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Essensys upbeat on product roadmap

Essensys will ramp up research and development to accelerate its product pipeline, the global provider of mission critical software-as-a-service to the flexible workspace industry said as it reported a strong trading update.

The company said it was complying with the recommendation from the Financial Reporting Council to all listed companies to delay the publication of interim financial statements for at least two weeks due to coronavirus. London Stock Exchange listed companies have been given time to prepare statements as managers would be distracted by the shutdown in the economy and their financial projections would be altered.

Essensys was due to reports its half-year financial statements for the six months ended 31 January 2020 this week.

Instead, the company gave a market and trading update which includes unaudited highlights and commentary for the half year.

Mark Furness CEO Essensys

Mark Furness, CEO of essensys, said: “It has been a good six months for essensys, as we build on our ambition to power the world’s largest community of tech-driven flexible workspaces. We have successfully delivered strong sales momentum and continued to expand our US business.

“The second half of the year has started well, supported by contracted new Connect sites in delivery and a healthy pipeline. Whilst we have seen only limited direct impact of Covid-19 on the business to date, there will undoubtedly be more; and we are focussed on preparing for and minimising that impact where possible. Our sales pipeline includes a number of significant future opportunities; this and the high proportion of contracted recurring revenues underpins the board’s confidence in the long-term growth opportunity ahead, in spite of near-term macroeconomic uncertainty.”

Turnover in the six months to the end of January was £11.4m, up nearly 20% from £9.6m in the same period of 2019. Recurring revenue within this was £9.7m, or 85%, up from £7.5m

Essensys made a small pre-tax profit of £200,000, down from £600,000 last time. The business has £1.7m in the bank.

On the virus, the company said in its statement: “Whilst there has been limited direct impact to date from the Covid-19 virus outbreak, the government restrictions on movement globally lead us to expect an increased level of uncertainty relating to the timing of delivery of these sites…The board continues to monitor developments with, and potential impact of, Covid-19 in the short and medium term and is in particular focused on the key risks of: delays by customers in activation of existing contracted sites; near term delays in customer contracting decisions in respect of new sites; potential reduction in marketplace service utilisation; and the impact of the current situation on the financial stability of customers.”

US recurring revenues were up 52% and continue to grow strongly; US business is now larger than the UK in Connect site numbers.

The lower adjusted earnings reflected investment in sales and marketing, product development and geographic expansion to support long term growth.

The company said it would continue to invest in “development of new products, services and unified platform to drive increased cross and up-sell” and “scale up UK-based R&D team to accelerate delivery of product roadmap.”

Shares in the business have lost around 100p from 240p to 140p in the past month as global stockmarkets have experienced sharp losses.

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