The onslaught of technology into the education sector has paved fertile grounds for numerous edtech start-ups over the past few years. This budding market is projected to grow at a compound annual growth rate of 15.4% between 2018 and 2024, according to Infoholic Research, presenting vast growth opportunities to its major players.
By bringing companies that sell promising interactive hardware and software solutions under one umbrella, Boxlight (NASDAQ: BOXL) has established itself as a major force in this space. The company, which went public in November 2017, aims to make learning more effective with its interactive flat panels, interactive projectors, touch boards and Mimio studio software, besides the upcoming audio distribution system MimioClarity.
Boxlight recently became one of the few vendors selling several K-12 classroom technology solutions including interactive flat panels in New York City — and expects this region to be one of its largest next year.
However, stock performance has been pretty disappointing, especially this year. In an exclusive chat with AlphaStreet, Boxlight President Michael Pope talks in detail about the company’s stock, strategies and opportunities ahead.
On existing customers coming back for new products
Michael Pope said the company is seeing numerous customers coming back to try different products, thanks in part to multi-year roll-outs. “A good example of that is Clayton County in Georgia. Last year, we signed a $12 million contract to implement 3,250 classrooms with interactive flat panels. After that was completed, we also signed a professional development contract with them that will exceed $1 million.”
Pope pointed out that most of the company’s large school district implementations are multi-year rolls-outs, which enhances continued interaction with the customers, in turn, setting the stage for more upselling opportunities.
Boxlight is also hoping to promote its audio distribution system MimioClarity, which will begin deliveries this quarter, through this strategy. The Lawrenceville, Georgia-based firm expects over $5 million in MimioClarity sales in 2020.
On reaching out to slow adopters
The executive asserted that some regions are difficult to penetrate because they are slow to adopt new technologies. But this is hardly a concern at the moment, as most schools are overwhelmingly moving to interactive technologies, he said.
“In the US, about 80% of the classrooms have interactive displays. In the UK, this is over 90%. Currently, our focus in these markets is to win display replacement contracts and provide additional solutions by showing educators that our solutions are a better fit than those of our competitors,” Pope said.
On the disappointing stock performance
Boxlight stock, which had opened 31% higher after being offered at $7 apiece two years ago, is currently trading 77% below the IPO price. Despite positing reasonably strong quarterly earnings and margin expansions, the stock has been on a downward trend since May this year.
Pope said the company is hoping to increase the institutional holding of the stock, which is expected to stabilize the price. Boxlight is approaching various potential investors, who could, in turn, be long-term institutional holders. He added that the concerns among retail investors about the company’s balance sheet in the past few quarters will vanish as it starts showing signs of profitability.
On margins and expenses
After guiding 2019 gross margin of 25-30%, the company has posted margins at the top end of this range for all three quarters of the fiscal year. At the end of the third quarter of 2019, Boxlight’s margin had improved to 30% from 22% a year ago.
Pope cited improved product mix and focus on high-margin solutions as reasons for the improved margins. Without giving any specific figures, the executive said he expects further improvements in the coming quarters, with the introduction of high-margin accessory, software and STEM solutions, including the MimioClarity (>50% margin) to the product mix.
On slower-than-expected growth in the international markets
Pope said growth in the international markets has doubled over last year, but this was slower than what the management had anticipated. The edtech firm is currently restructuring the personnel and team in the UK to make sure the region continues to deliver robust growth.
“International sales accounted for greater than 10% of total sales, compared to around 5% last year. Looking ahead into 2020, you can expect to see further growth through our international channels, specifically in Europe and South America,” he stated.