REG - Tribal Group PLC - Trading Update and Notice of Results

TribalAnnouncement

02/02/2024 07:00

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RNS Number : 7842B  Tribal Group PLC  02 February 2024

2 February 2024

Tribal Group plc

("Tribal" or "the Group")

 

Trading Update and Notice of Results

 

Cloud expansion driving growth in ARR and results ahead of market expectations

 

Tribal (AIM: TRB), a leading provider of software and services to the
international education market, is pleased to provide an update on trading for
the year ended 31 December 2023 ("FY23" or "the Year").

 

Trading performance

 

The Board anticipates a solid trading performance in FY23 with adjusted EBITDA
and net debt expected to be comfortably ahead, and revenue marginally ahead,
of current market expectations(1). This incorporates the Nanyang Technology
University ("NTU") provision release disclosed in the Group's half year
results.

 

Tribal's performance in the Year demonstrates the strength of the business,
with its established customer base and enhanced SaaS product set. This was
achieved despite the backdrop of the lapsed offer for the Company by Ellucian
(the "Offer") and the termination of the contract with NTU.

 

Closing Core Annual Recurring Revenue (ARR)(2) is expected to have increased
by 13% to £51.1m (2022: £45.3m at constant currency), subject to audit,
reflecting growth in the Group's strategic products. Overall ARR is expected
to have increased by 9% to £54.5m (2022: £50.2m), reflecting the anticipated
decline in the non-core Software and Services segment.

 

While initial exchanges have taken place with NTU, they have not yet reached a
resolution and the potential outcome remains uncertain. An update will be
provided as and when appropriate.

 

Net debt

 

The Company closed the Year with a net debt position of £7.2m (2022: net debt
of £3.4m), which reflects a net cash outflow as a result of continued
investments in its product portfolio, the issues surrounding the NTU contract
and exceptional costs in relation to the lapsed Offer and restructuring of the
Education Services business, as discussed below.

 

The Company has renewed its banking facilities for three years, with the
option to extend for a further two years until December 2028, which consists
of a £20m multicurrency loan facility. The Board is confident it has
sufficient funds to execute on its growth strategy.

 

Sales performance

 

The Group achieved a solid sales performance during the Year, especially in
the first half, including one new SITS:Vision customer (ARR value of £0.5m)
and four major Tribal:Cloud migrations (ARR value of £1.7m). Sales momentum
slowed in the second half of the Year, as customers awaited the outcome of the
proposed offer for the Company.

 

Education Services (ES)

 

The Board conducted a strategic review of the ES division during the Year and
concluded that the best way to drive further growth in revenue and
profitability, and deliver value to shareholders, was to establish ES as a
standalone entity within the Group, with its own company structure. The
business continues to make progress against its strategy, resetting its
operating model and strengthening its business development and marketing
functions.

 

Outlook

 

As part of the transformation of Tribal to a pure SaaS business, the Board has
instigated a restructuring of the core software business and, together with
associated headcount reductions, expects this to support future profitability
levels.

 

Whilst sales cycles are still extended, the Group has a significant pipeline
across the business, and the Board is confident in the effectiveness of its
cloud strategy and continued growth in 2024.

 

Notice of Results

The Group expects to announce its audited full year results on 21 March 2024.

 

Mark Pickett, CEO of Tribal Group, commented:

 

"Notwithstanding the various corporate developments during the year, the
Group's positive performance reflects the enduring strength of our businesses,
the team's ability to retain existing customers and win new ones, and the
effectiveness of transitioning customers to the cloud. We have been, and
remain, focused on delivering an outstanding service to our customers, and
with high levels of recurring revenues, the Board is confident in its ability
to evolve Tribal to become a global pure-play EdTech SaaS business."

 

Notes

(1) In so far as the Board is aware, as at the point of this announcement,
consensus market expectations for FY23 were for Revenue of £84.2m adjusted
EBITDA of £12.6m, excluding share based payments, and Net Debt of £9.5m.

(2) 'Core ARR' = Foundation, Cloud and Edge product sets.

 

 Enquiries:

 Tribal Group plc

                                                        Tel: +44 (0) 117 311 5293
 Mark Pickett, Chief Executive Officer

 Diane McIntyre, Chief Financial Officer

 Investec Bank plc (NOMAD & Joint Broker)             Tel: +44 (0) 20 7597 5970
 Virginia Bull, Nick Prowting, Tom Brookhouse

 Singer Capital Markets (Joint Broker)                Tel: +44 (0) 20 7496 3000
 Shaun Dobson, Tom Salvesen, Alex Bond

 Alma Strategic Communications                        Tel: +44 (0)203 405 0205
 Caroline Forde, Hannah Campbell, Will Ellis Hancock

 

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.

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