Shares for Australian-owned Janison Education Group [ASX:JAN] are up by 16% — trading at 43 cents on Wednesday morning.
This comes after Janison announced the extension of its agreement with Education Services Australia (ESA) to provide the platform powering NAPLAN Online across Australia.
The new agreement has an initial term of three years — plus three additional optional years — valuing the deal at over AU$24 million for the full six-year term.
This is huge news for the edtech provider after a rocky year of trading — with shares down by 25% in the past year as the wider sectors’ prices continued to slide from their stratospheric pandemic highs.
Source: TradingView
JAN shares up by 16% from the agreed extension
The NAPLAN agreement is the largest in Janison’s history and will see it maintain a strong footing in the Australian market.
The National Assessment Program — Literacy and Numeracy (NAPLAN) began in 2008 but moved increasingly online in 2018.
The NAPLAN examinations focus on numeracy and literacy for students in years three, five, seven, and nine throughout Australia, serving around 1.2 million students annually.
The news has seen share prices return to April values when JAN was awarded a three-year global agreement with Oxford University Press (OUP) to deliver its digital assessment technology.
Last year Janison also signed with Cambridge University Press (CUP), its largest enterprise deal prior to today’s announcement, which sent shares surging by 67% to a 52-week high of 66 cents a share in November 2022.
With the deal in hand, Janison can look forward to some breathing room as it waits for its OUP and CUP deals to bear fruit in 2HFY23.
Janison CEO, David Caspari commented:
‘We are delighted to have renewed our agreement with ESA.
‘This is also an important milestone in Janison’s history, signing our largest agreement which demonstrates the trust ESA has placed in Janison to deliver high-quality educational technology solutions.
‘This builds on the strategic opportunities forged this year with Oxford University Press and Cambridge University Press & Assessments looking into FY24 and beyond.’
Costs down, heads up
The announcement is a welcome one for Janison after a tough year saw share prices slide from their yearly high to 23 cents a share in early March despite securing valuable international agreements.
Much of the investor concern has revolved around ballooning operating costs which have hung over the company since 2019.
Opex increased approximately $7.7 million in FY22, from $13.7 million in FY21 to $21.4 million in FY22 — an increase of plus 56%.
These costs were associated with expanding their international acquisition and transitioning from bespoke testing to larger enterprise-level assessments.
Cost-saving initiatives were put in place in June 2022 as well as internal restructuring. This saw the company lower its headcount and consolidate legacy systems.
With these changes, 2022 saw a significant increase in gross profits to 64% — up by 9% from FY21.
While these changes all point to a rosy outlook, it’s still unclear if Janison can recapture the highs seen at the peak of COVID as schools scrambled for online education and assessment software.
Globally, there has been growing investment in edtech — even before the pandemic.
Venture capital investment totalled more than $10 billion in the sector, up from $500 million in 2010.
Some estimates have an additional $87 billion flowing into the sector in the next decade.
Source: HolonIQ
More disruption ahead
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Regards,
Charlie Ormond
For Money Morning
