2023

VR Education (AIM: VRE; Euronext Growth: 6VR), a virtual reality ('VR') technology company, announces its results for the year ended 31 December 2020.

VRE is focused on becoming a leading global provider of virtual communications solutions through its proprietary software platform, ENGAGE. Having signed contracts with 60 clients during 2020, the Group's core focus is on scaling the revenue, client and user base on ENGAGE through three solutions: Virtual Campus, Virtual Office and Virtual Events.

Financial Highlights:

• Group revenue increased by 38% to €1.4 million (2019: €1.0 million) driven by a significant increase in new clients and activity on ENGAGE
• ENGAGE revenue was up 550% to €0.6 million (2019: €0.1 million) following the onset of global lockdowns
• Gross profit increased by 63% to €1 million (2019: €0.6 million) as gross margin improved as proportion of revenue from ENGAGE increased
• Cash position on 31 December 2020 was €2.0 million with no debt

Operational Highlights:

• Acceleration of demand for ENGAGE Platform and partnerships with major organisations, including smart mobile device manufacturer HTC Corporation, Sky Ireland, Tokyo Global Gateway and Victory XR, a leading provider of VR and AR education solutions
• Value of ENGAGE Subscriptions grew to more than €1.8 million with average deal size increasing.  60 customers signed contracts in 2020.
• Following onset of Covid, launched Engage Events in March hosting virtual events for a range of companies and organisations, including the European Commission, Facebook, HTC, Vodafone, Xprize and Yahoo
• Substantial increase in potential user base through the launch of ENGAGE Mobile (for Android and iOS) enabling customers to use ENGAGE without a VR headset or device
• ENGAGE launched to HTC customers in Greater China Region under the Vive Session brand, following strategic investment from HTC in May 2020
• The official release of ENGAGE on the Facebook/Oculus Quest Store in November 2020

COVID-19

• The pandemic generated significant demand for remote and virtual communication solutions offered by VRE. Meets using ENGAGE provide a more immersive alternative to traditional video-based solutions such as MS Teams and Zoom
• Strong demand for ENGAGE’s Virtual Campus and Virtual Office enabling users to virtually meet work colleagues or attend company meetings. Also used for virtual office parties and graduation ceremonies

Medium-Term Outlook

In January 2021 VRE launched an ambitious strategy to achieve a €10 million annualised revenue milestone for ENGAGE during 2023 - 2025 (the“ Medium Term Outlook”):

• To generate €10 million ENGAGE revenue from 500 active enterprise customers and 100,000 monthly users
• To deliver a gross margin in excess of 80% once ENGAGE revenue is between €5 million and €10 million annually
• To retain at least 80% of ENGAGE customers
• To grow average annual contract value to in excess of €20,000, reflecting the targeted Enterprise and Institutional client base and ENGAGE value proposition

David Whelan, CEO, VRE, said: “2020 was a formative year for VRE. Having launched our software platform ENGAGE 13 months earlier, we were well positioned to benefit from the pandemic-driven demand for virtual and remote modes of communication and interaction. In 2020, we successfully commercialised our Virtual Office, Virtual Campus and Virtual Events solutions with a number of multi-national enterprises and international institutions. We are now focussed on building our sales organisation and partnerships to bring ENGAGE to the broadest possible audience in 2021.

“Following the onset of the pandemic, the shift to remote working, online learning and virtual events led to a significant increase in demand for virtual communications solutions such as ENGAGE. The pandemic has been a catalyst in terms of permanently changing the traditional practices and mindsets of companies and organisations towards communication. At VRE, we can see this change through the diversity of our growing user base which includes large blue-chip companies and leading international organisations, as well as our own behaviour such as hosting all our daily team meetings in  VR. The use of virtual communications is only set to grow.”

Investor Presentation

CEO David Whelan and CFO Séamus Larrissey will provide a live presentation relating to the Full Year Results via the Investor Meet Company platform today at 10:00am GMT.

The presentation is open to all existing and potential shareholders. Questions can be submitted at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet VR Education via: https://www.investormeetcompany.com/vr-education-holdings-plc/register-investor

For further information, please contact:

Notes to Editors:
VR Education is (AIM: VRE; Euronext Growth: 6VR) is a leading virtual reality ('VR') technology company focused on becoming the world's largest crossed reality ('XR') communications, training and virtual events platform provider. The Irish based Group's core focus is the commercialisation of its online virtual communications platform called ENGAGE, which provides a platform for creating, sharing and delivering proprietary and third-party XR content in education, training and online events.

On 12 March 2018, VR Education listed on the AIM market of the London Stock Exchange and on the Enterprise Securities Market, a market regulated by Euronext Dublin.  For further information, please visit www.vreducationholdings.com.

CHAIRMAN’S STATEMENT for the year ended 31 December 2020

I am pleased to present the Annual Report and Financial Statements of VR Education Holdings PLC (“VRE” or “the Group”), a company incorporated in the Republic of Ireland, for the year ended 31 December 2020 (‘FY-2020’).

Overview of the year

This is the third set of financial statements I am proud to present to shareholders following the successful fundraising and IPO in March 2018.  VRE is an early stage, growing company with unique intellectual property in both content and operating software in the world of Virtual Reality (“VR”).

Revenues in FY-2020 grew by 38% to €1.4 million (FY-2019: €1.0 million) generating a gross profit margin of 72% and gross profit of €1,013k (FY-2019: €622k).

COVID-19

VRE has the bulk of its operations in Waterford in the Republic of Ireland. Prior to the Republic’s mandated lockdown, the Group made the prudent decision to have all 37 employees work remotely to ensure their safety. This action has not had any negative effect on productivity within the Group as all employees have remained dedicated and professional throughout this difficult period.

Our ability to utilise our own products for conferences as well as other meeting facilities has proved to be invaluable, not least as it gave us greater insights into the needs of customers and our ability to serve them. As an example, the Group now holds all its daily stand-up and design meetings inside the ENGAGE platform which has proved very successful. VRE has also hired new staff from the US and UK who will always work remotely. These employees only attend staff meetings and events virtually. This has helped the Group improve the platform making it easier to sell platform licenses to companies such as HTC, Facebook and others.

The only negative impact COVID-19 has had on the Group to date has been the closure of all museums and exhibits which have been hosting VRE content on a revenue share basis. We expect this to have cost in the region of €300k in 2020.  However, as locations reopen in the latter part of 2021 and 2022, the Group expects to see revenues in this area bounce back and increase as VRE works with more locations on new installations.

Development of ENGAGE

The Group’s proprietary VR education platform ENGAGE was commercially launched in December 2018.  VRE has developed and promoted ENGAGE against both technological and commercial headwinds, including the lack of availability of suitable hardware. The commercial issues were mainly associated with Brexit in the UK where companies reduced technology spending due to the uncertainty it caused. 

In July 2020, ENGAGE Mobile launched on Android phones and tablets, with the iOS version for iPhones and iPads later released in December 2020. Users can now host virtual events without a VR headset or device, thereby expanding ENGAGE’s addressable user base as it enables increased use of ENGAGE by large corporations to host virtual events. This was a major milestone achieved during the year and highlights VRE’s ability to quickly adapt to the market.

Furthermore, the management team’s perseverance has led the Group to sign partnerships with major organisations, including one of the leading world’s smart mobile device manufacturers HTC Corporation and US-based Victory XR, a leading provider of VR and Augmented Reality (“AR”) education solutions. The partnership with HTC has provided a platform and opportunity for ENGAGE within the Asian region, which is an area forecast to experience rapid growth in the VR market. The fact that these companies, with the robustness of their investment criteria, partnered with VRE is a terrific endorsement of ENGAGE and the opportunities it provides.

The ENGAGE platform is the ideal tool to meet the needs of the remote working world. The global COVID-19 pandemic has generated significant demand for VR solutions and there have been high levels of interest in our conferencing and collaboration tools. Our most popular products via the ENGAGE platform are our virtual campus and virtual offices where users can login to a persistent location and meet work colleagues to attend company meetings and events. Proving very popular late last year were virtual office parties and virtual graduation ceremonies. The Group has been working hard since the year end to ensure the platform is available to those who want to use it, releasing the platform on mobile phones, tablets, and iOS devices.

Standalone content

The Group also continues to produce award-winning standalone content to showcase VR/AR’s potential as a tool for educational purposes. Our first release Apollo 11 VR about the first mission to the moon has won multiple awards including a Time Warner “Future of Storytelling” award. Apollo 11 VR was one of first big VR hits when released on the Oculus Rift and the HTC Vive in 2016. A High-Definition version was re-released in November 2018. Apollo 11 VR has generated more than €1.9 million in revenues since its launch to this year-end. Furthermore, Titanic VR and Shuttle Commander, which launched in Q4 2018 and Q4 2019 respectively, continue to perform well and have generated a combined €1.1 million in revenues since their launches.

Although our standalone experiences have been highly successful for the group in the past, our focus is now principally on the delivery of ENGAGE as the next big communication, education and collaboration platform seeking to replace Microsoft Teams and Zoom for large group conferences and virtual events.

Outlook

There has been considerable progress in 2021, and VRE is now well placed to deliver long-term value to shareholders, initially through the execution of its medium-term outlook as announced on 22 January 2021. Management view the ENGAGE total addressable market to be between $10bn and $25bn based on the expected compound annual growth rate (“CAGR”) of between 12-23% forecast within the global team collaboration, global e-learning and global virtual events markets as per Grand View Research and Facts & Factors. 

I would like to take this opportunity to thank the management and employees for their hard work in what has been a challenging environment.  Furthermore, I want to thank our shareholders for their continued support.

Richard Cooper
Chairman
25 February 2021

CHIEF EXECUTIVE’S REVIEW the year ended 31 December 2020

Review of the Year

ENGAGE - Significant Progress Made

2020 was a challenging year, however it provided a significant opportunity for VRE. This was illustrated with the significant accelerated growth of the Group’s ENGAGE platform. During the year, over 60 commercial deals were signed to use the platform, compared to three in the previous financial year.

In the past six months, the user base of ENGAGE has increased by more than 700%. Revenue from the platform is now outstripping all other sources of revenue for the Group, with all metrics pointing to the continued accelerated growth of the platform in 2021 and beyond.  The significant progress made by the Group in FY20, including key partnerships such as HTC, Sky Ireland, and Tokyo Global Gateway, provides an opportunity to scale the business and create a path to profitability in the short to medium term.

Partnership with HTC

In May 2020, the Group announced that HTC had purchased a 20% equity stake in the Group. The acquisition of the stake followed the success of HTC’s annual Vive developer conference inside the ENGAGE platform. The platform hosted over 1,000 concurrent VR users with 1.1 million viewers watching the live stream.  Furthermore, VRE negotiated a commercial deal with HTC to resell ENGAGE services inside China under the Vive Session brand.

In October 2020, ENGAGE was launched in China following months of work with HTC.  Revenue from this partnership is expected to be generated from Q2 2021.  ENGAGE China has been rebranded as Vive Sessions inside the China region. HTC is working closely with the ENGAGE team on a new enterprise and education offering, which will be available later in 2021.  The APAC region, particularly China, South Korea and Japan, will be the key driver of the global virtual reality market through until 2030.  The Group’s partnership with HTC, the market leader in Asia for immersive hardware, places VRE in a strong position to capitalise on this market, providing customers with a combined hardware and software offering.

Additional Platforms

In 2020 the ENGAGE platform successfully hosted virtual events for a range of companies including Facebook, Vodafone, Xprize, the European Commission, Yahoo and HTC. This demand has continued into 2021 with multiple events already confirmed for the first half of 2021 including a number of HTC conferences.

Before 2020, the most significant barrier to adoption for the Group’s ENGAGE platform was its accessibility.  ENGAGE was only available on PC based VR devices. This barrier was overcome during the year through the launch of ENGAGE Mobile on Android phones and tablets in July 2020, with the iOS version for iPhones and iPads released in December 2020.  This has enabled increased use of ENGAGE by large corporations to host virtual events.

Facebook/Oculus Quest Release

The official release of ENGAGE on the Facebook/Oculus Quest Store in November 2020 was another milestone. The ENGAGE application was front and centre on the store under collaboration applications. This positioning drove many requests from corporations to host the ENGAGE platform for ease of installation and updates.  Facebook has also become a commercial user of ENGAGE by signing up for an enterprise account for internal use cases. 

The progress made in 2020 means that ENGAGE is now available to a global audience and easy to install on a range of platforms and devices. This has resulted in increased revenues and continued growth in ENGAGE users month on month.

ENGAGE Broadening Userbase

Originally, ENGAGE was marketed as an education and training platform to provide remote distance learning as well as tools for educators to create content. The platform has evolved to enable a broad spectrum of different use cases generating revenues for the Group in different ways.

ENGAGE now has three main types of users, which are:

• Education clients using ENGAGE Virtual Campus for remote classes offering persistent virtual campus locations, private branded learning environments with the ability to create and publish content and use virtual collaboration tools.
• Enterprise clients using ENGAGE Virtual Office for remote team collaboration and meetings offering persistent virtual office locations, private branded office environments with the ability to use virtual collaboration tools and virtual sales presentation tools.
• Event clients using ENGAGE Virtual Events to host safe large scale virtual events offering unique content possibilities with a large cost saving over traditional events.

Revenue from these three streams is currently evenly split. However, the Group expects to see a marked increase in Virtual Events and Virtual Office usage during 2021 now that the ENGAGE platform is accessible on a broader range of devices.

The Group now views ENGAGE as a comprehensive communications platform and believes that competition for future growth will be against video and text-based platforms such as Zoom, Microsoft Teams and Slack. While video-based platforms are primarily designed for one-on-one communication and not suited to hosting “virtual events” or large group meetings, ENGAGE provides a differentiated offering to the competition, as the platform was specifically designed to enable large groups to meet and interact naturally in virtual spaces. To this end, the Group is currently undertaking a rebranding of ENGAGE and will be investing in its marketing and business development to continue to support its growth trajectory.

ENGAGE Total Addressable Market (TAM)

The Group has estimated that ENGAGE’s total addressable market is between $10bn and $25bn, which is determined as follows as per Grand View Research and Facts & Factors:

• Global team collaboration software market size of $10 billion in 2020 with forecasted CAGR of 12.7% during the period 2020 to 2027;
• Global e-learning market size of $165 billion in 2020 with forecasted CAGR of 14.6% during the period 2020 to 2026; and
• Global events market size of $94 billion 2020 with forecasted CAGR of 23.2% during the period 2019 to 2027.

This presents a compelling opportunity for ENGAGE as the requirement for virtual, remote communications in response to COVID-19 and working-from-home phenomenon is accelerating forecast growth rates in these markets and the market share for VR and next generation solutions. The Group is well positioned with its current product offering to take advantage of this large global market and high growth forecasts.

Showcase Experiences

Showcase Experiences was an important part of the business and a key generator of revenue in prior years.  However, the Group’s focus is now on scaling the ENGAGE platform. Our Showcase Experiences continued to sell strongly on a range of different platforms throughout 2020.  Shuttle Commander was released on the popular Oculus Quest platform in September, and later PC-based VR devices via the Steam network in November.

Outlook

On 22 January 2021, VRE announced the Group’s medium-term outlook. The Group is targeting €10 million ENGAGE revenue generated from 500 active enterprise customers and 100,000 monthly users during the period FY-2023 to FY-2025. These key performance indicators are supported by the Group’s strategy, strong ENGAGE momentum and large global addressable market. This outlook captures and quantifies the upward trend targeted by the ENGAGE platform.

Furthermore, the Group is targeting a gross margin in excess of 80% once ENGAGE revenue is between €5 million – €10 million, a forecast retention rate of ENGAGE customers of at least 80% and estimated growth in average annual contract value in excess of €20,000, reflecting the targeted Enterprise and Institutional client base and ENGAGE value proposition.

In the past six months, we have begun to prove the monetisation strategy of ENGAGE, with over 60 commercial deals signed to use the platform in FY-2020. The strategy’s efficacy is also evident in the increasing average ENGAGE deal sizes, with some of our earlier commercial clients purchasing additional accounts and services leading to larger purchase orders.

With just two full-time business developers for the majority of 2020, the Group has closed deals during the year worth more than €1.8 million, which should be recognised over the next 36 months.  The Group has now hired an additional four business developers.  VRE will begin to allocate increased funding to the marketing and promotion of the ENGAGE platform as we look to grow in 2021 and beyond.

Following the deployment of the ENGAGE platform on the Chinese mainland in collaboration with HTC in late 2020, we expect to see the first revenues generated from this partnership realised in the first half of 2021. ENGAGE is now available on almost every platform globally, opening major opportunities where sales were previously limited to a small but growing marketplace.

VRE has made significant operational progress and achieved several key milestones during 2020. With a workforce of in excess of 50 people at the year end we will continue to grow the team during 2021 with strategic hires planned in a number of areas within the organisation to drive the growth of the business.

As the Group moves into 2021, it is well-positioned with increasing revenue, growing numbers of ENGAGE users, and an expanding market opportunity. As we look to scale the business and increase market share, VRE is poised to capitalise on its strong position in China.  China is the fastest-growing immersive market in the world. The Group looks forward to capitalising on the many exciting opportunities on the horizon.  VRE is focused on identifying new strategic partnerships to support the Group’s growth and expansion in 2021.

We are looking forward to the future with confidence.

David Whelan
Chief Executive Officer
25 February 2021

CHIEF FINANCIAL OFFICER’S REVIEW for the year ended 31 December 2020

I am pleased to report that revenue for the year was up 38% on the prior year from €1.0 million to €1.4 million, driven by a significant increase in demand for the ENGAGE platform. ENGAGE revenue was up 500% on the prior year from €0.1 million to €0.6 million.

EBITDA loss was €2.1 million compared to a loss of €1.4 million in the prior year and loss before tax was €2.7 million compared to a loss in the prior year of €1.9 million. This increased EBITDA loss is driven by reduced capitalisation of developer staff costs in 2020 in line with International Accounting Standards which were required to go through the income statement in 2020.

Operating cashflows were a net outflow of €2.0 million for the period.  The current run-rate of staff costs and other ongoing costs is approximately €250k per month.

At the balance sheet date, trade and other receivables were €358k, marginally ahead of trade and other payables at €357k. Trade receivables represented an average of 74 debtor days (2019: 52 days)

The Group’s cash position on 31 December 2020 was €2.0 million with no debt. The cash balance was significantly strengthened during the year by a successful €3.0 million (€2.93 million net of expenses) share subscription by HTC.

Séamus Larrissey
Chief Financial Officer
25 February 2021

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
for the Year Ended 31 December 2020

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2020

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

COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2020

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

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2020

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

COMPANY STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2020

The accompanying notes form an integral part of these financial statements

CONSOLIDATED STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2020

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

COMPANY STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2020

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.

2022

VR Education (AIM: VRE; Euronext Growth: 6VR), a virtual reality ('VR') technology company, announces its results for the year ended 31 December 2020.

VRE is focused on becoming a leading global provider of virtual communications solutions through its proprietary software platform, ENGAGE. Having signed contracts with 60 clients during 2020, the Group's core focus is on scaling the revenue, client and user base on ENGAGE through three solutions: Virtual Campus, Virtual Office and Virtual Events.

Financial Highlights:

• Group revenue increased by 38% to €1.4 million (2019: €1.0 million) driven by a significant increase in new clients and activity on ENGAGE
• ENGAGE revenue was up 550% to €0.6 million (2019: €0.1 million) following the onset of global lockdowns
• Gross profit increased by 63% to €1 million (2019: €0.6 million) as gross margin improved as proportion of revenue from ENGAGE increased
• Cash position on 31 December 2020 was €2.0 million with no debt

Operational Highlights:

• Acceleration of demand for ENGAGE Platform and partnerships with major organisations, including smart mobile device manufacturer HTC Corporation, Sky Ireland, Tokyo Global Gateway and Victory XR, a leading provider of VR and AR education solutions
• Value of ENGAGE Subscriptions grew to more than €1.8 million with average deal size increasing.  60 customers signed contracts in 2020.
• Following onset of Covid, launched Engage Events in March hosting virtual events for a range of companies and organisations, including the European Commission, Facebook, HTC, Vodafone, Xprize and Yahoo
• Substantial increase in potential user base through the launch of ENGAGE Mobile (for Android and iOS) enabling customers to use ENGAGE without a VR headset or device
• ENGAGE launched to HTC customers in Greater China Region under the Vive Session brand, following strategic investment from HTC in May 2020
• The official release of ENGAGE on the Facebook/Oculus Quest Store in November 2020

COVID-19

• The pandemic generated significant demand for remote and virtual communication solutions offered by VRE. Meets using ENGAGE provide a more immersive alternative to traditional video-based solutions such as MS Teams and Zoom
• Strong demand for ENGAGE’s Virtual Campus and Virtual Office enabling users to virtually meet work colleagues or attend company meetings. Also used for virtual office parties and graduation ceremonies

Medium-Term Outlook

In January 2021 VRE launched an ambitious strategy to achieve a €10 million annualised revenue milestone for ENGAGE during 2023 - 2025 (the“ Medium Term Outlook”):

• To generate €10 million ENGAGE revenue from 500 active enterprise customers and 100,000 monthly users
• To deliver a gross margin in excess of 80% once ENGAGE revenue is between €5 million and €10 million annually
• To retain at least 80% of ENGAGE customers
• To grow average annual contract value to in excess of €20,000, reflecting the targeted Enterprise and Institutional client base and ENGAGE value proposition

David Whelan, CEO, VRE, said: “2020 was a formative year for VRE. Having launched our software platform ENGAGE 13 months earlier, we were well positioned to benefit from the pandemic-driven demand for virtual and remote modes of communication and interaction. In 2020, we successfully commercialised our Virtual Office, Virtual Campus and Virtual Events solutions with a number of multi-national enterprises and international institutions. We are now focussed on building our sales organisation and partnerships to bring ENGAGE to the broadest possible audience in 2021.

“Following the onset of the pandemic, the shift to remote working, online learning and virtual events led to a significant increase in demand for virtual communications solutions such as ENGAGE. The pandemic has been a catalyst in terms of permanently changing the traditional practices and mindsets of companies and organisations towards communication. At VRE, we can see this change through the diversity of our growing user base which includes large blue-chip companies and leading international organisations, as well as our own behaviour such as hosting all our daily team meetings in  VR. The use of virtual communications is only set to grow.”

Investor Presentation

CEO David Whelan and CFO Séamus Larrissey will provide a live presentation relating to the Full Year Results via the Investor Meet Company platform today at 10:00am GMT.

The presentation is open to all existing and potential shareholders. Questions can be submitted at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet VR Education via: https://www.investormeetcompany.com/vr-education-holdings-plc/register-investor

For further information, please contact:

Notes to Editors:
VR Education is (AIM: VRE; Euronext Growth: 6VR) is a leading virtual reality ('VR') technology company focused on becoming the world's largest crossed reality ('XR') communications, training and virtual events platform provider. The Irish based Group's core focus is the commercialisation of its online virtual communications platform called ENGAGE, which provides a platform for creating, sharing and delivering proprietary and third-party XR content in education, training and online events.

On 12 March 2018, VR Education listed on the AIM market of the London Stock Exchange and on the Enterprise Securities Market, a market regulated by Euronext Dublin.  For further information, please visit www.vreducationholdings.com.

CHAIRMAN’S STATEMENT for the year ended 31 December 2020

I am pleased to present the Annual Report and Financial Statements of VR Education Holdings PLC (“VRE” or “the Group”), a company incorporated in the Republic of Ireland, for the year ended 31 December 2020 (‘FY-2020’).

Overview of the year

This is the third set of financial statements I am proud to present to shareholders following the successful fundraising and IPO in March 2018.  VRE is an early stage, growing company with unique intellectual property in both content and operating software in the world of Virtual Reality (“VR”).

Revenues in FY-2020 grew by 38% to €1.4 million (FY-2019: €1.0 million) generating a gross profit margin of 72% and gross profit of €1,013k (FY-2019: €622k).

COVID-19

VRE has the bulk of its operations in Waterford in the Republic of Ireland. Prior to the Republic’s mandated lockdown, the Group made the prudent decision to have all 37 employees work remotely to ensure their safety. This action has not had any negative effect on productivity within the Group as all employees have remained dedicated and professional throughout this difficult period.

Our ability to utilise our own products for conferences as well as other meeting facilities has proved to be invaluable, not least as it gave us greater insights into the needs of customers and our ability to serve them. As an example, the Group now holds all its daily stand-up and design meetings inside the ENGAGE platform which has proved very successful. VRE has also hired new staff from the US and UK who will always work remotely. These employees only attend staff meetings and events virtually. This has helped the Group improve the platform making it easier to sell platform licenses to companies such as HTC, Facebook and others.

The only negative impact COVID-19 has had on the Group to date has been the closure of all museums and exhibits which have been hosting VRE content on a revenue share basis. We expect this to have cost in the region of €300k in 2020.  However, as locations reopen in the latter part of 2021 and 2022, the Group expects to see revenues in this area bounce back and increase as VRE works with more locations on new installations.

Development of ENGAGE

The Group’s proprietary VR education platform ENGAGE was commercially launched in December 2018.  VRE has developed and promoted ENGAGE against both technological and commercial headwinds, including the lack of availability of suitable hardware. The commercial issues were mainly associated with Brexit in the UK where companies reduced technology spending due to the uncertainty it caused. 

In July 2020, ENGAGE Mobile launched on Android phones and tablets, with the iOS version for iPhones and iPads later released in December 2020. Users can now host virtual events without a VR headset or device, thereby expanding ENGAGE’s addressable user base as it enables increased use of ENGAGE by large corporations to host virtual events. This was a major milestone achieved during the year and highlights VRE’s ability to quickly adapt to the market.

Furthermore, the management team’s perseverance has led the Group to sign partnerships with major organisations, including one of the leading world’s smart mobile device manufacturers HTC Corporation and US-based Victory XR, a leading provider of VR and Augmented Reality (“AR”) education solutions. The partnership with HTC has provided a platform and opportunity for ENGAGE within the Asian region, which is an area forecast to experience rapid growth in the VR market. The fact that these companies, with the robustness of their investment criteria, partnered with VRE is a terrific endorsement of ENGAGE and the opportunities it provides.

The ENGAGE platform is the ideal tool to meet the needs of the remote working world. The global COVID-19 pandemic has generated significant demand for VR solutions and there have been high levels of interest in our conferencing and collaboration tools. Our most popular products via the ENGAGE platform are our virtual campus and virtual offices where users can login to a persistent location and meet work colleagues to attend company meetings and events. Proving very popular late last year were virtual office parties and virtual graduation ceremonies. The Group has been working hard since the year end to ensure the platform is available to those who want to use it, releasing the platform on mobile phones, tablets, and iOS devices.

Standalone content

The Group also continues to produce award-winning standalone content to showcase VR/AR’s potential as a tool for educational purposes. Our first release Apollo 11 VR about the first mission to the moon has won multiple awards including a Time Warner “Future of Storytelling” award. Apollo 11 VR was one of first big VR hits when released on the Oculus Rift and the HTC Vive in 2016. A High-Definition version was re-released in November 2018. Apollo 11 VR has generated more than €1.9 million in revenues since its launch to this year-end. Furthermore, Titanic VR and Shuttle Commander, which launched in Q4 2018 and Q4 2019 respectively, continue to perform well and have generated a combined €1.1 million in revenues since their launches.

Although our standalone experiences have been highly successful for the group in the past, our focus is now principally on the delivery of ENGAGE as the next big communication, education and collaboration platform seeking to replace Microsoft Teams and Zoom for large group conferences and virtual events.

Outlook

There has been considerable progress in 2021, and VRE is now well placed to deliver long-term value to shareholders, initially through the execution of its medium-term outlook as announced on 22 January 2021. Management view the ENGAGE total addressable market to be between $10bn and $25bn based on the expected compound annual growth rate (“CAGR”) of between 12-23% forecast within the global team collaboration, global e-learning and global virtual events markets as per Grand View Research and Facts & Factors. 

I would like to take this opportunity to thank the management and employees for their hard work in what has been a challenging environment.  Furthermore, I want to thank our shareholders for their continued support.

Richard Cooper
Chairman
25 February 2021

CHIEF EXECUTIVE’S REVIEW the year ended 31 December 2020

Review of the Year

ENGAGE - Significant Progress Made

2020 was a challenging year, however it provided a significant opportunity for VRE. This was illustrated with the significant accelerated growth of the Group’s ENGAGE platform. During the year, over 60 commercial deals were signed to use the platform, compared to three in the previous financial year.

In the past six months, the user base of ENGAGE has increased by more than 700%. Revenue from the platform is now outstripping all other sources of revenue for the Group, with all metrics pointing to the continued accelerated growth of the platform in 2021 and beyond.  The significant progress made by the Group in FY20, including key partnerships such as HTC, Sky Ireland, and Tokyo Global Gateway, provides an opportunity to scale the business and create a path to profitability in the short to medium term.

Partnership with HTC

In May 2020, the Group announced that HTC had purchased a 20% equity stake in the Group. The acquisition of the stake followed the success of HTC’s annual Vive developer conference inside the ENGAGE platform. The platform hosted over 1,000 concurrent VR users with 1.1 million viewers watching the live stream.  Furthermore, VRE negotiated a commercial deal with HTC to resell ENGAGE services inside China under the Vive Session brand.

In October 2020, ENGAGE was launched in China following months of work with HTC.  Revenue from this partnership is expected to be generated from Q2 2021.  ENGAGE China has been rebranded as Vive Sessions inside the China region. HTC is working closely with the ENGAGE team on a new enterprise and education offering, which will be available later in 2021.  The APAC region, particularly China, South Korea and Japan, will be the key driver of the global virtual reality market through until 2030.  The Group’s partnership with HTC, the market leader in Asia for immersive hardware, places VRE in a strong position to capitalise on this market, providing customers with a combined hardware and software offering.

Additional Platforms

In 2020 the ENGAGE platform successfully hosted virtual events for a range of companies including Facebook, Vodafone, Xprize, the European Commission, Yahoo and HTC. This demand has continued into 2021 with multiple events already confirmed for the first half of 2021 including a number of HTC conferences.

Before 2020, the most significant barrier to adoption for the Group’s ENGAGE platform was its accessibility.  ENGAGE was only available on PC based VR devices. This barrier was overcome during the year through the launch of ENGAGE Mobile on Android phones and tablets in July 2020, with the iOS version for iPhones and iPads released in December 2020.  This has enabled increased use of ENGAGE by large corporations to host virtual events.

Facebook/Oculus Quest Release

The official release of ENGAGE on the Facebook/Oculus Quest Store in November 2020 was another milestone. The ENGAGE application was front and centre on the store under collaboration applications. This positioning drove many requests from corporations to host the ENGAGE platform for ease of installation and updates.  Facebook has also become a commercial user of ENGAGE by signing up for an enterprise account for internal use cases. 

The progress made in 2020 means that ENGAGE is now available to a global audience and easy to install on a range of platforms and devices. This has resulted in increased revenues and continued growth in ENGAGE users month on month.

ENGAGE Broadening Userbase

Originally, ENGAGE was marketed as an education and training platform to provide remote distance learning as well as tools for educators to create content. The platform has evolved to enable a broad spectrum of different use cases generating revenues for the Group in different ways.

ENGAGE now has three main types of users, which are:

• Education clients using ENGAGE Virtual Campus for remote classes offering persistent virtual campus locations, private branded learning environments with the ability to create and publish content and use virtual collaboration tools.
• Enterprise clients using ENGAGE Virtual Office for remote team collaboration and meetings offering persistent virtual office locations, private branded office environments with the ability to use virtual collaboration tools and virtual sales presentation tools.
• Event clients using ENGAGE Virtual Events to host safe large scale virtual events offering unique content possibilities with a large cost saving over traditional events.

Revenue from these three streams is currently evenly split. However, the Group expects to see a marked increase in Virtual Events and Virtual Office usage during 2021 now that the ENGAGE platform is accessible on a broader range of devices.

The Group now views ENGAGE as a comprehensive communications platform and believes that competition for future growth will be against video and text-based platforms such as Zoom, Microsoft Teams and Slack. While video-based platforms are primarily designed for one-on-one communication and not suited to hosting “virtual events” or large group meetings, ENGAGE provides a differentiated offering to the competition, as the platform was specifically designed to enable large groups to meet and interact naturally in virtual spaces. To this end, the Group is currently undertaking a rebranding of ENGAGE and will be investing in its marketing and business development to continue to support its growth trajectory.

ENGAGE Total Addressable Market (TAM)

The Group has estimated that ENGAGE’s total addressable market is between $10bn and $25bn, which is determined as follows as per Grand View Research and Facts & Factors:

• Global team collaboration software market size of $10 billion in 2020 with forecasted CAGR of 12.7% during the period 2020 to 2027;
• Global e-learning market size of $165 billion in 2020 with forecasted CAGR of 14.6% during the period 2020 to 2026; and
• Global events market size of $94 billion 2020 with forecasted CAGR of 23.2% during the period 2019 to 2027.

This presents a compelling opportunity for ENGAGE as the requirement for virtual, remote communications in response to COVID-19 and working-from-home phenomenon is accelerating forecast growth rates in these markets and the market share for VR and next generation solutions. The Group is well positioned with its current product offering to take advantage of this large global market and high growth forecasts.

Showcase Experiences

Showcase Experiences was an important part of the business and a key generator of revenue in prior years.  However, the Group’s focus is now on scaling the ENGAGE platform. Our Showcase Experiences continued to sell strongly on a range of different platforms throughout 2020.  Shuttle Commander was released on the popular Oculus Quest platform in September, and later PC-based VR devices via the Steam network in November.

Outlook

On 22 January 2021, VRE announced the Group’s medium-term outlook. The Group is targeting €10 million ENGAGE revenue generated from 500 active enterprise customers and 100,000 monthly users during the period FY-2023 to FY-2025. These key performance indicators are supported by the Group’s strategy, strong ENGAGE momentum and large global addressable market. This outlook captures and quantifies the upward trend targeted by the ENGAGE platform.

Furthermore, the Group is targeting a gross margin in excess of 80% once ENGAGE revenue is between €5 million – €10 million, a forecast retention rate of ENGAGE customers of at least 80% and estimated growth in average annual contract value in excess of €20,000, reflecting the targeted Enterprise and Institutional client base and ENGAGE value proposition.

In the past six months, we have begun to prove the monetisation strategy of ENGAGE, with over 60 commercial deals signed to use the platform in FY-2020. The strategy’s efficacy is also evident in the increasing average ENGAGE deal sizes, with some of our earlier commercial clients purchasing additional accounts and services leading to larger purchase orders.

With just two full-time business developers for the majority of 2020, the Group has closed deals during the year worth more than €1.8 million, which should be recognised over the next 36 months.  The Group has now hired an additional four business developers.  VRE will begin to allocate increased funding to the marketing and promotion of the ENGAGE platform as we look to grow in 2021 and beyond.

Following the deployment of the ENGAGE platform on the Chinese mainland in collaboration with HTC in late 2020, we expect to see the first revenues generated from this partnership realised in the first half of 2021. ENGAGE is now available on almost every platform globally, opening major opportunities where sales were previously limited to a small but growing marketplace.

VRE has made significant operational progress and achieved several key milestones during 2020. With a workforce of in excess of 50 people at the year end we will continue to grow the team during 2021 with strategic hires planned in a number of areas within the organisation to drive the growth of the business.

As the Group moves into 2021, it is well-positioned with increasing revenue, growing numbers of ENGAGE users, and an expanding market opportunity. As we look to scale the business and increase market share, VRE is poised to capitalise on its strong position in China.  China is the fastest-growing immersive market in the world. The Group looks forward to capitalising on the many exciting opportunities on the horizon.  VRE is focused on identifying new strategic partnerships to support the Group’s growth and expansion in 2021.

We are looking forward to the future with confidence.

David Whelan
Chief Executive Officer
25 February 2021

CHIEF FINANCIAL OFFICER’S REVIEW for the year ended 31 December 2020

I am pleased to report that revenue for the year was up 38% on the prior year from €1.0 million to €1.4 million, driven by a significant increase in demand for the ENGAGE platform. ENGAGE revenue was up 500% on the prior year from €0.1 million to €0.6 million.

EBITDA loss was €2.1 million compared to a loss of €1.4 million in the prior year and loss before tax was €2.7 million compared to a loss in the prior year of €1.9 million. This increased EBITDA loss is driven by reduced capitalisation of developer staff costs in 2020 in line with International Accounting Standards which were required to go through the income statement in 2020.

Operating cashflows were a net outflow of €2.0 million for the period.  The current run-rate of staff costs and other ongoing costs is approximately €250k per month.

At the balance sheet date, trade and other receivables were €358k, marginally ahead of trade and other payables at €357k. Trade receivables represented an average of 74 debtor days (2019: 52 days)

The Group’s cash position on 31 December 2020 was €2.0 million with no debt. The cash balance was significantly strengthened during the year by a successful €3.0 million (€2.93 million net of expenses) share subscription by HTC.

Séamus Larrissey
Chief Financial Officer
25 February 2021

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
for the Year Ended 31 December 2020

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2020

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

COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2020

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

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2020

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

COMPANY STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2020

The accompanying notes form an integral part of these financial statements

CONSOLIDATED STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2020

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

COMPANY STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2020

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.

2021

VR Education (AIM: VRE; Euronext Growth: 6VR), a virtual reality ('VR') technology company, announces its results for the year ended 31 December 2020.

VRE is focused on becoming a leading global provider of virtual communications solutions through its proprietary software platform, ENGAGE. Having signed contracts with 60 clients during 2020, the Group's core focus is on scaling the revenue, client and user base on ENGAGE through three solutions: Virtual Campus, Virtual Office and Virtual Events.

Financial Highlights:

• Group revenue increased by 38% to €1.4 million (2019: €1.0 million) driven by a significant increase in new clients and activity on ENGAGE
• ENGAGE revenue was up 550% to €0.6 million (2019: €0.1 million) following the onset of global lockdowns
• Gross profit increased by 63% to €1 million (2019: €0.6 million) as gross margin improved as proportion of revenue from ENGAGE increased
• Cash position on 31 December 2020 was €2.0 million with no debt

Operational Highlights:

• Acceleration of demand for ENGAGE Platform and partnerships with major organisations, including smart mobile device manufacturer HTC Corporation, Sky Ireland, Tokyo Global Gateway and Victory XR, a leading provider of VR and AR education solutions
• Value of ENGAGE Subscriptions grew to more than €1.8 million with average deal size increasing.  60 customers signed contracts in 2020.
• Following onset of Covid, launched Engage Events in March hosting virtual events for a range of companies and organisations, including the European Commission, Facebook, HTC, Vodafone, Xprize and Yahoo
• Substantial increase in potential user base through the launch of ENGAGE Mobile (for Android and iOS) enabling customers to use ENGAGE without a VR headset or device
• ENGAGE launched to HTC customers in Greater China Region under the Vive Session brand, following strategic investment from HTC in May 2020
• The official release of ENGAGE on the Facebook/Oculus Quest Store in November 2020

COVID-19

• The pandemic generated significant demand for remote and virtual communication solutions offered by VRE. Meets using ENGAGE provide a more immersive alternative to traditional video-based solutions such as MS Teams and Zoom
• Strong demand for ENGAGE’s Virtual Campus and Virtual Office enabling users to virtually meet work colleagues or attend company meetings. Also used for virtual office parties and graduation ceremonies

Medium-Term Outlook

In January 2021 VRE launched an ambitious strategy to achieve a €10 million annualised revenue milestone for ENGAGE during 2023 - 2025 (the“ Medium Term Outlook”):

• To generate €10 million ENGAGE revenue from 500 active enterprise customers and 100,000 monthly users
• To deliver a gross margin in excess of 80% once ENGAGE revenue is between €5 million and €10 million annually
• To retain at least 80% of ENGAGE customers
• To grow average annual contract value to in excess of €20,000, reflecting the targeted Enterprise and Institutional client base and ENGAGE value proposition

David Whelan, CEO, VRE, said: “2020 was a formative year for VRE. Having launched our software platform ENGAGE 13 months earlier, we were well positioned to benefit from the pandemic-driven demand for virtual and remote modes of communication and interaction. In 2020, we successfully commercialised our Virtual Office, Virtual Campus and Virtual Events solutions with a number of multi-national enterprises and international institutions. We are now focussed on building our sales organisation and partnerships to bring ENGAGE to the broadest possible audience in 2021.

“Following the onset of the pandemic, the shift to remote working, online learning and virtual events led to a significant increase in demand for virtual communications solutions such as ENGAGE. The pandemic has been a catalyst in terms of permanently changing the traditional practices and mindsets of companies and organisations towards communication. At VRE, we can see this change through the diversity of our growing user base which includes large blue-chip companies and leading international organisations, as well as our own behaviour such as hosting all our daily team meetings in  VR. The use of virtual communications is only set to grow.”

Investor Presentation

CEO David Whelan and CFO Séamus Larrissey will provide a live presentation relating to the Full Year Results via the Investor Meet Company platform today at 10:00am GMT.

The presentation is open to all existing and potential shareholders. Questions can be submitted at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet VR Education via: https://www.investormeetcompany.com/vr-education-holdings-plc/register-investor

For further information, please contact:

Notes to Editors:
VR Education is (AIM: VRE; Euronext Growth: 6VR) is a leading virtual reality ('VR') technology company focused on becoming the world's largest crossed reality ('XR') communications, training and virtual events platform provider. The Irish based Group's core focus is the commercialisation of its online virtual communications platform called ENGAGE, which provides a platform for creating, sharing and delivering proprietary and third-party XR content in education, training and online events.

On 12 March 2018, VR Education listed on the AIM market of the London Stock Exchange and on the Enterprise Securities Market, a market regulated by Euronext Dublin.  For further information, please visit www.vreducationholdings.com.

CHAIRMAN’S STATEMENT for the year ended 31 December 2020

I am pleased to present the Annual Report and Financial Statements of VR Education Holdings PLC (“VRE” or “the Group”), a company incorporated in the Republic of Ireland, for the year ended 31 December 2020 (‘FY-2020’).

Overview of the year

This is the third set of financial statements I am proud to present to shareholders following the successful fundraising and IPO in March 2018.  VRE is an early stage, growing company with unique intellectual property in both content and operating software in the world of Virtual Reality (“VR”).

Revenues in FY-2020 grew by 38% to €1.4 million (FY-2019: €1.0 million) generating a gross profit margin of 72% and gross profit of €1,013k (FY-2019: €622k).

COVID-19

VRE has the bulk of its operations in Waterford in the Republic of Ireland. Prior to the Republic’s mandated lockdown, the Group made the prudent decision to have all 37 employees work remotely to ensure their safety. This action has not had any negative effect on productivity within the Group as all employees have remained dedicated and professional throughout this difficult period.

Our ability to utilise our own products for conferences as well as other meeting facilities has proved to be invaluable, not least as it gave us greater insights into the needs of customers and our ability to serve them. As an example, the Group now holds all its daily stand-up and design meetings inside the ENGAGE platform which has proved very successful. VRE has also hired new staff from the US and UK who will always work remotely. These employees only attend staff meetings and events virtually. This has helped the Group improve the platform making it easier to sell platform licenses to companies such as HTC, Facebook and others.

The only negative impact COVID-19 has had on the Group to date has been the closure of all museums and exhibits which have been hosting VRE content on a revenue share basis. We expect this to have cost in the region of €300k in 2020.  However, as locations reopen in the latter part of 2021 and 2022, the Group expects to see revenues in this area bounce back and increase as VRE works with more locations on new installations.

Development of ENGAGE

The Group’s proprietary VR education platform ENGAGE was commercially launched in December 2018.  VRE has developed and promoted ENGAGE against both technological and commercial headwinds, including the lack of availability of suitable hardware. The commercial issues were mainly associated with Brexit in the UK where companies reduced technology spending due to the uncertainty it caused. 

In July 2020, ENGAGE Mobile launched on Android phones and tablets, with the iOS version for iPhones and iPads later released in December 2020. Users can now host virtual events without a VR headset or device, thereby expanding ENGAGE’s addressable user base as it enables increased use of ENGAGE by large corporations to host virtual events. This was a major milestone achieved during the year and highlights VRE’s ability to quickly adapt to the market.

Furthermore, the management team’s perseverance has led the Group to sign partnerships with major organisations, including one of the leading world’s smart mobile device manufacturers HTC Corporation and US-based Victory XR, a leading provider of VR and Augmented Reality (“AR”) education solutions. The partnership with HTC has provided a platform and opportunity for ENGAGE within the Asian region, which is an area forecast to experience rapid growth in the VR market. The fact that these companies, with the robustness of their investment criteria, partnered with VRE is a terrific endorsement of ENGAGE and the opportunities it provides.

The ENGAGE platform is the ideal tool to meet the needs of the remote working world. The global COVID-19 pandemic has generated significant demand for VR solutions and there have been high levels of interest in our conferencing and collaboration tools. Our most popular products via the ENGAGE platform are our virtual campus and virtual offices where users can login to a persistent location and meet work colleagues to attend company meetings and events. Proving very popular late last year were virtual office parties and virtual graduation ceremonies. The Group has been working hard since the year end to ensure the platform is available to those who want to use it, releasing the platform on mobile phones, tablets, and iOS devices.

Standalone content

The Group also continues to produce award-winning standalone content to showcase VR/AR’s potential as a tool for educational purposes. Our first release Apollo 11 VR about the first mission to the moon has won multiple awards including a Time Warner “Future of Storytelling” award. Apollo 11 VR was one of first big VR hits when released on the Oculus Rift and the HTC Vive in 2016. A High-Definition version was re-released in November 2018. Apollo 11 VR has generated more than €1.9 million in revenues since its launch to this year-end. Furthermore, Titanic VR and Shuttle Commander, which launched in Q4 2018 and Q4 2019 respectively, continue to perform well and have generated a combined €1.1 million in revenues since their launches.

Although our standalone experiences have been highly successful for the group in the past, our focus is now principally on the delivery of ENGAGE as the next big communication, education and collaboration platform seeking to replace Microsoft Teams and Zoom for large group conferences and virtual events.

Outlook

There has been considerable progress in 2021, and VRE is now well placed to deliver long-term value to shareholders, initially through the execution of its medium-term outlook as announced on 22 January 2021. Management view the ENGAGE total addressable market to be between $10bn and $25bn based on the expected compound annual growth rate (“CAGR”) of between 12-23% forecast within the global team collaboration, global e-learning and global virtual events markets as per Grand View Research and Facts & Factors. 

I would like to take this opportunity to thank the management and employees for their hard work in what has been a challenging environment.  Furthermore, I want to thank our shareholders for their continued support.

Richard Cooper
Chairman
25 February 2021

CHIEF EXECUTIVE’S REVIEW the year ended 31 December 2020

Review of the Year

ENGAGE - Significant Progress Made

2020 was a challenging year, however it provided a significant opportunity for VRE. This was illustrated with the significant accelerated growth of the Group’s ENGAGE platform. During the year, over 60 commercial deals were signed to use the platform, compared to three in the previous financial year.

In the past six months, the user base of ENGAGE has increased by more than 700%. Revenue from the platform is now outstripping all other sources of revenue for the Group, with all metrics pointing to the continued accelerated growth of the platform in 2021 and beyond.  The significant progress made by the Group in FY20, including key partnerships such as HTC, Sky Ireland, and Tokyo Global Gateway, provides an opportunity to scale the business and create a path to profitability in the short to medium term.

Partnership with HTC

In May 2020, the Group announced that HTC had purchased a 20% equity stake in the Group. The acquisition of the stake followed the success of HTC’s annual Vive developer conference inside the ENGAGE platform. The platform hosted over 1,000 concurrent VR users with 1.1 million viewers watching the live stream.  Furthermore, VRE negotiated a commercial deal with HTC to resell ENGAGE services inside China under the Vive Session brand.

In October 2020, ENGAGE was launched in China following months of work with HTC.  Revenue from this partnership is expected to be generated from Q2 2021.  ENGAGE China has been rebranded as Vive Sessions inside the China region. HTC is working closely with the ENGAGE team on a new enterprise and education offering, which will be available later in 2021.  The APAC region, particularly China, South Korea and Japan, will be the key driver of the global virtual reality market through until 2030.  The Group’s partnership with HTC, the market leader in Asia for immersive hardware, places VRE in a strong position to capitalise on this market, providing customers with a combined hardware and software offering.

Additional Platforms

In 2020 the ENGAGE platform successfully hosted virtual events for a range of companies including Facebook, Vodafone, Xprize, the European Commission, Yahoo and HTC. This demand has continued into 2021 with multiple events already confirmed for the first half of 2021 including a number of HTC conferences.

Before 2020, the most significant barrier to adoption for the Group’s ENGAGE platform was its accessibility.  ENGAGE was only available on PC based VR devices. This barrier was overcome during the year through the launch of ENGAGE Mobile on Android phones and tablets in July 2020, with the iOS version for iPhones and iPads released in December 2020.  This has enabled increased use of ENGAGE by large corporations to host virtual events.

Facebook/Oculus Quest Release

The official release of ENGAGE on the Facebook/Oculus Quest Store in November 2020 was another milestone. The ENGAGE application was front and centre on the store under collaboration applications. This positioning drove many requests from corporations to host the ENGAGE platform for ease of installation and updates.  Facebook has also become a commercial user of ENGAGE by signing up for an enterprise account for internal use cases. 

The progress made in 2020 means that ENGAGE is now available to a global audience and easy to install on a range of platforms and devices. This has resulted in increased revenues and continued growth in ENGAGE users month on month.

ENGAGE Broadening Userbase

Originally, ENGAGE was marketed as an education and training platform to provide remote distance learning as well as tools for educators to create content. The platform has evolved to enable a broad spectrum of different use cases generating revenues for the Group in different ways.

ENGAGE now has three main types of users, which are:

• Education clients using ENGAGE Virtual Campus for remote classes offering persistent virtual campus locations, private branded learning environments with the ability to create and publish content and use virtual collaboration tools.
• Enterprise clients using ENGAGE Virtual Office for remote team collaboration and meetings offering persistent virtual office locations, private branded office environments with the ability to use virtual collaboration tools and virtual sales presentation tools.
• Event clients using ENGAGE Virtual Events to host safe large scale virtual events offering unique content possibilities with a large cost saving over traditional events.

Revenue from these three streams is currently evenly split. However, the Group expects to see a marked increase in Virtual Events and Virtual Office usage during 2021 now that the ENGAGE platform is accessible on a broader range of devices.

The Group now views ENGAGE as a comprehensive communications platform and believes that competition for future growth will be against video and text-based platforms such as Zoom, Microsoft Teams and Slack. While video-based platforms are primarily designed for one-on-one communication and not suited to hosting “virtual events” or large group meetings, ENGAGE provides a differentiated offering to the competition, as the platform was specifically designed to enable large groups to meet and interact naturally in virtual spaces. To this end, the Group is currently undertaking a rebranding of ENGAGE and will be investing in its marketing and business development to continue to support its growth trajectory.

ENGAGE Total Addressable Market (TAM)

The Group has estimated that ENGAGE’s total addressable market is between $10bn and $25bn, which is determined as follows as per Grand View Research and Facts & Factors:

• Global team collaboration software market size of $10 billion in 2020 with forecasted CAGR of 12.7% during the period 2020 to 2027;
• Global e-learning market size of $165 billion in 2020 with forecasted CAGR of 14.6% during the period 2020 to 2026; and
• Global events market size of $94 billion 2020 with forecasted CAGR of 23.2% during the period 2019 to 2027.

This presents a compelling opportunity for ENGAGE as the requirement for virtual, remote communications in response to COVID-19 and working-from-home phenomenon is accelerating forecast growth rates in these markets and the market share for VR and next generation solutions. The Group is well positioned with its current product offering to take advantage of this large global market and high growth forecasts.

Showcase Experiences

Showcase Experiences was an important part of the business and a key generator of revenue in prior years.  However, the Group’s focus is now on scaling the ENGAGE platform. Our Showcase Experiences continued to sell strongly on a range of different platforms throughout 2020.  Shuttle Commander was released on the popular Oculus Quest platform in September, and later PC-based VR devices via the Steam network in November.

Outlook

On 22 January 2021, VRE announced the Group’s medium-term outlook. The Group is targeting €10 million ENGAGE revenue generated from 500 active enterprise customers and 100,000 monthly users during the period FY-2023 to FY-2025. These key performance indicators are supported by the Group’s strategy, strong ENGAGE momentum and large global addressable market. This outlook captures and quantifies the upward trend targeted by the ENGAGE platform.

Furthermore, the Group is targeting a gross margin in excess of 80% once ENGAGE revenue is between €5 million – €10 million, a forecast retention rate of ENGAGE customers of at least 80% and estimated growth in average annual contract value in excess of €20,000, reflecting the targeted Enterprise and Institutional client base and ENGAGE value proposition.

In the past six months, we have begun to prove the monetisation strategy of ENGAGE, with over 60 commercial deals signed to use the platform in FY-2020. The strategy’s efficacy is also evident in the increasing average ENGAGE deal sizes, with some of our earlier commercial clients purchasing additional accounts and services leading to larger purchase orders.

With just two full-time business developers for the majority of 2020, the Group has closed deals during the year worth more than €1.8 million, which should be recognised over the next 36 months.  The Group has now hired an additional four business developers.  VRE will begin to allocate increased funding to the marketing and promotion of the ENGAGE platform as we look to grow in 2021 and beyond.

Following the deployment of the ENGAGE platform on the Chinese mainland in collaboration with HTC in late 2020, we expect to see the first revenues generated from this partnership realised in the first half of 2021. ENGAGE is now available on almost every platform globally, opening major opportunities where sales were previously limited to a small but growing marketplace.

VRE has made significant operational progress and achieved several key milestones during 2020. With a workforce of in excess of 50 people at the year end we will continue to grow the team during 2021 with strategic hires planned in a number of areas within the organisation to drive the growth of the business.

As the Group moves into 2021, it is well-positioned with increasing revenue, growing numbers of ENGAGE users, and an expanding market opportunity. As we look to scale the business and increase market share, VRE is poised to capitalise on its strong position in China.  China is the fastest-growing immersive market in the world. The Group looks forward to capitalising on the many exciting opportunities on the horizon.  VRE is focused on identifying new strategic partnerships to support the Group’s growth and expansion in 2021.

We are looking forward to the future with confidence.

David Whelan
Chief Executive Officer
25 February 2021

CHIEF FINANCIAL OFFICER’S REVIEW for the year ended 31 December 2020

I am pleased to report that revenue for the year was up 38% on the prior year from €1.0 million to €1.4 million, driven by a significant increase in demand for the ENGAGE platform. ENGAGE revenue was up 500% on the prior year from €0.1 million to €0.6 million.

EBITDA loss was €2.1 million compared to a loss of €1.4 million in the prior year and loss before tax was €2.7 million compared to a loss in the prior year of €1.9 million. This increased EBITDA loss is driven by reduced capitalisation of developer staff costs in 2020 in line with International Accounting Standards which were required to go through the income statement in 2020.

Operating cashflows were a net outflow of €2.0 million for the period.  The current run-rate of staff costs and other ongoing costs is approximately €250k per month.

At the balance sheet date, trade and other receivables were €358k, marginally ahead of trade and other payables at €357k. Trade receivables represented an average of 74 debtor days (2019: 52 days)

The Group’s cash position on 31 December 2020 was €2.0 million with no debt. The cash balance was significantly strengthened during the year by a successful €3.0 million (€2.93 million net of expenses) share subscription by HTC.

Séamus Larrissey
Chief Financial Officer
25 February 2021

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
for the Year Ended 31 December 2020

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2020

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

COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2020

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

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2020

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

COMPANY STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2020

The accompanying notes form an integral part of these financial statements

CONSOLIDATED STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2020

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

COMPANY STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2020

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.

2020

VR Education (AIM: VRE; Euronext Growth: 6VR), a virtual reality ('VR') technology company, announces its results for the year ended 31 December 2020.

VRE is focused on becoming a leading global provider of virtual communications solutions through its proprietary software platform, ENGAGE. Having signed contracts with 60 clients during 2020, the Group's core focus is on scaling the revenue, client and user base on ENGAGE through three solutions: Virtual Campus, Virtual Office and Virtual Events.

Financial Highlights:

• Group revenue increased by 38% to €1.4 million (2019: €1.0 million) driven by a significant increase in new clients and activity on ENGAGE
• ENGAGE revenue was up 550% to €0.6 million (2019: €0.1 million) following the onset of global lockdowns
• Gross profit increased by 63% to €1 million (2019: €0.6 million) as gross margin improved as proportion of revenue from ENGAGE increased
• Cash position on 31 December 2020 was €2.0 million with no debt

Operational Highlights:

• Acceleration of demand for ENGAGE Platform and partnerships with major organisations, including smart mobile device manufacturer HTC Corporation, Sky Ireland, Tokyo Global Gateway and Victory XR, a leading provider of VR and AR education solutions
• Value of ENGAGE Subscriptions grew to more than €1.8 million with average deal size increasing.  60 customers signed contracts in 2020.
• Following onset of Covid, launched Engage Events in March hosting virtual events for a range of companies and organisations, including the European Commission, Facebook, HTC, Vodafone, Xprize and Yahoo
• Substantial increase in potential user base through the launch of ENGAGE Mobile (for Android and iOS) enabling customers to use ENGAGE without a VR headset or device
• ENGAGE launched to HTC customers in Greater China Region under the Vive Session brand, following strategic investment from HTC in May 2020
• The official release of ENGAGE on the Facebook/Oculus Quest Store in November 2020

COVID-19

• The pandemic generated significant demand for remote and virtual communication solutions offered by VRE. Meets using ENGAGE provide a more immersive alternative to traditional video-based solutions such as MS Teams and Zoom
• Strong demand for ENGAGE’s Virtual Campus and Virtual Office enabling users to virtually meet work colleagues or attend company meetings. Also used for virtual office parties and graduation ceremonies

Medium-Term Outlook

In January 2021 VRE launched an ambitious strategy to achieve a €10 million annualised revenue milestone for ENGAGE during 2023 - 2025 (the“ Medium Term Outlook”):

• To generate €10 million ENGAGE revenue from 500 active enterprise customers and 100,000 monthly users
• To deliver a gross margin in excess of 80% once ENGAGE revenue is between €5 million and €10 million annually
• To retain at least 80% of ENGAGE customers
• To grow average annual contract value to in excess of €20,000, reflecting the targeted Enterprise and Institutional client base and ENGAGE value proposition

David Whelan, CEO, VRE, said: “2020 was a formative year for VRE. Having launched our software platform ENGAGE 13 months earlier, we were well positioned to benefit from the pandemic-driven demand for virtual and remote modes of communication and interaction. In 2020, we successfully commercialised our Virtual Office, Virtual Campus and Virtual Events solutions with a number of multi-national enterprises and international institutions. We are now focussed on building our sales organisation and partnerships to bring ENGAGE to the broadest possible audience in 2021.

“Following the onset of the pandemic, the shift to remote working, online learning and virtual events led to a significant increase in demand for virtual communications solutions such as ENGAGE. The pandemic has been a catalyst in terms of permanently changing the traditional practices and mindsets of companies and organisations towards communication. At VRE, we can see this change through the diversity of our growing user base which includes large blue-chip companies and leading international organisations, as well as our own behaviour such as hosting all our daily team meetings in  VR. The use of virtual communications is only set to grow.”

Investor Presentation

CEO David Whelan and CFO Séamus Larrissey will provide a live presentation relating to the Full Year Results via the Investor Meet Company platform today at 10:00am GMT.

The presentation is open to all existing and potential shareholders. Questions can be submitted at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet VR Education via: https://www.investormeetcompany.com/vr-education-holdings-plc/register-investor

For further information, please contact:

Notes to Editors:
VR Education is (AIM: VRE; Euronext Growth: 6VR) is a leading virtual reality ('VR') technology company focused on becoming the world's largest crossed reality ('XR') communications, training and virtual events platform provider. The Irish based Group's core focus is the commercialisation of its online virtual communications platform called ENGAGE, which provides a platform for creating, sharing and delivering proprietary and third-party XR content in education, training and online events.

On 12 March 2018, VR Education listed on the AIM market of the London Stock Exchange and on the Enterprise Securities Market, a market regulated by Euronext Dublin.  For further information, please visit www.vreducationholdings.com.

CHAIRMAN’S STATEMENT for the year ended 31 December 2020

I am pleased to present the Annual Report and Financial Statements of VR Education Holdings PLC (“VRE” or “the Group”), a company incorporated in the Republic of Ireland, for the year ended 31 December 2020 (‘FY-2020’).

Overview of the year

This is the third set of financial statements I am proud to present to shareholders following the successful fundraising and IPO in March 2018.  VRE is an early stage, growing company with unique intellectual property in both content and operating software in the world of Virtual Reality (“VR”).

Revenues in FY-2020 grew by 38% to €1.4 million (FY-2019: €1.0 million) generating a gross profit margin of 72% and gross profit of €1,013k (FY-2019: €622k).

COVID-19

VRE has the bulk of its operations in Waterford in the Republic of Ireland. Prior to the Republic’s mandated lockdown, the Group made the prudent decision to have all 37 employees work remotely to ensure their safety. This action has not had any negative effect on productivity within the Group as all employees have remained dedicated and professional throughout this difficult period.

Our ability to utilise our own products for conferences as well as other meeting facilities has proved to be invaluable, not least as it gave us greater insights into the needs of customers and our ability to serve them. As an example, the Group now holds all its daily stand-up and design meetings inside the ENGAGE platform which has proved very successful. VRE has also hired new staff from the US and UK who will always work remotely. These employees only attend staff meetings and events virtually. This has helped the Group improve the platform making it easier to sell platform licenses to companies such as HTC, Facebook and others.

The only negative impact COVID-19 has had on the Group to date has been the closure of all museums and exhibits which have been hosting VRE content on a revenue share basis. We expect this to have cost in the region of €300k in 2020.  However, as locations reopen in the latter part of 2021 and 2022, the Group expects to see revenues in this area bounce back and increase as VRE works with more locations on new installations.

Development of ENGAGE

The Group’s proprietary VR education platform ENGAGE was commercially launched in December 2018.  VRE has developed and promoted ENGAGE against both technological and commercial headwinds, including the lack of availability of suitable hardware. The commercial issues were mainly associated with Brexit in the UK where companies reduced technology spending due to the uncertainty it caused. 

In July 2020, ENGAGE Mobile launched on Android phones and tablets, with the iOS version for iPhones and iPads later released in December 2020. Users can now host virtual events without a VR headset or device, thereby expanding ENGAGE’s addressable user base as it enables increased use of ENGAGE by large corporations to host virtual events. This was a major milestone achieved during the year and highlights VRE’s ability to quickly adapt to the market.

Furthermore, the management team’s perseverance has led the Group to sign partnerships with major organisations, including one of the leading world’s smart mobile device manufacturers HTC Corporation and US-based Victory XR, a leading provider of VR and Augmented Reality (“AR”) education solutions. The partnership with HTC has provided a platform and opportunity for ENGAGE within the Asian region, which is an area forecast to experience rapid growth in the VR market. The fact that these companies, with the robustness of their investment criteria, partnered with VRE is a terrific endorsement of ENGAGE and the opportunities it provides.

The ENGAGE platform is the ideal tool to meet the needs of the remote working world. The global COVID-19 pandemic has generated significant demand for VR solutions and there have been high levels of interest in our conferencing and collaboration tools. Our most popular products via the ENGAGE platform are our virtual campus and virtual offices where users can login to a persistent location and meet work colleagues to attend company meetings and events. Proving very popular late last year were virtual office parties and virtual graduation ceremonies. The Group has been working hard since the year end to ensure the platform is available to those who want to use it, releasing the platform on mobile phones, tablets, and iOS devices.

Standalone content

The Group also continues to produce award-winning standalone content to showcase VR/AR’s potential as a tool for educational purposes. Our first release Apollo 11 VR about the first mission to the moon has won multiple awards including a Time Warner “Future of Storytelling” award. Apollo 11 VR was one of first big VR hits when released on the Oculus Rift and the HTC Vive in 2016. A High-Definition version was re-released in November 2018. Apollo 11 VR has generated more than €1.9 million in revenues since its launch to this year-end. Furthermore, Titanic VR and Shuttle Commander, which launched in Q4 2018 and Q4 2019 respectively, continue to perform well and have generated a combined €1.1 million in revenues since their launches.

Although our standalone experiences have been highly successful for the group in the past, our focus is now principally on the delivery of ENGAGE as the next big communication, education and collaboration platform seeking to replace Microsoft Teams and Zoom for large group conferences and virtual events.

Outlook

There has been considerable progress in 2021, and VRE is now well placed to deliver long-term value to shareholders, initially through the execution of its medium-term outlook as announced on 22 January 2021. Management view the ENGAGE total addressable market to be between $10bn and $25bn based on the expected compound annual growth rate (“CAGR”) of between 12-23% forecast within the global team collaboration, global e-learning and global virtual events markets as per Grand View Research and Facts & Factors. 

I would like to take this opportunity to thank the management and employees for their hard work in what has been a challenging environment.  Furthermore, I want to thank our shareholders for their continued support.

Richard Cooper
Chairman
25 February 2021

CHIEF EXECUTIVE’S REVIEW the year ended 31 December 2020

Review of the Year

ENGAGE - Significant Progress Made

2020 was a challenging year, however it provided a significant opportunity for VRE. This was illustrated with the significant accelerated growth of the Group’s ENGAGE platform. During the year, over 60 commercial deals were signed to use the platform, compared to three in the previous financial year.

In the past six months, the user base of ENGAGE has increased by more than 700%. Revenue from the platform is now outstripping all other sources of revenue for the Group, with all metrics pointing to the continued accelerated growth of the platform in 2021 and beyond.  The significant progress made by the Group in FY20, including key partnerships such as HTC, Sky Ireland, and Tokyo Global Gateway, provides an opportunity to scale the business and create a path to profitability in the short to medium term.

Partnership with HTC

In May 2020, the Group announced that HTC had purchased a 20% equity stake in the Group. The acquisition of the stake followed the success of HTC’s annual Vive developer conference inside the ENGAGE platform. The platform hosted over 1,000 concurrent VR users with 1.1 million viewers watching the live stream.  Furthermore, VRE negotiated a commercial deal with HTC to resell ENGAGE services inside China under the Vive Session brand.

In October 2020, ENGAGE was launched in China following months of work with HTC.  Revenue from this partnership is expected to be generated from Q2 2021.  ENGAGE China has been rebranded as Vive Sessions inside the China region. HTC is working closely with the ENGAGE team on a new enterprise and education offering, which will be available later in 2021.  The APAC region, particularly China, South Korea and Japan, will be the key driver of the global virtual reality market through until 2030.  The Group’s partnership with HTC, the market leader in Asia for immersive hardware, places VRE in a strong position to capitalise on this market, providing customers with a combined hardware and software offering.

Additional Platforms

In 2020 the ENGAGE platform successfully hosted virtual events for a range of companies including Facebook, Vodafone, Xprize, the European Commission, Yahoo and HTC. This demand has continued into 2021 with multiple events already confirmed for the first half of 2021 including a number of HTC conferences.

Before 2020, the most significant barrier to adoption for the Group’s ENGAGE platform was its accessibility.  ENGAGE was only available on PC based VR devices. This barrier was overcome during the year through the launch of ENGAGE Mobile on Android phones and tablets in July 2020, with the iOS version for iPhones and iPads released in December 2020.  This has enabled increased use of ENGAGE by large corporations to host virtual events.

Facebook/Oculus Quest Release

The official release of ENGAGE on the Facebook/Oculus Quest Store in November 2020 was another milestone. The ENGAGE application was front and centre on the store under collaboration applications. This positioning drove many requests from corporations to host the ENGAGE platform for ease of installation and updates.  Facebook has also become a commercial user of ENGAGE by signing up for an enterprise account for internal use cases. 

The progress made in 2020 means that ENGAGE is now available to a global audience and easy to install on a range of platforms and devices. This has resulted in increased revenues and continued growth in ENGAGE users month on month.

ENGAGE Broadening Userbase

Originally, ENGAGE was marketed as an education and training platform to provide remote distance learning as well as tools for educators to create content. The platform has evolved to enable a broad spectrum of different use cases generating revenues for the Group in different ways.

ENGAGE now has three main types of users, which are:

• Education clients using ENGAGE Virtual Campus for remote classes offering persistent virtual campus locations, private branded learning environments with the ability to create and publish content and use virtual collaboration tools.
• Enterprise clients using ENGAGE Virtual Office for remote team collaboration and meetings offering persistent virtual office locations, private branded office environments with the ability to use virtual collaboration tools and virtual sales presentation tools.
• Event clients using ENGAGE Virtual Events to host safe large scale virtual events offering unique content possibilities with a large cost saving over traditional events.

Revenue from these three streams is currently evenly split. However, the Group expects to see a marked increase in Virtual Events and Virtual Office usage during 2021 now that the ENGAGE platform is accessible on a broader range of devices.

The Group now views ENGAGE as a comprehensive communications platform and believes that competition for future growth will be against video and text-based platforms such as Zoom, Microsoft Teams and Slack. While video-based platforms are primarily designed for one-on-one communication and not suited to hosting “virtual events” or large group meetings, ENGAGE provides a differentiated offering to the competition, as the platform was specifically designed to enable large groups to meet and interact naturally in virtual spaces. To this end, the Group is currently undertaking a rebranding of ENGAGE and will be investing in its marketing and business development to continue to support its growth trajectory.

ENGAGE Total Addressable Market (TAM)

The Group has estimated that ENGAGE’s total addressable market is between $10bn and $25bn, which is determined as follows as per Grand View Research and Facts & Factors:

• Global team collaboration software market size of $10 billion in 2020 with forecasted CAGR of 12.7% during the period 2020 to 2027;
• Global e-learning market size of $165 billion in 2020 with forecasted CAGR of 14.6% during the period 2020 to 2026; and
• Global events market size of $94 billion 2020 with forecasted CAGR of 23.2% during the period 2019 to 2027.

This presents a compelling opportunity for ENGAGE as the requirement for virtual, remote communications in response to COVID-19 and working-from-home phenomenon is accelerating forecast growth rates in these markets and the market share for VR and next generation solutions. The Group is well positioned with its current product offering to take advantage of this large global market and high growth forecasts.

Showcase Experiences

Showcase Experiences was an important part of the business and a key generator of revenue in prior years.  However, the Group’s focus is now on scaling the ENGAGE platform. Our Showcase Experiences continued to sell strongly on a range of different platforms throughout 2020.  Shuttle Commander was released on the popular Oculus Quest platform in September, and later PC-based VR devices via the Steam network in November.

Outlook

On 22 January 2021, VRE announced the Group’s medium-term outlook. The Group is targeting €10 million ENGAGE revenue generated from 500 active enterprise customers and 100,000 monthly users during the period FY-2023 to FY-2025. These key performance indicators are supported by the Group’s strategy, strong ENGAGE momentum and large global addressable market. This outlook captures and quantifies the upward trend targeted by the ENGAGE platform.

Furthermore, the Group is targeting a gross margin in excess of 80% once ENGAGE revenue is between €5 million – €10 million, a forecast retention rate of ENGAGE customers of at least 80% and estimated growth in average annual contract value in excess of €20,000, reflecting the targeted Enterprise and Institutional client base and ENGAGE value proposition.

In the past six months, we have begun to prove the monetisation strategy of ENGAGE, with over 60 commercial deals signed to use the platform in FY-2020. The strategy’s efficacy is also evident in the increasing average ENGAGE deal sizes, with some of our earlier commercial clients purchasing additional accounts and services leading to larger purchase orders.

With just two full-time business developers for the majority of 2020, the Group has closed deals during the year worth more than €1.8 million, which should be recognised over the next 36 months.  The Group has now hired an additional four business developers.  VRE will begin to allocate increased funding to the marketing and promotion of the ENGAGE platform as we look to grow in 2021 and beyond.

Following the deployment of the ENGAGE platform on the Chinese mainland in collaboration with HTC in late 2020, we expect to see the first revenues generated from this partnership realised in the first half of 2021. ENGAGE is now available on almost every platform globally, opening major opportunities where sales were previously limited to a small but growing marketplace.

VRE has made significant operational progress and achieved several key milestones during 2020. With a workforce of in excess of 50 people at the year end we will continue to grow the team during 2021 with strategic hires planned in a number of areas within the organisation to drive the growth of the business.

As the Group moves into 2021, it is well-positioned with increasing revenue, growing numbers of ENGAGE users, and an expanding market opportunity. As we look to scale the business and increase market share, VRE is poised to capitalise on its strong position in China.  China is the fastest-growing immersive market in the world. The Group looks forward to capitalising on the many exciting opportunities on the horizon.  VRE is focused on identifying new strategic partnerships to support the Group’s growth and expansion in 2021.

We are looking forward to the future with confidence.

David Whelan
Chief Executive Officer
25 February 2021

CHIEF FINANCIAL OFFICER’S REVIEW for the year ended 31 December 2020

I am pleased to report that revenue for the year was up 38% on the prior year from €1.0 million to €1.4 million, driven by a significant increase in demand for the ENGAGE platform. ENGAGE revenue was up 500% on the prior year from €0.1 million to €0.6 million.

EBITDA loss was €2.1 million compared to a loss of €1.4 million in the prior year and loss before tax was €2.7 million compared to a loss in the prior year of €1.9 million. This increased EBITDA loss is driven by reduced capitalisation of developer staff costs in 2020 in line with International Accounting Standards which were required to go through the income statement in 2020.

Operating cashflows were a net outflow of €2.0 million for the period.  The current run-rate of staff costs and other ongoing costs is approximately €250k per month.

At the balance sheet date, trade and other receivables were €358k, marginally ahead of trade and other payables at €357k. Trade receivables represented an average of 74 debtor days (2019: 52 days)

The Group’s cash position on 31 December 2020 was €2.0 million with no debt. The cash balance was significantly strengthened during the year by a successful €3.0 million (€2.93 million net of expenses) share subscription by HTC.

Séamus Larrissey
Chief Financial Officer
25 February 2021

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
for the Year Ended 31 December 2020

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2020

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

COMPANY STATEMENT OF FINANCIAL POSITION
at 31 December 2020

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

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2020

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

COMPANY STATEMENT OF CHANGES IN EQUITY
for the Year Ended 31 December 2020

The accompanying notes form an integral part of these financial statements

CONSOLIDATED STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2020

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

COMPANY STATEMENT OF CASH FLOWS
for the Year Ended 31 December 2020

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.

2019

VR Education (AIM: VRE; Euronext Growth: 6VR), a virtual reality ('VR') technology company, announces its results for the year ended 31 December 2020.

VRE is focused on becoming a leading global provider of virtual communications solutions through its proprietary software platform, ENGAGE. Having signed contracts with 60 clients during 2020, the Group's core focus is on scaling the revenue, client and user base on ENGAGE through three solutions: Virtual Campus, Virtual Office and Virtual Events.

Financial Highlights:

• Group revenue increased by 38% to €1.4 million (2019: €1.0 million) driven by a significant increase in new clients and activity on ENGAGE
• ENGAGE revenue was up 550% to €0.6 million (2019: €0.1 million) following the onset of global lockdowns
• Gross profit increased by 63% to €1 million (2019: €0.6 million) as gross margin improved as proportion of revenue from ENGAGE increased
• Cash position on 31 December 2020 was €2.0 million with no debt

Operational Highlights:

• Acceleration of demand for ENGAGE Platform and partnerships with major organisations, including smart mobile device manufacturer HTC Corporation, Sky Ireland, Tokyo Global Gateway and Victory XR, a leading provider of VR and AR education solutions
• Value of ENGAGE Subscriptions grew to more than €1.8 million with average deal size increasing.  60 customers signed contracts in 2020.
• Following onset of Covid, launched Engage Events in March hosting virtual events for a range of companies and organisations, including the European Commission, Facebook, HTC, Vodafone, Xprize and Yahoo
• Substantial increase in potential user base through the launch of ENGAGE Mobile (for Android and iOS) enabling customers to use ENGAGE without a VR headset or device
• ENGAGE launched to HTC customers in Greater China Region under the Vive Session brand, following strategic investment from HTC in May 2020
• The official release of ENGAGE on the Facebook/Oculus Quest Store in November 2020

COVID-19

• The pandemic generated significant demand for remote and virtual communication solutions offered by VRE. Meets using ENGAGE provide a more immersive alternative to traditional video-based solutions such as MS Teams and Zoom
• Strong demand for ENGAGE’s Virtual Campus and Virtual Office enabling users to virtually meet work colleagues or attend company meetings. Also used for virtual office parties and graduation ceremonies

Medium-Term Outlook

In January 2021 VRE launched an ambitious strategy to achieve a €10 million annualised revenue milestone for ENGAGE during 2023 - 2025 (the“ Medium Term Outlook”):

• To generate €10 million ENGAGE revenue from 500 active enterprise customers and 100,000 monthly users
• To deliver a gross margin in excess of 80% once ENGAGE revenue is between €5 million and €10 million annually
• To retain at least 80% of ENGAGE customers
• To grow average annual contract value to in excess of €20,000, reflecting the targeted Enterprise and Institutional client base and ENGAGE value proposition

David Whelan, CEO, VRE, said: “2020 was a formative year for VRE. Having launched our software platform ENGAGE 13 months earlier, we were well positioned to benefit from the pandemic-driven demand for virtual and remote modes of communication and interaction. In 2020, we successfully commercialised our Virtual Office, Virtual Campus and Virtual Events solutions with a number of multi-national enterprises and international institutions. We are now focussed on building our sales organisation and partnerships to bring ENGAGE to the broadest possible audience in 2021.

“Following the onset of the pandemic, the shift to remote working, online learning and virtual events led to a significant increase in demand for virtual communications solutions such as ENGAGE. The pandemic has been a catalyst in terms of permanently changing the traditional practices and mindsets of companies and organisations towards communication. At VRE, we can see this change through the diversity of our growing user base which includes large blue-chip companies and leading international organisations, as well as our own behaviour such as hosting all our daily team meetings in  VR. The use of virtual communications is only set to grow.”

Investor Presentation

CEO David Whelan and CFO Séamus Larrissey will provide a live presentation relating to the Full Year Results via the Investor Meet Company platform today at 10:00am GMT.

The presentation is open to all existing and potential shareholders. Questions can be submitted at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet VR Education via: https://www.investormeetcompany.com/vr-education-holdings-plc/register-investor

For further information, please contact:

Notes to Editors:
VR Education is (AIM: VRE; Euronext Growth: 6VR) is a leading virtual reality ('VR') technology company focused on becoming the world's largest crossed reality ('XR') communications, training and virtual events platform provider. The Irish based Group's core focus is the commercialisation of its online virtual communications platform called ENGAGE, which provides a platform for creating, sharing and delivering proprietary and third-party XR content in education, training and online events.

On 12 March 2018, VR Education listed on the AIM market of the London Stock Exchange and on the Enterprise Securities Market, a market regulated by Euronext Dublin.  For further information, please visit www.vreducationholdings.com.

CHAIRMAN’S STATEMENT for the year ended 31 December 2020

I am pleased to present the Annual Report and Financial Statements of VR Education Holdings PLC (“VRE” or “the Group”), a company incorporated in the Republic of Ireland, for the year ended 31 December 2020 (‘FY-2020’).

Overview of the year

This is the third set of financial statements I am proud to present to shareholders following the successful fundraising and IPO in March 2018.  VRE is an early stage, growing company with unique intellectual property in both content and operating software in the world of Virtual Reality (“VR”).

Revenues in FY-2020 grew by 38% to €1.4 million (FY-2019: €1.0 million) generating a gross profit margin of 72% and gross profit of €1,013k (FY-2019: €622k).

COVID-19

VRE has the bulk of its operations in Waterford in the Republic of Ireland. Prior to the Republic’s mandated lockdown, the Group made the prudent decision to have all 37 employees work remotely to ensure their safety. This action has not had any negative effect on productivity within the Group as all employees have remained dedicated and professional throughout this difficult period.

Our ability to utilise our own products for conferences as well as other meeting facilities has proved to be invaluable, not least as it gave us greater insights into the needs of customers and our ability to serve them. As an example, the Group now holds all its daily stand-up and design meetings inside the ENGAGE platform which has proved very successful. VRE has also hired new staff from the US and UK who will always work remotely. These employees only attend staff meetings and events virtually. This has helped the Group improve the platform making it easier to sell platform licenses to companies such as HTC, Facebook and others.

The only negative impact COVID-19 has had on the Group to date has been the closure of all museums and exhibits which have been hosting VRE content on a revenue share basis. We expect this to have cost in the region of €300k in 2020.  However, as locations reopen in the latter part of 2021 and 2022, the Group expects to see revenues in this area bounce back and increase as VRE works with more locations on new installations.

Development of ENGAGE

The Group’s proprietary VR education platform ENGAGE was commercially launched in December 2018.  VRE has developed and promoted ENGAGE against both technological and commercial headwinds, including the lack of availability of suitable hardware. The commercial issues were mainly associated with Brexit in the UK where companies reduced technology spending due to the uncertainty it caused. 

In July 2020, ENGAGE Mobile launched on Android phones and tablets, with the iOS version for iPhones and iPads later released in December 2020. Users can now host virtual events without a VR headset or device, thereby expanding ENGAGE’s addressable user base as it enables increased use of ENGAGE by large corporations to host virtual events. This was a major milestone achieved during the year and highlights VRE’s ability to quickly adapt to the market.

Furthermore, the management team’s perseverance has led the Group to sign partnerships with major organisations, including one of the leading world’s smart mobile device manufacturers HTC Corporation and US-based Victory XR, a leading provider of VR and Augmented Reality (“AR”) education solutions. The partnership with HTC has provided a platform and opportunity for ENGAGE within the Asian region, which is an area forecast to experience rapid growth in the VR market. The fact that these companies, with the robustness of their investment criteria, partnered with VRE is a terrific endorsement of ENGAGE and the opportunities it provides.

The ENGAGE platform is the ideal tool to meet the needs of the remote working world. The global COVID-19 pandemic has generated significant demand for VR solutions and there have been high levels of interest in our conferencing and collaboration tools. Our most popular products via the ENGAGE platform are our virtual campus and virtual offices where users can login to a persistent location and meet work colleagues to attend company meetings and events. Proving very popular late last year were virtual office parties and virtual graduation ceremonies. The Group has been working hard since the year end to ensure the platform is available to those who want to use it, releasing the platform on mobile phones, tablets, and iOS devices.

Standalone content

The Group also continues to produce award-winning standalone content to showcase VR/AR’s potential as a tool for educational purposes. Our first release Apollo 11 VR about the first mission to the moon has won multiple awards including a Time Warner “Future of Storytelling” award. Apollo 11 VR was one of first big VR hits when released on the Oculus Rift and the HTC Vive in 2016. A High-Definition version was re-released in November 2018. Apollo 11 VR has generated more than €1.9 million in revenues since its launch to this year-end. Furthermore, Titanic VR and Shuttle Commander, which launched in Q4 2018 and Q4 2019 respectively, continue to perform well and have generated a combined €1.1 million in revenues since their launches.

Although our standalone experiences have been highly successful for the group in the past, our focus is now principally on the delivery of ENGAGE as the next big communication, education and collaboration platform seeking to replace Microsoft Teams and Zoom for large group conferences and virtual events.

Outlook

There has been considerable progress in 2021, and VRE is now well placed to deliver long-term value to shareholders, initially through the execution of its medium-term outlook as announced on 22 January 2021. Management view the ENGAGE total addressable market to be between $10bn and $25bn based on the expected compound annual growth rate (“CAGR”) of between 12-23% forecast within the global team collaboration, global e-learning and global virtual events markets as per Grand View Research and Facts & Factors. 

I would like to take this opportunity to thank the management and employees for their hard work in what has been a challenging environment.  Furthermore, I want to thank our shareholders for their continued support.

Richard Cooper
Chairman
25 February 2021

CHIEF EXECUTIVE’S REVIEW the year ended 31 December 2020

Review of the Year

ENGAGE - Significant Progress Made

2020 was a challenging year, however it provided a significant opportunity for VRE. This was illustrated with the significant accelerated growth of the Group’s ENGAGE platform. During the year, over 60 commercial deals were signed to use the platform, compared to three in the previous financial year.

In the past six months, the user base of ENGAGE has increased by more than 700%. Revenue from the platform is now outstripping all other sources of revenue for the Group, with all metrics pointing to the continued accelerated growth of the platform in 2021 and beyond.  The significant progress made by the Group in FY20, including key partnerships such as HTC, Sky Ireland, and Tokyo Global Gateway, provides an opportunity to scale the business and create a path to profitability in the short to medium term.

Partnership with HTC

In May 2020, the Group announced that HTC had purchased a 20% equity stake in the Group. The acquisition of the stake followed the success of HTC’s annual Vive developer conference inside the ENGAGE platform. The platform hosted over 1,000 concurrent VR users with 1.1 million viewers watching the live stream.  Furthermore, VRE negotiated a commercial deal with HTC to resell ENGAGE services inside China under the Vive Session brand.

In October 2020, ENGAGE was launched in China following months of work with HTC.  Revenue from this partnership is expected to be generated from Q2 2021.  ENGAGE China has been rebranded as Vive Sessions inside the China region. HTC is working closely with the ENGAGE team on a new enterprise and education offering, which will be available later in 2021.  The APAC region, particularly China, South Korea and Japan, will be the key driver of the global virtual reality market through until 2030.  The Group’s partnership with HTC, the market leader in Asia for immersive hardware, places VRE in a strong position to capitalise on this market, providing customers with a combined hardware and software offering.

Additional Platforms

In 2020 the ENGAGE platform successfully hosted virtual events for a range of companies including Facebook, Vodafone, Xprize, the European Commission, Yahoo and HTC. This demand has continued into 2021 with multiple events already confirmed for the first half of 2021 including a number of HTC conferences.

Before 2020, the most significant barrier to adoption for the Group’s ENGAGE platform was its accessibility.  ENGAGE was only available on PC based VR devices. This barrier was overcome during the year through the launch of ENGAGE Mobile on Android phones and tablets in July 2020, with the iOS version for iPhones and iPads released in December 2020.  This has enabled increased use of ENGAGE by large corporations to host virtual events.

Facebook/Oculus Quest Release

The official release of ENGAGE on the Facebook/Oculus Quest Store in November 2020 was another milestone. The ENGAGE application was front and centre on the store under collaboration applications. This positioning drove many requests from corporations to host the ENGAGE platform for ease of installation and updates.  Facebook has also become a commercial user of ENGAGE by signing up for an enterprise account for internal use cases. 

The progress made in 2020 means that ENGAGE is now available to a global audience and easy to install on a range of platforms and devices. This has resulted in increased revenues and continued growth in ENGAGE users month on month.

ENGAGE Broadening Userbase

Originally, ENGAGE was marketed as an education and training platform to provide remote distance learning as well as tools for educators to create content. The platform has evolved to enable a broad spectrum of different use cases generating revenues for the Group in different ways.

ENGAGE now has three main types of users, which are:

• Education clients using ENGAGE Virtual Campus for remote classes offering persistent virtual campus locations, private branded learning environments with the ability to create and publish content and use virtual collaboration tools.
• Enterprise clients using ENGAGE Virtual Office for remote team collaboration and meetings offering persistent virtual office locations, private branded office environments with the ability to use virtual collaboration tools and virtual sales presentation tools.
• Event clients using ENGAGE Virtual Events to host safe large scale virtual events offering unique content possibilities with a large cost saving over traditional events.

Revenue from these three streams is currently evenly split. However, the Group expects to see a marked increase in Virtual Events and Virtual Office usage during 2021 now that the ENGAGE platform is accessible on a broader range of devices.

The Group now views ENGAGE as a comprehensive communications platform and believes that competition for future growth will be against video and text-based platforms such as Zoom, Microsoft Teams and Slack. While video-based platforms are primarily designed for one-on-one communication and not suited to hosting “virtual events” or large group meetings, ENGAGE provides a differentiated offering to the competition, as the platform was specifically designed to enable large groups to meet and interact naturally in virtual spaces. To this end, the Group is currently undertaking a rebranding of ENGAGE and will be investing in its marketing and business development to continue to support its growth trajectory.

ENGAGE Total Addressable Market (TAM)

The Group has estimated that ENGAGE’s total addressable market is between $10bn and $25bn, which is determined as follows as per Grand View Research and Facts & Factors:

• Global team collaboration software market size of $10 billion in 2020 with forecasted CAGR of 12.7% during the period 2020 to 2027;
• Global e-learning market size of $165 billion in 2020 with forecasted CAGR of 14.6% during the period 2020 to 2026; and
• Global events market size of $94 billion 2020 with forecasted CAGR of 23.2% during the period 2019 to 2027.

This presents a compelling opportunity for ENGAGE as the requirement for virtual, remote communications in response to COVID-19 and working-from-home phenomenon is accelerating forecast growth rates in these markets and the market share for VR and next generation solutions. The Group is well positioned with its current product offering to take advantage of this large global market and high growth forecasts.

Showcase Experiences

Showcase Experiences was an important part of the business and a key generator of revenue in prior years.  However, the Group’s focus is now on scaling the ENGAGE platform. Our Showcase Experiences continued to sell strongly on a range of different platforms throughout 2020.  Shuttle Commander was released on the popular Oculus Quest platform in September, and later PC-based VR devices via the Steam network in November.

Outlook

On 22 January 2021, VRE announced the Group’s medium-term outlook. The Group is targeting €10 million ENGAGE revenue generated from 500 active enterprise customers and 100,000 monthly users during the period FY-2023 to FY-2025. These key performance indicators are supported by the Group’s strategy, strong ENGAGE momentum and large global addressable market. This outlook captures and quantifies the upward trend targeted by the ENGAGE platform.

Furthermore, the Group is targeting a gross margin in excess of 80% once ENGAGE revenue is between €5 million – €10 million, a forecast retention rate of ENGAGE customers of at least 80% and estimated growth in average annual contract value in excess of €20,000, reflecting the targeted Enterprise and Institutional client base and ENGAGE value proposition.

In the past six months, we have begun to prove the monetisation strategy of ENGAGE, with over 60 commercial deals signed to use the platform in FY-2020. The strategy’s efficacy is also evident in the increasing average ENGAGE deal sizes, with some of our earlier commercial clients purchasing additional accounts and services leading to larger purchase orders.

With just two full-time business developers for the majority of 2020, the Group has closed deals during the year worth more than €1.8 million, which should be recognised over the next 36 months.  The Group has now hired an additional four business developers.  VRE will begin to allocate increased funding to the marketing and promotion of the ENGAGE platform as we look to grow in 2021 and beyond.

Following the deployment of the ENGAGE platform on the Chinese mainland in collaboration with HTC in late 2020, we expect to see the first revenues generated from this partnership realised in the first half of 2021. ENGAGE is now available on almost every platform globally, opening major opportunities where sales were previously limited to a small but growing marketplace.

VRE has made significant operational progress and achieved several key milestones during 2020. With a workforce of in excess of 50 people at the year end we will continue to grow the team during 2021 with strategic hires planned in a number of areas within the organisation to drive the growth of the business.

As the Group moves into 2021, it is well-positioned with increasing revenue, growing numbers of ENGAGE users, and an expanding market opportunity. As we look to scale the business and increase market share, VRE is poised to capitalise on its strong position in China.  China is the fastest-growing immersive market in the world. The Group looks forward to capitalising on the many exciting opportunities on the horizon.  VRE is focused on identifying new strategic partnerships to support the Group’s growth and expansion in 2021.

We are looking forward to the future with confidence.

David Whelan
Chief Executive Officer
25 February 2021

CHIEF FINANCIAL OFFICER’S REVIEW for the year ended 31 December 2020

I am pleased to report that revenue for the year was up 38% on the prior year from €1.0 million to €1.4 million, driven by a significant increase in demand for the ENGAGE platform. ENGAGE revenue was up 500% on the prior year from €0.1 million to €0.6 million.

EBITDA loss was €2.1 million compared to a loss of €1.4 million in the prior year and loss before tax was €2.7 million compared to a loss in the prior year of €1.9 million. This increased EBITDA loss is driven by reduced capitalisation of developer staff costs in 2020 in line with International Accounting Standards which were required to go through the income statement in 2020.

Operating cashflows were a net outflow of €2.0 million for the period.  The current run-rate of staff costs and other ongoing costs is approximately €250k per month.