ReadCloud Narrows Loss by 59% but Faces Industry Training Funding Risks
ReadCloud Limited reported a 5% revenue increase to $12.9 million for FY25, alongside a 109% surge in underlying EBITDA to $0.76 million, narrowing its statutory loss by 59%. Strong growth in its VET-in-Schools segment and domestic eBooks sales underpinned this improved financial performance.
- 5% revenue growth to $12.9 million
- 109% increase in underlying EBITDA to $757,395
- 59% reduction in statutory loss to $415,898
- 26% growth in VET-in-Schools revenue with 62 new school customers
- 28% decline in industry training revenue amid government funding challenges
Financial Performance Highlights
ReadCloud Limited has delivered a marked improvement in its financial results for the year ended 30 September 2025. The company reported a 5% increase in consolidated revenue to $12.9 million, driven primarily by organic growth in its core education technology offerings. Underlying EBITDA more than doubled, rising 109% to $757,395, reflecting enhanced operational efficiency and disciplined cost management. This translated into a significant narrowing of the statutory loss after tax by 59%, down to $415,898 from over $1 million the previous year.
Growth in Core Segments
The Vocational Education and Training (VET)-in-Schools segment was a standout performer, with revenue climbing 26% to $5.7 million. This growth was underpinned by the onboarding of 62 new school customers and a strong 92% retention rate, alongside an increase in qualifications delivered per school. The segment maintained gross margins above 90%, highlighting its robust unit economics.
Meanwhile, the domestic direct eBooks business expanded sales by 17%, supported by a 91% customer retention rate and increased average customer value. However, the international and reseller channels faced challenges, leading to a subdued overall eBooks revenue growth of 6%.
Challenges in Industry Training
The industry training arm, Southern Solutions, encountered headwinds due to changes in state government funding policies, particularly in New South Wales and Victoria. This resulted in a 28% decline in revenue for the segment, negatively impacting overall profitability. The Board has initiated a strategic review of this business to realign focus on higher-margin and more predictable activities.
Operational and Strategic Initiatives
ReadCloud increased its investment in advertising and marketing by 54%, alongside a 62% rise in travel expenses, reflecting a strategic push to deepen customer engagement and expand its footprint, including new markets such as South Australia and international schools. The company’s disciplined cost control measures helped offset these investments, maintaining stable employment expenses year-on-year.
Looking ahead, ReadCloud aims to capitalize on its strong school-based recurring revenue model, targeting retention rates of 90-95% and continued organic growth. The company also plans to leverage its scalable technology platforms and proprietary curriculum to drive sustainable profitability and shareholder value.
Risk Management and Governance
Key risks identified include regulatory compliance for its Registered Training Organisations (RTOs), government funding volatility, and cybersecurity threats. The company has implemented comprehensive risk mitigation strategies, including dedicated compliance teams, ongoing industry engagement, and robust IT security measures. The financial statements were audited with an unqualified opinion, underscoring the integrity of the reported results.
Bottom Line?
ReadCloud’s FY25 results signal a turning point, but the strategic review of its industry training segment will be pivotal for sustained growth.
Questions in the middle?
- What outcomes will the Board’s strategic review yield for the industry training business?
- How will ReadCloud rejuvenate its international and reseller eBook channels?
- What impact might ongoing government funding changes have on future revenue streams?
