2023

ENGAGE XR Holdings Plc (AIM: EXR), a leading metaverse technology company, is pleased to announce its audited results for the 12 months ended 31 December 2022.

Financial Highlights:

• Total revenue for the Group was up 62% to €3.9 million (2021: €2.4 million)
• ENGAGE platform revenue grew 86% to €3.3 million (2021: €1.8 million)
• December 2022 was the Company’s biggest ever month with €0.6 million in deals closed
• Average contract values increased by 24% to €21k
• Gross margin increased to 82% from 79%
• EBITDA loss was €5.8 million (2021: loss of €2.8 million) primarily driven by increased headcount. Subsequent cost reduction exercise has reduced annualised payroll costs by 25%
• The Group’s cash position on 31 December 2022 was €2.2 million with no debt and at 30 April 2023 was €10.3 million

Operational Highlights:

• Ended 2022 with more than 190 enterprise and education clients. This is now over 200 (as at 30 April 2023)
• More than 70 new customers signed, including Pfizer, MTN, HSBC, KIA, Pearson, Lenovo, Kuehne & Nagel, Adtalem Global Education and University of Miami
• Renewing clients included 3M, KPMG, Meta, HTC, BHP and Stanford University
• Successfully launched the Group’s fully featured corporate metaverse ENGAGE Link in November 2022
• Group partner Victory XR launched 10 metaversities built on ENGAGE. This has grown with a new round of schools being announced in March 2023. Each student requires a full ENGAGE license to access the Victory XR content generating recurring revenue from the Group.
• In September 2022, ENGAGE and Lenovo™ announced a partnership. ENGAGE will be part of Lenovo’s new all in one VRX Headset, expected to be available from H2 2023

Post period end Highlights:

• The cash balance was significantly strengthened post period end by a successful €10.5 million (€9.9 million net of expenses) fundraise.
• Ground-breaking concert hosted in ENGAGE in March 2023 by the renowned international musician, Norman Cook, aka Fatboy Slim
• The Group is gaining traction in the US market. 58% of revenue in Q1 2023 has been derived from North America compared to 30% for FY22, following deployment of the US sales team in mid-2022
• Q1 2023 reported revenue figures are 40% higher than the same period in 2022

David Whelan, CEO of ENGAGE XR, said: “2022 was an extremely busy year with many positives and most metrics going in the right direction despite turbulence hitting the global tech sector during the second half of the year. This had a consequential impact on the conversion of our pipeline of commercial opportunities. During the year we launched new services on our platform, added more Fortune 500 companies to our client list, saw revenues grow throughout the year, and successfully launched ENGAGE Link in November 2022.

“2023 has started encouragingly. We have had some exciting client wins already, including two of the world’s leading banks. How fast and how big our growth will be remains to be seen. However, the Company has a strong balance sheet and is now in the best position possible to capitalise on the clear market opportunity. We are seeing increasing engagement from potential customers with our technology and platform. Our Lenovo partnership opens up exciting opportunities, and we are confident that the momentum seen in 2022 will continue into the current financial year and beyond.”

Investor Communications

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 23 May 2023 at 10:00am (UK).

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 metaverse technology company focused on becoming a leading global provider of virtual communications solutions through its new fully featured corporate metaverse, ENGAGE Link. A demonstration of ENGAGE Link is here

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)

CHAIRMAN’S STATEMENT

I am pleased to present the Annual Report and Financial Statements of ENGAGE XR Holdings PLC (“ENGAGE XR”, “the Group” or “the Company”) for the year ended 31 December 2022. Our aim is to become a leading global provider of virtual communications solutions through our proprietary software platform, ENGAGE. However, it has been a challenging year with an uncertain macro-economic backdrop which manifested itself most acutely in the “tech crash” in Autumn 2022.

Revenue in the year increased by 62% to €3.9 million. Gross profit increased by 67% as gross profit benefited from an improved gross profit margin of 82% (2021: 79%).  A longer sales decision-making cycle in our customer base due to the economic uncertainty in the second half of 2022 meant we were disappointed not to break through the €4 million revenue barrier.

Earlier in the financial year, the Company made a decision to significantly increase its sales function and development capability as it sought to accelerate the market penetration of ENGAGE and expedite the development of its fully featured corporate metaverse, ENGAGE Link. Staff and contractor costs rose to €7.0 million, up from €3.7 million in 2021. At the time, this was the correct decision, but the tech crash meant slower than expected corporate sales. This led to a downgrading of our guidance for the year and a cost reduction exercise which reduced annualised payroll costs by 25%. Additionally, a placing was successfully competed after the year end in February 2023 to bolster the Group’s balance sheet and to help us deliver our ambitious growth plans.

The Board continue to see meaningful opportunities to exploit metaverse use in companies in the corporate and education sectors. The Board believes that the specific areas the Company is targeting, such as remote education, remote events, and the way in which organisations interact with staff, suppliers and customers will be transformed by the Metaverse. As a result, the Board remains very focused on selling to and servicing universities, other education establishments and global enterprise customers. We now have over 200 Enterprise and Education customers on the ENGAGE platform. Some of the highlights in the year include the launch of ten Metaversites in the US, and our collaboration with Lenovo, which has developed into a commercial relationship.

Post period end, we successfully completed a €10.5 million equity raise (before expenses) in February 2023 and we have seen a strong start to 2023. We were also delighted with the response to the ground-breaking concert hosted in ENGAGE in March 2023 by the renowned international musician, Norman Cook, aka Fatboy Slim.

The management team and the Board are looking forward to the future with optimism. I would like to thank everyone at ENGAGE XR in delivering great progress in what has been a challenging environment. Furthermore, I want to thank our shareholders for their continued support.

Richard Cooper
Non-Executive Chairman
22 May 2023

CHIEF EXECUTIVE’S REVIEW

Overview

2022 was an extremely busy year with many positives and most metrics going in the right direction despite turbulence hitting the global tech sector during the second half of the year. This had a consequential impact on the conversion of our pipeline of commercial opportunities. During the year we launched new services on our platform, added more Fortune 500 companies to our client list, saw revenues grow throughout the year, and successfully launched ENGAGE Link in November 2022.

The market opportunity

The Board believes that the opportunities created by the metaverse are significant and that corporates are seeing how elements of the metaverse can be used to tremendous effect.  Not just in terms of how a company interacts with its customers but also with suppliers and staff. The growth of metaversities and the use of VR in education is further evidence of the opportunities created by the metaverse.  All these opportunities fit perfectly into ENGAGE’s offering.

From the outset, the ENGAGE platform has been positioned as the metaverse platform focused on servicing the needs of enterprise customers and universities. We are targeting organisations looking for immersive corporate communications, remote collaboration, training and development, education and remote events. Our technology provides the platform which can help them to deliver their own metaverse strategies.  So far, we have developed over 900 metaworlds for our clients.

2022 saw the continued evolution in the growth of the business. Our partner Victory XR launched 10 metaversities built on our software This has grown with a new round of schools being announced in March 2023.  All students within the Victory XR ecosystem require an ENGAGE license which generates recurring revenue for the Group.

The main development in the period was the successful launch of ENGAGE Link in November 2022. ENGAGE Link is an evolution of our successful immersive communications platform.  It was specifically developed as a metaverse platform for corporations, professionals, education organisations, and event organisers. ENGAGE Link allows the Group's wide-ranging customer base to use the metaverse to create their own virtual worlds to provide services directly to clients and engage with employees and suppliers. 

Client Growth

Throughout 2022 we dealt with many new enterprise and educational clients. More than 70 new customers signed during the year, including Pfizer, MTN, HSBC, KIA, Pearson, Lenovo, Kuehne & Nagel, Adtalem Global Education and University of Miami.

Renewing clients included 3M, KPMG, Meta, HTC, BHP and Stanford University.  The Company ended 2022 with more than 190 enterprise and education clients, which is now over 200. Many of our renewing clients now spend more with us and are purchasing additional services and licenses.   There was an average increase of 24% to our average contract value in the year which is extremely positive. This is also a strong indication that ENGAGE is offering something unique in the marketplace and the strength of the names on our client roster demonstrates this. 

We have also started to gain increased traction in the US market from the US sales team we deployed in mid-2022. 58% of revenue in Q1 2023 has been derived from North America compared to 30% for FY22, a strong indication that the team is performing well.

Results

To give more colour on how our year went financially, we achieved some important milestones which included:

• ENGAGE platform revenue grew 86% in 2022 from €1.8 to €3.3m
• Overall group revenue grew 62% to €3.9m outlining our total focus on platform growth
• December 2022 was our biggest ever month with €0.6m in deals closed
• Average contract values in the year increased by 24% to €21k
• Gross margin increased to 82% from 79%

2022 saw strong revenue growth during the year. There was an undeniably upward trend of our average monthly income through the year with that trend continuing so far during the first half of 2023. Q1 2023 reported figures are already 40% higher than the same period in 2022.

Growth in Services

As noted above, during 2022 we launched ENGAGE Link where clients can, for the first time, open a public space and interact directly with each other and directly with customers, suppliers, and employees. These spaces are akin to physical locations just like a business might have in a city.

One example of how ENGAGE Link has been successfully used is by major car manufacturer, Kia. Kia opened a virtual showroom for visitors to find out more about their products and services.

We expect many of our new and existing clients will progress onto ENGAGE Link for marketing, networking events, professional services, and recruitment drives. Enquiries as to how ENGAGE Link can be used are being brought to us each week.

Lenovo Partnership

In September 2022 we announced that ENGAGE and Lenovo™, one of the world's largest computer manufacturing and smartphone companies, had entered into a partnership. The partnership will see ENGAGE available on Lenovo’s new all in one VRX Headset. This is an enterprise-focused VR device.

The new headsets are expected to be available from H2 2023. We have been training and working with Lenovo’s sales team as they look to bundle ENGAGE software licenses with their new headset. It means ENGAGE software will be sold by hundreds of salespeople globally to Lenovo’s client base, not just a handful of ENGAGE employees.

The Board are confident that this new channel partner will enable us to grow our international reach and customer base. This should see further revenue growth during the second half of 2023 after the headsets arrive on the market. Lenovo have a large global market share in enterprise and education which is ENGAGE’s target market and should be a fruitful partnership for both parties.

Outlook

Despite 2022 being a year of growth, we believe our market capitalisation does not reflect the actual progress of the company.

There is growth in all our metrics, and we have reduced our cost base by approximately 25% in Q1 2023 (compared to Q4 2022). Our product offering has grown along with our client base. The partnerships we have put in place during 2022 should begin to bear fruit in the coming months.

Although times remain tough for many in the tech industry, we took decisive actions early. These actions have provided us with a solid foundation and the Company is poised for strong growth.

2023 has started encouragingly. We have had some exciting client wins already, including two of the world’s leading banks. How fast and how big our growth will be remains to be seen. However, the Company has a strong balance sheet and is now in the best position possible to capitalise on the clear market opportunity. We are seeing increasing engagement from potential customers with our technology and platform. Our Lenovo partnership opens up exciting opportunities, and we are confident that the momentum seen in 2022 will continue into the current financial year and beyond.

David Whelan
Chief Executive Officer
22 May 2023

CHIEF FINANCIAL OFFICER’S REVIEW

I am pleased to report that revenue for the year was up 62% on the prior year from €2.4 million to €3.9 million, driven by a significant increase in demand for the ENGAGE platform. ENGAGE revenue was up 86% on the prior year from €1.8 million to €3.3 million.

EBITDA loss was €5.8 million compared to a loss of €2.8 million in the prior year and loss before tax was €6.0 million compared to a loss in the prior year of €3.1 million. This increased EBITDA loss is primarily driven by increased headcount in the year.

Operating cashflows were a net outflow of €5.5 million for the period.  The current run-rate of staff costs and other ongoing costs is approximately €0.4m per month.

At the balance sheet date, trade and other receivables were €1.4m, ahead of trade and other payables at €1.2m. Trade receivables represented an average of 52 debtor days (2021: 58 days).

The Group’s cash position on 31 December 2022 was €2.2 million with no debt. The cash balance was significantly strengthened post period end by a successful €10.5 million (€9.9 million net of expenses) fundraise. As at 30 April 2023, the Company’s cash position was €10.3 million.

Séamus Larrissey
Chief Financial Officer
22 May 2023

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME

for the year ended 31 December 2022

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 31 December 2022

COMPANY STATEMENT OF FINANCIAL POSITION

at 31 December 2022

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2022

COMPANY STATEMENT OF CHANGES IN EQUITY

the year ended 31 December 2022

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2022

COMPANY STATEMENT OF CASH FLOWS

for the year ended 31 December 2022

2022

ENGAGE XR Holdings Plc (AIM: EXR), a leading metaverse technology company, is pleased to announce its audited results for the 12 months ended 31 December 2022.

Financial Highlights:

• Total revenue for the Group was up 62% to €3.9 million (2021: €2.4 million)
• ENGAGE platform revenue grew 86% to €3.3 million (2021: €1.8 million)
• December 2022 was the Company’s biggest ever month with €0.6 million in deals closed
• Average contract values increased by 24% to €21k
• Gross margin increased to 82% from 79%
• EBITDA loss was €5.8 million (2021: loss of €2.8 million) primarily driven by increased headcount. Subsequent cost reduction exercise has reduced annualised payroll costs by 25%
• The Group’s cash position on 31 December 2022 was €2.2 million with no debt and at 30 April 2023 was €10.3 million

Operational Highlights:

• Ended 2022 with more than 190 enterprise and education clients. This is now over 200 (as at 30 April 2023)
• More than 70 new customers signed, including Pfizer, MTN, HSBC, KIA, Pearson, Lenovo, Kuehne & Nagel, Adtalem Global Education and University of Miami
• Renewing clients included 3M, KPMG, Meta, HTC, BHP and Stanford University
• Successfully launched the Group’s fully featured corporate metaverse ENGAGE Link in November 2022
• Group partner Victory XR launched 10 metaversities built on ENGAGE. This has grown with a new round of schools being announced in March 2023. Each student requires a full ENGAGE license to access the Victory XR content generating recurring revenue from the Group.
• In September 2022, ENGAGE and Lenovo™ announced a partnership. ENGAGE will be part of Lenovo’s new all in one VRX Headset, expected to be available from H2 2023

Post period end Highlights:

• The cash balance was significantly strengthened post period end by a successful €10.5 million (€9.9 million net of expenses) fundraise.
• Ground-breaking concert hosted in ENGAGE in March 2023 by the renowned international musician, Norman Cook, aka Fatboy Slim
• The Group is gaining traction in the US market. 58% of revenue in Q1 2023 has been derived from North America compared to 30% for FY22, following deployment of the US sales team in mid-2022
• Q1 2023 reported revenue figures are 40% higher than the same period in 2022

David Whelan, CEO of ENGAGE XR, said: “2022 was an extremely busy year with many positives and most metrics going in the right direction despite turbulence hitting the global tech sector during the second half of the year. This had a consequential impact on the conversion of our pipeline of commercial opportunities. During the year we launched new services on our platform, added more Fortune 500 companies to our client list, saw revenues grow throughout the year, and successfully launched ENGAGE Link in November 2022.

“2023 has started encouragingly. We have had some exciting client wins already, including two of the world’s leading banks. How fast and how big our growth will be remains to be seen. However, the Company has a strong balance sheet and is now in the best position possible to capitalise on the clear market opportunity. We are seeing increasing engagement from potential customers with our technology and platform. Our Lenovo partnership opens up exciting opportunities, and we are confident that the momentum seen in 2022 will continue into the current financial year and beyond.”

Investor Communications

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 23 May 2023 at 10:00am (UK).

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 metaverse technology company focused on becoming a leading global provider of virtual communications solutions through its new fully featured corporate metaverse, ENGAGE Link. A demonstration of ENGAGE Link is here

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)

CHAIRMAN’S STATEMENT

I am pleased to present the Annual Report and Financial Statements of ENGAGE XR Holdings PLC (“ENGAGE XR”, “the Group” or “the Company”) for the year ended 31 December 2022. Our aim is to become a leading global provider of virtual communications solutions through our proprietary software platform, ENGAGE. However, it has been a challenging year with an uncertain macro-economic backdrop which manifested itself most acutely in the “tech crash” in Autumn 2022.

Revenue in the year increased by 62% to €3.9 million. Gross profit increased by 67% as gross profit benefited from an improved gross profit margin of 82% (2021: 79%).  A longer sales decision-making cycle in our customer base due to the economic uncertainty in the second half of 2022 meant we were disappointed not to break through the €4 million revenue barrier.

Earlier in the financial year, the Company made a decision to significantly increase its sales function and development capability as it sought to accelerate the market penetration of ENGAGE and expedite the development of its fully featured corporate metaverse, ENGAGE Link. Staff and contractor costs rose to €7.0 million, up from €3.7 million in 2021. At the time, this was the correct decision, but the tech crash meant slower than expected corporate sales. This led to a downgrading of our guidance for the year and a cost reduction exercise which reduced annualised payroll costs by 25%. Additionally, a placing was successfully competed after the year end in February 2023 to bolster the Group’s balance sheet and to help us deliver our ambitious growth plans.

The Board continue to see meaningful opportunities to exploit metaverse use in companies in the corporate and education sectors. The Board believes that the specific areas the Company is targeting, such as remote education, remote events, and the way in which organisations interact with staff, suppliers and customers will be transformed by the Metaverse. As a result, the Board remains very focused on selling to and servicing universities, other education establishments and global enterprise customers. We now have over 200 Enterprise and Education customers on the ENGAGE platform. Some of the highlights in the year include the launch of ten Metaversites in the US, and our collaboration with Lenovo, which has developed into a commercial relationship.

Post period end, we successfully completed a €10.5 million equity raise (before expenses) in February 2023 and we have seen a strong start to 2023. We were also delighted with the response to the ground-breaking concert hosted in ENGAGE in March 2023 by the renowned international musician, Norman Cook, aka Fatboy Slim.

The management team and the Board are looking forward to the future with optimism. I would like to thank everyone at ENGAGE XR in delivering great progress in what has been a challenging environment. Furthermore, I want to thank our shareholders for their continued support.

Richard Cooper
Non-Executive Chairman
22 May 2023

CHIEF EXECUTIVE’S REVIEW

Overview

2022 was an extremely busy year with many positives and most metrics going in the right direction despite turbulence hitting the global tech sector during the second half of the year. This had a consequential impact on the conversion of our pipeline of commercial opportunities. During the year we launched new services on our platform, added more Fortune 500 companies to our client list, saw revenues grow throughout the year, and successfully launched ENGAGE Link in November 2022.

The market opportunity

The Board believes that the opportunities created by the metaverse are significant and that corporates are seeing how elements of the metaverse can be used to tremendous effect.  Not just in terms of how a company interacts with its customers but also with suppliers and staff. The growth of metaversities and the use of VR in education is further evidence of the opportunities created by the metaverse.  All these opportunities fit perfectly into ENGAGE’s offering.

From the outset, the ENGAGE platform has been positioned as the metaverse platform focused on servicing the needs of enterprise customers and universities. We are targeting organisations looking for immersive corporate communications, remote collaboration, training and development, education and remote events. Our technology provides the platform which can help them to deliver their own metaverse strategies.  So far, we have developed over 900 metaworlds for our clients.

2022 saw the continued evolution in the growth of the business. Our partner Victory XR launched 10 metaversities built on our software This has grown with a new round of schools being announced in March 2023.  All students within the Victory XR ecosystem require an ENGAGE license which generates recurring revenue for the Group.

The main development in the period was the successful launch of ENGAGE Link in November 2022. ENGAGE Link is an evolution of our successful immersive communications platform.  It was specifically developed as a metaverse platform for corporations, professionals, education organisations, and event organisers. ENGAGE Link allows the Group's wide-ranging customer base to use the metaverse to create their own virtual worlds to provide services directly to clients and engage with employees and suppliers. 

Client Growth

Throughout 2022 we dealt with many new enterprise and educational clients. More than 70 new customers signed during the year, including Pfizer, MTN, HSBC, KIA, Pearson, Lenovo, Kuehne & Nagel, Adtalem Global Education and University of Miami.

Renewing clients included 3M, KPMG, Meta, HTC, BHP and Stanford University.  The Company ended 2022 with more than 190 enterprise and education clients, which is now over 200. Many of our renewing clients now spend more with us and are purchasing additional services and licenses.   There was an average increase of 24% to our average contract value in the year which is extremely positive. This is also a strong indication that ENGAGE is offering something unique in the marketplace and the strength of the names on our client roster demonstrates this. 

We have also started to gain increased traction in the US market from the US sales team we deployed in mid-2022. 58% of revenue in Q1 2023 has been derived from North America compared to 30% for FY22, a strong indication that the team is performing well.

Results

To give more colour on how our year went financially, we achieved some important milestones which included:

• ENGAGE platform revenue grew 86% in 2022 from €1.8 to €3.3m
• Overall group revenue grew 62% to €3.9m outlining our total focus on platform growth
• December 2022 was our biggest ever month with €0.6m in deals closed
• Average contract values in the year increased by 24% to €21k
• Gross margin increased to 82% from 79%

2022 saw strong revenue growth during the year. There was an undeniably upward trend of our average monthly income through the year with that trend continuing so far during the first half of 2023. Q1 2023 reported figures are already 40% higher than the same period in 2022.

Growth in Services

As noted above, during 2022 we launched ENGAGE Link where clients can, for the first time, open a public space and interact directly with each other and directly with customers, suppliers, and employees. These spaces are akin to physical locations just like a business might have in a city.

One example of how ENGAGE Link has been successfully used is by major car manufacturer, Kia. Kia opened a virtual showroom for visitors to find out more about their products and services.

We expect many of our new and existing clients will progress onto ENGAGE Link for marketing, networking events, professional services, and recruitment drives. Enquiries as to how ENGAGE Link can be used are being brought to us each week.

Lenovo Partnership

In September 2022 we announced that ENGAGE and Lenovo™, one of the world's largest computer manufacturing and smartphone companies, had entered into a partnership. The partnership will see ENGAGE available on Lenovo’s new all in one VRX Headset. This is an enterprise-focused VR device.

The new headsets are expected to be available from H2 2023. We have been training and working with Lenovo’s sales team as they look to bundle ENGAGE software licenses with their new headset. It means ENGAGE software will be sold by hundreds of salespeople globally to Lenovo’s client base, not just a handful of ENGAGE employees.

The Board are confident that this new channel partner will enable us to grow our international reach and customer base. This should see further revenue growth during the second half of 2023 after the headsets arrive on the market. Lenovo have a large global market share in enterprise and education which is ENGAGE’s target market and should be a fruitful partnership for both parties.

Outlook

Despite 2022 being a year of growth, we believe our market capitalisation does not reflect the actual progress of the company.

There is growth in all our metrics, and we have reduced our cost base by approximately 25% in Q1 2023 (compared to Q4 2022). Our product offering has grown along with our client base. The partnerships we have put in place during 2022 should begin to bear fruit in the coming months.

Although times remain tough for many in the tech industry, we took decisive actions early. These actions have provided us with a solid foundation and the Company is poised for strong growth.

2023 has started encouragingly. We have had some exciting client wins already, including two of the world’s leading banks. How fast and how big our growth will be remains to be seen. However, the Company has a strong balance sheet and is now in the best position possible to capitalise on the clear market opportunity. We are seeing increasing engagement from potential customers with our technology and platform. Our Lenovo partnership opens up exciting opportunities, and we are confident that the momentum seen in 2022 will continue into the current financial year and beyond.

David Whelan
Chief Executive Officer
22 May 2023

CHIEF FINANCIAL OFFICER’S REVIEW

I am pleased to report that revenue for the year was up 62% on the prior year from €2.4 million to €3.9 million, driven by a significant increase in demand for the ENGAGE platform. ENGAGE revenue was up 86% on the prior year from €1.8 million to €3.3 million.

EBITDA loss was €5.8 million compared to a loss of €2.8 million in the prior year and loss before tax was €6.0 million compared to a loss in the prior year of €3.1 million. This increased EBITDA loss is primarily driven by increased headcount in the year.

Operating cashflows were a net outflow of €5.5 million for the period.  The current run-rate of staff costs and other ongoing costs is approximately €0.4m per month.

At the balance sheet date, trade and other receivables were €1.4m, ahead of trade and other payables at €1.2m. Trade receivables represented an average of 52 debtor days (2021: 58 days).

The Group’s cash position on 31 December 2022 was €2.2 million with no debt. The cash balance was significantly strengthened post period end by a successful €10.5 million (€9.9 million net of expenses) fundraise. As at 30 April 2023, the Company’s cash position was €10.3 million.

Séamus Larrissey
Chief Financial Officer
22 May 2023

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME

for the year ended 31 December 2022

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 31 December 2022

COMPANY STATEMENT OF FINANCIAL POSITION

at 31 December 2022

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2022

COMPANY STATEMENT OF CHANGES IN EQUITY

the year ended 31 December 2022

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2022

COMPANY STATEMENT OF CASH FLOWS

for the year ended 31 December 2022

2021

ENGAGE XR Holdings Plc (AIM: EXR), a leading metaverse technology company, is pleased to announce its audited results for the 12 months ended 31 December 2022.

Financial Highlights:

• Total revenue for the Group was up 62% to €3.9 million (2021: €2.4 million)
• ENGAGE platform revenue grew 86% to €3.3 million (2021: €1.8 million)
• December 2022 was the Company’s biggest ever month with €0.6 million in deals closed
• Average contract values increased by 24% to €21k
• Gross margin increased to 82% from 79%
• EBITDA loss was €5.8 million (2021: loss of €2.8 million) primarily driven by increased headcount. Subsequent cost reduction exercise has reduced annualised payroll costs by 25%
• The Group’s cash position on 31 December 2022 was €2.2 million with no debt and at 30 April 2023 was €10.3 million

Operational Highlights:

• Ended 2022 with more than 190 enterprise and education clients. This is now over 200 (as at 30 April 2023)
• More than 70 new customers signed, including Pfizer, MTN, HSBC, KIA, Pearson, Lenovo, Kuehne & Nagel, Adtalem Global Education and University of Miami
• Renewing clients included 3M, KPMG, Meta, HTC, BHP and Stanford University
• Successfully launched the Group’s fully featured corporate metaverse ENGAGE Link in November 2022
• Group partner Victory XR launched 10 metaversities built on ENGAGE. This has grown with a new round of schools being announced in March 2023. Each student requires a full ENGAGE license to access the Victory XR content generating recurring revenue from the Group.
• In September 2022, ENGAGE and Lenovo™ announced a partnership. ENGAGE will be part of Lenovo’s new all in one VRX Headset, expected to be available from H2 2023

Post period end Highlights:

• The cash balance was significantly strengthened post period end by a successful €10.5 million (€9.9 million net of expenses) fundraise.
• Ground-breaking concert hosted in ENGAGE in March 2023 by the renowned international musician, Norman Cook, aka Fatboy Slim
• The Group is gaining traction in the US market. 58% of revenue in Q1 2023 has been derived from North America compared to 30% for FY22, following deployment of the US sales team in mid-2022
• Q1 2023 reported revenue figures are 40% higher than the same period in 2022

David Whelan, CEO of ENGAGE XR, said: “2022 was an extremely busy year with many positives and most metrics going in the right direction despite turbulence hitting the global tech sector during the second half of the year. This had a consequential impact on the conversion of our pipeline of commercial opportunities. During the year we launched new services on our platform, added more Fortune 500 companies to our client list, saw revenues grow throughout the year, and successfully launched ENGAGE Link in November 2022.

“2023 has started encouragingly. We have had some exciting client wins already, including two of the world’s leading banks. How fast and how big our growth will be remains to be seen. However, the Company has a strong balance sheet and is now in the best position possible to capitalise on the clear market opportunity. We are seeing increasing engagement from potential customers with our technology and platform. Our Lenovo partnership opens up exciting opportunities, and we are confident that the momentum seen in 2022 will continue into the current financial year and beyond.”

Investor Communications

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 23 May 2023 at 10:00am (UK).

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 metaverse technology company focused on becoming a leading global provider of virtual communications solutions through its new fully featured corporate metaverse, ENGAGE Link. A demonstration of ENGAGE Link is here

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)

CHAIRMAN’S STATEMENT

I am pleased to present the Annual Report and Financial Statements of ENGAGE XR Holdings PLC (“ENGAGE XR”, “the Group” or “the Company”) for the year ended 31 December 2022. Our aim is to become a leading global provider of virtual communications solutions through our proprietary software platform, ENGAGE. However, it has been a challenging year with an uncertain macro-economic backdrop which manifested itself most acutely in the “tech crash” in Autumn 2022.

Revenue in the year increased by 62% to €3.9 million. Gross profit increased by 67% as gross profit benefited from an improved gross profit margin of 82% (2021: 79%).  A longer sales decision-making cycle in our customer base due to the economic uncertainty in the second half of 2022 meant we were disappointed not to break through the €4 million revenue barrier.

Earlier in the financial year, the Company made a decision to significantly increase its sales function and development capability as it sought to accelerate the market penetration of ENGAGE and expedite the development of its fully featured corporate metaverse, ENGAGE Link. Staff and contractor costs rose to €7.0 million, up from €3.7 million in 2021. At the time, this was the correct decision, but the tech crash meant slower than expected corporate sales. This led to a downgrading of our guidance for the year and a cost reduction exercise which reduced annualised payroll costs by 25%. Additionally, a placing was successfully competed after the year end in February 2023 to bolster the Group’s balance sheet and to help us deliver our ambitious growth plans.

The Board continue to see meaningful opportunities to exploit metaverse use in companies in the corporate and education sectors. The Board believes that the specific areas the Company is targeting, such as remote education, remote events, and the way in which organisations interact with staff, suppliers and customers will be transformed by the Metaverse. As a result, the Board remains very focused on selling to and servicing universities, other education establishments and global enterprise customers. We now have over 200 Enterprise and Education customers on the ENGAGE platform. Some of the highlights in the year include the launch of ten Metaversites in the US, and our collaboration with Lenovo, which has developed into a commercial relationship.

Post period end, we successfully completed a €10.5 million equity raise (before expenses) in February 2023 and we have seen a strong start to 2023. We were also delighted with the response to the ground-breaking concert hosted in ENGAGE in March 2023 by the renowned international musician, Norman Cook, aka Fatboy Slim.

The management team and the Board are looking forward to the future with optimism. I would like to thank everyone at ENGAGE XR in delivering great progress in what has been a challenging environment. Furthermore, I want to thank our shareholders for their continued support.

Richard Cooper
Non-Executive Chairman
22 May 2023

CHIEF EXECUTIVE’S REVIEW

Overview

2022 was an extremely busy year with many positives and most metrics going in the right direction despite turbulence hitting the global tech sector during the second half of the year. This had a consequential impact on the conversion of our pipeline of commercial opportunities. During the year we launched new services on our platform, added more Fortune 500 companies to our client list, saw revenues grow throughout the year, and successfully launched ENGAGE Link in November 2022.

The market opportunity

The Board believes that the opportunities created by the metaverse are significant and that corporates are seeing how elements of the metaverse can be used to tremendous effect.  Not just in terms of how a company interacts with its customers but also with suppliers and staff. The growth of metaversities and the use of VR in education is further evidence of the opportunities created by the metaverse.  All these opportunities fit perfectly into ENGAGE’s offering.

From the outset, the ENGAGE platform has been positioned as the metaverse platform focused on servicing the needs of enterprise customers and universities. We are targeting organisations looking for immersive corporate communications, remote collaboration, training and development, education and remote events. Our technology provides the platform which can help them to deliver their own metaverse strategies.  So far, we have developed over 900 metaworlds for our clients.

2022 saw the continued evolution in the growth of the business. Our partner Victory XR launched 10 metaversities built on our software This has grown with a new round of schools being announced in March 2023.  All students within the Victory XR ecosystem require an ENGAGE license which generates recurring revenue for the Group.

The main development in the period was the successful launch of ENGAGE Link in November 2022. ENGAGE Link is an evolution of our successful immersive communications platform.  It was specifically developed as a metaverse platform for corporations, professionals, education organisations, and event organisers. ENGAGE Link allows the Group's wide-ranging customer base to use the metaverse to create their own virtual worlds to provide services directly to clients and engage with employees and suppliers. 

Client Growth

Throughout 2022 we dealt with many new enterprise and educational clients. More than 70 new customers signed during the year, including Pfizer, MTN, HSBC, KIA, Pearson, Lenovo, Kuehne & Nagel, Adtalem Global Education and University of Miami.

Renewing clients included 3M, KPMG, Meta, HTC, BHP and Stanford University.  The Company ended 2022 with more than 190 enterprise and education clients, which is now over 200. Many of our renewing clients now spend more with us and are purchasing additional services and licenses.   There was an average increase of 24% to our average contract value in the year which is extremely positive. This is also a strong indication that ENGAGE is offering something unique in the marketplace and the strength of the names on our client roster demonstrates this. 

We have also started to gain increased traction in the US market from the US sales team we deployed in mid-2022. 58% of revenue in Q1 2023 has been derived from North America compared to 30% for FY22, a strong indication that the team is performing well.

Results

To give more colour on how our year went financially, we achieved some important milestones which included:

• ENGAGE platform revenue grew 86% in 2022 from €1.8 to €3.3m
• Overall group revenue grew 62% to €3.9m outlining our total focus on platform growth
• December 2022 was our biggest ever month with €0.6m in deals closed
• Average contract values in the year increased by 24% to €21k
• Gross margin increased to 82% from 79%

2022 saw strong revenue growth during the year. There was an undeniably upward trend of our average monthly income through the year with that trend continuing so far during the first half of 2023. Q1 2023 reported figures are already 40% higher than the same period in 2022.

Growth in Services

As noted above, during 2022 we launched ENGAGE Link where clients can, for the first time, open a public space and interact directly with each other and directly with customers, suppliers, and employees. These spaces are akin to physical locations just like a business might have in a city.

One example of how ENGAGE Link has been successfully used is by major car manufacturer, Kia. Kia opened a virtual showroom for visitors to find out more about their products and services.

We expect many of our new and existing clients will progress onto ENGAGE Link for marketing, networking events, professional services, and recruitment drives. Enquiries as to how ENGAGE Link can be used are being brought to us each week.

Lenovo Partnership

In September 2022 we announced that ENGAGE and Lenovo™, one of the world's largest computer manufacturing and smartphone companies, had entered into a partnership. The partnership will see ENGAGE available on Lenovo’s new all in one VRX Headset. This is an enterprise-focused VR device.

The new headsets are expected to be available from H2 2023. We have been training and working with Lenovo’s sales team as they look to bundle ENGAGE software licenses with their new headset. It means ENGAGE software will be sold by hundreds of salespeople globally to Lenovo’s client base, not just a handful of ENGAGE employees.

The Board are confident that this new channel partner will enable us to grow our international reach and customer base. This should see further revenue growth during the second half of 2023 after the headsets arrive on the market. Lenovo have a large global market share in enterprise and education which is ENGAGE’s target market and should be a fruitful partnership for both parties.

Outlook

Despite 2022 being a year of growth, we believe our market capitalisation does not reflect the actual progress of the company.

There is growth in all our metrics, and we have reduced our cost base by approximately 25% in Q1 2023 (compared to Q4 2022). Our product offering has grown along with our client base. The partnerships we have put in place during 2022 should begin to bear fruit in the coming months.

Although times remain tough for many in the tech industry, we took decisive actions early. These actions have provided us with a solid foundation and the Company is poised for strong growth.

2023 has started encouragingly. We have had some exciting client wins already, including two of the world’s leading banks. How fast and how big our growth will be remains to be seen. However, the Company has a strong balance sheet and is now in the best position possible to capitalise on the clear market opportunity. We are seeing increasing engagement from potential customers with our technology and platform. Our Lenovo partnership opens up exciting opportunities, and we are confident that the momentum seen in 2022 will continue into the current financial year and beyond.

David Whelan
Chief Executive Officer
22 May 2023

CHIEF FINANCIAL OFFICER’S REVIEW

I am pleased to report that revenue for the year was up 62% on the prior year from €2.4 million to €3.9 million, driven by a significant increase in demand for the ENGAGE platform. ENGAGE revenue was up 86% on the prior year from €1.8 million to €3.3 million.

EBITDA loss was €5.8 million compared to a loss of €2.8 million in the prior year and loss before tax was €6.0 million compared to a loss in the prior year of €3.1 million. This increased EBITDA loss is primarily driven by increased headcount in the year.

Operating cashflows were a net outflow of €5.5 million for the period.  The current run-rate of staff costs and other ongoing costs is approximately €0.4m per month.

At the balance sheet date, trade and other receivables were €1.4m, ahead of trade and other payables at €1.2m. Trade receivables represented an average of 52 debtor days (2021: 58 days).

The Group’s cash position on 31 December 2022 was €2.2 million with no debt. The cash balance was significantly strengthened post period end by a successful €10.5 million (€9.9 million net of expenses) fundraise. As at 30 April 2023, the Company’s cash position was €10.3 million.

Séamus Larrissey
Chief Financial Officer
22 May 2023

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME

for the year ended 31 December 2022

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 31 December 2022

COMPANY STATEMENT OF FINANCIAL POSITION

at 31 December 2022

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2022

COMPANY STATEMENT OF CHANGES IN EQUITY

the year ended 31 December 2022

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2022

COMPANY STATEMENT OF CASH FLOWS

for the year ended 31 December 2022

2020

ENGAGE XR Holdings Plc (AIM: EXR), a leading metaverse technology company, is pleased to announce its audited results for the 12 months ended 31 December 2022.

Financial Highlights:

• Total revenue for the Group was up 62% to €3.9 million (2021: €2.4 million)
• ENGAGE platform revenue grew 86% to €3.3 million (2021: €1.8 million)
• December 2022 was the Company’s biggest ever month with €0.6 million in deals closed
• Average contract values increased by 24% to €21k
• Gross margin increased to 82% from 79%
• EBITDA loss was €5.8 million (2021: loss of €2.8 million) primarily driven by increased headcount. Subsequent cost reduction exercise has reduced annualised payroll costs by 25%
• The Group’s cash position on 31 December 2022 was €2.2 million with no debt and at 30 April 2023 was €10.3 million

Operational Highlights:

• Ended 2022 with more than 190 enterprise and education clients. This is now over 200 (as at 30 April 2023)
• More than 70 new customers signed, including Pfizer, MTN, HSBC, KIA, Pearson, Lenovo, Kuehne & Nagel, Adtalem Global Education and University of Miami
• Renewing clients included 3M, KPMG, Meta, HTC, BHP and Stanford University
• Successfully launched the Group’s fully featured corporate metaverse ENGAGE Link in November 2022
• Group partner Victory XR launched 10 metaversities built on ENGAGE. This has grown with a new round of schools being announced in March 2023. Each student requires a full ENGAGE license to access the Victory XR content generating recurring revenue from the Group.
• In September 2022, ENGAGE and Lenovo™ announced a partnership. ENGAGE will be part of Lenovo’s new all in one VRX Headset, expected to be available from H2 2023

Post period end Highlights:

• The cash balance was significantly strengthened post period end by a successful €10.5 million (€9.9 million net of expenses) fundraise.
• Ground-breaking concert hosted in ENGAGE in March 2023 by the renowned international musician, Norman Cook, aka Fatboy Slim
• The Group is gaining traction in the US market. 58% of revenue in Q1 2023 has been derived from North America compared to 30% for FY22, following deployment of the US sales team in mid-2022
• Q1 2023 reported revenue figures are 40% higher than the same period in 2022

David Whelan, CEO of ENGAGE XR, said: “2022 was an extremely busy year with many positives and most metrics going in the right direction despite turbulence hitting the global tech sector during the second half of the year. This had a consequential impact on the conversion of our pipeline of commercial opportunities. During the year we launched new services on our platform, added more Fortune 500 companies to our client list, saw revenues grow throughout the year, and successfully launched ENGAGE Link in November 2022.

“2023 has started encouragingly. We have had some exciting client wins already, including two of the world’s leading banks. How fast and how big our growth will be remains to be seen. However, the Company has a strong balance sheet and is now in the best position possible to capitalise on the clear market opportunity. We are seeing increasing engagement from potential customers with our technology and platform. Our Lenovo partnership opens up exciting opportunities, and we are confident that the momentum seen in 2022 will continue into the current financial year and beyond.”

Investor Communications

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 23 May 2023 at 10:00am (UK).

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 metaverse technology company focused on becoming a leading global provider of virtual communications solutions through its new fully featured corporate metaverse, ENGAGE Link. A demonstration of ENGAGE Link is here

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)

CHAIRMAN’S STATEMENT

I am pleased to present the Annual Report and Financial Statements of ENGAGE XR Holdings PLC (“ENGAGE XR”, “the Group” or “the Company”) for the year ended 31 December 2022. Our aim is to become a leading global provider of virtual communications solutions through our proprietary software platform, ENGAGE. However, it has been a challenging year with an uncertain macro-economic backdrop which manifested itself most acutely in the “tech crash” in Autumn 2022.

Revenue in the year increased by 62% to €3.9 million. Gross profit increased by 67% as gross profit benefited from an improved gross profit margin of 82% (2021: 79%).  A longer sales decision-making cycle in our customer base due to the economic uncertainty in the second half of 2022 meant we were disappointed not to break through the €4 million revenue barrier.

Earlier in the financial year, the Company made a decision to significantly increase its sales function and development capability as it sought to accelerate the market penetration of ENGAGE and expedite the development of its fully featured corporate metaverse, ENGAGE Link. Staff and contractor costs rose to €7.0 million, up from €3.7 million in 2021. At the time, this was the correct decision, but the tech crash meant slower than expected corporate sales. This led to a downgrading of our guidance for the year and a cost reduction exercise which reduced annualised payroll costs by 25%. Additionally, a placing was successfully competed after the year end in February 2023 to bolster the Group’s balance sheet and to help us deliver our ambitious growth plans.

The Board continue to see meaningful opportunities to exploit metaverse use in companies in the corporate and education sectors. The Board believes that the specific areas the Company is targeting, such as remote education, remote events, and the way in which organisations interact with staff, suppliers and customers will be transformed by the Metaverse. As a result, the Board remains very focused on selling to and servicing universities, other education establishments and global enterprise customers. We now have over 200 Enterprise and Education customers on the ENGAGE platform. Some of the highlights in the year include the launch of ten Metaversites in the US, and our collaboration with Lenovo, which has developed into a commercial relationship.

Post period end, we successfully completed a €10.5 million equity raise (before expenses) in February 2023 and we have seen a strong start to 2023. We were also delighted with the response to the ground-breaking concert hosted in ENGAGE in March 2023 by the renowned international musician, Norman Cook, aka Fatboy Slim.

The management team and the Board are looking forward to the future with optimism. I would like to thank everyone at ENGAGE XR in delivering great progress in what has been a challenging environment. Furthermore, I want to thank our shareholders for their continued support.

Richard Cooper
Non-Executive Chairman
22 May 2023

CHIEF EXECUTIVE’S REVIEW

Overview

2022 was an extremely busy year with many positives and most metrics going in the right direction despite turbulence hitting the global tech sector during the second half of the year. This had a consequential impact on the conversion of our pipeline of commercial opportunities. During the year we launched new services on our platform, added more Fortune 500 companies to our client list, saw revenues grow throughout the year, and successfully launched ENGAGE Link in November 2022.

The market opportunity

The Board believes that the opportunities created by the metaverse are significant and that corporates are seeing how elements of the metaverse can be used to tremendous effect.  Not just in terms of how a company interacts with its customers but also with suppliers and staff. The growth of metaversities and the use of VR in education is further evidence of the opportunities created by the metaverse.  All these opportunities fit perfectly into ENGAGE’s offering.

From the outset, the ENGAGE platform has been positioned as the metaverse platform focused on servicing the needs of enterprise customers and universities. We are targeting organisations looking for immersive corporate communications, remote collaboration, training and development, education and remote events. Our technology provides the platform which can help them to deliver their own metaverse strategies.  So far, we have developed over 900 metaworlds for our clients.

2022 saw the continued evolution in the growth of the business. Our partner Victory XR launched 10 metaversities built on our software This has grown with a new round of schools being announced in March 2023.  All students within the Victory XR ecosystem require an ENGAGE license which generates recurring revenue for the Group.

The main development in the period was the successful launch of ENGAGE Link in November 2022. ENGAGE Link is an evolution of our successful immersive communications platform.  It was specifically developed as a metaverse platform for corporations, professionals, education organisations, and event organisers. ENGAGE Link allows the Group's wide-ranging customer base to use the metaverse to create their own virtual worlds to provide services directly to clients and engage with employees and suppliers. 

Client Growth

Throughout 2022 we dealt with many new enterprise and educational clients. More than 70 new customers signed during the year, including Pfizer, MTN, HSBC, KIA, Pearson, Lenovo, Kuehne & Nagel, Adtalem Global Education and University of Miami.

Renewing clients included 3M, KPMG, Meta, HTC, BHP and Stanford University.  The Company ended 2022 with more than 190 enterprise and education clients, which is now over 200. Many of our renewing clients now spend more with us and are purchasing additional services and licenses.   There was an average increase of 24% to our average contract value in the year which is extremely positive. This is also a strong indication that ENGAGE is offering something unique in the marketplace and the strength of the names on our client roster demonstrates this. 

We have also started to gain increased traction in the US market from the US sales team we deployed in mid-2022. 58% of revenue in Q1 2023 has been derived from North America compared to 30% for FY22, a strong indication that the team is performing well.

Results

To give more colour on how our year went financially, we achieved some important milestones which included:

• ENGAGE platform revenue grew 86% in 2022 from €1.8 to €3.3m
• Overall group revenue grew 62% to €3.9m outlining our total focus on platform growth
• December 2022 was our biggest ever month with €0.6m in deals closed
• Average contract values in the year increased by 24% to €21k
• Gross margin increased to 82% from 79%

2022 saw strong revenue growth during the year. There was an undeniably upward trend of our average monthly income through the year with that trend continuing so far during the first half of 2023. Q1 2023 reported figures are already 40% higher than the same period in 2022.

Growth in Services

As noted above, during 2022 we launched ENGAGE Link where clients can, for the first time, open a public space and interact directly with each other and directly with customers, suppliers, and employees. These spaces are akin to physical locations just like a business might have in a city.

One example of how ENGAGE Link has been successfully used is by major car manufacturer, Kia. Kia opened a virtual showroom for visitors to find out more about their products and services.

We expect many of our new and existing clients will progress onto ENGAGE Link for marketing, networking events, professional services, and recruitment drives. Enquiries as to how ENGAGE Link can be used are being brought to us each week.

Lenovo Partnership

In September 2022 we announced that ENGAGE and Lenovo™, one of the world's largest computer manufacturing and smartphone companies, had entered into a partnership. The partnership will see ENGAGE available on Lenovo’s new all in one VRX Headset. This is an enterprise-focused VR device.

The new headsets are expected to be available from H2 2023. We have been training and working with Lenovo’s sales team as they look to bundle ENGAGE software licenses with their new headset. It means ENGAGE software will be sold by hundreds of salespeople globally to Lenovo’s client base, not just a handful of ENGAGE employees.

The Board are confident that this new channel partner will enable us to grow our international reach and customer base. This should see further revenue growth during the second half of 2023 after the headsets arrive on the market. Lenovo have a large global market share in enterprise and education which is ENGAGE’s target market and should be a fruitful partnership for both parties.

Outlook

Despite 2022 being a year of growth, we believe our market capitalisation does not reflect the actual progress of the company.

There is growth in all our metrics, and we have reduced our cost base by approximately 25% in Q1 2023 (compared to Q4 2022). Our product offering has grown along with our client base. The partnerships we have put in place during 2022 should begin to bear fruit in the coming months.

Although times remain tough for many in the tech industry, we took decisive actions early. These actions have provided us with a solid foundation and the Company is poised for strong growth.

2023 has started encouragingly. We have had some exciting client wins already, including two of the world’s leading banks. How fast and how big our growth will be remains to be seen. However, the Company has a strong balance sheet and is now in the best position possible to capitalise on the clear market opportunity. We are seeing increasing engagement from potential customers with our technology and platform. Our Lenovo partnership opens up exciting opportunities, and we are confident that the momentum seen in 2022 will continue into the current financial year and beyond.

David Whelan
Chief Executive Officer
22 May 2023

CHIEF FINANCIAL OFFICER’S REVIEW

I am pleased to report that revenue for the year was up 62% on the prior year from €2.4 million to €3.9 million, driven by a significant increase in demand for the ENGAGE platform. ENGAGE revenue was up 86% on the prior year from €1.8 million to €3.3 million.

EBITDA loss was €5.8 million compared to a loss of €2.8 million in the prior year and loss before tax was €6.0 million compared to a loss in the prior year of €3.1 million. This increased EBITDA loss is primarily driven by increased headcount in the year.

Operating cashflows were a net outflow of €5.5 million for the period.  The current run-rate of staff costs and other ongoing costs is approximately €0.4m per month.

At the balance sheet date, trade and other receivables were €1.4m, ahead of trade and other payables at €1.2m. Trade receivables represented an average of 52 debtor days (2021: 58 days).

The Group’s cash position on 31 December 2022 was €2.2 million with no debt. The cash balance was significantly strengthened post period end by a successful €10.5 million (€9.9 million net of expenses) fundraise. As at 30 April 2023, the Company’s cash position was €10.3 million.

Séamus Larrissey
Chief Financial Officer
22 May 2023

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME

for the year ended 31 December 2022

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 31 December 2022

COMPANY STATEMENT OF FINANCIAL POSITION

at 31 December 2022

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2022