28 January 2021
Tribal Group plc
("Tribal" or "the Group")
Strong sales performance builds platform for growth
Tribal (AIM: TRB), a leading provider of software and services to the international education market, today announces the following trading update in respect of its financial year ended 31 December 2020. The Group expects to announce its audited full year results on 17 March 2021.
Resilient trading performance
The Board is pleased to report that a strong sales performance in the year has resulted in Annual Recurring Revenue (ARR) committed at the period end increasing 12% to £47.5m (2019: £42.4m), demonstrating the successful ongoing execution of the Group's SaaS transition strategy. The Group has shown great resilience in the year and anticipates reporting results in line with current market expectations upgraded in October 20201, delivering revenue in the region of £73.0m (2019: £78.2m), adjusted EBITDA2 of approximately £14.9m (2019: £15.4m) and adjusted EBIT2 of approximately £11.8m (2019: £11.7m).
Strong cash balances have been maintained and the Group ended the year with a net cash position of £9.5m (2019: £16.5m), with no debt drawn; all furlough benefits received and all temporary tax deferrals were repaid in the year. The net cash position is after paying an interim dividend of £2.2m, the one-off payment of £8.1m to settle the platform dispute, as well as continued investment in Tribal Edge of £6.6m (2019: £5.9m). Cash generation excluding these items was £10.0m.
Strong sales execution
The Group had a positive end to the year, closing a number of significant sales to new and existing customers, and expanding into new territories in South East Asia.
Across the year Tribal won four new SITS:Vision Student Information Systems customers being Kaplan Business School Australia, Chartered Accountants Australia and New Zealand (CAANZ), Arden University in the UK, and Nanyang Technological University in Singapore.
Our success with Nanyang Technological University validates Tribal's strategy to provide complete, integrated Student Information Systems managed in the public cloud, covering the complete student journey, from pre-admission through to graduation. The £16.9m, eight year contract encompasses SITS in the Tribal:Cloud and Tribal Edge products, together with Tribal Student Marketing & Recruitment and Tribal Student Support & Welfare.
The Group's cloud offering was enhanced in the year through the launch of Tribal:Cloud, enabling all existing products to be hosted and managed by Tribal in the public cloud, resulting in cost efficiencies for our customers whilst significantly increasing Tribal's share of wallet. There were two significant Tribal:Cloud sales in the second half of the year to existing customers: the University of Sydney in Australia and King's College London in the UK, and a growing pipeline across the existing customer base.
We continued to deliver on our Tribal Edge strategy, which provides a compelling vision to new and existing customers to embrace our next-generation, best-of-breed, cloud native Student Information System (SIS) solutions. As a cloud native SIS, Tribal Edge provides a competitive differentiator in targeting and acquiring new customers. In addition, it protects Tribal's customer base into the future by providing the most efficient, lowest cost route to achieve a comprehensive, integrated, open-standards SIS which maximises the student experience and reduces the technical complexity and IT cost for our customers.
Tribal Edge Submissions, the first Tribal Edge product, was launched on schedule during the year, and successfully sold to all 12 of our current Australian University customers, as well as to TAFE New South Wales. Our continued investment in Tribal Edge has seen the first version of Tribal Edge Admissions completed in December; it will be released to early adopters in the first half of 2021.
In Education Services our team proved their adaptability in the face of Covid-19, with the key assurance, training and inspections contracts in the UK, US and New Zealand continuing largely remotely. The inspections contract with ADEK in the Middle East was paused due to Covid-19 school closures but is expected to resume upon relaxation of Covid-19 restrictions. The benchmarking and student surveys work continued; however, the larger Student Barometer survey for the southern Hemisphere had to be delayed to 2021.
Tribal enters the current financial year with increased levels of revenue visibility due to the strong sales performance in 2020, a strengthened position in South East Asia through the addition of Nanyang Technological University to the customer base and a considerably expanded addressable market through the launch of Tribal:Cloud and imminent launch of Tribal Edge Admissions.
The safety and well-being of the Group's employees and customers remains a priority, as we continue to monitor the impact of Covid-19 both on Tribal and Education as a whole. The financial impact of Covid-19 and the changing expectations of students, means that never has the need for cloud-based solutions for the Education market been more pressing. The investments the Group continue to make position Tribal at the forefront of this evolution in the industry, providing for an exciting future for the Group.
Overall, the Board looks forward to the year ahead with confidence.
Mark Pickett, Chief Executive Officer of Tribal, commented:
"I am very proud of how the Tribal team performed in 2020 adding a number of significant new customers against the challenging backdrop of Covid-19 while delivering on our product expansion strategy.
"The addition of Nanyang Technological University has strengthened our presence in South East Asia and validated our strategy of providing complete, integrated Student Information Systems managed in the public cloud to our customers.
"Our Tribal:Cloud and Tribal Edge products provide significant opportunities with our existing and new customers as they focus increasingly on standardisation and efficiency. We expect to see further sales across 2021. The growth of our Annual Recurring Revenue provides us with a strong platform as we enter 2021 and the Board is confident in the outlook for the year ahead."
(1) In so far as the Board is aware, prior to this announcement, market expectations for the year ending 31 December 2020 were for revenue of £72.6m, adjusted EBITDA of £14.8m and adjusted EBIT of £11.5m.
(2) Adjusted EBITDA and Adjusted EBIT is in respect of continuing operations excluding restructuring costs, share based payments and provision for the platform dispute settlement.
Tribal Group plc
Tel: +44 (0) 117 311 5293
Mark Pickett, Chief Executive Officer
Paul Simpson, Acting Chief Financial Officer
Ken Lewis, Company Secretary
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Investec Bank plc (NOMAD & Joint Broker)
Tel: +44 (0) 20 7597 5970
Sara Hale, Virginia Bull, Will Godfrey
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N+1 Singer Capital Markets Limited (Joint Broker)
Tel: +44 (0) 20 7496 3000
Shaun Dobson, Tom Salvesen, Alex Bond
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Tel: +44 (0) 203 405 0205
Caroline Forde, Robyn Fisher, Josh Royston, Molly Gretton
About Tribal Group plc
Tribal Group plc is a pioneering world-leader of education software and services. Its portfolio includes Student Information Systems; a broad range of education services covering quality assurance, peer review, benchmarking and improvement; and student surveys that provide the leading global benchmarks for student experience. Working with Higher Education, Further and Tertiary Education, schools, Government and State bodies, training providers and employers, in over 55 countries; Tribal Group's mission is to empower the world of education with products and services that underpin student success.
This Statement has been prepared for and is addressed only to our shareholders as a whole and should not be relied on by any other party or for any other purpose. Tribal, its directors, employees, agents or advisers do not accept or assume responsibility to any other person to whom this Statement is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed. This Statement may contain forward-looking statements. Any forward-looking statement has been made by the directors in good faith based on the information available to them up to the time of approval of this Statement and should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information. To the extent that this Statement contains any statement dealing with any time after the date of its preparation, such statement is merely predictive and speculative as it relates to events and circumstances which are yet to occur and therefore the facts stated and views expressed may change. Tribal undertakes no obligation to update these forward-looking statements.