Dotdigital profits set to exceed full-year expectations

Marketing automation and customer engagement software company Dotdigital said in an update on Tuesday that revenue for the year just ended was at the top end of the range it gave at half-year, and in line with market expectations, growing 8% to £62.8m.

The AIM-traded firm said recurring revenue as a percentage of total revenue rose to 94% for the 12 months ended 30 June, from 93% in the 2021 financial year.

Average revenue per customer continued its upward trend, growing 17% to £1,461 per month from approximately £1,251 per month.

Functionality recurring revenue, from licence fees, data and enhanced bolt-on functionality, grew 18% to £22.3m, while revenues from customers using a data connector from strategic partners rose 14% to £28.9m.

Dotdigital said adjusted EBITDA and adjusted operating profit were both expected to be ahead of market expectations.

The board reported “strong” cash generation through the year, with cash balance of £43.9m at year-end on 30 June, which it said confirmed the “resilience” of the company’s model and provided it with flexibility to invest in its growth strategy.

It said it was intending to pay a final dividend in line with policy, with the expected pay-out linked to EBITDA growth.

Looking ahead, Dotdigital said its “strong” fourth quarter financial performance and sales momentum had continued into the new financial year.

“The group has delivered a strong trading period, with growth at the top end of expectations and profitability ahead of expectations,” said chief executive officer Milan Patel.

“The market opportunity remains buoyant, underpinned by the structural move to digital marketing.”

Patel said the company was cognisant of broader macroeconomic uncertainty, but entered the new financial year in a “position of strength” across its 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.”

At 1533 BST, shares in Dotdigital Group were up 26.2% at 97.3p.

Reporting by Josh White at Sharecast.com.