What3Words Significantly Improves Financial Outlook with Losses Narrowing to £17.5m
In an impressive turn of events, the UK-based retail technology firm What3Words has announced a significant reduction in its pre-tax losses, bringing them down to £17.5 million. This development marks a substantial improvement in the company’s financial health, highlighting a 48 percent decline in losses year-on-year, and an even more remarkable 60 percent drop from the 2021 financial year.
What3Words is renowned for its innovative approach to addressing, having divided the world into a grid of three-metre squares, each uniquely identified by a combination of three words. The system encompasses approximately 57 trillion squares, covering the entire planet. This revolutionary idea has been embraced through an API that enables partners to incorporate What3Words into their systems, facilitating a broad spectrum of applications from logistics to emergency services.
Among the high-profile backers of What3Words are several industry heavyweights, including ITV, IKEA, Mercedes-Benz, and former Formula 1 champion Nico Rosberg. Notably, in 2021, IKEA invested a significant sum of £12 million into the company, underscoring the potential seen in What3Words’ groundbreaking technology.
Despite having not turned a profit since its establishment in 2013, What3Words has demonstrated a clear growth trajectory, especially in terms of revenue, which saw an increase from £838,000 to just over £1 million. The firm has managed to forge partnerships with some of the largest logistics companies globally, including DHL, Yodel, and DPD, signaling strong confidence in the utility and future adoption of its addressing system.
The recent financial advancements are attributed to a couple of key factors. Firstly, the easing of the semiconductor shortage, a pandemic-induced supply chain crisis, has played a crucial role. This situation had previously hampered production across various sectors, including automotive, one of What3Words’ key partner segments. Additionally, the firm credits its improved financial performance to a strategic shift in consumer acquisition tactics, focusing on more cost-effective and sustainable methods.
Despite the positive trends, What3Words remains cautious about the future. The firm acknowledges the potential challenges posed by the ongoing cost of living crisis and slow global growth, which could impact revenue streams. The automotive sector, in particular, is highlighted as a concern, with lowered consumer demand possibly leading to reduced production volumes. Furthermore, the company anticipates that the current economic environment might lead to generally lower investment levels across all sectors, potentially curbing short- to medium-term growth opportunities.
In conclusion, while What3Words faces uncertainties in the evolving global economic climate, the substantial improvement in its financial performance points to a robust strategy and a product that continues to gain traction across multiple industries. The firm’s innovative approach to addressing and navigation, supported by key partnerships and investments, positions it as a noteworthy player in the tech industry, poised for potential future successes.
