Family Zone [ASX:FZO], a Perth, Australia-based education technology company, is de-emphasizing M&A for now to focus on integrating a slew of recent acquisitions, said Ross Young, Executive Vice President-North America.
The company, which has three US offices including a North American headquarters in San Diego, has grown rapidly since Ross joined in July 2018, when it had AUD 8m to AUD 10m in run rate revenue. Now, the figure is more than AUD 88m [USD 62m], he said.
Since the company went public in 2016, it has made five acquisitions, financed with the issuance of new shares. Shaw & Partners advised on a recent secondary offering, he added.
“With that many deals in a short time, we are consolidating talent and getting the technologies to talk to each other,” he added. The company is also looking for cross-selling opportunities among the acquired companies. Young said Family Zone regards 2023 as an organic growth-focused year.
The company’s most recent acquisition was in October 2022 when it purchased student wellness tool provider Educator Impact for nearly USD 7m. In May 2022, it acquired Qustodio, which he characterized as a “best-of-breed parental control app for districts.” Barcelona, Spain-based Qustodio had an enterprise value of AUD 70m-AUD 90m, he said.
In 2021, the company’s Linewize unit acquired Smoothwall, a Leeds, UK-based edtech for an enterprise value of about AUD 140m, he said. It also acquired NetRef, a classroom management software company. In March 2022, Linewize acquired Cipafilter, an East Moline, Illinois-based web filter and firewall provider to educators nationwide.
Family Zone has gone from “hyper growth and cash burn to generating cash,” he said. It expects to be profitable by June, Young added.
The company employs a B2B2C strategy, he said. It sells to school districts globally but also sells a version of its app to parents for their kids’ phones. This strategy results in “negative customer acquisition costs,” he said.
Family Zone’s products are sold in 160 countries. Most revenue is from Europe at the moment, but the biggest growth is from the US, where it works with 15% of school districts, he noted. North America saw triple-digit year-over-year growth, according to Young. Part of the growth stems from government stimulus funding for K-12 education and school safety, he explained.
Family Zone’s products include a compliance platform to filter content; classroom management solutions to enable teachers to see and control devices in the classroom; and the Linewize monitor, providing student safety on devices. Linewize also offers an AI tool to keep children safe from cyber and physical school bullying and to help prevent suicide, he said. It also guards against “online grooming” in which sexual predators target children.
The potential market for Linewize is vast as only 5% of parents globally monitor their kids’ devices, he said.
Family Zone counts GoGuardian; Lightspeed Systems; and Securly as other players in the space, he said. “We have the largest span globally,” he added.
By Marlene Givant Star
