TIDMDOTD
RNS Number : 8141T
dotDigital Group plc
23 July 2020
23 July 2020
dotdigital Group plc
( "dotdigital" or the "Group")
FY 2019/20 Trading Update
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 ahead
of the publication of its full year results for the year ended 30
June 2020 in November. The trading performance in this statement is
based on unaudited management accounts.
Highlights
-- We are pleased to report that the pandemic had minimal impact
in the final quarter of our financial year due to the high
level of contracted recurring revenues in the core business;
-- Momentum has continued into the new financial year, despite
the ongoing uncertainty around the impact of COVID-19, though
management continues to monitor the current situation;
-- Organic revenue from continuing operations grew by c.12% to
GBP47.4m (2019: GBP42.5m)
-- Adjusted EBITDA(1) from continuing operations is expected
to be comfortably ahead of market expectations;
-- Adjusted operating profit(2) from continuing operations is
expected to be in line with market expectations;
-- Discontinued operations are expected to be at breakeven operating
profit;
-- Strong cash balance of GBP25.4m at 30 June 2020, in line with
market expectations;
-- ARPC(3) continued its upward trend, growing by 12% from approximately
GBP966 per month to GBP1,083 per month;
-- Recurring revenue as a percentage of total revenue is broadly
flat YoY at 85%;
-- Our intention is to pay a final dividend in line with our
policy, with the expected pay-out linked to EBITDA growth;
and
-- Dotdigital was independently rated as a "Strong Performer"
in the 2020 Forrester Wave Email Marketing Services Providers
Report.
Notes
(1. EBITDA is earnings before interest, tax, depreciation and
amortisation and adjusted for acquisition costs and share-based
payments)
(2. Operating profit is adjusted for acquisition costs and
share-based payments)
3. ARPC means Average Revenue Per Customer (including new
customers added in period and existing customers)
Growth Strategy
dotdigital's organic growth strategy continues to be focused
around three key areas:
-- Product Innovation;
-- Geographic Expansion; and
-- Developing strategic partnerships.
Product Innovation
Recurring revenue from enhanced product functionality and
upgrades, taken by both existing and new customers, has increased
by 16% compared with the same period last year. As marketeers'
business models adapted to the pandemic and as lockdown
restrictions continue to ease, we have witnessed a shift towards an
increasing importance on Digital Marketing. The dotdigital platform
is well-placed to deliver on marketeers' requirements and assist in
driving return on investment from their marketing campaigns. We
continue to see an increase in the use of data, platform adoption
and automation capabilities, as marketing strategies become more
sophisticated in ensuring they have a relevant and targeted message
at every touchpoint between the customer or prospect and the
brand.
The Group is making encouraging progress in increasing the
number of customers using our newer messaging capabilities, such as
SMS and Live Chat. We continue to educate the market, for example
through live sessions and digital marketing content, on how it can
combine these different messaging capabilities to deliver a more
cohesive message to customers, as we see interest and demand
growing.
The platform continues to go from strength to strength,
delivering on the needs of our customers and maintaining our
competitive advantage. In May, dotdigital was independently rated
as a "Strong Performer" in the 2020 Forrester Wave for Email
Marketing Service Providers report, an important endorsement of our
competitive edge in the space.
Geographic expansion
EMEA
EMEA revenue grew 9% to GBP36.3m despite the impact of COVID-19
in the second half of the financial year. Sales cycles lengthened
during the lockdown as prospects delayed technology decisions and
existing customers delayed project completions. As the lockdown has
started to ease, we have seen an uptick in momentum both from a
pipeline and sales conversion perspective.
USA
Revenues from the US region were up 17% to $10.5m from $9.0m in
2019, again despite the impact of COVID-19. We have continued to
build on a strong team in North America with continued investment
in Partnerships within the Microsoft Dynamics space and in the
management of the region through hiring a seasoned General Manager
in-region to create more management bandwidth and allow us to
scale. We are continuing to build strong relationships with
partners in-region and remain focused on increasing brand
awareness.
APAC
The APAC market saw high levels of growth in the year, albeit
from a smaller base, with revenues growing 37%, from $3.8m in 2019
to $5.2m. We continue to increase dotdigital's presence in the
region and see a growing pipeline in the Far East through our local
team in Singapore.
Strategic Partnerships
Enhanced brand awareness alongside the additional functionality
that we have developed for ecommerce merchants has allowed us to
continue growth in the Magento space; all new Magento customers now
ship with not only dotdigital messaging capabilities but with our
chat functionality pre-installed, providing us with an additional
route to market and source of lead generation in the conversational
commerce space. Our respective teams continue to work together on
our joint marketing strategy and enhanced development of our
integration. Signup of customers in all regions remains strong - in
the year we added 206 Magento customers to the platform, taking the
total to 716, as at the end of June 2020. In the year, revenue from
Magento customers grew 10% from GBP11.8m to GBP13.0m.
With the inclusion of the dotdigital platform in Shopify's Plus
Certified App Program, which is intended to make it easier for
Shopify Plus merchants to discover carefully selected,
best-of-breed apps, our relationship continues to go from strength
to strength. In addition, we have seen an increasing pipeline
resulting from the integration that we have built with Shopify
Flow, which allows ecommerce merchants a seamless connection to
easily deploy campaigns from the dotdigital platform. We continue
to build relationships with system integrators in the ecosystem. We
now have 83 customers using the Shopify connector versus 56 this
time last year. In the year, revenue from Shopify customers grew
36% from GBP0.9m to GBP1.2m.
As Big Commerce's global elite partner, work continues in
deepening our strategic relationship, formulating a joint go-to
market plan through offers for ecommerce merchants, and joint
marketing efforts to the user base. This will enable us to increase
our addressable market across all regions.
As part of our commitment to our B2B Marketing customers, we
hired a partner manager to build our strategic relationship with
Microsoft for our integration into Dynamics 365 in North America,
where we see a significant opportunity. Revenues from customers
using our Dynamics connector were broadly flat at GBP3.8m in the
period and we expect to see this grow with the addition of our new
partner manager.
Outlook
We remain focused on delivering our strategic objectives of
continuing to drive product innovation, identifying suitable growth
opportunities through partners and continuing to expand our
international footprint.
The management team continues to monitor the effects of the
current pandemic, not only on our business but also our customers.
Our business has performed resiliently against a backdrop of
macro-economic uncertainty to date, but the pandemic remains a
fluid situation and it is difficult to predict with any certainty
how it will evolve, over what time frame and how our customers will
be impacted.
We enter the new financial year with encouraging sales momentum,
a robust pipeline, a strong balance sheet, a high proportion of
recurring revenues and strong cash generation. Therefore it is our
intention to invest as we look into 2021, to secure new business
and grow revenue over future years.
Milan Patel, CEO of dotdigital, commented:
"We continue to operate remotely with virtually no impact on our
operations and are fortunate enough that we have not had to
furlough any staff or introduce any cuts because of the pandemic. I
would like to again thank our 340 colleagues around the world who
have all risen to the challenge of the past few months
superbly.
"These results demonstrate the value our customers attach to our
platform, the benefits of our recurring revenue business model and
our ability to withstand a severe macro-economic shock. Against a
challenging backdrop, we have continued to deliver strong growth,
profitability, and cash generation. Uncertainty is likely to
persist for some time, but as the world returns to some form of
normality, we expect to be in a strong position."
For further information please contact:
dotdigital Group Plc Tel: 020 3953 3072
Milan Patel, CEO InvestorRelations@dotdigital.com
Paraag Amin, CFO
Alma PR (Financial PR) Tel: 020 3405 0210
Hilary Buchanan dotdigital@almapr.co.uk
Josh Royston
David Ison
Canaccord Genuity (Nominated Advisor Tel: 020 7523 8000
and Joint Broker)
Bobbie Hilliam
Georgina McCooke
Jonathan Barr, Sales
finnCap (Joint Broker) Tel: 020 7220 0500
Stuart Andrews, Corporate Finance
Rhys Williams, Sales
N+1 Singer (Joint Broker) Tel: 020 7496 3000
Shaun Dobson, Head of Corporate
Finance
Alex Bond, Corporate Finance
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END
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