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
