Good morning, ladies and gentlemen, and welcome to the essensys plc half-year results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab that's just situated on the right-hand corner of your screen. Please simply type in your questions at any time and press Send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all of the questions submitted today and publish responses where it's appropriate to do so. These will be available via your Investor Meet Company dashboard, and we will notify you by email when these are ready for your review. Before we begin, I would like to submit the following poll, and if you'd give that your kind attention, I'm sure the company would be most grateful.
I'd now like to hand you over to CEO, Mark Furness, and CFO, Alan Pepper. Good morning.
Good morning. Thanks, Jake. Good morning, everyone, and welcome to essensys half-year results presentation. Thanks all for taking the time to join us today. For those of you who don't know us, since 2006, we've been developing and delivering software and technology for the commercial real estate sector, mostly the flex workspace industry, but certainly more recently, the wider real estate industry at large. What does our products do? What do they deliver for our customers? Well, our platforms help our customers to automate out complexity of their operations. It allows in-building experiences to be delivered on demand. It allows our customers to manage and scale their operations more effectively and more cost efficiently, provides and solves for cyber and digital security challenges.
It reduces the complexity of running data networks in buildings and in spaces. It allows our customers to surface hugely valuable and deep data and insight on their businesses. Talking specifically to the highlights of H1, where we've really demonstrated the resilience of our business and our model, we continue to grow across our organization, and we've really focused on the execution of our strategy. That's resulted in really strong U.S. performance again. Our biggest primary market opportunity and the world's largest single real estate market, we've performed exceptionally well there. In APAC, since we launched our business there less than 12 months ago, we've really delivered great progress. Across our product and our platforms, the accelerated investment has led to significant development of that capability and of the value it delivers to our customers.
The market continues to evolve, so real estate is undergoing major structural changes, and we're at the very heart of those major shifts, be they digitalization, be they flex, or be they decarbonization. Finally, for us, we've really focused on, heads down, delivering on the strategy, which is about long-term, that long-term strategic market opportunity that we see opening up in front of us. Delighted with the quality of the team we've been able to recruit. Our full senior executive now in place across all regions, with a really talented and deep, supporting cast of domain experts. We'll be remiss not to mention the impact of COVID-19. That was a little unforeseen, around the turn of the year, as we saw Delta and Omicron variants hit.
That led to some delayed capital deployment on our part, as we were unable to put some of those funds that we'd raised to work in the timescale we expected. In terms of customers, we saw them extend the sales cycles, not move away from us, but certainly think about the deployment of their capital in that period, which was certainly extended. We had one single customer loss in the U.K., one of our long-standing customers, who at that point had a number of sites in the U.K. and was unable to renegotiate with their landlord.
In terms of performance, that's 3% up on overall revenue, 4% up on recurring revenue, with 91% of all revenues now recurring and GBP 30.5 million of net cash on the balance sheet, at the turn of the half year. Our strategy is really simple. The model is all about the benefits of compounding over time and growing into the opportunity. We think about landing new customers, expanding into their portfolios and growing our capability to support them and solve their problems. In terms of how we performed in terms of landing customers, nine high-value new strategic logos added in the period. We've seen really strong pipeline growth, particularly since the turn of the year across all regions.
We've got that domain expertise across the whole senior team and downstream in the whole organization now as we've deployed some of that capital to expand our teams. The existing customer expansion opportunities or the ability to grow with our existing customers is beginning to unlock again. Again, we talked about expanding the team around the talent and the quality of our colleagues. Finally, in that section, it's about our global reach. This is undoubtedly a global shift in real estate. essensys is positioned to make the most of that global opportunity. From an operational footprint point of view and from the reach of our platforms point of view, we've continued to expand globally.
That platform evolution has led to the development and delivery of new capabilities that we'll talk about a little later today. It's also about the development of our people. If we grow our people, you know, they can help us fulfill our ambition. Just handing over now to Alan, who will take us through the financial highlights.
Thanks, Mark. Morning, everyone. Thanks for joining. If you've joined us before, this is a similar format to what we've done before, and on the historic decks that are available on the website. In terms of overall highlights, total revenue up 3% to just under GBP 11 million for the half year. That's at actual currency. You'll be aware that, you know, we've obviously got some US dollar currency translation, and so we talk to actual and constant currency as well. Recurring revenue at actual currency up 3%. The standout obviously comparator is our U.S. recurring revenue at local currency, and so in US dollar terms, up 20%, year-on-year or period-on-period, over the last period.
That's a combination obviously of the full period effect of those sites that went live in the first half of FY 2021, together with the impact of those that have gone live since then. Overall non-recurring revenue flat period-on-period, sort of consistent with the things we talked about sales cycles and new sites. U.S. non-recurring down slightly, not really material in the period and catching up, and we'll talk to that in a moment. Then in terms of the underlying products, we will recall Connect obviously the largest portion of the revenue, that's up 4% in line with overall revenue. Our Operate business, a smaller part of the business, down about GBP 100,000 in the period compared to the last period.
I'll touch on that, and that was mostly impacted by that large U.K. customer insolvency that we referred to historically, and we'll touch on that in a moment. The consequence of that is our recurring revenue run rate, if you like, our measure of growth going forward, up 2% period-on-period, notwithstanding the challenges over the last 12 or so months. Then, in terms of other statistics, EBITDA and EBITDA loss, we have been forecasting a loss as we invest in the business and the growth in the business over the next two or three years. So a GBP 2.9 million loss in the period.
Slightly better than we'd originally forecast due to, you know, just, the time taken to recruit additional staff to support the growth, and Mark will talk on that in a minute. We're expecting that to catch up in the second half of the year. Recurring revenue in line with the previous period, and we would expect that to come down as an overall proportion of the business in time, reflecting a greater proportion of non-recurring revenue as the business starts to grow more rapidly again. Net retention slightly ahead of last period, so please allow me to touch on that in a moment.
Margins are down slightly in the period, primarily driven by accounting adjustments to do with IFRS 16 and the way we treat right-of-use assets as a short-term transfer from depreciation interest back into cost of sales, which will come back out or has already come back out in the second half of the year. In terms of personnel, up 20% in terms of personnel numbers from the full year end. We're up at about 172 at the end of March. That personnel number continuing to grow. U.S. business now more than half. For those of you who followed us previously, that's becoming a greater proportion of the overall business.
More than half now, and as the other regions start to grow and generate direct revenue, we will report those separately going forward. Margins I've touched on a moment ago. Talking about sort of moving forward to products. The Connect and our platform element is the vast majority of revenue, up slightly compared to the previous period. 92% over instead of 90. Revenue up there, 4%. We continue to see customer and site growth compared to the previous period. Net retention still maintained, still very high, nearly 100% net retention. Some slight margin movement there, but that's driven by mix of business, with an increasing proportion of U.S. business.
On the Operate side, just to cover a small part of the business, that's the area where we had and we inherited some years ago a large number of smaller customers. These are not core customers to the business going forward. Those at the moment are most affected over COVID-19. The relative customer value is modest, and we've sort of a number of those have come out. Most of the site loss relates to that single U.K. customer. We have actually seen revenue per site go up as a consequence of that as we're focused on more of our core customers who have got engagement in Connect as well.
Looking forward in terms of the standard sort of reporting statements, I've covered off most of the income statement elements. The other area to cover off is overheads, where that movement of overhead obviously there's significant driver in EBITDA. That's the growth primarily in our sort of go-to-market and third-party marketing spend. This full period effect of growth during H1 2021 plus H2 2021 and then the first half of this year, that's what's clearly driving that growth as we expand the business and for future growth driving that number. That's really all on the P&L front.
On cash flow, a bit of working capital movement, that's timing, where we have a number of large customers in the U.S. paid us a few days later into February rather than January. There was a little bit of inventory build, which we'll touch on shortly further. We're continuing to invest in capital in our software development. Mark will touch on that in a moment. Not quite to the extent that we would have expected in the first half of the year, and that's to do with people.
Again, Mark will touch on timing of bringing those people on, and we'd expect that to catch up in the second half and be on target for GBP 3.5 million-GBP 4 million of capitalized development for the full year. Clearly, from an overall cash position, the fundraise that completed just before the end of the last financial year is the big driver there, driving us having GBP 13.5 million cash in at period end.
Finally, just on this point, just to highlight subsequent to the period end, we made a decision to make a strategic inventory investment in North America to ensure that we, A, locked in current pricing and also ensured that if there was any potential for supply shortages over the next 12 months, that we had secured supply to ensure we could deliver our growth. That was GBP 2.3 million. That will obviously be reflected in the second half-year numbers, but that will unwind through FY 2023 and also ensures that we can deliver growth to our customers primarily in North America at the moment. On the balance sheet, the balance sheet's there really for record only.
Finally, just to sort of talk through some of the KPIs that, again, you will have seen before. Key one obviously to note, 53 new contracted sites for delivery after the turn of the half year. A number of those are into FY 2023, which is starting to underpin FY 2023 growth projections, which is good. In terms of customer concentration, that continues to broaden. We now only have one customer that is more than 10% of revenue, sort of obviously our largest customer in North America. We're seeing a broader cohort in the balance, if you like, of the top ten, as that area broadens out. So positive. LTV to CAC down slightly as we forecast.
Still market leading in terms of being just around 3 to 1. That will nevertheless continue to drift down over the second half of the year as we continue to invest in sales and marketing and probably in the first half of 2023 before I would expect we'd start to see it recover or climb back up again in the second half of 2023 as we see the new sales and marketing personnel start to deliver over the next 6-9 months. Finally from me, just clearly we're continuing to sell both products. That becomes increasingly less relevant to incoming new customers as the relevant Operate functionality is incorporated in the new platform.
Therefore, you know, Operate in due course will become a standalone product of itself without necessarily any application across both products. That's it from me, Mark.
Thanks, Alan. I want to talk specifically to the market opportunity right now. The real estate industry is really at the front end of three major structural drivers converging, and those structural drivers are also driving the conversation towards essensys and our technology. The first is well understood for essensys. For 16 years, we've been delivering the software and technology that helps flex workspace operators. We know that trend, and we understand it well. Over the last few years, we've seen the rise of two other structural changes in real estate. The first being digitalization. That's using digital-first technologies to transform the journey in building and the in-building experience.
Whether it's touchless control, touchless access, whether it's automated and autonomous operations, digitalization is the thing that will make real estate more relevant, more efficient, and more commercially viable as we look out for the next five, 10, 15, 20 years. The third theme that is converging towards us is decarbonization. Which technologies, whether they be cloud, SaaS, whether they be digital, can help in the decarbonization of real estate portfolios. Those three trends and those three major challenges for the industry are the challenges we are helping to solve with our technology. Forgive me. Just moving through to how that looks in terms of an overall market picture.
What used to be the case in buildings and big real estate organizations was really it was all about the traditional tenant spaces that they sold. Think of it as like, selling you a big empty box on a long-term lease, and they're responsible for all of the services in that box was for the tenant. That's evolved rapidly in the last few years, and we have now in these buildings all types of spaces. A building can have traditional tenants, it can have co-working, flex spaces, it can have, amenity spaces and communal areas, and it can even have conferencing and meeting spaces. Those multi-mode buildings are likely to be the most commercially successful assets in the future of real estate.
The Flexible Workspace Report and the Trend Report from Colliers of 2022 says that actually in real estate, the world of flex and the world of traditional tenants is actually blurring. What used to be two never the twain shall meet type space formats are now combining to create the workspaces of today and tomorrow.
Buildings now will have all forms of these types of spaces and solutions, and that will really play to technology platforms like ours that enable them to operate efficiently. The second thing here is a Deloitte report that we've had earlier this year which is the Commercial Real Estate Outlook which is really to survey the wider commercial real estate industry and understand how well-equipped they are to meet the needs of their tenants and their occupiers and to support these technologies that are ever more important. 8/10 organizations suggest that they don't have a modernized core system, so if you like, the intelligent digital infrastructure needed to incorporate these emerging and critical technologies going forward. That really plays to the white space opportunity that exists for essensys.
Now, let's just talk specifically then to, the problems we solve for the real estate industry at large. On the right-hand side you can see the flex workspace operator. As they scale, their operations become more complex. Our automation technology, our private platform, our private secure global network, and the ability to deliver on-demand services are really the challenges we solve with technology for that part of the industry. Increasingly, the asset owners, so the real estate owners, the real estate brands and the property managers are the biggest global players, are looking to us to help them solve for that intelligent digital infrastructure. Can they support in their buildings those new innovations that are needed by them and their clients and their customers and tenants?
Today it's about solving that, digital complexity with our automation technology, and tomorrow it's about the operational complexity as they evolve to deliver those flexible workspaces, in and around their own portfolios. We're seeing the real estate market evolve rapidly. We know digital maturity is variable across the industry, across people's portfolios and even at an asset level. The final point here is critical. Digitally enabled spaces and buildings are critical to the commercial success of these real estate portfolios. Just specifically in the regions that we operate, our biggest regional market, North America, so CBRE report that, the industry faces a challenge to deliver the technology, privacy, so if you like, cybersecurity and digital security, that is needed for enterprises to take spaces in these buildings.
It also faces the slow adoption of the critical technology that's needed to support their growth or a better user experience in the building. We all want a premium experience as we walk through these workspaces and these buildings, and it's technology that unlocks that. Our biggest customer, Industrious, actually reported their biggest ever increase in enterprise sales in the third quarter of 2021. That was over 150% increase. That was really around them being able to deliver the digital security and the digital experience that enterprise customers demand in these spaces, all powered by essensys technology.
In the U.K. and Europe, we know that companies will pay a premium for being in these type of spaces, and we also know that technology that allows landlords and flex workspace operators to reduce time to value, so to do things in real time, via automation and the digital infrastructure, is critical to developing a better commercial models and increasing return on investment rapidly. In Asia Pacific, which is our second-largest market opportunity, landlords there are looking to high-impact technologies such as smart building systems, big data and analytics, and digital property management, which we cover all three of those major trends, to really drive the biggest impact for their portfolios in the next five years.
The market backdrop is one which is really driving the conversation towards essensys, and we think we have a very strong strategy to capture that market opportunity. A little under a year ago, we announced a fundraise to really equip ourselves and resource the business to face into and make the most of that emerging market opportunity, that structural growth story. The fundraise was really to do three things. One is to expand the geographic reach of our platforms and our organization. Two, to accelerate our go-to-market activities, to really build brand equity and to have the feet on the street that can sell the essensys product and platforms into those target customers.
Finally, it was to accelerate the value of the product so that actually we become even more embedded into our customers, deliver even more value and really help them to solve these major challenges via our technology. Specifically, how have we performed in terms of driving product value? We expected as part of this fundraise to increase our head count. In the first half of the year, we increased the head count. We were 116% of plan. By the end of the full year, which is July this year, we expect that to be pretty much bang on plan in terms of the head count. Really pleased that we've been able to hire and retain and recruit and onboard the technology talent that we need to deliver the product development.
We've restructured our organization in terms of R&D around full stack development, around Internet of Things and hardware, and around really innovative new initiatives, and ideation around essensys Labs. That's all delivered accelerated product output. Flex Services platform, which we'll now talk about as the essensys platform, really developing new capabilities within that new core platform for us. Smart Access and Hub and Halo, which is really about creating unique in-building journeys that our technology can enable. In terms of that expansion we talked about, underpinning everything we do is our global private network. We plug directly into these buildings from our data centers with a big fiber connection that delivers all of our capability and gives security and experience protection for us and our customers.
This investment phase will see us deliver 25 data centers across these key markets. It's all about unlocking the opportunity in those major regional markets where there is high density of offices and buildings. This investment will allow us to support over 3,700 locations, which is equating to over GBP 300 million of ARR as we get there. The platform today, as we talk about the global private network plugging into buildings, we connect directly to the essensys platform to these buildings through our data center network. Then we use intelligent automation around the networks or the data networks, around automated provision of services, around space management and occupancy management. We allow that control to happen through our intelligent automation engine via a single pane of glass for our customers.
That allows us to create these amazing seamless in-building and cross-portfolio experiences that are unique to essensys and our customers, and we are able to surface really deep insights about those journeys and about how customers are using and accessing the spaces. One of the initiatives that essensys Labs has delivered, so we ideated this a little under a year ago, is essensys Smart Access and the Hub and Halo product. This is about using our mobile device to unlock an in-building journey. To make it easy to tap, book and pay even through these buildings and spaces. Those technology solutions around access control, around booking and availability, and around sensors are historically siloed solutions and proprietary.
We figured that if we can converge these in one single unique capability which is commercially compelling and disruptive, as well as technologically disruptive and compelling, that this would be really powerful for our customers. Hub and Halo has been deployed in its first beta test phase with some U.K. customers. That really will unlock the power of using your mobile device, and we're all familiar with tapping our mobile device to pay or to get through the tube. To do that and be able to navigate through a building to unlock a door, as well as to book a space, as well as to pay for it, we think is a really powerful use case for essensys Smart Access, Hub and Halo.
As well as new product innovation, we talk about accelerating go to market. This is really not about just scale, it's about hyper-efficient growth. We talked about that LTV to CAC number being near 3 to 1. It really shows the efficient growth that essensys is well known for. That comes from the type of customers that we target and being able to expand with them over time. When we grow head count, as we've done through the year and we continue to do, to the end of the year, it's all about industrialization of the process, driving sales efficiency. You're seeing us move to a digital-first approach to demand generation as we build new markets and brand equity in those markets. It's all about making sure we get the right head count.
COVID limited our ability to get the right people onboarded. You can identify and find the people in terms of sales and marketing, but it's all about the onboarding quality. We will have recovered that position by the end of the year, and we'll be back on plan as we talk about the outturn of the full year. In terms of the regions, North America, our largest market, as I've said, which is, you know, a $1.7 billion total addressable market. Our target customers right now represent over $377 million of ARR. We've been impacted again by COVID. At the half year we were a little behind the plan in terms of deploying that capital and getting the head count, but we recovered and we expect to recover to 80% of the plan by full year.
We've done really well in actually engaging with some significant new logos at the bottom of the funnel too. We have some really strong opportunities that we're looking to close in the near term. That's a Californian mixed-use landlord with a number of locations, a pan-U.S. REIT, Texas mixed-use developer, and a West Coast landlord that not only have 37 buildings across that area, but also have an APAC business too. It's about really focusing on the type of customers that as we land them, will deliver long-term expansion opportunity for our business. I wanna really talk specifically to APAC. It is undoubtedly a huge market opportunity.
Just in the early stages, when we think about Hong Kong, Singapore, and Australia, our early entry points, that is a serviceable addressable market of over GBP 225 million a year of ARR. Since we launched our business there little under a year ago, we've made great progress. Alan and I were fortunate enough to visit the team in Singapore last week, and we were super impressed by the quality of our team and the progress they've made. To give you an example of that, since the turn of the year when we've managed to onboard our new sales team, we've seen pipeline grow 11% week on week, since we onboarded the team.
We've actually managed to engage with over 40% of our target customers in the market already, with really high conversion rates already being shown through the funnel and through the pipeline. That's resulted in some strong new logo prospects. A regional landlord with a flex, established flex brand, a large Australian landlord with an established flex brand and a multi-family portfolio, a Singaporean regional flex operator with over 40 locations, and a Singapore brand that actually has a global portfolio that has over 11 flex locations in the region. We're actually really excited about the APAC opportunity and what it could mean to the business. Finally, the U.K. and Europe. Our heartland is the U.K., and we've done really well in the 16 years we've been established here.
Obviously only when you add the European opportunity to that to that UK market does it become super significant for us. As we think about that as our third market opportunity with a TAM of nearly GBP 1 billion but with a service addressable market of GBP 250 million we've appointed James Lowery as our CEO for the region recently. He comes from British Land where he was their lead at the head of their flex division. Now we've got real expansion opportunity across the continental market. Sorry, we have 36 operate-only sites with a single French customer that we're talking to about taking the whole platform.
We've got a U.K. building operator with over 50 locations, a Swedish private landlord as well as a Swedish customer we've recently won, and a German REIT with over 500 buildings across the region. Again, we've done really well on recruitment and managing to get our head count up to the numbers we expected, and that will result in a full year outturn in terms of the U.K. and Europe of being pretty much bang on plan in terms of the numbers of people. The people, our progress with our strategy, has resulted in the pipeline progress that we see in front of us. Delta and Omicron undoubtedly saw that pipeline stall and all of the funnel progression really slow down as uncertainty returned. Since the end of January, we've seen those pipeline moves unlock.
In terms of top of funnel, we've seen that increase 23% since the middle of January. More importantly in terms of the medium-term pipeline, we've seen that increase 40% since the middle of January. To give you some context around our existing customers too, as well as our new logos, we took a snapshot a little over a couple of weeks ago of a small subsection of our existing customers to really get a sense of their levels of confidence through the near term, through next year, and what the long-term opportunity represents with those logos. As you can see here, I think we've got 17 customers, or 13 actually, customers that we went to.
Near-term pipeline, you can see that across North America our existing established customers who've been with us over a year, you know, there's 33, and that pipeline, near-term pipeline is really till the end of our financial year. New sites they see and 12 from brand-new customers. But more importantly, in support of our land expand growth strategy, it's what those customers are expecting to deliver in terms of new sites in FY 2023, and perhaps even more importantly, what those whole portfolios represent in terms of overall expansion opportunity for essensys, which is in excess of 1,700 locations, just those logos you see in front of you. And that would equate to over GBP 150 million of ARR.
When we come to the outlook and the summary for our half year, it's really a story of building foundations and getting our business in shape for the opportunity in front of it. We've made great progress with delivering the quality of people, the talent in the business that can support our ambitions, domain experts, the senior executive team, and all the way through to our development teams and our operational teams. That really supports our product, because our product really is everything for the future of the business. We have to support our customers deliver great product that is super sticky, and you've seen that in the net retention numbers of near 100%, with Connect and the Flex Services platform.
The more value we can create for our customers, the quicker we can get the accretive revenue, accretive margin per building, the better for our customers and us. The progress we've made across for delivering our strategy I'm really pleased with across all fronts, in the two and a bit quarters since we raised GBP 33 million to accelerate our growth. The market backdrop, those converging structural drivers of flex, of sustainability, and of digitalization are really playing into the conversation on technology like essensys. Finally, we have the global capability, the reach of our platform, and the reach now of our operations to deliver and unlock those major market opportunities in front of us. Thank you for your time. That concludes my part.
I think, Jake, while I hand quickly over to people here.
Mark-
Yeah.
Yeah, that's perfect. Alan, Mark, thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the right-hand corner of your screen. Just while Alan and Mark take a few moments to review those questions submitted already, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. Mark, Alan, as you can see, we did receive a number of pre-submitted questions ahead of today's event, as well as a number of questions that have come through throughout today's presentation. Firstly, can I thank all investors for their submitting their questions?
Alan and Mark, if I could please hand back to you just to run through that Q&A tab and where it's appropriate to do so, if you could just read out the question and give your response, and then I'll pick up from you at the end. Thank you.
Thanks, Jake. We'll get through as many of these, sorry, as we can. Actually, the question's from a different Jake we'll start with. Question is: On the 1st of March, the market cap reduced significantly when the company update never seemed to justify this. Do you think this market cap reduction was justified, and do you think, believe the share price should be back to pre-March 1st levels based on the recent half year results just released? I wouldn't try and understand how markets work. My job is to understand how essensys and our customers work. That's what I focus on. My belief is, I'm told the markets are efficient, and therefore eventually we will be valued accordingly.
I would just add that I'm the biggest single holder of this business, the founder since we started the organization back in 2006. I guess the question is, am I confident in the future? The answer has to be absolutely. Jake, you asked another question. Your stack of flex services platform sites contracted for delivery grew from 28 at Feb 2022 to 53. Were any sites delivered in that period? In other words, were the growth additions the same as the net 25? Yes, there were. That's the reported number at the period end.
There have been some of those sites delivered to date, and we'll see some of those sites delivered, but obviously as we continue to accelerate pipeline, that will hopefully result in the addition of new sites added to that number as we look out. Hopefully that answers that for you. We've got another one here from Jake, which is, it may well be in your presentation, but if not, what's your up-to-date LTV to CAC? I think we've answered that. LTV to CAC is one of those three-letter acronyms that the industry has tagged onto, which is really all about efficiency. We've always been super focused on return on investment when it comes to sales and marketing and acquisition of customers. Very low churn across our organization.
High long-term lifetime value and high margin really drives that ratio. We've always been very efficient in sales, and we expect to be so in the future. Roughly how much of your admin expenses reflect steady state maintaining service in the existing products and customers rather than expansion? Alan, do you wanna come briefly in on that?
Yeah. If you look back to last year before we sort of started the growth, you know, that'll probably give you an indication of where our admin expenses would normally be if we weren't growing the business. Clearly we are growing the business, and there's a continued operational requirement to support those customers. Obviously, it's not linear. Clearly as we bring in our bigger customers, they are not one for one. We'd expect that sort of, if you like, that operational gearing to flow through. I hope that answers that.
Thanks, Alan. You talk about longer sales lead times with some significant potential new customers and large European property companies and managers. Do you expect this to be an enduring feature of the market? Absolutely. The real estate industry is primarily about risk management. One of the reasons we took the business public was to give the confidence and to deal with that part of the risk matrix for real estate companies to go, "Actually, public company confidence," so that they could deal with essensys with confidence. Actually it's all about that efficiency. Larger customers with larger portfolios and scale, we deliver increasing ROI the further we're penetrated in those organizations.
Actually, the more complexity we automate out, the better the ROI profile and on the investment for our customers. They're absolutely our target customers. As well as that, they provide that sales efficiency. They really provide that long-term growth and expansion opportunity. The sales pipeline might be longer, it might be more professional, the sales process itself, because of a procurement process being much tighter. Actually the outsize returns for essensys are really important. Finally on that, operationally, those bigger organizations as we embed, and we become part of their standard operating procedures, actually they become less of an overhead. On a unit basis, they are less costly to service than small customers.
Absolutely targeting global large high-value strategic accounts, whether they be our existing customers like JLL, Cushman & Wakefield, Industrious, Hines in the U.S., to some of the new prospects we've been talking about today. We have one about can you talk a little more about the losses arising from the U.K. customer insolvency? How much of the GBP 224,000 expected credit loss provision is due to this customer? How much of the continued committed costs associated with the lost customer in the U.K. that affected your gross margin? Having been through this experience, are you doing anything differently now to mitigate the insolvency risk? I can deal with that straight up.
I think this was a long-standing customer, been with us for thick end of a decade and was actually fully up to date. So we didn't experience any significant loss in terms of cash terms from unpaid bills. That organization was unable to renegotiate their leases with their landlords, and so unfortunately was not able to survive. In terms of continued committed costs and the impact to margins, limited, because we're able to obviously repurpose the benefits of cloud and SaaS, is to repurpose a lot of those costs elsewhere, and so not really an impact on gross margin. Having been through this experience, are you doing anything different now to mitigate the solvency risk? We're pretty robust, and as you can imagine, we are mission critical to our customers.
Without us, they are unable to operate their businesses. We have quite a big stick with which to sort of wave to manage credit risk. I think we continue to be very active on that. But we're not seeing any additional risks from our customers. You talk about building inventories, and I can see the increase in the balance sheet. What stuff is the inventory? I think Alan talked about that. It's really about supply chain management, making sure that we control our supply chain in the face of inflationary likely cost pressures and cost increases, and also in case there's any possible supply chain disruption through the year. I think that's proven a really good approach to us.
Type of stuff is some of network equipment and the stuff that is located on the site that we deliver our services over. Good morning. An article out today states you need to double revenue to get to breakeven. Is this true? And if not, when do you forecast breakeven? We're absolutely in growth mode right now. The size of the opportunity, it is the largest single asset class, broadly untouched by technology like essensys, so it is really all net new and white space opportunity to grow into. We need to grow into that opportunity rapidly, then we get the defensive moat, the economic moat, and we become embedded across the industry. It's really important we do that aggressively in the years to come.
That will mean that we will run harder, and revenues and margins will catch up, and we'll lag slightly that investment. We said about a breakeven. We talk about 2024 in terms of when we expect that to be. One thing to note in terms of our breakeven capability is a lot of that investment that we're making is all about growth. We have a huge range of existing customer growth and expansion opportunity that we see today. We are able to leverage that, and if we feel that at any point we are not confident about the growth opportunity, then obviously we're able to pretty quickly wind off a lot of the costs in the business that are supporting our future growth ambitions. From Lloyd.
Do you consider the company is in the strongest position ever? If so, do you believe the share price is justified to be this low? I think I talked about the share price and dealt with that earlier. As the founder, and I've been here thick end of 16 years now, absolutely do I see this as the strongest time for essensys. You know, the quality of our teams, the reach of our organization, proven product market fit, the quality of our customers, that have been with us now for a while, as well as our new customers, the expansion opportunities with them and how we can help. I am very, actually hugely delighted with where we are today. Again, it's all about execution.
There's really one thing that will kill this organization and kill the opportunity for us, and that's complacency. We've worked too hard to get to here, bootstrapping the business all the way through to IPO. Now we have to make the most of the opportunity, but not be complacent as we get there. From Lloyd again. Are directors in a closed period currently? And if so, when does this end? I think we've just come out of the closed period. I think it's 30 days before the results. Lloyd again asks, we're currently sitting on just over GBP 30 million of cash. How is this cash best utilized to maximum potential while waiting to invest in the business?
I think the market's pretty volatile, so I'm not gonna answer on behalf of how treasury works. I'm sure Alan has got that in hand. Yeah, it is, you know, we're putting it to work. The best way is in investing. Alan, anything to add on that?
No, not particularly. You know, you saw what we said in terms of investing in inventory to ensure, you know, you were obviously well-positioned for cash. I guess a sensible use of those cash resources to ensure that we de-risk any, or we remove or mitigate any risk for growth next year by buying that stock. I think those are the sorts of things that, where relevant, we'll make those investment decisions. I think the plan is the right answer. We wanna make sure that actually the business is funded through to breakeven time, that Mark talked about, and that's what it's there for.
Thanks, Alan. Christoph L., sorry, Christoph L. Is the cash burn necessary and sustainable? Self-funding will be attractive to the market, and this will flow to the share price. I think it's all about size of opportunity. This is a multi-billion GBP ARR opportunity, which is broadly untouched and untapped. That is beginning to open up in front of us. Absolutely, we should be in growth mode and investment. To my point earlier, we've self-funded this whole organization through to IPO. Investment capital, so startup capital was less than GBP 7,000 that I put into this business. I understand the value of self-funding. Where we can, we will absolutely do that. We self-funded all the way through to our expansion into the U.S.
Right now we have a window of opportunity to, if you like, own a big part of the market. That is really important that we execute against that. Lloyd, apart from a slightly underwhelming first March trading update, what do you believe caused a significant drop in share price? Was it mainly an institution selling out, and is there active interest from other institutions to buy in? What caused it? We obviously notified that we have been impacted by Delta and Omicron just stalling some of our progress. Whether or not that drop was commensurate with that's for other people to decide. Definitely sellers that we saw, and I'm sure you guys are connected to that and can see that.
Hopefully our story is one with a structural growth story, a successful business, and real execution discipline that will keep the interest piqued for other organizations and institutions to buy in. Lloyd, again, with the strength in the American market, has there been any discussions regarding possible mergers and/or an American stock listing? If no, is this something that may be considered in the future? I'm not sure I can actually answer that but all sorts of conversations are always ongoing in our business about all sorts of things, as you would imagine. But you're right, it is a huge market opportunity, the U.S. When will new product details be released and launched? You saw some of that in this presentation, Lloyd.
Again, you know, keep up to date with our website. Connect with us on LinkedIn and some of the social channels. The key thing is our customers are really driving that innovation and really putting it in their hands. It's about constant delivery, constantly innovating, adding value, and that will allow us to increase significantly revenue per site and margin per site because the cost to serve are very low once we are in a building. How long is a typical customer contract, from Christoph. How embedded is your tech in a customer's building business? Typical contract is three years. How embedded are we? Well, up until the lockdown and COVID, we were always over 100% net retention.
Churn, low single digits if you look at our Connect Flex Services platform. You know, there's two elements to churn, gross and net. We've always been unbelievably high in terms of our performance, in terms of churn, at those levels. Very embedded, very sticky in terms of our customers because we solve big problems for them and we're mission critical. Lloyd, what is your vision for the company in two years' time, market cap and total share of market? This is a very ambitious team, a very ambitious organization with a significant opportunity in front of us. Our ambition reflects that opportunity. We expect in the years ahead to maintain and accelerate our position as market leader in a huge market that's growing rapidly in terms of opportunity.
I think we've talked to this previously about the first real milestone for us, I guess, is when we break GBP 100 million of ARR, and that's that investment that we've made, GBP 33 million fundraise to support our growth to that number. Lloyd, do you envisage any risks, negatives in the coming few years? Contrary, what do you see as the largest opportunity for you and your shareholders? I think I've talked to the opportunity quite clearly. It's delivering for our existing customers and those target customers because the ability and the opportunity to expand into their whole portfolios could be absolutely transformational for our business. We need to keep executing and delivering for our customers.
Any risks and negatives, undoubtedly there will be many risks. Our job is to see them as early as possible and navigate, but we can only control those things we can control. You know, our hope is that some of the macro things such as the global pandemics and, you know, wars in regions, we can hope we can navigate through those as successfully as possible. With the balance sheet that we have, you know, great customers, you know, we've got no debt, and a big opportunity and strong team, it's all about execution, and that will keep us safe. Christoph L., again, what is your win rate in a competitive tender for new customers? What are your key USPs versus competitors?
Our key USPs are all around the automation engine that we built. That intelligence automation that allows things to happen immediately on demand and without any people interaction. That is unique today to essensys. The way the platform is configured and connected to the buildings means that we can deliver these unique in-building experiences that are highly automated, limited, if not zero touch, and really unique to how we do things. I think we've got to tell more people and be better at explaining that to our customers. I think that will certainly deliver outsized results for our business.
The win rate in a competitive tender process, we're always very successful in those processes, as you can see by the logos that we have, those customers that we have today. You know, those procurement processes are very disciplined, very detailed, and, you know, our win rates are very high in those without going into specific numbers for each. Sorry, just checking through these. We're conscious of time, yours as well. Please split your visible revenue growth in 2023 between existing customer expansion rollout, new customers already contracted, new customers. Well, it's in the deck actually, Christoph. We talked to that in the pipeline bit.
You can see existing customers and that have been with us over 12 months and new customers that have been with us less than 12 months. In that pipeline slide, there is no addition of, if you like, new customers to that as well. You can see that confidence that comes through from our existing customers in terms of 2023. Imran K. "What did placing shares investors at 285 see in the business? Is it still true today? Who is the biggest investor of placings? They didn't sell since then, did they?" No, they've actually added, the biggest investor that came in there. What did they see? A lot of our existing investors held their position or added to.
Think about the structural opportunity in front of essensys. It's a structural shift in real estate, which is untapped and untouched. The white space opportunity is huge. This is all about looking out two, three, four, five, 10, 20 years on what that can look like for an organization like essensys. It's also about our execution history. You know, for the first 13 years of this business, we'd bootstrapped our way to success in North America, to the expansion of our portfolio and to working with some of the biggest real estate brands and names.
Really it's about turbocharging the DNA of our business, the experience, and allowing us to get more customers more quickly, build more product more quickly, and develop and deliver great people in our business more quickly and attract and retain them. That absolutely still holds true today. As I sit here, I am more excited and more optimistic about our business in the future than I've ever been. Just a comment. "Thanks for your answers, Mark," from Christoph. You're more than welcome. I think that brings us to the very end of the questions and super efficient, 11:58. Jake, anything else?
Absolutely, Mark and Alan. Thank you very much indeed for addressing all of the questions that came through from investors. Of course, ladies and gents, if there are any further questions submitted today, we'll provide those back to the company immediately after the presentation has ended, and we'll publish all those responses where it's appropriate to do so on the Investor Meet Company platform, and you'll be notified by email when these are ready for your review. Mark and Alan, perhaps before redirecting investors to provide you with their feedback, which I know is particularly important to yourselves and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great.
Yeah, absolutely. Thanks, Jake. Thanks everyone for joining us today. Really appreciate you taking the time to learn more about our business. I think the summary is right in front of you. It's all about have we got the foundations for future success/ Do I look across the business to the quality of our people, to the quality of our product and our innovation going forward and to the progress we've made to date and we will continue to make in the weeks and months, years ahead? Does that tie to a market opportunity which is significant? Does that mean that the global potential for essensys is huge? The answer to all of those things is yes. Thanks for your investment. Thanks for your time. I look forward to catching up again soon.
That's great. Mark and Alan, thank you very much indeed for taking the time to update investors today. Could I please ask investors not to close this session, as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of essensys plc, we'd like to thank you for attending today's presentation. That now concludes today's session. Good afternoon to you all.