How Good is Eagle Eye Solutions Group PLC (LON:EYE)?

I hold Eagle Eye Solutions Group PLC (LON:EYE) shares in the UK Portfolio. The company provides technology to retailers and restaurants to power their reward schemes, gift cards and discounts. The business is well established in the UK with clients such as ASDA, John Lewis and Burger King. International expansion is going well with Canadian conglomerate Loblaws already a customer and a recently signed partnership with New America Marketing, one of the largest distributors of supermarket coupons in the US.

Revenue for the Eagle Eye AIR platform (the main part of the business) grew 41% to £7.5 million in the first half of 2019. The company is marginally loss making, but management insists that it has sufficient funding to reach cash flow breakeven (I am expecting a capital raise should the share price rise enough). Eagle Eye's market cap is £43.9 million.

One thing that concerns me is that Eagle Eye's customers are typically much bigger than itself which could mean slow growth and low pricing. However, its customer base is reaching a scale where it is becoming attractive to brand owners who typically sell their products through retailers and restaurants. It is possible for these brands to run promotions across Eagle Eye's platform tapping into the underlying consumer base to gather meaningful data. This is attractive to Eagle Eye's existing customers because the brand usually pays for the offer and may pay additional fees on top. There is the potential for this dynamic to become self reinforcing with the platform becoming increasingly attractive to brands as the underlying subscriber base grows, in turn making it more attractive to retailers who gain growing access to brand marketing budgets. I don't know if this will happen, but think it is worth hanging around at these prices to find out.