The beginning of FY23 has been an appreciable sales period for online education provider KneoMedia (ASX: KNM) so far. The Company had just deployed 40,000 units of Dell Chromebooks linked to the KneoWorld platform into 11 school districts located across New York City. Students across school districts in all five Boroughs now have access to KneoMedia’s Connect All Kids educational program. This is their largest unit deployment to date, valued at US$24 million and paid for by the New York City Department of Education (NYC DOE).
KneoMedia will receive its share of deployment of approximately $9 million once the devices are used in classrooms, which is anticipated sometime in the March 2023 quarter and subject to completion of commercial terms in line with previously deployed contracts. The $9m revenue includes a three-year licencing period and paid upfront in Year 1, which underpins KneoMedia’s operations and will reduce reliance on external capital. Moreover, its Software-as-a-Service (SaaS) business model ensures its cost base remains largely the same, irrespective of the size of this and future deployments. The visibility that this deployment creates will also be a key catalyst for more schools wishing to access the technology.
KneoMedia CEO James Kellett said, “This much larger-scale deployment is also a major validation of KneoWorld’s world-class education and assessment capability and the outcomes it is delivering to students.
“Whilst it will provide the Company with a material boost to FY23 revenue, it also establishes an exciting platform for further growth through KneoMedia’s status as a preferred education provider to the New York City public school system.
“Our immediate focus is to continue building scale in the New York State public school system where there are some 686 school districts and 4,360 schools. We have achieved a small percentage of ~2% and as such, we have a lot of headroom to grow.”
Driven by the sales achieved in New York City, KneoMedia will focus on the US education market moving forward especially in building a more established presence in New York. Having successfully deployed the Connect All Kids program into over 100 schools to date, the Company strives to scale up operations and dive into a total addressable market of 2.5 million students in New York City and New York State alone – all of which are potential candidates for the KneoWorld content.
KneoMedia is a SaaS publishing company that delivers education and assessment products to global markets in both general and special education classrooms via its KneoWorld platform. Student licences are sold to education departments on an annual basis and via distribution agreements. The KneoWorld platform itself aims to bring the power of digital storytelling and game-based learning to the modern classroom. KneoWorld supports digital teaching and learning while promoting educational equity to close the achievement gap between public and private schools in the US.
Meanwhile, the Connect All Kids platform was created by KneoWorld, along with the NAACP (National Association for the Advancement of Colored People) and Dell Technologies to help all public school students become more technology literate. The platform allows all students to access KneoWorld educational programs and other digital learning content no matter their academic ability. Access to these proven programs can help even the most challenged child be more engaged and want to learn thereby enhancing their academic skills.
In FY22, KneoMedia had invested a total of $931k in developing KneoWorld technology platform and content in order to capture larger deployments of the Connect All Kids education initiative in New York City. The Company incurred a $3.8m loss during the financial year, mainly attributed to non-refundable deposits and loans from its Philippines operation that flopped during COVID. However, the investment seems to have started bringing fruitful returns in FY23 as a few months later in the September quarter, KneoMedia received $380k customer receipts related to the Connect All Kids commitment in New York City. This brings down their total net cash outflow down to $84k compared to $605k in the previous quarter, and $781k in the previous corresponding quarter. At the end of the quarter, KneoMedia had cash and equivalents of $1.1m.
The New York City Connect All Kids program provided the majority of the Group’s sales for the year. These contracts are for a period of three years. The revenue is recognised on a straight-line basis over the term of the contract resulting in a deferred revenue balance of $557k to be recognised over the contract life and accordingly booked as a liability until the contract term and related performance obligations have been fulfilled.
Clara is a Business Reporter for The Sentiment.
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