Engage XR revenue to fall short of market expectations

The AIM-traded company said it anticipated revenue for the 12 months ended 31 December of around €3.4m, down from €3.7m in 2023.

Recurring revenue grew to 70% of total revenue, up from 63% in the prior year.

The group said it expected to report an EBITDA loss of around €4m, consistent with market expectations and reflecting efforts to improve operational efficiencies and control costs.

Its cash balance stood at €3.6m at year-end, down from €7.9m in 2023.

The revenue shortfall was largely due to delays in the deployment of a seven-figure Middle Eastern contract secured through its partnership with PwC.

While client approval had now been finalised, the remaining €0.4m of associated revenue would be recognised in the first half of 2025.

Another substantial Middle Eastern contract, expected before year-end, was deferred to the first quarter of 2025, further impacting 2024 revenues.

Despite the setbacks, Engage XR reported progress in its education and training verticals, driving the company’s strategy.

Recurring revenue reportedly reached a new high as the company shifted focus away from pandemic-era remote collaboration solutions to more predictable and scalable business models.

Key successes in 2024 included a tenfold revenue increase from InspiredED, a global private education provider, which signed a mid-six-figure contract for immersive learning licenses.

OptimaED, a US-based education firm, expanded its licence usage from 950 to 2,500, with further growth anticipated in 2025.

The group also reported continued success in its training partnership with Bank of America.

Looking ahead, Engage XR sees significant growth opportunities in the Middle East and the US across education and training sectors.

With a strong project pipeline, the company said it was confident in achieving cash flow break-even during 2025 and delivering results in line with its strategic objectives.

“While it is disappointing that the delay in our new Middle East contract hit revenue recognisable in 2024, given the strength of the pipeline, we expect 2025 to be a strong year and remain confident in delivering our strategic objective of cashflow break even in 2025,” said chief executive officer David Whelan.

“The education and training sectors will be the primary drivers of growth - Meta released the Quest 3S headset late last year which is a high-quality but affordable device ideal for education and training.”

Whelan said the company was working with Meta and its partners on creating an education offering “to eclipse others in the sector”, adding that the company expected to “compete strongly” on pricing and services.

“We start 2025 with a strong client base, supported by our strategy of securing two-to-three year contracts with many of our partners in the education and training sectors.

“This ensures a stable foundation for continued growth and innovation.”

At 0825 GMT, shares in Engage XR Holdings were down 14.45% at 0.51p.

Reporting by Josh White for Sharecast.com.