ReadCloud : March 2022 Quarterly Report and Appendix 4C

ASX Release

29 April 2022

Quarterly Activities Report & Appendix 4C

Operational Highlights

•  25% year on year increase in VET-In-School user numbers to 15,000 users, driven by organic growth, cross-selling, and the acquisition of Ripponlea Institute

•  23% year on year increase in Direct full-curriculum ReadCloud platform user numbers to 69,000 users.

•  The ReadCloud platform is now used by over 600 schools and educational institutions

•  Conclusion of the most successful on-boarding season to date

•  Planned launch of ReadCloud VET Group in May 2022

Financial Highlights

•  Record cash receipts from customers of $3.6 million for the quarter, up 15% on the prior March quarter

•  $1.4 million positive net cash from operations

•  Unaudited consolidated revenue for 1H FY22 (ended 31 March) of $7.1 million, up 35% on the prior corresponding period, with invoicing of customers for both key business segments (full-curriculum and VET-In-Schools) still occurring

•  Strong cash balance of $5.4 million cash on 31 March 2022, positioning the Company well for growth

ReadCloud Limited ("ReadCloud" or "the Company") (ASX: RCL) is the leading provider of digital eLearning solutions to secondary schools and the Vocational Education and Training ("VET") sector in Australia. The Directors of ReadCloud are pleased to provide a quarterly update and cash flow statement for the March 2022 quarter.

The Directors are pleased to report a 25% increase in VET-In-Schools users (from 12 months ago) to 15,000 users, driven by organic growth (more existing customer schools taking more VET programs), an increase in new school customers, and the acquisition of Ripponlea Institute.

The Directors are also pleased to report a 23% increase (from 12 months ago) in Direct full-curriculum ReadCloud platform user numbers to 69,000 users for the 2022 school year. This is particularly encouraging considering the inability of the sales team to travel for the majority of another COVID-impacted year.

The Company experienced modest (4.4%) year-on-year growth in ReadCloud platform user numbers for full-curriculum Reseller schools for the 2022 school year. However, ReadCloud's main Reseller, having contributed to a $1 million Reseller revenue decline in FY21, has stabilised with year-to-date eBook sales being up on the FY21 full year.

The ReadCloud platform is now used by over 600 schools and educational institutions.

Channel	April 2022	April 2021	% Change
Direct full-curriculum schools	69,000	56,000	+23%
Reseller schools	47,000	45,000	+4%
VET-in-schools	15,000	12,000	+25%
Total Users	131,000	113,000	+16%

Operationally, the March quarter saw the conclusion of the most successful school and student on-boarding season to date for both the full-curriculum and VET-in-Schools segments. Leveraging the investments in systems and processes made in the past 12 months, the on-boarding of schools onto the ReadCloud platform at the start of the school year was completed more efficiently (in terms of accuracy and timeliness) than in any prior year. This has resulted in increasing customer satisfaction, further endorsing the ReadCloud platform.

As mentioned in ReadCloud's December quarterly activities report, significant planning and investment has been made in building the ReadCloud VET brand and associated marketing collateral ahead of a planned major marketing launch in May 2022. The Company is already seeing a positive pipeline for the VET segment for 2023.

New market opportunities leveraging ReadCloud's core SaaS platform continue to progress.

Finance Update

ReadCloud's cash flow is highly seasonal in line with the school year cycle. Most of the Company's cash receipts from customers are received in the quarters ending March and June each year. This is in line with the Board's decision to change the Financial Year end from 30 June to 30 September.

Key points from the accompanying Appendix 4C Cash Flow Statement:

•  record cash receipts from customers of $3.6 million for the quarter, up 15% on the prior March quarter;

•  $1.4 million positive net cash from operations, attributable to timing debtor collections and publisher payments;

•  Unaudited consolidated revenue for 1H FY22 of $7.1 million, up 35% on the prior corresponding period, with invoicing of customers for both key business segments (full-curriculum and VET-in-Schools) still occurring;

•  Staff costs for the March quarter were $1.1 million, up on the December quarter as a result of the recruitment of additional salespeople in the VET team; and

•  Payments to related parties (item 6.1 of the attached Appendix 4C) consisted of remuneration paid to directors during the quarter.

ReadCloud had a cash balance of $5.4 million as at 31 March 2022 and zero debt, positioning the Company well for growth. As noted above, ReadCloud's cash flows are highly seasonal, with most cash receipts from customers for the year to be received in the March and June quarters each year.

The Company's Appendix 4C Cash Flow Statement accompanies this report.

-Ends-

CONTACTS: Investors & Media:

Luke Murphy, Chief Financial Officer [phone]

About ReadCloud Limited

ReadCloud is the leading provider of eLearning software solutions, including eBooks, to over 600 Schools and in the Vocational Education and Training (VET) sector in Australia. ReadCloud's proprietary eBook platform delivers digital content to students and teachers with extensive functionality, including the ability to make commentary in, and import third party content into eBooks.

Students and teachers can share notes, questions, videos and weblinks directly inside the eBooks turning the eBook into a place for discussion, collaboration, and social learning, substantially improving learning outcomes.

ReadCloud sources content for its solutions from multiple publishers, delivering the full Australian school curriculum in digital form in all States, on one platform. In the Vocational Education and Training (VET) sector, ReadCloud provides over 60 digital VET courses and auspicing services to schools across Australia.

Rule 4.7B

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

ReadCloud Ltd

ABN

44 136 815 891

Quarter ended ("current quarter")

31 March 2022

Consolidated statement of cash flows	Current quarter $A'000	Year to date (6 months) $A'000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) staff costs (f) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	3,598 (133) (540) (131) (52) (1,126) (185) - -	4,715 (267) (769) (206) (100) (2,218) (341) (70) 396
1,431	1,140

2.

Cash flows from investing activities

2.1

Payments to acquire or for:

• (a) entities

• (b) businesses

• (c) property, plant and equipment

• (d) investments

• (e) intellectual property

• (f) other non-current assets

(8)

(14)

(57)

(154)

ASX Listing Rules Appendix 4C (17/07/20)

+ See chapter 19 of the ASX Listing Rules for defined terms.

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