Business Overview
 
Learning Technologies Group Plc (LON: LTG) is an LSE listed company, engaged in the business of digital learning and talent management. The company provides digital transformation services to large organisations. The company is having its operations worldwide, which includes Canada, Hong Kong, Brazil, Australia, Germany, the UK and the US.

Trading Update
On 21st January 2020, Learning Technologies Group Plc announced an update for trading for the full year ending 31st December 2019. The company expects its revenue to grow by approximately 38 per cent to nearly £130.0 million versus £93.9 million in the financial year 2018. The recurring revenues went up by 73 per cent for the period, driven by solid performance from Software & Platforms division and decent contribution from Watershed and PeopleFluent. The PeopleFluent generated a revenue of around $93.0 million in the financial year 2019, which is above the previously targeted value of $91.0 million. The growth was driven by Affirmity’s good sales performance and improved retention rate of software licences. The company’s adjusted EBIT stood ahead of the market expectations and is not below £41.0 millionfor FY2019 versus £26.0 million in FY2018. The increase was driven by synergies realised after integration of acquisitions and continued improved margins. The company’s net cash as on 31^st December 2019 stood at £3.8 million, due to higher cash generation in the second half of the financial year. The company Content & Services and Software & Platforms businesses are having an active pipeline of acquisition opportunities internationally which will help in high growth in the future. The company will announce its full-year results on 24^th March 2020.

Share Price Performance

Daily Chart as of  January 21^st, 2020, before the market close (Source: Thomson Reuters)

Learning Technologies Group Plc shares were trading at GBX 156.60 at the time of writing before the market close (at 2:24 PM GMT) on 21^st January 2020 and were up by 13.80 per cent versus the previous day closing price. Stock's 52 weeks High is GBX 163.00 and Low is GBX 58.80.The shares of the company have delivered a positive return of 54.48 per cent in the last quarter. The company’s stock has given investors 14.17 per cent of a positive return in the last week.


Conclusion
Although the operating expenses of the company have increased for the period, the company had shown a decent increase in financial performance in the financial year 2019. Both the top-line performance and the bottom-line performance have improved for the period. The company has shown an increase in the revenue from its businesses in the recent trading performance update. Driven by high growth acquisitions and new product developments, the Software & Platforms business has shown good performance. The Content & Services business is also performing well and is expected to deliver organic growth of 8 per cent in the Financial Year 2019. The company’s operations are supported by robust cash generation, and the company has managed to lower its net debt. The company is aggressively looking ahead towards strategic acquisition opportunities with momentous funding capacity. Based on the sales pipeline, the board is confident towards an increase in its recurring revenue.

Based on the above rationale, we have given a "HOLD" recommendation at the closing price of GBX 137.60 (as on 20^th January 2020).

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