ENGAGE XR Holdings Plc, a leading Metaverse / Spatial Computing technology company, is pleased to announce its unaudited interim results for the six months ended 30 June 2024.

Financial Highlights:

• Revenue of c.€2.2 million, up 5% (H1 2023: €2.1 million) with €0.8m of contracted revenue due to be recognised in the second half
• In addition, as at 30 June 2024 the Group had €0.8m of contracted revenue that is due to be recognised in the latter part of the current financial year.
• ENGAGE revenue of c.€2.1 million, up 11% (H1 2023: €1.9m).
• Gross margin in H1 2024 down 4% to 89% (H1 2023: 93%), due to one-off hardware purchases for a key customer in early 2024
• EBITDA loss was €1.8m (H1 2023: loss of €2.2m)
• Loss before tax was €1.8m, in line with management’s expectations, compared to a loss in H1 2023 of €2.2m.
• Cash balance at 30 June 2024 of €5.5m (31 December 2023: €7.9m).

Operational Highlights:

• ENGAGE’s total licensed Education and Enterprise users grew to approximately 18,000 users (31 December 2023: c.15,000)
• The Group signed a seven-figure contract with a large Middle East-based company Working in partnership with PWC Middle East, ENGAGE XR is developing a private MetaWorld to deliver language learning programmes and professional development.
• The Group agreed six-figure contracts with Bank of America, and world leading private educational provider InspiredED, to extend existing relationships
• In March 2024, the Group announced the launch of the "School of AI" a new offering that creates an immersive learning environment, in which students can speak to notable figures of history, powered by AI. School of AI is expected to roll out in September

Post-period end Highlight:

• Karthik Manimozhi became the Group's non-Executive Chairman from 1 July 2024

Outlook

• The Group signed a six figure renewal with Optima Ed, a US based Education organisation with a 400% increase in license numbers
• Release of AI Bot Builder and School of AI driving pipeline growth and a key focus for new and renewing customers.
• The Company continues to see positive engagement with potential customers with a strong pipeline of opportunities, particularly in North America and the Middle East;
• The Company remains focused on deepening its relationships with its platform partners such as Meta.

David Whelan, CEO of ENGAGE XR, said: "ENGAGE XR has delivered a resilient performance in the first half, despite a continued reduction in global spending on remote events and immersive marketing, post-lockdown. We have made good progress within the Corporate Learning & Development sectors, validated by new deals with Bank of America, and a large Middle Eastern enterprise, via PwC,  to develop a private MetaWorld for them.

“With the additional contracted revenue yet to be recognised and the strength of the pipeline, the Board remains confident about delivering against its expectations for the year.  Looking further ahead, as platform partners, such as Meta and Lenovo, look to build recurring revenues in the education, training and development sectors, we are confident that ENGAGE XR is in a prime position to capitalise on this nascent, but growing market.”

Investor Meet Company Presentation

CEO David Whelan and CFO Séamus Larrissey will provide a live presentation relating to the Group’s interim results via the Investor Meet Company platform on 19 September 2024 at 09:00am (BST).

The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9:00am 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

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

For further information, please contact:

About ENGAGE XR

ENGAGE XR Holdings plc (AIM: EXR) is a leading Metaverse / Spatial Computing technology company focused on becoming a leading global provider of virtual communications solutions through its new fully featured corporate metaverse, ENGAGE Link. A demonstration can be viewed here: ENGAGE The Spatial Computing Platform for Enterprise

The Company also has a proprietary software platform, ENGAGE. ENGAGE provides users with a platform for creating, sharing, and delivering VR content for education, training, and online events through its three solutions: Virtual Campus, Virtual Office, and Virtual Events.

For further information, please visit: www.engagexrholdings.com (LinkedIn: @Engage XR Holdings plc Twitter: @engage_xr)

Chief Executive’s Review

Overview

Our progress in the first half of 2024 resulted from more traction within the corporate education, training and development sectors. This continues the trend we saw in 2023, with these sectors being the primary sources of growth.

Notably, we signed a seven-figure contract with a major Middle Eastern enterprise in the corporate education, training, and development sector. Working alongside PwC Middle East, we are developing a private MetaWorld for the enterprise to support language learning and professional development.

Furthermore, we expanded our relationship with Bank of America, securing an additional six-figure contract that builds on our 2023 agreement, and reinforces our partnership. The additional work using the ENGAGE platform focuses on employee onboarding and continued platform development (further details here)

We also extended our collaboration with InspiredED, a leading global education provider, with a new mid-six-figure contract for education licenses to a portion of their 80,000 students worldwide. This represents a ten-fold increase in contracted revenue with InspiredEd, highlighting the scalability of our platform and the growing demand for immersive learning solutions in the global education sector.

In the period, ENGAGE’s total licensed Education and Enterprise users grew to approximately 18,000 users (31 December 2023: c.15,000)

Product Development

In March 2024, we launched the "School of AI" to a select group of educational clients. ENGAGE XR's educational clients include the Kentucky Department of Education, Optima Domi, and Lobaki.

This innovative product leverages conversational and generative AI to create immersive environments where students can interact with historical figures in authentic historic locations, such as Marie Curie's lab or the Hall of Independence with Benjamin Franklin.

School of AI will be available on all leading VR/AR devices, PCs, Phones and Tablets, with 12 AI-powered characters, including Neil Armstrong, Rosa Parks, and Nikola Tesla, available on release, with more arriving later this year.

A full roll-out is scheduled later this month, further strengthening our educational offering.  (more details here)

Board & Committee Changes

In a notable post-period development, we welcomed Karthik Manimozhi as the Group's new non-Executive Chairman, effective from 1 July 2024. Karthik is a distinguished global executive renowned for orchestrating three separate billion-dollar exits, securing over $250M in capital, and scaling multi-billion-dollar SAAS software revenues. A proven rainmaker, he has demonstrated exceptional skill in scaling tech ventures, driving innovation, and fostering collaboration. His appointment marks a significant step forward for the company as we continue to scale.

As Chair, Karthik replaces Richard Cooper, who had headed the Board since the Group's IPO. Richard remains on the board as Senior Independent Director, Chair of the Audit Committee and a member of the Remuneration Committee. Alongside his role as Chair of the ENGAGE XR Board, Karthik is also Chair of the Company's Nominations Committee, alongside Richard Cooper and Marc Metis. Marc joined the Board as the representative of HTC which owns 11.96% of the total issued share capital of ENGAGE XR. Marc replaced Praveen Gupta who served as non-Executive director from 6 July 2020 to 8 December 2023, until he retired from HTC.

Furthermore, Kenny Jacobs, Non-executive director, replaced Richard as Chair of the Remuneration Committee.

Following the appointment of both Karthik and Marc, the ENGAGE XR board comprises seven directors, of which Karthik Manimozhi, Richard Cooper and Kenny Jacobs are considered to be independent.

Outlook

Looking ahead, despite a cautious environment as enterprises reduce spending on immersive marketing post-lockdown, I am confident in our ability to continue delivering value in the Corporate Learning & Development sector. Our recent successes with Bank of America and the Middle Eastern enterprise highlight our strong market position.

With our platform partners such as Meta and Lenovo expanding their focus on recurring revenue in education, training, and development, ENGAGE XR is well-positioned to take advantage of the growing demand for immersive learning solutions.

With a strong pipeline within North America and the Middle East, I remain optimistic about the future, and confident in our ability to meet our goals for the year.

David Whelan
Chief Executive Officer
19 September 2024

Financial Review

Revenue for the half year is up 5% on the prior half year to €2.2m (H1 2023: €2.1m), driven by a continued acceleration in revenue from the ENGAGE platform.

ENGAGE revenue as a percentage of total revenue grew significantly in the period and comprised 95% of total revenue in the period (H1 2023: 91%).

ENGAGE revenue from Education customers grew in the period to €0.8 million (H1 2023: €0.4m) driven by significant renewals in the period and new customer wins primarily in North America and UK.

ENGAGE revenue from Enterprise grew in the period to €0.9 million (H1 2023: €0.6m) driven predominantly by the large contract in the Middle East and continued traction with our customers in North America. A further €0.8 million of contracted Enterprise revenue was recorded in the period which is expected to be recognised in the latter part of the current financial year.

ENGAGE revenue from Content and Events fell to €0.4m (H1 2023: €0.9m) in line with management expectations as the Group’s focus was centred on renewing license revenue from Enterprise and Education customers.

EBITDA loss was €1.8m (H1 2023: loss of €2.1m).  The primary cost driver for the EBITDA loss is salary and associated costs, currently approximately €0.5m per month.

Gross margin in H1 2024 down 4% to 89% (H1 2023: 93%), due to one-off hardware purchases for a key customer.

Loss before tax was €1.8m, in line with management expectations, compared to a loss in the prior year of €2.2m.

The combination of operating cashflows and capital expenditure in H1 2024 were €2.3m compared to €2.8m in H1 2023. The cash balance at 30 June 2023 was €5.5m (30 June 2023: €9.4m). The management team are fully focused on managing the cash position of the Group and remain very cost conscious as the Group focuses on delivering cash flow profitability in the future.

Séamus Larrissey
Chief Financial Officer
19 September 2024

Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2024

Consolidated Statement of Financial Position

As at 30 June 2024

Consolidated Statement of Changes in Equity

At 30 June 2024

Consolidated Statement of Cash Flows

For six month period ended 30 June 2024