FY20 Trading Update & Launch of Medium Term Outlook
22 January 2021
VR Education (AIM: VRE; Euronext Growth: 6VR) a leading virtual reality ('VR') technology company focused on becoming the world’s largest crossed reality (‘XR’) communications, training and virtual events platform provider, through commercialisation of ENGAGE, its proprietary online virtual communications platform, is pleased to provide a trading update for the year ended 31 December 2020 ('FY20') and also to announce the launch of its medium term financial objectives for the period 2023 to 2025.
- FY20 revenue expected to be circa €1.42 million, an increase of 38% on the prior year (FY19: €1.02 million):
- ENGAGE revenue and user base up by 550% and more than 700% respectively, now accounting for more than 40% of Group revenues (FY19: 9%). This is in line with the ENGAGE growth plan, with strong momentum carried into FY21
- Continued popularity of non-ENGAGE revenues from Showcase Experiences with Shuttle Commander released on the Oculus Quest platform in September 2020 and on PC based VR devices via the Steam network in November 2020. Showcase Experience revenues were however €400k below expectations due principally to COVID related museum closures in the US
- Launch of ENGAGE Mobile to support Android phones and tablets in July 2020, and an iOS version to support iPhones and iPads in December 2020, which allows the ENGAGE virtual event hosting solution without a user requirement for a VR headset or device. ENGAGE successfully hosted events in 2020 for Facebook, Vodafone, Xprize, the European Commission, Yahoo, Fidelity Investments and HTC
- ENGAGE partnership with HTC went live in the China region with ENGAGE China being marketed to HTC clients as Vive Sessions and first revenues from the partnership expected by the end of H1 2021
- Official release of ENGAGE on the Facebook/Oculus Quest Store in November 2020 with Facebook now an official user of the ENGAGE platform and ENGAGE is now available to a global audience, easy to install on a range of platforms and devices
- Substantial ENGAGE product development achieved with added functionality enabling enterprise clients to use ENGAGE for remote team collaboration and meetings, presenting a substantial opportunity for the Group in addition to education
- Year end cash balance of €2.03 million, with net monthly cash burn of approx. €0.2 million
Medium Term Outlook
Based on strong traction from over 60 commercial deals signed to use the ENGAGE platform and an expanded product offering in the market in 2020, VR Education is also announcing today the launch of its medium-term financial objectives for the period 2023 to 2025 (‘Medium Term Outlook’):
- Target of reaching €10 million annual ENGAGE revenue milestone, 500 active Enterprise customers and 100,000 monthly users during 2023 - 2025:
- Annual ENGAGE revenue CAGR in excess of 100%
- 10% average month-on-month increase in users to reach 100,000 monthly users, reflecting a target 500 active Enterprise customers;
- Customer retention rate of 80%+; and
- Growth in average annual contract value to €20,000+, reflecting the nature of emerging Enterprise client base and optimal contract value
- Target Group gross margin in excess of 80%
The Group will provide further details on the Medium Term Outlook to analysts and investors with the Preliminary Results intended for release in February 2021.
Outlook for FY21
ENGAGE has proven itself in the market in 2020. With substantial tailwinds for remote communications platforms as a result of the Covid-19 pandemic, the Group has had an opportunity to develop platform functionality and a product suite that resonates with the target enterprise customers, including educational institutions. As a result, the past six months has demonstrated the monetisation strategy of ENGAGE, with over 60 commercial deals signed to use the platform and the increase in the average deal sizes, with earlier commercial clients now purchasing further accounts and additional services leading to larger purchase orders.
With minimal investment in marketing, sales and business development to date, the Group has closed deals during 2020 in excess of €1.8 million which should be recognised over the next 36 months. The Group has also invested in an additional business development resource for 2021 and will begin to allocate increased funding to the marketing and promotion of the ENGAGE platform as the Group looks to achieve its Medium Term Outlook objectives.
VRE is also excited that its indirect ‘go to market’ strategy will start to contribute meaningfully to revenue growth. Following the deployment of the ENGAGE platform on the Chinese mainland in collaboration with HTC in late 2020, the Group expects to see the first revenues generated from this partnership recognised in the first half of 2021. The Group is focused on identifying further strategic partnerships to support the business’ further growth and expansion. ENGAGE is now available on many platforms across the globe, opening up significant opportunities where previously sales were limited to a small but growing marketplace.
David Whelan, CEO of VR Education, said: “We see 2020 as the seminal year where ENGAGE has started to take off with thanks to many different factors including COVID-19, 5G rollout and standalone VR devices becoming available. What is more exciting in the medium to long term is the uptake of ENGAGE on traditional devices such as phones and tablets where we have now enabled support and expect to see significant uptake throughout 2021 and beyond.
“Our projections are modest based on past experience, however, we do feel that growth can expand greatly given the trajectory for immersive technology adoption over the past twelve months. We see ENGAGE filling the gap where popular video-based communication apps are not meeting customer expectations for large group meetings, events and conferences. ENGAGE is now no longer marketed solely as an education and training platform. We see ENGAGE as the next step in corporate communications and remote conferencing.”
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
For further information, please contact:
|VR Education Holdings plc|
David Whelan, CEO
Sandra Whelan, COO
|Tel: +353 87 665 6708|
Cairn Financial Advisers LLP (Nominated Adviser)
James Caithie / Liam Murray / Ludovico Lazzaretti
Tel: +44 (0) 20 7213 0880
Shard Capital Partners LLP (Joint Broker)
Damon Heath / Erik Woolgar
Tel: +44 (0) 20 7186 9952
Davy (Joint Broker & Euronext Growth Advisor)
Fergal Meegan / Barry Murphy
Tel: +353 1 679 6363
Buchanan (Financial PR)
Henry Harrison-Topham / Chris Lane / Tilly Abraham
Tel: +44 (0)20 7466 5000
The Directors of the Company take responsibility for this announcement.
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.
Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Group’s current expectations, estimates, and projections about its industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Group’s control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.
The Group cautions security holders and prospective security holders not to place undue reliance on these forward-looking statements, which reflect the view of the Group only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Group will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.