due to its lack of profitability, but I really like the business model and the company is clearly gaining traction with a small but prestigious client list.

After the announcement I threw caution to the winds and doubled down on my holding. What could possibly go wrong?

https://announcements.asx.com.au/asxpdf/20230614/pdf/05qmd0kdb350kx.pdf

The NAPLAN extension is nice and underpins a portion of the revenues for the next several years. Supposedly this is the largest contract that Janison has signed in its history. I believe it's larger than the previous contract that was first initiated in 2016, but not by a large amount in per annum terms.

What's potentially just as, if not more, exciting was the unrelated final paragraph of the announcement

"The Cambridge agreement was signed with a minimum contract value of ~$1m in revenue over three years but has to date added $2.5m in the last nine months in FY23 and is expected to grow significantly in FY24 and beyond. The Oxford agreement has commenced with a range of tests worth approximately ~$1m in TCV but, similar to the Cambridge agreement, test volumes are likely to be higher than minimum contract amounts, and further opportunities exist to deliver additional OUP tests on the Janison assessment platform."

Janison signed a 3-year $1m minimum umbrella contract with Cambridge Assessments at the end of Q1 FY23. And in the first 9 months, has already booked $2.5m and will look to grow this significantly. Also hinted that the Oxford deal might head down a similar path.

I feel like this is the first time they've under-promised and over-delivered. Normally management have front run operational performance with flashy forecasts that they've never come close to hitting - ICAS, PISA for schools, etc.

Janison calling for break even over the 2023 financial year and announcing new projects with Oxford University Press… bullish

 ASX Announcement 28 April 2023

Janison awarded global agreement with Oxford University Press, and reaffirms FY’23 guidance

Janison Education Group Limited (ASX:JAN) (“Janison” or the “Company”) is pleased to announce it will provide its digital assessment technology and event support services to enable Oxford University Press (“OUP”) to develop and deliver a range of new and existing assessment products globally.

This represents another exciting advancement in Janison’s international expansion plans that follows the recent announcement of Janison’s new global partnership with Cambridge University Press & Assessment and cements Janison’s place as a strategic partner in two of the three largest higher education institutions globally (World University Rankings – Times Higher Education).

OUP is the education publishing arm of Oxford University, one of the largest and most prestigious providers of learning and assessment content today. This strategic partnership between Janison and OUP will accelerate the implementation of OUP’s digital strategy, and supports their objective to maximise the opportunities for students and teachers to access OUP content.

Signed by OUP’s global headquarters in the UK, the three-year umbrella agreement worth approximately AUD$1m TCV based on minimum assessment volumes will see Janison and OUP add further digital assessments over the next few years. The first new products are expected to be launched in the UK and Europe in 2H FY24. In addition to these, the partnership will see additional new products developed across OUP’s primary, secondary and international education markets, with the potential to position OUP as one of Janison’s largest enterprise customers globally.

Janison will assist OUP with a number of new digital products across a range of tests and markets, initially focusing on:

- Phase 1 - for Years 6 and 9 – 10,000 tests p.a. from 2024 with growth to 50,000 by 2027

- Phase 2 – roll-out from 2025 with estimate of 100,000 tests p.a. by 2028

- Phase 3 - for years 5-8 in India and Pakistan – roll out from 2025 with estimate of 500,000 tests p.a. by 2028.

 Janison will implement its standardised digital assessment platform, Janison Insights, and leverage its Microsoft Azure UK cloud deployment to support this new growth phase and enable OUP to take its assessment products to market, quickly and easily in a secure and reliable manner.

Janison is pleased to have achieved this milestone in its strategy to partner with large global enterprise, government and education institutions globally. Janison’s UK-based Chief Operating Officer, Derek Welsh, will lead the expansion of Janison’s UK-based teams to support this growth. These teams will support our existing UK and European partnerships, such as the OECD, Cambridge University Press & Assessment and now Oxford University Press.

About Oxford University Press (OUP)

Oxford University Press is the world’s largest university press with offices in 50 countries. It publishes print and digital texts in more than 40 languages.

OUP’s mission is to further Oxford University's objectives of excellence in research, scholarship, and education by publishing worldwide. OUP creates and distributes learning and assessment products to over 180 countries spanning across primary, secondary, higher education and English language sectors which are multidisciplinary in nature.

OUP has over 7,500 employees globally. OUP’s learning and assessment IP contains more than 32,000 educational titles published across digital and print medium. OUP’s digital platform ‘Oxford Owl’ attracts over 2 million users per month to access personalised learning and assessment journeys. In English Language Testing, the Oxford Placement Test attracts over 600,000 users p.a. across 94 countries.

FY23 Outlook

With a quarter of FY23 to go, Janison reiterates previous guidance of revenue ($41-43m) and EBITDA ($4-5m) with ongoing disciplined cost control. Larger cash receipts in 2H23 from ICAS in Q4 are expected to see the business finish break-even for total cashflow on a full year basis – a significant improvement over FY22.

*** End ***

This release has been approved by the board. For further enquiries, please contact Stuart Halls

at: IR@janison.com Visit janison.com

  2

The AGM today was curiously muted, hardly any questions were asked, it's almost as if nobody cares. Some highlights:

• Q1 revenue of $12.1m was up 95% on pcp
• (By comparison FY22 revenue for the year was $36m)
• Revenues are growing faster than expenses, despite investment of sales staff in UK and USA
• Q1 was EBITDA positive (for the first time ever, I think) at $2.1m, and company is guiding to positive free cash flow for the year
• The post-COVID world is one which favours JAN, as governments increase their investments in education to make up for the learning loss of the past few years
• "Management has confidence in achieving +20% CAGR in revenue for the next 3-5 years with gross profit margins of 70%-75%".

Clearly it is still early days. I am very optimistic for the future based on the customer wins over the past year, particularly with Cambridge University Press, which validate JAN's market leadership in high volume, high stakes online assessment. I almost wish that management would be less cautious in their growth strategy, and invest more in sales and marketing.

I hold a small parcel in my rl portfolio. My conviction level is high, but given JAN is not yet profitable I am still holding back from a full position size.

The good:

• Revenue up 20% to 36m, all segments of the business reported growth
• New product Rise+ launched as a direct-to-consumer offering for practice tests, allegedly has a TAM of $200m. This is evidence of Janisson starting to monetize the IP of its huge bank of questions.
• Gross margin has expanded 9% to 64%
• Delivered NAPLAN testing to 1.2m students, a 48% increase. The Insights platform supported 0.5 million concurrent users during this test, which was conducted 100% online for the first time. This is very impressive.
• "Management have confidence in surpassing analyst consensus and achieving +20% CAGR in revenue for the next 3-5 years with gross profit margins of 70-75%"

The not so good:

• $4.1m of revenue came from the acquisition of Academic Assessment Services in November 2021 (upfront cash payment of $6m.) $0.7m came from the acquisition of QATs in October 2021 (upfront cash payment of $1.25m). If you take the acquired $4.8m out of the total revenue of $36.3, then the organic revenue growth on FY21 is only 4%, or $1.3m
• A paltry $0.9m of revenue came from new or expanded customers using the Insights platform. According to the investor presentation "New client acquisition (Chartered Accountants ANZ) and expansion of existing assessment platform clients in FY22 added $1.6m of revenue", yet platform revenue only increased $0.9m for the year so most probably the missing $0.7m will be recognised in future years.
• Still not profitable, but expects to be 'operating cash flow' or 'net cash flow' positive in FY23 after a significant rationalisation and cost take out process in FY22.
• PISA has only grown from 15 to 17 countries in the past year, out of the TAM of 90+ countries. In the prior year it added 8 countries, and reported that ARR was $2.6m, which no longer seems to be accurate. The segment of PISA where Janisson is the National Service Provider increased revenue 69% from $0.8m to $1.3m, thanks mostly to becoming the NSP in the UK, as well as more take up of the test in the US. Being charitable, I have to assume that Covid is responsible for the lacklustre performance of this business unit.
• Cash reduced by $11.3m to a balance of $11.7m. There could be another capital raising on the cards.

The ugly:

• EBITDA declined 38% to negative $1.9m, and net loss increased a whopping 181% to $9.1m.
• The company highlights that it's cost of sales has declined slightly (3%), contributing to 9% improvement in gross margin, without mentioning that operating expenses have increased by 56%. This is explained as a 'necessary step change in the operating structure of the business to satisfy the growth in revenue' A step change of $7.7m in opex to support a $6.1m increase in revenue either means the company is very positive about its future growth opportunities, or is lacking in budget discipline.
• Personnel costs increased 100% ( but headcount only increased 34%) and share based payments increased 300%.
• 'Non operating expenses' (restructuring, acquisition costs and share-based payments) have increased by 145%.
• Janisson stil seems to be struggling with how they classify the different segments of their business. 6 months ago the business units were grouped into two buckets 'Educational Assessments' and 'Assessment Platform'. Now we still have 'Educational Assessments', which basically seems to mean the administration of tests where Janisson owns the IP for the tests themselves, as in the case of ICAS and PISA. 'Assessment Platform' has become 'Janisson Solutions', and seems to refer to the use of the Janisson platform for executing large scale testing, where Janisson does not own the IP for the tests, e.g. NAPLAN. To make matters more confusing, revenue from PISA tests in countries where Janisson is the National Service Provider is classed under 'Assessments', whilst revenue from other countries is classed under 'Solutions'. The business unit structure still seems like a work in progress to me.

Takeaways

• The upside still beats the downside with many revenue drivers
• The scalability of the Insights platform and the depth of test bank IP gives Janison a healthy moat
• I'm happy to keep holding my very small rl allocation to Janisson, but see no reason to increase my holding whilst profitability still seems to be a few years (and CRs) away

Fully online delivery of NAPLAN across multiple subjects. SUCCESSFUL, COMPLETED. 45% increase online students from last year. Contract in place until 2024.

So should we be expecting some more interest in Janison? Archer Materials? Cogstate?

While Janison says they bought the company at a low valuation, unfortunately, the terms of the "Earnout Consideration payable" means they overpaid for this acquisition. Honestly, AAS (Academic Assessment Services) negotiated a great deal for themselves. It is very similar to LTC where Janison overpaid for the acquisition.

Diving deeper into the terms:

• Janison will pay $9 million in upfront consideration consisting of $6 million paid in cash and $3 million paid in ordinary shares (“Upfront Consideration”).
• An additional $8 million may be payable on the completion of the FY23 financial year comprising $1 million in cash and $7 million in ordinary shares subject to certain financial criteria being achieved (“Earnout Consideration”).

While most of the expenses are in shares it hurts shareholders as we are diluted since the share count rise. The most troubling part of the acquisition is the terms of the earnout consideration:

• Minimum operating revenue target of $11 million in FY22 & FY23 combined.
• Operating revenue targets measured and paid on completion of FY23.
• Earnout Consideration adjusted up $0.50 for every $1.00 of operating revenue above the $11 million target and down by $1.00 for every dollar below.

I am sorry but that is way too easy of a target to achieve. AAS grew 29% from FY20 to $5M in FY21. They could do nothing for 1 year and generate $1M in FY23 to reach the minimum $11M revenue threshold for FY22-FY23.

Since the straw is about Assessing the acquisition, Janison has to justify the "synergy" otherwise they just overpaid for this acquisition. Cross-selling the ICAS exam is a good argument but how does that grow revenues under AAS? There are too many questions compared to answers and it diverts resources away from PISA. I would have much rather have seen the team spend more resources to win another contract from OECD. I know there are other tenders being pushed, why can't Janison bid on them etc...? Or grow schools in the existing PTBS contract.

Anyhow enough with the rant, very disappointed as it is also my largest position IRL and in strawman. I will hold for now have to readjust the financial model and revalue again...

Janison announced Vicki Aristidopoulos will be joining the board. She was the Chief Marketing Officer for Afterpay. It all sounds great but I don't know what she brings to the table?? Why would Janison need a marketing person for brand management when their product speaks louder than marketing expense. I really hope she doesn't convince the board to spend money on digital advertising. God, I hope not.

Afterpay is a company geared towards consumers so marketing spend and the overall strategy to win customers is really important. However, Janison is a digital education company where the customers are universities, schools and educational institutions that are geared towards the reliability of the product. After all, they are the ones paying for high-pressure exams

The only "consumer" part of the business is the ICAS exam where parents pay the cost. I really don't want her to get involved and shove Facebook ads or try to improve google search ranking. The business already operating in 90%+ gross margins. Janison is building a brand you can trust for online exams. Why would Janison need to spend on additional marketing?

I really hope her involvement in the business is limited to these areas:

1. Buy shares in the business (align with shareholder interest and obviously jump on board to the next big thing which is disruption on the traditional education system)
2. Make suggestions on building a community around paying ICAS customers without spending money on excessive marketing. We all see Afterpay's financials and the marketing spend is not $0.

JAN survived MF's previous recco on April 1 (up about 50% since), proving they're more than just April Fools :)

Janison is stock of the week in this Motley Fool podcast.

I hope that's not the kiss of death.

Held in SM and RL.

National Catholic Education Commission (NCEC) and Janison have entered a partnership in relation to PISA for Schools. 

News release: https://www.ncec.catholic.edu.au/news-events/media-releases/582-catholic-education-to-enhance-student-learning-through-pisa-for-schools-partnership/file

In NCEC's 2020 annual report, it states they represent ~500 secondary schools in Australia. So there's a potential of $3.5m in ARR here (500 x $7000/school).

This is where Janison can get some quick runs with PISA for Schools penetration - through partnerships with private and government bodies. NSW Department of Education, who they have a very strong relationship with, would be firmly in their sights. 

We own. Rocket emoji.

Ausbiz interview with David Caspari, Janison CEO, after FY21 results 

I have been on the hunt for a new investment candidate for my IRL portfolio since ditching APX a few weeks ago. I took a good look at ReadyTech, but somehow just couldn’t get too excited about it. It is now in my Strawman portfolio but I don’t have sufficient conviction to invest real money in the company.

A few weeks ago I stumbled across Janison, and naturally the first place to start my research was Strawman. I must thank @elapso96 for the many insightful straws. The more I read both here and in company reports, the more surprised I am that Janison hasn’t come to my attention before, since it is exactly the kind of business I like:

• Primarily a SaaS business, with high recurring revenue
• A recognised market leader in a growing market, with a global customer base
• Very sticky customers
• A no-nonsense management team who tell it like it is
• Providing a valuable service to society

Where Does The Revenue Come From?
Learning

At first I thought Janison was all about providing a portal for organisations to manage their internal staff training needs. Customers can curate their own custom learning materials on the Academy platform, and can also access off-the-shelf content provided in partnership with the likes of Deloitte, McKinsey and LinkedIn as well as content developed in house. I’m not sure how self-service the content creation is on this platform, it sounds like customers typically buy consulting from Janison as well as the Academy platform, to help them implement their own learning management system.

If you Google ‘Janison Portal’, a host of organisations that use this platform are revealed, including The Australian Sports Commission, the Commonwealth Government, Corrective Services NSW, David Jones, Netball Australia, NSW Ambulance, NSW Dept of Education, Royal Life Saving Society, Sailing Australia, Ryman Healthcare. A pretty impressive collection, I thought, with a strong focus on state (mostly NSW) and federal government organisations, and large enterprises. In 2019 for example Janison renewed a 3-year contract with Westpac worth $4.2m for “an integrated enterprise learning solution.”

This segment of the business is however static or even in decline, with revenue going from $5.7m to $7.3m to $6.1m in the past 3 years. Yet net client retention is 109%. There are 52 customers (47 in pcp). There is virtually no mention of this segment in the CEO or Chairmans’s narrative for the growth drivers of the business - it appears that it is going to be left to wither on the vine.

Assessment

The segment of the business that is getting all the attention is Assessments. The Janison Insights digital assessment platform allows education organisations to create the assessment, and deliver it in a locked-down, controlled environment, as well as closely manage the marking process. It also offers an analytics tool that, once results are in, can help staff identify how to improve student performance through reviewing the data. This segment has seen accelerated growth as the world has had to transition to online assessments and away from the classroom in the past year - a trend which Janisson reckons is a long term structural shift rather than a short term Covid sugar rush.

The beauty of the Assessments business is that it has multiple growth opportunities, using the Insights platform as the foundation. Janisson can sell SaaS subscriptions to organisations that want to conduct online assessments using their own test materials, a recent sale to the CFAA being a case in point. The CFAA deal is worth $5m over 5 years.

More excitingly though, Janisson can acquire the IP for widely used educational tests then charge a fee for administering those tests via the Insights platform. In 2019 Janisson won a tender from the OECD to administer the Programme for International Student Assessment (PISA) test to member countries. This test is used by schools to benchmark their performance against other institutions. So far Janisson has agreements in place with 9 countries. In Australia and the USA Janison is the service provider, meaning they enroll schools and manage the test cycle, for which they collect $7000 per school. At least 200 schools in Australia signed up this year. There are 2,700 schools that serve secondary students across Australia, meaning a total addressable market of $19 million, just for this one test in one country.  In the other 7 countries Janison provides the Insights platform and the test materials, but other organisations administer the test. According to OECD materials the base cost for a country to participate in PISA is 205 000 euro spread over 4 years. Assuming (arbitrarily) 60% of this cost flows through to Janison as revenue, that equates to $50,000 per country per year. The target market for PISA testing is 90+ countries.  

The second assessment that is really building a reputation for Janison is NAPLAN. In May 2021, 800,000 school students completed their NAPLAN tests online. Janison’s digital assessment platform had over 3 million tests completed in a two-week period, and at the peak, more than 195,000 students were being tested concurrently., with more than 32,000 transactions a second.

The NAPLAN test typifies the high-stakes, high-volume testing in which Janison is carving out a niche. In 2021 NAPLAN Online became the largest online schools assessment ever run world-wide, breaking all records, and considered by all parties to be an amazing success. 70% of students sat NAPLAN online in 2021 and the plan is to move to 100% in 2022. Janison’s customer here is Education Services Australia (ESA), i.e. the federal government. Janison was paid $367,000 for the development of Naplan Online in FY20. Presumably there is an ongoing revenue stream for making enhancements to the test, as well as for delivering it to schools.

The third assessment that Janison can now deliver on the Insights platform is the ICAS competition. In a very astute move Janison bought the rights to the ICAS test from a division of UNSW called Educational Assessments (EA) this year (for less than $1m!) so all revenue from running this test each year will flow to Janison. The target is to charge $15 per test, with 1 million tests pa, but Janison acknowledges it will take 'a few years' to get to $15m pa. EA had an annual recurring revenue of $10m in 2019. As well as the ICAS test itself Janison acquired EA’s item bank of 20,000 test questions, developed by academics over the past two decades, plus the skillset of EA’s team of psychometricians, statisticians, and exam authoring and reporting experts. This gives Janison the raw material to develop further test products for delivery on the Insights platform.

A final major (?) growth opportunity is the recent (March 2020) partnership with D2L (Desire to Learn), developers of the Brightspace learning management system, which is a cloud-based software suite used by schools, institutes of higher education, and businesses for online and blended classroom learning. D2L has 1,000 customers in 40 countries. The idea behind this partnership is that D2L provides online learning and Janison provides online examinations to measure the results of this learning. However, after a hunt around the D2L website I couldn’t find any reference to Janisson, so I suspect that it is going to be up to Janisson to knock on the doors of D2L customers if they want to win any business from this channel. This year’s annual report doesn’t provide any insight into the revenue from this channel.

What About The Management?

There seems to be a rather turbulent leadership history. Tom Richardson resigned as CEO in 2020 after 5 years as CEO, which included taking the company public in 2017. Previously he founded a small training / learning consultancy but that no longer seems to exist. With no strong credentials in either education or IT he perhaps wasn’t the right fit to lead the company in its current growth trajectory. 
David Caspari took over as CEO in 2020, an external hire. He has had market-facing leadership positions (VP and similar) with IT companies since at least 2004, including Cisco, HP, EDS, Singtel then Optus. I like the fact that he has worked in India, Singapore and Hong Kong. He seems to be a good communicator, and has a 90% approval rating on Glassdoor. 
George Gorman the CTO also joined in 2020, and previously worked as a technology consultant, specialising in ‘program recovery’. It sounds like he was brought in to reshape the IT organisation, or as the press announcement had it at the time “to establish the technology vision for the Company and to work closely with the CEO and executive team on delivering this vision as the business continues to further productise its offering and focus on growing recurring revenue in its target markets.”
Software development is managed by David Irvine, who joined in 2017, and previously held CTO roles. Daniel Berkovitch, the sales director, joined in 2019.
Wayne Houlden who founded the company in 1997 is still around, but in what sounds like primarily an honorary role of Vice Chair.

Risks

• With so many levers for growth, how can Janisson fail?
• The OECD may not renew the exclusive agreement with Janisson to deliver the PISA test in 2024;
• There may be a very public performance failure in executing NAPLAN online tests, causing the commonwealth government to look at another partner for future test delivery (NAPLAN is a 7-year deal 2016-2023);
• With so many avenues to explore for the creation and delivery of tests, Janisson may spread its resources too thinly, rather than focussing on the high stakes, high volume tests for which it is building a hard-won reputation;
• It may run out of cash. Growth has been funded by numerous capital raisings, the company is not yet consistently generating free cash flow, and expenses will continue to rise particularly in sales and marketing;
• Competition may depress margins and profitability - a very brief survey of the market for educational assessment products revealed almost 50 competitors (https://sourceforge.net/software/product/Janison-Insights/alternatives)
• The leadership team is relatively new and unproven, although the continuing involvement of the founder gives some comfort

Revenue Projections for 2025

Learning segment  - $5m, assuming gradual decline
PISA tests -$15m, pure guesswork, the TAM must be at least 10x this, Janisson ‘horizon target’ is $30m
ICAS tests - $15m, Janisson ‘horizon target’ is $20m
NAPLAN tests  - there doesn't seem to be any information in the public domain, but let's say $2m
Other tests - $5m
SaaS subscriptions - $5m, assuming 5 more deals like the CFAA
Services revenue - $10m, assuming moderate growth from current $7m
    
It is pretty easy to project total revenue of $50m + in 2025. Janisson’s own ‘horizon target’ is $80-$100m. With a TAM of $40B (if you believe market researchers) that doesn’t seem much of stretch.

Comparables

KME enterprise value $44.12m, revenue $19.28m, EV/revenue = 2.3
IDP enterprise value $8778m, revenue $528.7m, EV/revenue = 16.6
JAN enterprise value $205m, revenue $30.2m, EV/revenue = 6.8

US Comparables (from https://www.raymondjames.com/-/media/rj/dotcom/files/corporations-and-institutions/investment-banking/industry-insight/education-technology-quarterly.pdf)

See attachment (I wish I knew how to get inline images into a straw). This shows EV/revenue ratios for 10 EdTech companies, with Coursera at the high end (17.9)  and 2U Inc at the low end (3.3).

Listened to JAn on Reach markets briefing. very confident and bullish preso by CEO/CFO, which is consistent for JAN for some time. My q on renewal of PISA in 3 years was answered. no guarantees. it appears to be one of those small chance of big disaster type risks. they have three years, mgt should renew this asap, ususally a year out from close. so no concern at thsi stage. disclosure not held

There's soo much information out there it's quite extraordinary that it is coming from small cap company. I actually don't know if they are reading my straws as they addressed all my points lol. They broke down not only the revenues but even the expenses including cash. We get it... The CFO is awesome :) 

My analysis after reading the 116 page Annual report: 

• Noicewon11's question on OECD not addressed (The question is who is paying Janison in the OECD contract? is it; OECD, the education board of the country or schools? Regardless, Janison recognised $1.6M in revenues and the current ARR ~$3M. Stantons did the accounting so if the numbers are wrong they would be responsible. Tbh the question is irrelevant now as it does not make a difference in current revenues. I wager my last month upstreet cash that they are gonna make an ASX announcement clarifying the revenue source for OECD :D 
• The gross margins (GM) was 55% for combined business segment. However, if you split Assessments & Learning: 
  • Assesment - GM was 53% a 12pp improvement from last financial year 
  • Learning - GM was 64% a 11pp improvement from last financial year 
• I did a GM forecast as Janison has made their intentions very clear on FY24-FY25 revenue to be $80M-$100M. My modelling you can find attached to the straw:
  • OECD at 75% GM till FY24 
  • ICAS at 90% GM till FY24 
  • Assessments contracts (they could be recurring like NAPLAN or one-off like SCIO) at 55% GM till FY24 
  • Services (which is JEM) at 35% GM till FY24
  • Acquisition revenue (I am expecting a tiny acquistion ~ $5M & GM to be 40%) 
  • Tabulating all that into a forecast you get gross margins improve from 55% in FY21 -> 63% in FY24. Hence, assuming 70%+ GM is not practical moving forward.
  • To me, operating margins is a better metric to look at than gross margins as OP Margins inform shareholders the amount left for running the business and doing nothing else (like paying taxes, accounting depreciation etc..). For Janison I actually view it as a loss for FY21 even though they claim EBITDA postive of $3M. The funny thing of being transparent, is that they noted in the footnotes that $0.94M goes towards paying the lease for the new building and the largest depreciation expense is product development cost ~$3.3M. I have to count both of them as valid cost to operate the business which means EBIT is negative and is the right metric to assess performance. 
• The next point is the geographical revenue mix and it is where I am most bullish on the business long term:
  • AUS/NZ accounted ~ 80% of revenues and the latest $15M capital raise is to fund growth internationally. 
  • I hope they win more customers in UK as the cost of business there is much cheaper since they are already serving customers. 
  • Hardly any revenue from America and I hope D2L partnership provide the reach they need to expand the PISA test to schools across districts. 
• The government Job Keeper cash boost 
  • It goes to show the consequences of overpaying too much during acquisitions. 
  • The pandemic stifled existing revenues and they were given $1.6M jobkeeper of which $1M was paid to staff in JEM to keep their jobs. 
    • Great to see a company treat their employees well. Although from a shareholder point of view, it still bugs me that they overpaid for LTC. You can see it in page 34 under depreciation (Acquired intangibles -> $1.8M). It dents EBIT margins. Best way to overcome is through high margin revenue growth.

There's way too much information to cover in just one straw but those items were things I have not covered/expanded in previous straws.    

On a last personal note, I rescheduled my CFA for Feb next year and guess where I am going to do it? It's at Ultimo proctored by Janison lol. I thought the $0.94M lease was new HQ for only staff but in-fact it's also for computer based exams like the CFA. I am now contributing to Janison's top line through JEM :D JEM needs all the help it can get. 

More on that in the valuation update... 

Janison provided FY21 results & strategy outlook couple of weeks ago and I had to rethink the investment thesis as I made quite a bold assumption which is no longer correct. 

At long last they broke down revenues within assessment divison which has always felt a black box and I made guesses based on the available information at the time. 

We now can see within $18M Assessments: 

• $3M from OECD contract 
• $5M from ICAS 
• $10M from Assessments contract. You are looking at: 
  • NSW DOE check-in exam 
  • Chartered Accountant exam 
  • NAPLAN
  • SCIO 
  • etc.. 

So the key takeaway is gross margin and Claude grilled me on the margin forecast and he makes a fair point after seeing the revenue breakdown... 

I could have made the case where Gross Margins would be close to 75% if OECD revenues make up more than 70% in FY24, however it will defienitely be below that as Janison is forecasting $30M p.a. run rate. My hope was that OECD would be atleast $60M and my assumption was $80M.

In saying that, they are guiding for $80M-$100M by 2025 which was the gameplan from the start. I got the forecast mix wrong as I was making a stab in the dark without knowing the OECD revenue forecast.  

Does the latest announcement and guidance by Janison dent my valuation? Absolutely! But by how much?

Find out in the next valuation update ;)  

To summarise the latest update -> covid will accelerate revenue growth and force governments to conform to remote exam testing. 

The lockdowns across Australia is preventing in person examination. I did not realise the severity of the situation until I saw the impact of HSC trial exam deferral. If I was doing the HSC again, I would be extremely stressed with the uncertainty & added pressure to perform well. It's a pity that governments do not face consequences for terrible decisions that affect large number of people. Government is a corporation at the limit. They are only held accountable during election time. There's no extraordinary meeting to kick those in power out of power.  

The NSW Department of Education was forced to use the only technology provider capable of "playing a critical role in allowing [the HSC Trial] exams to continue". 3 guesses who that was? What I am quite annoyed at is the slow adoption to change. The HSC exams are coming up in October so why can't they conduct it remotely? We are already in lockdown and it's not like case numbers magically disappear when we reopen. Remote exams was trialled with NAPLAN this year and it worked. I agree it is a completely biased point of view being a Janison shareholder, but come on, Covid is a public health risk why increase the likelihood of transmission with in-person exams? 

Anyhow, the annual report will be provided Tuesday, August 24. I hope the report provide clarity on the 3 pending questions in my previous straw. Most likely have to ask at the webinar.   

News just released on the renewal of Janison’s agreement to be the US National Service Provider (NSP) for a further three years.

Now that the SPP is nearing the close, let's look at the capital raise presentation deck in more detail. Starting with the general summary:

• Janison achieved significant revenue growth despite the COVID impact. Most first time investors might not know that Janison has 2 subsidiaries UNSW Global (acquired 2020) but the other is JEM formerly LTC (Language Testing Consultants, acquired 2019).
  • They overpaid for LTC and paid the price with covid. LTC is the entity proctoring high pressure exams. Some of the notable exams are for IDP Education, and also UMAT (the undergraduate entrance exam for medical students). Hence, you see IDP Education's logo in Janison's presentation deck (slide 6)-> do not tell Rudi that IDP partnered with a small cap company :D  
  • Despite this, covid made in-person exams extremely difficult. Therefore, Janison lost a fair chunk of revenue. They had to transition LTC to proctor online/computer based exams via JEM. 
  • The CFA exam is proctored by JEM in Australia but Prometric is the online exam provider for CFA Institute. Luckily the CA exam was not digital and Janison won the bid to be online provider. 
• Forecasting $30M in revenue for FY21 which is 37% YoY growth. Very close to my valuation of 40% CAGR for the next 5 years. If you do the math, that would be ~$120M in revenues in 2025. 
• Forecasting 54% Gross profit and $3M EBITDA. Therefore, operating margin is ~10% which is quite good considering the LTC acquisition cost still hurt Janison in the bottom line. It should go away during the next financial year.
  • There are no doubts on gross margins, it looks great and we hope it expands with new customers. However the key for shareholders is the operating margins. If operating margins are greater than 20% you are looking at a special business. Promedicus is currently 50%! 
  • Operating margins drives valuations and makes the company worth more even if they don't make as much in revenues compared to other companies. 

Ok, now for the big stuff and the reasons why they raised capital. In my previous straw I speculated that they would need capital for global expansion, maybe small acquisition and raising up to $15M is a good idea. They are using:

1. $5M for Revenue growth (i.e. international expansion)
2. $5M for Acquisitions and product development 
3. $5M working capital 

Smack bang in the middle, $15M cap raise, great amount and for very good reasons. Setting up for US expansion and UK beach heads makes a lot of sense. Thiey are preparing for further growth in FY22-23. Remember $15M capital raise is for 2 financial years (FY22-23). They are signalling to investors that they don't need more capital to grow. I hope so :D Otherwise my $750M valuation makes no sense as the valuation assumes Janison maintain 25% operating margin.    

Breaking down the cap raise by section: 

Product development (~$1M-$2M) 

• Janison has identified a number of opportunities to develop new school assessment products which will expand the offering to parents, teachers and school systems.
• Great use of funds, increase the ARR per customer. They are using it for practice tests and ICAS global. 

Acquisition (~$3M-4M)

• Janison at late stage of several potential acquisition targets in the Assessment division. The aquisition aims to broaden product offering. A portion of the capital raise wouold be used to fund the upfront cost and integration. 
• Considering product development and acquisition cost tally up to $5M. My bet is one strategic $3M-$4M acquisiton. Not expensive and they are at late stages so it is very interesting to find out who it would be? Although the announcement mentioned several, it could be a couple that tally up $4M. More research required. 

Working Capital ($5M)

• They are using this to increase the headcount and expand globally. The beach head in UK requires more employees, so having an office there and recruiting a UK head would require capital. 
• Janison have customers in UK outside of PISA for schools exam (i.e. Cambridge University and University of London). Ideal location to grow more customers in the region. 

Revenue growth ($5M) 

• Expanding UK & US as discussed, they have a go-to market plan. 
• Establishing a key opinion leader framework. I don't know how that works probably need to ask them in the next earnings call. 
• New functionality to support the global roll-out of PISA for Schools and aid delivery automation. Accelerate product innovation and enter adjacent assessment markets (e.g. Global Competency Module). 
  • Wait what? Never heard of the Global Competency Module and that's what makes the Assessment market great. 
  • According to the OECD 
    • "How do we assess global competence?
    • The global competence assessment in PISA 2018 is composed of two parts: a cognitive assessment and a background questionnaire.
      • The cognitive assessment is designed to elicit students’ capacities to critically examine global issues; recognise outside influences on perspectives and world views; understand how to communicate with others in intercultural contexts; and identify and compare different courses of action to address global and intercultural issues.
      • In the background questionnaire, students will be asked to report how familiar they are with global issues; how developed their linguistic and communication skills are; to what extent they hold certain attitudes, such as respect for people from different cultural backgrounds; and what opportunities they have at school to develop global competence."
  • Reading the 33 page report on Global Competency gave me traumatic flashbacks to Year 12 HSC English exam. Unlike that exam :D, the questions are atleast interesting; especially the global warming graphs question. It questions whether the student can make a logical decision from data. I find it a really important skill in the ripe age of misinformation. Heck we are all stock picking and have to sift through countless presentation decks to understand the businesses we are investing. The questionarre section does not capture how students would behave. It should be more fun and interactive, like gaming. The second part of the competancy test is boring especially for a digital age.
  • Anyhow, if OECD gives the greenlight for Janison to do this aspect of the PISA exam then I am all for it. More revenues from OECD the better :D 

So in summary Janison did the cap raise at $0.82 at the same price as institutional investors. I think that is awesome from a small cap to give the same right as us retail shareholders. I participated IRL, let's hope the SPP not get scaled back due to demand. Although, I doubt it. 

SPP close July 15th if I remember correctly. 

Janison put on a trading halt today regarding capital raise. Great move by management to do it at a high valuation as it lowers the dilution. The presentation to Wilsons advisory makes more sense now as they were looking for fund managers to add to the register. Ben Clark from TMS capital was really impressed by Janison. If you watch "The Call" at Ausbiz, Ben is an amazing investor, his past record is exceptionally strong. For Ben to get excited by an edtech company is a first as IDP usually steal the conversation with every fund manager.

Soo, let the speculation begin. But first, reading the announcement, a couple of things: 

• "[Janison] anticipates that the trading halt will remain in place until the earlier of the commencement of normal trading on Friday 25 June 2021 or the release of an announcement by the Company in relation to the capital raising". So either way we will know by Friday regarding what the cap raise is for. 
• "The capital raising is material to the Company." Very very interesting and it raises a lot of possibilities. 
  • Could the capital raise be for an acquisiton? 
  • How much will they raise? 
  • Would the capital raise be used to setup a beach head in UK to conduct the OECD PBTS tests there as Janison would be a NSP?
  • Finally, would the capital raise be expansion in US for the PBTS test?
• My guess would be international expansion for NSP areas. That is the best use of funds as they make more being the NSP.
• It would be great if retail investors could participate in the SPP, but Janison did the whole roadshow with Wilsons Advisory. Soo, most likely an institution raise. Good for those that bought earlier ;) 

Forward Speculation (Nothing true, just my thoughts)

• International expansion UK 
  • Good place to start would HQ in England. Most likely due to the GDPR regulations, data cannot go outside Europe, but also makes a lot of sense as University of London is a customer and Cambridge University is a partner.
  • Janison could also deploy the ICAS exam to Europe with the England HQ. 
  • How much would I raise? As the great philospher Micheal Scott would say "more money more problems". They have $10M in the bank from 1HFY21 results. So raising another $10M would not overly dilute shareholders. 
• International Expansion US 
  • I really think it makes a lot of sense to setup a HQ in US later down the track. It is the largest market opportunity. However, it assume that Janison renew the OECD contract and that is too big of a risk. Considering they have not won any customers other than OECD to enter USA, it does not make much sense to do it now. 
• Acquisition 
  • Small value add acquisition that win hard to reach customers is not a bad idea. 
  • I really hope they don't go the Bigtincan route and acquire a company every quarter. 
  • I also do not want to see Janison over paying for the acquisition. They overpaid LTC which lead to revenue loss due to COVID-19. 
• Looking at it holistically $10M - $15M capital raise is a good amount. $15M-$30M is pushing it considering they have $10M cash that we know of. There was no quarterly report. It would be interesting if Wayne Houlden participate in the capital raise or sell a chunk of his holding (31% weighting with 60 million shares), it adds more liquidity to the stock and would influence the stock price.           

Kazakhstan added to the list making it the 15th country doing the PBTS exam. Janison would be the IPP not the NSP - so less revenue. It is a good call as there are 7,500 schools there and physically getting schools together would be too time consuming. Tests expect to start October this year, so that is really quick. I assume it's for small number of schools but I can be wrong with this. 

A really interesting note from Janison in their latest presentation deck to Institutional investors (i.e. Wilsons Advisory investor conference) - IPP ~ $200Kp.a. per country. Which means for the next 3 years Janison is projecting on average around 1,000 schools per country. For the IPP agreements, the expected ARR is $18M p.a. 

For me the valuation comes down to the execution in US and how many schools they can onboard for the PBTS. Getting the first 1,000 will be difficult and thus, the partnership with Brightspace is vital.

Mr Market likes the progress. 

Before Janison announce their quarterly results either next week or the week after, I have pulled together a valuation that makes a lot of sense. This straw is my revenue growth assumptions, I could have put it in the Valuation update but that would be too long for anyone to read.  

What no one is doing (professional investors/brokers) is analysing the potential revenue recognition from the OECD contract. From Janison's own estimates they aim to reach $120M in revenues by 2024. It seems absurd but when I played around with the numbers, there is a way for them to get there. OECD contract holds the key to their success. 

• From the attachment below, I project $85M of revenue can be attained with the current 10 countries in the OECD contract.
• USA contributes half of total OECD revenue assuming Janison acquires 6,400 schools to participate in the PISA test for schools. 
• Australia assumption would be by 2023 all schools would participate in PBTS. $20M guaranteed revenues to Janison. 
• Russia made their intention clear that 70,000 schools will participate by 2024 therefore $18M should be obtained. 
• China was a very recent win and I not sure with the rollout - Janison is not the NSP. Thus, I made conservative assumptions on the TAM and how many schools would participate by 2024. I think I am significantly undervaluing the China potential with both the TAM and the number of schools. 
• Brazil I am hesitant to give high penetration rate as we are not given guidance on revenue potential long term. Janison is not a NSP and Brazil is part of the Emerging market despite having many schools. Therefore 1% penetration rate I chose for safety. 

I have not considered future countries like India, UK or Canada in the revenue growth assumption. Even if Janison win these countries, the first year is the pilot trial with less than 200 schools. Afterwards, more schools take the PBTS. 

ICAS revenues long term would be around $15M assuming $15/test. The latest webinar indicates that $15M will take a couple of years, most likely 3 years for them to deliver 1M tests. 

Finally, other revenues from Universities or NSW Department Education I predict around $20M would be possible. They will/have done deployments for SCIO, UOL, NSW Department (Check In and NAPLAN), Chartered Accountants etc... Therefore $20M revenue potential is a genuine possibility if Janison can maintain relationships with customers they serve. 

Summing it up = $85M (OECD) + $15M (ICAS) + $20M (other) = $120M revenues by 2024. 

I do not know what happens afterwards, but there should be a discussion on whether Janison can renew the OECD contract? If they can, then $300M in revenues by 2031 is a likely outcome.           

Recent CEO signing, David Caspari will be awarded 700 000 perforamcne rights if the share price exceeds $1.00 by April 2022. 

Long term incentive plans target the following thresholds:

Index linked total shareholder return: Threshold: Index TSR; Target: Index TSR + 10% CAGR; Stretch: Index TSR + 20% CAGR

ROE THRESHOLD: 10%;  Target of 12.5%; Stretch: 15%.  

The time consuming compilation of the OECD contract is done. Currently I am estimating ARR for all current contracts for the first year ~ $2.2M (which is not much) but let's look at the big picture.

OECD contract signed in 2019 netting 10 countries of which 2 of them are NSP (National Service Providers). There are 80 OECD countries participating in PISA every year with Non-OECD countries not restricted to participate. 12.5% penetration after 1.5 years is a very good start as they manage to win countries with very large populations (China, USA, Brazil). India is the next obvious target from my perspective. The first year is always the pilot trial with less than 200 schools per country are trialled.

Russia

Although, in the case of Russia 1,750 was trialled, the Russian Education Ministry have plans to expand to 70,000 by 2024. If Janison gets all of those schools, it correspond ~ $17.6M revenues. That's reaching my definition of TAM in Russia, need clarification from management if that is realistic. Aso another clarification is the contract itself, has it been revised to $250 per school over 200 schools? The exisiting contract is based on student test volumes in excess of 20,000.   

Australia 

Refer to my previous straws, and they are doing a great job. 68 schools signed up in the first 3 weeks for PISA, my question would be whether those are from ICAS. My hunch is most likely ICAS. 

USA 

Now their latest announcement for USA made me quite excited "preparing for growth in 2021/22". My assumption would be that D2L integration has been completed and now they are netting schools. The TAM is given to us, it is 32,000 secondary schools eligible for PISA. 

Just rough maths, if Janison gets the same number of schools as Australia (2000 schools ~ AU$14M). If they reach the TAM of 32,000 schools ~ AU$224M in revenues. Quite a massive gap between TAM and Australia. Realistically, by 2024, they could attain 20% market share. Which means 6,400 schools ~ AU$44M in revenues. We don't know until they give us guidance. 

China

So I missed this part, but they are using BenBen as the NSP to deliver the test. The data obviously will be stored in China and not leave outside China. The likelihood of Janison being NSP there is 0%. However, they will recieve platform fee $150k p.a. I wonder if they also get the same fee for more than 200 schools -> $250 per additional school? It was not mentioned. 

Pakistan

Pakistan delay till 2022 is curious, not sure why, should be checked by management. The test was meant to happen during November 2020. So delayed by over a year. 

Summary

We are given enough information to project revenues for the OECD contract. Now revenue growth assumptions will be better explained as we can split OECD with other assessments revenues for the valuation. Gross margin should differ but only sightly. If gross margins were to make an impact, it would be on the NSP countries (Australia and USA), my reasoning is that additional supervisors/ employees are required to deploy, monitor PISA exams. More staff, more cost = lower gross margins. As stated in the last half yearly, they are currently experiencing 75%+ gross margins for OECD contract.  To date, the key countries that will drive revenues for the OECD contract are (USA, Russia, Australia and China) - especially USA. 

Final step -> Revaluation. Why does it take soo long? :D

Australian Ethical sold around 1% of their weighting in Janison. Before they had 9.37%, now it is 8.33%. My guess would be to prevent them owning more than 10% of a company as per their investment mandate.

They sold 2M shares on 1st March (at $0.635 share price) ~ $1.3M. Subsequently share price did drop from $0.635 to $0.59. It does not mean much, but if large holders sell there is a drop in the market value - in this case, not a substainal move. 

Anyhow, Australian Ethical is trimming in very small increments. They still maintain a decent weighting on the business. I don't understand why they would be trimming for any other reason besides meeting the investment mandate.

Janison has grown and I will revalue the business based on the latest announcement which not only exceeded my expectations but provided more information on the OECD revenue projections. They will report more updates in the next quarterly, but I feel I understand the business well enough to revalue the business with the current financials.     

I took some notes on the call today, but before I started writing, I saw Matt Joas and an analyst from VGI Partners on the call. I think they are interested in the business and are doing further due dilligence before thinking about investing. Institutions are interested in Janison, hopefully having them on the register can improve the liquidity in the stock. 

Here are my notes: 

• The OECD contract deliver the PBTS and management are confident that they can sign one country a month (imminently), although it will be lumpy and unpredictable. Currently 7 countries conduct the PBTS, so I am hoping another 7 countries by the end of this year. 
• D2L second phase integration complete which means revenues should flow in 2HFY21. 
• 1750 schools are doing the PISA test in Russia. The 1st year license revenue in Russia was $197K based on 80,000 students sitting the test. Russia was one of the early countries Janison acquired, and the agreement back then was revenue per student. I am not sure if they have changed the agreement to revenue per school, like with recent countries. A new PISA table will come when they announce the next country.
• Management has reiterated their plan to expand ICAS internationally and are considering options. North America would be my pick but that would mean investing into sales and marketing. The ICAS test has incredibly high 80% gross margin, so it is extremely scalable.       
• A unique aspect of the business is that gross margins are 2.5x higher from new customers. They dedicated a slide towards Gross Margin Expansion which will drive "value investors" over the moon. 
• Interesting note on free cashflow. They expect positive cashflow in FY22. What that means, is that this financial year they reinvesting heavily into the business to build the infrastructure to scale. 
• Interesting question on competitive advantage 
  • Deep relationships with customers since inception of the company. I wrote straws here on those relationships. 
  • The platform was created from scratch. Previous management team signed a development agreement with SEAB (Singapore Examination Authority Board) to build and stress test the Janison insights platform under high stakes Singapore exams. There was extensive testing done with a polytechnic university to create high pressure testing environment that does not breakdown. It will give confidence to future customers like (Universities, Schools and Professional institutions) to trial the Janison insight platform. The worst thing that happens to a customer is when an online testing platform breaks down half way through the exam. They need the platform to be reliable and soo far Janison have not had any issues.     
  • Product differentiation. From my interpretation, it means the platform is flexible. They have ICAS, and can be used off the shelf to multiple customers. The platform is hosted in the cloud so you have fast deployment to many locations quickly. 
• One of the questions I asked was whether Janison have plans to set up a base in North America as it is one of the largest education testing markets: 
  • Janison at this stage not focused on putting working capital towards another beachhead. They are focused on building the partnership with D2L in America. 
  • The D2L/Brightspace integration have significant sales pipeline, so what I am thinking is that they are focused on getting revenues first before making decision to expand.   
• The second question I asked was whether Janison have plans to use service providers like Benesse from Japan to expand into more tests and countries. 
  • Short answer is yes and that is the genius behind winning the OECD contract. Janison not only got their foot on the door though the PISA exam but they also won new relationships with service providers that operate in multiple countries with multiple customers. Through strategic partners like Benesse their cost to market entry decreased and speed to market entry increased. 
• Other notable things
  • JEM will become a computer testing hub. This will be the case for the CFA exams. I should know as I am doing the exam :) Ironic that Promteric is the testing platform but JEM would be proctoring  (supervising) the exam.  
  • The learning business to grow single digits. I am not surprised and they have expressed their intention to focus on the Assessment business. They did win 3 customers, but it is not in their intention to grow Learning division. 
  • Before Janison the ICAS exam had a net promoter score of -60 (haha). The net promoter score is now 59 - no wonder they generated $4.8M in revenues.  
  • Janison is the NSP (National Service Provider) in the USA for the PBTS. Very interested to see how this progress as they are not using a third party to proctor the exam.   

Janison is my largest holding in Strawman and I am impressed with their performance. 

The key driver of the company is the Assessment division with a massive 143% growth. This is not from a small base. Going from $4M to $9.5M is a massive achievement. The main contributor is EA which they acquired dirt cheap for $700K. It has now generated $5M in revenues. Surely has to be one of the most ingenious acquisitions in the edtech sector. I view it as a 5x return in 6 months. 

Another key metric to note is recurring revenues. Janison's ARR is $13.4M which is nearly 85% of total revenue. Contract wins fall to the bottom line and we will see margin expansion going forward. We saw that in the Gross margin of 54% up 8%. 

The OECD contract is key as if you read my previous straws "Janison has a 5-year exclusive agreement with the OECD to assist its 90 countries sitting the tri-annual PISA assessment". They currently have the license to 7 countries: USA, Brazil, Portugal, Russia, Pakistan, Thailand and Japan. This has not changed from last time. I attached a screenshot below to show how much each country is willing to pay Janison for the PISA test. I assume this table will change when new countries come on board. 

Janison is capitalising the EA acquisition by launching the REACH progression test in Q4 FY21. This is on top of the ICAS test revenues expected to happen around September. Janison was meant to deliver NAPLAN but due to COVID that was not possible. In saying that, it is a good thing as the 2021 NAPLAN will be fully digital. The pandemic has forced the NSW Department of Education to conduct exams digitally. Which means more future contracts for Janison. They have a 10-year relationship with the NSW Department of Education. I am hoping the Janison will be awarded a contract for the HSC exam this year. In saying that, they did generate $800K for creating the new assessment tool, “CHECK-IN” as COVID halted NAPLAN. It is a vital tool for teachers to assess how much of an impact school closures have on the student's learning. This could be an ongoing stream of revenue. 

Looking ahead, they plan to win more countries from the OECD, expand partnerships for the assessments division, deliver NAPLAN and reinvest heavily into R&D to make the platform scalable. Janison generated a positive $1.3M operating cash flow and invested $2.4M back into the business for R&D. Thus, overall we saw net cash outflow. I don't mind that, especially if it involves growing top line and retaining customers for the long term. They have met guidance which is always fantastic to see and build trust with shareholders. 

Overall, I trust Janison will succeed as they have proven they can execute, their assessment platform is well received by customers and the management is honest with expectations (very rare to find that from a small-cap company).              

Janison certainly ticks all boxes for me. The current valuation at $128M market cap still feels undervalued in my opinion. The recurring nature of the revenues makes it very difficult to get killed by a competitor.  

When I did my deepdive on Janison I noted that they acquired Educational Assesments (EA) for $750k, which had to be one of the cheapest acquisitions I have seen. The ICAS test alone did $7.6M in FY19 ~ 650k tests. UNSW Global wanted to get rid of EA soo badly that they did not bargain a premium.

Now, the acquisition is starting to pay off. They had to make the test digital and quickly deploy. Their guidance was $3.7M but it ended up being $4.8M from 300k tests . It is 30% above management expectations. What's even more impressive was that gross margins was 80% for the ICAS test - Janison did mention that the reason for high gross margin was that the development cost incurred prior to acquisition.

The primary reason for selling EA to Janison was the customer complaints. Parents found miscommunication from EA and did not have their complaints addressed. Now, customer complaints reduced by 98% and received overwhelming number of positive comments from teachers who felt that this year’s online test delivery was significantly better than in previous years. 

"Next year the test will offer the full suite of subjects (writing test not delivered in 2020) in a more favourable environment where COVID is contained and a greater number of schools are able to sit the test. In advance of 2021 Janison will be investing to improve the quality of test questions – enriching content to enhance student experience and further raise the ICAS competition standard". What I find fascinating is the flexibility of the platform and how they have the capability to increase revenue per customer by potentially controlling pricing. 

The real announcement is management guidance for 1HY21. In the Q1 update, Janison is targeting $15M-$16M, but now are saying it would be closer to $16M. I am assuming this is due to the $1.1M outperformance from ICAS. Platform revenues is expected to grow substantially from $6.3M in 1HFY20 to $11.6M in 1HFY21 (expected). This is recurring revenue, which means the business is further derisking. Exam services as expected would shrink due to Covid prohibiting in-person exams although it makes up small portion of overall revenues. Another guidance assumption is "through improved pricing, targeted cost reduction programs in Cost of Sales, and now a stronger than expected ICAS 2020 result, Janison is predicting gross margins for the first 6 months of FY21 (1H FY21) to be above 50%". Finally they are investing heavily into sales and marketing and are expected to increase Opex of approximately $1m per quarter. 

Soo far, management has done a great job in delivering on their FY21 goals. What's even better is that they are keeping themselves accountable and keeping the market informed on the progress. The 1HY21 report will be very interesting to see, especially on how they are going with the OECD contract and customer wins. 

My takeaways from both the Conference call and Annual report

• The main focus of the business is Assessments while acknowledging that they have slacked off in the Learning segment. They are increasing Sales and Marketing spend from 8% of revenues to 16% with some of the efforts geared towards getting corporates to the Janison Academy. Prime use of their sales and marketing spend is to get more countries & schools signed for the PISA based Test for Schools (PBTS).  
• OECD is highly scalable test where they disclosed that they are hitting 75% gross margins. One of the advantages is using their "Replay" feature where tests can be adminsitered in areas with low internet penetration without increasing development costs. Stuart Halls (CFO) reiterated that OECD contract is one of the prime goals for FY21, where countries that have done the pilot ($100K for implementation, will roll out to more schools, that's where the additional recurring revenue kicks in). They have 8 countries out of 90 countries (Spain, Portugal, Japan, Pakistan, USA, Brazil, Russia, Thailand). In August, Thailand was a recent customer win, and I expect to see an announcement on them soon. From their presentation deck, "In FY21 [we] will invest in Business Development and Account Management to further expand PBTS into more countries and develop existing relationships secured in FY20." 
• UNSW Global EA is a business they acquired this FY20. EA create multiple tests but the most prominent is ICAS. The pre-covid pricing for ICAS was $15/test where ~1million test p.a. equating $15M p.a. in platform revenue. They state that ICAS can generate 90% Gross margins from platform revenues.
• Excluding Naplan, 1million candidates took tests using Janison's Insight platform in 2020, 50% yoy increase. Roughly 1.7million tests were conducted in 2020, 25% yoy increase. David Caspari mentioned in the conference call that it is one of the metrics the company will use to judge internal performance. 
• As predicted, Janison's Exam management (JEM) services revenue (Formerly LTC) is dependent on the number of students sitting tests in-person. Janison experienced a material downturn in JEM revenue due to government restrictions on gatherings causing universities and professional associations to cancel exams or defer until later this year. Q4 of a financial year is where JEM experience the most revenue in a quarter (~$3M). This year, Q4 contributed $0.         
• From a financial standpoint, we are starting to see Janison starting to achieve operating leverage. Prior to the platform model, there was increase in development cost per customer. The software was not scalable. Transitioning to an off the shelf platform product increased recurring revenue by 62% to $9.4M in FY20. Customers that paid the implementation fee in FY19 are now paying recurring revenues. The platform has enough features for a user to write their own tests without increasing additional development costs. This is highlighted by the lower cost of goods sold this financial year compared to last year. When tests are reusable, the cost of implementation decreases shown by a lower COGS. 
• There are global competitors and one of them is Prometric who is in charge of the CFA exams. David agrees that they are one of the main competitors to Janison and "welcome the competition".  

What I did not like 

• Hiring a 3rd party advisor to assist M&A strategy for school customers in the assessment business. 
  • I particularly don't know why they want to go towards acquisition again as they already have UNSW global. If they want to go there, atleast get companies at a very cheap valuation. This is on top of the M&A fees. 
  • If I were acquiring someone, it would be an organisation that have more than 10 years of experience and >50% market share in a semi-large market. Acquisition for market share makes more sense to me than acquiring a company which specialise in 1 product. 
• Neglecting the Learning business but saying that Janison would increase Sales and Marketing in this segment. I think Janison could sell the corporate arm to another player. Despite high gross margins, it does not make sense why they would reinvest if the goal is not to improve the platform for corporate learning customers. The mining companies left in FY20 as the platform was not flexible for the mining industry. The learning business itself is fine for schools and higher education.

What I liked 

• Clear plan for international growth through (OECD, Higher education (University of London, SCIO- Czech Republic)) 
• Building additional products for schools like benchmarking tools, reports and teacher training solutions to analyse performance. This can increase the recurring revenue per customer. Their goal is "one core product set for repeatable sales across our target markets"
• Increasing sales and marketing to reduce the length of the sales cycle, support existing customers and to increase revenues. 
• Matt Wolf is a new addition to the team, he is head of product/ Chief product offier who was formerly the head of product at 3PL from 2008 - 2016. I think he is a great addition to the team. 
• They are starting to get operating leverage with existing customers who are now migrated to SaaS model. 

I leave with this, which in essence shows what they have done and how they see the education market in the near term.  

"Janison is at the beginning of the third phase in its evolution. Our first phase began 22 years ago when Janison’s founders Wayne and Jacquie Houlden saw the role technology could play in transforming education. We then transitioned to our second phase in 2015, our ‘establishment’ phase. Under Tom Richardson’s leadership we have established a global customer base, market-leading product offerings generating recurring revenue, and solid financial foundations.

And that now leads to our 3rd phase, our ‘growth’ phase. The global education market continues to grow. By 2025, half a billion more students are expected to be in schools and universities, and education spend per student is increasing year on year. Prior to the extraordinary impacts of COVID-19, digital spend in this sector represented 2.6% of total spend. The pandemic has accelerated a decade’s worth of technology and cultural transformation in this sector into less than six months. It has done more to speed up the transition to online in the education space and the way people educate and learn than any other trend in recent times. Post COVID-19, digital spend will lift substantially as adoption levels stabilise at far higher levels than pre-pandemic. Janison is well placed to capture this market opportunity." 

Please DYOR. There are a lot things missing in my takeaways so please read the annual report and presentations :) Also,  the Zoom call was very hard to hear, it made notetaking a pain. FY20 was a lot of restructuring and implementation. To me, the reported numbers has not materially affected my valuation, but will revisit the valuation after the AGM. The AGM is on the 1st October.