Renoworks Software Reaches New Sales Record for Second Quarter
Renoworks Software (CA: RW – $0.46 & US: ROWKF – $0.36), which offers a web-based visualization platform for homeowners and contractors to plan, design and visualize home repair and remodeling projects before committing to purchases and construction achieved record sales in its second quarter ended June 30, 2021.
Renoworks’ net sales for the second quarter were $1.47 million compared to $1.33 million in 2020, an increase of 11%. The increased revenue is primarily attributable to increases in design service revenue of $74,050 and increases in revenue from libraries of $61,270 in 2021 compared to 2020.
Net loss for the second quarter was $47,976 or $(0.00) per diluted share compared to net income of $236,790 or $0.00 per diluted share for the same period of 2020, a decrease of $284,766. The increased loss is primarily attributable to higher general and administrative costs which returned back to more normal levels in 2021. In 2020, the Canadian government announced various programs, one of which was the Canadian Emergency Wage Subsidy (CEWS) program, to assist companies experiencing significant impacts from the COVID-19 pandemic. The Company received $235,938 in wage subsidies from this program in the first six months of 2020. This amount was recorded as a reduction to general and administrative expenses of the financial statements for the period ended June 30, 2020.
Cost of sales for the three months ended June 30, 2021 totaled $563,764 yielding a gross margin of 62% on revenues compared to a gross margin of 69% in the three months ended June 30, 2020. The decrease in gross margin percentage can be primarily attributed to a higher cost of sales for design services revenue partially due to the recent strength in the Canadian versus US dollar as well as increased commission costs.
Also important to note is that Renoworks’ consolidated cash position at June 30, 2021 was $1,598,610 compared to consolidated cash of $523,555 at December 31, 2020, an increase of $1,075,055. This increase is mainly due to the exercise of warrants, which the Company announced two months ago.
Mr. Doug Vickerson, the CEO of Renoworks commented on the results by saying, “Continued investment in the Renoworks platform has resulted in more clients adopting our visualization technology that removes home repair and remodeling frictions. This resulted in record quarterly revenues, driven primarily by a strong construction and repair and remodel season that began at the beginning of 2021 and has continued through June 2021.”
Financials & Balance Sheet
Net sales for the six months ended June 30, 2021 were $2.90 million, compared to $2.45 million in the same period in 2020, an increase of $447,442 or 18%. The increase in revenue is primarily attributable to an increase in design service revenue of 29% in the first six months of 2021 compared to 2020. The Company continues to see high demand for this service.
Net loss for the six months ended June 30, 2021, was $90,901 or $(0.00) per diluted share, an increased loss of $257,024 compared to net income of $166,123 or $0.00 per diluted share for the six months ended June 30, 2020. The decreased profitability is primarily attributable to increased net general and administrative costs in 2021 due to the wage subsidies received under the Canadian Emergency Wage Subsidy in 2020. To a lesser extent, the higher net loss is also due to foreign exchange losses, which increased by $90,570 in 2021 compared with last year.
Three Months Ended
Six Months Ended
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Selected income statement data for the quarters and six months ended June 30, 2021 and June 30, 2020. Source: Company Press Release
Cost of sales for the six months ended June 30, 2021 totaled $1,057,692 yielding a gross margin of 64% on revenues, compared to a gross margin for the six months ended June 30, 2020 of 69%. The decrease in gross margin percentage can be primarily attributed to a higher cost of sales associated with design services revenue. The increased demand for this service requires additional resources to support the acceleration in design service growth.
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June 30, 2021
June 30, 2020
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Selected balance sheet data for the quarters ended June 30, 2021 and June 30, 2020. Source: Company Press Release
The Company’s consolidated working capital at June 30, 2021 was $846,236 compared to a consolidated working capital of $276,098 at December 31, 2020 an increase of $570,138 primarily due to increased cash from proceeds of both warrant and share option exercises. This more than offset an increase in current deferred revenue balances. Current assets increased by $1,117,456 also due primarily to increased cash. Current liabilities increased by $547,318, primarily due to an increase in deferred revenue.
Renoworks Software Inc. is one of the leading producers of end-to-end visualization technologies for the building construction industry.
Home visualizers allow manufacturers, distributers, builders, and retailers to have a tool on their website that increases brand recognition and customer engagement, generates more sales, pushes qualified leads to preferred contractors and provides valuable marketing analytics data on how homeowners interact with their products.
Additionally, visualizers minimize homeowner design paralysis and indecision and increase efficiency throughout the value chain by showing homeowners exactly what their new home or remodeling project will look like when complete.
For years, the manufacturing industry has been lagging in digital transformation, however, digitalization in the construction industry has been a growing trend for many years, and now its speed is accelerating further.
Proof of greater adoption of the technology can already be seen in Renoworks’ financial performance. In fiscal 2020, the Company reached revenues of $5,132,109, which was up 20% over 2019. And this trend is clearly continuing in the first half of 2021.
Although Renoworks didn’t provide any guidance, it did mention that its pipeline remains robust as clients continue to see increased traffic and more conversions of high quality leads. As a result, the Company anticipates the solid trajectory to continue through the rest of the year. Smallcaps Recommendation: BUY.
|Smallcaps.us Advice: Buy||Price Target: $1.45||Latest Company Report (pdf)|
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