IPO Update: Visionary Education Technology Aims For $23 Million IPO


  • Visionary Education Technology Holdings has filed proposed terms for a $22.5 million U.S. IPO.
  • The firm provides education services to a range of student levels in Canada.
  • VEDU has grown quickly from a small base but the IPO appears priced for perfection.
  • I'm on Hold for the IPO due to excessive valuation.
  • Looking for more investing ideas like this one? Get them exclusively at IPO Edge. Learn More »

The National Flag of Canada and shadows of people, concept picture

AlxeyPnferov/iStock via Getty Images

A Quick Take On Visionary Education Technology Holdings

Visionary Education Technology Holdings Inc. (NASDAQ:VEDU) has filed to raise $22.5 million from the sale of its common shares in an IPO, according to an amended registration statement.

The company provides education services to students in online and offline environments in Canada.

The small firm is growing quickly, but management is seeking a valuation at IPO that assumes continued ultra-high growth and profitability.

I'm on Hold for the IPO due to excessive valuation expectations by management.


Markham, Canada-based Visionary was founded to provide educational services to domestic and international students studying in Canada.

Management is headed by Chairman and CEO Dr. Thomas Traves, who has been with the firm since 2021 and was previously president of Brock University and Dalhousie University.

The company’s primary offerings include:

  • 9-12 grades

  • College

  • Vocational programs

  • Masters degree programs

  • Visa and immigration services

Visionary has booked fair market value investment of $666,000 as of September 30, 2021 from investors including founder Fan Zhou, Ying Wagn, Yamin Han and Qiasha He.

Visionary Education - Customer Acquisition

The firm has pursued partnerships with other educational networks connected to domestic and international students.

Management plans to grow through more partnerships, enhancing student learning success through advanced student management techniques and further develop its international marketing capacities.

General & Administrative expenses as a percentage of total revenue have trended lower as revenues have increased, as the figures below indicate:

General & Administrative

Expenses vs. Revenue



Six Mos. Ended Sept. 30, 2021


FYE March 31, 2021


FYE March 31, 2020



The General & Administrative efficiency rate, defined as how many dollars of additional new revenue are generated by each dollar of General & Administrative spend, fell to a still impressive in the most recent reporting period, as shown in the table below:

General & Administrative

Efficiency Rate



Six Mos. Ended Sept. 30, 2021


FYE March 31, 2021



Visionary’s Market & Competition

According to a 2021 market research report by IBISWorld, the Canadian educational services sector has grown by an average annual rate of 5.2% from 2015 to 2020.

Employment has grown by 7.1% per year during the period and the number of businesses has grown by 4.8%, to 35,419 businesses in 2020.

Also, wages in 2020 totaled $6.6 billion versus $4.2 billion in 2015, making it a very large sector in the Canadian economy.

Major competitive or other industry participants include:

  • Private schools

  • Public schools

  • Online education

Visionary Education’s Financial Performance

The company’s recent financial results can be summarized as follows:

  • Growing topline revenue

  • Increasing gross profit but lower gross margin

  • Reduced operating profit

  • Uneven cash flow from operations

Below are relevant financial results derived from the firm’s registration statement:

Total Revenue


Total Revenue

% Variance vs. Prior

Six Mos. Ended Sept. 30, 2021

$ 3,238,624


FYE March 31, 2021

$ 7,725,221


FYE March 31, 2020

$ 932,707

Gross Profit (Loss)


Gross Profit (Loss)

% Variance vs. Prior

Six Mos. Ended Sept. 30, 2021

$ 1,753,060


FYE March 31, 2021

$ 4,265,774


FYE March 31, 2020

$ 576,384

Gross Margin


Gross Margin

Six Mos. Ended Sept. 30, 2021


FYE March 31, 2021


FYE March 31, 2020


Operating Profit (Loss)


Operating Profit (Loss)

Operating Margin

Six Mos. Ended Sept. 30, 2021

$ 875,024


FYE March 31, 2021

$ 3,728,786


FYE March 31, 2020

$ 381,207


Net Income (Loss)


Net Income (Loss)

Net Margin

Six Mos. Ended Sept. 30, 2021

$ 638,348


FYE March 31, 2021

$ 2,913,646


FYE March 31, 2020

$ 241,738


Cash Flow From Operations


Cash Flow From Operations

Six Mos. Ended Sept. 30, 2021

$ 1,784,309

FYE March 31, 2021

$ 4,439,717

FYE March 31, 2020

$ 273,631

(Glossary Of Terms)


As of September 30, 2021, Visionary had $255,083 in cash and $24.6 million in total liabilities.

Free cash flow during the twelve months ended September 30, 2021, was negative ($13 million).

VEDU’s IPO Details

VEDU intends to sell 5 million shares of common stock at a proposed midpoint price of $4.50 per share for gross proceeds of approximately $22.5 million, not including the sale of customary underwriter options.

No existing or potentially new shareholders have indicated an interest to purchase shares at the IPO price.

Assuming a successful IPO at the midpoint of the proposed price range, the company’s enterprise value at IPO (excluding underwriter options) would approximate $181 million.

The float to outstanding shares ratio (excluding underwriter options) will be approximately 12.5%. A figure under 10% is generally considered a 'low float' stock which can be subject to significant price volatility.

Per the firm's most recent regulatory filing, it plans to use the net proceeds as follows:

Approximately $4.5 million on PPP projects.

Approximately $3 million on MTM course development and program partnerships with other universities

Approximately $5 million at the vocational education level, including training equipment purchases, renovations of facilities, and promotions and professional trainer recruitments.

Approximately $2 million on global market development and distribution channel establishments.

Approximately $1.3 million for staff development.

Approximately $1.1 million for working capital.

$500,000 to be held in escrow for 18 months from the closing of the offering to cover potential indemnification claims by the Underwriters.


Management’s presentation of the company roadshow is not available.

Regarding outstanding legal proceedings, management says the firm is not currently a party to any legal proceedings that would have a material adverse effect on its financial condition or operations.

The sole listed underwriter of the IPO is Joseph Stone Capital.

Valuation Metrics For VEDU

Below is a table of the firm’s relevant capitalization and valuation metrics at IPO, excluding the effects of underwriter options:

Measure [TTM]


Market Capitalization at IPO


Enterprise Value


Price / Sales


EV / Revenue




Earnings Per Share


Operating Margin


Net Margin


Float To Outstanding Shares Ratio


Proposed IPO Midpoint Price per Share


Net Free Cash Flow


Free Cash Flow Yield Per Share


Revenue Growth Rate


(Glossary Of Terms)


Commentary About Visionary Education

VEDU seeks to raise public capital market funding to pay down debt and for a variety of corporate development initiatives.

The firm’s financials show increasing topline revenue, growing gross profit but lower gross margin, lowered operating profit and variable cash flow from operations.

Free cash flow for the twelve months ended September 30, 2021, was negative ($13 million).

Sales and Marketing expenses as a percentage of total revenue have trended lower as revenue has increased and its Sales and Marketing efficiency multiple fell to 8.6x in the most recent reporting period.

The firm currently plans to pay no dividends on its capital stock and anticipates that it will use any future earnings to reinvest back into its growth plans.

The market opportunity for educational services in Canada is moderate and the expected growth rate is in the middle single-digits.

Joseph Stone Capital is the lead underwriter and the only IPO led by the firm over the last 12-month period has generated a return of negative (82.3%) since its IPO. This is a bottom-tier performance for all major underwriters during the period.

The primary risk to the company’s outlook is the continued threat of pandemic variants on its in-person operations.

As for valuation, management is seeking an EV/Revenue multiple of 20.25x. A basket of publicly held education stocks compiled by the NYU Stern School’s valuation expert Dr. Aswath Damodaran indicated an average EV/Sales of 2.72x in January 2022.

So, even though the tiny firm is growing quickly, management is seeking a valuation at IPO that assumes continued ultra-high growth and profitability.

I view this assumption as excessive and I'm on Hold for the IPO due to high valuation expectations by management.

Expected IPO Pricing Date: To be announced.

Gain Insight and actionable information on U.S. IPOs with IPO Edge research.

Members of IPO Edge get the latest IPO research, news, and industry analysis.

Get started with a free trial!

This article was written by

Donovan Jones profile picture
Author of IPO Edge
Get IPO Edge with actionable research on next-generation high growth stocks

I'm the founder of IPO Edge on Seeking Alpha, a research service for investors interested in IPOs on US markets. Subscribers receive access to my proprietary research, valuation, data, commentary, opinions, and chat on U.S. IPOs. Join now to get an insider's 'edge' on new issues coming to market, both before and after the IPO. Start with a 14-day Free Trial.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Investing in IPOs can be a volatile and opaque endeavor. My research is focused on identifying quality IPO companies at a reasonable price, but I’m wrong sometimes. I analyze fundamental company performance and my conclusions may not be relevant for first-day or early IPO trading activity, which can be highly volatile and unrelated to company fundamentals. This report is intended for educational purposes only and is not financial, legal or investment advice. The information referenced or contained herein may change, be in error, become outdated and irrelevant, or removed at any time without notice. You should perform your own research for your particular financial situation before making any decisions. IPO investing is subject to significant volatility and risk of loss.

Recommended For You

Comments (2)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.