Revenue slips but gross profit rises at Engage XR
By Josh White
Date: Monday 15 Apr 2024
(Sharecast News) - Engage XR reported total 2023 revenue of €3.7m in its final results on Monday, down slightly from €3.9m year-on-year.
The AIM-traded firm said revenue from its 'Engage' virtual reality (VR) platform remained steady at €3.3m, while Engage demonstrated a significant market presence in North America, with 60% of total revenue generated from that region, up from 35% in 2022.
Gross profit rose 5% to €3.3m, which the board put down to an enhanced gross profit margin of 90%, up from 82% in 2022.
Furthermore, the group managed to reduce its EBITDA loss to €4m, an improvement from the prior year's loss of €5.8m.
Ending the year on a strong financial note, the group reported a cash position of €7.9m, with no debt, compared to €2.2m at the end of the prior year.
Additionally, a successful fundraise of €10.5m (€9.9m net of expenses) in February last year bolstered its financial standing.
Operationally, Engage said it experienced notable growth in revenue from its education segment, reaching €1.1m, up from €0.8m.
That growth was fuelled by key deals, including a significant K-12 education licence deal with a US state, alongside increased revenues from existing educational clients such as Optima Domi Academy and Victory XR.
The total licensed education and enterprise users also saw an uptick, reaching around 15,000 users by the end of the period, compared to 10,000 users in 2022.
Since the year ended Engage said it had secured four significant contracts, primarily in the education and training sectors.#
Notably, the group inked its first-ever seven-figure deal with a prominent Middle East-based company in education, training, and development.
The first quarter marked a record revenue quarter, with over €2m in contracted revenue booked, with a substantial portion attributed to professional education.
Additionally, Engage announced the launch of 'School of AI', an immersive learning environment leveraging conversational and generative AI technology, with a full rollout planned in the second quarter, presenting new revenue opportunities.
"2023 was a year in which the company successfully strengthened its balance sheet but was also a year that saw many ups and downs," said chief executive officer David Whelan.
"We are now focused on the aspects of the business that have a long-term future, namely the education and training sectors within both the education and enterprise markets.
"2023 saw a number of enterprise customers deciding not to renew contracts or renewing at lower levels and revenue for remote events and collaboration also decreased, as many tech companies mandated employees to return to the office."
In contrast, Whelan said the year also saw good growth in the company's education, training, and development client base.
"In the last nine months, we signed four of the largest contracts, within the company's history, including the signature of the group's first seven-figure deal in early 2024 with a large Middle East based company, all in the education, training, and development sector.
"We recently announced our 'School of AI' initiative which is a new product offering for schools and universities to be released in the second quarter."
David Whelan said 2024 had started strongly, with the first quarter being the firm's biggest-ever revenue quarter.
"We continue to strengthen our relationships with our partners and are very focused on our work with strong platform partners such as Meta and Lenovo on growing the market away from single pay entertainment purchases.
"Both of these partners are highly focused on recurring revenue generators with education, training and development sectors, which is key to our strategy."
At 0912 BST, shares in Engage XR Holdings were down 5% at 1.9p.
Reporting by Josh White for Sharecast.com.
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