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Essensys into negative earnings as domestic market disappoints

The software company raised £33m in July to fund expansion
Essensys into negative earnings as domestic market disappoints
  • Salary costs rise as it recruits new heads for North America and Asia Pacific
  • Net cash of £35m (ex-liabilities) is enough for "foreseeable future"

The tumult experienced in commercial property markets over the past 18 months doesn’t appear to have put off investment in the flexible workspace sector. The investment appeal is understandable given that many companies still haven't worked out a long-term hybrid working plan and what it means for their own office footprints. Essensys (ESYS), a software-as-a-service (SaaS) operator, is intent on seizing the opportunity, illustrated by a recent £33m equity raise to support geographical expansion.

The push into overseas markets is understandable given the global growth of SaaS, although it opens up the provider to other risks. Indeed, annual revenues were held in check due to adverse currency fluctuations, but it's also worth noting that domestic UK sales were 13 per cent down on FY2020. The percentage of recurring revenues at 87 per cent was broadly flat on the prior year. Group administrative expenses jumped by 20 per cent, with staff costs rising by 40 per cent as the group brought in new executives, including new heads for its North America and Asia-Pacific businesses. The equity raise meant it closed the year with £36.9m of cash (ex-liabilities), which it claims is enough for “the foreseeable future”, although it's worth mentioning that the group recorded a net outflow of £12.7m in financing activities when proceeds from the issuance of new shares are discounted. 

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