EYE - Eagle Eye Solutions Plc - 535p
Small-cap provider of tech solutions for omni-channel retail, with AI drivers
Description
Profitable SAAS provider offering a platform for large retailers to implement dynamic, omni-channel execution of complex pricing schemes relating to loyalty, discounting, rewards, gifting etc. Global traction among Tier 1 retailers, but still trading at a tiny valuation multiple (c3x EV/Sales), despite “Rule of 40” profitability (EBITDA margin plus revenue growth over 40). Increasingly likely to be recognised as a winner from AI trends, as AI allows more complex optimisation of personalised pricing/offers. Eagle Eye should win both as an execution player through the Eagle AIR platform, and increasingly in a decision-making role too, through its new EagleAI offering.
A word of caution
This is a somewhat speculative candidate, and the stock is small and illiquid. Insider Ideas has no particular edge in assessing the technical/competitive risks involved in this case. Please bear that in mind when assessing the blog piece. The investor day today (22 Feb 2024) is due to feature customer testimonials, which may be helpful in assessing competitive risks that we discuss in the risk section below.
Link to today’s capital markets event
https://www.londonstockexchange.com/news-article/EYE/capital-markets-event/16343500
What is the Eagle AIR offering (the core existing product)?
Eagle Eye AIR provides retailers with a comprehensive digital marketing toolkit, whose feature set keeps growing.
Thus far, the most important feature has been a price-data message-carrying system with extremely high message throughput capacity. This system allows retailers to run dynamic personalised pricing offers for customers and for these price offers to be executed correctly at the point of check-out, whether in-store or online. The retailer, sometimes with the help of some specialist data companies, decides what is the best offer to send to a particular customer at a given point in time, and then Eagle AIR makes sure those pricing messages are executed correctly and accurately. This often involves integration with the POS system of the relevant retailer.
Eagle Eye is just now releasing a new product, EagleAI, which brings the company into the decision-making field whereby it can now help retailers decide which are the best personalised prices/offers to send to each customer, as well as then allowing the retailer to practically execute such a complex system through the Eagle AIR system. The company has just recently won its first customer for Eagle AI and so this is not yet a material financial contributor to the results - the impressive financial record achieved to date is entirely based on Eagle Eye’s execution related offering.
Eagle Eye’s Annual Report 2023 states that the company has deployed more than 60 new features in the preceding 12 months, including new promotion types (e.g. quest campaigns), extensions to existing product capabilities (e.g. message-at-till), and has delivered new ways for retailers to reward their customers (e.g. social and behavioural rewards), and has also released up a number of new APIs that allow retailers to deliver new digital and mobile services to customers.
Currently, in an average month, Eagle Eye issue more than 2.5 billion offers to customers worldwide, distribute more than 185 billion loyalty points into millions of unique wallets and process more than 6.7 billion API calls across the AIR platform. The company continues to significantly improve the overall performance of the AIR platform, allowing it to process ever-increasing volumes at ever-faster speeds, thus allowing retailers to achieve ever-greater levels of individual personalisation with their customers.
The Eagle Eye technology offering is used by the following major retailers
Asda (UK)
Morrisons (UK)
Fairprice (Singapore)
Woolworths (Australia)
The John Lewis Partnership (UK, for both John Lewis and Waitrose)
Pret A Manger (UK)
Staples (US)
Mitchells and Butlers (UK)
The Ivy Collection (UK)
IKEA Taiwan
Hudsons Bay (Canada)
(Via Untie Nots) - Carrefour, E. Leclerc and Auchan
Several other major retailers have not been openly named for commercial sensitivity reasons
In the paid section below we have sections covering
Management (including video interviews with CEO)
Revenue sources
Recent business trends
Untie Nots acquisition
AI drivers
Customer satisfaction/retention
Fundamentals and Valuation
Insider Ownership Details
Risks