Edufocal on Thursday released financial statements for the January-March quarter and revealed a 73 percent drop in revenue in the period, as the company shifted from reliance on one-off contracts that it struggled to collect on to more predictable recurring revenue streams.
According to its financial statements, EduFocal Group made revenue of $30 million in the January-March period, down significantly from $112 million in the same period last year.
“This change is part of our strategic shift towards more predictable recurring revenue streams,” the company said in a management analysis accompanying its consolidated financial results.
The company noted that its Amigo software, developed at a cost of $60 million, was a primary effort intended to generate significant recurring revenues based on its proposed business model.
Now, the company is struggling not only with declining revenue, but also with a first-quarter operating loss of $21 million, compared with operating profit of $51 million in the same period last year.
So far, the company has reported “laying off” 43 staff members between January 2023 and March 2024 in order to strengthen its position and reduce losses. This figure includes both permanent and contract employees. The changes are expected to save the company about $7 million per month, or just over $80 million per year. Before the cuts, Edufocal’s personnel costs in 2023 were $130 million, more than a third of its total expenses.
“The changes will not impact our ability to execute or achieve our goals in leveraging technology to improve productivity,” the company said.
Commenting on its segment reporting, Edufocal said its Learning division is focused on expanding its market presence globally in line with the group’s strategic objectives for growth and market penetration.The company said with the closure of academies and the acquisition of Clever School Teachers (CST), Edufocal Nigeria and Edufocal Africa, the division remains focused on expanding the group’s footprint in these regions.
Meanwhile, the company said it expects the operations division to contribute around $200 million to group revenue this year. The division mainly meets project demand, utilising contract labour when required, helping it manage associated expenses by spending only what it earns, it said.
However, operational issues aside, a look at the financials shows that major shareholder and CEO Gordon Swaby has reduced his holding in the company, and that new names have been added to the top 10 shareholders at the end of March compared to the beginning of the year.
As of the end of December 2023, Swaby held 201.6 million Edufocal shares, which represents approximately 31.08% of the total holdings. However, three months later, as of the end of March 2024, his holdings had fallen by 20.29 million shares to 181.3 million shares. At this level, Swaby now holds 28% of Edufocal shares. At the same time, a new name has emerged in the company’s top 10. Dale McFarlane held 17.5 million Edufocal shares as of the end of March, which represents 3% of Edufocal shares. This holding makes McFarlane the sixth-largest shareholder in Edufocal shares.
