Schrole Group consolidates longstanding relationship with Rio Tinto

Technology-based software developer Schrole Group (ASX: SCL) is up around 11% today, following the release of additional information in relation to the Rio Tinto (ASX: RIO) bookings, released to the ASX on 27 January 2022.

While the value of the bookings remains confidential, the company considers it financially material with guidance of between 15% and 20% of the revenue reported for the year ended 31 December 2020 ($6.1m).

Schrole Develop will provide more than 80 courses to over 700 staff across 18 Rio Tinto sites, with the final value of the bookings based on the total courses held during the year.

Management noted, the significance of the announcement is the continuation of the company’s On the Job (OJT) training program and confirmed bookings with long standing customer Rio Tinto.

Robust outlook

Today’s update follows the kicker Schrole received yesterday following the release of the company’s December quarter update.

In addition to strong cash receipts growth, and positive operating cashflow, what also captured investor’s attention yesterday was the management’s underlying commentary.

Managing director Rob Graham is optimistic for the company’s growth outlook and advised investors’ that December quarter results showcase the first results of investment in expanding its SaaS product range and growing the sales and account management team.

Graham also noted that the sales and account management team have generated sales in Europe and are working through a strong and growing customer pipeline.

"We are also growing our leading indicators of shareholder value such as customer numbers, SaaS product range and software margin,” Graham said.

“As we increase customer numbers, we are also increasing our potential customer value, with increased opportunities for up-sell across our full Schrole HR SaaS suite.”

The company’s flagship full SaaS product suite called “Schrole HR” (Human Resources), now comprises five Human Resources SaaS offerings, including Schrole Connect and Events, Verify, Engage (to be released Q1 2022), Cover, and Develop.

Pipeline growth

New and upcoming product releases have contributed to sales pipeline growth, with initial sales having been achieved in new geographies with expectations of further growth and continued strong renewals.

While Schrole already has a network of 190,000 teachers and educational organisations within its Schrole Community, management also noted that several high-profile schools and school groups, now previously customers, are undergoing free product trials or are in contract negotiations.

Quarterly report highlights

• Cash receipts were up 44% in the December quarter, and up 5% on the previous period of December 2020.

• Positive cashflow of $277k, its highest positive cashflow quarter since September 2019.

• Strong balance sheet of $5m for the December quarter, following significant investments in Schrole’s HR product suite expansion and increased staffing levels.

• Customer numbers for Schrole Connect increased 4% from 432 to 451 in the December quarter and are up 26% since the March 2021 quarter.

• Software margins rose slightly to 37% in Q4, up from 34% in Q3.

• Schrole Community numbers have risen by 18.5% year-on-year from 168k in December 2020 to 199k in December 2021.

Other developments

Demand for recently launched Schrole Events, which now has 1700 participants registered, enables the Schrole team to create regionalised four-hour online recruitment events for different geographies and customer requirements.

Schrole Connect 3.0, the company’s flagship recruitment SaaS module, was also released during the quarter with new functionality and enhanced existing features.

The company is also on track to release Engage 1.0, with 51 schools currently in beta testing.

Consensus does not cover this stock.

Three month snapshot: Schrole Group's share price movement