Singapore-based Genius Group was founded in 2015. Embracing technology to teach on an international scale, the company was founded by entrepreneur Roger James Hamilton.
Genius Group plans to list on the NYSE American under the symbol GNS on April 1. It will offer 3.27 million shares in a price range of $5.00 - $6.00.
Boustead Securities is the underwriter and sole bookrunner on the GNS IPO deal.
What is Genius Group?
Genius Group is an educational technology (EdTech) company delivering educational content remotely via interactive lessons. It also offers offline education via its venues. The company's long-term goal is to develop a learning pathway from 0 to 100 years old.
The company's mission is to disrupt the current education model with a student-centered, lifelong learning curriculum that prepares students with the leadership, entrepreneurial and life skills to succeed in today's market.
The group comprises Genius Group, GeniusU, Entrepreneurs Institute, and Entrepreneur Resorts Ltd. This constitutes Genius Group's pre-IPO setup.
Post-IPO, it will grow to a group of eight companies as it acquires four new companies on the date of IPO.
The four IPO acquisitions include Education Angels, E-Square, University of Antelope Valley, and Property Investors Network.
These acquisitions will complement and extend Genius Group's offering to entice and retain a more extensive student base.
The group boasted a student base of 1.9 million students at the end of 2020, with an additional 7,500 new students joining its GeniusU platform each week in 2021.
Of the 1.9 million students, 1.87 million were free and 35,600 paying, along with 9,900 partners.
Genius Group already has a raft of notable clients using its products. Some of these include:
Deloitte
Microsoft
T-Mobile
Vodafone
IBM
Google
Ogilvy & Mather
Mary Kay
McKinsey & Company
Who is Roger James Hamilton?
Genius Group was founded by Roger James Hamilton, who describes himself as a futurist and social entrepreneur. He is also a New York Times bestselling author of The Millionaire Master Plan.
Hamilton was born in Hong Kong and enjoyed international schooling, including Papua New Guinea, Scotland, and England. He graduated from Cambridge University.
Before founding Genius Group, he had success in publishing with a London-based company, Footprints and the launch of Expat Living magazine in Singapore. Roger Hamilton has also been involved in several other entrepreneurial ventures.
Roger J Hamilton previously founded two of Genius Group's subsidiaries.
When will Genius Group go public?
The Genius Group IPO was initially scheduled for March 16, 2022. The IPO date has been rescheduled for April 1, and the target raise has been reduced from $40m to $18m.
Therefore, the implied market capitalization at IPO is $118 million, given the midpoint of the target price range.
The offering also includes underlying options.
There are 5,046,894 other shares underlying options available for issuance at a weighted average exercise price of $6.41.
Furthermore, outstanding convertible notes may be converted to shares at the midpoint of the offer price, around $5.50. This equals about 54,545 shares.
How does GNS make money?
The company has over 1,400 events, courses and products listed on its digital platform. Some of its offerings are served as a freemium model, which encourages students to sign up and take part for free with the option to upgrade by paying for premium features.
So far, Genius Group's primary source of funding has been through the issuance of debt and equity securities for cash. It's also been growing through acquisition to supplement and expand its revenue streams.
The company is gaining venues for hosting events, courses, and retreats through its acquisition strategy.
The company also recruits partners. They can earn commissions by directing sales through the Genius platform.
This area is growing, and Genius Group is not too reliant on any one partner or product as none contributes to more than 5% of its revenues.
Genius Group is also making money selling course certificates. It hopes to extend this by partnering with the top institutions to offer high-quality certifications and degrees via GeniusU and its various locations.
Going forward, the company aims to convert non-digital revenue streams to digital.
Financials
In 2019 the company made sales of $9.9m. This fell to $7.6m in 2020 as COVID-19 hit the company revenues of its physical educational establishments.
Revenues from online activity rose in 2020 but there are no guarantees this is sustainable.
Total revenue for the six months ended June 30, 2021, came in at $6.3m.
Gross profit fell year over year from 2019 to 2020 and again for the first six months of 2021. The company is hoping to make up for falling revenues with its IPO acquisitions but that's speculative.
Free cash flow for the 12 months ending June 30, 2021, was negative at -$2.5m.
| Six months ended June 30, 2021 | Six months ended June 30, 2020 | |
|---|---|---|
| Digital Education Revenue | $5,075,000 | $3,068,000 |
| In-Person Education Revenue | - | $330,000 |
| Total Education Revenue | $5,075,000 | $3,398,000 |
| Campus Revenue | $1,277,000 | $1,140,000 |
| Total Revenue | $6,352,000 | $4,538,000 |
GNS Stock Growth Potential
Genius Group is an ambitious company taking strides to dominate in the EdTech world. Through its aggressive acquisition strategy, it aims to grow quickly while disrupting the traditional educational establishment.
Along with adult learning and certification, the company aims to disrupt childhood schooling.
There's a noted surge in homeschooling since the pandemic hit, while growth in digital schooling is also apparent.
Genius Group is keen to capture this trend as it expands its pre-school, primary school, middle school, and high school programs, together with its virtual camps.
Genius Group's IPO Acquisitions
Genius Group's four IPO Acquisitions include:
Education Angels provides early learning in New Zealand for children from 0 – to 5 years old.
E-Square, which provides primary and secondary school education in South Africa
The University of Antelope Valley, which provides vocational certifications and university degrees in California, USA
The Property Investors Network provides property investment courses and events in England, UK.
GNS IPO Use of Proceeds
Genius Group management intends to raise funds via IPO for various uses. These include:
General Corporate Purposes
Investment in Marketable Securities
Research & Development
Working Capital
As per the company prospectus, it states:
We plan to use approximately $7.6 million of the net proceeds from this offering for strategic acquisitions to cover the cash portion of the acquisition costs for the IPO Acquisitions and the remainder of the net proceeds to ensure sufficient working capital for the acquisitions, development costs of our Edtech platform, working capital, and for general corporate purposes. We do not currently plan to use any of the net proceeds from this offering for additional acquisitions.
The $7.6 million of net proceeds utilized for the cash portion of the Acquisition Costs is made up of the following:
The University of Antelope Valley: $6.5m
Property Investors Network: $0.45m
E-Square: $0.67m
The purchase price for the University of Antelope Valley per the original Stock Purchase Agreement is $24m in cash and $6m in shares in Genius Group. These shares of Genius Group Ltd will be paid at the pre-split price of $34.87 per share.
The actual number of ordinary shares issuable to the University of Antelope Valley will be based on the actual price per share in the GNS IPO offering. In an amendment signed on March 24, 2022, the consideration was amended to $6.5m in cash, $6m in shares in Genius Group and $17.5m in a note payable.
Risks to Investing in Genius Group
EdTech is a highly competitive space with over sixty companies operating in online program management. Coursera and edX are the most prominent players, while Udemy, LinkedIn Learning, and private universities are gaining ground.
The company was originally planning a bigger IPO target raise but cut its deal size by 55%. This may be to do with the subdued investing environment. Nevertheless, this move is a red flag to potential investors. Acquiring the University of Antelope Valley is an expensive undertaking and will need to be paid via share dilution in the future due to the lower IPO target raise.
The company has an international target audience, which poses challenges as well as casting a wider net to paying consumers.
Should you invest in Genius Group?
Educational content is a popular growth area, but monetizing is challenging, and competition is fierce.
The group's prospectus emphasizes 2020 figures when global lockdowns meant interest in educational content was at an exaggerated high, so it's questionable whether this level of interest can be maintained.
Nevertheless, the growth through acquisition strategy is a time-tested model. Genius Group intends to hit the ground running by adding no less than four acquisitions to its portfolio at the IPO launch.
The charismatic leader, Roger J Hamilton, has enjoyed global success in his own right and is likely driven to ensure his company succeeds.
Whether you should invest in Genius Group GNS stock depends on your appetite for risk and belief in the EdTech model.
