Eagle Eye H1 2026: AI momentum, fresh wins and a sturdier base
Eagle Eye Solutions has posted a first-half performance that beat the Board’s initial expectations. The period (six months to 31 December 2025) shows a business resetting well after the loss of the Neptune Retail Solutions (NRS) contract in 2025, with strong new business, especially in the US, and clear traction for its AI-led products.
Quick jargon check: Annual Recurring Revenue (ARR) is the contracted subscription and transaction revenue expected to recur over a year. Net Revenue Retention (NRR) tracks how much recurring revenue grows or shrinks with existing customers over 12 months. Adjusted EBITDA is a proxy for cash profits before interest, tax, depreciation, amortisation and certain non-cash or one-off items.
Key numbers from H1 2026
| Metric | H1 2026 | H1 2025 | Change |
|---|---|---|---|
| Group revenue (incl. NRS impact) | £23.0m | £24.2m | -5% |
| Recurring revenue | £19.6m | £19.5m | +1% |
| Recurring revenue as % of Group | 85% | 81% | +5ppts |
| Period-end ARR (incl. OEM est.) | £42.2m | £41.0m | +3% |
| Underlying ARR (ex-NRS base) | £42.2m | £32.8m | +29% |
| Net Revenue Retention | 99% | 104% | -5ppts |
| Adjusted EBITDA | £4.3m | £5.9m | -28% |
| Adjusted EBITDA margin | 18% | 24% | -6ppts |
| Profit after tax | £0.1m | £1.9m | -93% |
| Net cash (31 Dec) | £12.1m | £11.7m | +3% |
| EagleAI revenue | £3.6m | £2.9m | +23% |
| Professional services revenue | £3.0m | £4.4m | -32% |
AI-led growth and US wins are doing the heavy lifting
The strategy is clear: sell the AIR platform and EagleAI to large retailers, and expand within existing accounts. Eight new multi-year contracts landed across North America, Europe and Asia. Notably in the US, four significant deals delivered roughly £2.5m of new ARR – a strong signal that the brand and go-to-market tweaks are working.
Named wins include Wakefern (the largest retailer-owned cooperative in the US), Kwik Trip, a large regional US grocer, and contracts with major European and APAC retailers. Alongside that, EagleAI revenue rose 23% to £3.6m, now 15% of Group revenues. The integration of AIR and EagleAI into “AI Personalised Promotions” is a differentiator: retailers get 1:1, real-time offers without needing their own data science teams.
There is evidence this resonates. At Morrisons, AI Personalised Promotions grew to one million players in 11 weeks of trial, with a further 286,000 joining after the full launch, and repeat usage improving week-on-week.
ARR momentum is strong, even if headline revenue dipped
Excluding the one-off effect of losing NRS, revenue grew 16% to £22.4m and recurring revenue grew 24% to £19.1m. The underlying ARR base (comparable, excluding NRS) jumped 29% to £42.2m, and new ARR in H1 alone exceeded the whole of FY25. That is a powerful leading indicator for future reported revenue.
Including the NRS drag, Group revenue fell 5% and NRR printed at 99%. Management calls out 108% NRR on an ex-NRS basis and 115% within the top 10 customers. Customer churn in long-term contracts remains very low at 0.4% by value. In short: the core engine is expanding; the headline comparator still reflects last year’s exit of a big contract.
Margins, mix and cash: improving quality, near-term pressure
Adjusted EBITDA margin was 18%, ahead of Board expectations but below last year’s 24%, with profit after tax close to breakeven at £0.1m. Direct profit margin held at 70%, helped by platform optimisation and a higher share of recurring revenue. The SaaS direct margin nudged up to 74%.
Cash generation was solid: £4.1m from operating activities, net cash of £12.1m at period end, and an undrawn £10m revolving credit facility. The company also bought back £0.6m of shares. Investment is ongoing: total product development spend was £4.2m, of which £2.7m (64%) was capitalised, largely to support the OEM programme. Management expects capitalisation to reduce in H2.
Professional services revenue fell 32% to £3.0m, which looks negative at first glance, but aligns with Eagle Eye’s push to “productise” the platform. The last seven deals required no custom build – good for scalability and, ultimately, margins.
OEM channel: early proof points, revenue from FY27
The much-trailed OEM agreement is moving. Two blue-chip European customers have signed – one of the world’s largest furniture retailers and a sizeable DACH retail group. The company estimates c.£2.0m of initial ARR from these two once live, with material revenue expected from FY27 as capabilities roll out. That estimated ARR is included in the £42.2m period-end figure.
This route could be a step-change for distribution if the OEM’s customer base adopts at pace. For now, investors should note the timing: contribution is expected to be material from FY27, not this year.
What’s going right
- Underlying growth is strong: +29% ARR on a like-for-like basis, and new ARR in H1 outpaced FY25.
- US traction is real: four sizeable wins delivering c.£2.5m new ARR, supported by a sharpened sales approach.
- AI is pulling its weight: EagleAI up 23%, now 15% of Group revenue, and integrated AI Personalised Promotions is winning competitive tenders.
- Better revenue quality: 85% recurring, rising direct SaaS margin, and minimal churn.
- Balance sheet headroom: £12.1m net cash and an undrawn £10m facility to fund growth.
What to watch
- Headline profitability dipped: adjusted EBITDA down 28% to £4.3m and profit after tax of £0.1m, aided by a £1.4m tax credit.
- NRR including NRS is 99% – below the long-term 120% ambition. Progress with “deepening” needs to keep showing through.
- OEM timing risk: meaningful revenue is expected from FY27. Execution and rollout speed will be key.
- Capitalised development spend rose to 64% of product costs this half. Management says this should ease in H2 – worth tracking as it flatters EBITDA.
Outlook and my take
Management reconfirms guidance to exit FY26 with a 20% EBITDA margin run rate and to deliver FY26 in line with recently increased expectations. They also flag a return to double-digit revenue and EBITDA growth in FY27, supported by US momentum and OEM contribution.
In my view, this is a classic “quality mix improving, profits to follow” story. The company has replaced last year’s NRS shock with a broader, stickier base: more recurring revenue, more AI-led product adoption, and bigger-name customers in the US. The OEM channel is the potential kicker, but patience is needed until FY27.
For retail investors, the crux is whether ARR growth and productisation-led efficiency can lift margins back over 20% without throttling sales investment. If the US pipeline keeps converting and AI Personalised Promotions continues to deepen within existing accounts, that looks achievable. The balance sheet gives them the runway to try.
Bottom line
Despite softer headline revenue and lower EBITDA year-on-year, Eagle Eye’s H1 2026 shows underlying strength where it matters: ARR, win rate, AI adoption and cash generation. The business looks better set for scalable growth than a year ago. Delivery through H2, plus visible OEM progress, will determine how quickly that translates into sustained double-digit growth and margin expansion in FY27.
