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NetDragon’s education revenue up 38%

publication date: Mar 30, 2018

NetDragon WebSoft, the Hong Kong Stock Exchange-listed education and gaming company has reported an operating loss of RMB 30.0m ($4.8m) for the year ended 31 December 2017 (2016: RMB 387.4m loss), on revenue up 38.5% to RMB 3,868m - $616m (2016: RMB 2,793m).

The company’s Education business delivered an operating loss of RMB 423.3m ($67.4m) in 2017 (2016: RMB: 485.2m loss), on revenue up 38% to RMB 2,105m ($335m) from RMB 1,526m in 2016. Education accounted for 54.4% of NetDragon’s total revenue in 2017 (2016: 54.6%).

In November 2015, NetDragon acquired Promethean World, the provider of interactive displays, for £84.8m. Promethean was acquired to provide NetDragon with access to global sales and marketing partnership channels, and opportunities to create technological and operational synergies with NetDragon’s education business in China.

Internationally, NetDragon’s education business, which principally comprises Promethean, delivered a 32% increase in revenue to RMB 1,776m (2016: RMB 1,345m). The increase in revenue was achieved on the back of a solid performance in both the US and emerging markets as Promethean further consolidated its global market leading position in K-12 interactive classroom technologies, NetDragon said.

NetDragon says Promethean achieved a positive EBITDA of RMB 53.0m in 2017 (2016: RMB 50.6m loss), following an ongoing effort to drive revenue growth and rationalize costs post acquisition.

NetDragon reports that Promethean’s ActivInspire and ClassFlow software platforms have an estimated installed base of over 1.3 million classrooms, enabling teachers and students to interact in an online, collaborative community. Promethean expects to see significant online monetization opportunities from these communities, NetDragon said.

In March 2017, NetDragon announced a new technology partnership with the City of Moscow to equip 7,600 classrooms with Promethean interactive flat panel displays. This contract has recently been extended to add a further 13,000 classrooms. In addition, NetDragon says Promethean is also the front runner of several multi-phase tenders in other emerging countries. In particular, the company continues to see Turkey and Malaysia presenting significant revenue opportunities, NetDragon said.

In China, Education revenue increased 82% to RMB 329.5m (2016: RMB 181.0m), which NetDragon says was driven by the rollout of the company’s flagship platform, 101 Education PPT, which provides teachers with a digital library of courseware comprising over 350,000 images, videos, animations, audios, and exercises. 101 Education PPT had an installed base of 1.2 million classrooms at 31 December 2017, NetDragon said.

In July 2017, NetDragon acquired JumpStart, an LA-based provider of educational products which specialises in creative and educational games for the US K-12 market. The total consideration for the acquisition comprised an initial $7.6m and a contingent consideration of up to $20.0m.

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