Engage XR losses narrow as client list grows

Metaverse and virtual reality technology specialist Engage XR reported group revenue of €2.1m for the first half on Monday, up 18% year-on-year.

The AIM-traded firm said the primary contributor to the uptick was revenue from ‘Engage’, which accounted for €1.9m in the six months ended 30 June, surging 30% on the year.

Of the total first-half revenue, Engage’s contribution made up a striking 91%, up from 83% in the prior year.

The company’s gross margin came in at 93%, rising from 81% in the same period in 2022.

Its EBITDA loss settled at €2.1m, narrowing from the €2.8m loss in the first six months of 2022, with the majority of group administrative expenses being salaries and related costs.

The loss before tax totalled €2.2m, which met expectations and marked a decrease from the €2.8m loss in the first half of last year.

Engage XR recorded a cash balance of €9.4m at period end on 30 June - significantly higher than the €4.9m a year earlier.

The board put the robust cash position down to a highly successful fundraising campaign in February, which yielded €10.5m, or €9.9m post-expenses).

On the operational front, the US market showed promising growth, with revenue derived from the region making up 54% of the group’s total in the first half - a stark increase from the 34% a year earlier.

That growth trajectory was credited to the implementation of a US sales team in 2022.

The client base saw steady growth, totalling more than 220 active clients in the enterprise and education sectors as at 30 June - up from 190 clients at the end of 2022.

Following the recent launch of Lenovo's ‘ThinkReality VRX’ VR headset in June, Engage said it anticipated positive outcomes from its Lenovo hardware partnership by early in the fourth quarter.

Since the period ended, June set a record as the highest revenue-generating month for the company, with July and August collectively bringing in an additional €1m in revenue.

A lucrative deal had also been inked with a US state, encompassing 5,400 user licences for K-12 education for a pilot programme.

That deal was estimated to be worth more than €0.3m.

The company also orchestrated a successful employee onboarding event in collaboration with one of the world's largest banks.

“Engage’s client list, user numbers and revenue continue to grow,” said chief executive officer David Whelan.

“Given the sharp global decline in tech spend, this performance is an excellent endorsement of the value that clients think that Engage brings to their businesses.

“Although there has been much said in the press about the push for people to get back into the office, we are not seeing this trend reflected in our figures.”

Whelan said remote hybrid work was “here to stay”, even if it was two or three days a week for most.

“Quality talent want flexibility in terms of their work-life balance - we don't see this changing in the future, but foresee a push against constant video calls.

“This is where a platform like Engage steps in, especially for daily meetings such as standups and remote classes.

“The release and planned release of new VR headsets from Meta, Lenovo, HTC and Apple will ensure a steady stream of new leads coming into our inbox as more companies look at immersive communications, spatial computing and metaverse services for the first time.”

At 1006 BST, shares in Engage XR Holdings were up 13.68% at 3.24p.

Reporting by Josh White for Sharecast.com.