Lingo Media Corp. (LMDCF) Poised For Persistent Growth in China & Latin America

According to a report out in July this year from technology research and advisory outfit TechNavio, the English language training (ELT) market in China is on track to run at a CAGR of 19 percent over the next four years. With over 400 million English language learners, a concerted and ongoing effort by the Chinese government to create jobs through improvement of the overall quality of human capital in the country, continuously mounting student mobility to the U.S. and UK, as well as a pre K-12 dominance where under 14 children make up over 20 percent of the 1.35 billion population – the Chinese ELT market has now become a seriously coveted target for EdTech vendors.

Massive open online courses (MOOCs) have also become a big part of the equation, with entities like Coursera and Udacity still quite popular, as well as the online university-level offerings from entities like joint Harvard/MIT open-source project, edX, which have made waves for the larger sector players, such as international education and media outfit Pearson (NYSE: PSO). The ELT market in China is still mainly represented by private institutes, comprised of over 50,000 English language schools, but this has been a tough nut to crack for companies like Apollo Education Group (NASDAQ: APOL) and its Apollo Global subsidiary, leaving a fragmented market that is ripe for capitalization by agile English language learning program providers.

On the whole, Asian education markets are a hot topic, with the fastest growing e-learning space on earth, where English in particular commands the region’s vast majority of what is in total, a $247 billion global language market. Asia’s e-learning space represents around 8 percent currently, but it is set to rise to over 23 percent of an estimated $53 billion global e-learning market by 2018, as the broader education market continues to outstrip the U.S. by a factor of ten times the number of K-12 enrollments. Even with more than 100,000 native English speakers currently in China, English proficiency in the country remains relatively low, and the potential for supplementary EdTech language solutions is tremendous.

This is a story echoed by the planet’s other hot ELT markets, like those in Latin America. Where, according to leading research firm for the global EdTech supplier market, Ambient Insight, the digital English language learning product space is set to grow at a nearly 14 percent CAGR through 2018, when it will generate revenues in the neighborhood of $260.9 million. Brazil represents the largest chunk, with some 50 million primary and secondary students, and revenues which are seen as doubling by 2018.

Surveying this landscape, one of the more interesting publicly traded players in the EdTech arena today is developer and marketer of both print and digital English language learning products, Lingo Media (OTC: LMDCF) (TSXV: LM). LMDCF currently commands a whopping 60 percent plus of the massive primary school market in China via its Lingo Learning business unit’s print-based English language learning programs, alongside its co-publishing partners, People’s Education Press, and PEP Audio Visual Press. This is quite a feat by Lingo Learning, which recently launched its primary-level, PEP Primary English program into several additional provinces in China – but it is also par for the course, given that the company is one of the earliest entrants into China, which is now the world’s largest English language learning market. The company’s well established presence, backed up by a long and successful track record working closely with Chinese government agencies via partnerships, is cemented by a brand presence that has seen Lingo co-publish over 520 million product components, covering the entire gamut from K-12, to universities, and even the continuing education market for working professionals.

This rock-solid footprint in print media for the Chinese market has created considerable opportunity for the company’s digital solutions business unit, ELL Technologies. The importance of the company having been one of the first players in speech recognition and speech analysis technology is also paramount here, with state-of-the-art components available across ELL Technologies’ entire range of learning solutions. From Kids, a platform designed for pre-readers, which recently saw the debut of its inaugural pre-school program, Winnie’s World. To the company’s Scholar, Business, and Master learning solutions. Components such as Speaking Lab’s Speak2Me, an automatic feedback, computer-based virtual conversation tool that, in conjunction with speech recognition program, The Studio, can detect mispronunciation at the level of a single phoneme (an individual, perceptually distinct unit of sound), and provide immediate help to students.

Most traditional speech recognition programs simply cannot offer this level of advanced capability and are only able to diagnose mispronunciation errors at the whole word level, making the combined solution a revolutionary way to practice speaking on your own. A workflow that allows the user to hone in on an exact pronunciation problem, guided by color-coded instant feedback alerts made available during an avatar-driven simulated conversation. The entire ELL Technologies’ suite of products is also compliant with the e-learning industry’s de facto interoperability standard, SCORM. Meaning the code is written so that software meshes seamlessly with other e-learning content and Learning Management Systems (LMSs). Moreover, the entire suite offers contextual-based training for understanding conditional cultural nuances, as well as the much sought after achievement testing that Chinese consumers demand in order to validate content progression. At its core, the suite is comprised of a wide variety of interactive lessons, with content designed for everything from kindergarten to adult learning.

Strong Q2 revenue growth of roughly 776% year-over-year to $1.79 million, as digital learning outpaced the company’s bedrock print-based revenue for the first time in operating history, underscores a powerful expansion into booming English language learning EdTech markets like Colombia, Mexico and Peru (where the company recently secured new software licensing contracts for ELL Technologies’ programs), as well as other Latin American countries. President and CEO of LMDCF, Michael Kraft, reported in August at the time of the Q2 announcement, that management anticipates similar upward momentum for the second half of 2015, and noted how Latin America in particular was becoming a very appealing sales growth horizon.

A considerable expansion of the digital English language learning library, through a licensing agreement with Connecting Doors, to digitize and globally distribute its best-selling general English program – in addition to the release of its cutting-edge course/lesson, easy creation and management tools, known as Course Builder and Lesson Builder – have made ELL Technologies’ suite of offerings more compelling than ever. Looks like Latin America’s English language learning markets are already taking notice.

Get a closer look, visit Lingo Media at www.lingomedia.com

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