Keypath Education International, Inc. (ASX: $KED) Half-Year Report 2024

Keypath Education International, Inc. (ASX: $KED) has released its half-year report for the six months ended December 31, 2023. The company reported a revenue of $66.9 million for this period. The report, prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP"), provides a comprehensive overview of the company's financial performance and key operating metrics.

Executive Commentary

The company's principal activity is online program management ("OPM"), primarily serving the postgraduate education market of traditional universities. Keypath enables universities in Australia, the U.S., Canada, the U.K., Malaysia, and Singapore to deliver technology-enabled online degrees and programs driven by market demand. The suite of services provided to university partners includes program design and development, marketing, management, student recruitment, student support, clinical placement services, and faculty recruitment. The company enters into long-term contracts with universities and earns revenue through an agreed revenue share with the relevant university during the contracted term. Keypath has over 700 employees spanning five countries (U.S., Canada, U.K., Australia, and Malaysia). The company closely monitors revenue by vintage, reflecting the growth trajectory of programs as they evolve through the unit economic model. The 2021 and subsequent vintages continue to scale toward maturity and reflect the full benefit of the KeypathEDGE platform, primarily focused in the Healthcare vertical in the U.S. and across all verticals in the APAC market.

Summary

Keypath Education International, Inc. (ASX: $KED) reported a revenue of $66.9 million for the six months ended December 31, 2023, representing a 14.0% increase from the same period in 2022. The company's revenue share typically falls within the range of 40% to 60% of the tuition revenue, with contract durations spanning from seven to ten years. The company's principal activity of online program management primarily serves the postgraduate education market of traditional universities. Keypath's suite of services to university partners includes program design and development, marketing, management, student recruitment, student support, clinical placement services, and faculty recruitment. The company's focus on the Healthcare vertical in the U.S. and across all verticals in the APAC market has contributed to a 27.8% increase in Healthcare revenue for the six months ended December 31, 2023. Keypath's operating expenses, including salaries and wages, direct marketing, and general and administration expenses, have been closely managed, resulting in a decrease in salaries and wages and direct marketing, and an increase in general and administration expenses due to the Company's evaluation of SEC registration matters. The company remained debt-free during the reporting period and had no interest expense. Keypath's cash flows from operating activities decreased to $2.2 million from $3.1 million in the six months ended December 31, 2022, primarily driven by a one-time cash settlement of LTIP Cash Award last year and change in the net working capital. The company's business is subject to seasonality, with program starts affected by university partners. Keypath has evaluated subsequent events and transactions through February 26, 2024, and is not aware of any pending or threatened legal proceedings that would have a material adverse effect on the company's business, operating results, or financial conditions. The company's estimates and assumptions are based on historical experience and various other factors, and it evaluates them on an ongoing basis.