ENGAGE XR Holdings Plc, a virtual reality ('VR') technology company, is pleased to announce its results for the year ended 31 December 2021.

ENGAGE XR's aim is to become the world's largest crossed reality ('XR') communications, training and virtual events platform provider, through the commercialisation of ENGAGE, its proprietary online virtual communications platform.

Financial Highlights:

• Group revenue increased by 68% on the prior year to €2.4 million (FY20: €1.4 million)
• ENGAGE revenue up 200% to €1.8 million (FY20: €0.6 million)
• Cash position on 31 December 2021 was €7.8 million with no debt. Cash balance was significantly strengthened by a successful €9.0 million (€8.5 million net of expenses) fundraise
• Gross margin increased by 7% to 79% (FY20: 72%)

Operational Highlights:

• Increase in demand for ENGAGE services, which now has over 139 commercial customers
• ENGAGE was awarded ISO27001 certification, an internationally recognised information management security standard. The Group expects this to be a major help in accelerating the adoption of its new metaverse offering by corporate users
• The Group signed significant contracts during 2021, including:
  • A contract with 3M to use the ENGAGE platform to build its own MetaWorld "3M Home". This exploratory VR pilot project demonstrated the Group’s growing appeal to enterprise clients in the metaverse space
  • An initial six-figure dollar contract (to August 2023) with Optima Domi LLC ("Optima Domi"), an innovative classical curriculum development company, to service the first VR-based Florida charter school
  • A six-figure euro contract with a Korean enterprise customer in December 2021
• Strengthened Board with the appointment of Kenny Jacobs, former Chief Marketing Officer at Ryanair. Since the period end, in March 2022, the Group has appointed a US-based Director of Marketing and a Chief Revenue Officer who will help to further international expansion with a particular focus on the US
• Expansion of strategic partnership with HTC with ENGAGE (sold as VIVE Sessions in China) included in the software bundle of HTC's new headset, the VIVE Focus 3 XR and rolled out on new HP ProBook laptops sold inside China
• In June 2021, the Group announced it was building its enterprise-focused Metaverse offering, with the launch expected in the second half of 2022

Medium-Term Outlook:

• The Group is on track to deliver its ambitious medium-term financial objectives:
  • Annual ENGAGE revenue growth in excess of 100% until €10 million target achieved by 2025
  • Gross margin to reach a level in excess of 80% once ENGAGE revenue is between €5 million and €10 million annually
  • 10% average month on month increase to reach 100,000 monthly users, reflecting a target of 500 active customers
  • Customer Retention Rate of at least 80%
  • Growth in average annual contract value to €20,000+, reflecting the targeted Enterprise and Institutional client base and ENGAGE value proposition

David Whelan, CEO, ENGAGE XR, said: "2021 was a pivotal year of growth for our business with an impressive revenue increase of 68% thanks to the growth in demand for ENGAGE. During the year, we continued to expand ENGAGE’s client list of blue-chip companies, and the platform reached a record 139 commercial customers.

“We believe that one area that makes ENGAGE stand out compared to its competition is data security. Therefore, we are very proud to have become the only multi-user VR platform to have ISO 27001 certification in 2021.

“The really exciting growth opportunity for our business is providing Metaverse services, via ENGAGE, to major enterprise clients. Our Metaverse plans for ENGAGE are very different to Meta’s Horizons, Microsoft’s AltSpace or Roblox. We are well positioned to become the enterprise solution for companies seeking to enter the Metaverse to host meetings, events, product launches, and conduct training. We are already capturing this opportunity through our work with 3M, who is using our platform to build its own ‘Metaworld’. We look forward to fully launching our metaverse offering in the second half of this year.

“At ENGAGE we are expanding fast, and I expect 2022 to far eclipse the achievements of previous years.”

Investor Presentation

CEO David Whelan and CFO Seamus Larrissey will provide a live presentation relating to the results via the Investor Meet Company platform on 8 March 2022 at 10:30am UK time.

The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9am UK time the day before the meeting or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet Engage XR Holdings Plc via: https://www.investormeetcompany.com/engage-xr-holdings-plc/register-investor 

For further information, please contact:

The Directors of the Company take responsibility for this announcement. This announcement contains inside information for the purposes of the UK Market Abuse Regulation.

CHIEF EXECUTIVE’S REVIEW

Overview

2021 has been a busy year with many changes to our organisation. One of the biggest changes was the rebranding of the Group to ENGAGE XR from VR Education Holdings Plc as we moved away from building one-off education-based products to a much broader immersive platform under the brand, ENGAGE.

Although these education-based products were profitable, the real growth opportunity is providing Metaverse services via ENGAGE to major enterprise clients. During the year, we have added great names to our client list, including BMW, 3M, Abbott, Unilever, and Facebook (now META) to name just a few. We also work with globally recognised international accountancy and professional services firms, and each month, we have seen our client base grow.

ENGAGE

We have seen a marked increase in demand for ENGAGE services, with more than 60% of our revenue coming through enterprise clients. To better target enterprise clients, we have completely rebranded our website (www.engagevr.io) to showcase our offer to them. Furthermore, our marketing and business development teams have been refocused on this area. To support them, we have hired a Director of Revenue, Richard Allin, and a new Head of Marketing, Kyle Horner, who will start before the end of March 2022.

For enterprise customers, security is paramount. One area we believe that makes ENGAGE stand out compared to its competition is its data security and hosting abilities. For enterprise clients to adopt metaverse services, they require extensive security clearance to know exactly how their data is handled and where it is stored. In October 2021, ENGAGE was granted ISO 27001 certification and as of today, ENGAGE is the only multi-user VR platform to have ISO 27001 certification. This certification makes it much easier for blue-chip companies to work with us, and move their employees and clients away from traditional video-based communications into the immersive spatial environments ENGAGE provides.

Expansion

In mid-2021, we closed a placing of €8.5 million (net of expenses) to help scale the business due to increased client demand. Our team has grown to serve our expanding client base, with many new hires in our after-sales and virtual event support teams. Our newly appointed Director of Revenue will have a sizable budget to build our sales, lead generation and client onboarding teams. The primary focus will be the US, and secondly, Asia. 

To support our sales efforts in the US, we have engaged 5W Public Relations (“5WPR”), one of the larger US PR companies. With guidance from our new Non-Executive Director, Kenny Jacobs (former Chief Marketing Officer of Ryanair), and a new US-based Director of Marketing, 5WPR will be tasked with making ENGAGE a widely recognised brand name in the US before the year-end. The 5WPR contract starts in March 2022, and we expect to see significant growth in our brand awareness in the following months.

The Metaverse

With Facebook changing its name to Meta, and Mark Zuckerberg outlining his Metaverse vision, there has been increased interest in what we have been building. In terms of the Metaverse, our plans for ENGAGE are very different to Meta’s Horizons, Microsoft’s AltSpace or Roblox. All of these platforms are focused on massive user growth, with the majority being aimed at a young demographic to socialise and play games. Therefore, entertainment companies will engage with these platforms to increase brand awareness.  However, enterprise clients seeking a metaverse solution to enable real business dealings and host professional virtual events will choose ENGAGE.

History tends to repeat itself. The technological awakening we see in relation to the Metaverse is following a similar path to what we saw with the emergence of the internet in the late 1990s. Then, AOL tried to dominate the internet as a single platform for everything and failed. Companies and individuals wanted more control, security, and freedom to build what they needed with no constraints. They ended up building out services on platforms such as .java, .net and other web technologies, which were then self-hosted.  We believe that the same trend will happen with the Metaverse.

In the end, the Metaverse is simply an evolution of the internet. Our current 2D web screens will evolve into full 3D virtual worlds. Virtual interaction will become as personal and as social as the physical world. We believe ENGAGE is well-positioned as the enterprise solution for companies in a variety of industries seeking to enter the Metaverse to host meetings, events, product launches, and conduct training content.

Outlook

2021 was a pivotal year for the Group with strong client and revenue growth. In the past six months, we have put in the foundations for future growth and expect 2022 to far eclipse the achievements of previous years. As a business we continue to see an increase in client numbers, and the interest in and awareness of ENGAGE continue to grow. With a strong balance sheet and excellent opportunities before us, we look forward to 2022 with confidence.

David Whelan
Chief Executive Officer
7 March 2022

CHIEF FINANCIAL OFFICER’S REVIEW

I am pleased to report that revenue for the year was up 68% on the prior year from €1.4 million to €2.4 million, driven by a significant increase in demand for the ENGAGE platform. ENGAGE revenue was up 200% on the prior year from €0.6 million to €1.8 million.

EBITDA loss was €2.8 million compared to a loss of €2.1 million in the prior year and loss before tax was €3.1 million compared to a loss in the prior year of €2.7 million. This increased EBITDA loss is primarily driven by increased headcount in the year.

Operating cashflows were a net outflow of €2.6 million for the period.  The current run-rate of staff costs and other ongoing costs is approximately €0.25m per month.

At the balance sheet date, trade and other receivables were €646k, ahead of trade and other payables at €482k. Trade receivables represented an average of 58 debtor days (2020: 42 days). This increase is driven by some large invoices near the year end.

The Group’s cash position on 31 December 2021 was €7.8 million with no debt. The cash balance was significantly strengthened during the year by a successful €9.0 million (€8.5 million net of expenses) fundraise.

Séamus Larrissey
Chief Financial Officer
7 March 2022

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
for the year ended 31 December 2021

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2021

The accompanying notes form an integral part of these financial statements.

On behalf of the board

COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2021

The accompanying notes form an integral part of these financial statements.

On behalf of the board

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021

The accompanying notes form an integral part of these financial statements.

COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2021

The accompanying notes form an integral part of these financial statements.

COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 December 2021

The accompanying notes form an integral part of these financial statements.

Notes to the Final Results

The notes are available in the printable pdf of the results. To download it, please click here.