Smartspace Software loss widens as costs rack up

Smartspace Software on Wednesday reported a deepened annual loss after rising administrative costs outweighed a slight increase in revenue after a "transformational" year for the business.

The building and hospitality-sector software provider slumped to a loss before tax of £4.2m for the year ended 31 January, more than five times higher than its loss of £0.7m for the year before, as administrative expenses shot up by 54% to £7.9m and total cost of sales increased by 56% to £2.6m.

These increases more than offset a 3% increase in revenue from continuing operations to £6.3m, which included a 15% increase in annual recurring revenue from $1.6m at the end of September 2018 to $1.9m at the end of the year as the business moves its focus towards SaaS.

Frank Beechinor, chief executive of SmartSpace, said: "Our plan in the coming year is to continue to invest into sales and marketing to enterprise and mid-market companies to maximise the opportunity we see for workplace technology, both in the UK and overseas. This sales and marketing effort will also include further development of channel sales opportunities."

Over the course of its financial year, the AIM traded company announced the disposal of its Systems Integration and Managed Services divisions for £21.6m in favour of focusing on its higher margin software business.

As part of this transformation, the group completed the acquisition of New Zealand-based SaaS business SwipedOn in October 2018 for £5.5m, which the company said "directly aligns with the group's strategy of growing recurring annuity-based SaaS revenues".

"We will continue to focus our UK software development resources on our workplace software platform with the aim of enhancing the existing offering, allowing us to maintain competitive differentiation through technical innovation. Following the success of SwipedOn, we will continue to explore acquisition opportunities that deliver either complementary software functionality or have the potential to increase our customer base and geographical reach," said Beechinor.

Smartspace Software's shares were down 5.64% at 81.15p at 1606 BST.