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Online tutoring company Cluey (ASX: CLU) is acquiring edtech competitor Art of Smart for up to $6.5 million in a deal that will be partially funded by a $4.5 million capital raise announced today.
The fully underwritten entitlement offer will fund the first tranche of the acquisition with the maximum price for the transaction subject to Art of Smart achieving earnings performance targets over the next two years.
Cluey, which listed on the ASX in 2020, is Australia’s largest online tutoring and support company but has posted annual losses over the past five years.
However, the company’s earnings performance improved in FY25 to a net loss of $5.5 million, down 58.8 per cent from a year earlier, despite a 14.5 per cent drop in revenue.
Art of Smart, on the other hand, is a profitable company that the Sydney-based edtech says will accelerate its path to profitability.
Art of Smart provides tutoring services primarily to senior secondary students, online and in-person, across three campus locations in NSW.
"The acquisition of Art of Smart marks an important step in Cluey's evolution as a leading education services company,” says Cluey joint-CEO Matteo Trinca.
“By combining Cluey's online scale, technology platforms, extensive customer acquisition capabilities and upcoming self-study subscription service with Art of Smart's proven in-person learning model, we're extending our reach and meeting student demand across every learning format - online, on campus, and everywhere in between."
The acquisition is expected to provide Cluey with new product offerings to meet demand for in-person learning that the company can’t currently service while also delivering higher average revenue per student, which is typical of in-person education.
Cluey says it will leverage its “extensive demand data” to identify new campus locations to facilitate the rollout of new Art of Smart campuses.
Cluey also sees Art of Smart benefiting from its experience in delivering tutoring services across all age groups, year levels and states to extend Art of Smart’s capabilities beyond its established core senior secondary segment.
Robert Gavshon, chairman of Cluey, told shareholders at the AGM this morning that the acquisition of Art of Smart will aid the company's path to profitability at a critical time for the sector.
“We believe the Edtech sector is on the cusp of rationalisation and consolidation, and subject to the availability of capital, Cluey is well placed to take advantage of the opportunities this presents,” he says.
The acquisition of Art of Smart has been struck on a multiple of 6.5 times normalised EBITDA for FY25.
The $4.5 million capital raise comprises a fully underwritten two-for-11 pro-rata non-renounceable entitlement offer priced at 7c per share.
Shares in Cluey last traded at 7.8c each.
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