REG - dotDigital Group plc - Trading Update

dotDigitalAnnouncement

26/07/2022 07:00

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RNS Number : 6814T  dotDigital Group plc  26 July 2022

Dotdigital Group plc

("Dotdigital" or the "Group")

FY22 Trading Update

Growth across all key global regions and strong profitability

Dotdigital Group plc (AIM: DOTD), the leading 'SaaS' provider of an
omnichannel marketing automation and customer engagement platform, is pleased
to provide the following trading update for the year ended 30 June 2022
(FY22), ahead of the publication of its full year results in November. The
trading performance in this statement is based on unaudited management
accounts.

Highlights

 ·         Revenue at the top end of range given at half year and in line with market
           expectations, growing by c.8% to £62.8m (2021: £58.1m)(1)
           o  Recurring revenue as a percentage of total revenue of 94% (2021: 93%)
           o  ARPC(2) continued its upward trend, growing by 17% from
           approximately £1,251 per month to £1,461 per month;
           o  Functionality recurring revenue (from license fees, data and enhanced
           bolt-on functionality) grew 18% to £22.3m (2021: £18.9m);

           o  Revenues from customers using a data connector from strategic partners up
           14% to £28.9m (2021: £25.4m)
 ·         Adjusted EBITDA(3) and adjusted operating profit(4) are both expected to be
           ahead of market expectations;
 ·         Strong cash generation through the period with cash balance of £43.9m on 30
           June 2022, confirming the resilience of our model and providing the
           flexibility to invest in the growth strategy;
 ·         Email Messaging volumes up 22% in the year to 29.4bn from 24.1bn;
 ·         Intention to pay a final dividend in line with policy, with the expected
           pay-out linked to EBITDA growth;
 ·         Strong financial performance in Q4 with sales momentum continuing into the new
           financial year

 

Notes

1.Market Consensus for revenue for the year ended 30 June 2022 is £62.6m

2. ARPC means Average Revenue Per Customer (including new customers added in
period and existing customers)

3. EBITDA is earnings before interest, tax, depreciation and amortisation and
adjusted for acquisition costs and share-based payments

4. Operating profit is adjusted for acquisition costs and share-based payments

 

Overview

The Board is pleased to report a strong commercial performance and growth
across all key global regions in the year to 30 June 2022 having addressed the
challenges of the first half.

A particular highlight of the last six months has been the progress we have
made in building out our team in North America, with management now in place
to lead the execution of our growth strategy in the region. We have also been
successful in recruiting new talent beyond the senior team. Competition for
labour remains high, however, we are seeing improvements in conditions across
our territories, with several of our competitors now focused on controlling
their substantial overheads.

In the period, we continued to see an acceleration in the shift towards
digital marketing across industries as consumers become more and more
demanding of relevant and personalised experiences and businesses become more
aware of the potential for capturing additional value from new and existing
customers through using tools like Dotdigital's Engagement Cloud.

Customers are increasingly adopting an omnichannel approach, with email
remaining strong in terms of growth and importance to our customers in their
overall marketing strategies. Email volumes grew 22% in the period, as budgets
increase, and industries start to normalise post pandemic.

Both the B2B and B2C markets are increasingly moving towards data, platform
adoption and automation, which are areas Dotdigital has invested heavily in,
and where it excels. With a massive ongoing shift in consumer behaviour
towards digital channels and cost effectiveness and measurability becoming
more and more desirable to marketeers, digital marketing budgets as a
proportion of overall marketing budgets are only likely to continue to grow,
creating a favourable backdrop for Dotdigital.

We are pleased that John Conoley has joined as Non-Executive Chair bringing a
wealth of experience in growing international companies to the Dotdigital
Board. We are making good progress in identifying a new Chief Financial
Officer and will update the market on this appointment in due course.

Outlook

With the challenges of the first half of the year addressed, particularly in
the US, and on the back of a strong end to the period, we enter the new
financial year with confidence. We continue to invest in the business, in line
with budget, with a focus on internal talent development, building our partner
network and ensuring we have the right infrastructure in place to drive
international growth opportunities.

The uncertain external environment will need to be monitored carefully, but
market trends continue to develop in our favour and our product is built to
meet and surpass the needs of modern marketeers. With a diverse customer base,
healthy customer retention levels, strong pipeline, and talented teams in
place across our territories to deliver against our strategy, we are
optimistic about achieving continued strong sales and profitability growth in
FY23 and beyond.

 

Milan Patel, CEO of Dotdigital, commented:

"The Group has delivered a strong trading period, with growth at the top end
of expectations and profitability ahead of expectations.

"The market opportunity remains buoyant, underpinned by the structural move to
digital marketing. According to the 28th Edition of The CMO Survey published
in February 2022, digital marketing spend, which currently accounts for 57.1%
of marketing budgets, is expected to grow by 16.2% over the next year. Our
best-in-class Engagement Cloud is ideally positioned to support a growing and
diversified customer base, the value of which is demonstrated through our
consistently high retention rates and increasing functionality revenues.

"We remain cognisant of broader macro-economic uncertainty but enter the new
financial year in a position of strength across our markets. Supported by high
levels of recurring revenue and strong profitability, we remain focused on
executing against each pillar of our growth strategy: Product Innovation,
Geographic Expansion, and Strategic Partnerships. We look forward to the
future with confidence."

For further information please contact:

 

 Dotdigital Group Plc                                    Tel: 020 3953 3072

Milan Patel, CEO

George Kasparian, Group Finance Director               InvestorRelations@dotdigital.com

 Alma PR (Financial PR)                                  Tel: 020 3405 0210

 Hilary Buchanan                                         dotdigital@almapr.co.uk

 Josh Royston

 David Ison

 Canaccord Genuity (Nominated Advisor and Joint Broker)  Tel: 020 7523 8000

Bobbie Hilliam

 Georgina McCooke

 Jonathan Barr, Sales

 finnCap (Joint Broker)                                  Tel: 020 7220 0500

Jonny Franklin Adams, Corporate Finance

 Alice Lane, ECM

 Rhys Williams, Sales

 Singer Capital Markets (Joint Broker)                   Tel: 020 7496 3000

Shaun Dobson, Chairman of Corporate Finance

 Alex Bond, Corporate Finance

 

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