Immotion PLC (IMMO)
Very exciting opportunity here. It’s a highly speculative investment as the stock ranks indicate, but the rewards if they get it right are significant. The company is loss making but on course to break even in Q1 2020. They provide “Out of Home” Virtual reality experiences. The market cap is £19.27 million.
After experimenting with various different business models, the company have settled on a partnership model. This model is extremely attractive to both parties. Immotion provide the hardware; the content; training and support at their cost. The partner provides the staff; space and footfall at their cost, with the revenue being shared 50/50.
This is a very attractive model for the partner because they are able to add a relevant VR visitor attraction to their site for no upfront capital cost, with an immediate exposure to new revenues. For Immotion the model is attractive because it enables them to have their VR experiences placed in areas of high footfall. Since the marketing and operation of the experience is carried out by the partner, there are very little costs for Immotion once the experience is in place. This affords exceptional operational gearing and profitability potential. Trading has been very promising. Year to date, the average gross revenue per headset per week was £320. This figure averaged £402 per week during the 6 week school holiday period. The partnership estate averaged £381 per week.
The model has attracted some very prestigious partners including the 02, Blackpool Tower, Madame Tussauds and Lego land. The company currently have a total installed base of 256 headsets with a further 33 to install in the next few weeks. They remain confident of reaching 400 installed headsets necessary to meet their short-term monthly objective of monthly EBITDA break-even in Q1 2020. The company have the goal of reaching 1000 headsets by the end of 2020. At an average revenue per headset of £320 that’s a weekly turnover of £320,000. The company have indicated that once they have 400 headsets in the field the revenue from each extra headset goes straight to the bottom line. If they achieve the milestone of 1000 headsets by Q4 2020 whilst maintaining their average revenue per headset, the numbers and profitability look very attractive indeed.
The company did a placing in August where they raised £2.4 million. They currently have £2.3 million in cash. The CEO has indicated they will not need to return to the market to raise more money. All further expansion will be funded from their cash flows.
I have a long position in this company. I think it offers an excellent opportunity to multi bag. I love the business model which is truly a win win for both Immotion and the partner. More importantly the business model makes it a very easy sale for the company. As an owner of a visitor attraction, why wouldn’t you want a VR experience installed at your site at virtually no cost? To achieve their goal of 1000 headsets the company’s strategy is to continue to focus their efforts on signing new partners, especially in the “Edutainment” sector, in both Europe and the USA. They have divided the market into 4 sectors: Aquariums, Zoos, Science Centres (“Edutainment”) and Entertainment. To date their focus has been on Entertainment and the Aquarium destinations within the Edutainment sector. Given the initial performance of the Aquarium offering this will be their focus for the remainder of 2019. I have taken a look at various reviews of their experiences on websites such as trip. They are very good. Here is a review of their offering in the O2 https://www.tripadvisor.co.uk/Attraction_Review-g186338-d17804644-Reviews-ImmotionVR-London_England.html
Another potential source of revenue could be in the sale of their ever-growing library of content to third parties. Immotion go to great lengths to provide high quality VR experiences. For their Aquarium experience they hired the “shark whisperer” who without the use of an oxygen tank filmed 2 experiences. One where he swam with sharks and another where he swam with humpback whales!
This is intended as just a quick introduction into the company. For further research, as a starting point, its well worth watching this recent video https://www.youtube.com/watch?v=9ymk2eDp7Rg
You should also visit their excellent website here: https://immotion.co.uk/
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11 comments
14 July RNS - 'Immotion Group, is pleased to announce its UV cleansing division, Uvisan, has signed distributor and reseller agreements with 12 firms across Europe, USA, India and Australia.'
Excellent move to scale-up Uvisan which clearly has widespread global opportunities. IMMO move impressively quickly. Once the market demand is proven it probably warrants a further scale-up. As well as on the ground distribution there needs to be global multilingual marketing support.
The key question is to what degree Uvisan has relevance beyond Covid-19?
Any thoughts on this very welcome?
The Mello presentation on the 12 July will probably generate some investor interest. Mello usually has about 350 - 550 participants including many high net worth investors and some fund managers specialising in growth stage companies. so a perfect audience for IMMO.
Tickets are still available and if you would like one at half price then enter the code MMTADVFN50.
Https://melloevents.com/mellomonday-12th-july/
There will be some investors specifically looking for post-Covid 'experience' investments that will benefit from the expected post-lockdown exuberance. If you have been to any attractions recently - you'll see a lot of pent-up demand is being released.
Regards Maddox
We are not post-covid yet. Book value is up, but book value per share is down. Also, the revenue forecast for 2021 seems to have the decimal point in the wrong place. 2.75, surely!
Good read-across from Accesso Technology Accesso Technology (LON:ACSO) - trading update today:
'accesso is pleased to report that since its AGM trading statement on 18 May 2021, the Group has continued to benefit from pent-up customer demand and the accelerating trend towards online commerce in its end markets. The Group has seen operators' need to manage capacity boost its online reservation activity, and its virtual queueing solutions have seen demand well beyond historic levels. This has resulted in year-to-date revenues in 2021 significantly ahead of expectations.'
Steve Brown, accesso CEO, said: "We are pleased by the robust results we are seeing as the leisure sector reopens. We're working hard to capture strong pent-up demand alongside ensuring significantly higher utilisation across our solution set. As our end markets emerge from the pandemic, we will continue to respond with adjustments to our business in order capture the long-term value associated with this uptick in demand for our technology".
ACSO is not a competitor but operating in the same market sector.
About ACSO: accesso stands as the leading technology provider of choice for tomorrow's attractions, venues and institutions. We invest heavily in research and development because our industries demand it, our clients benefit from it and it makes a positive impact on the guest experience. Our innovative technology solutions allow venues to increase the volume and range of on-site spending and to drive increased transaction-based revenue through cutting edge ticketing, point-of-sale, virtual queuing, distribution and experience management software.
Currently serving over 1,000 clients in 30 countries around the globe, accesso's solutions help our clients streamline operations, generate increased revenues, improve guest satisfaction and harness the power of data to educate business and marketing decisions.
hTtpS://www.investegate.co.uk/accesso-technology--acso-/rns/trading-statement/202107070700033732E/
Introduces new hire Ian Hetherington (ex Sony Playstation plus) and the new 'Lets Explore Oceans' https://www.proactiveinvestors...
Any thoughts on the new "Lets Explore Oceans" product?
Having heard a few write positively about Immotion, I visited Lego Land Discovery today with my daughter. It was a good opportunity to test out the VR Lego race game installation. They had 2 off 2 seater Pods (4 headsets) and they were in constant use during my 2 hour visit. When I booked to go on the ride £5 a pop, I noted a sheet of paper keeping count of rides taken during day. At 1:15pm, It was 62 but by 3pm end of my session, it must have been nearer 100. Change over (one set of riders to the next) seemed to be no more than 10 mins. Reaction of kids and adults using the ride was extremely positive. My daughter loved it and I was surprised at how enjoyable it was. It is very immersive and you easily forget the outside world. Ride maybe lasted a couple of mins max. A number of people were reluctant to pay the extra for the ride (having already paid to get in) but plenty did pay to use it. Pre Covid, the staff member running the ride said it was typically 200 a day. She also talked about the more adult orientated ride in the Manchester Arndale which she said was very popular but has not yet reopened. Immotion must be using their own staff to operate the ride even though it is part of the legoland experience. I guess you can see how a small installation like this could comfortably generate £100k of revenue a year. The footprint is small and it looked very easy for one person to operate both PODS. I also think the fact that the PODS are open so everyone can see the enjoyment and reaction of those taking the ride really encourages others to pay for the ride. Overall I was sufficiently impressed enough to think that at sub £14m this looks potentially very interesting. If they can get anywhere near 1000 headsets then the current valuation looks bonkers.
Any thoughts on the new Uvisan product? looks very interesting however only RRP has been mentioned
Uvisan:
Was created for internal use -> the need to reassure clients and their customers.
They had external interest so they decided to sell to it as source of extra cash. There isn't much of a plan beyond that....suck it and see.
Tech obvs sourced (China I assume like their headsets) but design is theirs and they have exclusive territory rights in US and Europe.
WC/financing requirement small and gross product margin very high. Sales/fulfilment doesn't take extra resource at this time.
At present this is not much more than extra cash-flow to help breakeven ahead of return to full normal at their VR installations. However, mgt are experienced entrepreneurs with moves and my experience of them is that I'd expect them to work out how to monetise optimally.
The news from Immotion (LON:IMMO) has been relatively good recently. The response is muted probably for couple of reasons IMO
1) they were pre-profit pre-covid and they have product that is footfall and experience based
2) They had done a number of raises in short succession.
AIM punters hate the raises this...but I thought it was happening for really good reasons and punters seem to sometimes forget what AIM is all about (growth capital!) unless you are in biotech or something SAAS-y etc ->
IMMO had pivoted in their plans and spotted a large and profitable market opportunity providing a narrow-ish selection of 'edutainment' sort of stuff at locations (like aquariums) rather than a broader selection of gamer like stuff at shopping centres and specialist game outlets. They also struck the right model which is to take on all the capex of setting up their product for customers and then taking a high cut of revenue. Payback times on this were good.
Good mgt has also learned quickly how to increase revenue per headset and market product within host's space.
Pre-covid things were going well and IMO likely to surprise positively. In addition, increased scale and 'proof of concept' would likely open doors to more non dilutive installation focused funding.
Covid put a spanner in that. Another raise to shore up finances in time of covid activity suspension was needed....so it for sure forced a non productive round of financing on company.
I had a small position at 7p ish before covid, waiting for more evidence that they had hit pay. I bought the position back up to original at 2p. Its still small for me as so much uncertainty...but I do believe the covid crisis is nearing its endgame in terms of how we manage and cope with it vaccine or not (I'm not saying it just disappears) and I see IMMO as supercharged upside with lots of potential to surprise people.
Back to Uvisan...great if its a big deal. What it shows most of all is that they were on the ball in terms of reassuring clients/customers that their kit can be used. The uvisan product ensures that Mandalay Bay can maintain a high ongoing throughput of punters with minimal covid disruption.
Super risky though....a chance this could be a zero or diluted away. You'd need some amazing level of insight to see this is okay today. But from current levels it offers potential 'optionality' like upside and then levels out into a high margin decent growth biz.
(I think mgt are good and that we will overcome covid soon...or our hysterical perspective of it...so I see the risk as significantly mispriced)
I would hope that they would be able to move to shopping centres /recognised youth gaming areas such as Croydon as they expand . Could obviously hire small premises very cheaply in current environment. Plus could be one of the safest covid experiences available to family or teens with ability to take part in a sealed room with equipment and room quickly sanitised between visits. Taken a medium position this week as have had some experience with attending experimental installations at South Bank London in past and seen some of the potential and how thrilled kid and adults were by the experiences they had. Sector has huge entertainment potential.
A very exciting trading update from Immotion (LON:IMMO) today. They announced the installation of a 6 seater cinema at the London Eye, the UK's most popular paid tourist attraction. The installation will feature their unique VR Roller Coaster experience, Tower Coaster - London, where customers will be able to see London from 400 feet above the Thames, enjoying the sites of the city. This installation joins the 8-seater mini-theatre installation at neighbouring Sea Life Centre. Due to great demand at the Sea Life centre, the number of installed headsets has recently been increased from 4 to 8 after a short trial. This highlights the experience is in high demand and suggests Immotion have a first class offering.
The company have also announced today that in Q1 this year, they will be installing a total of 93 headsets across a further 5 entertainment sites, 9 aquariums and 1 European Zoo. The majority of these new installations will be deployed in aquariums, increasing the total number of aquarium partners from 14 to 26, with aquarium based headsets rising from 52 to 107. Average weekly revenue per headset in the Aquarium sector through 2019 was £476 and during the busy Christmas holiday period an average of £794 per week was achieved. Once all the installations have been completed the company will have a total of 394 headsets in the field.
Based on forecast costs, the company reported today that it it will reach monthly EBITDA break-even at or around the end of Q1. The company have previously stated that c.400 installed headsets is the magic number for break even, anything beyond that and the revenues fall straight to the bottom line. The business model is exciting because of its recurring revenues and the exceptional operational gearing as more headsets are installed.
Immotion are moving very quickly signing partnerships with blue chip clients like the O2 and the London Eye. They are targeting quality over quantity by only signing partnerships with customers who have high footfall. For example the London Eye attracts 3.5 million visitors every year. With this in mind, I would suspect each of the 6 headsets installed at this location should be able to achieve average revenues in excess of the £476 per week they are currently achieving from the aquarium sector.
It is still very early days but the signs are looking good. The company have a goal of 1,000 installed headsets by this time next year. I suspect this will be difficult to achieve but it I like the ambition of the management team.
I have a position in this company.