Tag: education

Keypath Education International (ASX:KED) Is In A Strong Position To Grow Its Business

We can readily understand why investors are attracted to unprofitable companies. For example, biotech and mining exploration companies often lose money for years before finding success with a new treatment or mineral discovery. Nonetheless, only a fool would ignore the risk that a loss making company burns through its cash too quickly.

Given this risk, we thought we’d take a look at whether Keypath Education International (ASX:KED) shareholders should be worried about its cash burn. For the purposes of this article, cash burn is the annual rate at which an unprofitable company spends cash to fund its growth; its negative free cash flow. Let’s start with an examination of the business’ cash, relative to its cash burn.

View our latest analysis for Keypath Education International

Does Keypath Education International Have A Long Cash Runway?

A cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn. As at December 2023, Keypath Education International had cash of US$42m and no debt. Looking at the last year, the company burnt through US$9.5m. So it had a cash runway of about 4.4 years from December 2023. Notably, however, analysts think that Keypath Education International will break even (at a free cash flow level) before then. If that happens, then the length of its cash runway, today, would become a moot point. Depicted below, you can see how its cash holdings have changed over time.

debt-equity-history-analysis

ASX:KED Debt to Equity History March 17th 2024

How Well Is Keypath Education International Growing?

It was fairly positive to see that Keypath Education International reduced its cash burn by 46% during the last year. And operating revenue was up by 10% too. On balance, we’d say the company is

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Brand’s advertising is about ‘education’ not sales

AirBnBAirbnb is aiming to use its advertising to “educate” people, rather than to directly drive sales, its CEO and founder Brian Chesky said on a call with investors overnight (13 February).

Around the time of the pandemic, the travel lettings platform made a decision to invest more of its advertising spend behind brand-building activity, rather than short-term sales spend. An approach it has indicated is paying dividends.

Speaking yesterday, during the company’s full year results for 2023, Chesky asserted that Airbnb’s “full-funnel” approach was driving results, and that its strong top-of-funnel activity was attracting new customers.

“We have a very different approach to marketing than our competitors,” he asserted. “We think of advertising more as education than sales.”

Now is the time for us to expand beyond our core business and reinvent Airbnb.

Brian Chesky, Airbnb

He cited the brand’s current campaign, ‘Get An Airbnb’, as advertising aimed to “educate” viewers on the advantages of doing a trip with the company. The campaign has been the business’s “most successful” digital advertising campaign ever, he claimed, and has now been rolled out onto TV.

Airbnb is also “staying relevant in culture”, he said, citing its collaboration with Mattel to create the Barbie Dreamhouse to coincide with the release of the film.

“We’re going to continue to hopefully stay relevant within culture, and if we can then convert that traffic… through product optimization, reliability efforts, improved customer service, then I think there’s a lot of opportunities,” said Chesky, speaking about winning new customers for the brand.

Airbnb’s earnings surge following ‘incredibly effective’ shift in marketing spend

He added that were many brands that wanted to partner with Airbnb, not just because the size of its platform and traffic, “but also because of the strength of [its] brand”.

Marketing spend is set to

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