By Durrant Pate/ Contributor

Digital education group EduFocal has rolled out a number of cost-cutting measures, including the retrenchment of a number of staff, which alone is set to save $7 million monthly or $80 million annually.

Between January 2023 and March 2024, the public company, which trades as LEARN, has made the difficult decision to release 43 team members comprising a mix of contract and full-time staff.

Management reports that, “These changes will not affect our ability to execute and achieve our targets as we leverage technology to increase productivity.”

For the 2023 financial year, consulting and staff costs accounted for nearly $130 million, representing 36 per cent of the Group’s total expenses of $361.6 million. With its new business model, EduFocal is transitioning from one-off projects with long payment cycles to developing software offering broad use cases, predictable revenue, lower human resource requirements, and higher net margins. 

For the first quarter ended March 31, 2024, revenues amounted to $30 million, representing a $82.7 million or 73 per cent decrease relative to the corresponding reporting period in 2023. This has come about because of the management’s strategic shift towards more predictable recurring revenue streams. 

Amigo showing good early prospects

The team has been focusing on developing Amigo, a new initiative designed to produce significant recurring revenues based on the proposed business model.  Amigo, in particular, is extremely important to the company’s future with the management investing heavily in its development. 

“Early feedback from potential customers about Amigo has been extremely positive, and we anticipate immediate opportunities to leverage this software beyond Jamaica. This investment underscores our commitment to driving top and bottom-line growth through innovative educational solutions,” the management report outlined. 

Net loss attributable to shareholders for the first quarter closed on $25.2 million, which is $67.6 million lower than the preceding quarter in 2023. Operating loss for the period was $21 million, compared to an operating profit of $51 million in the corresponding period in 2023, representing a decline of $71.5 million or 138 per cent reduction. 

Administrative expenses totalled $22.5 million or 42 per cent quarter over quarter, a decrease from $53 million in the first quarter of 2023 to $31 million in 2024. This decline is attributable to the group’s steadfast commitment to operational efficiencies across all divisions, minimising all operating costs and maximising productivity throughout the entire organisation.

This positive impact has offset the slow start experienced in the first quarter of 2024, thereby moderating the Group’s overall performance. 

Performance of divisions 

The Learn division continues to concentrate on the expansion of its market presence globally, aligning with the Group’s strategic objectives for growth and market penetration. With the closure of Academy and the acquisition of Clever School Teacher (CST), EduFocal Nigeria and EduFocal Africa, the division remains committed to widening the group’s footprint in these territories. 

The Business Division has a robust pipeline of nearly $100 million in contracts, a significant portion of which will be realised in FY 2024. The management expects the Business Division to contribute approximately $200 million to the group’s revenue for FY 2024. 

The division primarily leverages contract labour as needed to meet project demands, which helps manage associated expenses by ensuring the company only spend what it earns. 

Concurrently, total liabilities increased by 24 per cent, moving to $320.1 million in the period under review. Due to the challenges the group faced in the first quarter, shareholder’s equity was impaired moving to a deficit of $100.3 million,  a 295 per cent reduction when compared to the corresponding period in 2023. 

The management team  says it “remains firmly committed to reversing this downturn and improving our operational efficiencies. We are focused on strategic initiatives aimed at driving growth and increasing shareholder value. We are taking decisive actions to address the areas of concern and are confident in our ability to navigate through these difficulties, leveraging our strengths and opportunities.”