Learning Technologies (LTG) -- organic revenue growth?

A quick look at Learning Technologies (LTG). This software business has grown by acquisition during recent years. Revenue was £14.9m during 2014 and was £130.1m by 2019:

LTG sharepad revenue !

With such ‘buy and build’ strategies, shareholders ought to consider whether revenue is growing organically (good) or whether more recent acquisitions are hiding sales shortfalls from older deals (bad).

Annual reports ought to disclose the financial effect of acquisitions.

The relevant note from the 2019 annual report is shown below.

We discover the revenue contribution from the acquisition and what the revenue contribution would have been had the purchase been made on the first day of the financial year.

The relevant notes from the 2014 to 2018 annual reports are shown below:


LTG AR 2014 acquisitions2





A summary:

2019: Breezy: contributed £3.5m, would have been £1.0m higher at £4.5m
2018: PeopleFluent: contributed £41.8m, would have been £33.1m higher at £74.9m
2017: NetDimensions: contributed £12.9m, would have been £4.5m higher at £17.4m
2016: Rustici: contributed £6.3m, would have been £0.5m at £6.8m
2015: Eukleia: contributed £2.5m, would have been £3.7m higher at £6.2m
2014: LINE: contributed £5.1m, would have been £2.3m higher at £7.4m
2014: Preloaded: contributed £1.5m, would have been £0.6m higher at £2.1m

At the time of purchase, those seven acquisitions had revenue of £4.5m + £74.9m + £17.4m + £6.8m + £6.2m + £7.4m + £2.1m = £119.3m.

Back in 2014, revenue was £14.9m, of which £6.6m was contributed by the purchases of LINE and Preloaded. ‘Base’ 2014 revenue was therefore £8.3m.

So… revenue today ought to be at least ’base’ 2014 revenue of £8.3m plus acquired revenue of £119.3m = £127.6m.

The actual figure was £130.1m, which if you add on the ‘would have been’ effect of the last acquisition (Breezy) comes to £131.2m.

I must admit these sums do not suggest LTG has delivered notable organic revenue growth. Mind you, most of the acquired sales were purchased during 2018 so may not have had time to deliver. Currency effects may have been an issue, too. At least LTG’s revenue is not less than my £127.6m calculation.

LTG said organic growth for 2019 was 5%:

LTG acquired Open LMS for $32m earlier this year, so the sums will have to be revised when the 2020 annual report is published.



Indeed. LTG’s organic growth figures are relatively benign (edit: poor). And if you back out 2017, seems like it’s actually been negative. The 2019 figure excludes civil services contract and PeipleFluent so it’s a really distorted figure.

The other issue is that PeipleFluent, which was a sizeable acquisition, seems to have been a shrinking business as well.

The company claims that they will turn PF around. Time will tell.

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