Tuesday, November 3, 2015

Lingo Media (LMDCF) (LM.V) Multimillion Dollar Deal with Columbian Government Agency Paves Way For Further Expansion in Latin America

With the rapid rise in recent years of online language learning platforms such as Babbel, which has over 25 million app downloads to date, or freemium model-based social network language learning platform Busuu, which now boasts over 50 million users, the English language edtech market has effectively evolved beyond the grasp of all but a handful of truly savvy companies. As of earlier this year, over 60 million people were signed up to use the free, gamified Duolingo platform, which lets anyone via browser or smartphone app study languages, taking advantage of the platform’s adaptive language teaching technology.

However, Duolingo, which has taken in nearly $40 million in VC to date and even started shoveling out crowdsourced translation services to the likes of Buzzfeed and CNN as early as 2013, still doesn’t really have a revenue model to speak of. Looking at the underlying nature of the market today, it is easy to understand how Livemocha, despite over 16 million users and $19 million in funding, ended its startup run in an $8.5 million buyout by Rosetta Stone (NYSE: RST) last year. LinkedIn’s (NYSE: LNKD) $1.5 billion acquisition of renowned online education company Lynda.com last year – which is widely known in tech circles for its comprehensive, highly-valuable courses from industry experts, as well as its affordable prices – speaks volumes about where we are at in the evolution of the edtech market.

Furthermore, consider the following data point from June of this year by founder of the EdTech Europe conference, Benjamin Vedrenne-Cloquet, that edtech currently still represents less than five percent of the $4 trillion global education market. There is massive growth potential here and one of the biggest targets moving forward will be Latin America, where over 600 million people speak just two languages. Populations are largely resident in 20 or so major metropolitan centers throughout Latin America and in key markets such as Brazil, the nearly ubiquitous penetration of both broadband and smartphone coverage spells big success for companies that can deliver meaningful, truly useful digital content, as well as the ancillary services needed to learn English.

In stark contrast to now prevalent academic MOOC (massive open online course) programs, up-and-comer Udemy (which recently did a $65 million raise, led by private equity/VC firm, Stripes Group) is focused specifically on offering experts from any field the ability to create courses and offer them to the public, either for free, or for a tuition fee. This is sort of like Uberizing the Lynda.com model. According to head of business development for Udemy in Latin America, Brazil’s connectivity penetration leads the way as an example of where the regional edtech market is headed, and because the government allows for one fifth of the higher education curriculum to be delivered online in a partially unregulated space, the potential 25 million consumer market (core market of 7 million paying students) in Brazil has some of the highest margins available anywhere.

For an established edtech provider like Lingo Media (OTCQB: LMDCF) (TSX-V: LM) though, it’s about far more than simply generating the sort of healthy revenues evinced by its recent Q2 financial reportage, which showed 776 percent year-over-year revenue growth in digital learning, overtaking print-based revenue for the first time in the company’s history. Lingo Media is clearly driven by a strong, underlying mission to fundamentally change the way the entire world learns English.

In addition, the company is driven by the opening up of new markets, and providing best-in-class, innovative online, as well as print-based solutions. The recently announced securing by Lingo Media of a multi-million dollar software development contract with the Colombian Ministry of Labour’s National Training Service, SENA (Servicio Nacional de Aprendizaje), to provide a variety of digital resources and content that will be incorporated into SENA’s LMS (learning management system), is a solid indicator of how the company is currently making huge strides in Latin America.

Secured via a partnership between Lingo Media’s wholly-owned ELL Technologies subsidiary and Colombian ESL edtech digital platform developer, eDistribution, this multi-million dollar software development deal puts Lingo Media at the forefront of what is an ongoing campaign by Colombia’s government to leverage the nation’s substantial human capital via language learning. English is mandated in all schools by official Colombian policy under the PFDCLE (Foreign Languages Competencies Development Programme), with the goal of making the entire country bilingual, following CEFR (Common European Framework of Reference for Languages) proficiency standards.

Given that eDistribution is a specialist in the field of developing enhanced digital resources for second language classroom practices, and that ELL Technologies’ product suite spans the gamut from contextual-based training to comprehensive, SCORM-compliant achievement testing – putting together a winning package of digital resources, lessons, and learning objects for SENA should be a snap for the pair. The highly customizable and fluid framework that will be provided to educators, which will allow unprecedented ease of access to tools enabling dynamic coursework and in-class session development, no doubt will come to serve as a living advertisement for other regional markets.

Columbia’s SENA is laser-focused on digital content and this sweetheart deal is a major feather in Lingo Media’s cap. A deal which will serve to further open up the Latin American market, giving the company an ever more stable footing, amid the Permian Sea-like development of what continues to be one of the hottest markets in edtech today.

All around the world today, some two billion people or more are trying to learn the English language. In China, kids start learning English as early as grade three, and its teaching is mandated by law. China has become the largest English-speaking country on earth as a result of this practice and Lingo Media’s print based roots are firmly established in this key global market, with a wide range of popular educational text books and learning tools available through the company’s publishing unit, Lingo Learning.

Learn more, visit Lingo Media online at: www.lingomedia.com

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