REG - Eagle Eye Solutions - Half Year Results
17/03/2025 07:15
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RNS Number : 8326A Eagle Eye Solutions Group PLC 17 March 2025
17 March 2025
Eagle Eye Solutions Group PLC
("Eagle Eye", the "Group" or the "Company")
Half Year Results for the six months ended 31 December 2024
Growth in SaaS revenue and ARR, combined with H2 wins and partnerships provide
positive outlook
Eagle Eye, a leading SaaS and AI technology company that creates digital
connections enabling personalised, real-time marketing at scale, is pleased to
announce its unaudited interim results for the six months ended 31 December
2024 (the "Period" or "H1 2025").
Financial Highlights
H1 2025 H1 2024 Change
Group revenue £24.2m £24.1m +0.4%
SaaS Revenue £19.5m £17.7m +10%
Professional Services Revenue £4.4m £5.2m -16%
SMS Revenue £0.3m £1.2m -77%
Recurring revenue % of Group revenue 81.9% 78.2% +3.7ppts
Period end Annual Recurring Revenue(1) £41.0m £35.4m +16%
Net Revenue Retention(2) 104% 120% -16ppts
Gross profit £23.8m £23.1m +3.1%
Adjusted EBITDA(3) £5.9m £5.9m -
Adjusted EBITDA margin 24.4% 24.4% -
Adjusted EBITA(4) £3.0m £2.7m +11%
Adjusted EBITA margin 12.2% 11.0% +1.2ppts
Profit before tax £1.6m £(0.4)m n/a
Net cash flows from operations £4.8m £3.3m +43%
Adjusted net cash(5) at 31 December £11.7m £7.8m +51%
Strategic Highlights
Transformational OEM agreement with one of the world's largest enterprise
software vendors
· Elements of the AIR platform will be directly integrated into the vendor's
offerings, accelerating revenue growth in future years, taking Eagle Eye into
new markets and sectors
· Initiatives to enable the AIR platform to be OEM-ready well underway
· Formal launch currently scheduled for May 2025. Customers expected to be live
from FY26 and material revenue generation from FY27
· Early adoption programme with key customers has commenced
Good retention and expansion with blue chip customer base as retailers seek
greater personalisation in their loyalty programmes
· 16% growth in ARR, to £41.0m, reflecting the Company's success in expanding
engagement across blue-chip customer base
· Strong growth in Eagle Eye's high-margin, recurring SaaS revenue, including a
36% increase in EagleAI revenue, offset the previously announced decrease in
professional services revenue and slower Win rate. Initiatives to improve the
Win rate have commenced and have already resulted in improved momentum
· New customers secured in H1, including a leading UK grocery retailer,
Waterstones Booksellers Limited, Côte, Bettys and Taylors Group, and Transa
in Switzerland, and a high level of renewals, including Loblaw, Neptune and
E.Leclerc
Contract wins and deepening with customers in H2 provide confidence in FY25
and beyond
· New contracts secured in new and existing geographies, including with:
o A Mexican subsidiary of one of the world's largest retailers for Personalised
Challenges
o Rite Aid in North America, for the AIR platform
o Tesco Ireland Limited, for Personalised Challenges
o Transurban in Australia for the AIR platform
· Continued renewals with major customers, including Greggs and Southeastern
Grocers, with total renewals in the year to date representing £18.7m in ARR
and £64.0m in total contract value
· Confident in achieving results for the year ending 30 June 2025 in line with
current market expectations*
Confident in achieving medium-term milestones of £100m revenue and 30%
adjusted EBITDA margin, with initiatives implemented to get there faster
· Accelerating the Company's SaaS transition to improve margins and scalability
· Appointment of an experienced US-based CRO to help convert Eagle Eye's
substantial sales pipeline and capture more of the significant US opportunity
· Driving Win rate through increased focused on alliances, with new System
Integrator partnerships secured, alongside the major OEM agreement
· Ongoing AI innovation, including the launch of the Personalised Flyer in
partnership with E.Leclerc and product packaging to make Eagle Eye's
technology easier to scale
Tim Mason, Chief Executive of Eagle Eye, said:
"Personalisation is a priority for retailers around the world - and it's right
at the heart of our DNA, with our offerings powering many of the world's
largest and most successful loyalty programmes. Whilst the H1 performance was
lower than we had hoped, we have reset the business and are ready to scale,
with multiple avenues for growth. We have started the second half of the year
with renewed momentum, energised by the progress already achieved. The
recently announced global OEM partnership represents a transformative
opportunity for Eagle Eye, providing a clear path for substantial revenue
acceleration from FY27 onwards.
"With a clear line of sight over our 30% adjusted EBITDA margin target, and
sufficient growth drivers to exceed £100m in revenue, we are confident in
achieving our ambitions."
(1) Period end Annual Recurring Revenue ("ARR") is defined as period exit rate
for recurring subscription and transaction revenue (exc SMS) plus any
professional services contracted for more than 12 months hence and secured new
wins, excluding any seasonal variations and lost contracts.
(2) Net Revenue Retention ("NRR") rate is defined as the improvement in
recurring revenue excluding SMS and 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.
(4) EBITA has been adjusted for the exclusion of share-based payment charges
along with IFRS3 amortisation associated with acquisitions, interest and tax
from the measure of profit.
(5) Adjusted net cash is defined as cash and cash equivalents less financial
liabilities.
*As at 16 March 2025, the Board understands market expectations for FY25 to be
Revenue of £47.7m and Adjusted EBITDA of £11.35m.
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
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Strategic Report
Eagle Eye continues to be at the forefront of innovation within the global
personalised loyalty market. Personalisation is a priority for retailers
around the world - and it's right at the heart of our DNA, with our offerings
powering many of the world's largest and most successful loyalty programmes.
The growth in our high-margin, recurring software revenue base reflects our
continued success in expanding engagement across our blue-chip customer base.
Our SaaS revenue increased by 10% in the Period, to £19.5m, including EagleAI
revenue growth of 36% to £2.9m, and as a result, we exited the Period with
ARR up 16% at £41.0m, providing growing levels of revenue visibility. While
trading in the first half of the year did not meet the Board's expectations,
as previously announced on 13 January 2025, due to an accelerated decrease in
professional services revenue and slower Win rate, we have responded swiftly,
accelerating our SaaS transition and laying the foundations for increased
scalability and long-term growth.
We are confident in our ability to deliver our next milestone of £100m
revenue and newly increased adjusted EBITDA margin of 30%, however we want to
get there faster. The Original Equipment Manufacturer (OEM) partnership,
announced in January, will be a game-changer for the business, and one of the
key building blocks to achieving these ambitions. We have also implemented
initiatives to better convert our significant sales pipeline, including an
increased focus on the significant US market, with the appointment of an
experienced US-based CRO, a greater focus on partners, the productisation of
our offering and ongoing AI innovation.
We are encouraged by the level of new wins secured post period end, which
includes our first win in Central America, providing entry into an important
new geography. These wins, combined with the ongoing expansion with existing
customers, provide the Board with confidence in the achievement of FY25 market
forecasts. Looking further ahead, the rate at which we have secured a wide
range of partners paves the way for greater market reach, increased speed of
pipeline conversion, and faster implementations.
With industry leading software, a growing blue chip customer base and now
major global partners, the foundation is set to build Eagle Eye into a
world-leading SaaS business.
Growing market opportunity
We are seeing a global shift towards personalised engagement in loyalty
programmes across industries. While most retailers still rely predominantly on
mass marketing, industry leaders are increasingly recognising the higher ROI
and improved customer experience that personalised marketing delivers, and the
promise of large-scale personalisation is now possible thanks to advances in
cloud computing, AI, and real-time consumer communication.
Eagle Eye's AIR platform is supporting this shift, being the most scalable
loyalty and promotions personalisation platform in the world. The platform
delivers future-proofed loyalty, promotions, subscription, gamification and
gifting capabilities to hundreds of retailers and connected partners across
more than 90,000 connected stores globally. In 2024, AIR handled up to one
billion API requests per day, generated over 850 million personalised offers
weekly, and managed 500 million loyalty wallets, a scale unmatched by others.
We have footholds in many of the major, high growth loyalty markets around the
world, with considerable potential for further expansion in each. Of these,
the US is a primary focus, due to the scale of the opportunity in that region,
with North America accounting for 40% of the global loyalty market*.
Now with an increased ability to penetrate the market through the appointment
of an experienced US based CRO post period end, on top of the global OEM
agreement that will also target the US, we have a further significant
opportunity to grow internationally, providing entry into new sectors and
geographies.
* Source: Markets and Markets, Loyalty Management Market - Global Forecast to
2028
Route to £100m revenue and 30% adjusted EBITDA margin
Our vision to significantly grow the business remains unchanged. With the new
OEM agreement now in place, we are well positioned to accelerate our growth,
reinforcing our path toward £100m in revenue over 3-5 years and delivering
our increased target adjusted EBITDA margin of 30%.
Since FY19 we have consistently demonstrated growth in our adjusted EBITDA
margin, but we have set our ambition to improve margins further to 30% in the
medium term. There are three key areas that will drive improvement:
1) We are currently operating at a Group direct margin* of 70% but less mature
geographies are lower than this. Scale will naturally deliver higher direct
margins.
2) The work being performed to be 'partnership ready' will see the implementation
of auto scaling and flow rate restrictions so the end customer operates within
their framework. This will drive higher margins as the business will not be
paying for unused capacity.
3) A higher % of SaaS revenue as we move towards a System Integrator model will
drive overall higher margins as we will avoid carrying unnecessary 'bench
professional service' cost.
We will also benefit from operational leverage on fixed costs as we scale but
will invest some back into the business to fuel growth - particularly in Sales
& Marketing in the US. We currently invest just 13% of revenue in global
Sales & Marketing.
We agreed a new and increased three-year £10m revolving credit facility with
HSBC Innovation Bank during the Period which, alongside our increasing cash
reserves, provides increasing optionality, giving us flexibility as we execute
on our ambition and pursue new opportunities.
M&A has the potential to accelerate our strategy, and the successful
acquisition of EagleAI underscores the value Eagle Eye can bring to other
businesses looking to scale, and the benefits they can bring to the Group. We
have a proven, strong organic growth strategy, and any future M&A can be
considered a lever for accelerating us towards our vision to be a £100m
revenue business generating 30% adjusted EBITDA margin.
Win and Deepen activity in H2 provide confidence in FY25
The Period saw Wins with a leading UK grocery retailer, Waterstones
Booksellers Limited, Côte, Bettys and Taylors and Transa in Switzerland, and
deepening with E.Leclerc, Pret a Manger and JD Sports.
We are pleased to report that we have already seen a positive step forward in
our Win rate post period end, adding some of the world's largest retailers to
our client roster, and expansion with multiple customers, including the first
cross sale of AIR into the existing Untie Nots (now EagleAI) customer base.
These include:
· A Mexican subsidiary of one of the world's largest retailers, which has signed
an initial six-month contract for AI-powered Personalised Challenges. Ensuring
the success of this first engagement with this major retailer will be a key
focus for the team, given the significant deepen potential.
· A one-year contract, with a one-year extension option, with Tesco Ireland
Limited in the Republic of Ireland for Personalised Challenges, following the
success of Clubcard Challenges with Tesco UK over the past year.
· A four-year loyalty contract, with a two-year extension option, with
Transurban, a leading global toll road operator across Australia, Canada and
the United States. The Transurban Linkt Rewards program is currently being
expanded and has eight Rewards partners across fuel, travel, parking and more
with ~1.4m Rewards members.
· A five-year contract with Rite Aid, one of the largest drugstore chains in the
US, to power the evolution of its loyalty programme, Rite Aid Rewards. This is
the first customer to deepen from Personalised Challenges to AIR.
* See note 5. Alternative performance measures in the Consolidated Notes to
the Financial Statements
Multi-year renewals, representing over £64m in Total Contract Value
We are delighted to have secured multi-year contract renewals with many of our
largest customers since the start of FY25, providing a strong base of
contracted recurring revenue. These include Loblaw, Neptune Retail Solutions
and E.Leclerc, and post period end with Southeastern Grocers and Greggs.
Together, these represent £18.7m in ARR and £64.0m in total contract value.
Accelerating our Win rate and SaaS transformation
We are focused on four areas of work, which we are confident will enable Eagle
Eye to more successfully convert our strong sales pipeline, while accelerating
our SaaS transformation. These are:
1. Progressing the Global OEM agreement
As announced in January 2025, we have signed a game-changing OEM partnership
with one of the world's leading enterprise software vendors, accelerating our
SaaS transformation and providing confidence in revenue acceleration in future
years. The partnership will see elements of the AIR platform directly
integrated into the vendor's offerings, with the vendor responsible for
selling and delivering the new product, taking us into new markets and
sectors. Since the partner maintains the direct relationship with end
customers, Eagle Eye will treat the vendor as a single customer for pricing,
operating on a transactional model. An early adoption programme with key
customers has already commenced. Full marketing is expected post the formal
launch, currently scheduled for May 2025 with customers expected to be live
from FY26 and material revenue generation from FY27.
2. Increased focus on partnerships to expand the Group's reach
We are also sharpening our focus on partnerships to expand the Group's reach,
facilitate smoother sales processes and reduce our reliance on professional
services, with a medium-term goal of achieving 50% of new ARR through
partners. 42% of total Win ARR year to date has been referred by partners and
we have a significantly progressed partner pipeline across all partnership
types compared to FY24.
System Integrators
Alongside the landmark OEM agreement, System Integrator Partnerships are an
important focus for us to scale and in H1 95% of our referred partner pipeline
has come from System Integrators. They provide increased scalability through a
decreased reliance on Professional Services, and a new channel to generate
sales opportunities. We have also secured new System Integrator Partnerships
in the Period including with EPAM, a leading global provider of digital
engineering, cloud and AI-enabled transformation services, a leading business
and experience consulting partner, and a Global Teaming agreement with
Infosys, a global IT services and consulting company. We have also agreed a
new partnership with NETCONOMY, a European expert in end-to-end digitisation,
providing digital strategy, platform development, and system integration, with
a strong presence in the DACH market as well as significant activity in the
Nordics and Benelux.
Technology Partners
Technical integrations have always been at the heart of how Eagle Eye operates
due to our central position within an integrated loyalty programme software
stack, and we continue to build on this via new technology partnerships,
adding value to our existing customer base and facilitating smoother sales
processes and additional referrals. New technology partners include
Bloomreach, Braze, Odicci, Zonal, Purple, Urban Airship and Ecrebo. These
represent best-in-breed solutions that are sought after by our clients.
Google
We continue to work closely with Google and have been awarded Premier Partner
status for Google Cloud, assigned to companies that have demonstrated the
highest capability and performance with Google Cloud. This comes less than two
years since we launched on the Google Cloud Marketplace, demonstrating the
scalability of the AIR platform. We were also proud to become a certified
member of the MACH Alliance in the Period, a key endorsement of the quality of
the Company's technology offering.
3. Increasing our US focus
The US is the largest loyalty market in the world, where the average loyalty
contract is considerably larger than in other regions, due the size of
organisations. We have had a good level of success in the US and Canada to
date and half of our ARR is now derived from the region. However, this only
represents 2% penetration with retailers generating over $1 billion of
revenue. Small steps forward in this region can make a transformational
difference and therefore it is a focus area for us.
We believe that an increased senior presence will increase our opportunity and
our growth. We are therefore delighted to have appointed, post period end,
Jeff Baskin as Chief Revenue Officer, who will spearhead our global sales
efforts, with a focus on the US. Jeff brings extensive experience in
transitioning companies through multiple growth stages, building partnerships
and driving revenue generation. He has previously held senior roles at
multiple SaaS companies in the US, including Upshop, Radius Networks and
Simplexity, selling into some of the world's largest retailers and grocers.
Jeff also has deep industry knowledge and is the founder and COO of a
consultancy advising grocers on omnichannel commerce and loyalty.
As we see evidence of success, we will invest further to take advantage of the
opportunity.
4. Productisation and Innovation
Productisation
To fuel greater growth through alliances, we're making our technology easier
to scale and sell by packaging our offerings and streamlining documentation
and support materials for maximum impact.
This is now accelerating in conjunction with the major enterprise software
vendor as part of the OEM agreement. This includes creating a suite of APIs to
enable AIR's integration into third party platforms, as well as initiatives to
enable the platform to scale further to ensure we are prepared for the growth
in transactional volumes expected from OEM partnerships.
Alongside this work, we have created a number of packaged integrations to the
key strategic technology partners named above across the retail technology
stack to remove barriers to sale and get customers up and running faster. In
addition, we have also invested in building Eagle Eye Connect, our new
Integration Platform, which will accelerate this strategy by providing a
framework to build Marketing Automation and CDP connectors quickly and easily
to decrease time to value for our customers. Eagle Eye Connect also simplifies
and reduces the cost of integrating to the AIR platform for new partners who
are looking to become part of our ecosystem.
In order to speed up customer onboarding, we are automating key onboarding
tasks and creating baseline configurations to move closer to "one-click"
provisioning. We are also streamlining the role and permissions contained
within the AIR dashboard, aligned to product packages, which will also
highlight deepen opportunities for modules the customers have not yet
purchased.
Training and documentation are also being enhanced, adding 'self-serve'
training videos to allow customers to self-educate and introduce them to new
features and use cases to increase transactions, simplifying our documentation
and creating best-practice guides to allow customers to integrate solutions
into their tech stack more easily.
Together, these initiatives provide the foundation for increased scalability
as a true SaaS business.
Innovation
We were delighted to be ranked as the 3rd most innovative marketing technology
company in the world in the TMW 100 awards, reflecting our commitment to
innovation.
Our current focus for product innovation is within EagleAI, as we seek to
capitalise on the growing interest in AI-powered personalisation execution. We
are partnering with E.Leclerc on a Personalised Flyer, with the pilot now live
and a full rollout set for later in 2025. This collaboration enhances our
presence in the French and US markets, where digital flyers are already well
established. We are also continuing with the development of EagleAI's
portfolio, including applications that develop audience building, personalised
prices and personalised content.
The right team in place to achieve our ambitions
Our people remain our greatest asset, and we continue to invest in their
growth and engagement as we ready for the next stage of our journey. This
commitment has once again been recognised in various awards, achieving
continued high rankings in the Best Companies to Work for, placing 6th in the
UK's Best Mid-sized Company to Work For and 7th in the technology category.
In H1 2025, we successfully launched the Purple Playbook-a nine-module soft
skills training program-building on our well-established Life Skills
initiatives focused on resilience, teamwork, communication, time management
and personal development. We also strengthened our employee feedback loop with
quarterly SLT review sessions, which have already led to meaningful
improvements, including an enhanced US benefits package and better alignment
of our product offerings. Additionally, we launched the EDI Alliance, bringing
together all ERGs with a shared focus on charitable impact. As we move through
this period of transformation, we remain committed to building on the strong
foundations we've put in place, ensuring that our people feel supported and
empowered to drive our mission forward.
Confident outlook
We have commenced the second half of the year with renewed momentum, energised
by the new OEM partnership, as well as new Wins, renewals and Deepening with
customers early in H2.
The global OEM partnership represents a transformative opportunity for Eagle
Eye, providing a clear path for substantial revenue acceleration from FY27
onwards, and reinforcing our confidence in achieving our 3-5 year goal of
£100m in revenue, with an adjusted EBITDA margin of 30%. Accelerating our Win
rate remains a key focus and we are pleased to see the building momentum
already in the second half of the year. We have added major retailers to our
client base and are confident in achieving results for the year ending 30 June
2025 in line with current market expectations.
With growing SaaS revenue, strengthening margins, proven world-class
technology and global reach through powerful partners, the outlook for Eagle
Eye is positive.
Financial Review
Key performance indicators H1 2025 H1 2024
Financial £m £m
Revenue 24.2 24.1
Recurring revenue
AIR recurring revenue 16.6 69% 15.5 65%
EagleAI recurring revenue 2.9 12% 2.1 9%
SMS recurring revenue 0.3 1% 1.2 4%
Total recurring revenue 19.8 82% 18.8 78%
Direct profit(1) 16.9 16.2
Direct profit(1) margin 70% 67%
Adjusted EBITDA(2) 5.9 5.9
Adjusted EBITDA(2) margin 24.4% 24.4%
Adjusted EBITA(3) 3.0 2.7
Adjusted EBITA(3) margin 12.2% 11.0%
Profit/(loss) before tax 1.6 (0.4)
Adjusted net cash(4) 11.7 7.8
Cash and cash equivalents 11.8 9.0
Short term borrowings (0.1) (1.2)
Non-financial
Chargeable AIR redemption and interaction volumes 3.2bn 2.6bn
Long term contract customer churn by value 0.1% 1.2%
(1) Direct margin excludes indirect operating expenses, share-based payment
charges, depreciation, amortisation, interest and tax from the measure of
profit
(2) Adjusted EBITDA excludes share-based payment charges along with
depreciation, amortisation, interest and tax from the measure of profit
(3) Adjusted EBITA excludes share-based payment charges along with
depreciation, amortisation on intangible assets recognised under IFRS 3 on the
acquisition of EagleAI, interest and tax from the measure of profit
(4) Adjusted net cash is cash and cash equivalents less borrowings
Revenue and Gross Profit
During the Period, Group revenue was steady at £24.2m (H1 2024: £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.
Recurring revenue now represents 82% of total Group revenue, up from 78% in
the prior period, reflecting the Group's focus on building stable and
predictable revenue streams.
The 10% growth in SaaS revenue was driven by AIR recurring revenue, which
increased across all regions to £16.6m, representing 69% of total revenue (H1
2024: £15.5m, 65%). EagleAI recurring revenue saw significant growth,
increasing 36% to £2.9m, and now accounting for 12% of total revenue (H1
2024: £2.1m, 9%). As expected and aligned with the Group's strategic shift
away from lower-margin services, SMS revenue decreased to £0.3m, now making
up just 1% of total revenue (H1 2024: £1.2m, 4%).
The Group's Annual Recurring Revenue ("ARR"), which is our period exit rate
for recurring subscription and transaction revenue (excluding SMS) plus any
professional services contracted for more than 12 months hence and secured new
wins, excluding any seasonal variations and lost contracts, increased by 16%
to £41.0m (H1 2024: £35.4m). The growth rate is ahead of recurring revenue
growth of 5% due to the deflationary effect of the SMS business on recurring
revenue and the timing of new client wins and deepening of existing
opportunities going live, in particular with Leclerc and a leading retailer in
the UK. £1.6m of period-end ARR relates to new client wins not yet live at 31
December 2024 (H1 2024: £1.1m).
Under IFRS 15, a SaaS business will typically recognise revenue (including
implementation revenue from professional services) over time. In some cases,
implementation revenue is recognised over the period the service is live.
Therefore, during the period of implementation for a new client, no revenue
will be recognised, although directly attributable associated costs are also
spread over this period, matching revenue and costs. Revenue from professional
services that has been deferred into future periods, but delivered and billed,
was £5.4m at 31 December 2024 (31 December 2023: £6.0m).
The Group has continued to successfully deepen its relationships with existing
clients, resulting in a Net Revenue Retention ("NRR") rate of 104% (H1 2024:
120%). This positive rate was supported by the Group deepening its engagement
with Pret a Manger, JD Sports, E.Leclerc and Morrisons and contract renewals
for Loblaw, Neptune and E.Leclerc. The successful renewal of these key clients
ensures that long-term contract customer churn by value remains low at 0.1%
(H1 2024: 1.2%). This reflects the scale and breadth of our offering in
meeting our customers' needs.
Gross profit grew by 3% to £23.8m (H1 2024: £23.1m), with the gross margin
remaining high at 99%. Cost 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.
Direct profit
Direct profit grew by 4% to £16.9m (H1 2024: £16.2m) at an improved margin
of 70% (H1 2024: 67%). Direct profit is used as a performance measure by the
business as it more accurately reflects the margin directly generated by
revenue recognised in the year. In addition to cost of sales as defined above,
this measure also includes the cost of the AIR and EagleAI platforms
(including associated software licences) and staff costs for employees
dedicated to the successful implementation and ongoing running of client
services. Our ambition is to see this margin continue to increase as the
platform is made more efficient as transaction volumes continue to increase.
Excluding the impact of professional services and the low margin SMS business,
the direct profit from the AIR and EagleAI SaaS business increased 13% to
£14.3m (H1 2024: £12.7m).
Adjusted Operating Expenses and EBITDA
Adjusted operating expenses increased to £17.9m (H1 2024: £17.3m),
contributing to a stable adjusted EBITDA of £5.9m (H1 2024: £5.9m). The
adjusted EBITDA margin remained strong at 24.4% (H1 2024: 24.4%). To provide a
better guide to the underlying business performance, adjusted EBITDA excludes
share-based payment charges along with depreciation, amortisation, interest
and tax from the measure of profit.
The GAAP measure of operating profit before interest and tax was £1.6m (H1
2024: loss of £(0.3)m), the increase primarily reflecting a lower share-based
payment charge of £0.3m (H1 2024: £1.8m) primarily due to the reduction in
expectations for FY25 performance.
Net staff costs, which represent 57% of adjusted operating costs (H1 2024:
61%) decreased to £10.2m (H1 2024: £10.6m), reflecting the impact of lower
performance related bonuses and commissions. The increase in IT infrastructure
costs was broadly in line with the increase in total recurring revenue, as
expected, up 11% to £5.1m (H1 2024: £4.6m). Other operating costs, which are
either discretionary or are not correlated to changes in revenue, increased to
£2.7m (H1 2024: £2.2m), primarily reflecting adverse movements in foreign
exchange rates. Although we hedge 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, this does not prevent
some exposure in the income statement. There were no open hedges at 31
December 2024 (30 June 2024: none).
We have continued to invest in the Product, where total spend in the Period
was £4.4m (H1 2024: £3.8m). Capitalised product development costs were
£1.5m (H1 2024: £1.4m), representing 11% of total staff costs (H1 2024:
10%), whilst amortisation of capitalised development costs was £1.3m (H1
2024: £1.2m). Contract costs (including costs to obtain contracts and
contract fulfilment costs), recognised as assets under IFRS 15, were £1.3m
(H1 2024: £2.1m) and amortisation of contract costs was £1.3m (H1 2024:
£1.7m).
Earnings per Share
The tax credit of £0.1m (H1 2024: charge of £0.1m) primarily reflects the
R&D tax credit receivable in France offset by improved profitable
operations internationally. With improved profitability, the Group reported a
profit after taxation of £1.7m (H1 2024: a loss of £0.4m), resulting in an
adjusted basic earnings per share of 5.62p (H1 2024: loss per share (1.42)p),
a notable improvement indicative of the Group's strengthening financial
health.
Statement of Financial Position
Net assets increased to £35.9m (30 June 2024: £34.1m), driven by the profit
made in the period.
Cash and Net Debt
The Group ended the Period with an enhanced net cash position of £11.7m (30
June 2024: £10.4m), underpinning its robust balance sheet. The business moved
to a cash inflow for the Period of £1.4m (H1 2024: outflow of £0.9m
excluding deferred consideration paid in association with the acquisition of
EagleAI) reflecting improved working capital management and the timing of the
French R&D tax credit. This reflects a twelve-month free cash flow
conversion rate from adjusted EBITA of 70% (H1 2024: 50%). We expect to
continue to be cash generative in H2 25 and beyond.
The Company agreed a new and increased three-year £10m revolving credit
facility with HSBC Innovation Bank, which replaces the Company's previous £5m
revolving loan facility with HSBC. The new facility includes an additional
£10m accordion, subject to credit approval at the time, should there be an
appropriate investment opportunity. The new facility can also be extended for
an additional year and provides the business with improved security and
flexibility over its financing options across the medium term as the Company
executes on its growth strategy, which is the priority for the Board. The
facility is not currently drawn down and the Board does not expect any
requirement to use the facility for normal operations.
The Group's strong financial position provides it with the basis for continued
investment in growth. The Company continues to prioritise allocating capital
to its strategic growth initiatives, which it considers generate the highest
long-term shareholder returns. Whilst so, the Board reviews the Group's
capital allocation priorities, including M&A, in the context of its cash
resources and facilities on an on-going basis to ensure that shareholder
returns are optimised.
Consolidated unaudited interim statement of total comprehensive income for the
six months ended 31 December 2024
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 December 31 December 30 June
2024 2023 2024
Note £000 £000 £000
Continuing operations
Revenue 3 24,156 24,068 47,733
Cost of sales (350) (974) (1,283)
Gross profit 23,806 23,094 46,450
Operating expenses (22,293) (23,491) (45,814)
Other income 69 111 195
5 5,886 5,861 11,260
Adjusted EBITDA ((1) )
Change in fair value of contingent consideration - - 1,303
Share-based payment charge (268) (1,838) (2,835)
Depreciation and amortisation (4,036) (4,309) (8,897)
Operating profit/(loss) 1,582 (286) 831
Finance income 26 19 41
Finance expense (43) (88) (153)
Profit/(loss) before taxation 1,565 (355) 719
Taxation 99 (61) 5,015
Profit/(loss) after taxation for the financial period 1,664 (416) 5,734
Foreign exchange adjustments (97) (344) (333)
1,567 (760) 5,401
Total comprehensive profit /((loss) attributable to the owners of the parent
for the financial period
Earnings per share
From continuing operations
Basic 4 5.62p (1.42)p 19.47p
Diluted 4 5.04p (1.42)p 17.36p
((1)) Adjusted EBITDA excludes share-based payment charge, depreciation,
amortisation from the measure of profit
Consolidated unaudited interim statement of financial position as at 31
December 2024
Unaudited Unaudited Audited
31 December 31 December 30 June
2024 2023 2024
£000 £000 £000
Non-current assets
Intangible assets 16,818 18,816 17,804
Contract fulfilment costs 2,640 2,646 2,610
Property, plant and equipment 1,127 1,339 1,175
Deferred taxation 8,455 1,666 8,455
29,040 24,467 30,044
Current assets
Trade and other receivables 11,369 10,044 10,349
Current tax receivable 224 816 183
Cash and cash equivalents 11,855 9,003 10,576
23,448 19,863 21,108
Total assets 52,488 44,330 51,152
Current liabilities
Trade and other payables (10,537) (9,934) (10,583)
IFRS 15 deferred income (2,157) (3,734) (3,002)
Current tax payable (243) (40) -
Financial liabilities (87) (1,125) (122)
(13,024) (14,833) (13,707)
Non-current liabilities
IFRS 15 deferred income (3,235) (2,256) (2,927)
Other payables (316) (1,999) (412)
Financial liabilities (22) (114) (50)
(3,573) (4,369) (3,389)
(16,597) (19,202) (17,096)
Total liabilities
Net assets 35,891 25,128 34,056
Equity attributable to owners of the parent
Share capital 296 294 296
Share premium 30,089 29,934 30,089
Merger reserve 3,278 3,278 3,278
Share option reserve 9,352 8,697 9,084
Retained losses (7,124) (17,075) (8,691)
Total equity 35,891 25,128 34,056
Consolidated unaudited interim statement of changes in equity for the six
months ended 31 December 2024
Share capital Share premium Merger reserve Share option reserve Retained Total
losses
£000 £000 £000 £000 £000 £000
293 29,925 3,278 7,291 (16,747) 24,040
Balance at 1 July 2023
Loss for the period - - - - (416) (416)
- - - - (344) (344)
Other comprehensive income
Foreign exchange adjustments
- - - - (760) (760)
Transactions with owners
Exercise of share options 1 9 - - - 10
Fair value of share options exercised in the period - - - (432) 432 -
Share-based payment charge - - - 1,838 - 1,838
1 9 - 1,406 432 1,848
Balance at 31 December 2023 294 29,934 3,278 8,697 (17,075) 25,128
- - - - 6,150 6,150
Profit for the period
Other comprehensive income - - - - 11 11
Foreign exchange adjustments
- - - - 6,161 6,161
Transactions with owners
Exercise of share options 2 155 - - - 157
Fair value of share options exercised - - - (610) 610 -
Share-based payment charge - - - 997 - 997
Deferred tax on share-based payments - - - - 1,549 1,549
Deferred tax on losses - - - - 64 64
2 155 - 387 2,223 2,767
Balance at 30 June 2024 296 30,089 3,278 9,084 (8,691) 34,056
Profit for the period - - - - 1,664 1,664
- - - - (97) (97)
Other comprehensive income
Foreign exchange adjustments
- - - - 1,567 1,567
Transactions with owners
Share-based payment charge - - - 268 - 268
- - - 268 - 268
Balance at 31 December 2024 296 30,089 3,278 9,352 (7,124) 35,891
Included in "retained losses" is a cumulative foreign exchange loss of
£327,000 (June 2024: loss of £230,000).
Consolidated unaudited interim statement of cash flow for the six months ended
31 December 2024
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 December 31 December 30 June
2024 2023 2024
£000 £000 £000
Cash flows from operating activities
Profit/(loss) before taxation 1,565 (355) 719
Adjustments for:
Depreciation 348 336 718
Amortisation 3,688 3,974 8,180
Share-based payment charge 268 1,838 2,835
Finance income (26) (19) (41)
Finance expense 43 88 153
(Increase)/decrease in trade and other receivables (1,061) 814 544
Decrease in trade and other payables (377) (3,173) (2,019)
Movement on contingent consideration for acquisition of EagleAI - - (1,303)
Income tax paid (153) (189) (313)
Income tax received 455 - 10
Net cash flows from operating activities 4,750 3,314 9,483
Cash flows from investing activities
Payments to acquire property, plant and equipment (300) (128) (346)
Payments to acquire intangible assets (2,814) (3,467) (6,711)
Acquisition of Untie Nots, net of cash and cash equivalents acquired - (654) (654)
(3,114) (4,249) (7,711)
Net cash flows used in investing activities
Cash flows from financing activities
Net proceeds from issue of equity - 10 167
Repayment of borrowings (60) (60) (1,123)
Capital payments in respect of leases (261) (262) (545)
Interest paid in respect of leases (28) (44) (80)
Interest received 26 19 41
Interest paid (15) (44) (73)
(338) (381) (1,613)
Net cash flows used in financing activities
1,298 (1,316) 159
Net increase/(decrease) in cash and cash equivalents in the period
Foreign exchange adjustments (19) (296) (198)
Cash and cash equivalents at beginning of period 10,576 10,615 10,615
11,855 9,003 10,576
Cash and cash equivalents at end of period
Notes to the consolidated unaudited interim financial statements
1. Basis of preparation
The Group's half-yearly financial information, which is unaudited,
consolidates the results of Eagle Eye Solutions Group plc and its subsidiary
undertakings up to 31 December 2024. The Group's accounting reference date is
30 June. Eagle Eye Solutions Group plc's shares are listed on AIM, the market
of that name operated by the London Stock Exchange.
The Company is a public limited liability company incorporated and domiciled
in England & Wales. The presentational and functional currency of the
Group is Sterling. Results in this consolidated financial information have
been prepared to the nearest £1,000.
Eagle Eye Solutions Group plc and its subsidiary undertakings have not applied
IAS 34, Interim Financial Reporting, which is not mandatory for UK AIM listed
groups, in the preparation of this half-yearly financial report.
The accounting policies used in the preparation of the financial information
for the six months ended 31 December 2024 are in accordance with the
recognition and measurement criteria of UK-adopted International Accounting
Standards ('IFRS') and are consistent with those which will be adopted in the
annual financial statements for the year ending 30 June 2025.
The profit before interest, tax, depreciation, amortisation and share-based
payment charge and other adjusted performance measures are presented in the
statement of total comprehensive income as the Directors consider these
performance measures provide a more accurate indication of the underlying
performance of the Group and are commonly used by City analysts and investors.
While the financial information included has been prepared in accordance with
the recognition and measurement criteria of IFRS these interim financial
statements do not contain sufficient information to comply with IFRS.
The comparative financial information for the year ended 30 June 2024 has been
extracted from the annual financial statements of Eagle Eye Solutions Group
plc. These interim results for the period ended 31 December 2024, which are
not audited, do not comprise statutory accounts within the meaning of section
434 of the Companies Act 2006. The financial information does not therefore
include all of the information and disclosures required in the annual
financial statements.
Full audited accounts of the Group in respect of the year ended 30 June 2024,
which received an unqualified audit opinion and did not contain a statement
under section 498(2) or (3) of the Companies Act 2006, have been delivered to
the Registrar of Companies.
2. Going concern basis
As part of their going concern review the Directors have followed the
guidelines published by the Financial Reporting Council entitled "Guidance on
Risk Management and Internal Control and Related Financial and Business
Reporting''. The Directors have prepared detailed financial forecasts and cash
flows looking beyond 12 months from the date of this half-yearly financial
information. 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 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, 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 this half-yearly financial information.
3. Segmental analysis
The Group is organised into two principal operating divisions for management
purposes. Revenue is analysed as follows:
Unaudited Unaudited Unaudited
6 months to 6 months to Year to
31 December 31 December 30 June
2024 2023 2024
£000 £000 £000
Development and set up fees 4,379 5,240 10,249
Subscription and transaction fees 19,777 18,828 37,484
24,156 24,068 47,733
Unaudited Unaudited Unaudited
6 months to 6 months to Year to
31 December 31 December 30 June
2024 2023 2024
£000 £000 £000
AIR revenue 21,018 20,803 41,911
EagleAI revenue 2,878 2,109 4,424
Messaging revenue 260 1,156 1,398
24,156 24,068 47,733
The majority of the Group's revenue comes from services which are transferred
over time.
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 period. The calculation of diluted
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 period, diluted for the effect of options being converted to
ordinary shares. Basic and diluted earnings per share from continuing
operations are calculated as follows:
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
H1 2025 H1 2025 H1 2025 H1 2024 H1 2024 H1 2024
Earnings Profit Weighted average number of ordinary shares Earnings (Loss) Weighted average number of ordinary shares
per share £000 per share £000
pence pence
Basic earnings/(loss) per share 5.62 1,664 29,613,336 (1.42) (416) 29,281,665
Diluted earnings/(loss) per share 5.04 1,664 33,003,765 (1.42) (416) 32,792,651
5. Alternative performance
measures
Adjusted EBITDA and adjusted EBITA are key performance measures for the Group
and are derived as follows:
Unaudited Unaudited Unaudited Year to
6 months to 6 months to 31 December 30 June
31 December 2023 2024
2024
£000 £000 £000
Profit/(loss) before taxation 1,565 (355) 719
Add back:
Finance income and expense 17 69 112
Share-based payments 268 1,838 2,835
Amortisation of intangible assets recognised under IFRS 3 on the acquisition 1,106 1,106 2,212
of EagleAI
Change in fair value of contingent consideration - - (1,303)
Adjusted EBITA
2,956 2,658 4,575
348 336 718
Depreciation
Amortisation of capitalised development costs and IFRS 15 contract costs 2,582 2,867 5,967
5,886 11,260
Adjusted EBITDA 5,861
EBITA has been adjusted to exclude share-based payment charges along with
IFRS3 amortisation arising on acquisitions, interest and tax from the measure
of profit. EBITDA has been adjusted to exclude share-based payment charges
along with depreciation, amortisation, interest and tax from the measure of
profit.
Direct profit is a key performance measure which is more comparable to the
gross profit measure of other SaaS companies and is derived as follows:
Unaudited Unaudited Unaudited Year to
6 months to 6 months to 31 December 30 June
31 December 2023 2024
2024
£000 £000 £000
Profit/(loss) before taxation 1,565 (355) 719
Add back:
Finance income and expense 17 69 112
Share-based payments 268 1,838 2,835
Depreciation and amortisation 4,036 4,309 8,897
Change in fair value of contingent consideration - - (1,303)
Other income (69) (111) (195)
Indirect operating expenses 11,041 10,424 23,785
16,858 34,850
Direct profit 16,174
6. Adjusted net cash
30 June 2024 Cash flow Foreign exchange adjustments 31 December 2024
£000 £000 £000 £000
Cash and cash equivalents 10,576 1,301 (22) 11,855
Financial liabilities (172) 60 3 (109)
1,361 (19)
Adjusted net cash 10,404 11,746
7. Availability of this Interim Announcement
Copies of this announcement are available on the Company's website,
www.eagleeye.com (http://www.eagleeye.com) .
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