I would now like to hand the conference over to Mr. Matthew Sandblum, Executive Chairman. Please go ahead.
Welcome to 3P Learning's Full Year Results Presentation for the Financial Year twenty twenty four-twenty twenty five. My name is Matthew Samblom, Executive Chair of 3PL. And joining me today are CEO, Jose Palmeiro and CFO, Adam MacArthur. I'm pleased to report that we have increased underlying EBITDA to $15,500,000 which is 30% higher than in financial year twenty three-twenty four. We also finished the year with $11,600,000 in net cash balances, 6,500,000 higher than last year.
Revenue in financial year twenty four-twenty five was fractionally lower than last year at 109,100,000.0 After a period of significant investment in product development and acquisitions, 3P Learning has made good progress this year in executing the sales, marketing and business process improvements that we believe will deliver consistent top and bottom line growth for years to come. While there is still work to be done, I am also pleased to report that in the financial year twenty four-twenty five, we launched and began selling the three essentials to schools across APAC and EMEA. Further, we completed the first renewal cycle for the Reading Eggs U. S. School customers we acquired from Edmentum last year and in January 2025 finalised the acquisition of Literacy Planet for a purchase price of less than 1x revenue.
For B2C, we have maintained our year on year sales levels, which is a reasonable result given the economic headwinds parents and families have faced in all our key markets. We also recently released the first version of Homeschool Maps, a project to cater to the homeschooler market in The U. S. I'm particularly excited about this project as the homeschool market has seen huge growth in recent years, both in student numbers and government funding. Early results are encouraging and support our view that a more complete offering of reading eggs with added teacher functionality will help us get significant growth in this multibillion dollar market.
As I outlined in my previous market update, the overall story for the financial year twenty four-twenty five has been about keeping profitability up and sales steady while we continue our business transformation to make our programs a leading source for learners and educators in Pre K-six Reading, Writing and Math the three R's across the main English speaking markets. We are also beginning to see productivity gains from the introduction of AI across most areas of the business. This is a key part of our plans to grow the business while keeping the cost base flat, leading to increased margins over the next several years. The key goals for 3PL over the next twelve months are to greatly increase schools' adoptions of the three essentials package in APAC and EMEA and to drive strong billings growth in AIMA in both the school districts and home school markets. If we can achieve these goals, then we will be confident the significant investments we have made over the past four years will have provided the base for long term above trend growth.
I will now hand you over to Jose for his CEO update.
Thank you, Matthew, and good morning, everyone. We will begin with the highlights for the year, but in today's presentation, I will also cover in more detail our plans for three essentials in APAC and EMEA and our initiatives for B2B and B2C in The U. S. I will then pass on to Adam for the financials and cash flow section before inviting questions from those attending. The main highlights this year included a good uplift in profitability with underlying EBITDA of $15,500,000 which was 30% higher than last year's $12,000,000 and underlying cash flow from operations before tax of $14,200,000 which was $3,000,000 higher than last year's $11,000,000 Revenue was 1% lower than last year at $109,100,000 mainly due to the initial retention of Reading X U.
S. School customers acquired from Momentum being lower than expected. This also affected annual recurring revenue for B2B, which was 1% lower at $61,600,000 offset by the acquisition of LiteracyPlanet in January 25, which contributed $2,200,000 to annual recurring revenue. B2C billings also decreased 1% to $42,900,000 which was a reasonable result given the tougher economic conditions in the consumer market. During the year, we invested $27,000,000 in product development, of which $4,100,000 was capitalized on new products like Writing Legends and Three Essentials, plus $1,500,000 for the acquisition of Literacy Planet.
It is important to note that we have funded all product development and The U. S. Investments entirely from cash generated by the business, that we have expensed most of that already and that in financial year 2025, we moved from product build to sales and marketing execution. So we expect product development costs to be lower next year. We finished the year with net cash balances of $11,600,000 including $3,100,000 restricted cash and no debt.
Looking at segment performance in more detail, B2C billings decreased 1% in FY 2025, but revenue was up 1% to $43,400,000 In the regions, we saw marginal billings increase in AIMA offset by a small decline in EMEA and steady in APAC, but managed to improve our overall contribution margin to 53%, which was a good result. We launched Reading X Homeschool Max in The U. S. In June 2025 and had a positive initial response, which is encouraging given the size and potential of this market in The U. S.
Homeschool Max is an upgraded version of ReadingX with more teacher like functionality, including reports, assigning tasks and downloadables from the school's version of the program. It is priced at about three times the basic home package and then that parents and educators who homeschool their children. This is a growing market segment, particularly in The US, where it is also supported by government funding with programs such as the Education Savings Account or ESA. Our products already qualify for funding under the ESA program in eight US states and we have applied to qualify for an additional eight states. As I mentioned earlier, in the schools market, annual recurring revenue was 1% lower than last year at $61,600,000 with 4,700,000.0 subscribed licenses and slightly higher exit ARPU.
In APAC and EMEA, we launched three Essentials and acquired Literacy Planet, While in The U. S, we are now in the second year of direct distribution of Reading X to U. S. Schools with substantially improved sales pipeline and contribution margin. I would now talk about Three Essentials and U.
S. Performance in a bit more detail. Three Essentials combines our reading, writing and math programs into an integrated solution with single sign on, symptom navigation, easy class management and consolidated reporting. As a package, it represents our best value offer to schools. Since launching in '25, four fifty schools have subscribed to Three Essentials in APAC for about $2,100,000 in billings, which represents an average increase of 60% on what those schools were paying previously for individual programs.
In EMEA, we launched in Q4 with 50 paid subscribed schools so far. Feedback on the product and value proposition has been consistently good, so we expect greater impact in financial year '26. In The U. S, we reacquired the Reading X Scores distribution rights for Momentum in April 2024 for AUD20 million. In the first renewal season, we retained 76% buy value of the 4,300 schools we transitioned, which was lower than the 80% we expected as we unbundled the previous customer relationships with Admintum.
Now that we are in the second renewal season, we are seeing improved retention rates and contribution margin. We are also seeing more sales opportunities as we can now sell Reading X directly to U. S. Schools, but also upsell and cross sell Mathletics and Math Seeds to them. Other than the addition of Literacy Planet, which complements the strengths and early reader focus of Reading X for the schools market and the introduction of three Essentials and Homeschooled Max, our overall corporate strategy remains the same and continues to focus on the three Rs of learning complemented by our assessment solution, BrightPath Progress.
In terms of focus areas for B2C, although we expect similar consumer market dynamics in FY 2026, we will continue to explore ways of growing the homeschooler market in The U. S. With HomeschoolMax, expand approvals for ESI funding and explore partnerships with relevant associations and online schools where possible. Our focus areas for B2B in FY 2026 are to increase billings and the number of schools upgrading and adopting three Essentials in APAC and EMEA, expanding our Reading X user base and billings in The U. S.
And improving B2B customer retention and profitability. For product, the upcoming releases support our B2B strategy for the three essentials and U. S. Market requirements for B2B and B2C, but with more incremental improvements now that we have passed the peak of our investment in new products and significant upgrades. This concludes my presentation on the key themes and priorities.
So I will now hand over to Adam for the financial and statutory report update.
Thanks, Jose. I'll be taking you through the P and L, our two operating segments and cash flow for FY 2025. On Slide 21, this shows the P and L for the year. Our B2B revenue decreased by $1,400,000 against the prior comparison period due to declining license numbers. This was primarily impacted by the transition from MedMentum in The USA.
However, our b to c revenue increased by 300,000.0 due to growth in reading eggs and mass seeds billings on the Google platforms. Our underlying EBITDA was 15,500,000.0, up 30% on the prior comparison period, reflecting the impact of our cost management initiatives and efficiencies gained by direct selling to US schools. Pro form a adjustments after tax include $1,000,000 of unwinding of legacy of Minton distributor costs as deferred contact costs and the buyback of our distributor rights, 6,000,000 of DNA of acquired products for Blake, BrightPath, and Literacy Planner and other pro form a expenses. On slide 22, we look at our b to c performance metrics. Gross billings in the b to c segment were 42,900,000.0, which is flat on f y twenty four as we saw the impact of cost of living pressures and tougher economic conditions in our target markets.
Our B2C ARPU grew by 4% on the prior comparison period as we focused more on twelve month subscriptions and the introduction of our Homeschool Max product. B2C revenue grew by 300,000.0, and our contribution margin remained strong at 42% as we continue to balance growth with profitability in this segment. On slide 23, you can see our b two b performance metrics. In the b two b segment, revenue was 65,500,000.0, a decline of 2% on the prior comparison period, mainly due to the transition from Momentum in The USA. However, our contribution margin improved by 7% to 53% due to cost efficiencies gained by direct selling to US schools and, and further operational improvements.
Our exit ARPU increased to $13.20, up 2% from the prior comparison period. On slide 24, you can see the details of our cash bridge. Our underlying cash flow from operations before tax was 14,200,000.0. This is up 3,200,000.0 on last year. We had net PPP and intangible additions of 4,800,000.0 and acquired Literacy Planet for a net cash payment of 900,000.0.
Our closing net cash was 11,600,000.0 at June 30. This is up 6,500,000.0 from the prior year. We're pleased to announce we end this year with a strong cash balance and no external borrowings. Now I'll hand back to Jose for the outlook and closing comments.
Thank you, Adam. So to wrap up, we have reached significant milestones in FY 2025 despite tough economic and competitive conditions across B2B and B2C, but we look forward to what we can achieve in FY 2026 and beyond. For FY 2026 and the medium term, we will continue to focus on profitable growth through expanding the three essentials in APAC and EMEA and driving initiatives to increase billings in The U. S. School districts and homeschool markets.
We will continue to be disciplined with our cost management and expect the stronger cash position in FY 2026, which will allow us to review our dividend policy in the context of our capital management strategy. It's been a busy year at 3PL, so thank you to our team, our Board, shareholders, customers and everyone joining us today for our FY twenty twenty five results presentation. We will now invite questions from those attending. Thank you.
Thank you.
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