While the pandemic has afflicted untold damage on the higher education sector, online providers that enable remote learning are very much part of the ongoing solution.
In this context, the ASX-listed OpenLearning (ASX: OLL) is in a prime position as it furthers its quest to nurture a global community of “collaborative learners”.
According to a new Corporate Connect research report, the disruption from Covid-19 will be a key driver of OpenLearning’s growth and will likely lead to “fundamental and long-lasting changes” in the higher education sector.
“The accelerating shift to online education is creating new opportunities for the company, albeit requiring a level of flexibility to secure value-adding opportunities,” writes author Joh Snyman.
A ‘turnkey’ product, the OpenLearning platform enables end-to-end education delivery, from student acquisition and payments to assessment and certification.
The courses include undergraduate and postgraduate degrees, continuing professional development, vocational education and training and ‘micro credentials’ (short certificate courses to improve a particular skill).
The content is delivered via OpenLearning’s collaborations with 177 education providers in Australia and Malaysia. Locally, these partners include the University of NSW, Australian Catholic University, the University of Technology Sydney and Charles Sturt University.
OpenLearning is also a player in delivering MOOCs, or massive open online courses. These are global consumer-oriented online education platforms run in partnership with universities, governments or enterprises.
According to the Corporate Connect report, key macro drivers for the company will be skills shortages, coupled with technological changes such as the rise of robotics. These factors will drive demand for ongoing education as workers seek to stay relevant in their occupations.
OpenLearning was founded locally in 2012, expanding into Malaysia in 2015 and Singapore in 2018. The company listed in December 2019 after raising $8 million at 20 cents apiece.
The company generated modest revenue of $1.9 million in the (Covid affected) year to June 2020. But Corporate Connect forecasts current-year revenue to rebound to $4.7 million in the current year and then $7.7 million in the 2021-22 year.
The company is also expected to report a $4.6 million pre-tax loss in the current year, before generating a maiden $1.2 million surplus in the 2023-24 year.
Under the company’s software-as-a-service model, user clients pay ongoing fees on a usage-based tiered basis. Locally these fees are anywhere from $600 a year for 250 or fewer students, or from $50,000 for 4000 learners or more.
In some cases, revenue is shared between the company and the institution.
In the first (March) quarter, OpenLearning’s user base stood at 2.83 million registered users, 30 per cent higher than a year previously.
Overall 4.66 million students were enrolled on the platform, more than 50 per cent higher in the year.
Over this period, annual recurring revenue increased by 35 per cent to $1.42 million.
On a cautionary note, the report warns the online learning market is “highly competitive, rapidly evolving and fragmented and OpenLearning expects competition to continue to increase in the future.”
Still, OpenLearning is only scratching the surface of the market, which was valued at $US45 billion ($58bn) in 2019 and is growing at a 17 per cent compound annual growth rate.
On such a trajectory the industry will be worth $US117 billion by 2025.