With real estate booming worldwide, many people are looking to property management as a profitable avenue for growth. As multiple people flock to share the management of a property, services like cloud software provider Urbanise (ASX: UBN) have come into the spotlight. Especially huge in Dubai, where occupancy reached 72% in 2022, the Company’s 2023 financials underlined a mix of contract wins and losses.
In FY23, its total revenue was $12.85 million, up only 1.5% on FY22. Its licence revenue growth was up 1.5%, as revenue from new customers and growth from existing customers offset reduced licences from Ventia and two other APAC customers.
Its minor revenue growth was due to Urbanise losing out on a few facilities management licenses. Overall, its FY23 facilities management licence revenue was 2.7% lower compared to FY22. Licence fees of $3.8 million, were down mainly due to the loss of three Ventia (ASX: VNT) contracts in April 2022, worth $491k, reduced licences from an APAC customer, worth $50k, and customer churn, costing $64k. Moreover, in a bid to manage costs, the Company bore employee termination costs of $598k.
Its low license fees also reflected a significant investment in the development of a facilities management platform for real estate company Colliers in FY22 to assist with commercial property management.
Urbanise’s CEO, Simon Lee, shared, “In FY2023, Urbanise laid the foundations for future growth with the successful implementation of the Colliers Australia project, the RERA development in the Middle East, the restructuring of the Company into two business lines and the completion of an equity raising that is expected to fund Urbanise to breakeven. In FY24, the priorities will be to generate and convert our significant pipeline of opportunities, maintain our disciplined approach to cost and cash management and execute our product roadmap.”
Urbanise’s annual recurring revenue (ARR) of $11.56 million in June 2023 was 6.5% higher on FY22. As of July 1, 2023, the estimated backlog was $800k. ARR growth was driven by the implementation of backlog and contracts won and implemented in FY23, which offset the loss of three Ventia contracts and other direct and indirect (i.e. when the clients lose clients) customer churn.
Integration work into Dubai’s Real Estate Regulatory Authority’s (RERA) platform continues to be on track for a September 2023 completion date. The integration of Urbanise Strata (the shared management platform) and FM ensures that customers have to do less work and can meet legislative compliance obligations, specifically providing customer satisfaction, strata and facilities data which gets automatically loaded into the UAE government’s database.
In July 2023, the FM backlog included three contracts expected to contribute an estimated $400k in annual licence fee revenue. In APAC, Urbanise’s FM pipeline is focused on aged care, outsourcers and commercial property besides supporting existing outsourcer customers with their tender pipelines. In the Middle East, the focus is on outsourcers and trades management.
Urbanise closed FY23 with a cash balance of $4.25 million and no material debt.
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