Cluey Ltd (CLU.AX) Q1 FY2026 Earnings Call Transcript & Summary

Welcome, and thank you for joining us. I am Matteo Trinca, joint CEO of Cluey. This quarter, Cluey delivered its strongest underlying EBITDA to date with group revenue broadly in line with the prior year after several quarters of decline. Over the last 3 months, we have focused our attention and directed our resources on developing our AI-driven product and service enhancements ahead of the start of the 2026 school year. In our last update, I outlined our vision and introduced Cluey+, a subscription-based self-study product. Today, I'll share our first steps, explain how we're integrating AI applications into our human-led tutoring and outline the road map and initiatives already in progress. But first, our CFO, Greg Fordred, will cover the financials. I'll then return to the product sections.

Thank you, Matteo. Hello. My name is Greg Fordred, and I am the CFO here at Cluey. In the first quarter of FY '26, Cluey achieved a 10% improvement in the quarterly cash burn of $574,000 compared to the prior corresponding quarter. From an ASX Appendix 4C cash flow reporting perspective, the net cash used in operating activities was $375,000, representing a 20% improvement on the PCP. With $4.1 million in cash reserves at September 2025, this represents an estimated 10.8 quarters of funding available. The chart on the left-hand side provides an overview of our quarterly cash flow performance over the last 3 years. The period-on-period improvement in cash flow is the result of our ongoing and disciplined execution of Cluey's financial strategy, namely transitioning from the cost control and efficiency focus of FY '24 to a strategy centered on profitable revenue growth, achieving positive cash flow and sustainable long-term profitability, having produced Cluey's first quarter of positive cash flow of $341,000 in Q4 FY '25 with cash receipts of $8.5 million exceeding cash payments of $8.2 million. In Q1 FY '26, cash receipts decreased by 5% from the previous quarter, but were up 1% on PCP. Cash payments increased by 6% from the previous quarter, but were flat on PCP. The increase in cash payments this quarter compared to last quarter is primarily related to the timing of our tutor payments with 7 fortnightly payments made in Q1 FY '26 compared to 6 fortnightly payments made in Q4 FY '25 and the payment of $72,000 in one-off restructuring costs. While we remain focused on cost control, our strategy to drive product-led growth positions the company for continued long-term improvement in cash flow generation. Now turning to revenue growth. In Q1 FY '26, Cluey's year-on-year revenue growth was flat compared to PCP, demonstrating that revenue growth has now stabilized following the deliberate strategy of prior financial periods to reduce growth and drive improved cash flow and profitability. In Q1 FY '26, we achieved a variable CAC of $158 per new student. This financial year, Cluey is increasing investment in product and technology to deliver a range of new and exciting learning products and services, and we'll continue to increase investment in customer acquisition to drive new student and revenue growth. At this level of CAC, new customers add more to revenues than costs, which means there's an opportunity to grow revenue while increasing profitability. I'll now hand back to Matteo to provide a business update and outline our exciting expansion vision for Cluey's products and services.

Thank you, Greg. Let's recap on the vision for the future. Cluey is developing an integrated learning services ecosystem, bringing together self-study, tutoring, assessments and school partnerships. We'll deliver these omnichannel, combining a scalable digital platform with higher touch in-person support to drive engagement and lifetime value. AI enablement will be a key part of our service, a hybrid AI and human platform that embeds trustworthy AI across our products and services, streamlining the experience, personalizing instruction at scale and driving learning momentum for our students. AI can also amplify tutor productivity and help us deliver consistent quality across channels. AI lets us lift quality and efficiency without adding complexity for families. Our plan is to roll out the AI elements in phases using clear safety, privacy and integrity guardrails. We'll track engagement uplift, learning our counts, retention and unit economics as proof points. We'll iterate the improvements and retire elements that do not meet the bar. I thought it might be useful to provide you with a tangible example, homework. We're well aware of the challenges students face when they're stuck with their homework. Let me show you how our AI layer assists students from stack on homework to confident progress, instantly 24/7. This is an always-on study support service that encourages repeated use and reduces reliance on teacher-led assistance or live human tutoring sessions for routine questions. These also enables tutors to target and focus on those areas of learning where they add the most value. First, Ask a Question. This is our struggling with homework solution. Students get step-by-step explanations on any topic in plain language with word solutions and hints. Importantly, our AI does not simply provide the answer. It encourages students to go through the problem-solving exercise step by step. This helps to drive the learning process. It removes frustrations, helps build confidence and lowers dependence on parents or tutors for quick fixes. Guardrails ensure responses are age appropriate, sourced and guided by curriculum settings. Next, our Generate Quiz solution. In seconds, the AI produces adaptive practice test mapped to learning level, curriculum topic and areas where the student has made recent errors. This service delivers deliberate high-impact study support and habits, not just answering questions, but targeting weak spots until mastery is clear. In essence, it's a form of unlimited practice sets and assist students with preparing for their exams. Finally, our Review my Work solution. Students can upload assignments or problem sets and receive instant structured feedback, what's correct, what needs improvement as well as suggested next steps. This rapid feedback loop turns homework into learning and accelerates the learning cycle. Together, these tools extend learning behind the lesson or classroom. They also drive increased engagement between learning sessions and help improve tutor productivity. For families, these services deliver dependable learning support whenever it's needed. For Cluey’, these services support better student retention, learning satisfaction and scalable unit economics. This is where Cluey's’ AI delivers a unique learning experience. These AI applications work really well because they augment and work in tandem with our live one-to-one tutoring. It's the two components working together that become so powerful. This is something that's hard to replicate without a large-scale online tutoring component and the data, workflows and pedagogy that come with it. Every learning session turns into a wake of progress. What happens in the hour with a tutor does not end there. Using a range of digital content and AI-driven learning services alongside our human-led tutoring sessions helps keep students engaged on track and learning. This enables each tutoring session to be even more productive, review session for instant recalls. A clean recap of key ideas, goals and work examples, students can refresh in minutes before homework or the next lesson, trouble spots for targeted interventions. We surface the exact questions each student found hard, then guide them with step-by-step solutions and focused practice to close gaps fast. Practice topics for active mastery, unique auto-marked exercises aligned to that session, not generic worksheets, so effort compounds and confidence [ builts ], knowledge check to be ready for the next session. A quick quiz confirms what stack and where to focus next, giving tutors a running start. Because this learning loop is anchored by our human-led tutoring sessions, the recommendations are context aware, personalized and trustworthy. Tutors become more effective and students stay more engaged. In short, AI then multiplies the impact of human teaching. Our high-level execution plan is already in motion. We are running a focused road map with phased releases scheduled across the next few quarters. We're completing the foundations in the early part of 2026. The New Student Hub, Curriculum-aligned Video Lessons and Enhanced Weekly Practice. Alongside these, two AI modes, Ask a Question and Review my Work are being integrated, validated by our tutors and moving through controlled releases. With Phase 1 in place in the middle part of 2026, we will expand breadth and introduce more exam readiness services, Masterclasses and a Mock Exams Hub for senior students. On the AI side, the Generate Quiz and the Practice with AI services will help scale targeted practice and mastery. In the later part of the year, we will deepen usage and retention with our Intensive Practice Mode and Session Extension Mode services, extending the value of each live session across the week. Each phase is gated by quality. Pedagogy review, safety and privacy checks, tutor training and learner impact metrics, features progress only when they meet the bar on engagement, outcomes and unit economics. Our teams, our partners, tooling and content pipelines are all in place. The work is underway and tracking to plan. We look forward to achieving these key milestones. Thank you for your time and continued support.