New university-style education

Market Cap: AU$632.998m

Shares outstanding: 208.22m

New university-style education

Keypath is underwritten by Macquarie

Keypath was actually started in the US but half its businesses is in Australia so its listed base is here.

Most mature age people seeking additional qualifications do not want to go back to university campus life. The education must be delivered online. But traditional university courses are designed for campus presentation and a great many lecturers do not have the skills to adapt their material for an online format.

Currently Keypath designs courses for more than 30 universities around the world. The first Australian university was Southern Cross but then followed RMIT and a string of others. Under the Keypath model, the company works with each of their universities so that the educational material is provided by the university but Keypath provides the online structures and systems to present that material in a way that is attractive to students.

There is no government money in the process.

Like its rivals Keypath finances all the investment required to set up the course. It then markets that course under the university name (in a way is that is agreed with the university) to the postgraduate community. The marketing is mostly conducted online, very often via Google.

A big part of the outlay is the marketing, which must be carefully structured to meet the actual needs of prospective students The money is provided by the companies not the university. It is a high skilled business.

The risks are reduced by having a network of universities and markets so that trends in international skill demand can be recognised.

The outlays are covered by taking a share of the fees that the postgraduate students pay. The revenue splits between the universities and course providers vary greatly but seem to be in the vicinity of 40 to 60 per cent range with 50/50 perhaps the most common.

But with the big reduction in overseas students a lot of university people are in danger of losing their jobs. They can now develop a new career path if they can adapt to the new requirements.

The major shareholder is an overseas private equity group. The success of the company depends on its ability to retain enrolled students. The shares went to a discount after the float. Nevertheless, the bloom continues.

During 2020-21, Keypath recorded over 85,000 course enrolments, an increase of 51 per cent over the prior year. This enrolment growth reflects nine new university partners, in the US, Australia, Canada and Malaysia, and the addition of 34 programs since 2019-20.

96.9% Forecasted annual earnings growth

No debt

Stable cash situation

Reference to The Australian