3P Learning (ASX:3PL) reported a softer first-half performance for FY2026, with management saying it was “not satisfied” with results as revenue declined and EBITDA fell amid elevated churn in the schools business and ongoing challenges scaling in the U.S. market.
First-half results: EBITDA down 16% as revenue slipped
For the six months ended 31 December 2025, the company posted underlying EBITDA of $5.7 million, down 16% from the prior corresponding period. Total revenue was $51.9 million, down 2%.
- B2C revenue increased 1% to $22.0 million.
- B2B revenue declined 3% to $29.8 million.
Chair Matthew Sandblom said the company was reviewing “all parts of the business,” including its cost base, product offering, and go-to-market strategies, after significant investment in products such as Writing Legends, a revamped Mathletics, and the integrated “3 Essentials” bundle. He said the company has not yet seen returns from that investment “as we would have liked.”
Customer metrics and product investment
3P Learning said customer numbers were running at 4.9 million annualized. B2B licenses accounted for 4.7 million, down 4% from the previous period, while B2C licenses fell 5% to 266,000.
Total product investment for the half was AUD 11.2 million, with only about AUD 1 million capitalized, according to Sandblom. CFO Adam McArthur added that the half’s capitalization rate was around AUD 1.4 million lower than the prior corresponding period, driven by a shift toward ongoing enhancements rather than “long-life capitalizable projects.” He said the lower capitalization “negatively impacted EBITDA.”
Segment commentary: resilient B2C, pressured B2B
CEO José Palmero said the company remained in a “solid financial position” and emphasized that 3P controls the intellectual property and distribution channels for its programs across its key markets. He also said many of the company’s major development projects from recent years have now been completed and the focus is shifting to “smaller, targeted projects” that can generate more immediate returns. Palmero noted that product development has been funded from operating cash and that the company has no debt.
On B2C, McArthur said revenue (excluding other income) grew by AUD 0.3 million, primarily due to “ESA-related sales in the U.S. homeschool market,” which he said continued to perform strongly. However, he and Palmero both highlighted higher marketing costs, which have pressured margins. The B2C contribution margin for the half was 38%, down from 41% in the prior period.
On B2B, management pointed to churn outpacing new sales across regions. McArthur said B2B revenue was pressured by “higher churn across all regions and less new business being closed.” While the company is seeing “good signs” from bundling in EMEA and APAC, he said it is not yet enough to offset churn. In EMEA, Palmero said the school district sales motion is progressing but procurement cycles “take time,” with pipeline building but conversion slower.
In the U.S., Palmero described the market as “structurally harder,” citing weaker brand recognition and product positioning compared with APAC. Following the February 2024 acquisition of Reading Eggs’ U.S. schools distribution rights from Edmentum, U.S. school distribution is now managed directly by 3P; Palmero said it is “an expensive market to service when subscale,” and the company is exploring go-to-market options including partnering and strategic alliances.
Profit, cash, and balance sheet
Total expenses were $43.5 million, which McArthur said were steady due to tight cost management despite inflationary pressures. Statutory net profit after tax was AUD 0.4 million, an improvement of AUD 1.1 million versus the prior period, which McArthur attributed to lower non-cash and pro forma adjustments compared with HY25.
Underlying cash flow used in operations before tax was an outflow of AUD 1.8 million, which management attributed to normal seasonality, with cash generation weighted to the second half due to the APAC school-year billing cycle.
The company ended the half with underlying cash of AUD 7.5 million. McArthur described this as a “significant improvement” from AUD 1.9 million at the prior corresponding period. He said the company had no external borrowings and continues to maintain a debt-free balance sheet.
FY2026 guidance and capital management
Looking ahead, Palmero reiterated that about half of revenue comes from APAC and that billings and cash receipts are typically stronger in the second half, with most APAC schools invoiced in February and March.
Management provided the following FY2026 guidance ranges:
- Revenue: $105 million to $107 million
- Underlying EBITDA: $13 million to $15 million
- Net cash: $16 million to $18 million
With an expected improved cash position, Palmero said the company would pursue “shareholder-focused capital management,” including an intention to assess a dividend for FY2026 in line with its dividend policy.
About 3P Learning (ASX:3PL)
3P Learning Limited, together with its subsidiaries, engages in the development, marketing, and sale of educational software and e-books to schools and parents of school-aged students. It provides online education, and adaptive and collaborative learning, including mathematics and literacy products. The company offers Mathseeds, Mathletics, Reading Eggs, Brightpath Progress, and Writing Legends programs. 3P Learning Limited was incorporated in 2003 and is headquartered in Leichhardt, Australia.
