Essensys toasts strong first results since IPO

The UK and US flexible workplace software supplier reported growth in recurring revenue and plans for global expansion in its first set of figures since listing on the London Stock Exchange in May.

Turnover rose 26% to £20.6m in the 12 months to August 2019. The current run rate of recurring revenue is £17.3m, chairman Jon Lee said in his statement to accompany the results.

Lee said the company dipped into a £1.4m loss because of £2.3m of listing costs and staff share options vested during the initial public offering. Last year Essensys produced a pre-tax profit of £400,000.

However, if exceptional costs from the listing are stripped out, the business showed a pre-tax profit of £1.1m. The company operates with a profit margin of around 20%. Essensys has two space-as-a-service products; Connect and Operate, which “address” the “complex operational challenges” of running a serviced office. These products “automate key tasks and processes” to “reduce costs by simplifying the day-to-day management of flexible workspaces and the provision of on-demand IT, technology and infrastructure services to tenants.”

Mark Furness, CEO of Essensys, said: “We have a simple vision – to power the world’s largest community of tech-driven flexible workspaces. We are at the beginning of the adoption curve for flexible workspaces, with market penetration expected to reach 30% in 2030, compared to current levels of c.3%.

“Our performance reflects strong demand for Essensys’ technology offering to the flexible workspace industry. We have deployed our IPO proceeds in line with our plans to support long-term organic growth and capture our market opportunity. As a result, we have significantly evolved our presence in the US, grown our product development capabilities and extended our European presence for Connect.

“Growth in our existing customer base underpins future resilience and growth. This, aligned to a strengthening market backdrop and an encouraging pipeline from new customer wins, supports the Board’s confidence in further progress in the 2020 financial year.”

The IPO raised £28m and enabled Essensys to repay all bank debt and leave it at the end of the financial period with £2.7m cash in the bank. This compares with £3.8m of debt this time last year.

The group, whose clients include multi-site operators such as Uncommon, BizSpace, and Carr Workplaces, has opened in Canada in the past year and plans to open further offices in Continental Europe and Asia Pacific in 2020.

There will be no dividend as the board plan to keep investing in the business.

The share price is trading slightly below the debut 174p in May at 165p overnight.