Eagle Eye (AIM: EYE) ARR jumps 31% as AI loyalty platform targets stronger FY27 growth

Eagle Eye Solutions Group PLC (AIM: EYE) has entered FY27 with a substantially larger recurring-revenue base after annual recurring revenue excluding the lost Neptune Retail Solutions contract increased 31% to £44.5 million. Underlying group revenue excluding Neptune Retail Solutions increased 21% to £46.1 million and SaaS revenue rose 31% to £39.3 million, while net cash strengthened 31% to £16.1 million. Management now expects a return to double-digit revenue and adjusted EBITDA growth during FY27 as North American sales, artificial intelligence products and a new global OEM relationship begin contributing more meaningfully.

The market response was comparatively restrained. Eagle Eye Solutions shares were around 485p during September 15 trading, little changed from the previous close and only modestly below the recent 52-week high of 504p. That makes the results less a recovery trade than a test of whether a company already valued at roughly £147 million can convert accelerating annual recurring revenue into renewed margin expansion.

Why does Eagle Eye Solutions’ 31% ARR growth matter more than the 3% headline revenue decline?

The headline accounts initially look less impressive because total group revenue including Neptune Retail Solutions declined 3% to £46.7 million from £48.2 million. That comparison is distorted by the termination of the Neptune Retail Solutions relationship, however, and Eagle Eye Solutions’ underlying operating trajectory looks materially stronger once the lost contract is removed. Revenue excluding Neptune Retail Solutions increased 21%, while annual recurring revenue and SaaS revenue each increased 31%.

Recurring SaaS revenue now represents 85% of total group revenue compared with 83% in FY25, creating a more predictable revenue base than a business dependent heavily on implementation projects. Net revenue retention excluding Neptune Retail Solutions improved to 111%, meaning the existing customer base expanded its spending even before new customer wins were included. Long-term contract customer churn by value also fell dramatically from 23.1% to 0.4%, although the prior-year Neptune Retail Solutions loss makes that comparison unusually pronounced.

The combination gives Eagle Eye Solutions a clearer foundation for operating leverage. Growing customers such as Carrefour, Woolworths, Asda and Morrisons can generate greater transaction volumes without requiring customer acquisition costs to rise proportionately. The question for investors is whether the improved revenue quality can now translate into EBITDA growth after FY26 profitability temporarily moved in the opposite direction.

Why did Eagle Eye Solutions’ adjusted EBITDA fall despite stronger underlying SaaS growth?

Adjusted EBITDA declined 19% to £9.8 million and the adjusted EBITDA margin fell from 25.3% to 21.1%, while adjusted EBITA dropped 49% to £3.4 million. The group nevertheless said the EBITDA result finished ahead of the expectations it held at the beginning of FY26, with second-half adjusted EBITDA margin recovering to 23.5%. That second-half acceleration is important because Eagle Eye Solutions has been investing in direct sales, partners, product development and its international commercial operation to create a larger future revenue opportunity.

Cash generation remained comparatively strong despite the lower EBITDA. Operating activities generated £11.1 million of net cash, while free cash flow reached £3.9 million after £7.6 million of investment in intellectual property, product development and contract fulfilment. Net cash consequently increased from £12.3 million to £16.1 million, giving management room to continue funding growth without relying on new equity capital.

That balance-sheet strength gives Eagle Eye Solutions more flexibility than many AIM software businesses trying to accelerate internationally. The company can invest through a period of temporary margin compression while preserving strategic optionality, provided its commercial investments continue generating attractive new annual recurring revenue.

Is North America becoming Eagle Eye Solutions’ most important growth opportunity?

US commercial momentum accelerated materially during FY26. Eagle Eye Solutions generated £2.7 million of new annual recurring revenue from the United States, six times the amount achieved during FY25, and secured four significant new North American customers. EagleAI revenue separately increased 35% to £7.8 million as customers expanded adoption and usage of personalised promotion technology.

The US opportunity matters because the addressable loyalty and retail-media markets are substantially larger than Eagle Eye Solutions’ current revenue base. Increased adoption by major retailers could therefore change the scale of the group more dramatically than incremental growth in mature European accounts. The company estimates that deeper transaction volumes and adoption among its top 35 customers alone could eventually represent approximately £40 million of additional annual recurring revenue if customers used the full core product set.

A new global OEM partnership adds another potential distribution channel. Eagle Eye Solutions secured the first two blue-chip European customers through that agreement, with initial combined annual recurring revenue estimated at approximately £2 million and revenue expected to start during calendar 2027. A partner-led model could broaden geographic reach without requiring the company to replicate a full direct-sales organisation in every target market.

Can Eagle Eye Solutions reach its £100 million revenue ambition without sacrificing margins?

Management continues to target medium-term revenue of £100 million and an adjusted EBITDA margin above 30%. Reaching that revenue level from the current underlying base would require substantial further growth, but a £44.5 million recurring-revenue run rate means the target is no longer dependent on starting from a small installed base. The increasing contribution from artificial intelligence products, OEM distribution and North America gives the company several separate growth engines.

The more difficult target may be the margin. Eagle Eye Solutions needs investments made during FY26 to generate enough incremental high-margin recurring revenue for operating leverage to reappear. Management expects double-digit revenue and adjusted EBITDA growth in FY27, making the next reporting period an important test of whether the margin compression was genuinely the cost of building the next growth phase rather than a structural reduction in profitability.

With the shares already trading near their 52-week high, investors appear to be giving Eagle Eye Solutions credit for much of the ARR recovery. The next rerating therefore probably requires evidence that recurring-revenue momentum, US wins and OEM distribution can translate into faster EBITDA growth as well as impressive SaaS statistics.