Eagle Eye Regulatory News (EYE)

28 January 2020

Eagle Eye Solutions Group plc

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

H1 Trading Update

Strong progress continues, with 28% increase in AIR revenue, first customer wins in new geographies and material adjusted EBITDA growth

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 provide an update on the Group's trading for the 6 months ended 31 December 2019 ("the Period").

Highlights

·; Recurring revenue, from subscription fees and transactions over the network, represented 73% of total revenue (H1 2019: 72%)

·; Successful go-live of Tier 1 customers drove strong growth in transactional revenue

·; Good rate of new customer wins, including first wins in the US and Australia & New Zealand

·; Reduced cash outflow in the Period of £(0.9)m (H1 2019: £(2.1)m)

·; Net debt as at 31 December 2019 was £(2.2)m (30 June 2019: £(1.2)m), better than management expectations; sufficient headroom remains to support the Group's existing growth plans

·; Current trading remains in line with the Board's expectations, on track for another successful year of revenue and EBITDA growth

Trading update

The Group has delivered another strong performance, building on the momentum from the prior year. Revenue increased by 26% to £10.1m, (H1 2019: £8.0m) while revenue generated by the AIR platform grew by approximately 28% to £9.6m and now represents 95% (H1 2019: 94%) of total revenue. This growth has been driven by several significant customer contracts moving to the transactional phase following successful implementations, and increased transactional revenues from existing customers, demonstrating their growing use of the AIR platform.

The growth in revenues combined with a continued focus on managing the cost base and releasing investment into the business in line with revenue growth, has resulted in a significant improvement at the EBITDA level. The Group generated adjusted EBITDA of £1.3m compared to an EBITDA loss of £(0.3)m in the comparable period of the prior year.

Cash consumption in the Period has followed the Company's usual seasonal profile which sees the Company consume a higher level of cash in the first half of the year than the second six month period. Cash outflow during the Period was £0.9m, significantly reduced from the cash outflow in H1 2019 (H1 2019: cash outflow of £2.1m, H2 2019 cash inflow £0.6m). This has resulted in a Group net debt position at the end of the Period of £(2.2)m (30 June 2019: £(1.2)m) better than management expectations. The Group continues to have sufficient headroom within its £5m banking facility to support the Group's existing growth plans.

Operational update

The Period saw several Tier 1 customers move from implementation to successful go-live on the AIR platform, driving a strong increase in recurring, transactional revenue. Highlights in the period were the full roll-out of our loyalty service for an existing Tier 1 promotions customer - an example of the success of the Group's 'Win, Transact and Deepen' strategy, the go-live of a new Tier 1 customer and the expansion of an existing customer's mobile app across Europe.

We were delighted to announce during the Period first customer wins in new geographies: the US and Australia & New Zealand. These two contracts have entered the implementation phase and will both contribute to revenue in the second half of the current financial year. Winning a top 20 US grocer, in the Tier 1 bracket worldwide, is particularly pleasing and again demonstrates the applicability of the AIR platform for the world's largest retailers. The five-year contract for this customer has the potential to become one of our largest client implementations. This is a very encouraging start against the significant opportunity we believe the US represents.

We continued to secure new contracts with well-known brands in the UK and we upsold additional services to existing UK customers. The Period also saw the addition of new audience partners, such as Tradedoubler, the National Union of Students and SVM Global, giving our customers access to a wider consumer audience.

Outlook

The Group's current trading remains in line with the Board's expectations. The new customers secured in the Period are expected to drive continued growth in implementation and transactional revenues in the second half of the year. Investment has begun into the expansion of our teams to support new customer implementations, while leveraging our previous investments into Canada, in the case of the US, and the scalability of the Google Cloud environment.

With a good level of prospects in all target geographies, a growing customer base, high levels of recurring revenue, very low levels of customer churn and an expanding market opportunity, the Board expects to deliver another successful year of revenue and EBITDA growth.

Tim Mason, Chief Executive of Eagle Eye, said: "Having proven the power of the AIR platform within the UK and Canada we are delighted to now have customers and prospects across a significantly expanded list of geographies. This represents a step change for the business and demonstrates the significant progress we are making in the execution of our growth strategy. With a growing number of retailers across multiple geographies turning to the Eagle Eye AIR platform to create a meaningful connection to their customers, we are excited about the prospects for the business and the breadth of our opportunity and we look to the remainder of the financial year and beyond with confidence."

Notes:

All financials based on unaudited figures.

Adjusted EBITDA excludes share-based payment charges along with depreciation, amortisation, interest and tax from the measure of profit.

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 Group's current customer base comprises leading names in UK Grocery, Retail and Food & Beverage sectors, including Asda, Sainsbury's, Tesco, Waitrose and John Lewis & Partners, JD Sports, Greggs, Mitchells & Butlers, Pizza Express and in Canada, Loblaws, Shoppers Drug Mart and Esso.

For more information, please visit www.eagleeye.com