SmartSpace audited final results announcement for the year ended 31 January 2020
SmartSpace Software plc (AIM: SMRT), the leading provider of ‘Integrated Space Management Software’ for smart buildings, commercial spaces and hospitality, announces its audited final results for the year ended 31 January 2020.
Note: The Enterprise software division is treated as a discontinued business in the accounts as the decision to sell the business was taken prior to 31 January 2020
- Revenue from continuing operations of £5.1 million (FY19: £2.9million)
- Adjusted LBITDA* (£1.67 million) (FY19: £1.75 million)
- Total gross profit of £2.1 million (FY19: £1.1 million)
- Administration expenses of £4.3 million (FY19: £3.2 million)
- Cash and cash equivalents at 31 January 2020 £2.6 million (FY19: £8.0 million)
Operational Highlights: Includes post review period
Transition of software business to a pure SaaS business
- In line with the Board’s strategy of focusing the software business on a SaaS model, on 13 August 2020 SmartSpace completed the sale of the entire issued share capital of SmartSpace Global Ltd and certain contracts of its US subsidiary (which together comprised the Enterprise software division) to Four Winds Interactive, for an initial consideration of £4.6m:
- Payable in cash on completion, together with a further deferred payment of £0.4m, payable on receipt of R&D tax credits from HMRC.
- Significant progress made in developing the SaaS business, both organically and through acquisition with SwipedOn, (acquired in October 2018) growing its annual recurring revenues by 93% during the year to NZ$3.6m:
- At 31 January 2020 SwipedOn had 3,896 customers operating out of 5,280 locations (Jan. 2019: 2,713 customers in 3,590 locations).
- SwipedOn continues to sell its products through digital marketing campaigns focussed primarily on English speaking markets including the US, Canada, UK, Australia and New Zealand.
- During FY20 the product roadmap focussed on add-on modules and location-based settings. Software development changed with Covid-19 specific functionality developed including contactless sign-in and pre-screening questionnaires. This created increased opportunities for SwipedOn as countries reopened for business.
- In November 2019 the Group acquired Space Connect for a total consideration of AUD $6.0 million (approximately £3.2 million):
- Satisfied by the issue of up to 2,026,234 ordinary shares of 10 pence each in the capital of the Company and cash of £1.6m.
- Space Connect’s cloud-based platform offers room booking, desk booking, visitor management, catering and workplace analytics. This 'out of the box' functionality is quick to deploy, easy to configure and allows SmartSpace to accelerate the development of its mid-market business. The ease of configuration also allows Space Connect to sell through channel partners and with channel partnerships already established, opens international sales opportunities.
- A number of distribution agreements already signed allowing partners to resell its workplace management solution including an agreement with Softcat, one of the UK’s leading System Integrators.
- Space Connect has also agreed a partnership agreement with Evoko, a leading manufacturer of meeting room panels. As well as offering enhanced meeting room functionality built into the new Naso panel, Evoko will offer integrated software on a subscription basis enabling users to manage room bookings via Microsoft Outlook and a new Naso App.
- Anders & Kern, our specialist distributor and integrator of AV solutions has recently signed distribution and resale agreements focusing on workplace optimisation solutions. A+K’s established network of 200 resellers is strategic to the development of the market for Space Connect in the UK.
- Investment of £0.77 million during the year in further enhancing the software solutions of continuing businesses. This has included development of new add-on modules for SwipedOn including Deliveries, Catering and SMS
Following the sale of the Enterprise software division, the purpose of the Group is to fulfil the needs for SME businesses and Board has set the following strategic priorities:
- to focus on delivering pure SaaS revenues where the Group is not overly exposed to one market or customer;
- to develop technology-led intellectual property to help SME companies optimise use of their corporate real estate focussing on rooms, desks and visitors and provides businesses with a means to implement and manage Covid-19 policies in the workplace;
- to develop new sales channels to market for our software solutions by establishing a global network of channel partners;
- to bring together the technologies of Space Connect and SwipedOn in order to create an integrated product;
- to continue with a strategy of both organic and acquisitive growth both in our domestic market and overseas; and
- to deliver higher quality earnings which will, in turn, improve cash generation.
On outlook, Frank Beechinor, CEO of SmartSpace commented:
“Whilst the coronavirus pandemic can make any assessment of the future uncertain and whilst it will inevitably continue to pose challenges for the Company’s operations and those of our clients, the Board believes that it will also create opportunities. We believe that the Company’s product offerings will form part of the solution to help our customers deal with the impact of the virus on their work environment. Both our software businesses have already developed and launched new functionality to address the new needs of businesses in the post Covid-19 world. SwipedOn now allows for contactless visitor registration and pre-screening questionnaires. Space Connect has developed and released additional functionality to help customers manage and implement their Covid-19 policies.
New sales channels for Space Connect are expected to contribute towards revenue in the next financial year. The Group’s first white label version of its software will soon be sold through a strategic partner, Evoko. Further distribution channels are being established to sell our software to customers internationally. Following on from partnering with Softcat, post period end we announced that we had signed a distribution agreement with Esco, headquartered in Singapore and operating across the Far East with offices in The Philippines, Vietnam and Taiwan.
SwipedOn has grown at a consistent rate since it was acquired in October 2018 and is now cash generative. We continue to invest in customer acquisition to accelerate the growth of SwipedOn and therefore cement its place in the market. Continuous improvements to the product through add-on modules enable revenue per user to be increased at a low cost. At the point of acquisition, the largest single SwipedOn customer had 45 locations, today our largest customer has over 150 locations. We aim to further increase the number and size of these multi-location customers through further enhancing the functionality within the software and targeted sales and marketing activity. SwipedOn is well established in the major English-speaking markets of the US, UK, Canada, New Zealand and Australia and there is extensive growth potential in non-English speaking markets. We will continue to invest in our platform to ensure it is ready for this expansion.
With the successful sale of the Enterprise business and a significantly reduced fixed cost base and strengthened balance sheet, the Group is well positioned to exploit the opportunities the management believe exists for its SaaS products globally and now enters into a new period of sustained and secure growth. SwipedOn is already generating cash for the Group and the Board expects Space Connect to become cash generative once sales from our partnership with Evoko and partners such as Softcat start to flow. A+K’s established network of 200 resellers is also strategic to the development of the market for Space Connect in the UK.
In closing I would like to take this opportunity of thanking our loyal and hardworking employees, our strategic partners and longstanding shareholders for their continued support during these extremely challenging times.”
A copy of these final results and further information on the Company will be available on the Company's website at: www.smartspaceplc.com. Copies of the report and accounts will be available from the Company’s website in due course and notification will be made when they become available.
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