Learning Technologies Group PLC on Friday said it expects to report a drop in earnings in 2024 and face further challenges as the new US administration introduces changes to affirmative action.

The London-based digital learning and talent management company said it expects group revenue to fall to not less than £485 million in 2024, down by around 14% from £562.3 million year-on-year.

The company said revenue fell by around 5% on an organic constant currency basis due to macroeconomic, political and artificial intelligence uncertainty. The revenue falls within the company’s £473 million to £493 million range provided in its half-year results.

Learning Technologies anticipates adjusted earnings before interest and tax to be not less than £86 million in 2024, a decrease of around 13% from £98.5 million in 2023.

The company noted that this is at the lower end of the range stated in its half-year results. The adjusted Ebit margin is expected to have risen to 17.7% from 17.3%.

It expects some corporate clients to reduce or stop taking services from wholly-owned subsidiary Affirmity in the wake of moves by President Trump.

Following his inauguration as president, Trump rescinded an executive order which imposed affirmative action on federal contractors. Corporations servicing federal contracts in the US will no longer have to comply with affirmative action requirements from the second-quarter.

Affirmity provides software and services to assist clients in complying with affirmative action.

The company said non-discrimination obligations still exist, and so it expects to still work with clients on those requirements.

However, it expects the change to have a ‘highly material’ impact on earnings for Affirmity for 2025 and beyond. It generated revenue of around $21 million in 2024, and adjusted Ebit of $10 million.

‘We are actively assessing how to meet the evolving needs of Affirmity’s extensive customer base and will update the market as the situation becomes clearer,’ the company said.

Subsidiary GP Strategies was temporarily suspended from working on new classified contracts for the US government in July.

Learning Technologies said it has made ‘good progress’ on resolving issues and a new subsidiary has been set up for non-classified contracts from January.

It has applied for approval to work on classified contracts, which it expects to conclude in the first-half.

The company said it is confident in the overall business’ long-term outlook, but it expects headwinds in 2025.

It forecasts flat revenue performance in 2025 compared to 2024, excluding the impact on Affirmity.

A court and general meeting regarding the takeover of Learning Technologies by GASC ABF LP and some of its managed or advised funds, a grouping collectively referred to as General Atlantic, for £802.4 million will take place on February 6.

Shares in Learning Technologies were down 4.4% to 92.50 pence in London on Friday afternoon.

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