There’s much to be said about creating a level-playing field, especially in education. Giving access to everybody is no longer enough—or perhaps never has been; the game was always about equity. Treating every student’s needs differently and with equal importance. That’s why tutoring has come into the spotlight, helping students who are falling behind get a leg up—some extra support.
As a result, tutoring companies like Cluey (ASX: CLU) are witnessing growth in demand. The Company saw a 20% improvement in its performance in FY23. Its revenue saw a 15% uptick to $39.4 million on FY22 as new students increased by 24%, student sessions shot up by 11% and average revenue per student session witnessed a 3% increase to $65.65. The Company’s underlying EBITDA loss of $14.2 million improved majorly compared to $17.7 million in PCP.
Joint CEO, Matteo Trinca, said, “It is pleasing to see the benefits from the initiatives implemented in FY23 to reduce cash burn, decrease costs and drive the business to profitability starting to flow in Q4 FY23. This hard work has laid the foundation for the Company to achieve its objectives in an uncertain economic environment.”
Cluey is an EdTech company with a focus on holiday and after-school programs. It also provides tutoring services for the Aus and New Zealand curriculum.
In FY23, Cluey undertook many cost saving and margin improvement initiatives in Cluey Learning. In Q4 FY23, these initiatives delivered a $2 million reduction in the division’s operating costs.
The Company delivered 599,474 student sessions, and its gross profit saw a 24% increase to $22.5 million. While the student increase is one factor of growth, others could be considered somewhat controversial. The Company’s average tutor/teacher costs decreased by 6% resulting from targeted initiatives to optimise tutor allocation, reduce costs and implement efficiencies. And it increased student fees by 3%.
Cluey reduced its full-time employee count by 32% from 227 in June 2022 to 155 in June 2023. This was a part of its cost reduction plan, coupled with product and technology-led enhancements to the learning environment, self-service automation and operating efficiencies. In FY24, it also plans on building some ChatGPT-esque generative AI learning analytics tech. In FY23, employee benefits expense represented 48% of revenue, down from 55% in FY22. A scary picture for teachers, but a lucrative one for Cluey.
Besides its tutoring restructure, the Company saw a 50% reduction in the number of months required to pay back Customer Acquisition Cost (‘CAC’), after funding tutor and teacher costs, to five months in FY23 from 10 months in FY22. This was a direct result of increased allocation of investment in customer acquisition to Code Camp (Cluey’s after school coding program).
Code Camp achieved positive Underlying EBITDA of $100k, representing an improvement of $0.9 million. Code Camp generated positive cash flow in FY23 of $400k, signalling the growing interest in coding for Aussie students.
Cluey expects the cash balance of $14.7 million as of June 2023 to fund its working capital requirements.
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