Pre-close trading update

RNS Number : 8020A

Eagle Eye Solutions Group PLC

10 June 2016

 

10 June 2016

Eagle Eye Solutions Group PLC

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

Pre-Close Trading Update

Eagle Eye, the SaaS technology company that validates and redeems digital promotions in real-time for the grocery, retail and hospitality industries, announces the following trading update ahead of its audited results for the year ending 30 June 2016 (the "Period") which are expected to be announced on 21 September 2016.

Financial Highlights:

·     Group revenue expected to grow by c.34% to £6.5m (FY15: £4.9m)

·     Accelerating revenue growth in second half (c.20% H2-on-H1)

·     Recurring subscription and transactional AIR platform revenues expected to be up c.87% year-on-year at £3.6m

·     Expected redemption volumes of over c.38m, an increase of c.120% (FY15: 17.4m)

·     Subscription and transactional revenues are expected to represent c.81% of total revenues (FY15: 80%)

·     Expected messaging volumes maintained from prior year at c.40m per year

·     Cash position expected to be £1.1m (FY15: £4.3m)

Based on unaudited figures, turnover for the Period is expected to be in the region of £6.5m, up c.34% on the prior year (FY15: £4.9m). Overall revenue from the AIR platform is expected to be c.72% of total revenue, £4.7m (FY15: 56%, £2.7m). H2 FY16 revenue is expected to account for £3.5m (H1 FY16: £3.0m), representing growth of 38% year on year. Half by half growth rate would therefore represent c.20% (H2 FY15 to H1 FY16: 14%).

As stated at the time of our interim results in March 2016 this revenue, for the year ending 30 June 2016, is lower than previous management expectations. The shortfall has been driven by three factors: the timing of significant contracts being deployed to live, the knock on impact on the ability to drive FMCG brand campaigns through those clients; and, the messaging business generating lower than expected new business revenue.

The core strategic revenue from digital promotions and rewards expects to see a c.87% increase to £3.6m (FY15: £1.9m) driven by increased volumes through existing clients and the implementation of major projects at Sainsbury's and Loblaws Inc.

Redemption volumes, which are a key measure of usage of the AIR platform, are expected to grow by 120% year-on-year driven by our solution for Asda's coupon counting going fully live in February 2016 and increased volumes from existing Food and Beverage clients.

Messaging revenue is due to be c.£1.8m for the Period (FY15: £2.1m), despite maintaining a similar message volumes year on year (c.40m). Revenue per message was impacted by a key contract renewal at the start of FY16 and reflects the competitive messaging market. The revenue represents a shortfall from management expectations due to both the volatility in messaging volumes of existing clients and the timing of implementation of new wins. The Company won several new contracts during the second half of the Period, including Swinton and Asurion, which will have a positive impact in FY17. 

The cash position as at 30 June 2016 is expected to be £1.1m. Despite the shortfall in revenue, cash has continued to be managed through tight cost control and working capital management. Looking forward, the expected exiting run-rate would result in the Company being cashflow positive in FY 17.

Progress on Strategy

·     Build market leadership in the UK, extending beyond Food and Beverage to the core Grocery promotions market

o  Nationwide rollout to all Asda stores completed in February 2016

o  Major contract secured with Sainsbury's

o  Expected 30% redemption growth from Food and Beverage clients

·     Replicate UK success overseas

o  Major international contract win with Loblaws Inc. to deploy the Eagle Eye AIR platform

·     Develop product offering to include Loyalty functionality

Market leadership in the UK requires building a strong position in the core Grocery promotions market. During the Period the Company has demonstrated the ability to both win and deploy significant Tier 1 contracts in this market. Asda going fully live coupled with the contract win of Sainsbury's means that 30% of the UK grocery market is now committed to the Eagle Eye platform, which is significant progress from prior year.

In Food and Beverage, volumes are expected to be up 30% on the prior year. We added the extensive estates of Prezzo and The Restaurant Group to our portfolio of existing clients and migrated Pizza Express onto the AIR platform.

In February 2016, the Company signed its first international Tier 1 grocer, Loblaws Inc., for deployment of the AIR Platform. This signing of a multi-year deal with a client of this calibre is a major milestone in the Company's growth and was achieved earlier than management expectations. Having three of the world's top retailers signed up to Eagle Eye is a major endorsement of the benefits that the AIR platform delivers to our customers and will help accelerate future growth.

The functionality of the Eagle Eye AIR platform has developed substantially over the Period, adding new features and functions to support Tier 1 grocers and FMCG brands, whilst scaling to meet the ever increasing demands on the platform in terms of processing power and speed. Redemption volumes are expected to be over c.38m for the year (FY15: 17.4m), an increase of c.120% on prior year.

People

We have significantly strengthened our team across the business during the Period. At a Board level, Tim Mason joined as Non-Executive Chairman in January 2016. He has over 30 years' experience within the grocery and retail industries, with a strong background in strategic marketing and customer loyalty. His experience and network of relationships are already proving invaluable as Eagle Eye builds on its foundations to influence the UK market and expand internationally.

More recently, in May 2016, we were delighted that Helen Slaven joined the executive team as Chief Sales Officer. Helen's arrival supports Eagle Eye's commitment to driving its commercial success and to better serve our existing client base.

Outlook

During the Period, the Company has made strong progress against its strategic milestones; specifically Tier 1 wins in the UK and internationally, national deployment of the AIR platform for Asda and development of the technology ready for the changing digital landscape and FMCG brands. 

The growth and momentum achieved by Eagle Eye demonstrates the major structural shift of the promotions and rewards market towards digital issuance and redemption. We believe that as the retail market transitions to digital solutions, the major brand owners will follow. This will open up significant new revenues for our platform.

Although our short-term revenue growth has been slower than expected, the progress achieved on our strategic objectives has exceeded expectations and the Board believes that the foundations are now in place to continue to generate strong organic growth in revenue, not just in the UK but overseas as well.

Phill Blundell, Chief Executive, said:

"Overall we have made encouraging progress and have clear evidence that our organic growth strategy is working with revenue growth strengthening over the year. We look forward to providing a full update on the year's trading, together with greater detail on our future growth plans, when we announce our full year results in September."

For further information, please contact:

Eagle Eye

Phill Blundell, Chief Executive Officer

Lucy Sharman-Munday, Chief Financial Officer                                             Tel: [phone]

Investec

Dominic Emery / David Anderson, Corporate Finance

Matt Lewis, Corporate Broking                                                                       Tel: [phone]

Hudson Sandler

Nick Lyon / Alex Brennan                                                                                Tel: [phone]

- Ends -

Information on Eagle Eye

www.eagleeye.com

Eagle Eye is a leading SaaS technology company that securely validates and redeems digital promotions in real-time for the grocery, retail and hospitality industries.

The Company's digital marketing platform, Eagle Eye AIR, enables the secure, real-time, multi-channel issuance, management and redemption of digital promotions and rewards, replacing previously used paper-based methods. Our Eagle Eye platform creates a network effect between merchants, distributors and brands enabling stronger connections and value to all parties. Through our four products we enable brands and merchants to reduce cost, improve their customer offer and accelerate their innovation.

The UK promotions market is currently transitioning through substantial change as both retailers and consumers are moving away from paper and plastic to digital. In 2014 there were in excess of 730 million coupons redeemed in the UK¹, and 16 billion digital coupons redeemed worldwide².

The Eagle Eye AIR platform comprises four key products: Eagle Eye Promote - for the management of offers and promotions, Eagle Eye Gift - for gift cards and customer care, Eagle Eye Reward - for loyalty and reward schemes and Eagle Eye Engage - for digital messaging. These four products enable the Company's customers to deliver targeted promotions, gift vouchers and rewards to consumers in real time, in a simple and secure way, across multiple marketing communications channels including email, SMS messaging and loyalty apps. The promotions can be redeemed securely by the consumer through any enabled point of sale channel.

The Company's current customer base comprises leading names in UK grocery, retail and hospitality including Asda, Greggs, JD Sports, Ladbrokes, Marks & Spencer, Mitchells & Butlers, Pizza Express, Tesco and Thomas Pink.

Notes:

1. Source: Valassis 2014

2. Source: Statista 2014

Cautionary statement

This announcement contains unaudited information based on management accounts and forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts and undue reliance should not be placed on any such statements because they speak only as at the date of this document and are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.  The Group undertakes no obligation to revise or update any forward-looking statement contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise, save as required by law and regulations.

 

END

 

 

TSTLFFILRRIAIIR