SmartSpace CEO Beechinor on SaaS firm’s major plans in the workplace solutions market (SMRT)

By James Moore


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Against a volatile stock market that has hit many London-listed small-cap firms, software-as-a-service (SaaS) player SmartSpace has delivered steady performance so far this year, currently sitting at 84.7p. Following a major repositioning last year, the £18.8m business has been working hard to develop its wholly-owned platform aimed at addressing a growing need for space management solutions among companies. With SmartSpace recently painting a clear picture of its near-term growth plans in its full-year results, we spoke to chief executive Frank Beechinor about the company’s progress since our feature profile in January.

Strategic shift

As mentioned, although it has legacy operations in the retail and hospitality sectors, SmartSpace’s primary focus is on the workspace sector. Specifically, it aims to support organisations in their quest to keep up with an ever-growing need for employee mobility and flexibility in the face of changing workplace environments and rising costs.

SmartSpace’s platform consists of many services, or ‘modules’, such as desk management, meeting room and visitor management, and wayfinding that help clients optimise the use of their real estate. Its technology also supports smart car parking, employee engagement, reporting, and analytics.

As SmartSpace’s platform grows, clients will be able to buy as many or as few of its features as they wish. They will then pay for what they use every month. Businesses of all sizes are already employing SmartSpace’s services, with high profile customers, including GSK, JaguarLand Rover, and UBS.

SmartSpace’s focus on the workplace SaaS market really began last July, when it changed its name from RedstoneConnect after selling its Systems Integration and Managed Services division. It sold the arm for £21.6m in cash after deciding the market offered limited growth potential due to its mature status. In contrast, the business anticipated higher growth rates and better margins in the SaaS sector. To support its new direction, the organisation appointed software veteran Beechinor as its chief executive. Beechinor was previously SmartSpace’s chairman, where he was instrumental in repositioning operations.

In the year since its repositioning, SmartSpace has used the proceeds from its sale to pursue acquisitions and secure high profile contracts and partnerships to bolster its presence in the workplace software sector further. This has included a distribution agreement with leading panel manufacturer Evoko and material contracts with leading international financial institutions. 

Future plans

SmartSpace’s investors were treated to an early glimpse of the potential offered by its new strategy in May following the release of its results for the year ended 31 January 2019. As expected for a firm that has been repositioning itself, SmartSpace reported a loss of £2.7m for the period, reflecting the additional overheads required to build the software team that will transform it into a sector leader. However, the company’s cash balance – which stood at a hefty £7.5m as 31 January – and outlook, painted a highly exciting picture.

Specifically, Beechinor said SmartSpace would continue to invest in sales and marketing to enterprise and mid-market firms over the next year to maximise the opportunity for workplace technology in the UK and overseas.

‘During the coming year we expect to see increased sales from partners, in particular via Evoko, who operate through 400 resellers and distributors across the globe,’ he added. ‘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.’

Critically, Beechinor also said that SmartSpace would continue to use its healthy cash balance to explore new acquisition opportunities over the coming year. Eschewing its historic ‘buy and build’ acquisition style, SmartSpace is pursuing a careful growth strategy centred around making between two and four acquisitions in three different areas.

The first type of potential acquisition targets are those that can increase – or ‘bulk-up’ – SmartSpace’s turnover, development capabilities, and geographical reach. The second are those that can help to address gaps in SmartSpace’s current offering. The final type are firms on the self-serve side of the market that can increase the company’s customer base and speed up its growth.

Speaking to ValueTheMarkets, Beechinor said SmartSpace is looking at opportunities in the first and second acquisition categories to grow its reach and boost its average revenue per user (ARPU).

‘We are looking at firms with an existing presence in our market that we could accelerate as well as opportunities where both SmartSpace and its acquisition target could accelerate their runway by combining services. Obviously, we also plan to bring in new services and modules. If we can grow our customers and increasing the amount that each pays through the provision of additional services on our platform, then we will have accelerated our profitability line and metrics massively. This is why the SaaS model is so valuable,’ he said. ’We have gone from being a £48m business to being a £6m business. We need to get back to being a £20m pure play software organisation as quickly as we can. Finding the right acquisitions at the right price will be a great way of getting back there.’

SwipedOn success

Beechinor believes another critical driver for SmartSpace’s ongoing success and growth will be its New Zealand-based SwipedOn division, which it acquired for c.£5.5m last October. SwipedOn, which offers visitor management solutions to customers for a monthly fee, represented the firm’s first ‘pay and go’ solution, broadening its range to include services for mid-market and entry-level customers.

The acquisition has been a considerable success to date, with the division’s customer-base growing by 19pc from 2,279 to 2,713 between acquisition and year-end. This figure has now grown to more than 3,000. Likewise, a price plan shift has also led SwipedOn’s ARPU to increase $54/month per to more than $60. To boost this further, Beechinor tells us that SmartSpace is planning to add additional services to SwipedOn services:

As well as increasing top-line growth and customer numbers – we expect to get to 3,500 clients by the end of the Summer – we want to create a series of add-on modules for SwipedOn. Work is very advanced on the first of those, which will be a courier management system. If we were to sell that service for an extra $20-30/month – as an example – a customer that is currently spending $60 a month could potentially increase this to $80/month. Shifts like this have a dramatic impact on the metrics of the business. We will not stop there, either –  we plan to add another two or three modules over the rest of this year and into early next year.’

Going forward

With a strong team and international footprint in place, Beechinor says there are many opportunities for SmartSpace to continue expanding in the global workspace management market both organically and through targeted acquisitions. Broker N+1 Singer has also echoed this sentiment, previously stating that it expects SmartSpace’s sales to rise to £11.4m in 2020 and £15.9m in 2021. At this point, the business will be close to break-even.

The broker also expects the firm’s share price to enjoy a re-rating once SaaS revenues really start to outstrip one-off licence sales. If you believe in Beechinor’s ambitions then, with so much to play for, it could be an opportune moment to buy into the SmartSpace’s journey.


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Author: James Moore

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

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