Eagle Eye Regulatory News (EYE)

22 September 2021

Eagle Eye Solutions Group plc

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

Final Results for the year ended 30 June 2021

Growing profitability following record win performance, exiting the year with momentum

Eagle Eye, a leading SaaS technology company that creates digital connections enabling personalised, real-time marketing through coupons, loyalty, apps, subscriptions and gift services, is pleased to announce its results for the financial year ended 30 June 2021 (the "Year").

Financial Highlights

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

Operational Highlights

Post Period End Highlights

Outlook

Tim Mason, Chief Executive of Eagle Eye, said: "The pandemic has accelerated the digital engagement strategies of retailers around the world. We have seen personalised marketing coming to the fore which plays to our strengths. Our proven capabilities in enterprise retail, food and beverage and new sectors won in the year combined with our increased international presence positions us well to capture a growing proportion of this expanding market. We will continue to invest in our people and offering, in line with revenue growth, to ensure that we remain at the forefront of this growing industry.

"Our people are key to the success of Eagle Eye and with the challenges presented through this year, their support and cooperation has been paramount. They have continued to successfully deliver value for our clients, and I would like to put on record my thanks and gratitude to each and every one of them.

"Following record new client wins during FY21, Eagle Eye has entered FY22 with a considerably expanded underlying business and positive trajectory. In addition to securing new enterprise customers across multiple geographies, we have increased our engagement with existing customers and expanded the AIR platform, while carefully managing our cost base and cash resources, delivering a maiden full year profit before tax. We have entered the new financial year with a record pipeline and look to the future with confidence."

About Eagle Eye

Eagle Eye is a leading SaaS technology company transforming marketing by creating digital connections that enable personalised performance marketing in real time through coupons, loyalty, apps, subscriptions and gift services.

Eagle Eye AIR enables the secure issuance and redemption of digital offers and rewards at scale, across multiple channels, enabling a single customer view. We create a network between merchants, brands and audiences to enable customer acquisition, interaction and retention at lower cost whilst driving marketing innovation.

The Company's current customer base comprises leading names in UK Grocery, Retail, Leisure and Food & Beverage sectors, including Asda, Sainsbury's, Tesco, Waitrose and John Lewis & Partners, Virgin Red, JD Sports, Pret A Manger, Greggs, Mitchells & Butlers, Pizza Express; in North America, Loblaws, Shoppers Drug Mart, Southeastern Grocers and Staples US Retail and in Australia & New Zealand, Woolworths Group and The Warehouse Group.

Chairman's Statement

I am pleased to be in a position to update shareholders on a year of achievement and growth at Eagle Eye, against what has been a challenging backdrop for all. With the lockdown measures introduced to tackle the COVID-19 pandemic impacting approximately 10% of Group revenues at the time and elongating sales cycles, it would be natural to expect the business to hunker down and enter protection mode to ride out the storm. However, that is not the Eagle Eye way.

What I have seen in the Eagle Eye team has been an enhanced sense of passion and purpose to support enterprises through these difficult times, helping them to connect with their customers in new and exciting ways. This passion has seen the business continue to add innovative new functionality to the Eagle Eye AIR platform, increasing the attractiveness of the platform and as a result, winning new customers around the world. New customers secured in the Year included the pioneering Pret A Manger coffee subscription service, the winning of a five-year contract with Woolworths Group, the largest retailer in Australia, and securing Staples US Retail, the Group's second US customer. It is particularly encouraging to note that the Woolworths programme has gone live in August 2021, following the end of the year, just ten months since contract signing, representing a remarkable achievement by the joint team.

As a result of these wins, our key contracts moving into the next stage of their lifecycle and the relaxation of COVID-19 restrictions, the Group enjoyed a strong close to the year, delivering 27% growth in Q4 FY21 revenues as compared with Q4 FY20, and importantly entered the new financial year with positive momentum.

Financial Results

Overall, the benefits of the Group's high quality SaaS business model can be seen in the robust financial performance in the Year. The Group's high levels of recurring revenue (approx. 74% of revenues), low customer churn and increased win rate meant Eagle Eye delivered double digit revenue growth of 12% to £22.8m (FY20: £20.4m). Careful management of the cost base, in line with the Group's revenue profile, alongside continued investment in the product and sales and marketing, resulted in an increase in adjusted EBITDA for the Year of 29% to £4.2m (FY20: £3.3m), and an increased adjusted EBITDA margin of 18% (FY20: 16%), ahead of market expectations. The Group is pleased to report a maiden full year profit before tax for FY21 of £0.1m (FY20: loss of £0.3m).

The Group continues to have access to its £5m banking facility which, combined with the Group's net cash, is sufficient to support its existing growth plans. Following the year end, the Group has extended the term of the facility to November 2022.

ESG and Our People and Values

Over the past year, we have seen a rapid acceleration in the importance of Environmental, Social and Governance issues for businesses, consumers and investors with the pandemic highlighting to all the importance of these topics. As a Board, we are committed to high standards of ESG and we are already seeing the early progress made by our initiatives, building on our existing foundation of responsible business practice. We are measuring our progress through KPIs and comparing to the market median to allow focus on areas of improvement.

Eagle Eye is a business which places the success and happiness of its people at its heart. The themes of the Company's recent Annual Company Day, which I was delighted to attend, were value creation by enriching the lives of everyone with whom we come into contact and the introduction of a Purple Women inititiative aimed at supporting women through all aspects of their work/home life. This is a key initiative which we will build upon in FY22 as our business strives to become a role model for women in tech by being an excellent place for women to work.

At this event, and throughout the year, I am continually struck by the culture that the team have created, where its people are supported and rewarded and where the management team constantly strive to make Eagle Eye an exceptional place to work. You can read more about the culture of Eagle Eye in our People section within this report and on behalf ot the Board, I once again thank the Eagle Eye team for their continued commitment during another challenging year for all. They are exceptional.

As a business, we already have a low Environmental footprint and we will continue to identify ways to improve on this. Our offering itself eliminates the use of paper coupons and vouchers. We will maintain our strong corporate governance framework which we have already adopted by following the QCA Code.

Opportunity

Eagle Eye has entered FY22 with a considerably expanded underlying business and positive trajectory. The impact of the pandemic has been to accelerate the digital engagement strategies of retailers around the world and the proven enterprise capabilities of the Eagle Eye AIR platform position the Group well to capture a growing proportion of this expanding market.

With a growing customer base, including some of the world's largest retailers, and a record sales pipeline, the Board looks to the future with increased confidence.

Malcolm Wall, Non-Executive Chairman

CEO's Statement

I am proud of the exceptional performance and high energy our team has maintained this Year; securing fantastic new retail clients around the world and delivering innovative solutions that create value for our customers, while dealing with the challenges of the pandemic. The business has delivered a good financial performance, and importantly, we have exited the year with strong momentum.

The AIR platform sits at the heart of the digital marketing programmes of a growing number of the world's largest retailers. Alongside our long-standing Tier 1 customers in the UK, we can now point to a range of landmark customers internationally, increasing our profile and demonstrating our credentials in an accelerating market, where personalised, digital marketing is coming to the fore.

The success of this Year provides us with a strong position as we enter the new financial year, focused on creating exceptional value for our clients and becoming the most flexible and scalable promotions and loyalty platform in the world.

Market opportunity

In a year in which retailers globally have had to face huge upheaval and change, the shift to digital has continued at pace, with retailers of all kinds developing their omnichannel capabilities to address rapidly changing consumer shopping behaviours.

McKinsey's latest US Consumer Sentiment research shows that 77% of consumers tried new shopping behaviours in the past year, and that they were primarily driven to it by a need for value, convenience, and availability (Source: US consumer sentiment during the coronavirus crisis). Ecommerce sales also continue to grow according to a report by eMarketer which showed worldwide retail ecommerce sales had grown 28% in 2020. (Source: Global Ecommerce Update 2021 - January 2021).

This shift has, in turn, driven an acceleration of retailers' digital engagement strategies. They have been forced to reassess their marketing spend to ensure they have remained competitive and attractive in the face of growing and new competition, retaining the loyalty of existing customers while seeking to win new ones. They are looking for new ways to harness the increased availability of customer data, machine learning and AI to power personalised connections and prosperous long-term relationships.

According to a report by Euromonitor and the National Retail Federation, 72% of retail professionals say COVID-19 has accelerated the company's digital transformation by at least a year (Source: Using Retail Tech Innovation to Enhance the Customer Experience, June 2021).

However, achieving true personalisation is not easy across multiple customer touchpoints as it requires data to be aligned across a retailer's multitude of systems in real time, the analytics to determine the customer message and the transaction capability to deliver personalisation at scale; Eagle Eye enables its clients to address these very issues.

Competitive strength

The proven capabilities of the Eagle Eye AIR platform and the breadth of solutions we are able to offer across loyalty, promotional coupons, apps, subscriptions and gifting; position Eagle Eye well to capture a growing proportion of this expanding digital loyalty and promotions market.

The competitive advantage we offer can be illustrated by the way we solve client pain points. There are vendors in the market that specialise in standalone solutions such as loyalty or gift, but not at the same scale or range of capabilities that our platform offers. Typically, the main competition we face is from retailers who want to try to build a comparable solution to the Eagle Eye AIR platform in-house. However, by choosing to work with Eagle Eye, retailers can focus on building the experiences for their end customers whilst we manage the enabling technology. We help clients deploy faster, manage their costs, control the risk and ensure security and data compliance.

The Eagle Eye platform unlocks the power of omnichannel personalisation, removing any existing channel or technology limitations on the scale at which retailers can deploy personalised communications and offers. We are also able to create multiple ways for retailers to engage with their consumers, from full-scale loyalty initiatives to cashback programmes, digital stamp cards, charity donations and more. This allows retailers to develop their own unique range of promotions and loyalty tactics which work for their business.

Our platform can automate feeds into finance systems to create a single source of truth for supplier funds and also consolidate a retailer's array of legacy systems, centralising all loyalty and promotions set-up and execution onto one platform which then creates a single customer view rather than having data in silos across multiple systems. As a real time platform, Eagle Eye enables retailers to react faster, providing the capability for them to view and respond to customer interactions as they happen.

These capabilities have led Eagle Eye to become one of the most proven and flexible loyalty platforms in the world, powering some of the largest and most sophisticated marketing and loyalty programmes globally.

We are pleased to be gaining recognition from industry analysts, with Eagle Eye referenced in two different sector reports in recent months. In May 2021, we were included in Loyalty360's 2021 Technology Today Report where Eagle Eye was listed as an "all in one supplier" within the grocery, retail and c-store sectors and in August 2021 we were delighted to be included in Forrester's Now Tech: Promotions and Offer Management Providers, Q3 2021 Report where we were included in both the loyalty standalone and loyalty embedded functionality segments within the grocery, retail, and hospitality vendor market focuses. Inclusion in these two reports reinforces the value and commitment Eagle Eye delivers to clients.

Strategic Partnerships and Collaborations 

Eagle Eye AIR has the ability to sit across the entire marketing ecosystem, connecting all the elements required to deliver personalised marketing at scale. As part of our growth strategy, we will continue to create partnerships and collaborations with other businesses in the industry, using their expertise to strengthen our offering and leveraging their marketing reach.

New partnerships in the year include Oracle MICROS Simphony POS System (to deliver YourPret Barista); Outra, a predictive data science business, to help retailers, hospitality operators and branded CPG (Consumer Packaged Goods) to enhance the effectiveness of their promotional marketing investments; and Artificial Intelligence provider Peak to help retailers leverage customer data for loyalty and promotional campaigns. We have continued to build out our own brand capabilities with CPGs by bringing on partners such as Gladcloud, Engage Interactive, X Influence and Voxly who all use our APIs to create consumer facing digital experiences that help brands to engage with consumers and drive transactions. We partnered with Chargebee, initially to help retail and hospitality operators drive customer engagement and recurring revenue through subscription services; we are now engaged on joint sales and marketing initiatives.

During the year, the Liberty omnichannel gift programme was enabled through our integration with Salesforce Commerce Cloud, a powerful ecommerce solution from the world's largest CRM provider which enables Eagle Eye to deploy our solutions quickly to the wider Salesforce customer base. We recently signed our first client in the food services sector, Vermaat in the Netherlands. Vermaat has over 20 STACH coffee shops that are currently using the Eagle Eye app and the integration with our partner Qikserve to enable click and collect for food and beverage orders.

We are continuing to harness relationships to optimise our expansion into the US. Our partnerships and collaborations with Neptune Retail Solutions (previously News America Marketing) the premier marketing services company in the US and Canada, Ecrebo, the receipt marketing technology provider and dunnhumby, a global leader in customer data analytics, all continue to progress well.

We are encouraged by the increasing number of opportunities entering our sales pipeline via our partners and maintaining these relationships will be a key focus for us as we continue to scale internationally.

Delivering against all elements of our growth strategy

I am pleased to report the following progress across all four elements of our growth strategy:

1."Win, Transact and Deepen"

Our customer strategy is to:

· '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.

Our high level of customer retention means that each new customer win significantly adds to our growth prospects, with revenue from our largest revenue-generating customers typically increasing 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.

Win

During the Year we saw an increase in win rate both in the UK and internationally. New customers secured in the Year included a five-year contract with Woolworths Group in Australia & New Zealand; a three-year contract with Staples US Retail in North America; and we signed our first client in the food services sector, Vermaat, which included the launch of an app to enable digital loyalty stamp cards for coffee and sandwiches at their STACH coffee shops in the Netherlands. Wins in the UK included a three-year contract with Liberty Retail Limited, the luxury department store, to support their omnichannel gift programme and a two year contract with Robinsons Brewery, who have approximately 260 pubs, inns and hotels across the North West of England and North Wales, to run their gift programme.

We were pleased to confirm our role as a key technology provider for Virgin Red, Virgin's new rewards club during the past year. The Eagle Eye platform was chosen to support Virgin Red because of its ability to process and manage the billions of Virgin Points being earned and spent across multiple organisations globally, bringing together the Virgin companies and beyond, across multiple sectors. Our platform has also successfully helped transition Virgin Atlantic Flying Club miles to Virgin Points and since March 2021, Virgin Trains Ticketing has been added to the programme, where members can earn points when booking train tickets within the UK.

We have been delighted by the success of the Pret Coffee Subscription. Now a year old, this was the UK's first ever in-shop coffee subscription, allowing subscribers to enjoy up to five barista-prepared drinks per day for a fixed monthly fee, including the first month for free. The service was built on the Eagle Eye AIR platform as part of Pret A Manger's new digital infrastructure and was Pret's first major step in delivering against its new digitally-led, omnichannel strategy.

A first for the UK high street, the new in-shop digital service capability is providing Pret with new data-led customer insights. Since launch in September 2020, we are pleased that Pret have been utilising more of the capabilities of the AIR platform which has assisted in the start of an international rollout of subscriptions starting in in the US. We continue to work closely with them as they seek to drive customer engagement as a digitally-led, multichannel business.

The increased win rate demonstrates the range of capabilities being delivered by the Eagle Eye AIR platform, with the ways in which businesses are using Eagle Eye AIR increasing at pace, providing us with a strong base for future expected growth.

Transact

Chargeable AIR redemption and interaction volumes, a key measure of usage of Eagle Eye AIR, grew by 11% to 952m (FY20: 856m), primarily reflecting an increased number of loyalty transactions following the successful launch of new customer programmes, including for Southeastern Grocers ("SEG") and the full Year effect of Sainsbury's, offset by the impact of COVID-19.

The Year saw an 88% increase in SMS volumes to 85m (FY20: 45m) driven by the growth of Click & Collect offerings at a selection of our high-street retail customers during the pandemic and also from supporting clients following the UK Government's Test and Trace guidelines. We do not anticipate similar growth rates in SMS volumes moving forward and overall expect SMS to represent a decreasing proportion of revenues in coming years.

Brands & Audiences

The Eagle Eye AIR platform is also used by brands to run campaign activations across our growing Retailer, Operator and Audience Network. This was one of the key areas of the business impacted by the COVID-19 lockdown. Overall, the revenue from branded drinks campaigns decreased to £0.1m (FY20: £0.3m), which was effectively delivered during the still heavily restricted periods of Q1 FY21 and Q4 FY21. Affiliate revenue held steady at £0.5m (FY20: £0.5m), bringing total brand and audience revenue to £0.6m (FY20: £0.8m).

We now have over 7,100 hospitality venues connected to the Eagle Eye AIR platform, creating an attractive platform for Brands to exploit once lockdown restrictions are lifted, as they seek the means to recapture lost revenue and strengthen their businesses.

Deepen

COVID-19 has caused some contract expansion to be delayed and lower transactional volumes in our Food and Beverage clients which, together with its effect on brand revenue, has impacted circa 10% of the Group's pre COVID-19 revenue base. However, throughout the Year, we have continued to have a wide range of discussions across our customer base as they consider how to continue on their journey towards personalised omnichannel loyalty, promotion and gift offerings. Our 'Deepen' pipeline continues to grow with several new customers having commenced transacting in the Year, including Pret A Manger and Virgin Red in the UK and, with our international customers also continuing with their roll-outs, we anticipate our recurring, transactional revenues to increase in future periods.

Pleasingly, our long-term contract customer churn rate by value remains very low at 0.3% (FY20: 0.9%), with good levels of renewals taking place, including multi-year contracts with 16 customers.

2. Innovation and the AIR platform

Innovation

Innovation continues to lie at the heart of our proposition, investing in the capabilities of our flexible Eagle Eye AIR platform to find new ways to deliver value to our customers, and their consumers.

POS Connect

Last year, we launched our POS Connect capability, a next generation approach to enable us to enhance the way we integrate with our clients' Points of Sale systems. POS Connect was designed to provide retailers with greater flexibility in their ability to provide their customers with a diverse range of offer types (e.g. points and discounts), executed in real time and at huge scale.

During the year, we have continued to invest in this area, providing our clients with new and innovative ways to engage with their customers using our cloud-based adjudication service. Using this service, we are able to execute incredibly complex calculations in real time at the POS, using Eagle Eye AIR to adjust customers' basket totals based on any valid discount, points, multibuy or other promotions that are available them. These calculations can be complex and involve millions of permutations which previously would not have been possible to handle by retailers' existing POS systems. Using POS Connect, retailers are set free from the limitations they would have faced regarding the number and/or type of offers they could deliver to their customers, thus unlocking the power of true omnichannel personalisation.

Message At Till

In the Year we launched our new, personalised Message At Till capability, enabling the delivery of real-time, relevant and targeted promotions to customers at the till, through physical coupons or digital coupons, SMS and in-app push notifications following a transaction, based on their customers' basket content and buying behaviour.

This functionality is particularly important in the US, acting as a digital replacement for the widely prevalent receipt-based couponing market, adding further capability for our US enterprise customers while opening-up a new segment of the US retail market.

Load to Card

Our Load to Card functionality is now live and in use at Southeastern Grocers. This allows retailers to leverage data analytics and artificial intelligence ("AI") to recommend and issue personalised digital rewards via digital channels such as a website or an app. A consumer is able to select the offers they wish to redeem and load them to their digital loyalty card.

App

Our app solution is now used in more countries across the world as IMO rolled out their car wash app in an additional seven countries and Vermaat launched their STACH coffee app in the Netherlands.

3. International growth

We have continued to deliver on our international growth strategy in the Year, winning new customers, and strengthening our positions in our new territories. Revenue from international customers grew by 32% to £9.3m (FY2020: £7.0m).

North America

In December 2020, we were pleased to secure our second US customer, Staples US Retail.

We are making great progress with Southeastern Grocers (SEG) since signing them in December 2019, helping them connect with customers on a personal level, whether that is in stores or through digital platforms. Eagle Eye and dunnhumby are collaborating to enable the personalisation of promotions for SEG, and to provide the retailer with a deeper understanding of its customers' behaviours and preferences. Once fully integrated, it is expected to produce more than 200 million digital offers, coupons and recommendations to customers monthly.

We have now gone live with six media channels, with further channels to follow. We have also modernised SEG's loyalty offering and become their points master, enabling SEG to execute more types of campaigns and support their wider personalised media objectives.

Through the success of this customer programme we have demonstrated our ability to manage the digital marketing needs of US retailers.

In Canada, our relationship with Loblaw Companies Ltd ("Loblaw") continues to strengthen. During the Year, Eagle Eye supported the launch of their PC Health app which provides live chat to members with registered nurses and dietitians, plus the opportunity to earn PC Optimum™ rewards through custom digital health programmes. More recently, we supported both the Holiday Insiders and Summer Insiders programmes which are highly anticipated programmes used to introduce new and exciting products to Canadians and give customers the opportunity to earn points through the PC Optimum programme. We also supported the launch of the PC Money Account, a new, no monthly fee account that lets customers earn PC Optimum points for their everyday banking.

Australasia 

In November 2020, we secured a five-year agreement with Woolworths Group, Australia's largest retailer; the Group operates 1,400 stores in Australia and New Zealand. Woolworths are using Eagle Eye AIR to support their personalised real-time digital marketing programme. Eagle Eye's services allows Woolworths Group to enable the end-to-end management of real-time personalised digital promotions and support its transition to a digitally led rewards programme. Woolworths deploys the proposition across touchpoints including its app, its eCommerce business and various other digital media. Eagle Eye AIR is also used to enable a real-time integration with a network of partners. Implementation commenced on contract signature and our local team in the region is supporting Woolworths to deploy our Eagle Eye AIR platform across Woolworths' network of Australian and New Zealand stores.

Post our financial year end, the programme went live in August 2021, just 10 months after contract signing, to the members of the Everyday Rewards loyalty scheme, following a successful pilot. This marked the point at which Eagle Eye's full fees were payable and the start date of the five-year agreement announced on 10th November 2020.

We continued our work with The Warehouse Group, one of the largest retailing groups in New Zealand. The Warehouse Group is successfully piloting an app-first loyalty programme within its largest retail banner, The Warehouse.

With two of the largest retailers in the Australasia region now as customers, we are investing in the team as a platform for Eagle Eye's entry into the wider Asia Pacific region. The Group believes there to be a good level of enterprise-level prospects in the region.

Eagle Eye provides digital loyalty and personalised promotion services to several of the world's leading grocers, we are uniquely strong in the UK food and beverage sector and we have added new clients such as Virgin Red and Pret A Manger opening up the travel and ('Quick Serve Restaurant') QSR sector alongside the likes of JD Sports and others. We have established a management structure in EMEA, North America and APAC where the regional heads and their teams are using our diverse and loyal existing client base as proof points to build a strengthened pipeline around the world.

4. "Better, Simpler, Cheaper"

We have developed a proven business model to grow our EBITDA margin whilst also investing as we 'Win' in sales and marketing to generate new opportunities for growth, enhancements to the product to add value to our customers and the 'spine of the business' to ensure the health of Eagle Eye is maintained. This agility means we can control our costs through periods of adversity and prosperity.

Our agility extended to our operational approach at the time of the COVID-19 pandemic, enabling us to swiftly implement home working and the change of working practices required to ensure its successful execution. As we now hopefully emerge from the pandemic, we remain agile and are moving to a hybrid model of working for our employees, allowing them to work effectively from home some of the time but ensuring that when they do come to the office that it was worth the commute. We will ensure that going to the office meets the three C's: Culture - it helps to grow the Eagle Eye culture and improve teamwork; Collaboration - it allows our teams to take part in brainstorming and blue sky thinking sessions to aid innovation and kick off meetings for new projects to ensure everyone is aligned; and Coaching - to continue to enhance the skills capabilities of our employees.

Our new agile methodologies have enabled us to supplement our local teams by our global resource pool, enabling us to open up these geographies in a cost-efficient and scalable manner.

The performance of Eagle Eye AIR continues to benefit from our move to the Google Cloud. We are improving the speed and scale of the AIR platform as API response times at the POS improved by 30% and volumes increased by 11%. We were, therefore, able to increase our scalability and flexibility, being able to grow compute power as we sign up new customers and as our existing customers require it. This has seen our direct IT infrastructure costs increase by only 5% despite an 11% increase in volumes.

We have now introduced site reliability engineering (SRE) with a major focus on customers in order to be more scalable, automated, reliable, standardised and secure. We have created a Customer Reliability Engineering team who follow SRE principles that allow us to focus on reducing manual or repetitive tasks, automating our platforms with a focus on keeping our services running, making them better and faster. It is our intention to introduce the SRE concepts and principles across the business and to our clients.

During the year we have achieved ISO27001 recertification and added our Canadian, Australian and US businesses to the certification. SOC2 Type2 has also been completed and extended to cover all of our offices in all geographies, providing our enterprise clients with assurance around the quality of our systems and the safeguarding of data.

Our People and Beliefs

Creating value for our customers sits at the heart of Eagle Eye and we believe this is the foundation of our successful business. We aim to enrich the lives of everyone we come into contact with by creating exceptional value for them and by being kind, thoughtful, friendly, generous and considerate. We passionately believe that the culture we have created sets us apart.

We are committed to delivering value to our clients by partnering with them to solve their problems in the "Purple way." By collaborating with clients to deliver solutions that solve their pain points and to help maximise their return on investment, we secure customer loyalty. New customer collaboration initiatives recently commenced include the implementation of Professional Services Satisfaction Reports and Net Promoter Scores, to monitor how we are performing.

All the value we create is thanks to our people. Our goal is to be an exceptional place to work, which will lead us to deliver exceptional results. We measure our success via our employee NPS scores, as well as our annual stress survey tool, and annual Company Day vision and strategy survey. Our June 2021 NPS scores were +47 (How likely is it that you would recommend Eagle Eye as a place to work?) and +56 (How likely is it that you would recommend Eagle Eye's products and services?), which are above the industry standard where a score over 30 is considered good. By training well and rewarding our employees, we are better able to create and deliver more value to our customers. To promote our values we have introduced Company Value Awards, Purple Awards and quarterly communications on financial and operational company performance. Having had a successful and popular company day for years we have now introduced quarterly communications sessions where we promote our values, give awards for purple performance and update on financial and operational progress. We also meet for 30 minutes every Monday at a meeting called 'Tea with Teams' where we keep everyone up to date on achievements and reasons to celebrate.

 Last year we launched Employee Resource Groups (ERGs) where employee volunteers can update their friends and colleagues on events that are important to them; through this, we have learnt from our black colleagues what 'BLM' means to them, we've also learnt about Diwali, Ramadan and Passover. In conjunction with the progress of our ERG's launched last year we have also built upon its success by launching a 'Purple Women's Group' which every woman in the Company has voluntarily attended. The key areas where we strive to make a difference for women are by providing a platform for their voice; supporting them through their career journey; developing family friendly policies/benefits; creating more diversity through encouraging more women in tech; and looking to tackle important health issues that impact people in the workplace.

We have strengthened our compensation reviews to incorporate loyalty and to reward our people based on the value they bring, in addition to our normal annual review process. We believe this will only further increase engagement and strengthen our retention which is currently at 91%.

Looking forward to FY22 we have partnered with 52 Lives, a charity built around the concept of 'kindness' who find people who need help and then deliver it. We believe that this partnership will make Eagle Eye a better place and if we are successful not only will we help 52 Lives to help more people but create a model for them to expand their charity and help even more people. Working with our charity committee, this is a whole company effort to team build, be more kind, and raise important funds for those in need within our communities.

Outlook

Following record new client wins during the Year, Eagle Eye enters FY22 with a considerably expanded underlying business and positive trajectory. In addition to securing new enterprise customers across multiple geographies, we have increased our engagement with existing customers and expanded the AIR platform, while carefully managing our cost base and cash resources, delivering a maiden full year profit before tax. We have proven the strength of our business model, growing revenues and profits, during a challenging year. Our recurring revenues, breadth of customer base, strong customer retention, extent of pipeline and growing market need have all kept driving the business forward.

Trading in the current year is in line with Board expectations and the Board is confident in achieving a positive year of growth in FY22.

The pandemic has accelerated the digital engagement strategies of retailers around the world. We have seen personalised marketing coming to the fore which plays to our strengths. Our proven capabilities in enterprise retail, food and beverage and new sectors won in the year combined with our increased international presence positions us well to capture a growing proportion of this expanding market. We will continue to invest in our people and offering, in line with revenue growth, to ensure that we remain at the forefront of this growing industry.

Our people are key to the success of Eagle Eye and with the challenges presented through the Year their support and cooperation has been paramount. They have continued to successfully deliver value for our clients, and I would like to put on record my thanks and gratitude to each and every one of them.

We have entered the new financial year with a record sales pipeline and we look to the future with confidence.

Tim Mason, Chief Executive Officer

Financial review

Key Performance Indicators

(1) Adjusted EBITDA excludes 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) Net cash is cash and cash equivalents less borrowings.

Group results

Revenue

Revenue growth for the Group was 12% for the Year (FY20: 21%), reflecting an increased win rate in the Year, offset by the continuing impact of the COVID-19 pandemic. However, with successful client implementations in Q4 2021 the revenue growth rate on exiting the year was 27% compared to Q4 2020.

COVID-19 saw many of the Group's clients in the UK shut or only partially open throughout the Year, impacting circa 10% of the Group's pre COVID-19 revenue base. The impact of this was on brand and F&B transactional revenue but there was also an impact on the continued deepening of client accounts that we would traditionally see.

Chargeable AIR redemption and interaction volumes, a key measure of usage of the Eagle Eye AIR platform, grew by 11% year-on-year to 951.6m for the year (FY20: 855.9m) with AIR revenue increasing to £20.2m (FY20: £19.2m). As expected, UK non-grocery volumes were significantly impacted by COVID-19, but the gradual relaxation of restrictions from late March 2021 onwards and increased international transactions as those clients ramped up their services helped drive 20% quarter-on-quarter volume growth in Q4 2021.

SMS messaging revenue grew by 110% to £2.6m (FY20: £1.3m), reflecting changing consumer shopping habits during the pandemic from clients where the Group is integrated for both their High Street stores and their eCommerce offering, as well as use of the Group's SMS messaging platform to support clients in following the UK Government's Test & Trace guidelines. As pandemic restrictions ease, SMS is expected to represent a decreasing proportion of the business in future years.

Overall, £16.9m of revenue was generated from subscription fees and transactions over the network, representing 74% of total revenue (FY20: 73%, £14.9m). The balance, £5.9m, relates to implementation fees for new customers or new services for existing customers and represents 26% of total revenue (FY20: 27%, £5.5m). The increase in implementation fees primarily reflects contract wins in North America, including the full year effect of SEG, and Australia.

In addition to winning new business and deepening existing accounts, the Group successfully maintained an extremely low rate of long-term contract customer churn by value at 0.3% (FY20: 0.9%). This reflects the scale and breadth of the AIR platform in meeting our customers' needs.

Gross profit

Gross profit grew 8% to £20.7m (FY20: £19.1m), although gross margin fell to 91% (FY20: 94%). The underlying gross margin from AIR platform revenues increased to 98% (FY20: 97%) but this was offset by the impact of the increased share of revenue from the lower margin SMS messaging business which accounted for 4% of gross profit (FY20: 2%).

Costs of sales include 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

The global uncertainties caused by the COVID-19 pandemic have meant that the Group has chosen to carefully manage its cost base, in line with our revenue profile in particular internationally, whilst continuing to invest in the product and sales & marketing. This has seen growth in adjusted operating expenses limited to just 4% at £16.5m (FY20: £15.8m). This cost represents sales and marketing, product development (net of capitalised costs), operational IT, general and administration costs.

The 7% increase in staff costs to £13.0m (FY20: £12.1m) reflected standard annual pay awards and increased commission/bonus reflecting the increased new customer win rate and the Group's strong EBITDA performance. Average headcount for the year was 141 (FY20: 139). We continue to invest in the product and sales and marketing; within staff costs, gross expenditure on product development increased to £4.3m (FY20: £4.0m) and sales and marketing spend was £2.8m (FY20: £2.9m).

The benefits of the migration of our environments to the Google Cloud continue to be felt. Although transaction volumes grew by 11% and further infrastructure investment was required to support new international clients, infrastructure costs increased by just 2% to £4.5m (FY20: £4.4m). Reflecting the Group's agile investment strategy and cost control measures during COVID-19, marketing, travel and administration costs were 13% lower than in FY20 at £1.8m (FY20: £2.1m).

Capitalised product development costs were £2.2m (FY20: £2.4m), whilst amortisation of capitalised development costs was £2.2m (FY20: £2.0m). Contract costs (including costs to obtain contracts and contract fulfilment costs), recognised as assets under IFRS 15, were £0.7m (FY20: £0.5m) and amortisation of contract costs was £0.6m (FY20: £0.5m).

Adjusted EBITDA and Profit before tax

The growth in revenue, continued tight control of costs and net furlough receipts of £0.1m have resulted in a significant increase in adjusted EBITDA which was up 29% at £4.2m (FY20: £3.3m) for the year, with EBITDA margin improving to 18% (FY20: 16%). 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 £0.2m (FY20: £0.04m loss) reflecting the EBITDA profit achieved in the year, offset by increased amortisation and the non-cash share-based payment charge of £0.9m (FY20: £0.5m), reflecting the successful EBITDA performance this year and the strong position the Group is now in to deliver increased revenue and profits which are reflected in future performance related vesting assumptions.

The Group is pleased to report a maiden full year profit before tax for FY21 of £0.1m (FY20: loss of £0.3m) reflecting the improved profit before interest and tax and a reduction in finance expense to £0.1m (FY20: £0.3m) due to lower utilisation of the Group's revolving loan facility during the year as expected following careful working capital management and improved operating performance.

EPS and dividend

The Group's international businesses have continued to grow successfully and as a result, overseas tax charges increased to £0.4m (FY20: £0.3m). The impact of this is partially mitigated in the UK by the continued successful R&D tax claims and the deferred tax asset recognised in relation to a proportion of the historic losses brought forward.

As a result, loss after taxation was £0.1m (FY20: £0.5m) and reported basic and diluted loss per share improved by 88% to 0.22p (FY20: loss per share 1.77p).

Group Statement of Financial Position

The Group had net assets of £5.4m at 30 June 2021 (30 June 2020: £4.4m), including capitalised intellectual property of £3.6m (30 June 2020: £3.7m). The movement in net assets reflects the improved EBITDA performance in the year and the exercise of share options during the year.

Current assets increased by £1.8m primarily due to higher revenue in the year and the timing of significant receipts, including the research and development tax credit of £0.2m received in July 2021. Liabilities increased by £0.7m due to the value of the drawdown of the Group's revolving credit facility, offset by a lower overseas corporate tax creditor due to payments made on account during the year.

Cashflow and net cash

The Group ended the year with net cash of £0.8m (30 June 2020: net cash of £1.5m) being better than the Board's expectations. During FY20, the Group made use of a number of COVID-19 linked schemes in order to manage its working capital, including the deferral of VAT and PAYE in the UK. As a result, £1.7m of cash outflow was deferred from FY20 to FY21 with a further £0.4m deferred to FY22 in line with agreed payment plans. Stripping out the impact of these schemes, the underlying net cash inflow for the year was £0.9m (FY20: £0.8m inflow). Overall net cash outflow for the year was £0.7m (FY20: inflow of £2.8m).

The main components to the net cash inflow (unadjusted for the impact of COVID-19 deferral schemes) were the operating cash inflow of £2.4m (FY20: inflow of £6.1m), reflecting the EBITDA profit of £4.2m (FY20: £3.3m), a working capital outflow of £1.2m (FY20: £2.6m inflow), including COVID-19 deferral repayments, and net tax payments of £0.6m (FY20: £0.2m net receipt), offset by capital investment in the AIR platform and other infrastructure of £2.4m (FY20: £2.4m), contract costs capitalised under IFRS 15 of £0.6m (FY20: £0.5m), payments in respect of leases £0.1m (FY20: £0.3m) and interest due on the Group's revolving credit facility with Barclays £0.1m (FY20: £0.2m).

The Board does not feel it appropriate at this time to commence paying dividends and continues to invest in its growth strategy.

Banking facility

The Group has remained comfortably within its banking covenants which relate to available headroom and adjusted EBITDA performance. Following the year end, the Group has extended the term of its £5.0m revolving loan facility with Barclays Bank PLC to November 2022. The Group's gross cash of £1.7m (FY20: £1.5m) and the undrawn £4.1m of the £5.0m facility (FY20: £5.0m undrawn) gives the Group £5.8m of headroom, which the Directors believe is sufficient to support the Group's existing growth plans.  

Consolidated statement of profit or loss and total comprehensive income

for the year ended 30 June 2021

Consolidated statement of financial position

as at 30 June 2021

Consolidated statement of changes in equity

for the year ended 30 June 2021

Included in Retained losses is a cumulative foreign exchange loss balance of £(69,000) (2020: profit £31,000).

Consolidated statement of cash flows

for the year ended 30 June 2021

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 2021 has been extracted from the Group's audited financial statements which were approved by the Board of Directors on 21 September 2021 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 2020 has been extracted from the Group's audited financial statements which were approved by the Board of Directors on 15 September 2020 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 prepared on a going concern basis under the historical cost convention, and in accordance with 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. A number of forecasts have been produced which take into consideration different assumptions on the timing and extent of recovery from Covid-19, including the risk of debtor default and the likely different recovery profiles of the different sectors in which the Group's services are offered.

On the basis of the above projections, and although the Group has net current liabilities at 30 June 2021, 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 extension of the revolving credit facility with Barclays Bank plc 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 one principal operating division for management purposes. Therefore, the Group has only one operating segment and segmental information is not required to be disclosed. Revenue is analysed as follows:

Continuing revenues can be attributed to the following countries, based on the customers' location:

4 Loss per share

The calculation of basic and diluted loss 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 weighted average number of shares for the purpose of calculating the basic and diluted measures is the same. This is because the outstanding share options would have the effect of reducing the loss per ordinary share and therefore would be anti-dilutive. Basic and diluted loss per share from continuing operations is calculated as follows:

5 Alternative performance measure

EBITDA is a key performance measure for the Group and is derived as follows:

6 Net cash/(debt)

The cash flow above includes £1.6m of Covid-19 repayments relating to government schemes allowing deferral of certain taxes due to the economic impact of the COVID-19 pandemic.

7 Report and Accounts

A copy of the Annual Report and Accounts for the Year ended 30 June 2021 will be sent to all shareholders in due course together with notice of the Annual General Meeting