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If you’re a keen follower of successful, innovative businesses, you probably missed that what3words’ latest accounts came out last week.
We wrote about the geolocation start-up’s prodigious cash-burning capabilities last year, and identified two key problems:
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Its product is flawed.
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It isn’t making any money.
Often companies can get away with having just one of those, but it’s hard to manage both for long.
So we’re delighted to report an improvement: the highlight of w3w’s new accounts is that it managed to break through £1mn in revenues while reducing total losses to a mere, uh, £16.4mn.
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Once again, the figures were mildly flattered by some financial jiggery-pokery to do with its reliance on cash-settled convertible loan notes: the company booked a £2.2mn gain from “interest payable and similar expenses” related to how it values these instruments.
Elsewhere, there’s a definite whiff of austerity — the group’s wage bill fell from £12.3mn to £10.9mn, and its administrative expenses from £47.2mn to £21.7mn — the latter of which, it said, was “primarily driven by the reduction in consumer acquisition activities”.
After burning through almost £150mn since its foundation, w3w had roughly £14.8mn in cash at hand at the end of 2023, with a further £12.7mn in term deposits maturing this year. So: £16.4mn loss, about £28mn in cash, and £1mn in revenues. You can probably do the maths on your hands: it isn’t pretty. Presumably, more cuts are coming unless a revenue miracle arrives.
W3w’s directors don’t think the group could go bust in the next twelve months, a projection which includes a pretty meaningless downside scenario in which revenue falls to zero (what difference would that a missing million-ish make at this stage?). In the accounts’ “going concern” section, they add that “the nature of spend is sufficiently dynamic to enable runway to be extended if needed”, which is encouraging but suggests said runway could soon be pointing downwards. Ultimately, it might end up peddling a cute concept rather than an actual business.
All of which we probably wouldn’t care about, incidentally, if it weren’t for the fact that w3w raised £6.9mn from retail punters last year while refusing to disclose details about its growth projections. Caveat.emptor.applies, we suppose.
Further reading
— Does what3words know where it’s going?