Dotdigital Group on Tuesday reported revenue growth of 8%, to £90.9m, for the year ended 30 June, with adjusted pre-tax profit rising 2% to £19.4m, as the AIM-listed marketing technology provider said full-year results came in line with market expectations.
The group's earnings (adjusted EBITDA) grew 10% to £29.4m, maintaining a 32% margin, while adjusted diluted earnings per share rose 3% to 4.94p.
Forward-looking contracted annual recurring revenue (ARR) for the core customer experience and data platform (CXDP) business increased 18% to £85.4m, with organic growth accelerating to 8% from 6% at the half-year stage.
Excluding acquisitions, group revenue was flat, reflecting the previously flagged exit of a low-margin messaging contract and the unwinding of a strong prior-year comparator.
Cash fell to £17.1m from £36.2m, after Dotdigital funded the $30m acquisition of Alia, paid a £3.7m dividend and completed a £3m share buyback.
Acquired businesses growing
Alia, acquired in March, grew ARR 45% during its four months under Dotdigital ownership to £10m. Social Snowball, bought the prior year, grew ARR 33% in its first full year of ownership to £5.4m, triggering an expected first-year deferred consideration of approximately $1m payable in FY27.
Both acquisitions have been integrated with the Dotdigital Marketing platform at product and data level; since the year end, Alia has expanded beyond its initial Shopify base and is now being sold across the wider customer group by Dotdigital's revenue teams.
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Gross retention in the Dotdigital Marketing platform improved to 85% from 84%, which the company attributed to strengthened commercial execution under a newly appointed chief revenue officer and a new CRM system.
International revenue rose to 37% of the total from 33%, with North American revenue up 37% to $25m, led by Alia and Social Snowball.
The board proposed a final dividend of 1.33p per share, up 10% from 1.21p, subject to shareholder approval.
Progress but markets remain mixed
"FY26 was a year of substantial progress for Dotdigital," said chief executive Milan Patel.
"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."
Dotdigital said trading in the first four months of FY27 has been in line with the board's expectations, with an acceleration in growth anticipated as the year progresses.
Consensus market expectations for FY27, as cited in the announcement, point to revenue of £104.7m, adjusted EBITDA of £32.8m and adjusted pre-tax profit of £22.3m.
Broker repeats bullish 115p target price
In a note, following Tuesday's update, Panmure Liberum analyst Harvey Robinson said Dotdigital is well placed to accelerate growth, whilst the broker repeated a Buy rating with a 115p target; compared to the current price of 52.4p.
Robinson highlighted that the acquisitions and accelerating contracted ARR in the CXDP business are key forward catalysts supporting Dotdigital's medium-term expansion.
The broker also argued that AI concerns are overstated.