Dotdigital Group Plc · LSE:DOTD
Dotdigital — H1 2020 Earnings Presentation
42 slides from Dotdigital's earnings presentation, February 2020
Slide 1: Half year results presentation for 6 months ended 31 December 2019
Half year results presentation for 6 months ended 31 December 2019 Milan Patel, CEO Paraag Amin, CFO February 2020
Slide 2: A global omnichannel marketing automation provider
A global omnichannel marketing automation provider Who we are What we do Who we help • Formed in 1999 as dotmailer with a marketing We provide a SaaS based omnichannel technology vision marketing platform that enables brands to • A global business with a UK headquarters engage with their customers a
Slide 3: People
People At the end of the period we employed 331 people in 14 office locations around the world. Continued investment in new hires in all regions. 132 120 47 32 UK - 266 Other Client Services Sales & Marketing IT & Development UK USA Australia South Africa Singapore Belarus Poland Netherlands 253 peo
Slide 4: Financial and operational progress
Financial and operational progress Strong trading period with Continued momentum in Focussed R&D programme double digit organic growth adoption of Engagement Cloud delivering value and adding to platform globally recurring revenues (c.90%) Robust financial position with Strengthened business Confide
Slide 5: Market opportunity
Market opportunity As digital marketing complexity increases, businesses are embracing omnichannel tools to improve efficiency and speed to market enabling them to create memorable 1:1 customer journeys at every touch point
Slide 6: Global marketing automation spend predicted to grow to $25.1bn
Global marketing automation spend, according to Forrester Research, is predicted to grow to $25.1bn by 2027 from $3.8bn today.
Slide 7: The stats behind the rise of omnichannel customer engagement
The stats behind the rise of omnichannel customer engagement £42 73% 30% 13% Average return for £1 consumers shop on higher lifetime value when Increase in spend per spent on email more than one an omnichannel approach order when more than marketing channel is adopted 3 channels are used 7
Slide 8: Engagement Cloud positioning
Engagement Cloud positioning LOW (price: <£350/month) MID (price: £350-£30k/month) HIGH (price: >£30k/month) • Functionality hits a wall • Value vs. cost • Very high costs • Limited or no service/support • Ease of use is an issue • Often underutilise platform • Become expensive at high • Require bet
Slide 9: Our value proposition
Our value proposition Our mission is to drive value from every engagement for our customers
Slide 10: Why over 65,000+ marketers use Engagement Cloud
About dotdigital Why over 65,000+ marketers use Engagement Cloud Empowering technology Super-powerful and easy to use so marketers can do it all themselves. Breadth of functionality Available graduation pathway to more sophisticated tools Learning We help brands get smarter with inspiring events and
Slide 11: Market leading for email and more
Market leading for email and more dotdigital was named market leader in G2’s marketing automation grid. ✓ Mid-market leader ✓ 85% would recommend ✓ Best in ease-of-use Engagement Cloud ✓ 91% of reviews with ✓ 86% say all their 4 or 5 stars requirements are met
Slide 12: Clear and focussed growth strategy
Clear and focussed growth strategy Foundations for long term success
Slide 13: Growth strategy
Growth strategy Expand our product suite: providing organic Focus on growth Expand cross-selling: geographical deeper customer coverage Geographic expansion relationships Grow our Strategic partnerships customer base Increasing our Organic Growth by Adjacent technology global; market presence growth
Slide 14: Robust SaaS business model to support growth
Robust SaaS business model to support growth • High-quality and visible revenues with repeatable characteristics • 90% recurring revenue, of which 90% is contracted • Provides foundations to build upon for sustainable growth Onboarding, training, managed service, design services, custom integrations
Slide 15: Financial review
Financial review Execution & Financial Review • Strong profitable organic Strong,growth profitable organic growth • Paraag Amin
Slide 16: Key financial highlights
Financials Key financial highlights 15% 90% 32% £22.6m Total revenue Recurring rev of Functionality Strong cash growth (£23.1m) total revenue revenue growth position & (£7.4m) no debt 33% 33% 34% 35% International Adjusted EPS (2.03p) Messaging revenue growth operating profit volume growth (£7.9m) (
Slide 17: Trading performance
Financials Trading performance Revenue Dec 19 Dec 18 Growth Dec 19 Dec 18 Dec 19 Profit & Loss £M (continuing £M (continuing % (continuing £M (discontinued £M (discontinued £M (Group) £20m £10m Statement operations) operations) operations) operations) operations) £0m Dec-15 Dec-16 Dec-17 Dec-18 Dec-
Slide 18: Trading performance
Financials Trading performance Group revenue Cost of sales analysis • Revenue from Continuing Operations grew 15% to • Direct marketing decreased 24% to £1m £23.1m (H1 2019: £20.1m) • Partner commission decreased 5% to £1.1m • Monthly ARPU increased 14% to £999 (H1 2019: £876) Key investment areas •
Slide 19: EBITDA from continuing operations
Financials EBITDA from continuing operations • Reconciliation from operating profit from Adjusted EBITDA Dec 19 Dec 18 £M £M continuing operation to adjusted EBITDA Operating profit from 6.6 4.7 continuing operations from continuing operations Depreciation 0.2 0.2 IFRS 16 depreciation 0.4 - Amortisa
Slide 20: Statement of financial position
Financials Statement of financial position • Healthy balance sheet • Net cash balances of £22.6m Dec 19 Dec 18 Balance sheet £M £M • Now includes right of use assets of £5.3m and Non-current Assets 28.7 21.5 lease liabilities of £5.3m as a consequence of Other Current Assets 13.2 12.4 IFRS16 Cash 22
Slide 21: Cash flow statement
Financials Cash flow statement • Strong cashflows generated from operations Dec 19 Dec 18 • Adjusted free cash flow of £3.6m Cash flow £M £M • R&D spend of £2.9m (H1 2019: £2.6m) Net cash generated from 6.6 4.5 operations 5-year trend – cash balance Net cash used in investing (3.0) (2.8) £25m activi
Slide 22: IFRS 16 adjustment
Financials IFRS 16 adjustment • The IFRS 16 impact was a net decrease of In-period adj £70k on adjusted operating profit for the Continuing Operations £’000 continuing operations in the 6 months to 31 Depreciation (402) December 2019 Interest expense (49) • We have adopted IFRS 16 as at 1 July 2019
Slide 23: Operational review
Operational review Strengthened foundations for continued growth
Slide 24: Expanding international presence
Expanding international presence US revenue grew organically 18% to $5.1m, (H1 2019: $4.3m) driven by acquisition of higher value Geographic expansion customers and growth of existing customers APAC sales, channel team Strategic partnerships expansion and Asia presence 18% drove revenue from the reg
Slide 25: Expanding international presence
Expanding international presence US EMEA APAC Geographic expansion Strategic partnerships Product innovation 25
Slide 26: Building pipeline and market reach
H1 2020 Building pipeline and market reach Review Non-integrated, Magento, 29% 49% Geographic expansion • Growing pipeline and enhanced value proposition Salesforce, for connectors into both ecommerce platforms 7% Strategic partnerships and CRM (Customer Resource Management) software Dynamics, 8% Ot
Slide 27: Building pipeline and market reach
Building pipeline and market reach Looking ahead Geographic expansion • Continued investment in new hires in all regions with increased focus on building Global Premier Gold Microsoft strategic partnerships Technology Partner Partner Strategic partnerships • Further investment in our Shopify relatio
Slide 28: Product innovation driving value
Product innovation driving value • Functional recurring revenue grew 32% to Functional Recurring Revenue Geographic expansion £7.4m demonstrating the value that can (Engagement Cloud - license & be derived from the creation of new data- functionality) £7.4m, Strategic partnerships related revenue st
Slide 29: Engagement Cloud roadmap
Engagement Cloud roadmap Now – 20one April Coming soon January release 20two SMS continued: Reply handling Multi-decision node for programs Mobile-first, interactive landing pages and Split testing eRFM Social ads Abandoned Browse Program enrolment improvements Unified contacts across channels UI im
Slide 30: Outlook & Summary
, Outlook & Summary ,
Slide 31: dotdigital outlook
Summary dotdigital outlook Confidence in the full year Future growth • H1 delivered good financial and operational • Recurring SaaS revenue model progress • Growth platform for mid-market companies • Continued strong momentum into second half • Clear and focussed strategy • Operational foundations i
Slide 32: Questions
Questions www.dotdigitalgroup.com
Slide 33: Appendix
Appendix
Slide 34: Significant shareholders
Significant shareholders • Directors 10.6% • European institutions • Liontrust Investment Holdings 19.5% • Slater Investment Ltd 5.9% • Investec Group 4.8% • Franklin Templeton Fund Management 4.5% • Highclere International 4.2% Global reach • Chelverton Asset Managment 3.7% Germany USA France New Z
Slide 35: Some of our 6,000+ clients and growing
Some of our 6,000+ clients and growing 35
Slide 36: Customer base sector analysis
Customer base sector analysis Pharmaceuticals Real Estate We have a broadly equal split of Government B2B and B2C customers, with 25% of our revenue from the retail Health Care sector. Financials Other Business Services Tech & Telecomms Media Industrials Consumer Retail 0% 5% 10% 15% 20% 25% 36
Slide 37: Our Journey
Our Journey Today Omnichannel Conversational Orchestration Messaging Interface controlled 1-2-1 real-time Scaled marketing Transactional 2018 Action-based Customer Programmable Engagement Unified Behavioral Marketing Relevant Messaging Automation Customer 1999 Engagement Intelligence Product Recs RF
Slide 38: Investment highlights
About dotdigital Investment highlights Clear and Highly Attractive Successfu Experienced Opportunities compelling scalable industry l dotdigital management for superior strategy platform growth culture team growth 38
Slide 39: icelolly.com case study
Icleolly.com email: Subject line ‘Get more Majorca in your life ✈’ Case study icelolly.com Challenge: icelolly.com found that its batch-and-blast destination emails were delivering lackluster engagement rates. With no order data, the holiday comparison site struggled to make marketing messages relev
Slide 40: Oliver Sweeney
Case study Oliver Sweeney Challenge: Oliver Sweeney shoes are a work of art and the team sweats over every detail: from the design and color to leather and stitching. To keep customers happy and engaged, they had to be able to deliver increasingly relevant marketing messages across a variety of chan
Slide 41: Royal Aeronautical Society
Case study Royal Aeronautical Society Challenge: The RAeS has a vast amount of data at its fingertips: 24,000 members, 400 events per year, and almost 300 corporate partners. Members include engineers, astronauts, entrepreneurs, designers, and students from across the globe – each with their own int
Slide 42: Disclaimer
Disclaimer Certain statements included or incorporated by reference within this presentation may constitute “forward-looking statements” in respect of the Group’s operations, performance, prospects and/or financial condition. By their nature, forward-looking statements involve a number of risks, unc