Cluey Ltd (CLU) Earnings Call Transcript & Summary

Welcome, and thank you for joining us. My name is Matteo Trinca, and I'm the joint CEO here at Cluey. Over the past year, we've made good progress. FY '25 has been one of our strongest years yet. We delivered a $4.4 million improvement in EBITDA. We saw our first quarter of positive operating cash flow, which is an important signal of our underlying financial strength. And finally, we resumed growth in student numbers, enrolling more than 34,000 new students, which is an 11% increase and a clear return to growth. This performance is the result of focused, disciplined execution. We made deliberate choices to pivot from top line growth to sustainable profitability, tightening our cost base, streamlining operations and investing only where it makes the biggest impact. Those decisions have paid off with gross operating and marketing costs down by $5 million against last year and improved our variable CAC by 33%, now at $180 per new student, giving us greater efficiency and room to scale sustainably. Looking ahead, we're building on this momentum. FY '26 will be about product-led growth, continuing to expand our product suite and accelerating the rollout of AI-first features and services that deepen engagement and drive scalable differentiated growth. I'll now hand over to our CFO, Greg Fordred, to discuss our financial performance in more detail.

Hello. I'm Greg Fordred, Cluey's CFO. It is my pleasure to present Cluey's financial performance update for the 2025 financial year. As Matteo mentioned, FY '25 marks a pivotal milestone in Cluey's journey. This year, we reduced our EBITDA loss by $4.4 million, a 50% improvement. Underlying EBITDA, which excludes capital raise costs, restructuring costs, impairment charges and noncash share-based payment expense improved by $2.2 million or 35% to a $4 million loss. As seen in the chart on the left, this improvement over the prior financial year reflects the cost-saving measures, automation of internal processes and organizational redesign initiatives that more than offset the decline in year-on-year revenue. Three factors drove this revenue decline. Firstly, the company made the strategic decision to reduce customer acquisition spending in the first half of FY '25 to prioritize profitability. This was partially offset in the second half as the company increased investment in customer acquisition, returning to growth in new students. This delivered a 12% increase in new students in the second half versus PCP compared to a 2% contraction in the first half versus PCP. Secondly, a shift from higher average revenue tutoring sessions to CodeCamp after-school sessions in Australia and the U.K. And thirdly, ongoing pressure on household budgets impacting discretionary spending. As you can see in the chart on the right, Cluey's underlying EBITDA performance has improved substantially over the last 4 years from a loss of $17.6 million in FY '22 to a loss of $4 million in FY '25. This reflects the continued improvement in operating performance as the company has transitioned from a cost control and efficiency focus in FY '23 and FY '24 to driving sustainable revenue growth, positive cash flow and long-term profitability. In FY '25, cash flow performance improved by $6.1 million or 60% compared to FY '24, reducing the net cash burn to $4.1 million. In the fourth quarter of FY '25, Cluey delivered its first positive quarterly cash flow result, a net cash positive result of $341,000, representing a $1.6 million improvement compared to the prior corresponding period. The chart on this slide provides an overview of our quarterly cash flow performance over the last 3 years. The shift to positive 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 '23 and FY '24 to a strategy centered on sustainable revenue growth, positive cash flow and long-term profitability. Turning to student acquisition. 34,737 new students commenced with Cluey in FY '25, an 11% increase from the prior year. This growth in new students was achieved in the second half of the year as the company increased investment in customer acquisition. As you can see from the chart on the left side, quarterly new students growth compared to the prior corresponding period was positive since the second quarter of FY '25. In FY '25, our variable CAC improved by 33% to $180, and at this level remains well within our efficient acquisition range. Each new student we acquire adds more to revenues than to costs. This supports our ability to scale student acquisition further. As you can see in the chart on the right, we have consistently reduced the decline in revenue growth throughout FY '25. Our strategic decision to increase investment in product and technology to enhance customer experience and marketing to further scale customer acquisition positions us well for growth in FY '26. I'll now hand back to Matteo to provide a business outlook.

Thank you, Greg. As we look ahead, Cluey is evolving into a broader learning services company, one that supports the entire student journey, not just through tutoring but through a comprehensive suite of products and services. We see 3 key pillars driving the next phase. The first one is broader product offering. The learning support sector is large, diverse and interconnected. Students engage with different types of support at different stages from core curriculum and test prep through to skill-based learning, targeted help and live skills like financial literacy. We're building out our portfolio to meet students where they are, whether that's preparing for the HSC, building confidence in STEM or developing stronger study habits. The second one is AI enablement. We believe the future of education is a hybrid model, combining the best of human teaching with AI systems. As a technology-first education provider, we're well placed to lead in this space. We're developing a suite of AI features from tutors that provide always-on microlearning support to content generation, adaptive learning pathways and even AI-based marketing tools for test prep. We're also considering copilots for tutors to help them work more efficiently and deliver even more value to students. And third, omnichannel delivery. K-12 learning is not longer just online or offline, it's hybrid and that shift opens up new opportunities for us. While offline services are less scalable, they tend to deliver higher retention and longer customer lifetimes. Our goal is to become the leading provider of integrated online and offline learning whether through schools, learning centers or directly to families at home. At the intersection of these areas, product breadth, AI innovation and flexible delivery is where Cluey is heading. We're not just scaling what we have already built. We are transforming into a category leader in education support. One of the most exciting developments in our road map is the expansion of our product suite to drive even more value for students and families. At the center of that is Cluey+, our new self-study subscription service. Cluey+ is designed to help students build strong learning foundations by combining multimedia lessons, practice exercises, assessments and project-based activities, all in one adaptive platform. It's structured around 3 key pillars: knowledge, practice and support. Students start by learning through curated content. Then they apply what they have learned through exercises. And if they get stuck, they can access 24/7 AI-powered assistance to guide them through it. But we're not stopping at just self-study. Around Cluey+, we're building out a broader ecosystem, a portfolio of value-added services that create a flywheel of engagement, retention and long-term growth. This includes one-to-one support for more personalized help, master classes for topic-specific learning, group sessions for peer collaboration, events to keep students motivated and school or center-based learning for integrated, in-person support. What we are creating here is a modular, student-centric model where learners can move seamlessly between formats and support types, depending on what they need at that moment. It's designed to increase stickiness, drive stronger outcomes and meet students wherever they are in their learning journey. We're working to bring Cluey+ to the market. It isn't just a concept. It is a fully mapped out road map of targeted high-impact features that enhance our core learning model. Everything we're building here is designed to deepen our value proposition, improve student outcomes and extend engagement across the learning journey. Here's what's coming next. First, on-demand video lessons. These are short modular curriculum aligned videos that help students reinforce key concepts independently. They are designed to work alongside tutoring or as stand-alone learning, giving students flexibility and control. Second, AI-supported practice. We're building a guided practice environment powered by AI that gives students real-time feedback. These help them stay motivated, build mastery and reduce their reliance on human intervention without compromising support. Third, the year 12 AI Exam Coach. This is a smart exam prep companion built specifically for final year students. It integrates real exam questions, exemplar solutions and targeted guidance, helping students prepare more effectively for their end-of-school examinations. And finally, our Mock Exams Hub, a growing library of exam-style tests complete with solutions, marking rubrics and tutor walkthroughs. It's all about helping students refine their technique and build confidence in exam conditions. All of these initiatives work together to support our knowledge, practice and support model, making Cluey+ more robust, more personalized and more scalable than ever. This is how we continue to differentiate not just by what we offer, but by how seamlessly we deliver it. One of the most common challenges we hear from families is finding the right balance between effective learning and affordable support. Parents want their children to have access to high-quality structured academic help. But one-to-one tutoring isn't always the only answer or the most scalable one. At the same time, many students need the tools to take greater ownership of their learning to practice, revise and build confidence independently outside of live sessions. That's where on-demand video lessons come in. These short, modular lessons are aligned to the school curriculum and broken down into manageable weekly content delivered seamlessly within the Cluey platform. They are designed to help students reinforce classroom concepts, keep up with their tutoring and work at their own pace. Each week includes 2 to 3 videos structured into 3 key formats: new concepts with scaffolded explanations, work examples with step-by-step walkthroughs and learning tips to help avoid common mistakes. Together, they offer a cost-effective, scalable and engaging way to support students, either as stand-alone learning path or as a powerful complement to one-to-one tutoring. These help students stay connected to their learning, keeps parents within the Cluey ecosystem and accelerates the overall impact of our teaching model. Another key gap we are solving with Cluey+ is independent practice, one of the most challenging areas for students, families and educators alike. We know that students often struggle to retain and apply what they've learned, whether from tutoring or in class, if they don't have the opportunity to practice consistently and more importantly, to get support when they needed. Without instant feedback, independent learning can quickly lead to frustration, negative outcomes and disengagement. Many students end up relying heavily on parents or additional tutoring, both of which can be costly or unsustainable. That's where AI-supported practice makes a real difference. We're building a fully integrated practice environment powered by AI and aligned to Cluey's structured content from our on-demand lessons through to tutoring sessions. Here is how it works. Students tackle structured practice questions mapped directly to what they're learning. As they work, our multi-agent AI system provides on the spot support, not just answers but real guidance that walks them through the problem-solving process. The system adjusts to student inputs, delivering sequential help and ensure students are supported as they build mastery. We're not rushing the release of this product. We're testing multiple AI models in parallel to ensure they are safe, accurate and aligned with our teaching philosophy. The result will be a seamless, scalable and pedagogically sound learning experience, one that helps students consolidate their learning, improve confidence and reduce dependence on tutoring hours. For senior students in years 11 and 12, exam preparation can be incredibly high pressure. These are high-stake tests that play a major role in determining future opportunities. Yet many students face real challenges when it comes to access, either because one-to-one tutoring is cost prohibitive or because self-study tools fall short when they need targeted support the most. That's exactly why we have built the AI exam coach. This tool delivers on-demand, personalized exam guidance through a simple, chat-based interface available 24/7 whenever students need it. Students can simply take a photo of a question or their workings and the AI coach will provide tailored feedback, showing them how to approach the problem, structure their response and improve their answers to maximize marks. Behind the scenes, the system is powered by multi-agentic AI based on typical exam data, including exemplar responses, marking criteria and rubrics. This enables highly targeted coaching at scale for students preparing for their end of school assessments. Whether they need help with essay writing, structured math responses or scientific explanations, the exam coach is designed to deliver expert-level guidance on demand and at scale. This is about unlocking performance potential for every student, not just those who can afford hours of private tutoring and doing it in a way that's accessible and aligned with real exam outcomes. The final component in our exam prep toolkit is the Mock Exams Hub, a single trusted destination for year 11 and 12 students preparing for high-stakes assessments. While past papers do exist, they're often outdated or incomplete due to curriculum changes. And many available solutions simply aren't reliable or well aligned with the latest exam standards. The Mock Exams Hub addresses these head-on by offering a curated library of high-quality syllabus aligned Mock exams, built to replicate the real exam experience as closely as possible, but it goes further than just questions and answers. Each paper is paired with exemplar solutions, tutor-led walkthroughs and detailed marking guides, all designed to help students not just test what they know but truly understand how to improve and work to focus their efforts. Students can work through real paper formats, see model responses and validate their performance using clear structured feedback, all from within the same Cluey+ ecosystem. And because the platform is built on a multi-agentic AI system backed by Syllabus data and reviewed by educators, we can ensure both quality and scalability. It's about giving students the confidence and clarity they need to walk into their exams fully prepared with less reliance on expensive coaching and more ownership of their learning journey. Clearly, there is still important work ahead. But what's different now is the clarity of our road map. We're moving and we're doing it with purpose, continuing to test, validate and refine our products through real-world feedback before scaling them more broadly. That discipline is what underpins our confidence going forward. With Cluey+, we're building far more than a set of features. We're developing an integrated learning ecosystem that's accessible, adaptive and scalable. AI is enabling us to do this more efficiently and more effectively than ever before. Over the coming quarters, our updates will focus on progress against this road map, particularly how we're deepening customer value, driving adoption across new learning modes and using product innovation to unlock long-term growth. We believe Cluey is in a strong position to become the leading learning support platform for school age students. Thank you for your time and continued support.