essensys reports strong US growth despite Covid headwinds

Flexible workspace software provider essensys saw strong growth in its US business in the six months to January despite the pandemic’s impact on parts of its operations, the company said in a trading statement.

With recurring revenue in the US business up 18% to £4.4m, London-listed essensys said its half-year results were in line with expectations, having previously predicted that US revenues would overtake the UK’s this year.

Despite growth in the US, total revenue was down 5.2% to £10.8m on a constant currency basis, though recurring revenue was marginally ahead of the same period last year at £9.8m (up £0.1m).

Non-recurring revenue declined due to the impact Covid-19 has had on new site openings. Marketplace revenues were similarly “moderated” as a result of reduced occupancy in its customers’ sites.

However, this was offset by demand for flexible workspace software, with essensys signing contracts with 18 new customers in the first half of the year. Some of these “high-value” accounts are expected to provide significant long-term expansion opportunities.

Its Connect product had 431 live sites, a net increase of 8% from January 2020, with another 38 contracted for delivery.

The trading update did not reveal revenues for the UK business, but it did say it “continues to prove its resilience.” In its full year results published in October, essensys reported a 5% fall in UK revenue in 2020, while its US revenue grew 32%.

Responding to the trading update, analyst N+1 said: “We see the initial CV19 impact of site deployment elongation as secondary to the longer-term effect of accelerated flex workspace demand as landlords seek to sustain occupancy rates with remote working becoming more pervasive.”

It added that essensys is “excellently positioned” within a sector that could “materially outperform” current expectations once the pandemic eases.

Mark Furness, CEO of essensys, said: “In what has been a challenging year for the flexible workspace sector we are pleased to deliver results in line with expectations. The strength of our US business, high levels of recurring revenue and very strong retention rates have underpinned our performance.

“Despite the short-term effect of Covid-19, the longer-term impact will be increased adoption of flexible workspace solutions by companies of all sizes. We continue to see traditional landlords and commercial real estate companies accelerate the development of their own flexible workspace products and services, which we believe will be a key driver our future growth.

“The strength of our performance during the ongoing pandemic and the increasing market opportunity, allied to contracted new Connect sites, a healthy pipeline and new product development, provide us with confidence in the long-term opportunity for essensys.”