Eagle Eye Solutions Group PLC Trading Update and Contract extensions (2958O)

TIDMEYE

RNS Number : 2958O

Eagle Eye Solutions Group PLC

29 May 2020

29 May 2020

Eagle Eye Solutions Group plc

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

Trading Update

and

Contract extensions with Sainsbury's and Asda

Eagle Eye, a leading SaaS technology company that creates digital connections enabling personalised, real-time marketing through coupons, loyalty, apps, subscriptions and gift services, today provides an update on trading for the year ending 30 June 2020.

Highlights

   --    Business responding as anticipated to the COVID-19 lock-down: 
   o   Supermarket customers remain extremely active, with associated revenue resilient 
   o   All large customer implementations and projects progressing to plan 

o Food & Beverage, Leisure and Retail (non-grocery) clients have been impacted, representing a 10% decrease in monthly Group revenue during COVID-19 lock-down period

   o   Cost management actions taken to mitigate revenue impact of COVID-19 
   o   The sales pipeline continues to develop, but as anticipated new contract signings taking longer 
   --    Contract extensions with Sainsbury's Supermarkets Ltd and Asda Stores Limited 

-- Adjusted EBITDA for the year ending 30 June 2020 expected to be at least GBP0.5m ahead of market expectations

-- Continued improvements to cashflow, with net debt tracking better than management expectations

-- Current funding position is secure and sufficient headroom remains within the Group's GBP5m banking facility to support existing growth plans

Trading Update

Trading in the weeks following the release of our Final Results on 17 March 2020 has continued largely as we anticipated at the time, in the scenario that the UK entered a period of full lock-down.

Revenues from supermarket clients have remained resilient. Our large client implementations and projects are progressing well and to plan. Food & Beverage, Retail (non-grocery) and Leisure clients have been impacted as we anticipated, representing a 10% decrease in monthly Group revenue for the period of the COVID-19 lock-down.

The longer-term social distancing measures likely to be a part of the gradual re-opening of the economy are prompting retailers to consider how to prepare their businesses to re-open in a safe manner, including assessing where digital engagement with customers can replace direct interactions.

We are experiencing normal levels of new business activity and a growing sales pipeline, however new contract signings are taking longer to close, as anticipated.

We have continued to invest in enhancements to our AIR platform and anticipate R&D spend in the second half to be broadly in line with the first half of the year.

We have maintained our strong focus on operational cost control and implemented a reduction in run rate cost in response to COVID-19, including a reduction in ad hoc spend, travel costs and variable overheads related to Food & Beverage. The Company has benefited from its agile structure, which has facilitated the redeployment of existing UK teams to support the implementation of our first US client, Southeastern Grocers. This has enabled the successful ongoing deployment with a key new client without the short term need to increase headcount. As a result of these factors, adjusted EBITDA for the year ending 30 June 2020 is expected to be at least GBP0.5m ahead of market expectations.

The improved profit performance and continued focus on cash management means that the Group's net debt position is tracking better than management expectations. As a prudent measure we have engaged the Group's lender, Barclays, in discussions with regards to increasing the flexibility of the facility, should it be required. However, the Group's current funding position is secure and sufficient headroom remains within the Group's GBP5m banking facility to support existing growth plans and taking into account COVID-19 scenario planning.

Contract Extensions

The Company is pleased to announce the extension of existing relationships with two of its UK supermarket clients.

The Company has signed two new two-year contracts with Sainsbury's Supermarkets Ltd ("Sainsbury's"). Having started work with Sainsbury's in 2015, the contracts are for the continued provision of the Eagle Eye AIR platform to support the Nectar rewards programme, one of the UK's preeminent loyalty schemes, and the ongoing issuance of omni-channel coupons, across Sainsbury's direct mail, online and at-till marketing programmes.

The Company has also signed a two-year contract renewal and extension with Walmart-owned UK Supermarket group, Asda Stores Limited ("Asda"). Previously signed via a third party, the contract is now direct with Asda. Since 2015, the Eagle Eye AIR platform has enabled Asda to form innovative digital connections with its millions of customers each week, through a variety of digital promotions to customers and staff.

Supporting Asda to deliver the National Voucher Scheme

As part of the services being delivered to Asda, Eagle Eye is supporting Asda in safely and securely powering their part of the National Voucher Scheme, to provide free school meals to eligible children while schools are closed due to COVID-19. Due to the AIR platform's sophisticated integration at the Point of Sale (POS), the Eagle Eye AIR platform is able to analyse the customers' basket to ensure that only specific items permitted as part of the scheme can be purchased. This means that the funds from the voucher cannot be used to purchase restricted items such as cigarettes, alcohol and lottery tickets.

Tim Mason, Chief Executive of Eagle Eye , said : "For many of our clients, this has been a period of intense activity and change, requiring the implementation of new business models and customer engagement methods. I am proud of how our teams in the UK and internationally have responded to the situation, providing a high level of client support and continued innovation of our offering to support these changing dynamics, during challenging circumstances for us all.

"We are conscious we are only at the start of the impact of COVID-19 on the economy and the retail sector in particular and, therefore, while we believe digital, personalised connections with customers will continue to grow in relevance, we will maintain our strong focus to ensure we successfully navigate these challenging times for all."

For further information, please contact:

 
 Tim Mason, Chief Executive Officer                  Tel: [phone] 
  Lucy Sharman-Munday, Chief Financial 
  Officer 
 Investec (Nominated Advisor and Joint               Tel: [phone] 
  Broker) 
  Corporate Finance: David Anderson, Sebastian 
  Lawrence 
  Corporate Broking: Sara Hale, Toba Fatimilehin 
 Shore Capital (Joint Broker)                        Tel: [phone] 
  Corporate Finance: Hugh Morgan, Daniel 
  Bush, Sarah Mather 
  Corporate Broking: Henry Willcocks 
 Alma PR 
  Caroline Forde, Rebecca Sanders-Hewett,            Tel: [phone] 
  Harriet Jackson 
 

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 and Food & Beverage sectors, including Asda, Sainsbury's, Tesco, Waitrose and John Lewis & Partners, JD Sports, Greggs, Mitchells & Butlers, Pizza Express and in North America, Loblaws, Shoppers Drug Mart, Esso and Southeastern Grocers.

For more information, please visit www.eagleeye.com

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May 29, 2020 02:00 ET (06:00 GMT)