TIDMSMRT
RNS Number : 9105H
Smartspace Software PLC
09 August 2021
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in
the public domain.
SmartSpace Software Plc
("SmartSpace", the "Company" or the "Group")
Trading Update
SmartSpace Software Plc, (AIM:SMRT) the leading provider of
'Integrated Space Management Software' for smart buildings and
commercial spaces - 'visitor reception, desks and meeting rooms',
today provides an update on trading and the expected financial
performance of the Group for the six month period ended 31 July
2021.
Key highlights:
-- Forward looking Group Annual Recurring Revenue ("ARR") as at
31 July 2021 up 28% in the 6 month period to GBP3.8m (up 51% since
July 2020)
-- Half year revenues expected to be approximately GBP2.5m
(HY20: GBP2.3m) of which 63% is recurring revenue (HY20: 45%)
-- SwipedOn
o Forward looking ARR up 22% in the six-month period to GBP3.2m
on a constant currency basis (up 43% since July 2020)
o Monthly Average Revenue Per User ("ARPU") up 22% in the
six-month period to NZ$111.8 (GBP56.1) (HY20: $85.3 (GBP42.8))
o Locations up to 7,003 (31 Jan 2021: 6,741) and customers up to
4,747 (31 Jan 2021: 4,735) as SwipedOn target higher value
multi-location customers
o First SwipedOn Desks customers signed and deployed
o SwipedOn desks will be available to all customers from August
and will include new mapping module
-- Space Connect
o ARR up 157% in the six-month period to GBP0.4m driven
primarily by successful reseller agreements including Softcat
o 14 new partner agreements signed in the period, including 5
further reseller agreements signed in July alone
o First Space Connect partners located in Poland, Ireland,
Canada, Belgium and USA
o Naso sales lower than expected but first significant order
received in July 2021
o New Space Connect mapping module released
-- Anders & Kern (A+K)
o Sales below expectations due to Covid lockdown in H1, but
significant increase in orders and improved revenue and sales
pipeline since July
-- Cash as at 31 July 2021 of GBP3.4 million (31 January 2021: GBP4.5 million)
The Board is very pleased with the progress made by the business
in the last six months. During what was a challenging and
unpredictable environment, Group ARR grew by 28% (on a constant
currency basis) from GBP2.9m to GBP3.8m in the period and by 51%
over the 12-month period, with good ARR expansion for both SwipedOn
and Space Connect. Importantly, we also made considerable progress
in establishing the foundations for further expansion of ARR and
ARPU, with increased number of resellers, enhanced functionality
and streamlined processes.
Revenue for the six-month period amounted to GBP2.5m (2020:
GBP2.3m) of which 63% was recurring (2020: 45% recurring). Whilst
revenues from hardware sales in the A+K business were impacted by
uncertainty around the lifting of lockdown restrictions in the UK,
the business is well placed to support office re-openings through
provision of both workplace hardware and software solutions. With
growth expected to accelerate in the second half of the year as
lockdown restrictions continue to be eased, the Board remains
confident of achieving future growth in line with market
expectations.
Cash as at 31 July 2021 totalled GBP3.4 million (31 January
2020: GBP4.5 million).
SwipedOn
SwipedOn ARR growth is in line with Board expectations,
increasing by 22% in the six month period on a constant currency
basis from GBP2.6m to GBP3.2m. Our strategy of increasing ARPU from
existing customers, increasing the focus of new sales into higher
value multisite opportunities continues to positively impact
SwipedOn and remains the key driver for growth over the coming
years.
In May 2021 we reported ARPU was at NZ$99.3 (GBP49.9) (up from
$91.8 in Jan 2021). By the end of July ARPU increased to NZ$111.8
(GBP56.1) (an increase of 22% since the beginning of the year). Our
main sales focus has shifted to higher value customers, who opt for
our more expensive Business and Enterprise plans, and who have
potential for multilocation and SwipedOn Desk sales. This has
resulted in an increase in average locations per new customer
signed in the period to 1.8, compared to a historic average at the
beginning of the year of 1.4 locations per customer. Churn is still
significantly below budgeted levels and is currently running at
1.1% per month for customers and 0.7% per month for revenue. The
majority of churn is from our lower value Starter Plan customers
with limited, if any, 'land and expand' opportunity. These lower
value customers cost as much to acquire as the higher spending
customers and can take a disproportionate amount of support
time.
Notwithstanding the churn of lower value customers, growth has
occurred in both customers, and more importantly, locations. The
number of locations SwipedOn is deployed into has increased during
the period from 6,741 to 7,003. Net new customers have slightly
from 4,735 to 4,747, as we focus on higher value multi-location
clients. This is well illustrated by the recent client win in June
with major airline catering group, Gategroup.
We have signed and implemented our first SwipedOn Desks
customers in the UK and we are now ready to offer this product
across our entire SwipedOn customer base. An example of one of our
most recent customer wins for SwipedOn Desks is Jamie Oliver Group,
taking their ARPU from GBP39 to GBP375.
Space Connect
Space Connect saw significant increase in demand for its
products in the period leading to 157% ARR growth over the six
month period to GBP0.4m. We are seeing a strong pipeline from our
resellers, reinforcing the momentum seen in the business and
underpinning our confidence in the opportunity for Space Connect,
its product capabilities and the potential market.
This increase in ARR was driven largely by the successful
relationship with partners such as Softcat. In the six months to 31
July 2021 Space Connect added a further 14 partners along with our
first partner signings in Poland, Ireland, Belgium, Canada and the
USA. We have also started to make good progress in signing Crestron
partners globally. Of these new signings, Insight Partners and XMA
are key, as they have significant customer bases and we envisage
they will become major resellers of Space Connect in the UK.
We have had a number of significant orders for Space Connect
recently from new clients including Travis Perkins, XPS Pensions,
Rank Leisure Group and NHS Highlands.
The ARPU for Space Connect customers is now GBP804 per
month.
In July we released our new Space Connect Mapping module. This
product has been developed inhouse allowing customers to upload
their floorplans, and, intuitively and quickly identify desks on
these plans and give access to employees. Previously we used a
third-party service provider to undertake this mapping task which,
depending on complexity, could take up to three weeks to complete.
With this new module, customers can get up and running instantly.
The Mapping module has been well received by both existing and new
customers, and will be critical to our 'speed of deployment'
differentiator as customers can activate their applications
immediately. As this module is enhanced further, it will also
create new revenue opportunities, as customers will be able to use
it on a standalone basis to continuingly model floorplan schemas as
their requirements changes.
Sales of our strategic partner's meeting room panel (the "Evoko
Naso") for which Space Connect receives both licence fees and SaaS
revenues, were less than we expected in the first half of the year.
As detailed below, indications of improvement occurred in July with
the first significant strategic order for Naso products being
placed by a major international hospitality brand. As Evoko
partners progressively reopen, we expect this momentum to
continue.
The shortfall in sales of Naso was mainly a result of Evoko
partners in key markets such as Germany, Spain and Austria being
closed due to lockdown. These partners experienced what we
ourselves experienced in A+K - a reluctance to place orders for
hardware when their customers were not in the office. Evoko have
used the time during lockdown to ensure partners are fully trained
in Naso and to further develop and release Naso marketing
collateral. Evoko have also confirmed that all partners now have
active engagements with Naso prospects which they expect will
transform into orders in the second half of the year. Evoko's sales
estimates for the remainder of the year are in excess of our
assumptions. They are confident in achieving their estimates and
have sufficient Naso units in stock to fulfil orders.
Anders & Kern (A+K)
As lockdown in the UK was extended, a large number of A+K's
customers were closed and a number of end-user customer investment
decisions for hardware were delayed. This led to lower revenues for
A+K in April to June. However, since July, there has been a
significant uptick both in revenues and in near-term pipeline. This
is as a direct result of removal of lockdown restrictions in the UK
and a reluctance to invest when there was no clear date to return
to the office. During the period A+K continued to furlough a small
number of employees taking advantage of the UK Government's job
retention scheme. Whilst we remain confident that the recent
increase in orders for A+K products will continue in the second
half of the year, any return to further lockdown conditions is
likely to place uncertainty on this business.
Outlook
We continue to build on the foundations we have set over the
past year, with our focus on building ARR and ARPU.
We have also centralised our product support operation under a
newly appointed Head of Customer Service based in Mildenhall. This
structure will allow us to offer 24-hour global support to both
SwipedOn and Space Connect customers. These changes together with
the development of our own mapping tool and streamlined sales
process were essential to the roll out of SwipedOn Desks. The
initial soft launch of SwipedOn Desks aimed at customers based in
the UK demonstrated demand for the product. Therefore, from August
2021 onwards we will be targeting our entire SwipedOn customer
base. This will contribute to further growth in ARR and ARPU for
SwipedOn in the second half of the year.
With lockdown restrictions progressively easing around the
globe, we believe Naso will start to generate new sales momentum as
seen in the recent order from a major international brand for the
Naso product.
As Covid and lockdowns ease across the globe and businesses
gradually return to the office, many will adopt hybrid working,
implement systems for more efficient space utilisation, creating a
better employee experience. In this environment, demand for Space
Connect will continue to grow. The agility of Space Connect to
rapidly deploy to customers with a high degree of user control
means that we are, particularly from a competitive perspective,
ideally placed to assist these customers with their
requirements.
There has been a noticeable change in A+K customer activity
since lockdown restrictions eased in July. Orders that had been put
on hold during the earlier part of the year are now being placed
and we now have good visibility over our sales orders for the
coming months.
Commenting on the announcement, Frank Beechinor, CEO of
SmartSpace said:
"Both SwipedOn and Space Connect have successfully achieved
strong growth and demonstrated robust business models through these
challenging and unpredictable times. As we move forward, we will
continue to globalise the businesses and enhance our product
offerings, with the continued focus of becoming a leading workplace
optimisation SaaS business.
Our focus through to FY22 will be on maintaining and increasing
ARR, through increased ARPU, further expansion of reseller
channels, further internationalisation of the business and
continuing to offer enhanced functionality. This will support the
Group in subsequent years in becoming a leading global SaaS
business.
In particular, SwipedOn Desks, along with enhanced features and
a focus on larger multi-location contracts, continue to be major
catalysts for achieving our growth objectives for SwipedOn. In
Space Connect the continued successful partnership with our
existing partners will continue to develop, whilst more
recently-signed resellers are already growing their sales
pipelines. We will continue to expand the reseller base in new
international geographies.
Whilst Evoko Naso sales have been slower than originally
anticipated, we understand the reasons why, as we have experienced
similar delays in investment decisions from A+K customers, due to
Covid restrictions. However, we are optimistic that through the
second half of the year and beyond, Naso will contribute
significant revenues to the business. This confidence is
underpinned by both the reopening of resellers in important
overseas markets for Evoko and the signing of the first strategic
contract for Naso.
As a result, the Board is confident growth will accelerate in
the second half of the year, allowing us to achieve our expected
growth for the full year in line with market expectations."
End
Enquiries
SmartSpace Software Plc via Lisa Baderoon
Frank Beechinor (CEO) - Head of Investor
Kris Shaw (CFO) Relations
Lisa Baderoon (Head of Investor Relations)
LBaderoon@smartspaceplc.com
+44(0) 7721 413
496
Singer Capital Markets (NOMAD & Joint Broker)
Shaun Dobson, Tom Salvesen, Jen Boorer, Alex
Bond +44 (0)20 7496 3000
Canaccord Genuity (Joint Broker) +44 (0) 20 7523 8000
Adam James
Georgina McCooke
About SmartSpace Software Plc:
SmartSpace Software plc is a fast-growing SaaS-based technology
business, designing and building smart software solutions. The
Company's software solutions help transform employee engagement
with modules which include visitor management, desk management,
meeting room management and analytics.
The three operating companies in the Group comprise:
-- Space Connect - SaaS meeting room and desk booking ( www.spaceconnect.co )
-- SwipedOn - SaaS visitor management, desk booking ( www.SwipedOn.com )
-- Anders & Kern - distribution and technical support ( www.anders-kern.co.uk )
For more information go to: www.smartspaceplc.com .
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