Janison share price jumps 13% on FY22 trading update

Janison’s shares are zooming higher on Thursday…

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Key points

  • Janison's shares are jumping on Thursday following the release of a trading update
  • The education technology company revealed that it expects to deliver strong revenue growth in FY 2022
  • Management is guiding to further growth and positive cash flow next year

The Janison Education Group Ltd (ASX: JAN) share price is racing higher on Thursday.

In morning trade, the education software provider’s shares are up 13% to 51 cents.

Why is the Janison share price rocketing higher?

Investors have been bidding the Janison share price higher today following the release of a trading update.

According to the release, the company expects to report revenue of $36 million in FY 2022, which represents a 20% or $6 million increase over the prior corresponding period.

While this was driven by growth across all strategic business units, a key highlight was its Assessments business. It reported a 35% increase in delivered tests to 8.7 million for the year.

Janison’s annualised recurring revenue (ARR) continues to grow, albeit at a slower rate. The company’s ARR grew 9% or $2 million to $25 million in FY 2022.

And thanks partly to an 8-percentage points improvement in its gross margin to 64%, Janison is expecting to report positive earnings before interest, tax, depreciation and amortisation (EBITDA) for the full year.

Outlook

Looking ahead, management is very positive on its prospects in FY 2023. Particularly given its streamlined operating model, which is expected to deliver material cost savings this year.

Combined with its positive growth outlook thanks partly to its robust pipeline of new assessment platform clients, management expects to be cash flow positive in FY 2023.

The release concludes:

Management remains confident in the medium-long term outlook for digital assessments (products and solutions) and the Company’s leading position in the market for powering high volume, highly secure and scalable assessments for schools and accreditation customers.

The impact of COVID over the past two years has increased the market size and rate of digital adoption but has pushed out the timing of customers’ willingness to commit to large-scale transformations or deployments due to the extent of disruption in the market and resourcing constraints.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Janison Education Group Limited. The Motley Fool Australia has positions in and has recommended Janison Education Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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