US surge in new business for essensys
The continuing migration to flexible office space underlined a resilient performance during the past year with the specialist management software provider’s US business showing year-on-year recurring revenue increasing 43% to £8.0m from £5.6m in 2019.
Essensys is a provider of mission critical software-as-a-service platforms and on-demand cloud services to the flexible workspace industry.
In a trading update to the London Stock Exchange for the year ended 31 July 2020 chief executive Mark Furness said a fundraise in April to boost international growth plans was starting to pay off.
Revenue for the year was in line with market expectations at £22.4m, an increase of 9% (FY19: £20.6m). Recurring revenue increased by 18% to £19.3m (FY19: £16.3m) and represented 86% of revenue in the year (FY19: 79%). Adjusted Ebitda is expected to be in line with market expectations, when the full year results are published.
Annual recurring revenue (ARR) run rate on 31 July was £19.7m, an increase of 14% on the same stage in 2019 (£17.3m).
Despite the challenges posed by the Covid-19 pandemic, the group delivered 15 new Connect, one of its product platforms, sites in the final quarter and closed the financial year with 419 live Connect sites, an increase of 17% year-on-year (358 as at 31 July 2019). The group has an additional 26 new Connect sites contracted with the majority of these to be delivered in H1 FY21.
New product releases in the second half of the year have already started to generate new customer enquiries and contracted business. STEP, essensys’s proposition designed to help traditional office landlords provide more flexible tenant solutions and Smart Access, a touchless access control solution, have both been “very well received by our target audience with sales pipeline building strongly since their respective launches”.
The board said it was “pleased with the continued progress” made by the group in FY20, demonstrating the resilience of its business model by delivering another year of profitable growth and expanding its customer base despite the significant challenges presented by the Covid-19 pandemic.
Net cash at year end was £8.4m and the group remains debt free.
Looking ahead, the board “remains confident in the group’s future growth which is underpinned by long-term structural drivers, its high proportion of contracted recurring revenue and good pipeline visibility, notwithstanding the continued uncertainty resulting from the Covid-19 pandemic”.
Mark Furness, CEO, commented: “Our performance in FY20 underlines the resilience of our business model and the long-term nature of our underlying growth drivers. This reflects two key factors; the continuation of supportive long-term industry trends, with the expansion of our customer base and new customer sites, and the accelerated migration of traditional real estate operators into the flexible workspace market.
“Following our fundraise in April 2020 we have made good progress with delivery of the first phase of our international growth plan. This has resulted in the expansion of our US sales team to increase our reach into the traditional landlord and commercial real estate markets which has been further accelerated by the launch of STEP. Our growth trajectory remains clear and we expect to initiate the second phase of our plan, comprising the establishment of European and APAC operations, during the first half of FY21.”
Shares in essensys nudged up slightly to 152.50p on Tuesday morning.
- Hear more from essensys at PlaceTech: Offices on 3 September