Plato Learning, Inc. (Nasdaq: TUTR) provides computer-based instruction, assessment instruments, and job training for K through adult consumers. The company is struggling to change its revenue model from dependence on a one-time perpetual software license model to a fee-based subscription model. There is reason for optimism about the new subscription model. Subscription revenues from fourth quarter (4Q) 2007 are up 9% to $7.1 million from the previous quarter, and up 32% from 4Q 2006. Orders for subscription courseware products are up 90%. Deferred revenue balance, revenue the company will receive in the future, increased 17% to $49 million. Restructuring costs declined 90% in 4Q 2007 and will decline further going forward. Operating expenses also declined, but so did gross margins in both perpetual license fees and subscriptions.

Plato Learning is still bleeding money. The net loss for 4Q 2007, excluding restructuring charges, was $3.2 million or $0.13 per share. This is $0.04 per share worse than anticipated, but still less than net losses in 2006 when the company began switching its revenue model. Total revenues were down 23% year-over-year to $18.2 million, $1 million below anticipated.

E-learning, either in school or the workplace, will only expand in terms of both reach and content offerings. Plato Learning is already one of the dominant content providers for educational courseware and assessment tools. Patient bargain investors may want to take a look at this stock, currently trading under $4 per share.