Actual Experience plc (LON:ACT), the Digital Workplace Management Platform (DWMP) company, has announced its unaudited consolidated interim results for the six months ended 31 March 2023.
Financial Highlights
· Revenue of £0.23m (H1 FY22: £0.82m)
· Gross loss of £0.07m (H1 FY22: £0.35m)
· Operating loss of £2.54m (H1 FY22: loss of £2.84m)
· Loss per share of 1.16p (H1 FY22: loss per share of 4.97p)
· Cash and cash equivalents at 31 March 2023 of £3.10m (30 September 2022: £2.87m)
Operational Highlights
· Successful early commercial release of the new Digital Workplace Management Platform (DWMP) in October with Defra, leading to the first sale of the Company’s new product offering less than 6 months after launching.
· Significant automation of the delivery process for DWMP content, significantly reducing the load on manual resources and facilitating operational leverage.
· Sales pipeline increasing due to a combination of reinvigorated partner relations and the bolstering of the sales team.
· Several significant pipeline opportunities progressed to advanced stages in the funnel during the period.
· Further strengthening of the Board with the addition of two highly experienced Non-Executive Directors.
· Recruitment of an experienced CEO after the period end, marking the beginning of the next phase of the Company’s growth.
Current trading and outlook
· Market demand is reflected in the increasing volume of interest in Digital Workplace Experience (DEX) as shown by commentary from Gartner and Forrester. Organisations will prioritise investment in technologies that optimise their digital infrastructure for the new era of hybrid working, often termed ‘the new ways of working’. The Company’s board believes that it is in a strong position to capitalise on this significant market opportunity.
· Feedback from partners and enterprises for our recently launched DWMP continues to be very positive, and we will seek to maintain our technology leadership by developing a rich roadmap of features and capabilities.
· With the recruitment of an experienced CEO, the turn-around phase is largely complete and resources are increasingly focused on optimising sales execution to deliver strong revenue growth.
· Immediate focus remains on generating orders from our more advanced sales opportunities. In addition, sales and marketing outreach campaigns are delivering increased numbers of prospects into our sales pipeline and we will seek to ensure efficient progression through the sales stages.
· Our first DEX customer, Defra, remains an important relationship for Actual, and we will seek to expand the size and scope of this deployment while also working to engage with other central government departments.
· We will continue to tightly manage operating expenses and seek to derive further economies while investing in sales and marketing activities.
Kirsten English, Chair of Actual Experience plc, said: “As detailed in the 2022 Annual Report, Actual Experience has implemented fundamental and extensive changes to the business in the last 12 months. Since the beginning of the current financial year, the Company has completed the goals that were set by the Board for this turnaround phase, and the focus will now move to execution and growth with predictable revenue and strong customer fulfilment at the top of the agenda. With the new CEO, fresh ideas and a proven track record of execution will open the next chapter for Actual Experience.”
Iain McCready, CEO of Actual Experience plc, said: “I’m delighted to be joining Actual at this important time. The measures taken by the Board and Leadership team over the last year have positioned the Company to leverage its excellent technology to establish a leading position in the rapidly developing DEX technology market sector. My focus will be to translate this potential into strong revenue growth through effective sales and marketing execution.”
Market
As the emerging technology category of Digital Employee Experience (DEX) continues to gain rapid momentum, analysts are increasingly emphasising its importance and commenting that this will become a major area of enterprise focus and investment in the coming years.
The market definition and scope of what DEX entails is still in its infancy, with an element of confusion arising from multiple technology suppliers promoting differing visions, each aligned to their individual capabilities.
With a standardised approach yet to be defined within the market, Actual’s DWMP offering is well placed to provide a practical starting point for enterprise DEX transformations. The Company’s proprietary HX Score is unique in its capability to provide a reliable baseline of the overall employee experience of the digital workplace as well as delivering a prioritised list of improvement projects, ranked by business impact and enterprise value creation. The Company’s technology is quick to deploy and is partner agnostic, meaning it forms an ideal foundation to any wider DEX transformation programme.
Product development
At the beginning of the period, the Company launched an early release of its newly built DWMP. During a six-month pilot, the team worked closely with the customer, Defra, to understand their use of the insights and data, making iterative improvements month-on-month. The DWMP showed quantified before and after productivity savings due to improvements made by the customer. At the end of the pilot, the Company was delighted to announce the first sale of the new platform. The Actual Experience team were praised for their deep knowledge of the complex area of Digital Experience Management and the usefulness of the DWMP insights, which allow firms to navigate successfully through transformational change over the total enterprise.
Following the early commercial release, the CPO set up a new cross-functional process encouraging the sales and customer facing teams to connect openly with the R&D and product functions within the business. The Company remains committed to building and improving the DWMP based on tested market problems to ensure the commercial viability of the platform.
After the period end, the next version of the product was released, with extensive improvements and new features including a new Equality Grade metric (which models how even the distribution of digital wellness is across an organisation) to better support business leaders with DE&I initiatives.
In addition to customer-facing improvements, the Company also made substantial progress in automating the customer insights creation process, reducing the amount of manual resource needed to service clients on a continuous basis.
Several new development opportunities have been identified to increase the Company’s product portfolio, including a lighter version of the platform with a number of use cases and a regulatory based tool to track the impact of hybrid working patterns on scope 3 carbon emissions.
Sales & Marketing
During the period, Actual continued to apply the lessons learned from early engagements with prospective customers and further refined its sales focus and approach, both in terms of partner projects and direct sales efforts. This has led to positive sales pipeline development, with increased numbers of active prospects and also good momentum through the various sales stages. This progress has been further supported by greater enterprise awareness of, and focus on, the need for transformation of their digital infrastructure to ensure efficient business processes in the more complex, hybrid working environment.
As noted in the Company’s Annual Report, sales cycles remain lengthy, and efforts to reduce this have been hampered by the challenging general business environment and, specifically, the weak macroeconomic conditions. Notwithstanding this, several of our sales engagements are now progressing to the point where customer decisions will be made, and we hope to be able to announce further customer orders in the near future.
Over the period, the Company has formed a strong market positioning based on learnings from the sales cycles and the commentary on the emergent DEX category. A key priority moving forward will be to re-establish a marketing function within the business to further drive sales activities.
Strategy
As a small company with market-leading technology, we will continue to leverage our existing strong relationships with Verizon and Vodafone while putting in place further sales and technology partnerships with leading technology companies. In this way, we are planning to achieve significant market penetration by accessing our partners’ large global enterprise customers.
At the same time, our direct sales team will continue to engage directly with prospective customers to ensure we continue to understand evolving market requirements and trends.
Typically, new enterprise sales engagements will commence with a subset of the total addressable opportunity in each account, such as employees in a region, country, or division. Over time, we expect that the initial engagement will expand to address the whole digital estate. This is the approach adopted with Defra, and we term this a ‘land and expand’ strategy.
As well as growing our customer base in this way, a further driver of top-line growth is expected to arise from new product expansion initiatives that are planned in our development roadmap. An example of this is the opportunity to develop further our work that leverages our existing technology to estimate the carbon impact (scope 3 emissions) of commuting and business travel dynamics across an organisation.
This product development road map is aimed at ensuring we maintain our technology leadership in the DEX sector. In addition, we will continue to enhance the scalability of our service clouds, driving down per-seat costs and ensuring that we can handle the demands of the world’s largest enterprises.
Board Changes
The Board has been significantly strengthened in the period by the appointment, in October 2022, of Harmesh Suniara and Barry Hoffman, in February 2023. Harmesh and Barry bring to the board extensive experience in capital markets and people management respectively. After the period end, in June 2023, we welcomed Iain McCready to the board as CEO and Executive Director.
After almost ten years of service, Stephen Davidson stepped down from the board in March 2023 and his contribution to the development of the Company is appreciated.
Outlook
With the recent appointment of a new CEO, the turnaround of the Company is now largely complete. Management and the board are now keenly focused on taking the business to the next stage of growth and achieving its strategic objectives.
Since launching the new platform at the start of the current financial year, the Company continues to receive consistent and positive feedback from both commercial prospects and partners alike, as demonstrated by a growing sales pipeline and reinvigorated relationships with our partners. In late May 2023, after the period end, the Company completed development on the next version of the platform, enhancing the offering based on market feedback. This resulted in significant improvement in both the capability and usefulness of the data. Furthermore, several promising additional value creation opportunities have been identified and the resulting rich product development roadmap will lead to value-enhancing adjacent features and capabilities.
The Digital Employee Experience (DEX) category is emergent and there remains a general lack of clarity for business leaders on how to deliver effective digital workplaces. Actual’s platform is outcome-oriented, which means it is perfectly placed within the market to guide customers through these complex, enterprise-wide transformation projects.
This requirement is clearly a market problem which the DWMP can address, as shown in current RFIs and RFPs that the Company has been invited to participate in. Working closely with leading analysts as well as investing in marketing and brand building will be key to the growth of the business and maintaining the Company’s technology leadership position. Actual’s ability to support multiple business leaders by quantifying the ROI of improvements to productivity, reportable ESG efforts and employee wellbeing remains a unique capability in the market.
The Company has progressed with its sales strategy and execution and has achieved a first sale for the new DWMP within 6 months of launch. There are several advanced sales engagements in the pipeline that are expected to lead to outcomes in the coming months. It is also noted that due to the current macroeconomic climate SaaS sales cycles are lengthening; however, the Company has put significant focus on communicating the productivity element of the insights which can estimate the operational dollar recovery of identified projects, thus adding critical value for potential customers as cost optimisation efforts become prevalent across the market.
Actual Experience has delivered the milestones set out a year ago. There is a new team, a new SaaS product and a first, contracted client using that product. In the interim, the Company has seen the appetite for Digital Workplace Experience tools increasing in the market and are uniquely placed to take advantage of this trend. The new CEO has a track record of taking companies and instilling execution and delivery and this is now the strategic focus. There is a clean slate to build upon and the path ahead is clear.
