REG - Eagle Eye Solutions - H1 FY25 Trading Update & Notice of Results

Eagle Eye SolutionsAnnouncement

13/01/2025 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250113:nRSM0552Ta&default-theme=true

RNS Number : 0552T  Eagle Eye Solutions Group PLC  13 January 2025

 

13 January 2025

Eagle Eye Solutions Group PLC

("Eagle Eye" or the "Company")

 

H1 FY25 Trading Update & Notice of Results

Landmark OEM agreement and accelerated SaaS transition

 

Eagle Eye, a leading SaaS and AI technology company that creates digital
connections enabling personalised, real-time marketing at scale, provides an
update on the Group's trading for the six months ended 31 December 2024 (the
"Period" or "H1 FY25").

 

H1 Financial Summary

                                                               H1 FY25    H1 FY24  % change
 Group Revenue                                                 £24.2m     £24.1m   +0.4
                 SaaS Revenue                                  £19.5m     £17.7m   +10.4
                 Professional Services Revenue                 £4.4m      £5.2m    -16.4
                 SMS Revenue                                   £0.3m      £1.2m    -77.5
 Recurring revenue (subscription fees and transactions)        82%        78%      +4ppt
 Adjusted EBITDA(*)                                            c. £5.9m   £5.9m    -
 Adjusted EBITDA(*) margin                                     c. 24%     24%      -
 Net cash at 31 December(**)                                   £11.8m     £7.8m    +51%

 

Highlights

 ·             Major new partnerships agreed, including a five-year global original equipment
               manufacturer ("OEM") agreement with a global leader in enterprise software
               applications. The agreement will see elements of the AIR platform directly
               integrated into the vendor's offerings, providing confidence in revenue
               acceleration in future years and a strong endorsement of the world-class
               quality of Eagle Eye's software.
 ·             Other new partnerships and teaming agreements agreed with EPAM, Infosys,
               Zonal, Purple and Ecrebo.
 ·             High renewal levels across the customer base, representing over £16m of
               Annual Recurring Revenue (ARR) and £43m in total contract value, provide a
               strong foundation of recurring revenue, on multi-year contracts.
 ·             New wins secured in the Period include a leading UK retailer, Waterstones
               Booksellers, Côte, Transa Backpacking in Switzerland and RONA in Canada.
 ·             Good SaaS revenue performance driven by growth with existing customers. The
               Group expects to report double digit growth in ARR as at 31 December 2024.
 ·             Significant reduction in Professional Services in H1, which will continue in
               H2, as Eagle Eye accelerates its strategy to develop into a high margin, fully
               scalable, SaaS business.
 ·             Continued cost control has delivered a healthy H1 EBITDA margin and strong
               cash performance.

Outlook

 ·             The Board continues to expect double digit SaaS revenue growth, however FY25
               & FY26 Revenue is now expected to be c. 15% and 18% below current market
               expectations, respectively(***), primarily due to the significant reduction in
               Professional Services revenue alongside lengthening sales cycles due to the
               macroeconomic climate. However, forecast EBITDA margins are expected to
               improve to approx. 24% & 25% respectively, due to an increasing proportion
               of SaaS revenue, mitigating the impact on profitability.
 ·             The newly agreed global partnership is a game changing opportunity for Eagle
               Eye. It provides confidence in substantial revenue growth acceleration from
               FY27 and we are, therefore, solidifying our confidence in our 3-5 year journey
               to £100m revenue and increasing our target EBITDA margin to 30%.
 ·             The business continues to grow ARR, profitability and cash reserves, has a
               blue-chip customer base on multi-year contracts, and increasing market reach
               through major global partners. As such, the long-term outlook is increasingly
               positive, and the Board is confident in Eagle Eye's ability to achieve its
               ambitions.

 

Tim Mason, Chief Executive of Eagle Eye, said:

 

"We are delighted to announce this morning a landmark agreement with one of
the world's leading enterprise software vendors, providing Eagle Eye with a
platform for growth at a rate far greater than that which could be achieved
alone. The speed with which we have achieved this first major partnership,
just months after stating our medium-term goal is to achieve 50% of new ARR
through partners, underlines the world-leading power of our software.

 

"Accelerating our Win rate remains a key focus and the new partnerships will
assist in this, alongside the appointment of a US-based Chief Revenue Officer.
Our growing SaaS revenue and margin profile provides us with the means to
increase investment into our sales team, while maintaining our strict
financial discipline, to better enable the conversion of our considerable
sales pipeline. We are more confident than ever that we have the right
building blocks: industry leading software; a growing blue chip customer base;
and now major global partners, to build Eagle Eye into a world-leading SaaS
business."

 

H1 Financial and Operational performance

 

Group revenue was steady at £24.2m (H1 FY24: £24.1m) incorporating double
digit growth in EagleAI and overall SaaS revenue, alongside the ongoing
decrease in Professional Services and SMS revenue, as the business continues
its evolution into a fully scalable, SaaS business.

 

SaaS revenue increased 10% to £19.5m (H1 FY24: £17.7m), as the Group
continued to successfully expand its use with existing customers. ARR is
expected to show double digit growth, reflecting major multi-year contract
renewals with Loblaw, Neptune Retail Solutions and E.Leclerc.

 

In total, renewals have been signed in the Period representing over £16m of
ARR and £43m in total contract value.

 

The Group also deepened its engagement with Pret a Manger, JD Sports,
E.Leclerc and Morrisons. While the Win rate was lower than anticipated, as a
result of the timing of new customer conversions, Eagle Eye secured wins in
the Period with a leading retailer in the UK, Waterstones Booksellers Limited,
Côte, RONA in Canada and Transa Backpacking in Switzerland.

 

Adjusted EBITDA* remained flat at approximately £5.9m (H1 FY24: £5.9m),
representing an EBITDA margin of 24% (H1 FY24: 24%).

 

The Group had a strong cash performance in the Period, generating a cash
inflow of £1.4m (H1 FY24: £1.5m outflow), resulting in a net cash position
of £11.8m at 31 December 2024 (30 June 2024: £10.4m). The new, and
increased, three-year £10m revolving credit facility with HSBC Innovation
Bank agreed in the Period provides the business with security and flexibility
over its financing options across the medium term as the Company executes on
its growth strategy.

 

Strategic initiatives to accelerate Win and SaaS transformation

 

Eagle Eye continues to progress its four areas of focus to enable the business
to more successfully convert its strong sales pipeline, while accelerating its
SaaS transformation. These are: an increased focus within the sales
organisation on 'Win'; an increased focus on Alliances to expand the Group's
reach; the productisation of its technology; and ongoing innovation,
particularly within EagleAI.

 

To accelerate these initiatives, the Group will now invest further into its
sales team, including the appointment of an experienced CRO based in the US,
bringing greater enterprise SaaS sales experience. This will be funded via the
implementation of cost reduction initiatives and increasing SaaS-based EBITDA
margins.

 

The business has made excellent progress in achieving new partnerships in both
of the areas identified:

 ·             New Systems Integrator partnerships, providing increased scalability through a
               decreased reliance on Professional Services, and a new channel to generate
               sales opportunities:
               o                                         A partnership with EPAM, a leading global provider of digital engineering,
                                                         cloud and AI-enabled transformation services, and a leading business and
                                                         experience consulting partner
               o                                         A Global Teaming agreement with Infosys, a global IT services and consulting
                                                         company, and
 ·             New technology partnerships, adding value to our existing customer base,
               facilitating smoother sales processes and additional referrals:
               o                                         Zonal, Purple and a global partnership with Ecrebo, a global technology
                                                         company delivering targeted point of sale marketing

 

Alongside these, we are delighted to have separately announced today a major
five-year global OEM agreement with a global leader in enterprise software
applications, which will see elements of the AIR platform directly integrated
into the provider's offerings, to be sold by their sales force. This is the
first OEM agreement secured by Eagle Eye and represents a significant global
expansion opportunity for the Group, providing entry into new sectors and
geographies. Once the product is live, the agreement is expected to provide a
significant contribution to Group ARR. We continue to increase the
productisation of our technology to support these partnerships and this will
now accelerate in conjunction with the partner.

 

As well as these initiatives, the Board has commenced a cost review to
identify immediate areas of optimisation and assess the overall cost base to
support the ongoing move to a SaaS focused business. This is expected to
facilitate investment into the sales engine of the business, while providing
for an increased EBITDA margin opportunity over time.

 

Notice of results

 

The Group expects to announce its results for the six months ended 31 December
2024 on 18 March 2025.

 

Notes:

All financials are based on unaudited figures

*EBITDA has been adjusted for the exclusion of share-based payment charges
along with depreciation, amortisation, interest and tax from the measure of
profit.

** Net cash is defined as cash and cash equivalents less financial
liabilities.

*** In so far as the Board is aware, as at 10 January 2025, consensus market
expectations for FY25 and FY26 were for Revenue of £56.4m and £64.0m, and
adjusted EBITDA of £12.7m and £15.0m, respectively.

 

This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 which is part of UK law by virtue of
the European Union (Withdrawal) Act 2018. The person responsible for arranging
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 / James Smith

 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

 

About Eagle Eye

Eagle Eye is a leading SaaS and AI 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,
at scale.

 

Eagle Eye AIR is a cloud-based platform, which provides the most flexible and
scalable loyalty and promotions capability in the world. More than 1 billion
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 a certified member of the MACH Alliance and 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
(https://url.avanan.click/v2/r02/___http:/www.eagleeye.com___.YXAxZTpzaG9yZWNhcDphOm86OTZhYTVmMmQ2ZWY2OWI3NjkxN2VmYmQ2NDYyYzJhYTY6Nzo5MTBhOjNlNDA0ZGNkZjMxZTU0NTY0MTlmZWFmYTAzZDQwZmRjYWM0OGM1ZTRlNjg2MzQxOTA0MzRlZmE5NWRiMTBjMGM6cDpGOk4)

 

 

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  TSTPKBBKBBKBODD