Dotdigital Group (LON: DOTD), the London-based marketing automation software provider, reported an 18% rise in annual recurring revenue to £85.4m for the year to the 30th of June. The results came at 7am today, before the open. Adjusted pre-tax profit rose just 2% to £19.4m, from £19.0m a year earlier.
Annual recurring revenue (ARR) is contracted, forward-looking revenue that excludes one-offs. Growth excluding acquisitions was 8%, up from 6% at the half year. Group revenue rose 8% to £90.9m but was flat without acquisitions, reflecting the exit of a low-margin messaging contract and lower one-off sales.
Acquisitions did the work. Alia, a list-growth tool for Shopify merchants bought on the 3rd of March, lifted its ARR 45% to £10.0m in less than four months. Social Snowball, an influencer and referral marketing platform, grew ARR 33% to £5.4m. Together they make up about 18% of group ARR, against 6% a year ago.
The core marketing platform’s contracted recurring revenue grew only 3% to £69.4m. Dotdigital blamed mixed macro conditions, which lengthened buying cycles and slowed new customer wins, and said US revenue on the core platform fell after it lost three significant customers.
Adjusted EBITDA, earnings before interest, tax, depreciation and amortisation, rose 10% to £29.4m. Adjusted pre-tax profit lagged because of lower interest income and cash spent on deals. Statutory profit after tax rose 18% to £13.2m, helped by a £5.2m gain from lower expected Social Snowball earn-out payments.
Cash fell to £17.1m from £36.2m after the US$30.0m Alia payment, a £3.7m dividend and a £3.0m share buyback. Earn-outs, deferred payments to sellers tied to performance, are still to come. The proposed final dividend rises 10% to 1.33p, subject to shareholder approval.
Trading in the first four months of the new financial year is in line with the board’s expectations, with growth expected to accelerate. The board is confident of FY27 consensus the company cites: revenue of £104.7m, adjusted EBITDA of £32.8m and adjusted pre-tax profit of £22.3m. Chief executive Milan Patel said:
Market conditions remain mixed, but with more ways to grow and a larger recurring revenue base that gives us greater visibility, we are confident of delivering FY27 results in line with market expectations.
Milan Patel, Dotdigital
Non-Executive Chairman John Conoley said the acquisitions had performed at the upper end of the board’s expectations.