REG - Eagle Eye Solutions - Trading Update

Eagle Eye SolutionsAnnouncement

23/07/2024 07:00

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RNS Number : 3682X  Eagle Eye Solutions Group PLC  23 July 2024

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 2014/596/EU AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR"). UPON PUBLICATION OF THIS
ANNOUNCEMENT THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC.

23 July 2024

Eagle Eye Solutions Group plc

("Eagle Eye", the "Group", or the "Company")

 

FY 2024 Trading Update

19% ARR growth and strong EBITDA performance, ahead of expectations

 

Eagle Eye (LSE: "EYE"), a leading SaaS technology company that creates digital
connections enabling personalised, real-time marketing, is pleased to provide
an update on the Group's trading for the year ended 30 June 2024 (the "Year"
or "FY 2024").

 

Financial Highlights

                                                         FY 2024  FY 2023  % change
 Period end Annual Recurring Revenue (ARR)(1)            £39.7m   £33.3m   +19%
 Group Revenue                                           £47.7m   £43.1m   +11%
 Recurring revenue (subscription fees and transactions)  79%      80%      -1pps
 Adjusted EBITDA(2)                                      £11.3m   £8.8m    +28%
 Adjusted EBITDA(2) margin                               24%      20%      +4pps
 Closing net cash(3) position                            £10.4m   £9.3m    +12%

 

 ·             Another year of profitable growth, with new customers secured in the UK, North
               America and Australia and expansion with existing customers including Tesco,
               Morrisons and Asda in the UK, Hudson's Bay in North America and Woolworths in
               Australia
 ·             Several new international customers won at the end of the Year, including
               Central Retail Vietnam - the Group's first customer in Vietnam, Z Energy in
               New Zealand, and Picard and Chronodrive in France
 ·             The Group exited the Year with strong ARR, up 19% year on year, with the
               majority of revenue from the wins in Q4 FY 2024 to be recognised from FY 2025
               onwards
 ·             The win momentum towards the end of FY 2024 has continued post year end, with
               RONA in Canada and Waterstones in the UK, increasing ARR further and providing
               good visibility for FY 2025
 ·             The Group maintained strong cost discipline, delivering adjusted EBITDA(2)
               ahead of market expectations(4)
 ·             Continued innovation to expand the Group's addressable market, focusing on the
               Group's AI-based offering, EagleAI, validated by initial customer wins
               including Tesco, Morrisons and Carrefour via Média performances
 ·             Significant sales pipeline across all geographies as retailers look to drive
               customer loyalty through personalised promotions, at scale

 

Continued growth and operational discipline delivers adjusted EBITDA above
expectations

 

The continued expansion with existing customers and win momentum ahead of the
Year-end means that Eagle Eye exited the Year with ARR(1) up 19% to £39.7m
(FY 2023: £33.3m). This ARR growth included strong progress with EagleAI and
provides a good foundation for the year ahead, as the timing of wins means
that revenue recognition from these contracts will benefit FY 2025 onwards.
New contracts secured post-year end have increased ARR further, as additional
'win' initiatives start to deliver results.

 

Group revenue increased 11% to £47.7m (FY 2023: £43.1m), with license and
transaction revenues growing half-on-half and year-on-year.

 

EagleAI, the Company's AI-based personalised promotions offering, enjoyed a
strong H2, winning a new contract with Tesco Stores Ltd to power Clubcard
challenges and the swift expansion of the Morrisons contract, secured at the
end of FY 2023, into Personalised Challenges, as well as further new
customers, detailed below.

 

The Group has maintained strong cost discipline, delivering adjusted EBITDA(2)
ahead of market expectations(4), increasing by 28% to approximately £11.3m
(FY 2023: £8.8m), with good growth in adjusted EBITDA(2) margin to 24% (FY
2023: 20%) demonstrating the operating leverage within the business and
ongoing 'better, simpler, cheaper' initiatives.

 

The Group was cash generative in H2 and the Year overall, in line with the
Board's expectations, and closed the Year with a net cash position(3) of
£10.4m (30 June 2023: £9.3m), providing Eagle Eye with the continued ability
to invest to support future growth.

Contract momentum closing out the Year

The Company is pleased to announce today a number of new customer wins in the
final month of the Year and at the start of FY 2025, including the Group's
first customer in Vietnam, and retailers in new industries of Fuel and
Convenience and eCommerce, demonstrating the wide applicability of Eagle Eye's
offerings. The wins will commence revenue contribution through the course of
FY 2025.

 

AIR/ Loyalty wins

 ·             A three-year contract with Central Retail Vietnam ("CRV"), one of the largest
               multi-format retailers in Vietnam operating across more than 340 stores, to
               launch CRV's first digital loyalty programme utilising the Group's AIR
               platform. The programme is expected to be fully live by the end of 2024
               calendar year.
 ·             A three-year loyalty contract with Z Energy in New Zealand, a full-service
               fuel and convenience retailer operating across 289 outlets, with potential for
               expansion.
 ·             Post Year end, a five-year contract with Waterstones Booksellers Limited in
               the UK to support their loyalty and gifting propositions and a three-year
               contract with RONA, one of Canada's leading home improvement retailers, to
               deliver personalised loyalty benefits to their Pro customers.

 

EagleAI /Personalised Challenges wins

 ·             Two specialist French retailers Picard Surgeles and, Chronodrive, the Group's
               first eCommerce customer, entered two-year contracts for EagleAI -
               Personalised Challenges, to be deployed across their customer bases. This
               follows successful pilots, which demonstrated strong customer engagement and
               incremental sales, demonstrating strong ROI from the Personalised Challenges
               solution.

Focused on driving our win rate for future growth

The Group has a considerable pipeline of sales opportunities, including some
of the world's largest retailers, and continues to develop initiatives to
maintain and increase the pace at which opportunities convert to sales.
Several further initiatives have been implemented in the Year, including:

 

 ·             a reorganisation of the sales team to be more focused on customer wins;
 ·             increased productisation of technology to facilitate a simplified sales
               discussion;
 ·             a new focus on alliances, covering both partners and system integrators, to
               expand the Group's reach; and
 ·             continued innovation, particularly within EagleAI, as Eagle Eye seeks to
               capitalise on the growing interest in AI-powered personalisation execution.

 

Outlook

 

Eagle Eye's market-leading reputation as the provider of personalised
marketing at scale and the increasing opportunities available to it through
its new AI-based offerings, provide it with a strong foundation for long-term
growth. The Group has a significant sales pipeline, including some of the
world's largest retailers, and has implemented new initiatives to drive its
win rate. Meanwhile, the wins secured at the end of FY 2024 and into FY 2025
provide a strong basis for further growth through FY 2025 into FY 2026. With
healthy levels of cash generation, a growing international customer base and
new AI-based offerings, the Board looks to the future with confidence.

 

Notice of Results

 

The Group expects to announce its results for the year ended 30 June 2024 on
18 September 2024.

 

Tim Mason, Chief Executive of Eagle Eye, said: "The world of loyalty is
evolving at pace. At the vanguard of this movement are the grocers, for whom
loyalty increasingly means personalised promotions, due to their proven
ability to delight customers and increase loyalty, profitably. Our ability to
support personalised promotions at scale, and the increasing opportunities
presented by our new AI-based offerings, mean we are the acknowledged leaders
in this market. The strength of our customer base helps to drive interest from
some of the world's largest retailers as we continue to capture what is a
sizeable, long-term growth opportunity."

 

Notes:

All financials are based on unaudited figures

1- Period end Annual Recurring Revenue ("ARR") is defined as Period exit rate
for recurring subscription and transaction revenue (excluding SMS) plus any
professional services contracted for more than 12 months hence and secured new
wins, excluding any seasonal variations and lost contracts.

2- EBITDA has been adjusted for the exclusion of share-based payment charges
along with depreciation, amortisation, interest and tax from the measure of
profit. 2023 EBITDA figure has also been adjusted to exclude costs associated
with the acquisition of Untie Nots.

3- Net cash is defined as cash and cash equivalents less financial
liabilities.

4- Company compiled adjusted EBITDA range is based on known sell-side analyst
estimates for the full year ended 30 June 2024 of £10.3m to £10.8m.

 

The person responsible for arranging the release of this announcement on
behalf of Eagle Eye is Lucy Sharman-Munday, Chief Financial Officer.

 

Enquiries:

 Eagle Eye Solutions Group plc                               Tel: 0844 824 3686
 Tim Mason, Chief Executive Officer
 Lucy Sharman-Munday, Chief Financial Officer

 Investec Bank plc (Nominated Adviser and Joint Broker)      Tel: +44 20 7597 5970
 David Anderson / Nick Prowting

 Shore Capital (Joint Broker)                                Tel: +44 20 7408 4090
 Corporate Advisory: Daniel Bush, David Coaten, Lucy Bowden
 Corporate Broking: Henry Willcocks

 Alma Strategic Communications                               Tel: +44 20 3405 0205
 Caroline Forde, Hannah Campbell, Kinvara Verdon

 

Forward-looking statements

 

This announcement may include statements, beliefs or opinions that are, or may
be deemed to be, "forward-looking statements". These forward-looking
statements may be identified by the use of forward-looking terminology,
including the terms "believes", "estimates", "plans", "projects",
"anticipates", "targets", "aims", "continues", "expects", "intends", "hopes",
"may", "will", "would", "could" or "should" or, in each case, their negative
or other variations or comparable terminology, or by discussions of strategy,
plans, objectives, goals, future events or intentions. No representation or
warranty is made that any of these statements or forecasts will come to pass
or that any forecast results will be achieved. Forward-looking statements may
and often do differ materially from actual results. Any forward-looking
statements contained in the announcement speak only as of their respective
dates, reflect Eagle Eye's current view with respect to future events and are
subject to risks relating to future events and other risks, uncertainties and
assumptions relating to Eagle Eye's business, results of operations, financial
position, liquidity, prospects, growth and strategies.

 

Except as required by any applicable law or regulation, Eagle Eye expressly
disclaims any obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained in this announcement or
any other forward-looking statements it may make whether as a result of new
information, future developments or otherwise.

 

About Eagle Eye

Eagle Eye is a leading SaaS technology company enabling retail, travel and
hospitality brands to earn the loyalty of their end customers by powering
their real-time, omnichannel and personalised consumer marketing activities.

 

Eagle Eye AIR is a cloud-based platform, which provides the most flexible and
scalable loyalty and promotions capability in the world. More than 850 million
personalised offers are executed via the platform every week, and it currently
hosts over 500 million loyalty member wallets for businesses all over the
world. Eagle Eye is trusted to deliver a secure service at hundreds of
thousands of physical POS destinations worldwide, enabling the real-time
issuance and redemption of promotional coupons, loyalty offers, gift cards,
subscription benefits and more.

 

The Eagle Eye AIR platform is currently powering loyalty and customer
engagement solutions for enterprise businesses all over the world, including
Asda, Tesco, Morrisons, Waitrose and John Lewis & Partners, JD Sports,
Pret a Manger, Loblaws, Southeastern Grocers, Giant Eagle, and the Woolworths
Group. In January 2024, Eagle Eye launched EagleAI, a next-generation data
science solution for personalisation, already being used by leading retailers
worldwide including Carrefour, Auchan and Pattison Food Group.
Web - www.eagleeye.com
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