Focus on SMEs pays off for dotDigital

DotDigital's strategy of focusing on fast-growing SMEs was paying off on Tuesday, with the company painting an impressive picture in its interim report.

Profit before tax was up 30% to £3.3m at the AIM-traded software-as-a-service (saas) provider, on revenue from operations that grew 29% in the six months to 31 December, to £12.9m, from £10m in the previous interim period.

Recurring revenue from usage charges on the dotmailer saas product was up 35% to £10m. Email-related creative and managed service revenue was up 36% to £1.5m.

Additionally, dotDigital said recurring revenue charges from market automation functionality increased by 156% compared to the prior period.

"The strategy of focusing on fast growing medium/light-enterprise businesses and Magento clients has driven average monthly spend up by 31%. This combined with a focus on longer term contracts and client retention is leading to notably higher client lifetime values," said CEO and CFO Milan Patel.

"Based on the strong performance in the half year to 31 December 2015, the growing demand for marketing automation, the newly released product features and investment strategy, the board remains confident of delivering strong growth, underlying profitability and increasing shareholder value for this year," he added.

Earnings per share also increased by 35% to £1.04, from 77p, and a net cash position of £14.8m was confirmed as of the calendar year end.

Having risen to their all-time high in the New Year, the results saw shares in the company fall to their lowest point since mid-December, down 5% to 45.9p just after 1500 on Tuesday.