• publish

Keypath is a globally-successful, Chicago-based organisation specialising in an area of higher education known as online program management (OPM). It’s a sector in ‘edtech’, a portmanteau of education and technology, that develops digital platforms through which tertiary institutions and others provide courses and teaching materials.

The business forms long-term relationships with universities and has partners in the US, Canada, the UK and Malaysia, as well as Australia. With such a large global footprint, at first glance an Australian listing seems curious.

Steve Fireng, Keypath Education

"We're anticipating a rise in demand for counselling and mental health disciplines as a result of COVID." 

“Australia has always been an important part of our growth story, it’s where we generate practically half our revenue,” says Steve Fireng, Keypath Education global CEO. “We saw ASX’s commitment to technology stocks with the establishment of the ASX All Technology Index in February last year and saw an opportunity to stand out, knowing we would be the largest edtech on the exchange. Also, we recently launched the business in Malaysia and listing in Australia will support our continuing expansion in the Asia Pacific region.” 

Rapid growth

Keypath listed on ASX on 2 June this year, raising $212.5 million at $3.71 per share. The funds will be used to pursue opportunities to develop the business, which operates in a market that is predicted to grow over coming years. Education intelligence firm HolonIQ predicts the value of OPM firms will rise from $5.7 billion in 2020 to about $13.3 billion by 2025.

“Technology and student expectations have become a lot more sophisticated since I launched my first online university in 2001,” Fireng says. “We’re investing a great deal in making sure the student experience isn’t sacrificed if they choose an online option.”

He’s also determined the decision to study online should not be based on cost. Universities set tuition fees, but the aim is for courses to cost the same, no matter if they are delivered by the university face-to-face or through Keypath’s online format. 

Along with geographical expansion, Keypath is improving how programs are delivered through its platform. Healthcare is an area of focus, which is a sector in which there is significant unmet demand for online education resources.

“Healthcare is our fastest-growing vertical, with nursing the most popular subject. We’re also anticipating a rise in demand for counselling and other mental health disciplines, particularly in Australia, as a result of COVID.”

Occupational education

Keypath also has a focus on courses for working professionals. “Online education has really opened up the opportunities for adult learners who want to reskill or change their career,” says Fireng. “Most of our students have full time jobs.”

As part of its service, Keypath helps universities match their new online courses with demand from industry, employers and students.

“KeypathEDGE, our proprietary technology and data platform, provides us with market intelligence and predictive analytics from around the world. This enables our partners to make informed decisions about which programs to develop.”

Keypath provides initial funding to launch new, online programs, and also covers the cost of marketing and recruitment. It also provides retention and other services to support the student experience on the university’s behalf. The universities still make decisions about who to admit to courses and deliver all things academic and courses remain under their own brand.

An Australian success story

Fireng started the company with the intention of creating a global platform. His first two partnerships in 2015 were with Spring Arbor University in the US and Australia’s Southern Cross University. Keypath now has nine Australian partners, more than all its competitors combined.

“We benefited from good timing,” he says. “When we launched, Australian universities were reliant on their international student intake and were looking for ways to diversify their student base. We offered technology, a platform and a service that catered to what they wanted to achieve. We were also fortunate with the people we hired. Ryan O’Hare, our Australian CEO since 2014, is an extraordinary leader doing a wonderful job.”

Keypath has also succeeded in engaging Australian investors.

“I know local investors can worry they’ll be overlooked by a US-based company, but our feedback has been positive,” he says. “Many investors have commented on our accessibility. We make sure there’s plenty of interaction, and I think we’ve done a really good job of building rapport with our investor base. I’m just looking forward to the time I can meet them in person.”

COVID’s impact

Keypath has maintained an impressive rate of growth. “We went from zero revenue in 2014 to US$98 million at the end of our last fiscal year,” says Fireng. The company has yet to produce a profit.

“Every program we launch costs us between half a million and a million US dollars and we’re planning to launch approximately 30 new programs in the next year,” he says. “We’ll break even when more programs are established, out of launch phase, and profitability is in sight.”

He saw a lift in interest across all Keypath’s territories as COVID focused attention on online learning, although this has now normalised. “Many adults are prompted to go back to learning by a change in their lives such as marriage, divorce or losing or changing jobs. During lockdown, more people were assessing what they really want from life and realising education is a great way to move forward.”

The pandemic also encouraged universities to reassess online learning. “Pre-COVID, they assumed certain things weren’t possible,” he says. “These days, everything is on the table. They’ve been able to see just how much they can achieve and they won’t go back from that.”

Long-term partnerships

Keypath’s partnerships typically run for seven to 10 years. The question is whether there’s the potential for universities to take programs back in-house when contracts end.

“Our belief is no,” says Fireng. “It’s true over the last few years universities have been building online program capabilities. But we mostly help deliver post-graduate courses and offer things universities have a hard time doing themselves. We’re able to invest capital in services and technology to maximise the growth opportunity across every program. We also have a superior ability to provide highly-complex programs like nursing, social work and pharmacy.” It can also arrange clinical placements and recruit faculty staff.

“We have already renewed our contract with five of our earliest partners. Contracts that provide 92 per cent of our revenue don’t have a renewal date till 2024 or beyond. From what we’ve seen so far, universities consider us to be a strategic partner for much longer than the initial term.”

While nothing is certain, especially in the current climate, Keypath is set to become permanently enmeshed in the local and global education system.

Related links