Corporate News

Group continues to grow despite challenging macro environment with record demand for consumer training bootcamps

Northcoders (AIM:CODE), an independent provider of training programmes for software coding, announces its results for the six months ended 30 June 2023 ('H1 2023' or the 'Period').

Financial Highlights

• Revenue grew to £3.5 million (H1 2022: £2.4million), an increase of 46%
• Record demand for consumer bootcamp training, delivering revenues in H1 2023 of £2.8 million (H1 2022: £1.7 million) driven by geographical expansion and entry into new disciplines
• Gross profit increased 32% to £2.2 million (H1 2022: £1.7 million) with a gross margin of 63% generated by continued investment into internal efficiencies and software
• Underlying adjusted EBITDA of £0.04 million (H1 2022: £0.42 million) in line with management expectations following investments into Business Solutions and Tech Returners
• The Group’s core business, Consumer Training Bootcamps, achieved adjusted EBITDA of £0.5 million showing ongoing growth in profitability
• Loss after tax of £0.2 million (Profit after tax H1 2022: £0.2 million), delivering adjusted EPS of (2.07) pence (H1 2022: 4.59 pence)
• Strong balance sheet with cash of £2.04 million (H1 2022: £1.04 million) and net assets at the Period end of £5.5 million (H1 2022: £2.4 million)

Operating Highlights

• Positive growth in demand with record Consumer Training Bootcamp course applications, more than doubling to 7,107 in the Period (H1 2022: 3,494)
• Q3 2023 has again seen record applications, now standing at over 10,000
• Continued to secure Government funding for consumer Skills Bootcamps, achieving a successful Department for Education Skills Bootcamps bid giving a further £4.5 million revenue visibility for H2-2023 and FY-2024
• Strategy for geographical expansion continues to progress with over 45% of the Company’s Training Bootcamp learners now based outside of Manchester and Leeds, a significant change from the Group’s position at IPO two years ago
• In February 2023 the Group acquired Tech Returners Limited, which has now been fully integrated into the Business Solutions division, with the pipeline now including several large corporate businesses
  • As part of Tech Returners brand offering, ReFrame, the North’s largest conference dedicated to Women in Technology has been launched in London and through marketing and PR is creating significant corporate brand awareness in the London region
• Business Solutions division signed its first public sector contract with a significant central Government department which is due to commence in Q4 2023
• Investment and roll out of nCore platform on track for use across the Group in 2024, improving efficiency and supporting gross margin growth
• New technology training courses continue to expand
• The Data Engineering discipline is performing strongly with further investment having been made into course delivery.  The Group is now benefitting from significant cohorts of learners each quarter
• Launched a third discipline within the Consumer Training Bootcamp division, Cloud Engineering.  The first cohort launched in March 2023

Current trading and outlook

Despite the strategic momentum achieved in H1 2023 which ended in line with management’s expectations, the current financial year is presenting several market challenges for the Group’s Business Solutions division. FY23 was and still is expected to be a second half weighted year but the outturn is uncertain due to the prevailing headwinds encountered by the technology market. Budget constraints, workforce reductions and recruitment freezes have led to many corporate clients delaying and deferring budget commitment to Northcoders’ Academy, Your Return to Tech and Consultancy programmes.

In particular, one client is undergoing a substantial business reorganisation leading to a division closure. As a result, their immediate demands for our services have diminished below the £0.75 million we had been expecting with the quantum now being uncertain. We are actively collaborating with them during this transitional phase and remain optimistic about the possibility of future work and contract fulfilment, as the client has expressed a keen interest in continuing our partnership.

As a result of this contract, and the more cautious technology training market conditions, the Group now expects revenue and profits for the year as a whole to be significantly below current expectations. With its strong balance sheet, the Board remains confident in Northcoders’ ability to continue to deliver significant growth as it delivers its strategy and continues to build its reputation as a leading technology training provider in the UK.  The Company continues to work with blue chip corporates and now public bodies, as both hiring partners and customers, to improve the UK’s technology gap with digital transformation remaining a priority.

Chris Hill, Chief Executive Officer of Northcoders, said: “Our performance to date reaffirms our commitment to addressing the UK’s digital skills gap as a leading technology training provider.  H1 2023 saw the Group’s revenue increase to £3.5 million, a 46% increase compared to the same period last year, driven by high demand for consumer bootcamp training, generating £2.8 million in revenue, up 65% on H1 2022 performance.

“Northcoders’ strategic acquisition of Tech Returners in February has already yielded positive results, engaging several major corporate clients. The launch of ReFrame, the North’s largest Women in Technology conference in London, has significantly boosted the Group’s corporate brand awareness.  Demand for technology training beyond the original Coding courses continues to increase, including for the Group’s Data Engineering services, as well as Cloud Engineering tuition having launched successfully.  The Business Solutions division signed its inaugural contract with a central government department project set for Q4 2023.

“As outlined at the Trading Update in July, the market continues to be challenging, with budget constraints, workforce reductions, and recruitment freezes affecting the Business Solutions division, which means our growth in the short term is expected to be slower than previously expected.  Nonetheless, Northcoders remains a key enabler of growth and innovation and we are resolute in our pursuit of evolving to meet technology's ever-changing demands, confidently providing sustainable long-term growth for all our stakeholders.”

Analyst meeting and Investor Meet Company presentation

A virtual meeting for sell-side analysts will be held at 9.30 a.m. today, 19 September 2023.  Please contact Buchanan via [email protected] if you wish to join the meeting.

Northcoders will be also be presenting via the Investor Meet Company platform today, 19 September 2023 at 6 p.m. (BST).  The meeting will be hosted by Chris Hill (CEO) and Charlotte Prior (CFO), and there will be an opportunity for Q&A at the end of the session.  Questions can be submitted pre-event via the Investor Meet Company dashboard up until 9.00 a.m. the day before the meeting or at any time during the live presentation.  To sign up to the Northcoders Group presentation via Investor Meet Company please click the following link:

https://www.investormeetcompany.com/northcoders-group-plc/register-investor.

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

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Notes to Editors

Northcoders is a market leading provider of technology training for businesses and individuals with courses in, Software Engineering, Data Engineering and Cloud Engineering.  Founded in 2015, the Group’s business model operates a hybrid structure with a flagship site in Manchester and other sites in Leeds, Birmingham and Newcastle supported by a proven digital offering to support its students across the UK.

Powered by IP rich technology, Northcoders offers boot camp courses to individuals from a range of backgrounds, delivered through virtual and physical learning.  The Group also works with blue chip corporates across multiple sectors to help them to achieve their digital requirements, with teams as a service and to supply innovative solutions for the upskilling and reskilling of employees. With a keen focus of inclusivity, diversity and quality at its core, Northcoders aims to address the digital skills gap in the UK to meet the increasing demand for digital specialists at all levels, from businesses and public agencies.  Northcoders was admitted to trading on AIM in July 2021 with the ticker CODE.L.  For additional information please visit investors.northcodersgroup.com.