Australian online tutoring provider Cluey Learning is weighing an initial public offering on its domestic bourse as it moves to capitalise on a surging demand for distance learning spurred by the pandemic.

According to the Australian Financial Review, the ed tech business has hired Bell Potter and Canaccord Genuity to float its shares on Australia’s stock exchange.

During a roadshow, Cluey is expected to pitch fund managers on its robust growth throughout the coronavirus crisis that has propelled it to the position of Australia’s leading online tutoring and test preparation providers for primary and secondary school students.

According to the AFR, Cluey will tell prospective investors that it is delivering 20,000 tutoring sessions a month – up from 8,000 six months ago – and is adding more than 1,000 students a month to its platform.

To date, Cluey has raised at least A$40 million in a series of funding rounds.

A successful initial public offering would see Cluey join the likes of OpenLearning, SEEK, 3PL and ReadCloud on the Australian Stock Exchange.

Some have doubted the firm’s success, however.

A “concerned investor” who was in March “recently approached to consider an investment in Cluey Learning” posted an article titled ‘Investors beware – Clue Learning is the next Bitcoin hype. Stay away’ under the domain

In a scathing portrayal of Cluey’s financial and operational affairs allegedly based on the firm’s investor presentation, the author claimed that Cluey had been trying to raise new capital earlier this year “at an approximately A$45 million valuation with less than A$1 million in sales”. This figure “translates to a 45-times sales multiple, which is as high as companies like Zoom, which are already profitable, at massive scale, with a disruptive technology advantage”, the article states.

The author goes on to lambast Cluey as “a dangerous, speculative investment that will lose investors significant amount (sic) of money by only talking about their revenue and brushing over their growing operating losses”.

The article concludes: “The key message for investors is beware. Cluey is charging 45-times their revenue last year for a business with a small target market size that isn’t growing very quickly, with a structurally unprofitable business model that has failed in far more attractive geographies and depending on investors who haven’t done proper research into their model to write the cheques to fund their multi-million dollar cash burn.

“It doesn’t take any skill to spend your hard earned $1 to buy $0.50 cents of revenue, show all the fast revenue growth to the next investors to keep the Ponzi scheme going. Ask to see their profits, their unit economics, their operating expenses and the truth will be blindingly obvious.”

Date published: 29 September 2020

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