Renoworks Still On Track For Record Sales in 2021
Renoworks Software (CA: RW – $0.46 & US: ROWKF – $0.33), 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 announced financial results for the third quarter and nine months ended September 30, 2021.
Renoworks’ net sales for the third quarter were $1.39 million compared to $1.41 million in 2020, a decrease of 1%. The slightly lower revenue is primarily attributable to a decrease in design service revenue of $58,017 which was offset by increases in revenue from licensing and hosting of $37,398 in 2021 compared to 2020.
Net loss for the third quarter was $157,434 or $(0.00) per diluted share compared to net income of $27,042 or $0.00 per diluted share for the same period of 2020, a decrease of $184,476. The increased loss is primarily attributable to increased personnel costs.
Cost of sales for the three months ended September 30, 2021 totaled $534,021 yielding a gross margin of 62% on revenues compared to a gross margin of 65% in the three months ended September 30, 2020. The decrease in gross margin percentage can be primarily attributed to staffing costs.
Financials & Balance Sheet
Net sales for the nine months ended September 30, 2021 were $4.29 million, compared to $3.87 million in the same period in 2020, an increase of $427,956 or 11%. The increase in revenue is primarily attributable to an increase in design service revenue of 15% in the first nine months of 2021 compared to 2020. The Company continues to see high demand for this service.
Net loss for the nine months ended September 30, 2021, was $248,334 or $(0.00) per diluted share, an increased loss of $441,499 compared to net income of $193,165 or $0.00 per diluted share for the nine months ended September 30, 2020. The decreased profitability is primarily attributable to increased net general and administrative costs in 2021. Also, research and development expenses increased $146,315 in 2021 as the Company continued to invest in its technology platform.
| Three Months Ended September 30 | Nine Months Ended September 30 | |||
| Amounts in $000’s | 2021 | 2020 | 2021 | 2020 |
| Net Sales | 1,395 | 1,414 | 4,294 | 3,866 |
| Gross Profit | 861 | 919 | 2,703 | 2,618 |
| Expenses | 1,052 | 840 | 2,892 | 2,364 |
| Net Income (Loss) | (157) | 27 | (248) | 193 |
| Earnings Per Share | (0.00) | 0.00 | (0.00) | 0.00 |
| Selected income statement data for the quarters and six months ended September 30, 2021 and September 30, 2020. Source: Company Press Release | ||||
Cost of sales for the nine months ended September 30, 2021 totaled $1,591,712 yielding a gross margin of 63% on revenues, compared to a gross margin for the nine months ended September 30, 2020 of 68%. 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. The 2021 strength in the Canadian dollar also contributed to a lower gross margin as a high proportion of design service revenue is denominated in U.S. dollar.
Also note that in the first nine months of 2020 the Company received $235,938 of wage subsidies under the Canadian Emergency Wage Subsidy (CEWS) program, which assisted companies that experienced significant impacts from the COVID-19 pandemic.
| Amounts in $000’s | September 30, 2021 | September 30, 2020 |
| Cash and Cash Equivalents | 1,434 | 834 |
| Accounts Receivable | 782 | 490 |
| Total Current Assets | 2,366 | 1,459 |
| Property and Equipment | 76 | 45 |
| Total Assets | 2,584 | 1,732 |
| | | |
| Accounts Payable | 155 | 167 |
| Deferred Revenue | 1,394 | 845 |
| Total Current Liabilities | 1,657 | 1,130 |
| Deferred Revenue | 150 | 224 |
| Total Liabilities | 1,817 | 1,472 |
| Total Stockholder Equity | 767 | 261 |
| Selected balance sheet data for the quarters ended September 30, 2021 and September 30, 2020. Source: Company Press Release | ||
Renoworks’ consolidated cash at September 30, 2021 was $1,433,889 compared to consolidated cash of $523,555 at December 31, 2020, an increase of $910,334. This increase is mainly due to the exercise of warrants, which the Company announced a few months ago.
The Company’s consolidated working capital at September 30, 2021 was $709,732 compared to a consolidated working capital of $276,098 at December 31, 2020, an increase of $433,634 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 $1,104,154 also due primarily to increased cash. Current liabilities increased by $670,520, primarily due to an increase in deferred revenue.
Conclusion
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.
Renoworks Software Inc. is one of the leading producers of end-to-end visualization technologies for the building construction industry.
The Company is currently presenting its platform to several large industry players, including technology partners, customers and service providers. Thanks to its AI-assisted design, digital library assets, design services and data-infused offerings, Renoworks is positioned to expand its reach and presence in these markets.
We believe that a deal with a significant building constructor, or other player in the field, is imminent. The added value of Renoworks’ platform is simply too appealing for those companies to ignore it any longer. Smallcaps Recommendation: BUY.
| Smallcaps.us Advice: Buy | Price Target: $1.45 | Latest Company Report (pdf) |
| For important disclosures, please read our disclaimer. | ||