Eagle Eye (AIM: EYE) targets double-digit FY27 growth after stronger second half

Eagle Eye Solutions Group plc (AIM: EYE) reported unaudited FY26 revenue of £46.7 million and adjusted EBITDA of £9.8 million, both ahead of the market expectations identified by the company before its 17 July trading update. Annual recurring revenue excluding the lost Neptune Retail Solutions contract increased 31% to £44.5 million, supported by new customers, expansion within existing accounts and the first contracts secured through a global original equipment manufacturer partnership. The company ended the year to 30 June 2026 with £16.1 million of net cash and expects a return to double-digit revenue and EBITDA growth in FY27. The central tension is whether Eagle Eye has completed a durable transition back to profitable growth or merely delivered a strong recovery year after cost reductions and favourable contract timing.

The headline numbers require careful interpretation. Total revenue declined 3% from £48.2 million because the prior year included revenue from the Neptune Retail Solutions contract that was lost in June 2025. Excluding that contract, underlying revenue increased 21% to £46.1 million, while SaaS revenue increased 26% to £39.3 million.

Adjusted EBITDA also remained 19% below the prior-year level of £12.2 million, despite materially exceeding the £7 million consensus figure cited by management. The update therefore shows that Eagle Eye has not yet returned to its previous absolute profit level, but it has recovered faster and more efficiently than the market expected after losing a material customer.

Investors responded positively. Eagle Eye shares rose approximately 7.5% during the 17 July session and traded around 500 pence, reaching a new 52-week high. The price was more than double the 52-week low of approximately 210 pence, while the company’s market capitalisation stood near £141 million.

Why did Eagle Eye outperform FY26 expectations despite losing a major customer contract?

The loss of the Neptune Retail Solutions contract created a difficult starting point for FY26 because the agreement had contributed meaningfully to recurring revenue in the previous year. Eagle Eye responded by restructuring its sales organisation, reducing operating costs and accelerating new customer acquisition.

The result was a stronger underlying business even though the statutory revenue comparison remained negative. Revenue excluding Neptune Retail Solutions increased from £38.1 million to £46.1 million, representing growth of 21%. SaaS revenue excluding the contract rose from £31.3 million to £39.3 million, an increase of 26%.

This distinction matters because the lost contract could have exposed a deeper weakness in customer acquisition or product competitiveness. Instead, Eagle Eye replaced much of the economic contribution through new wins, higher transaction volumes and expanded use of its technology by existing customers.

The company secured eight multi-year contracts during the first half and added further customers during the second half. These included easyJet, Subway, a major United Kingdom health and beauty retailer and a proof-of-concept agreement with a large French grocer.

Eagle Eye also expanded relationships with Asda, Carrefour and Morrisons, while renewing Woolworths Group for five years and Auchan for two years. These renewals reduce near-term churn risk and support the argument that the company’s platform is becoming more deeply embedded within customer loyalty and promotions infrastructure.

The 111% net revenue retention rate provides further evidence of expansion within the installed base. A figure above 100% means increased spending and transaction activity from continuing customers exceeded revenue lost through contractions or churn within the measured group.

However, the Neptune Retail Solutions experience remains relevant. Enterprise software companies can build recurring revenue profiles while retaining material exposure to individual large accounts. Eagle Eye’s stronger customer roster reduces that concentration risk, but the final FY26 accounts will be needed to show how revenue is distributed across its largest customers.

How significant was Eagle Eye’s second-half margin recovery for the FY27 outlook?

Eagle Eye generated £4.3 million of adjusted EBITDA during the first half of FY26 on revenue of £23 million, producing an 18% margin. Full-year adjusted EBITDA reached £9.8 million on revenue of £46.7 million, implying approximately £5.5 million of adjusted EBITDA during the second half.

Second-half revenue was approximately £23.7 million, suggesting an inferred adjusted EBITDA margin above 23%. That performance materially exceeded the company’s earlier objective of exiting FY26 at a 20% margin run rate.

The improvement indicates that Eagle Eye benefited from a higher proportion of SaaS revenue, operating cost discipline and efficiency measures. The business added customers and continued investing in sales, marketing and data engineering without allowing operating expenditure to absorb all incremental gross profit.

This is the operating leverage investors expect from a mature software-as-a-service platform. Once the core technology, infrastructure and support functions are established, additional transaction volumes and customers should generate revenue faster than costs increase.

The quality of the improvement will become clearer in September. Adjusted EBITDA excludes share-based payment charges, depreciation, amortisation, restructuring costs, interest, tax and certain expenses associated with the 2025 acquisition of Promotional Payments Solutions. Statutory operating profit and cash-flow conversion will therefore provide a more complete measure of profitability.

Management’s FY27 guidance is also deliberately directional. Eagle Eye expects double-digit revenue and EBITDA growth but has not yet provided a precise range. Maintaining a margin above 20% while restarting investment would provide stronger evidence that the efficiency gains are structural rather than dependent on temporary cost restraint.

The company must avoid squeezing product development or sales capacity merely to protect near-term margins. Its medium-term strategy requires significant expansion, meaning investment must continue if new markets and partner channels are to become meaningful revenue contributors.

Why is the increase in annual recurring revenue more important than headline revenue?

Annual recurring revenue increased 31% on an underlying basis to £44.5 million. This provides a forward-looking measure of contracted subscriptions, expected transaction revenue, long-term professional services and secured new business.

Recurring revenue represented 87% of reported group revenue, up from 84% in FY25. A higher recurring mix generally improves visibility, supports planning and can increase operating leverage because revenue does not need to be rebuilt through one-off project sales every year.

There is, however, an important qualification. Eagle Eye’s ARR definition includes estimates for contracts secured through its global OEM partnership. These estimates are derived from expected consumer numbers and transaction volumes because the commercial model is usage based.

The first two OEM customers contributed an estimated £2 million to ARR at the end of FY26, but the contracts are expected to begin generating revenue during FY27. The figure should therefore be viewed as a management estimate of the initial recurring opportunity rather than revenue already earned.

This does not undermine the strategic significance of the contracts, but it affects the level of certainty. Actual revenue will depend on deployment timing, customer usage, consumer participation and transaction volumes after launch.

Investors should monitor the relationship between ARR and reported recurring revenue. If ARR continues growing while revenue conversion slows, the gap could indicate delayed implementations or cautious assumptions about customer ramp-up. Faster conversion would validate management’s forecasts and strengthen the predictability of the model.

The 31% ARR growth nevertheless gives Eagle Eye a stronger opening position for FY27. It suggests the company enters the new year with more contracted and anticipated recurring business than it carried into FY26.

Can easyJet and Subway prove that Eagle Eye’s platform works beyond grocery retail?

Grocery retailers remain central to Eagle Eye’s customer base, with clients including Tesco, Asda, Morrisons, Carrefour, E.Leclerc, Wakefern and Woolworths Group. These customers process high transaction volumes and operate large loyalty programmes, making the sector a natural market for real-time promotions technology.

The easyJet and Subway agreements demonstrate a broader application. Eagle Eye will support easyJet’s planned loyalty programme through a three-year agreement secured with Boston Consulting Group, with the airline’s scheme expected to launch in 2027.

The Subway contract covers four European markets and uses the AIR platform to support the restaurant chain’s loyalty programme. This strengthens Eagle Eye’s presence in quick-service restaurants, where transaction frequency, franchise structures and personalised promotions create a different operating environment from supermarket retail.

Expansion into travel and hospitality can increase the addressable market and reduce dependence on grocery spending cycles. Airlines, restaurants, hotels and other consumer-facing businesses increasingly want to use first-party customer data to improve retention and personalise offers.

The commercial challenge is that each vertical has different integration requirements, economics and customer behaviour. An airline loyalty programme is built around less frequent but higher-value transactions, while quick-service restaurant engagement depends on repeat visits and localised offers.

Eagle Eye must show that the same underlying platform can support these models without requiring excessive custom development. Successful implementation would confirm that the technology is genuinely scalable across sectors rather than merely adaptable through labour-intensive services.

The company’s API-based and cloud-native architecture should support broader use. The economic proof will come from implementation margins, transaction growth and the ability to reuse product capabilities across customers.

How could Eagle Eye’s global OEM partnership change its customer acquisition model?

The OEM agreement embeds elements of the Eagle Eye AIR platform within the offering of an unnamed global software provider. This gives Eagle Eye an indirect route to customers that may already use the partner’s broader technology ecosystem.

The first two European contracts have moved beyond implementation planning and are expected to generate revenue during FY27. Management estimates their initial combined ARR contribution at approximately £2 million.

The strategic attraction is distribution leverage. Eagle Eye’s direct sales model requires its own teams to identify customers, manage procurement processes and support enterprise deployments. An OEM partner can introduce the technology through an established product suite and existing customer relationships.

If successful, this could reduce customer acquisition friction and extend Eagle Eye into regions or sectors where building a direct sales presence would be expensive. It could also create a repeatable pipeline rather than depending solely on individually negotiated contracts.

The trade-off is reduced control. The partner influences positioning, pricing, customer engagement and implementation timing. Eagle Eye may also receive a smaller share of the economics than it would under a direct contract.

The identity and commercial strength of the partner have not been publicly disclosed, limiting external assessment of the channel’s ultimate scale. The first two contracts provide initial validation, but two deployments are insufficient to establish a predictable growth engine.

FY27 should reveal whether the OEM relationship produces additional customers beyond the initial European wins. The most persuasive evidence would be a growing number of deployments, faster implementation and recurring revenue that converts broadly in line with the ARR assumptions.

Is EagleAI becoming a meaningful growth driver or still an enhancement to the AIR platform?

EagleAI revenue increased 34% to £7.7 million during FY26, accelerating from the 20% growth reported during the first half. The product range secured customers including Morrisons, Wakefern and Asda while expanding volumes with Carrefour.

EagleAI uses customer and transaction data to generate personalised offers, challenges and promotional recommendations. Its integration with the AIR platform allows those offers to be executed in real time across loyalty programmes.

This combination is strategically important. Many businesses can produce customer analytics or promotional recommendations, but enterprise retailers also need systems capable of delivering offers accurately across stores, digital channels and millions of loyalty accounts.

Eagle Eye’s competitive proposition is therefore not artificial intelligence in isolation. It is the connection between prediction, personalisation and execution at transaction scale.

The company processes more than 1.7 billion personalised offers each week and manages more than 750 million loyalty member wallets. That operating scale creates data and implementation experience that could strengthen product development.

However, the term artificial intelligence has become heavily used across enterprise software. Investors should judge EagleAI through revenue growth, customer adoption, measurable expansion within existing accounts and its effect on retention rather than through branding alone.

At £7.7 million, EagleAI is now material but still represents a minority of group revenue. Sustained growth above the broader company rate would indicate that it is becoming a distinct economic driver rather than an additional feature supporting AIR platform sales.

What does Eagle Eye’s £16.1 million net cash balance allow management to do next?

Net cash increased 31% to £16.1 million from £12.3 million despite continued investment and share-capital activity. The year-end figure included a £500,000 net benefit from the company’s buyback programme and the sale of treasury shares.

The balance sheet provides resilience and reduces the need to raise equity to fund ordinary growth. It also gives Eagle Eye flexibility to invest in sales recruitment, data engineering, product development and international expansion.

Management could additionally consider selective acquisitions, although the company should demonstrate the returns from Promotional Payments Solutions before pursuing another material transaction. Acquisitions can broaden capability, but they can also complicate integration and weaken the clarity of organic performance.

At a market capitalisation near £141 million and net cash of £16.1 million, Eagle Eye’s implied enterprise value was approximately £125 million around the 17 July market price. That equates to roughly 2.7 times FY26 revenue and 12.7 times unaudited adjusted EBITDA.

The valuation is not extreme for a recurring-revenue software company delivering underlying growth above 20%, but it already reflects meaningful expectations for continued execution. The shares have more than doubled from their 52-week low and reached a fresh high following the update.

Further rerating would likely require confirmation that FY27 growth reaches double digits without reversing the margin recovery. A slower OEM ramp, delayed implementations or renewed customer concentration concerns could challenge the current optimism.

Can Eagle Eye realistically reach more than £100 million of revenue and a 30% EBITDA margin?

Eagle Eye reiterated its medium-term ambition to generate more than £100 million of revenue and an adjusted EBITDA margin above 30%. Achieving that target would require revenue to more than double from the FY26 level.

The company has not attached a specific completion date to the ambition. That gives management flexibility but also means investors must assess progress through annual growth rates and margin development rather than a fixed deadline.

The existing business provides several potential growth engines. These include expansion within major retailers, entry into travel and hospitality, continued EagleAI adoption, North American customer acquisition, system-integrator partnerships and the OEM channel.

The margin target depends on SaaS scalability. If recurring revenue grows faster than operating expenses, the business could move from a 21% margin towards 30%. However, international sales, implementations, customer support and product innovation will require continued expenditure.

A credible path would combine double-digit organic revenue growth with gradual annual margin improvement. Trying to reach 30% too quickly could underfund sales and product development, while pursuing growth without cost discipline could prevent the platform’s operating leverage from appearing.

Eagle Eye has improved its strategic position. It replaced much of a lost contract, accelerated underlying revenue, rebuilt margins and strengthened cash. The next measurable proof point is the 15 September 2026 full-year result, followed by evidence that the £44.5 million ARR base and approximately £2 million OEM opportunity convert into profitable FY27 revenue.

What are the key takeaways from Eagle Eye’s FY26 trading update and FY27 outlook?

• Eagle Eye reported unaudited FY26 revenue of £46.7 million, ahead of the £45.4 million market expectation identified by the company.
• Adjusted EBITDA reached £9.8 million, approximately 40% above the £7 million consensus figure cited before the update.
• Total revenue declined 3% because FY25 included the Neptune Retail Solutions contract, which was lost in June 2025.
• Underlying revenue excluding Neptune Retail Solutions increased 21% to £46.1 million, while SaaS revenue rose 26% to £39.3 million.
• Annual recurring revenue grew 31% on an underlying basis to £44.5 million, although this includes estimated ARR from OEM contracts not yet generating revenue.
• Recurring revenue represented 87% of group revenue, supporting stronger visibility and potential operating leverage.
• New agreements with easyJet, Subway and a major health and beauty retailer expanded Eagle Eye beyond its traditional grocery customer base.
• EagleAI revenue increased 34% to £7.7 million as Morrisons, Wakefern, Asda and Carrefour expanded adoption.
• Net cash rose to £16.1 million, giving the company flexibility to invest in sales, product development and international growth.
• Eagle Eye expects double-digit revenue and EBITDA growth in FY27, but OEM conversion, customer diversification and sustained margins remain the decisive tests.