Release Date: September 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Engage XR Holdings PLC (LSE:EXR, Financial) reported a 400% growth in license usage for Optima Ed and a 500% increase for Inspired Ed between 2023 and 2024.
- The company signed a seven-figure deal with PwC for a Middle Eastern client, indicating strong enterprise engagement.
- Recurring revenue grew from 66% in H1 2023 to 83% in H1 2024, reflecting increased license revenue.
- The company is implementing AI features, allowing customers to build their own AI chatbots and AI assistants, enhancing the platform's capabilities.
- Engage XR Holdings PLC (LSE:EXR) has a strong pipeline for the second half of 2024 and into 2025, positioning the company for continued growth.
Negative Points
- Gross margin declined from 93% to 89% due to a one-off hardware purchase, which impacted profitability.
- EBITDA loss was EUR1.8 million, although an improvement from the previous year's loss of EUR2.1 million, it still indicates financial challenges.
- Cash reserves decreased from EUR9.4 million in H1 2023 to EUR5.5 million in H1 2024, raising concerns about liquidity.
- The company is experiencing a reduction in one-off professional services and events revenue, which declined from EUR900,000 to EUR350,000.
- Despite positive news and deals, the share price has not seen significant movement, indicating potential investor skepticism.
Q & A Highlights
Q: Does July and August financials make the Board less or more confident to delivering against expectations for the year?
A: We are still very confident in delivering our expectations for the year. We've made progress during July and August, and we're also in negotiations with a number of large customers which will help deliver against our targets that are out in the market at the moment. (Seamus Larrissey, CFO)
Q: What are Engage doing to increase the visibility of the services that we offer?
A: We're enabling resellers on our platform to become successful. We're dealing with very large corporations like Meta, who will be promoting Engage in the future, as well as Optima Domi, Inspired Education, and other key partners. These partners are growing substantially on our platform and are pushing our platform forward and selling licenses on our behalf. (David Whelan, CEO)
Q: To what extent will the new low-price Meta headsets benefit our business model?
A: The new low-price Meta headsets will drive increased education and enterprise focus to the platform, bringing more people into the marketplace. We are excited about the upcoming announcements from Meta, which will align with our focus areas in education, training, and development. (David Whelan, CEO)
Q: Are you willing to take a much smaller salary until you reach a cash-generative position?
A: The Executive Board, including Dave, Sandra, and myself, have taken substantial pay cuts since the middle of the year. We will continue to operate on this basis until we reach a cash-generative position. (Seamus Larrissey, CFO)
Q: What is the correlation between engaged licensed users and revenues?
A: We have two main types of licensed users: enterprise and education users. Enterprise license users are on a higher price point compared to education license users. We are seeing significant growth in our education side and continued traction on the enterprise side. We hope to see our license users grow closer to 20,000 by year-end. (Seamus Larrissey, CFO)
Q: What is happening with the platform partners, Meta and Lenovo?
A: We are working closely with Meta on their new headset release and being promoted heavily by them. Lenovo is also actively pushing our platform to their customer base. (Seamus Larrissey, CFO)
Q: What are the expectations and guidance for H2 revenue for license renewals and new licenses from the pipeline?
A: We expect the balance of our revenue for the year to come from pre-existing contracted revenue of EUR0.8 million, license renewals of around EUR1 million, EUR800,000 from new customers, and the balance from one-off professional services and non-engaged services. (Seamus Larrissey, CFO)
Q: Can you please advise on the new Chairman's role?
A: Kartik is very experienced and US-based. He has had $2 billion exits in the past and is helping us create a better pipeline, introducing us to ex-employees, and helping us grow our bottom line and revenue to achieve profitability as quickly as possible. (David Whelan, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
