REG - Eagle Eye Solutions - Final Results
19/09/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230919:nRSS8340Ma&default-theme=true
RNS Number : 8340M Eagle Eye Solutions Group PLC 19 September 2023
19 September 2023
Eagle Eye Solutions Group plc
("Eagle Eye", the "Group", or the "Company")
Final results for the year ended 30 June 2023
An exceptional year of growth, delivering revenue and profits ahead of initial
expectations
Eagle Eye, (LSE: "EYE"), a leading SaaS technology company that creates
digital connections enabling personalised, real-time marketing, is pleased to
announce its audited results for the financial year ended 30 June 2023 (the
"Year").
Financial Highlights
FY 2023 FY 2022 % change
Group Revenue £43.1m £31.7m +36% (29% organic)
Recurring revenue (subscription fees and transactions) 80% 76% +4ppts
Annual Recurring Revenue(1) (ARR) £33.3m £23.9m +40%
Net Revenue Retention(2) 137% 145% -8ppts
Adjusted EBITDA(3) £8.8m £6.5m +36%
EBITDA margin 20.4% 20.5% -0.1ppts
Profit after tax £1.2m £0.6m +114%
Closing net cash(4) position £9.3m £3.6m +156%
(1)Period End Annual Recurring Revenue is defined as period exit rate for
recurring AIR subscription and transaction revenue plus any professional
services contracted for more than 12 months hence and secured new wins,
excluding any seasonal variations and lost contracts.
(2)Net retention rate is defined as the improvement in recurring AIR revenue
excluding new wins in the last 12 months.
(3)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.
(4)Net cash is defined as cash and cash equivalents less financial
liabilities.
Strong financial performance delivers revenue and profit ahead of the Board's
initial expectations, reflecting strength of SaaS business model and growing
customer demand
· Achieved strong revenue and adjusted EBITDA(3) growth as a result
of the growth of the customer base, delivering across all three areas of the
Customer strategy: Win, Transact and Deepen
· Continued expansion of the customer base, adding Morrisons in the
UK, Hudson's Bay, an iconic Canadian department store brand, IKEA in Taiwan,
and expansions with Asda in the UK and Woolworths Group in Australia
· Significant international revenue expansion, driven by the US
(+129%) and APAC (+56%), including first customer in Singapore
· ARR(1) up 40% to £33.3m and NRR remained high at 137%,
consistent with the COVID adjusted NRR in 2022, with very low churn
maintained, at less than 1%, providing a solid basis for expansion
· Strong operating cash generation resulting in better than
expected net cash(4) of £9.3m
Successful acquisition of Untie Nots, delivering European expansion and AI
opportunity
· Acquisition of Untie Nots in January 2023, a rapidly growing SaaS
company enabling retailers to deliver AI-powered, personalised challenges to
customers at scale
· Provides accelerated entry into the French market, bringing some
of Europe's largest grocers as customers, provides cross-sale opportunities,
and enhances the Group's AI capabilities
· Untie Nots team benefitting from Eagle Eye's more advanced sales
and marketing organisation, considerably expanding the reach for their
innovative technology
Continued investment in innovation, including creation of new AI offering:
EagleAI
· Added more than 60 new features to the Eagle Eye AIR platform,
including new promotion types, extensions to existing product capabilities,
new ways for retailers to reward their customers, and new, enterprise ready,
direct-to-consumer API packages
· Applied hundreds of new rules and permutations to our cloud-based
adjudication engine, enabling retailers to achieve levels of individual
personalisation with their customers that has never been seen before, at an
unprecedented speed and scale
· Development teams creating a new offering, EagleAI, which uses
Untie Nots' market-leading AI capabilities and retail expertise to create and
autonomously target personalised offers for customers, expected to launch in
2024
Positive outlook for FY24 and beyond
· Expanding market opportunity, driven by growth in demand for
personalisation and real-time delivery as retailers seek to apply modern data
science/AI-based techniques to power personalisation
· Eagle Eye has entered FY24 in a strong position, with a healthy
new business pipeline and a growing international opportunity, in the US,
Europe and Asia
· The acquisition of Untie Nots has provided an additional channel
for growth, as well as bringing valuable AI capabilities into the Group
· Trading in the current year to date is in line with Board
expectations and the Board is confident in achieving another positive year of
profitable growth in FY24
Tim Mason, Chief Executive of Eagle Eye, said:
"Eagle Eye's outstanding performance in FY23 demonstrates we have the right
strategy, offering and team in place to support our continued strong growth as
an increasingly international business.
"In the current difficult economic environment, retailers are turning more and
more to data driven, personalised promotions and rewards as one of the most
effective ways to drive increased trade and retain customer loyalty. Eagle
Eye's central position as the technology that enables the execution of these
programmes means we are becoming increasingly relevant, providing further
growth opportunities.
"We have entered FY24 in a strong position with considerable momentum across
the Group. We are particularly excited by the opportunity for EagleAI, our new
AI offering launching in 2024, building on the capabilities brought into the
Group with the acquisition of Untie Nots.
"The quality of our team, offering and business model, alongside an expanding
market opportunity, provide us with confidence in the continued success and
significant long-term growth potential of Eagle Eye."
For further information, please contact:
Tim Mason, Chief Executive Officer
Lucy Sharman-Munday, Chief Financial Officer Tel: 0844 824 3686
Investec (Nominated Advisor and Joint Broker) Tel: 020 7597 5970
Corporate Broking: David Anderson / Nick Prowting
Shore Capital (Joint Broker) Tel: 020 7408 4090
Corporate Advisory: Daniel Bush / David Coaten / Lucy Bowden
Corporate Broking: Henry Willcocks
Alma PR Tel: 020 3405 0205
Caroline Forde / Hannah Campbell / Kinvara Verdon
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 750 million
personalised offers are executed via the platform every week, and it currently
hosts over 100 million individual loyalty members for businesses all over the
world. We are 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 2023, the Group acquired France-based Untie Nots, an AI-powered
personalised promotions business, adding Carrefour, E. Leclerc, Auchan and
other leading brands to its European customer base.
Chairman's Statement
I am delighted to again be reporting to shareholders on another year of
outperformance by the Eagle Eye team, delivering growth ahead of the Board's
initial expectations. These results clearly demonstrate the business can
deliver sustained high levels of organic growth and successfully complete
complementary acquisitions, as evidenced by the acquisition of Untie Nots.
This will be my last Chairman's statement, and as I look back on my time with
Eagle Eye, it is remarkable the extent to which the business has evolved in
recent years - considerably expanding its offering, customer base, financial
strength and geographic reach - becoming the established leading provider of
personalised digital marketing capabilities to tier 1 retailers, globally.
When I joined as a Non-Executive Director in 2014, taking on my role as
Chairman in 2016, it was clear that the future of Eagle Eye was an exciting
one. It has been a pleasure to be part of the Group's journey on the public
markets and I am confident there is the right Board and team in place to take
the business to its next stage of growth. Importantly in these times, the
business has also proven its ability to successfully navigate challenging
economic backdrops, such as the COVID-19 pandemic and the current inflationary
environment, while maintaining strategic focus. With its incredible customer
base and underlying growth drivers, the future for Eagle Eye is brighter than
ever.
Eagle Eye has a clear vision, mission and purpose, and our unique 'Purple' way
of working is in large part made up by our values which are celebrated on a
daily basis throughout the organisation. Our team are passionate about our
customers, passionate about our offering and is setting the standard for
service levels globally.
Momentum is strong at Eagle Eye, with the Group delivering across all areas of
the customer strategy, underpinned by supportive market drivers.
One recent trend worth noting that will have a significant impact on the
industry is the rapid advancement of Artificial Intelligence (AI). We believe
Eagle Eye will be a key enabler for AI-driven personalisation in the coming
years as we continue to play a central role in executing omnichannel
personalisation at scale for the world's leading retailers. In addition to
that, the Group is also planning to expand into the data and analytics space
by launching an AI-based promotion personalisation offering, EagleAI, in 2024.
This is incredibly exciting and is expected to significantly increase Eagle
Eye's addressable market in the coming years.
Financial Results
The Group enjoyed strong trading momentum throughout the Year, delivering
revenue growth of 36% to £43.1m (FY22: £31.7m) and underlying organic
revenue growth of 29%, excluding the contribution from Untie Nots. Adjusted
EBITDA(3) increased by 36% to £8.8m (FY22: £6.5m) and profit after taxation
increased by 114% to £1.2m (FY22: £0.6m). This growing level of profits has
driven strong cash generation and the Group closed the year with a net cash(4)
position of £9.3m at 30 June 2023 (30 June 2022: £3.6m), providing the
business with the continued ability to invest to support future growth.
The Group continues to benefit from high levels of recurring revenue,
providing a strong basis for continued positive performance, with growth in
Annual Recurring Revenues* of 40% to over £33m at 30 June 2023 (2022:
£23.9m).
ESG
As a Board and business, we are committed to high standards within all areas
of ESG and made good progress against our stated objectives during the Year,
building on our existing foundation of responsible business practice.
Measuring our progress against set KPIs, which we commenced in FY21, and our
focus on how we can make Eagle Eye a better business has provided us with a
clearer picture as to where to commit our efforts.
As a 'Virtual First' business and outsourcing the running of our
infrastructure to key suppliers, our carbon emissions as a business are
naturally low, although we have seen an increase in air travel following the
lifting of lock down and the increasing geographic spread of the business, as
we support customers and continue sales and marketing activities globally.
This has, as in previous years, been offset by the planting of trees. We also
ensure our key suppliers monitor and have targets around their environmental
impact.
Central to everything we do at Eagle Eye is our belief in following the Golden
Rule - treating people as they would like to be treated. This is at the very
heart of personalisation with the AIR platform being used by retailers
globally to help them follow the Golden Rule when engaging with their own
customers. Internally, this manifests itself in our people-first culture where
the business places the success and happiness of its people at its heart. On
behalf of the Board, I would like to thank all the team for their commitment
to creating exceptional value for our customers, always working in accordance
with our stated values.
We fully recognise the importance and value of high standards of corporate
governance and always look to maintain our strong corporate governance
framework, following the principles of the QCA Corporate Governance Code.
After more than 12 years with the Company, long-standing Non-Executive
Director and founding external shareholder, Bill Currie, retired from the
Board in March 2023. We are incredibly grateful for all the support and
guidance he provided in his time with Eagle Eye and wish him the very best. We
were delighted to welcome Charlotte Stranner to the Board as an Independent
Non-Executive Director in May 2023, who brings a wealth of experience in both
the listed technology company arena and the adjacent world of digital
advertising. As notified in September 2023, I will also be stepping down from
the Board at the forthcoming AGM, following 9 years with the Company. In Anne
de Kerckhove, my successor, the Board has found a highly experienced and
driven individual who I am sure will be a fantastic steward of the business
for all stakeholders.
Opportunity
The market in which Eagle Eye operates is expanding, as retailers globally
develop their omnichannel capabilities to address the rapidly changing
consumer shopping behaviours, particularly in the current cost-conscious
climate. Eagle Eye expects the shift towards digitisation and personalisation
to continue to accelerate and for Eagle Eye to be a beneficiary of that
acceleration, as retailers globally continue to recognise the strategic
importance of real-time delivery of personalised offers. How to harness the
power of AI is a key topic of debate across all retailers and we believe the
lead we have in this area, through the Untie Nots acquisition and the AIR
platform's ability to deliver hyper personalised messages to consumers at
speed and scale, places us in the ideal position to be a key enabler of these
advancements.
Eagle Eye is an ambitious business with a passionate team. With such a
considerable opportunity ahead, we will continue to invest in order to
innovate and grow, building on our position as the digital marketing platform
of choice for tier one retailers globally.
This ambition, together with the Group's growing ARR, profitability and cash
generation, means the Board looks to the future with confidence.
Malcolm Wall, Non-Executive Chair
CEO Statement
This has been another outstanding year for Eagle Eye. We successfully
delivered across all areas of our customer strategy in every target geography,
while also completing the acquisition of Untie Nots, a rapidly growing,
AI-powered gamification promotions company, bringing new capabilities,
customers, and talented team members into the Group.
These successes led to strong revenue growth in the Year, achieving an
increase of 36% to £43.1m and an increase in adjusted EBITDA(3) of 36% to
£8.8m. This growing level of earnings is flowing through into positive cash
generation, providing us with the ability to invest to support our future
growth. Profitable growth is an important measure for the Group, reflecting
the discipline with which we invest in the business.
The strength of our SaaS business model is once again evidenced by our strong
metrics, with ARR(1) up 40% to £33.3m, NRR strong at 137% and churn low at
0.2%, providing a strong basis for continued expansion.
We have an exceptional team at Eagle Eye who are dedicated to creating value
for our customers through building and delivering great technology to some of
the world's biggest businesses and best loved brands. Their energy fuels the
momentum in the business. We, in turn, are committed to providing them with
fantastic opportunities to accelerate their careers.
We have continued to invest, to support our increasingly international
customer base, drive our win rate and strengthen our position as a leader in
personalised digital engagement for tier-1 retail. Core areas of investment
include the expansion of our operational team, increased investment into sales
and marketing, and our continued investment into the scalability and
flexibility of our technology.
We continue to expand across all key geographies, with particularly strong
growth in the US and Australia in the Year, as we deepen our engagements with
key customers in these regions. Our strategic partnership with Google
continues to deepen, and we are already seeing this generate new sales and
additional opportunities for the Group.
Our strong performance over the last 12 months across all key territories
reflects the growing relevance of our loyalty and promotions platform at a
time when digital engagement with consumers has never been more important.
Market opportunity and competitive strength
The overarching competitive strength of the AIR platform is its ability to
deliver real-time loyalty and customer engagement initiatives, enabling
retailers to treat each of their customers in the way they would like to be
treated - as individuals. The platform can scale to deliver any type of
personalised marketing message to any customer across any channel securely and
at enterprise scale. This ability is resonating with retailers around the
world, as they become increasingly aware that data driven, personalised
promotions and rewards are one of the most effective ways to drive increased
trade and retain customer loyalty.
Personalisation at scale is becoming increasingly more important
In this cost-conscious climate, customer engagement propositions are key ways
for retailers to be able to deliver tangible value to their customers. In a
recent global loyalty study conducted by Eagle Eye, 84% of consumers felt that
more personalised offers would enable them to access additional value to help
them save at the shelf but almost a third of global loyalty programme managers
surveyed admitted that delivering personalised offers was one of their biggest
challenges. 1 (#_ftn1)
This clearly demonstrates the need for retailers globally to develop their
omnichannel capabilities to address the rapidly changing consumer shopping
behaviours and the opportunity for Eagle Eye to solve those retailers'
challenges by offering a platform that is flexible, scalable and one that
seamlessly integrates into their existing marketing ecosystem.
We are seeing retailers across the globe launch new, sophisticated customer
engagement initiatives to deliver additional value to customers. This has been
done through member pricing, personalised pricing, subscription schemes and
more. There has been significant innovation in this space across sectors, from
Liberty's 'Beauty Drop' subscription to Pret a Manger's 'Club Pret' and
Woolworths Australia's 'Everyday Extra' subscription, as well as the flurry of
activity in the UK grocery sector regarding member pricing, creating an
expanding market opportunity for Eagle Eye.
AI presents an additional market opportunity
The development in the field of AI represents an enormous opportunity for the
future of scaling Eagle Eye. I am particularly pleased that, at this early
stage, we have three tangible areas for progression.
a) Continue to be the leading enabler of advanced analytics and AI
Recent developments in AI across the retail industry demonstrate that
personalisation is going to be easier for all types of retailers globally to
adopt, which presents an exciting opportunity for Eagle Eye's AIR platform.
Working with some of the biggest and most advanced retailers in the world, we
have always worked closely with data analytics firms and, more recently, AI
technologies and businesses, which help our client base understand what the
next best message to send to each customer is, and when to send it. This
personalised marketing is then executed at scale, across all channels, via our
AIR platform.
As retailers all over the world enhance their data science and AI
capabilities, the market opportunity for Eagle Eye will increase as these
businesses will need the technology in place to enable them to execute against
the insights that they are now able to generate. We believe that we are the
only platform in the world that can deliver personalised marketing at the
required speed and scale to keep up with AI-led personalisation which will be
powering more engaging and more relevant experiences for the end customer. As
a result, we look forward to working with more businesses across more
geographies and verticals to act as the execution platform to deliver
omnichannel personalisation at scale.
b) Launching our own AI-powered offering for retailers globally -
EagleAI
Through the acquisition of Untie Nots we gained great new customers, an
increased geographical reach and a fantastic team, many of whom have deep
experience using and developing AI solutions for retailers. Untie Nots'
AI-based SaaS solution which powers personalised and gamified continuity
promotions or 'Challenges', has been a great addition to our product
portfolio.
To further capitalise on the exceptional AI talent we now have within our
business, Eagle Eye's sales and marketing executives and Untie Nots'
development teams have been working together to build a new offering, EagleAI,
which uses AI to autonomously create the right personalised offers to send to
the right customers. By using our AI offering rather than traditional data
science techniques, retailers will be able to create one to one experiences
for each of their customers using a fully automated stack of AI algorithms to
optimise product affinity, stretch and reward levels for each individual
customer. EagleAI is unique in that it has been built specifically for
retailers, a sector both teams understand deeply. We believe that EagleAI
could be sold as both a standalone offer picking product or in conjunction
with AIR, whereby the EagleAI decisioning would feed into the AIR platform,
enabling the AI-derived personalised offers to be executed in real time across
all channels.
We are currently working on a pilot and believe this offering can open up a
considerable additional addressable market for Eagle Eye, following its launch
in 2024.
c) Using AI to enhance our tech stack and development capabilities
Internally, we are exploring how AI can be applied to our own internal
projects, processes and tools to continue to the run the business in a Better,
Simpler, Cheaper way. It is in its early stages, but we believe this will be
an important way of reducing toil whilst maximising the time we can spend on
innovation and product development. We expect AI to be the capability that
enables further efficiencies within Eagle Eye which in turn could drive higher
margins to allow us to reinvest into the business to support our continued
growth.
Delivering against our five strategic pillars for growth
1. Customer strategy: Win, Transact, Deepen
We continued to successfully deliver across the three areas of our customer
strategy in the Year - Win, Transact and Deepen.
· 'Win': bring more customers on to the Eagle Eye AIR platform;
· 'Transact': drive higher redemption and interaction volumes
through the platform; and
· 'Deepen': encourage our customers to adopt more of our product
portfolio as they become more adept at digital marketing.
Win
Each new win adds substantial additional value given our high level of
customer retention, and revenue from our largest revenue-generating customers
typically increases by a multiple of over three times by the end of their
third year on the AIR platform, through both increased use of the platform and
the addition of new services.
The Group delivered a steady level of "Win" related revenue for the Year,
which included extending our reach into new territories.
New customer highlights include a multi-year contract with Morrisons to
provide promotion and loyalty services, a multi-year loyalty contract with
Hudson's Bay Company in Canada and IKEA Taiwan, our second IKEA subsidiary.
We also facilitated Untie Nots' entry into the Singapore market, securing a
multi-year contract with Singapore's largest retailer, NTUC FairPrice
Co-Operative Ltd ("FairPrice").
We have introduced a range of initiatives to increase our future win rate,
including: the acquisition of Untie Nots, which provides a quicker 'win'
product, with several positive joint conversations already underway; a
partnership with Google Cloud, providing an additional source of leads; and
increased investment in our marketing activity. As a result, we are seeing an
improved level of leads in the pipeline and have entered FY24 with a strong
new business pipeline. Wins post year end include a three-year contract with
an Australian retailer, increasing our presence in the region.
Partnerships provide additional strength and access to potential customers
We have a clear and considered strategy to work with other 'Best in Class'
partners within the marketing ecosystem to provide a digitally connected
experience across the shopping journey both at home and in-store from the
shelf to the register. Our strategy enables us to engage and partner with
several relevant businesses, where we are able to extend our sales and
marketing reach and ultimately bring more customers on to the AIR platform.
In the Year, we deepened our strategic partnership with Google, firstly
through our Google Cloud Partner Advantage accreditation in H1, giving us
access to Google's training, co-marketing and technical resources.
Importantly, we also launched Eagle Eye on Google Marketplace, making it
easier and more cost effective for enterprise Google users to discover,
purchase and deploy Eagle Eye AIR. In the first six months of launching, we
have already transacted our first two enterprise deals, being Morrisons and
FairPrice. We have engaged with the Google sales teams in each of our key
regions and in June 2023 our senior team were invited to meet senior Google
executives at Google's offices in California.
We also deepened our relationships with key partners across the spectrum of
the marketing ecosystem including rolling out our Oracle Simphony integration
to a number of other brands internationally and new partnerships with
Salesforce. We continue to partner with Neptune Retail Solutions ("NRS"), with
whom we are targeting the vibrant and highly active Consumer Packaged Goods
("CPG") digital coupons market in North America. Together with NRS we are
working closely to deliver for two of our major clients in the US which
continues to progress well. We remain focused on revitalising and modernising
how CPG companies can engage shoppers digitally through personalised
promotions.
Transact
Chargeable AIR redemption and loyalty interaction volumes, a key measure of
usage of Eagle Eye AIR, increased by 98% to 3.3 bn (2022: 1.7 bn). We continue
to benefit from the accelerated ability to take these customers live into the
Transaction phase.
Growth in transaction and subscription revenue was driven by the Woolworths
Group contract in Australia reaching full-scale, the full go-live of a large
grocer in the U.S., and the national rollout of Asda's loyalty programme, Asda
Rewards. Eagle Eye AIR powers Asda Rewards, operating the offer and reward
management within the app - which was number one in the UK app store for six
weeks post-launch 2 (#_ftn2) , the membership card, star products, missions,
and cashpot as well as the creation and redemption of vouchers through its
integration with Asda's point-of-sale systems. Nearly five million customers
now use the Asda Rewards app every month and have been growing their cashpots
to help reduce their grocery bills. In June 2023, Asda announced that more
than £100m had already been earned into cashpots during the first half of the
year 3 (#_ftn3) .
Deepen
A key part of our strong performance has been the considerable increase in use
of the AIR platform by our existing customers, as reflected our strong NRR of
137%. This is due to the significant increase in interest in our promotion and
loyalty offerings as retailers look to enhance the way they retain and reward
their customers, particularly with the cost-of-living crisis continuing to
tighten household budgets. The new capabilities and cross-sale capability
from our acquisition of Untie Nots have provided increased opportunities to
deepen our contractual relationships with existing customers. Pleasingly, our
long-term contract customer churn rate by value remains very low at below 1%
with good levels of renewals taking place.
Key deepen successes include a new five-year contract with The John Lewis
Partnership, a new pan-partnership loyalty project launching in 2024 alongside
dunnhumby. This brings together Eagle Eye's existing relationships with John
Lewis, first announced in 2017 to improve John Lewis's digital marketing
capabilities, and with Waitrose, subsequently announced in 2019.
We also significantly deepened our relationship with Pret a Manger in the
period, supporting them in relaunching their coffee subscription as 'Club
Pret'. In this new model, Eagle Eye enables Pret to offer their subscribers
10% off all products and five barista made beverages a day for the monthly
cost of £30. This re-launch was swiftly followed by the Eagle Eye-powered
Pret 'Gold Card', available for all employees to manage their team member
discount.
Further customer expansions include Staples US retail and the deepening of our
partnership with Mitchells & Butlers through the launch of its Staff
Rewards app as well as an app targeting suppliers, providing discounts at
venues across the UK.
2. Innovation
Innovation sits at the heart of everything we do at Eagle Eye. As one of six
core company values, we pride ourselves on innovating both with and for our
customers to deliver value which ultimately helps the businesses we work for
better delight their end customers. Innovation has enabled us to continually
deliver new solutions to the market in the Year which differentiate us and
enable us to provide added value to our core enterprise customer base.
Innovation is in our DNA and we will continue to celebrate our teams for
delivering new capabilities as it is critical to our future success.
During the Year, we have grown significantly, onboarding new customers in new
geographies and Deepening the services we provide to them. We are now
servicing more than 90,000 unique outlets globally, up 15% vs. the prior year.
From a platform point of view, this has meant a continued focus in the period
on ensuring we can match this fantastic growth, delivering against the needs
of our current, new and future customers all over the world when it comes to
our product's speed, scale and flexibility.
Extending the digital marketing toolkit
Eagle Eye AIR provides retailers with a comprehensive digital marketing
toolkit, but we continue to innovate in this space to enable us to deliver an
even more flexible and extensive set of use cases to our customers to power
their leading customer engagement initiatives. In the period, we have deployed
more than 60 new features, including new promotion types (e.g. quest
campaigns), extensions to existing product capabilities (e.g. message at
till), delivered new ways for retailers to reward their customers (e.g. social
and behavioural rewards), and have packaged up a number of new, enterprise
ready direct-to-consumer APIs (e.g. delivering digital and mobile services to
our customers). In addition to this, we have built new features that will
support us as we enter new verticals and geographies (e.g. pending points and
a set of mobile ready APIs which enable easier integration).
Continuing to lead with personalisation, speed and scale
As we extend our toolkit, we also innovate to ensure that we can meet the
needs of our growing customer base when it comes to speed and scale. We
currently have more customers than ever transacting more than ever through our
platform and so we are continually working to improve performance to ensure
that we can deliver more, faster. Currently, in an average month, we issue
more than 2.5 billion offers to customers worldwide, distribute more than 185
billion loyalty points into millions of unique wallets and process more than
6.7 billion API calls across the AIR platform. We continue to make use of the
best technologies that cloud has to offer, significantly improving the overall
performance of our AIR platform and to scale the overall running of the
platform, maintain lightning response times whilst we build more and more
capability. As a result of our investment into this area of the business, we
are able to process these ever-increasing volumes at ever-faster speeds.
In the Year we have applied hundreds of new rules and permutations to our
cloud-based adjudication engine, POS Connect. This enables retailers to
achieve levels of individual personalisation with their customers that has
never been seen before, at an unprecedented speed and scale.
Delivering value faster
This year we were excited to launch our Eagle Eye Academy across the world.
This bespoke training platform gives our customers the ability to get up to
speed more quickly on how to get the most value out of Eagle Eye AIR. The
Academy contains a full array of courses available to take online, with
learning paths for different parts of our platform. Initial feedback both from
our internal teams and from customers has been fantastic. This, coupled with
best practice guides for integration, enabling our API documentation to be
available online and automating the configuration of the platform means that
customers can start to get value from AIR from day one.
3. International growth
The benefits of our investment into international expansion are evident, with
the deepening of our clients' engagements in the US and Australia, as
mentioned above, and initial customers secured in Southeast Asia. As a result,
we have seen significant revenue growth from the US (+129%) and APAC (+56%) in
the Year. 35% of the Group's total revenue now comes from the US (2022: 21%).
We now have a much broader international footprint, adding France, Germany and
Singapore following a year of expansion, providing a wider funnel for
opportunities going forward.
International marketing activities
We made initial investments into Singapore and Germany as well as additional
direct sales resource in North America, targeting the considerable US
promotions and loyalty market and, as a result, marketing activities stepped
up to support the sales resource investment in these regions. We plan to
further increase our sales and marketing activities throughout FY24, with a
particular focus on investing into North America and France, in line with our
strategy to invest as we 'Win'.
Investment has been made into lead generation campaigns to drive more inbound
leads into the sales pipeline as well as an events programme that included the
Tech For Retail Show in France, Groceryshop in the US, breakfast briefings
with major retailers in Singapore, Thailand and Malaysia, and NRF, the most
influential retail conference in the US. Eagle Eye also joined key trade
associations including GS1 Switzerland, California Grocers Association, FMI,
Australian Loyalty Association and NRF to raise awareness amongst loyalty
professionals and increase networking opportunities. These activities led to a
considerable increase in leads compared to FY22 with converted leads up 61%.
We are also encouraged by the initial marketing activities being carried out
with Untie Nots, individually and jointly, building the pipeline both in the
UK but predominantly internationally. Untie Nots is leveraging our more
extensive sales and marketing expertise and strong customer network which has
led to encouraging conversations. Untie Nots' contract win with NTUC FairPrice
Co-Operative Ltd in Singapore demonstrates the benefit to Untie Nots of Eagle
Eye's international marketing reach, and we look forward to continuing
building a promising joint international sales pipeline.
4. Better, Simpler, Cheaper
As a business we strive to maximise our productivity and efficiency and look
for ways to benefit from our increasing scale as we continue to invest in
innovation and growing the business. We have developed a proven business
model to grow our EBITDA margin, whilst also investing, as we 'Win', in sales
& marketing and enhancements to the product to generate new opportunities
for growth.
On the 'Better' side we have invested in new tooling to help us manage the AIR
platform more effectively, as described above, resulting in availability of
99.97%. We continue to upskill our staff and have again invested in our
technical staff to achieve Google Cloud Certifications as well as building an
internal library of resources and collateral, and launching our Eagle Eye
Learning Academy internally and externally. We successfully recertified our
ISO27001 across all our offices globally, as well as continuing our SOC2 Type
II certification.
As ever, we have continued to look at how better to onboard our clients and
the volume and speed of new clients in the Year shows the great work done in
this area with more to come in the new financial year. Security is always a
huge focus for the Group, and we continue to invest in this area by moving to
a continuous assurance, always on monitoring, backed by expert third parties
who monitor our platforms and the dark web for possible threats 24/7.
Our people and beliefs
Firstly, I'd like to take this opportunity to thank Malcolm Wall, who will
retire as Chair following this year's AGM. Malcolm has been an incredible
support to me and this business over the past nine years and his importance
cannot be overstated. He has provided significant guidance since Eagle Eye
joined AIM and we have all benefitted from his extensive experience and
knowledge. On behalf of the whole Company, we thank him for his service and
wish him all the very best for the future. Our new Chair, Anne de Kerckhove,
who will join the Board in October as Non-Executive Director before assuming
the Chair role at the close of the AGM, brings a wealth of experience in the
technology, media and entertainment industries and high growth, international
businesses and we look forward to working with her. I'd also like to thank our
long-standing Non-Executive Director, Bill Currie, who after 12 years on the
Eagle Eye Board stepped down following the Group's interim results in March
2023. We are incredibly grateful for all the support and guidance he has
provided in his time with Eagle Eye and wish him the very best.
The central tenet of Eagle Eye is to create value for our customers. This
drives what we do, and we believe it is key to making a successful business.
All the value we create is thanks to our brilliant employees.
Integration with the Untie Nots team has been smooth, as we are aligned with
in both our values and culture, and now we have an even larger team of people
who are dedicated to developing market leading technology that delivers value
to some of the biggest industry names around the world.
At Eagle Eye we have a clear vision, mission, and purpose, and a unique
'Purple' way of working that we curated and follow because we believe it
influences our lives and the world for the better. Our Purple Playbook,
introduced last year and given to every member of our team, celebrates the
evolution of Eagle Eye and explains our belief that by following the 'Purple
Method', we will continue to grow together.
Our commitment to our ethos, purpose and Purple Method helps us deliver value
to clients, which we track through our NPS score. We are incredibly proud of
our latest score of +66 which is significantly higher than the Technology
Industry benchmark of +35. We celebrate the contribution of our people both at
our Annual Company Conference and throughout the Year through our Purple
Values Awards.
Last year we launched our 'Purple Pathways' career development programme,
which supports employees in developing their careers at Eagle Eye and
advancing into new roles Pathways is an interactive tool which employees
navigate, which shows the critical skills required for progression and the
type of experiences or training that could be provided. It is fantastic to see
our team members already reaping the benefits of the programme, with more than
52% of employees now having a formal development pathway in place. In
addition, we designed and implemented our bespoke Purple Leaders training -
focusing on eight core modules essential for existing and aspiring managers as
part of their Pathways. We believe that having a great boss is one of the most
important ingredients for workplace happiness and success and are therefore
thrilled that 100% of our current managers have already taken part in this
training programme.
As part of our onboarding process, we run a bespoke programme called Life
Skills for all new starters. This introduction to cognitive behavioural
therapy is an investment into our new starters to help them become the best
version of themselves.
In the Year we launched our new Wellbeing policy which is underpinned by our
value of Passion. Our vision statement is that we are "passionate about your
mental and physical health, and we place your wellbeing at the heart of our
culture" and as part of the new policy we have delivered a range of
initiatives to achieve this vision, including mental health training, fitness
sessions and risk assessments to ensure safe working at home.
As part of our ongoing commitment to charity work and to create a positive and
engaged work environment, we continue our partnership with 52 Lives, a charity
built around the concept of 'kindness' who find individuals who need help and
then deliver it. Every month, we recognise the individual that our efforts
have helped and during the course of the Year, run a series of
employee-generated fundraising events.
Our 'Purple Women' initiative continues to effect positive change in the
workplace and champions policies that offer parents more flexible working
patterns, enhanced leave packages, and additional support on their return to
the work; together with education and support of health-related issues
impacting employees. During Pride month in June 2023, we also launched a
'Purple Pride' initiative that aims to create a safe workspace for all
employees, celebrating our individuality and encouraging everybody to be
themselves. Looking, ahead we will continue to evolve our employee development
programmes, succession planning and diversity and inclusion efforts. We remain
committed to continuous improvement and investment in its employees and making
Eagle Eye a great place to work.
Of the many 'Simpler' initiatives across the teams, a few notable successes
include the move to Terraform which allows us to standardise and control our
environments globally in a more structured way, and the use of Financial Force
now rolled out across our Delivery teams to help us manage their effectiveness
and project allocation.
In terms of running the business 'Cheaper', our KPI of Google Cloud Platform
spend percentage against recurring revenue is the indicator we have been using
to monitor our Google Cloud spend. This year we have averaged 20.5% by closely
monitoring and taking on initiatives to drive us forward in our goal to become
more cloud native and serverless. We successfully migrated to PubSub for our
messaging service, and we continue in our drive to become more efficient and
resilient by the use of cloud native tooling.
The acquisition of Unite Nots provides immediate synergies, such as cloud
hosting costs and the ability to offer them our extensive sales and marketing
expertise, as described above. We now have the combined sales and marketing
efforts of our two companies in our arsenal, enabling us to streamline our
efforts and reduce costs.
Our people costs represent 65% of the operating costs of the business in the
Year (FY22: 65%) and we recognise they are our biggest asset. Our business
model continues to allow us to use remuneration as one of the levers to reward
and retain our best people. Continued investment into the new year is built
into our plan each year, in line with the model we have developed. We continue
to review average industry wages and are comfortable we are well placed to
manage any rises in the year ahead.
5. M&A
We successfully completed the acquisition of Untie Nots in January 2023, a
rapidly growing SaaS company enabling retailers to deliver AI-powered,
personalised spend-stretch challenges to customers at scale which are
profitable by design. The acquisition provides us with accelerated entry into
the French market, brings some of Europe's largest grocers into the Group,
adds to our growing roster of US clients and provides a wealth of cross-sale
opportunities for both businesses. Importantly, the Untie Nots team have been
able to benefit from becoming part of our more advanced sales and marketing
organisation, considerably expanding the reach for their innovative
technology. The Untie Nots team also bring additional capabilities and deep
experience of using and developing AI solutions for retailers.
In just a few months post-acquisition, we are already seeing the benefits of
working together. Introduced by Eagle Eye, Untie Nots secured a contract with
FairPrice, Singapore's largest supermarket chain, in May 2023. This was the
first win for the Group in the region and demonstrates the benefit to Untie
Nots of Eagle Eye's international marketing reach, and the speed of the sales
cycle for the Untie Nots offering. It is also testimony to the benefit of our
own investment into international expansion and we continue to build a
promising international sales pipeline, alongside Untie Nots.
The success of the acquisition and mutual benefit to both businesses provides
us with a blueprint for further acquisitions, and we continue to assess the
market for new opportunities.
Outlook
We have entered FY24 in a strong position with a growing pipeline and
considerable momentum across the Group. Trading in FY24 to date has been in
line with the Board's expectations.
In the current difficult economic environment, retailers are turning to data
driven, personalised promotions and rewards as one of the most effective ways
to drive increased trade and retain customer loyalty. Meanwhile, advances in
technology, such as generative AI, are making personalisation more accessible
for a wider range of retailers. Eagle Eye's central position as the technology
that enables the execution of these programmes means we are becoming
increasingly relevant, providing further growth opportunities.
The Group continues to successfully manage inflationary pressures and the
underlying growth and flexibility of the Company's business model mean that we
can invest into the business and people with confidence to support future
growth. The successful acquisition of Untie Nots demonstrates the benefit we
can bring to other businesses looking to scale, and we continue to assess the
market for earnings enhancing acquisition opportunities.
We have a growing addressable market, high profile customers in multiple
geographies, an outstanding team and a high-quality business model driving
growth in revenue, profits and cash generation. Alongside this, developments
within AI and the clear demand from our customer base and wider retail sector,
means we are very excited about the future of Eagle Eye.
Tim Mason, Chief Executive Officer
Financial review
Key Performance Indicators
Financial FY23 FY22
£m £m Var
Revenue 43.1 31.7 36%
Subscription and transaction revenue:
- AIR Licence revenue £14.1m 32% £12.2m 39% 16%
- AIR transaction revenue £15.7m 37% £9.7m 30% 63%
- Untie Nots Licence & transaction revenue £2.2m 5% - - -
- SMS transaction revenue £2.4m 6% £2.1m 7% 12%
Total subscription and transaction revenue £34.5m 80% £24.0m 76% 44%
AIR Annual recurring revenue 33.3 23.9 40%
Net revenue retention rate 137% 145% -8ppt
Adjusted EBITDA ((1)) 8.8 6.5 36%
Adjusted EBITDA ((1)) margin 20.4% 20.5% -0.1ppt
Profit after tax 1.2 0.6 114%
Net cash ((3)) 9.3 3.6 156%
Cash and cash equivalents 10.6 3.6 192%
Borrowings (1.3) - N/A
Non-financial FY23
FY22
Chargeable AIR redemption & interaction volumes 3,350m 1,693m 98%
Long-term contract customer churn by value 0.2% 0.2% 0ppt
((1)) Adjusted EBITDA excludes costs associated with the acquisition of Unite
Nots SAS, share-based payment charges along with depreciation, amortisation,
interest and tax from the measure of profit and is reconciled to the GAAP
measure of profit before taxation in note 5.
((2)) Adjusted Profit before tax excludes costs associated with the
acquisition of Unite Nots SAS.
((3)) Net cash is cash and cash equivalents less borrowings.
Group results
Revenue
Revenue growth for the Group was 36% for the Year (FY22: 39%), with the
contribution to H2 from Untie Nots building on top of the strong organic
growth in revenue of 29%.
The Group's Annual Recurring Revenue(1) (ARR), which is our period exit rate
for recurring AIR and Untie Nots subscription and transaction revenue, plus
any professional services contracted for more than 12 months hence and secured
new wins, excluding any seasonal variations and lost contracts, increased by
40% to £33.3m (FY22: £23.9m). The growth rate in ARR is higher than the
overall revenue growth due to subscription and transaction revenue increasing
to 80% of total revenue (FY22: 76%) as the use of our services increases with
our largest Tier 1 clients across the globe, as well as benefitting from the
impact of the acquisition of Untie Nots. The increased use of the platform can
particularly be seen from the 63% increase in AIR transactional revenue to
£15.7m (FY22: £9.7m).
Professional services revenue increased by 12% to £8.6m (FY22: £7.6m). Under
IFRS 15, a SaaS business will typically recognise revenue (including
implementation revenue from professional services) over time. In some cases,
this means implementation revenue is now recognised over the period the
service is live. Therefore, during the period of implementation for a new
client, which is typically between two and six months, no revenue will be
recognised, although directly attributable associated costs are also spread
over the same period, matching revenue and costs. Revenue from professional
services that has been deferred into future periods, but delivered and billed,
was £5.8m at 30 June 2023 (30 June 2022: £3.0m).
The Group has maintained a strong Net Revenue Retention(2) (NRR) rate, which
is the improvement in recurring AIR revenue excluding new wins in the last 12
months. In FY22 our NRR benefitted from the recovery in the Food &
Beverage sector from the impact of Covid-19. Excluding the Covid-19 recovery
impact NRR for FY22 was 137%; in FY23 this has been maintained due to
continued successful deepening of existing accounts, including increased
transactional revenue.
Chargeable AIR redemption and loyalty interaction volumes, a key measure of
usage of the AIR platform, increased by 98% to 3.3bn (FY22: 1.7bn), ahead of
the growth in recurring subscription and transaction revenue, reflecting
increasing transactional usage of the platform by all our international
grocery clients, in particular for loyalty transactions where we have seen key
customers such as Woolworths moving through their contract cycle with volumes
from the Everyday Extra subscription increasing within their existing licence
and transection fee charging bands.
In addition to winning new business, including Morrisons, IKEA Taiwan and
Hudson Bay, a substantial Canadian retailer, and deepening existing
relationships, the Group successfully maintained an extremely low rate of
long-term contract customer churn by value at 0.2% (FY22: 0.2%). This reflects
the scale and breadth of the AIR platform's offering in meeting our customers'
needs.
SMS messaging revenue increased from the prior year, despite strong cost
headwinds in this commoditised market, to £2.4m (FY22: £2.2m). This
reflected inflationary increases with volumes of messages sent down 1% to
65.3m (FY22: 68.3m) driven by those clients who recognise the benefit of an
omni-channel strategy and which have integrated their High Street stores and
their eCommerce offering, including JD Sports and Pets at Home. Consistent
with previous guidance, SMS is expected to continue to represent a decreasing
proportion of the Group's revenue in future years.
Gross profit
Gross profit grew 38% to £41.0m (FY22: £29.6m), with gross margin at 95%
(FY22: 94%) as the contribution to revenue from the lower margin SMS business
continues to reduce.
Costs of sales includes the cost of sending SMS messages, revenue share
agreements and outsourced, bespoke development work. All internal resource
costs are recognised within operating costs, net of capitalised development
and contract costs.
Adjusted operating expenses
Adjusted operating costs increased 39% in line with the growth in gross profit
to £32.2m (FY22: £28.9m) as the business has invested in line with our
planned growth investment model. These operating expenses, which exclude costs
of £1.3m associated with the acquisition of Untie Nots SAS, represent sales
and marketing, product development (net of capitalised costs), operational IT,
general and administration costs.
The 39% increase in staff costs to £26.1m (FY22: £18.8m) primarily reflected
an increase in average headcount for the Year which was up 36% to 222 (FY22:
162), including the impact of the acquisition of Untie Nots. In addition,
reflecting the inflationary pressures seen in all territories, we had built
into our operating model increased annual pay awards which were made in
January 2023. We continue to invest in developing our products, and in sales
and marketing to support our growth plan; within staff costs, gross
expenditure on product development increased to £6.9m (FY22: £5.2m) and
sales and marketing spend was £4.8m (FY22: £3.7m).
IT Infrastructure costs grew at a slower rate than recurring revenue growth by
23% to £8.1m; representing 23% of recurring revenue (FY22: £6.5m; 27% of
recurring revenue) as the Group benefited from investment in infrastructure
for its overseas regions in FY22 in advance of the significant increases in
volumes seen in FY23, with work continuing to optimise the efficiency of our
infrastructure as we continue to grow. Capitalised product development costs
increased to £2.6m (FY22: £2.2m), whilst amortisation of capitalised
development costs was £2.5m (FY22: £2.3m). Contract costs (including costs
to obtain contracts and contract fulfilment costs), recognised as assets under
IFRS 15, increased to £2.8m (FY22: £2.7m), reflecting the high level of new
wins during the Year, and amortisation of contract costs was £1.7m (FY22:
£1.3m).
Adjusted EBITDA and profit/(loss) before tax
The strong revenue performance and continued controlled investment spend have
resulted in continued growth in organic adjusted EBITDA margin to 21% (FY22:
20%). Reflecting its earlier stage of growth, EBITDA margin for Untie Nots was
4%, resulting in an adjusted EBITDA margin for the Group of 20%, in line with
the prior year. The acquisition of Untie Nots and the timing of inflationary
pay awards and investment for growth meant that Group EBITDA margin fell to
18% in H2 23 compared to 23% in H1 23. Adjusted EBITDA was up 36% at £8.8m
(FY22: £6.5m) for the Year. To provide a better guide to the underlying
business performance, adjusted EBITDA excludes the costs of the acquisition of
Untie Nots along with share-based payment charges, depreciation, amortisation,
interest and tax from the measure of profit. The GAAP measure of operating
loss before interest and tax was £(0.6)m (FY22: profit of £0.7m) reflecting
the increased amortisation as a result of intangibles recognised under IFRS 3
on the acquisition of Untie Nots of £1.3m and the increased non-cash
share-based payment charge of £2.4m (FY22: £1.9m), reflecting the successful
revenue and EBITDA performance this year and the strong position the Group
continues to be in to deliver increased revenue and profits, which are
reflected in future, performance related, vesting assumptions, offset by the
EBITDA earnt in the Year.
The Group aims to manage the business to at least achieve the Rule of 40
(Revenue growth + Adjusted EBITDA margin = 40), with an expectation that the
Adjusted EBITDA margin achieved for the Group will be at least c20% on an
annualised basis. In FY23 our result versus this metric was 56 (FY22: 59).
The loss before tax for FY23 was £(0.8)m (FY22: profit of £0.7m), reflecting
the reduction in operating loss before interest and tax. Net finance expense
increased to £0.14m (FY22: £0.05m) reflecting the partial utilisation of the
Group's revolving loan facility towards funding the acquisition of Untie Nots,
along with the higher interest rates seen during the Year.
Profit after tax, EPS and dividend
The improvement in underlying profitability during the Year, in particular in
the UK, has allowed the Group to forecast the recovery of taxable losses
brought forward from prior years with more certainty which has resulted in an
additional deferred tax asset of £1.6m, reflecting historic losses brought
forward now being recognised. Along with the continued successful R&D tax
credit claims in the UK and France, this has resulted in an overall tax credit
of £1.9m in FY23 (FY22: charge of £(0.1)m).
As a result, the Group's profit after taxation increased to £1.2m (FY22:
£0.6m) and reported basic earnings per share improved to 4.25p (FY22: 2.12p)
with diluted earnings per share of 3.79p (FY22: 1.86p).
No dividend is proposed this year (FY22: £nil) as the Group continues to
invest in a managed way to pursue our growth strategy.
Group Statement of Financial Position
The Group had net assets of £24.0m at 30 June 2023 (30 June 2022: £8.6m),
including capitalised intellectual property of £5.3m (30 June 2022: £3.5m).
The movement in net assets reflects the acquisition of Untie Nots along with
improved EBITDA performance in the Year and the exercise of share options
during the Year.
Current assets increased by £8.3m primarily due to revenue growth, aligned
with an improvement in debtor days to 49 (FY22: 61 days) and higher EBITDA,
generating cash in the Year, along with an increased current tax receivable,
primarily due to the French R&D tax credit. Liabilities increased by
£9.0m primarily due to increased deferred income arising from the treatment
of billed revenue for new implementation fees and professional services under
IFRS 15, along with higher bonus and commission accruals, reflecting the
revenue and EBITDA growth in the period, the term debt acquired with Untie
Nots which is used to manage Euro working capital requirements, and the
deferred and contingent consideration due on the acquisition of Untie Nots.
Cashflow and net cash
The Group ended the Year with net cash of £9.3m (30 June 2022: £3.6m),
exceeding the Board's prior expectations. Excluding costs associated with the
acquisition of Untie Nots, the underlying net cash inflow for the Year was
£7.0m (FY22: £2.8m). Overall net cash inflow for the Year was £5.7m.
The main components to the net cash inflow were:
· the operating cash inflow of £12.3m (FY22: £7.4m), reflecting
the EBITDA profit (unadjusted for the acquisition of Untie Nots) of £7.5m
(FY22: £6.5m), a working capital inflow of £3.9m (FY22: £1.5m outflow) and
net tax receipts of £0.9m (FY22: net payments of £0.6m). The £2.4m
improvement in working capital primarily arose as a result of increased income
deferred under IFRS 15 and enhanced focus on reducing debtor days;
· net proceeds from the issue of equity during the Year, primarily
in relation to the acquisition of Untie Nots, of £7.1m;
· offset by capital investment in the AIR platform and other
infrastructure of £2.6m (FY22: £2.4m), as well as contract costs capitalised
under IFRS 15 of £2.8m (FY22: £2.7m);
· payments in respect of leases of £0.2m (FY21: £0.1m); and
· £6.3m consideration and costs paid for the acquisition of Untie
Nots, net of cash and debt acquired.
Banking facility
The Group has remained comfortably within its banking covenants which relate
to the Group's debt ratio and adjusted EBITDA performance. During the Year,
the Group's primary banker at the time, Silicon Valley Bank, encountered
financial difficulties and US financial regulators closed SVB US, subsequently
selling it to First Citizens Bank, while SVB UK was purchased by HSBC and
subsequently renamed HSBC Innovation Bank. As a result of successful
mitigating actions at the time, the Group maintained access to sufficient
liquidity to support the Group's ongoing working capital requirements and to
deliver the Group's stated growth strategy throughout the period of
uncertainty. Following the respective acquisitions, no Eagle Eye funds were at
risk of loss. However, the Group has subsequently revised its treasury policy
such that exposure to the failure of one bank is minimised.
In light of the economic environment, and our increasingly global customer
base, we have taken the step of hedging elements of our foreign currency net
receipts to ensure that the Group is protected from significant and sudden
adverse movements in foreign currency exchange rates. There were no open
hedges at 30 June 2023 (30 June 2022: none).
The Group continues to hold a £5.0m revolving loan facility with HSBC
Innovation, with an additional £2.5m accordion facility available, subject to
credit approval at the time. This provides the business with security and
flexibility over its financing options to deliver on its growth aspirations.
The Group's gross cash of £10.6m (FY22: £3.6m) and the £4.0m undrawn
portion of its £5.0m facility (FY22: £5.0m undrawn), less £0.3m debt of
Untie Nots, gives the Group £14.3m of headroom, which, allied to growing
levels of profitability and organic cash generation, the Directors believe is
sufficient to support the Group's current organic growth plans.
Lucy Sharman-Munday, Chief Financial Officer
Consolidated statement of profit or loss and total comprehensive income
for the year ended 30 June 2023
2022
2023
Note £000 £000
Continuing operations
Revenue 3 43,074 31,667
Cost of sales (2,091) (2,037)
Gross profit 40,983 29,630
Operating expenses (41,581) (28,896)
Other income 122 -
8,789
Adjusted EBITDA ((1)) 5 6,476
Acquisition costs (1,298) -
Share-based payment charge (2,426) (1,851)
Depreciation and amortisation (5,685) (3,891)
Operating (loss)/profit 4 (620) 734
Finance income 30 1
Finance expense (170) (50)
(Loss)/Profit before taxation (760) 685
Taxation 1,948 (131)
1,188 554
Profit after taxation for the financial year
(410) 582
Foreign exchange adjustments
Total comprehensive profit/(loss) attributable to the owners of the parent for 778 1,136
the financial year
((1)) Adjusted EBITDA excludes share-based payment charge, depreciation and
amortisation from the measure of profit
Earnings/(loss) per share
From continuing operations
Basic 4 4.25p 2.12p
Diluted 4 3.79p 1.86p
Consolidated statement of financial position
as at 30 June 2023
2023 2022
£000 £000
Non-current assets
Intangible assets 19,458 6,663
Contract fulfilment costs 2,562 1,433
Property, plant and equipment 1,444 684
Deferred taxation 1,626 131
25,090 8,911
Current assets
Trade and other receivables 11,085 9,853
Current tax receivable 762 718
Cash and cash equivalents 10,615 3,632
22,462 14,203
Total assets 47,552 23,114
Current liabilities (17,338) (12,185)
Trade and other payables (74) -
Current tax payable
Financial liabilities (1,102) -
(18,514) (12,185)
Non-current liabilities
Other payables (4,801) (2,362)
Financial liabilities (197) -
(4,998) (2,362)
(23,512) (14,547)
Total liabilities
Net assets 24,040 8,567
Equity attributable to owners of the parent
Share capital 293 264
Share premium 29,925 17,685
Merger reserve 3,278 3,278
Share option reserve 7,291 5,549
Retained losses (16,747) (18,209)
Total equity 24,040 8,567
Consolidated statement of changes in equity
for the year ended 30 June 2023
Share capital Share Merger Share option Retained losses Total
premium reserve reserve
£000 £000 £000 £000 £000 £000
Balance at 1 July 2021 261 17,503 3,278 3,997 (19,644) 5,395
Profit for the financial year - - - - 554 554
Other comprehensive income
Foreign exchange adjustments - - - - 582 582
- - - - 1,136 1,136
Transactions with owners recognised in equity
Exercise of share options 3 182 - - - 185
Fair value of share options exercised in the year - - - (299) 299 -
Share-based payment charge - - - 1,851 - 1,851
3 182 - 1,552 299 2,036
264 17,685 3,278 5,549 (18,209) 8,567
Balance at 30 June 2022
Profit for the financial year - - - - 1,188 1,188
Other comprehensive income
Foreign exchange adjustments - - - - (410) (410)
- - - - 778 778
Transactions with owners recognised in equity
Issue of share capital 22 12,148 - - - 12,170
Issue costs - (285) - - - (285)
Exercise of share options 7 377 - - - 384
Fair value of share options exercised in the year - - - (684) 684 -
Share-based payment charge - - - 2,426 - 2,426
29 12,240 - 1,742 684 14,695
293 29,925 3,278 7,291 (16,747) 24,040
Balance at 30 June 2023
Consolidated statement of cash flows
for the year ended 30 June 2023
2023 2022
£000 £000
Cash flows from operating activities
(Loss)/profit before taxation (760) 685
Adjustments for:
Depreciation 487 320
Amortisation 5,198 3,570
Share-based payment charge 2,426 1,851
Finance income (30) (1)
Finance expense 170 50
Increase in trade and other receivables (3) (3,659)
Increase in trade and other payables 3,850 5,155
Income tax paid (56) (785)
Income tax received 960 221
12,242 7,407
Net cash flows from operating activities
Cash flows from investing activities
Payments to acquire property, plant and equipment (171) (178)
Payments to acquire intangible assets and contract fulfilment costs (5,444) (4,943)
Acquisition of Untie Nots, net of cash and cash equivalents acquired (6,347) -
(11,962) (5,121)
Net cash flows used in investing activities
Cash flows from financing activities
Net proceeds from issue of equity 7,097 185
Proceeds from borrowings 2,000 900
Repayment of borrowings (1,627) (1,800)
Capital payments in respect of leases (217) (185)
Interest paid in respect of leases (31) (29)
Interest received 4 1
Interest paid (113) (21)
7,113 (949)
Net cash flows from/(used in) financing activities
Net increase in cash and cash equivalents in the year 7,393 1,337
Foreign exchange adjustments (410) 582
Cash and cash equivalents at beginning of year 3,632 1,713
10,615 3,632
Cash and cash equivalents at end of year
Notes to the consolidated preliminary financial information
1 Basis of preparation
The financial information set out herein does not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006. The financial
information for the Year ended 30 June 2023 has been extracted from the
Group's audited financial statements which were approved by the Board of
Directors on 18 September 2023 and which, if adopted by the members at the
Annual General Meeting, will be delivered to the Registrar of Companies for
England and Wales.
The financial information for the Year ended 30 June 2022 has been extracted
from the Group's audited financial statements which were approved by the Board
of Directors on 20 September 2022 and which have been delivered to the
Registrar of Companies for England and Wales.
The reports of the auditor on both these financial statements were
unqualified, did not include any references to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
did not contain a statement under Section 498(2) or Section 498(3) of the
Companies Act 2006.
The information included in this preliminary announcement has been extracted
from the audited financial statements prepared in accordance with UK-adopted
International Accounting Standards in conformity with the requirements of the
Companies Act 2006 and the International Financial Reporting Interpretations
Committee (IFRIC) interpretations issued by the International Accounting
Standards Board ("IASB") that are effective as at the date of these financial
statements.
The Company is a public limited Company incorporated and domiciled in England
& Wales and whose shares are quoted on AIM, a market operated by The
London Stock Exchange.
2 Going concern
As part of their going concern review the Directors have followed the
guidelines published by the Financial Reporting Council entitled "Guidance on
the Going Concern Basis of Accounting and Reporting on Solvency and Liquidity
Risks- Guidance for directors of companies that do not apply the UK Corporate
Governance Code".
The Directors have prepared detailed financial forecasts and cash flows
looking beyond 12 months from the date of approval of these consolidated
financial statements. In developing these forecasts, the Directors have made
assumptions based upon their view of the current and future economic
conditions that will prevail over the forecast period.
On the basis of the above projections, the Directors are confident that the
Group has sufficient working capital and available funds to honour all of its
obligations to creditors as and when they fall due. In reaching this
conclusion, the Directors have considered the forecast cash headroom,
including the impact of the revolving credit facility with HSBC Innovation
Bank and the covenants associated with it, the resources available to the
Group and the potential impact of changes in forecast growth and other
assumptions, including the potential to avoid or defer certain costs and to
reduce discretionary spend as mitigating actions in the event of such changes.
Accordingly, the Directors continue to adopt the going concern basis in
preparing these consolidated financial statements.
3 Segmental analysis
The Group is organised into two principal operating division for management
purposes. These reflect the organic Eagle Eye business and the newly acquired
Untie Nots business. All non-current assets are held in the United Kingdom,
other than the right of use asset relating to the lease for the Paris office
of Untie Nots.
Organic & Total
Organic Untie Nots Total 2022
2023 2023 2023
£000 £000 £000 £000
Revenue 40,862 2,212 43,074 31,667
Cost of sales (2,091) - (2,091) (2,037)
38,771 2,212 40,983 29,630
Gross profit
Adjusted operating costs (30,060) (2,134) (32,194) (23,154)
8,711 78 8,789 6,476
Adjusted EBITDA
Revenue is analysed as follows:
Service 2023 2022
£000 £000
Development and set up fees 8,563 7,645
Subscription and transaction fees 34,511 24,022
43,074 31,667
Product 2023 2022
£000 £000
AIR revenue 38,440 29,497
Untie Nots revenue 2,212 -
Messaging revenue 2,422 2,170
43,074 31,667
4 Earnings per share
The calculation of basic earnings per share is based on the result
attributable to ordinary shareholders divided by the weighted average number
of ordinary shares in issue during the Year. The calculation of diluted
earnings per share is based on the result attributable to ordinary
shareholders divided by the weighted average number of shares in issue during
the year, diluted for the effect of options being converted to ordinary
shares. Basic and diluted earnings per share from continuing operations is
calculated as follows:
Earnings per Profit 2023 Earnings per Profit 2022
share £000 Weighted average number of ordinary shares share £000 Weighted average number of ordinary shares
pence pence
Basic earnings/(loss) per share 4.25 1,188 27,942,991 2.12 554 26,136,009
Diluted earnings/(loss) per share 3.79 1,188 31,380,031 1.86 554 29,829,550
5 Alternative performance
measure
Adjusted EBITDA is a key performance measure for the Group and is derived as
follows:
2023 2022
£000 £000
(Loss)/Profit before taxation (760) 685
Add back:
Finance income and expense 140 49
Share-based payments 2,426 1,851
Depreciation and amortisation 5,685 3,891
Acquisition cost 1,298 -
Adjusted EBITDA 8,789 6,476
6 Net cash
Net cash is a key performance measure for the Group and is derived as follows:
30 June Cash flow Foreign exchange adjustments Acquisition 30 June 2023
2022
£000 £000 £000 £000 £000
Cash and cash equivalents 3,632 5,376 (561) 2,168 10,615
Financial liabilities - (372) - (927) (1,299)
5,004 (561)
Net cash 3,632 1,241 9,316
7 Business combinations
On 3 January 2023, Eagle Eye Group plc completed the acquisition of 100% of
the issued share capital of Untie Nots SAS. The consideration for the
acquisition was made up of initial cash consideration of €9.1m and €5.9m
worth of newly issued shares in Eagle Eye Group plc. Further consideration of
€0.7m was paid on 3 July 2023 following the finalisation of certain tax
affairs related to the period prior to the acquisition. Contingent
consideration is due to be paid in FY25 subject to specific revenue targets
being achieved in the year to December 2024 and achievement of a minimum
EBITDA margin. The contingent consideration included in the goodwill
calculation is a discounted probability weighted value, payable to those
vendors who are not employees of the Group. Contingent consideration due to
vendors who are required to remain employees of the Group to earn the
consideration will be expensed through the income statement in accordance with
IFRS 3.
Book value Provisional fair value adjustment Provisional fair value
£000 £000 £000
Intangible assets - 10,226 10,226
Property, plant and equipment 14 209 223
Trade and other receivables 1,261 (32) 1,229
Current tax receivable 497 - 497
Cash and cash equivalents 2,149 - 2,149
Trade and other payables (872) (209) (1,081)
Financial liabilities (927) - (927)
Provision fair value of identified net assets 12,316
Provisional goodwill 3,451
15,767
Fair value of consideration
Satisfied by:
Cash 8,549
Shares issued 5,192
Deferred consideration 670
Contingent consideration 1,357
15,767
8 Report and Accounts
A copy of the Annual Report and Accounts for the Year ended 30 June 2023 will
be sent to all shareholders in due course, together with notice of the Annual
General Meeting, and will be available to view and download from the Company's
website at www.eagleeye.com (http://www.eagleeye.com)
1 (#_ftnref1) Grocery's Great Loyalty Opportunity Now
(https://url.avanan.click/v2/___https:/resources.eagleeye.com/grocerys-great-loyalty-opportunity___.YXAxZTpzaG9yZWNhcDphOm86NGQwNGQwNjM4MGEzNjM2ZjUyZjlkNmE5MzJiNTEyNWM6Njo2NmU5Ojg3NDU5OGUzYTU2MmJmN2QzMjk5OTY5YzQ1MWQ4ZTlkYjZmYjI0YWM0ZDRjNWQwZDEzNzIwNTIyNDM0YmFkMTY6cDpG)
2 (#_ftnref2)
https://www.statista.com/statistics/700093/leading-iphone-shopping-apps-in-great-britain-by-downloads/#:~:text=In%20September%202022%2C%20Asda%20Rewards,iPhone%20users%20in%20Great%20Britain
(https://url.avanan.click/v2/___https:/www.statista.com/statistics/700093/leading-iphone-shopping-apps-in-great-britain-by-downloads/___.YXAxZTpzaG9yZWNhcDphOm86YmI1MDQ1MDkyOWNkY2I2OGE5ODRiMmNmMDUyZWNhMTc6Njo0ZmYyOjRlYzIwZDdlMTYyODdiZjc0MDlmNjE2YTc4MzNlZDkwNjBjZjVkYmY3NzE0ZWNjYTY2NWY3OTUxZDI3YWYzZWY6cDpU#:~:text=In%20September%202022%2C%20Asda%20Rewards,iPhone%20users%20in%20Great%20Britain)
3 (#_ftnref3)
https://corporate.asda.com/newsroom/2023/06/08/asda-customers-earn-over-100m-through-popular-rewards-app
(https://url.avanan.click/v2/___https:/corporate.asda.com/newsroom/2023/06/08/asda-customers-earn-over-100m-through-popular-rewards-app___.YXAxZTpzaG9yZWNhcDphOm86YmI1MDQ1MDkyOWNkY2I2OGE5ODRiMmNmMDUyZWNhMTc6NjoyY2VjOjQ3YmIyMjQwZTYxOGJiMDI0NjIzN2JlNjk1ZmQwODU0YTQzMDc1NDM0YTMxNjUzYTQ2OWE5NmM1NzA3NGQzMDQ6cDpU)
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR NKFBKCBKDKCDRecent news on Eagle Eye Solutions
See all newsREG - Eagle Eye Solutions - Issue of Equity
AnnouncementREG - Eagle Eye Solutions - Board and Senior Leadership Team Changes
AnnouncementREG - Eagle Eye Solutions - Half Year Results
AnnouncementREG - AIM - AIM Notice - 14/02/2025
AnnouncementREG - AIM - AIM Notice - 11/02/2025
Announcement