Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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https://martinflitton1.wixsite.com/privatepunter/post/vre-getting-hitched-with-engaged-03-11-20
Lol good old AIM. Showing down 5.45 when in fact up 4%....
If the above scenario plays out then we would get a fairly dramatic spike up in revenues in H1 2020 and also hit breakeven in this period, depending upon timing of deals. Moving into profit at this early stage would be nice, but more importantly it would demonstrate the validity of the business model, open of new avenues of finance at higher valuations for the company, and encourage large partners like HTC to continue to invest in the growth of the platform.
My view on newsflow over the next few months and revenue growth and profitability based on the meeting.
I think it is not well recognised how quickly VRE can move into profit given the effectively 100% margin that is received for the event and enterprise licences (they also get an undisclosed margin on services). They so far have not disclosed much about deal sizes except for a couple of deals worth about £200k each. However we can get a sense of the growth rate by looking through the figures they have published.
H1 2019 revenues of 497k with 18% or £89.5k of Engage Revenue (£407k other revenue)
H1 2020 revenues of 681k with 33% or £225k of Enagage Revenue so 150% growth YOY (£456k other revenue)
Post period Engage was 68% of revenues. If this continues, and if you assume other revenues continue to climb at 12% (reasonable given that the full run rate of shuttle commander revenue won't be visible until this year, and there are going to be a lot of the new VR headsets in xmas stockings this year) then you would reach H2 revenue of:
£511k other revenue.
£1.09m Engage revenue (nearly 5x H1 revenues)
£1.6m total revenue
Given that VRE's total costs in H1 were about £1.8 million this shows that breakeven could be coming a lot sooner than is recognised.
There is room for an much larger upside surprise in H1 2021 given the following.
1. There is nothing in the above that takes into account annoucements of deals coming out of the HTC launch in China.
2. As mentioned before, revenues coming from Engage currently are the thin end of the wedge - the events and the pilot deals are small in size relative to the rollouts that will occur afterwards, and given that VRE is selling to very large organisations, the deal sizes on these are going to be large (putting my former tech sales hat on I would guess in the order of hundreds of thousands, rising over time as the platform is rolled out across a company). The timing on these of course is uncertain but given the "huge spike in enquiries and enterprise customers" taking place over the last few months, I would expect many of these deals to be announced in Q1 2021, and there is still time to close a deal or two before year end 2020.
3. Pricing will continue to rise. As was said on the call they are not getting any pushback on their pricing which means they know they are too low and they will raise prices with each new successful event.
So to summarise my expecation on newsflow would be the following:
Next 3 months:
-Trading update showing a very significant increase in revenues and customers ahead of market expectations (last year they gave a trading update on Jan 16th)
- Positively revised forecasts issued of both revenues and breakeven date.
- More news on major organisations booking events.
- Possible significant news on new reseller partnerships (they have mentioned they are working on these)
If the above scenario plays out then we would get a fairly dramatic spike up i
VRE has just posted up the full recording of the investor presentation yesterday. They also have done a nice job of seperately recording their answers to investors specific questions. Worth a look -note you will have to register for free with investormeet to see this.
hTTps://www.investormeetcompany.com/investor/meeting/investor-presentation-10
Bensug - a good analysis of this company's market and prospects. I am an adult educator (until the pandemic, I ran interactive leadership training courses internationally), and I'm coming to terms with the likelihood that companies have lost their appetite for flying highly-paid managers and executives around the world to sit in confined conference rooms (however interactive & participative the learning methods are). Many training consultancies are experimenting with the new technologies and platforms to try to make learning online as close to a f2f experience as possible - e.g. using MS Teams, Zoom, Miro, Mural, Mentimeter, Slido, etc, etc. However, none of these quite cut the mustard for sessions of any more than about 2 hrs max. I think VR and AR technology will be the next level. VR is now just starting to catch on (after a slow start) as the tech gets cheaper and less clunky. I think this company is on to something, and I expect good things.
I've been thinking about the role that VR will play post pandemic as a communications platform in relation to the following doubts that I have heard expressed.
1. It's no substitute for real life meetings/events and everyone will go back to that post pandemic,
2. People are not going to spend lots of time with a VR device stuck on their head.
3. It's a fad - people might try it once and then not bother with it as it's too much hassle.
My feeling is the above arguments are based on a false choice between VR and reality/video meetings etc. Of course people will go back to having real life events, meetings and education. However I think of VR as being like a new mode of transport - it's a new way of doing all these things that will work better than real life in certain situations, without replacing face-to-face interactions. The pandemic is obviously one such, but there are plenty of other situations e.g. globally distributed teams, homeworking teams, emergency training, virtual classrooms and countless other situations where VR is inherently better than the alternative, not to mention cheaper.
Also the low cost also means the market for events and meetings can be expanded to cover areas where at the moment it would be too expensive to arrange a meeting/event. The real cost of an event attendance is way more than the ticket price - think of the flight, hotel, entertainment, food, taxi etc costs. Companies will have realised how much they have saved by not doing live events, and many will have drastically reduced budgets for these over the next couple of years. Finally it adds a new dimension to employee interactions that is just plain fun and in the war for talent having this be part of the workplace could be a real advantage. Of course VR won't replace reality - otherwise VRE would be heading for a multi-trillion pound market cap (we can hope), but we don't don't need it to to build a seriously profitable company. I think of the pandemic as an accelerator for a pre-existing trend, allowing far more companies to experience this and work out how to take advantage of this in the future than would otherwise be the case. Unlike Zoom, who have probably maxed out their growth during COVID, VRE is just getting started.
I also think VRE have been smart to recognise they are a small company still and leverage their platform and skills through larger players. At this stage that is the fastest way to market, and it adds credibility to the offering that leading players in the space want to partner with and sell Engage. I would expect to see more partners signed up in the near future.
Finally, by sheer luck the pandemic has coincided with the launch of a new generation of headsets that are lighter, cheaper and tether free, helping to overcome many of the issues many had with the technology. This trend will only accelerate with the release of 5G devices.
You’re completely right, however markets don’t reflect actual value these days, so don’t be surprised by a whole lot more juice in this tank. Although eventually the markets in general will inevitably return to some degree of a historic norm. Part of the decision making process I suppose !
Not to be a kill joy but is £50 million market cap on £1.2m revenue and no profit a bit excessive?
Don’t get me wrong, I am in and in for the long term. Not looking to buy anymore, just seems steep to me right now.
Or do we anticipate large increases to revenue? Anyone any thoughts on this?
Don’t bite my head off :-)
Thanks Bensug. Very interesting
1. They don't hire many sales people as they are very selective. This means that they believe the channel strategy will be the main driver of growth, although they do have sales reps in Europe and US.
2. They think the HTC China launch will be a real game changer for them. They feel the Chinese in particular are very open to this and HTC has wrapped Engage up in a package that is being sold as a VR solution for companies - they heavily featured Engage in their advert for this https://www.vrfocus.com/2020/06/vive-xr-suite-is-htc-vives-new-cloud-solution-for-remote-collaboration/.
3. They are finding they can continually raise prices for the events. Given that the budgets for events are currently being unspent, and the massive savings vs real live events (including travel expenses etc) it is not surprising. They are gunning to get a large number of events in the bag before the end of the year as budgets are there to be used up by year end and also often booked for next year before year end. So expect to hear more news on this before year end.
4. The events are a great advert for them - they are getting lots of interest in the engage platform as a communications tool for teams after they do an event for a company. So each event booked potentially adds another opportunity to their pipeline. This is really key when you are trying to do projections for potential income as although the events are highly lucrative, an even larger market is the subsequent rollout within customers, and this is recurring revenue. Moreover as they record events it provides great showcase material for further sales. As a form tech sales exec I can see how this woud overcome objections - when you are selling a new concept like this internally you need evidence that it really works well to remove doubts from the budget holders minds.
5. Typically post event they roll out Engage in a pilot for a couple of months to a couple of hundred users and then if they are successful at getting a contract it is charged on a per seat basis per annum.
6. They plan to update the market on new earnings expectations at the end of the year.
7. They are currently on track to break even in 2022, and don't expect to have to raise before then. However given the rise in revenues they are probably going to shorten the time to breakeven when they announce an update at year end.
8. They are going to create some high quality collateral from the upcoming UN event featuring Pitbull and expect this to really charge their sales funnel.
9. Engage does not need high bandwidth internet as they are not streaming video - means it can be used in developing world and china or rural locations. Will be hiring more customer service people as it does need an event host.
10.Competition exists but not direct (e.g.Zoom etc).
11.They are benefiting from "Zoom fatigue".
12. The main objections are at senior level where people have not experienced good VR so they try to do the selling within the platform.
I bought at 08.05 on the RNS news - then nothing happened......until now.
Boosters engaged....
V.Good observation...looks like i bought when it was quite! :)
Buy when it's quiet , one of the main rules of the AIM game.....
We're here alright. People tend to post on blue days and go missing (sell) on red days.
A busy forum should encourage you to sell. A quiet forum should encourage you to buy - that's what I've learned over the last two years accumulating VRE.
Are we the only three investors here? Big News... no reaction..... we three investors must have been the last to know about the China development? The share price jumped a few weeks ago on no news, that must have been the others lol
I think one should say: ZOOOOM!!!!
topped up at just over 19p ...very happy.
This is the news we have been waiting for for ages.....access to China!!
GAME CHANGER
This is a complete game changer..The Chinese Market is huge and this company is going from strength to strength backed by a technology giant like HTC..
ONWARDS AND UPWARDS
Cracking RNS
HTC launching Engage in China
0.25 not 0.25%*
Daily bought value £17.14k
Daily sold value £743
LSE shows the SP as being down 0.25% on the day.
Don't let the markets f*** with your mind folks. Deception at every turn. Hold strong.
Decent update, think there will be plenty more to come.
Plenty of top firms adopting this tech now.