Following on from VRE’s Interim results back in September and subsequent news flow, I have been fortunate enough to catch up with CEO and founder David Whelan along with CFO Seamus Larrissey once more.
Although the immediate onset of Covid had an initial negative impact on the business as was the case with many, the subsequent months has seen VRE seemingly making excellent progress, where remote conferencing, education and working has opened up the door to its ENGAGE platform offering.
Following on from the successful virtual reality event held for HTC in March of this year, which saw the Taiwanese giant taking a 20% stake, VRE has since seen a marked increase in awareness and take up of its ENGAGE platform that bodes well for the future.
Commenting on the more recent period David Whelan says “We have been super busy in the past quarter and we are now conducting weekly events with major corporations.
Given some of the clients we are working with and their wish for confidentiality, we just aren’t in a position to release every piece of news as much as we would like to”.
Despite obviously being restricted on that front there has however been plenty of positive news released, including the most recent which concerns HTC launching ENGAGE in China as VIVE Sessions.
Whelan sees that as providing a massive opportunity for the Company which clearly wouldn’t have manifested without HTC being on board, as to operate successfully in China you need a big hitting partner.
One piece of news to break recently that was however frustratingly disappointing was the revelation that the scheduled and well publicised YOUNGA event to be held across the ENGAGE platform had been postponed. This, the CEO says was not down to VRE’s input, rather, the organiser itself which has led to a wait for a new date to be set.
“We were already to go, had everything set up with 20 people on hand, so it was disappointing to see it postponed, but we will update when we can confirm a new timing.”
Despite that frustration things appear to be heading firmly ahead and in the right direction, where Whelan envisages that the momentum which has been building across the space is here to stay.
Whilst he, like everyone else wants to see a speedy end to the virus situation, he doesn’t see conferences and the like returning to the old format, where companies would fly employees and guests half way across the world, not when you can bring them together virtually and successfully for a fraction of the cost.
Clearly, VRE is experiencing plenty of demand where they say they are now seeing growth over two to three months that they would have previously expected over a two, or three year period.
For some eyeing the Company though there has perhaps understandably been uncertainty as to the VRE model at this stage of its evolution in terms of revenue and events hosted across the ENGAGE platform.
Whelan quickly confirms that all of these do generate revenue for the Company, but depend on the size and level of input required as these can he says vary.
At the lower level where there is nothing further from VRE regarding input, the range is within the 5k-10k number, moving onto £30k-£50k for some specific assistance and support to a higher range of £100k plus where typically VRE will be providing for a more individual level of support and service.
The number of employees at the Company has increased too, moving in the last three months to 51 from 30, a near 75% increase and they are still recruiting, when others are not.
Amongst its client base that has embraced the ENGAGE platform there are names such a Fidelity and the US Air Force, both of which have used the service for training purposes which works perfectly at a time when bringing people together via travel is out of the question.
Whelan is hopeful that the success in those instances will provide for further business and in turn serves to promote to the offering from the company to an increasingly wider audience.
There will says the CEO, be further news coming through in the months ahead and Larrissey adds that there should be an update to the market by the end of the year.
No clue as to what that will deliver at this stage, but the CFO does expand on the current cash situation.
On this front, he says that revenue is building month on month and at the current time they are looking at breakeven being achieved in 2022.
The cash situation allowing for burn gave them headroom for some 15 months as of June of this year, but Larrissey now sees a lengthened runway, given the building revenue.
Whilst that suggests that VRE doesn’t need to go back to the market in the near term, if revenues continue to gain traction and awareness increases it would seemingly make good sense for the Board to raise further funds at the right price to support additional growth and expansion.
With a current 50% revenue split between Asia and the US, VRE is already well placed to maximise opportunities going forward and with increasing adoption of virtual reality technology and accessibility anticipated, then its cemented partnerships with the likes of Deutsche Telekom and Facebook could provide for further routes for revenue.
It is also worth noting that the ENGAGE platform only saw its first customer sign up last year, so it is clearly making great strides and has now seen many updates to support the emergence of quality standalone (or untethered) VR devices, whose affordability has made the VR market more accessible to consumers.
Whelan says that a number of manufacturers are bringing out new products in and around the headset space and VRE works closely with several leading VR headset makers.
Being platform agnostic, ENGAGE is extremely well placed to serve an increasing number of areas, spanning the education/ training space to conferencing and events and the requirement for this kind of platform is likely to increase.
Despite being relatively in its infancy the platform is now surpassing VRE’s previously recognised main revenue generator in the form of its showcase experiences.
This has seen successes such as Titanic and Berlin Blitz and although now playing second fiddle to ENGAGE, it still has its part to play.
At a current 15.75p per share VRE is not only a speculative investment play, but one that can prove volatile too.
That said, the team here sound confident in the prospects, where if further news flows as envisaged and the numbers begin to demonstrate serious growth traction then the share price should follow suit and look after itself.
With both HTC and Octopus on board and where the bulk of the shares are quite tightly held, there appears to be an underlying confidence and belief in the delivery, which could prove highly rewarding for investors who understand the speculative nature of the stock.