Plato Learning posts profit as subscriptions grow

Subscription growth helps Plato Learning posts 3rd-quarter profit despite sales drop

• On 8:09 am EDT, Tuesday September 1, 2009

MINNEAPOLIS (AP) -- Education-software maker Plato Learning Inc. on Tuesday said it posted a third-quarter profit, compared to a loss last year, as subscriber growth and lower operating expenses offset a drop in sales.

Plato said it earned $184,000, or 1 cent per share, in the three months ended July 31, compared with a loss of $2.1 million, or 9 cents per share, last year. The third quarter of 2008 included restructuring charges of 4 cents per share.

Sales dropped 10.2 percent to $16.7 million from $18.6 million.

Plato cut its operating expenses by 16.6 percent, to $9.4 million, from last year. The cost of its subscriptions, license fees and services fell 23 percent to $7.1 million.

The Minneapolis-based company said its subscriptions orders grew 33 percent to $23.5 million, and gross margins for subscriptions increased to 62 percent from 50 percent. Total orders rose 13 percent to $31.2 million.

The company said it added 176 school districts and community colleges as first-time subscribers to its Internet-based learning management system software, despite the education sector's budgeting constraints. Orders for its "PLE", or Plato Learning Environment, system were up 49 percent from last year.

In June, Plato said it had about 1,300 educational institutions as PLE customers.

Plato is trying to phase out what it says are "non-strategic" products and software maintenance services. Sales for these licensed products dropped 46 percent to $3.5 million.

Plato did not provide specific guidance, but said it expected to post a profit for the year.

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