TIDMEYE
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 GBP43.1m GBP31.7m +36% (29% organic)
Recurring revenue ( subscription
fees and transactions) 80% 76% +4ppts
Annual Recurring Revenue(1) (ARR) GBP33.3m GBP23.9m +40%
Net Revenue Retention(2) 137% 145% -8ppts
Adjusted EBITDA(3) GBP8.8m GBP6.5m +36%
EBITDA margin 20.4% 20.5% -0.1ppts
Profit after tax GBP1.2m GBP0.6m +114%
Closing net cash(4) position GBP9.3m GBP3.6m +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 GBP33.3m 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 GBP9.3m
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 Tel: 0844 824 3686
Officer
Investec (Nominated Advisor and Joint Tel: 020 7597 5970
Broker)
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 GBP43.1m (FY22: GBP31.7m) and
underlying organic revenue growth of 29%, excluding the
contribution from Untie Nots. Adjusted EBITDA (3) increased by 36%
to GBP8.8m (FY22: GBP6.5m) and profit after taxation increased by
114% to GBP1.2m (FY22: GBP0.6m). This growing level of profits has
driven strong cash generation and the Group closed the year with a
net cash(4) position of GBP9.3m at 30 June 2023 (30 June 2022:
GBP3.6m), 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 GBP33m at 30 June 2023 (2022: GBP23.9m).
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 GBP43.1m and an increase in
adjusted EBITDA (3) of 36% to GBP8.8m. Th is 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 GBP33.3m, 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]
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.
G rowth 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] , 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 GBP100m
had already been earned into cashpots during the first half of the
year [3] .
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 GBP30. 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
GBPm GBPm Var
Revenue 43.1 31.7 36%
Subscription and transaction
revenue:
* AIR Licence revenue GBP14.1m 32% GBP12.2m 39% 16%
* AIR transaction revenue GBP15.7m 37% GBP9.7m 30% 63%
GBP2.2m 5% - - -
* Untie Nots Licence & transaction revenue
* SMS transaction revenue GBP2.4m 6% GBP2.1m 7% 12%
--------- ---- ------------------------ ---------- --------
Total subscription and
transaction revenue GBP34.5m 80% GBP24.0m 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
GBP33.3m (FY22: GBP23.9m). 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 GBP15.7m (FY22: GBP9.7m).
Professional services revenue increased by 12% to GBP8.6m (FY22:
GBP7.6m). 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 GBP5.8m at 30 June
2023 (30 June 2022: GBP3.0m).
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 GBP2.4m
(FY22: GBP2.2m). 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 GBP41.0m (FY22: GBP29.6m), 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 GBP32.2m (FY22: GBP28.9m) as the business has
invested in line with our planned growth investment model. These
operating expenses, which exclude costs of GBP1.3m 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 GBP26.1m (FY22: GBP18.8m)
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 GBP6.9m (FY22:
GBP5.2m) and sales and marketing spend was GBP4.8m (FY22:
GBP3.7m).
IT Infrastructure costs grew at a slower rate than recurring
revenue growth by 23% to GBP8.1m; representing 23% of recurring
revenue (FY22: GBP6.5m; 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 GBP2.6m (FY22: GBP2.2m), whilst
amortisation of capitalised development costs was GBP2.5m (FY22:
GBP2.3m). Contract costs (including costs to obtain contracts and
contract fulfilment costs), recognised as assets under IFRS 15,
increased to GBP2.8m (FY22: GBP2.7m), reflecting the high level of
new wins during the Year, and amortisation of contract costs was
GBP1.7m (FY22: GBP1.3m).
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 GBP8.8m (FY22: GBP6.5m) 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 GBP(0.6)m (FY22: profit
of GBP0.7m) reflecting the increased amortisation as a result of
intangibles recognised under IFRS 3 on the acquisition of Untie
Nots of GBP1.3m and the increased non-cash share-based payment
charge of GBP2.4m (FY22: GBP1.9m), 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 GBP(0.8)m (FY22: profit of
GBP0.7m), reflecting the reduction in operating loss before
interest and tax. Net finance expense increased to GBP0.14m (FY22:
GBP0.05m) 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 GBP1.6m, 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 GBP1.9m in FY23 (FY22: charge of GBP(0.1)m).
As a result, the Group's profit after taxation increased to
GBP1.2m (FY22: GBP0.6m) 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: GBPnil) 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 GBP24.0m at 30 June 2023 (30 June
2022: GBP8.6m), including capitalised intellectual property of
GBP5.3m (30 June 2022: GBP3.5m). 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 GBP8.3m 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 GBP9.0m 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 GBP9.3m (30 June 2022:
GBP3.6m), exceeding the Board's prior expectations. Excluding costs
associated with the acquisition of Untie Nots, the underlying net
cash inflow for the Year was GBP7.0m (FY22: GBP2.8m). Overall net
cash inflow for the Year was GBP5.7m.
The main components to the net cash inflow were:
-- the operating cash inflow of GBP12.3m (FY22: GBP7.4m),
reflecting the EBITDA profit (unadjusted for the acquisition of
Untie Nots) of GBP7.5m (FY22: GBP6.5m), a working capital inflow of
GBP3.9m (FY22: GBP1.5m outflow) and net tax receipts of GBP0.9m
(FY22: net payments of GBP0.6m). The GBP2.4m 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
GBP7.1m;
-- offset by capital investment in the AIR platform and other
infrastructure of GBP2.6m (FY22: GBP2.4m), as well as contract
costs capitalised under IFRS 15 of GBP2.8m (FY22: GBP2.7m);
-- payments in respect of leases of GBP0.2m (FY21: GBP0.1m); and
-- GBP6.3m 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 GBP5.0m revolving loan facility
with HSBC Innovation, with an additional GBP2.5m 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 GBP10.6m (FY22: GBP3.6m) and the GBP4.0m undrawn portion of
its GBP5.0m facility (FY22: GBP5.0m undrawn), less GBP0.3m debt of
Untie Nots, gives the Group GBP14.3m 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
2023 2022
Note GBP000 GBP000
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 -
Adjusted EBITDA (1) 5 8,789 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)
----------------------------------- ----- --- ------------------- ------------------
Profit after taxation for
the financial year 1,188 554
Foreign exchange adjustments (410) 582
----------------------------------- ----- --- ------------------- ------------------
Total comprehensive profit/(loss)
attributable to the owners
of the parent for the financial
year 778 1,136
----------------------------------- ----- --- ------------------- ------------------
(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
GBP000 GBP000
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
Trade and other payables (17,338) (12,185)
Current tax payable (74) -
Financial liabilities (1,102) -
(18,514) (12,185)
Non-current liabilities
Other payables (4,801) (2,362)
Financial liabilities (197) -
---------------------------------------- ----------- -----------
(4,998) (2,362)
Total liabilities (23,512) (14,547)
---------------------------------------- ----------- -----------
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
Share Share Merger option Retained
capital premium reserve reserve losses Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
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
----------------------- --------- ------------- ----------- ----------- --------- ----------
Balance at
30 June 2022 264 17,685 3,278 5,549 (18,209) 8,567
----------------------- --------- ------------- ----------- ----------- --------- ----------
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
----------------------- --------- ------------- ----------- ----------- --------- ----------
Balance at
30 June 2023 293 29,925 3,278 7,291 (16,747) 24,040
----------------------- --------- ------------- ----------- ----------- --------- ----------
Consolidated statement of cash flows
for the year ended 30 June 2023
2023 2022
GBP000 GBP000
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
Net cash flows from operating activities 12,242 7,407
------------------------------------------------ --------- --------
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) -
Net cash flows used in investing activities (11,962) (5,121)
------------------------------------------------ --------- --------
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)
Net cash flows from/(used
in) financing activities 7,113 (949)
--------- --------
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
------------------------------------------------ --------- --------
Cash and cash equivalents
at end of year 10,615 3,632
------------------------------------------------ --------- --------
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
Organic Untie Total & Total
2023 Nots 2023 2022
2023
GBP000 GBP000 GBP000 GBP000
Revenue 40,862 2,212 43,074 31,667
Cost of sales (2,091) - (2,091) (2,037)
-------------------------- ---------- -------- --------- ---------
Gross profit 38,771 2,212 40,983 29,630
Adjusted operating costs (30,060) (2,134) (32,194) (23,154)
-------------------------- ---------- -------- --------- ---------
Adjusted EBITDA 8,711 78 8,789 6,476
-------------------------- ---------- -------- --------- ---------
Revenue is analysed as follows:
Service 2023 2022
GBP000 GBP000
Development and set up fees 8,563 7,645
Subscription and transaction
fees 34,511 24,022
43,074 31,667
------------------------------ ------- -------
Product 2023 2022
GBP000 GBP000
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:
2023 2022
Earnings Weighted Earnings Weighted
per average number per average number
share Profit of ordinary share Profit of ordinary
pence GBP000 shares pence GBP000 shares
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
GBP000 GBP000
(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 Foreign exchange 30 June
2022 Cash flow adjustments Acquisition 2023
GBP000 GBP000 GBP000 GBP000 GBP000
Cash and cash equivalents 3,632 5,376 (561) 2,168 10,615
Financial liabilities - (372) - (927) (1,299)
Net cash 3,632 5,004 (561) 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 EUR9.1m and EUR5.9m worth of newly issued shares
in Eagle Eye Group plc. Further consideration of EUR0.7m 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.
Provisional
fair value Provisional
Book value adjustment fair value
GBP000 GBP000 GBP000
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
------------------------------------ ----------- ------------ ------------
Fair value of consideration 15,767
------------------------------------ ----------- ------------ ------------
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
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September 19, 2023 02:00 ET (06:00 GMT)
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