SmartSpace losses widen as it announces Space Connect acquisition

Commercial space management software provider SmartSpace Software reported a 57% improvement in revenue from continuing operations to £3m in its first half on Thursday, with recurring revenue rising 332% to £0.78m.

The AIM-traded firm said its adjusted EBITDA loss for the six months ended 31 July totalled £3.1m, widening from £1.9m year-on-year, while its loss before tax from continuing operations grew to £4m from £2.7m

Its basic loss per share from continuing operations was 16.1p, compared to 12.8p a year earlier, while SmartSpace’s net cash position as at 31 July was £3.8m, down from £13.4m.

On the operational front, in the Enterprise operation, SmartSpace said its focus for the period was on deploying existing Enterprise customers, adding that it made continued investment in the Workplace platform, with version 2.1 released in July.

It said it had a “good pipeline” of business, predominantly from existing Enterprise customers.

In its Self-serve business, the company reported “strong growth” in ‘SwipedOn’, with 23% growth in customers numbers from 2,713 on 1 February to 3,348 at the end of July.

Annual recurring revenue (ARR) grew by 36% to NZD 2.57m as at 31 July, and rose to NZD 3.19m on 30 September, which the board said was a 69% increase since the beginning of the financial year.

Average revenue per user per month (ARPU) grew by 10.4% during the period under review, and had since increased further to NZD 75.05 by 30 September.

The board noted it had now withdrawn from the retail market and ceased signing new customers, and had invested £2.1m in product development over the period, up from £0.7m year-on-year, reportedly enhancing its workspace management platform.

SmartSpace also announced on Thursday that it has agreed to acquire 100% of the share capital of Space Connect, a company registered in Australia, for a total consideration of approximately £3.2m, or AUD 6m, satisfied by approximately £1.6m in cash, or AUD 3m, and approximately £1.6m, or AUD 3.0m, in equity.

The company said the acquisition would bring a number of benefits to the company, including a cloud-based “fast-to-deploy” platform, featuring room booking, desk management, visitor management, catering and workspace analytics.

It had software integrations with Microsoft Exchange, Google, Skype, Uber, Zoom, with the board saying it anticipated savings of up to £1.2m per annum in group product development spend from 2020 onwards, and accelerating the development roadmap by up to two years.

The acquisition would provide a solution for immediate roll out in the UK, and the acceleration of its current mid-market strategy, and would also open international channel sales opportunities.

It also said it would bring new technological capabilities into the group including AI, facial recognition, advanced analytics and end-user configuration tools, with Space Connect product ownership, design, support and sales to be handled from the UK through the company’s existing resources.

“The group is continuing its transformation to a pure play software company,” said chief executive officer Frank Beechinor.

“We have made great progress in the self-serve market with significant growth in customer numbers and ARPU and our SwipedOn business continues to go from strength to strength.

“Our sales and deployment efforts currently are focussed on Enterprise customers.”

Beechinor said the firm was in the process of deploying its technology for a number of new customers, including its single largest customer - a global bank with 86,000 employees.

“The business continues to have a strong sales pipeline which consists mainly of follow-on business from existing customers.

“Through the Space Connect acquisition we are hoping to accelerate growth and our ability to cross-sell in our mid-market business which will be sold purely on a software-as-a-service basis.”

As at 1131 GMT, shares in SmartSpace were down 2.03% at 72.5p.