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(Sharecast News) - Engage XR reported a lower full-year loss despite a sharp fall in revenue on Tuesday, as the immersive communications technology provider cut costs and shifted its focus towards education, training and subscription-led income.
The AIM-traded company said revenue for the year ended 31 December fell 43% to 1.9m from 3.3m, reflecting a reduced focus in the Middle East market and weaker global enterprise demand.
Gross margin improved to 93% from 86%, while the EBITDA loss narrowed to 2.8m from 3.9m as the company reduced headcount and controlled costs.
Engage said the EBITDA loss was higher than the roughly 2.4m expected in January after a post-year-end bad debt in the Middle East.
Losses before tax narrowed to 3.0m from 4.0m, while operating cash outflow reduced to 1.9m from 4.3m.
Cash at year-end stood at 1.6m, down from 3.6m a year earlier, with no debt.
Trade receivables fell to 0.5m from 1.8m, while debtor days reduced to 21 from 57.
The company said education licence revenue was broadly stable at 1.3m, while enterprise licence revenue dropped to 0.3m from 1.2m and professional services revenue fell to 0.1m from 0.7m as the group moved away from one-off VR events and bespoke development work.
North America accounted for 62% of Engage revenue, up from 32%, while the Middle East fell to 11% from 28%.
Engage said it had restructured in May 2025, reducing headcount from about 50 in mid-2024 to around 30 core staff, with monthly operating costs expected to run at about 0.2m for the rest of 2026.
The group said current trading had benefited from renewals and new contracts with customers including Bank of America, Optima Ed, the University of Miami and a Fortune 500 technology company.
It also said a significant renewal by its largest customer in May would improve its short-term cash position once funds are received later in the year, with 2026 performance expected to be weighted to the second half.
Chief executive David Whelan said 2025 had been "another challenging year" due to continued headwinds, particularly the erosion of renewals from enterprise clients.
"Notwithstanding the headwinds the Company is confronting, especially in the enterprise space, as a management team, we continue to believe that the education sector provides an important opportunity for the company and one where the Board is focused on enhancing value for Engage's proposition," he said.
Whelan said Engage believed its platform was relevant across schools, universities and the homeschool market, with the US likely to be a key geographic opportunity.
Chairman Karthik Manimozhi said trading had fallen short of expectations at the start of the year, citing weaker technology-sector hiring and delays to major tourism training contracts in the Middle East.
He said those pressures had accelerated a strategic shift away from volatile project-based revenues and towards a subscription model focused on education and training.
Engage said its strategic priority was now its AI Teacher programme, alongside no-code immersive learning tools and a planned PowerPoint-to-immersive conversion capability.
The company said the offering was designed to let educators create supervised AI-driven lessons while retaining human oversight.
At 0842 BST, shares in Engage XR Holdings were down 5% at 0.2p.
Reporting by Josh White for Sharecast.com.
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