Investors in Eve Sleep have given the company a vote of confidence, sending shares soaring as it said it could continue to break even in 2020, after balancing its books for the first time.
Shares had jumped 20.5%, or 0.4p, to 2.35p by around 11am on Tuesday, even as the business revealed that revenue had dropped by almost 19% to £23.8 million.
It will come as welcome relief for investors who have seen the price of their shares plummet from 128.9p two years ago.
Eve Sleep embarked on a turnaround plan in September 2018 with the arrival of new chief executive James Sturrock, after seeing is share price nearly wiped out.
We continue to create award winning products ... while removing unprofitable sales and marketingJames Sturrock, chief executive
The business had fallen into the trap of investing in growth and throwing money at areas that were not paying their way.
Management on Tuesday said that attempts to focus on long-term profitability were paying off.
“We are delivering on our priorities of reducing losses and stemming cash burn as we prioritise profitability over sales growth at any cost,” Mr Sturrock said.
Eve said its marketing had become more efficient, while it was bringing higher quality traffic to its website.
The changes helped management break even at an operating level in the last four months of 2019, for the first time in the company’s history.
It reduced negative earnings before interest, tax, depreciation and amortisation (ebitda), to a loss of £10.8 million – a 43% year-on-year drop – and it burnt through cash half as fast in 2019 as in 2018.
Mr Sturrock added: “We continue to create award-winning products … while removing unprofitable sales and marketing.
“We are well placed to make further significant progress in 2020, with a differentiated brand position, a broader product range than peers and ongoing improvements to the customer experience, supported by a lower cost base, a substantial cash balance and no debt.”