Analysts believe that the UK’s cashed-up Daily Mail Group (DMGT), which has a long history of divesting B2B operations and a recent track record of trimming ancillary companies, is preparing to sell Hobsons, its US-based education technology business.
Hobsons is described as “a student success business, our mission is connecting learning to life, by matching students to opportunity across a lifetime of education decisions”. It started life as a Cambridge, UK-based publisher of print directories on unversities and graduate careers. Its acquisition by DMGT in 1990 laid the foundation for a B2B investment strategy that eventually led to the 1998 game changing acquisition of Risk Management Solutions and to a tilt away from B2C and towards B2B that is only now being re-balanced.
Although the print directories have long gone, the Hobsons’ core product, the subscription-based Naviance, still “helps students figure out what they might want to do when they graduate and helps them in their academic planning”.
In 2018, DMGT CEO Paul Zwillenberg described Hobsons as “a growth business with opportunities to grow revenues and margins”. But, last week, a so-brief mention at DMGT‘s 2020 results presentation left analysts with the impression that what is now the smallest part of the company’s B2B division has become distinctly non-core.
Although it grew revenue by 6% to £85m last year, Hobsons operating profit was only £6m (just 9% of total B2B revenues even in a year when exhibitions were down by 70%). At this level, it may be close to breakeven on a net basis. The Hobsons operating margin of 7% was also the lowest, by contrast with property information (13%), RMS (14%) and exhibitions (normally 20%).
The CEO with a reputation for divesting good businesses for high prices and weak businesses for “focus” did not need to say any more.