Dotdigital Group (LSE:DOTD) — Results for the full year ended 30 June 2020

0:02 Good afternoon, ladies and gentlemen, and welcome to the DOTDIGITAL PLC presentation for the results for the full year ended 06/30/2020. We do apologize for the slow delay in this webinar starting. Throughout the presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available on your Investor Meet company dashboard.

0:33 We would also like to remind you that this presentation is being recorded. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Milan Patel, CEO and Paragamin, CFO of DOTDIGITAL PLC. Good afternoon. Good afternoon. Thank you for passing it over. Firstly, I'd like to welcome everyone that has joined the webinar in terms of listening to our full year presentation for the year ended of June 2020. So I'll just kick straight into the presentation. If we if we start with what we do, and I think some of you may have heard of heard of us as DOTDIGITAL. Some of them some of you guys may not have. But in terms of the platform, we provide a platform for digital marketers in the marketing department to really create their full end to end customer journey by taking data in, understanding a little bit about their recipients, and then effectively using the toolset that we have within the platform to not only use that data, but really understand the recipient and communicate them through relevancy and targeting.

1:44 You can do not only orchestrate customer journeys, but you can use any channel. So, it really puts the end recipient centric to all their marketing campaigns. So if we if we continue looking on, the business was originally formed in '99, was known as DOTMAILER, and more recently, around about three years ago, changed its name to DOTDIGITAL. It's a global business with over 340 employees and set out in 13 different offices, predominantly from three main hubs. UK is our hub into EMEA. Our New York offices is our hub into North America, and our Sydney offices is our hub into APAC. Now when we describe a hub, within the business, effectively, has all the different departments within, to really scale for the future, whether we do more international market penetration from those hubs or whether we continue servicing those clients in region to make sure that we deliver on what they've signed up for.

2:47 We belong to multiple trade organizations or associations, and effectively, what we are doing with them is not only working with them on regulation, but also understanding what the market needs in the future. Some of the key integrations, and as we go through the presentation itself, we'll be talking a bit more around the ecommerce integrations that we have within the business from a platform perspective as well as some of the CRM. So if we continue on, you'll be able to see some of the companies that we help. As I said previously, we focus on mid sized businesses. We also have large enterprises that use the platform. Effectively, the beauty of the platform is it can scale all the way down at the small business and people that are graduating for more sophisticated marketing all the way up to large enterprise who use us in not only multiple business units, multiple brands that they may have, but across the globe in their organization.

3:45 If we look at the ten year, financials, we talk about profitable growth, and it's all about that double digit growth on the top line as well as double digit growth on a profitability perspective and continuing to see seeing that EPS CAGR continuing to rise. If we look at the three main pies, at the bottom, effectively, it's been a vision of the business to diversify more revenues outside of The UK. You can see the platform being well received in international markets from the regional hubs that we have and that continuing to build. In terms of the business model, if we look at the license and functionality and the message recurring, that represents about 91% of group revenues, and one off is, just under 10%.

4:33 Effectively, within the license and functionality, you will have based on the size of client or the contacts that they're bringing in, they commit to a license, that is topped up with the amount of data that is being brought into the system, which is the core components of that license and functionality. And then customers could add on a bolt on basis additional functionality as well. And then the messaging, the bulk of the recurring, a bit like a mobile phone contract. You commit to a fixed volume of messages at a fixed monthly price. In terms of third pillar to our growth around the strategic partnerships, all contracts of of the client is with DOTDIGITAL, so they sign our paperwork.

5:19 We close the the business. The strategic partners help refer in and endorse the platform. So we have nearly half of our customers integrated with either an off the shelf integration that we may have or also sometimes you would have bespoke integrations. And the characteristics of those clients are slightly different to the general book of business where they are higher in terms of average revenue per customer on a monthly basis. They're a lot more stickier, and, effectively, they are a lot more sophisticated and want to do more with the data. So if we look at, where we are, I guess the key ingredients for the success of our business has been not only the platform being world class, but also the talent that we have within the business. I always talk about the people and the platform as the right ingredients to make us more successful.

6:15 Predominantly, most of the employees that we have are in IT and development and sales and marketing, And you can see some of the areas that they're spread out in. So we've continued to strengthen the the board as well, where we've now brought in skill sets that have really grown the business from here to the aspirations and the management team and where we're looking to go. So the board, complement the strong management that we have.

6:48 In terms of if we look at the the growth strategy of the business from an organic perspective, we center around three main pillars. First, being around product innovation and continuing to monetize the platform. Secondly, around strategic partnerships, both with integrations into ecommerce platforms and CRM. And thirdly, geographic expansion. Now how do we continue to do that? We continue to expand our product suite and continue to monetize it, understanding what the customer needs not only for today, but also for the future. I'm working with the likes of Forrester, Gartner, and some of the trade organizations in terms of what's coming next. Second part to that is continuing to focus on cross selling and building those relationships, making sure we're delivering on return on investment for our marketers to continue, adding in terms of ARPU expansion.

7:43 The other around growth in customer base, and that includes not only the the markets that we play in today, but also for the future, deepening our strategic partnerships with global vendors where they can help build on the brand awareness in those different regions or different verticals, and we can help complete that proposition from a value prop perspective. And importantly as well, as part of that, it's globalizing our talent across all the different regions that we play in. So the business is predominantly focused around organic growth, but we also look at, like we do with, three pillars for organic, three pillars to acquisition. And that's probably to do with, first pillar around buying talent in regions that we want to scale up, whether it's, buying more market share in these different regions, whether it's as adjacent technology that really move that platform on quite significantly.

8:43 And then functionality that we may be missing, and part of what we have within DOTDIGITAL is a strong tech ecosystem of partners where we can test the thesis of existing clients buying more functionality or adding on functionality or really what helps us complete that proposition from a new customer acquisitions perspective. So if we look at 1920, in review, firstly, let's cover off COVID nineteen. We were, very quick and safely transitioned to working from home. All employees are working from home, and we've seen an increase in efficiencies and also productivity. There's been minimal impact from an operations perspective. We've seen, NPS scores, which is a measure of customer health, that increasing quite significantly too.

9:32 In terms of new business, we saw a slight slowdown in March and April when, we all went into lockdown. I guess, one, a lot of the customers, both from an existing client perspective, but also new prospects, We're really understanding how they adapt their business models to COVID and the lockdown itself. And then round about May, June, we started to normalize. As we went into q one of this financial year, we saw that accelerating. In terms of cash collection, another important metric that we look at, we've been delivering strong cash conversion, and Parag will mention a little bit later what we've been doing. But we've got a strong diverse customer base, whether it's small, whether it's large, whether it's in in all these different types of verticals that we play in. So we don't have one specific vertical we focus in. We have a broad spectrum.

10:30 In terms of, through that period, we continue to retain all colleagues. We came into it strong with a strong balance sheet, strong profitable growth and effectively, something we're proud of. We haven't had to use any of the government schemes out there. And we're seeing continued sales momentum as we've come into as we came into the back end of last financial year, but also seeing that continuing to increase in the current financial year. So if we look at second lockdown, I think a lot of our customers as well as prospects have adapted their business models. So at this moment in time, we've seen no impact. And effectively, as a management team, we continue to monitor the situation closely and respond to any developments.

11:20 So some of the key messages. We've we've continued our double digit organic growth all the way through the life of the business, but that's continuing strong momentum in terms of the platform being used and also the platform adoption in all these multiple countries. In terms of increased demand for omnichannel and, what you've now started to see is more sophistication of marketers putting the recipient centric to their marketing strategies and starting to adopt these different channels in order to complete the communication with the touch points that they have with their customers. In terms of, what we've continued to do is scale up, from an investment perspective, our three international hubs.

12:06 We're seeing strong relationships building with our strategic partners and continue to invest in brand awareness, but also conversion of clients and continue to invest in r and d to really capitalize the market opportunity from a product perspective. We've also got strong recurring revenues over 90%, of which over 90% is contracted. We're seeing strong cash coming in. And effectively, that's really set us up from a strong financial position as we look forward as well. With the momentum and where we are as a business, we see high levels of confidence in delivering our targets for the new financial year, which has all started very positive.

12:53 So in terms of strategic progress and breaking those three organic pillars down, product innovation, and we talk around functional recurring revenues. That's where I mentioned, the licenses, the use of data, and bolt on functionality. That grew in the year by 16% and now represents a higher percentage of recurring, which is driving more value out of the platform and not just messaging. If we look at some of the key stats, we're now starting to see, more customers adopting more than one channel, which in turn means extra recurring revenues from an ARPU expansion. We saw 23% of our customers now using more than one channel. We also saw, the amount of data. And as I talked earlier around the sophistication of marketeers and then being able to use that data to get very relevant, use content personalization and targeted in their marketing campaigns, we've seen a 300 or nearly a 300% increase in the data that is being synced to the platform.

13:54 In terms of our customers and them generating return on investment, they've seen strong recovery from, some of the, I guess, more sophisticated marketing techniques they're using as well as average revenue that our merchants from an ecommerce perspective seen an increase in average revenue, which more than pays for their digital marketing campaigns. In terms of some of the the other areas that we focused on is around digital sorry, the data and the intelligence of the platform and creating that single customer view. We've continued to, enhance our user interface in in getting more customers to use the additional functionality. But where I mentioned about what is happening in the marketplace where our customers are trying to, create an positive experience at every touch point regardless of whether it's a marketing message or transactional message, and we've continued to add, to our integrations as well.

14:56 In terms of, omnichannel, I already talked about it, but, additional, I guess, channels that people are using outside of email is SMS as a core component in building that experience. But also as customers start to move online, they're seeing the or we're seeing the use of that live chat functionality that we also have. So if we look at the product vision and if we look out twelve to twenty four months, we've got all of the omnichannel capability. And effectively, omnichannel is giving our customers the broadcast capability to communicate with their end customers. We talked about data that's coming into the platform from the integrations within ecommerce, within CRM, other tech platforms that they may have.

15:46 But you're also seeing a rise in what is known as a customer data platform or a data management platform. And we have probably 70 to 80% of the capabilities there, And what we are going to be doing is increasing, or investing further in R and D to really help us take that to market further. That creates new monetization opportunities for us as a business, but also helps with the, recurring revenues coming from data. Now effectively, one of these CDPs or DMPs are are a way of not only bringing data from multiple, datasets that they may have, It gives them the ability to understand the recipient to build a picture and then give them the right, tool set to really communicate under each of these channels, but creating those experiences both from a marketing and a transactional perspective.

16:41 So we're we're continuing to invest in the r and d of the business, to really monetize for the future. And for us, we always talk about the four r's. We've built a platform which allows our customers to send the right message, through the channels that we have to the right customers by using that data to understand their customer base at the right time and through the those right channels as well. So in terms of the strategic partnerships, they continue to go from strength to strength. As I mentioned earlier, they really help us build brand awareness in these different regions that we wanna play. We plug into, global vendors. With the integrations that we have within Magento, Shopify, and BigCommerce, we can address at least 60 to 70% of the ecommerce mid market merchants with the technology.

17:36 And in the CRM space, part of our vision was also to address at least 50% of the CRM user base through the integrations that we have within Microsoft Dynamics. In Salesforce, we can address at least 60% of the mid market CRM user base. We continue to see that increasing. We have our core code base baked into, the core code base in Magento. So every merchant that builds a website within Magento has DOTDIGITAL already in. They just have to sign a contract with us to get up and running. In terms of, some of the other, new partnerships or partnerships we introduced about twelve months ago are now starting to feature as part of that pie that we see on the right hand side, which is encouraging for us as we look into the future.

18:26 In terms of, Microsoft Dynamics, that's an area that's been built up without much sales and marketing from the business, and that's an area that we're now gonna start to put more sales and marketing behind where we see real, traction in that in that marketplace as well. So if we go back to, the three main hubs and third pillar of growth, you can see some of the the clients that have signed up, below, but we saw relatively a little bit of disruption in Q4. As I talked about, it went normalized as we went into, I guess, the final couple of months, and that continued to accelerate as we went into Q1. We saw strong growth in all three of our regions.

19:13 North America showing 17% organic growth, 37% organic growth from the APAC region and strong growth within the EMEA market that we play in. What we are seeing is, a little bit more pull from customer demand, with the joint relationships that we have within Shopify, in the Japanese market now where, for us, any international expansion is more of an incremental approach where we start to dip our toe in the water, understand the market itself, understand our value proposition, our pricing strategy, and resourcing strategy, and then putting more sales and marketing dollars. So we're now starting to win more clients within the Japanese market. The other area, where we're dipping our toe in the water is the LatAm market.

20:02 As I I talk through these different markets, the Japanese market is the third largest market from an ecommerce perspective, after China and North America. Within the LatAm area, we're seeing that as the fastest growing e market sorry, ecommerce market across the globe. And effectively, through the integration that we have with Magento, Magento is doing really well in the LatAm market where we're now starting to win customers from a business perspective.

20:34 So I'm going to pass you over to Harald to go through a little bit more around the detailed financials. Good afternoon, everyone. So just running through some of the financials. What this chart shows that we typically put into our investor decks is just the long term growth rates of both revenue, EBITDA, and then also cash as well. And what we can show is that there's consistent growth over the last ten years, eleven years, in fact, with a 23% revenue CAGR and a 28% EBITDA CAGR over those that period. And then the cash balance also continues to grow with the one small dip down on the acquisition of Kemappi in 2017.

21:19 But we now have a cash balance that's over $25,000,000 at the end of the financial year, and we reported in October that it's now over $27,000,000 I will briefly touch on a couple of the key sort of trading highlights from last financial year, where we grew top line, as Milan said, 12% to GBP 47,400,000 of revenue, of which 91% is recurring. The other sort of key metrics, the average revenue per customer per month grew by 12%, and that's now just shy of £1,100 a month. The thing to note here though is we, as a business, have over 4,000 customers, and the range of that average revenue per month is anywhere from our smallest customers paying us around £200 a month up to our largest customers paying us between 50 and £60,000 a month. So there is a very broad range in terms of the number of customers that come on based around their needs. The average, of course, is around the £1,100 mark, but that average continues to grow.

22:23 The other key point, as Milan mentioned, we we like to grow both top and bottom line. So we last year saw an 11% growth in our adjusted operating profit, which is which reached GBP 13,100,000. So I'll flick over to a slide which shows the sort of P and L. But what I'll do is I'll just go through a couple of key points here. And just for the benefit of maybe some of you who are new to the company, before I talk about the continuing operations, just mention on the discontinued operations and what they are. So we made the acquisition of Camappi in 2017, and that was a predominantly an SMS platform with some omnichannel technology.

23:09 And that technology has now been fully integrated as of well, two financial years ago into the platform. So the Camapi technology now sits within our continuing operations. The discontinued operations remains a part the part of the business that was SMS sending, and that was known as Dynmark. Now that operations, we have stated, will discontinue fully at the end of this financial year. So by the 06/30/2021, there will no longer be any reporting on discontinued operations, which is the former Kemapi business and the Daimler part of that specifically. So as we look forward beyond this financial year, the entire business will be the continuing operations, and that's what we call the engagement cloud, which is our core product.

24:01 So when looking at that continuing operations, the revenue from that, as I mentioned, grew 12%. The cost of sales, has, increased, and there's a mix between the different channels that we send. So whereby channels, such as email, in app push messaging, live chat, social audiences, such as redirecting campaigns to Facebook, Instagram, Twitter, and then Facebook Messenger, Twitter direct messaging, all of those types of channels run off our core Azure infrastructure. So they have a gross margin of around 90%. There are certain channels which we call premium messaging channels, including SMS, WhatsApp, Line, WeChat, those sorts of channels.

24:49 They you you buy at a cost from the vendor, and then you resell. So their gross margin is typically in the 50 to 70% range. So where the business historically has seen gross margins of around eighty seven, eighty eight percent, That will, over time, because of the mix of the different channels we're selling into and the fact that we're seeing a strong acceleration in the likes of SMS and some of those channels that we've in through Comappi, will mean gross margins over the longer term, which will be around the 80% mark. Now this year, looking at consensus figures, our current run rate is 83% gross margin. And just to give to give you an indication of what those consensus figures are, So this year revenue, we're looking at a revenue of around £55,500,000 with a gross margin of 83% and an adjusted profit number of £12,700,000.

25:46 So that's where current consensus is. We've already given two revenue upgrades in the course of this financial year. Now if the current run rate that we've seen in the first four and a half months of financial year continues, we'd expect there to be likely upside to that revenue figure that I've just given with current consensus. But of course, with the pandemic, with uncertainty around the global macro environment, at this moment in time, we're conservative in the guidance that we're giving for top line. And likewise, what we're also doing with the guidance for from profit perspective is saying that we we're being prudent with putting in fully sort of pre pandemic type cost base back in towards the middle of next year. So what we're looking at from, say, April, May, June onwards is the full impact of travel, office costs, and and other subsequent costs that that come in. And if those don't come in, of course, then then there's a little bit of wiggle room there when it comes to the profitability.

26:49 But at this moment in time, we're being prudent with that guidance. Just one other key point also on the P and L. What happened last year with the pandemic was that direct events marketing was, of course, postponed. We're not sure when that will come back in, but what we have done is increased our marketing budget back to normalized levels for this financial year. And then with a view to those events coming back in either towards the end of the year or into next financial year. So we're we're almost back to a sort of return to pre pandemic cost base in our guidance when it comes to things like marketing as well. In the year, one final point, we added in a net 23 people over the last twelve months. So we continue to invest back in the business.

27:37 So just to summarize that in terms of investment, we're looking to invest in marketing, in our in people, and then also into the platform as Milan spoke about a little bit earlier.

27:49 So looking at the balance sheet, I'm not going to spend too long going again, going through the detail at this point. But what we do see is a strong healthy balance sheet with a cash balance that's now, as mentioned in the October trading update, over £27,000,000. So balance sheet remains strong with no debt. And then when looking at cash flow, again, we optimized our cash collection during the pandemic. What this has meant is that the continuing operations EBITDA to net cash from operations is at 99%. So we show EBITDA of $18,400,000 and the cash from operations at $18,200,000 So a strong cash conversion. And so we continue to have opportunity with the balance that we have.

28:34 And one more for the accountants, but really, we had an accounting standard change with IFRS 16. What that has meant is that it helped improve the EBITDA because of the higher depreciation on our office leases of about a million pounds, and it had a small impact on adjusted operating profit of £72,000 negative due to the new accounting standard change. So in summary on the financials, we have a high proportion of recurring revenues, a large percentage of that under contract. We've seen strong international growth, as Milan has mentioned. We've raised revenue growth guidance a couple of times already this year with potential risk to the upside.

29:20 And then we've got a healthy balance sheet and a strong cash position, which gives us opportunities as we look ahead. So with that, I will pass it over to Milan. Thanks, Parag. One of the other things to mention from a financial perspective is us as a business, we look at as we look forward, 15% to 20% top line organic growth with a profitability of a 20% plus margin perspective. In terms of going back to the market, if we look at what has happened, Satya, CEO of Microsoft, put it very nicely. You're seeing two years' worth of digital transformation in two months. You're getting more customers or our customers moving online to create online presence. You've seen a shift in terms of traditional marketing budgets to digital where they can measure the return.

30:16 You're seeing marketers across, across the globe adapting more channels, getting more sophisticated in their marketing to really communicate with that end end recipient from a relevancy, targeting, and personalization perspective. You're also seeing, not only the shift in terms of where marketers were purely focused or higher up the agenda were focused on customer acquisition marketing, you're also getting a rise in terms of, from a strategic perspective, on retention marketing. And us as a platform, as a marketing automate data driven marketing automation platform, we're a real key enabler with that digital transformation that our clients are making. In terms of looking some looking at some of the stats, email still generates the highest return from a return on investment perspective. For every pound spent in email marketing generates £42 in return.

31:17 With the adoption of cross channel and putting your your customer centric to your digital marketing campaigns at every touch point that they have with your business, they're seeing a higher customer lifetime value, an increase of 30%. And in store purchases are influenced by digital transactions. And obviously, more consumers now have multiple channels that they can shop on, and that's increased, to 73%. So if we look at some of the stats, what we're seeing within our platform, we're seeing significant email send growth, so more customers sending more messages, where we saw a 22% increase. You're getting more customers automating programs, and that saw a 28% increase.

32:06 More mobile messaging, and that's over a 200% increase. And then, as I mentioned, more customers using lots of different channels to communicate with their end customer. In terms of the competitive landscape, what you have is, the engagement cloud spanning all the way down from small business all the way up to the larger enterprise. Effectively, we're focused on that mid market where the cost of acquisition of a customer is around about GBP 8,000 to 10,000, our lifetime value is GBP 140,000 to GBP 160,000 from those customers. But that's continued to increase. As Parag mentioned, the ARPU spreads all the way down from customers spending £300 per month with us all the way up to larger customers spending 50 to £60,000 per month with us.

32:56 So what's actually been happening in the landscape? So there's been quite a lot of consolidation in the marketplace where effectively you've seen ExactTarget being bought by Salesforce. So you had Neolane being bought by Adobe. You had Oracle by Responsys, Eloqua. And also when they bought NetSuite, they bought Bronto together with it. Acoustic is the old, silver pop business. And last month, we saw Emasis being acquired by SAP. We saw Selligent being acquired by Centimeters Group, which is owned by Insight Partners private equity. So you're seeing a changing shift. And effectively with I guess, if you look at history when these companies go through, an acquisition, there's a bit of disruption in their own own businesses, whether it's from a culture perspective, strategic importance, etcetera, which shows a bit of a gap for us in the mid market where we are gonna be spending a bit more sales and marketing dollars to displace some of these competitors.

34:02 I guess, why do people choose us? And that's one of the questions that we've had. We're easy to use. We can scale with the customer, whether they're small all the way up to the larger enterprise. We have probably over 95% of the functionality any of these larger clouds have that they can continue using. The other is you are seeing a shift in enterprise clients where they're moving back to more cost effective, quicker to deploy platforms where we're also benefiting from that right hand side. Some of the the others is we make it very easy for customers to bring in that data, use that data to really create those customer journeys as well. And I think, what you are also seeing is an increase in the ability for enterprise customers to use that the engagement cloud to deploy further within their brand into different business units as well as across the globe. We're the only player out there that has in region data processing and data storage in three different regions, whether it's North America, EMEA, or APAC.

35:12 So our customers have that choice of where they want that data to be processed from a regulation's perspective and still maintain the use of the platform from,

35:22 I guess, a group structure perspective. The other, we have our user interface, translated into multiple languages, not just from active platform level, but all the users could still be using the engagement cloud, from a group structure perspective, but could be using it in that local language. So that's, some of the the areas of points of differentiation, from a competitive landscape perspective. That's some of the changes that are happening. You're getting the small business graduating to more sophisticated mid market platforms. And then from the right hand side, in summary, the enterprise clients are moving back to best of breed solutions. So if we look at, the next slide around, I guess, independent verification of the platform itself, g two Crowd is where a lot of the business to business buyers would go to, and that's determined by customer reviews.

36:21 In terms of the left hand side, Forrester Wave is, I guess, an independent research company in our space, that maps the spectrum. Now this is our first entry into the Forrester Wave, and what we can see is a strong performer. We've got a strategy where we're investing a little bit more in terms of the R and D to really get us into that leader's quadrant, looking forwards.

36:49 And the market itself is growing significantly. So Forrester forecast the market to grow from 3,800,000,000 today to 25,100,000,000 in 2027. And we've not only got scalability from a platform perspective, we've got a scalability from a business perspective to help take some of that growth in the market. So if we look at the summary and outlook, got strong strong business model from a recurring perspective, contracted revenues, no debt within the organization, and the, cash has been built up organically. And I think for us, the COVID has shown the strength of the business model really focused on those three key organic pillars, whether it be geographic, whether it be product innovation or strategic partnerships.

37:42 Solid trading performance, not only last financial year, but also Q1 of the current year. Paragord already mentioned the couple of upgrades that we have done from a revenue perspective. In terms of international hubs, we've got strong foundation set, ready to scale further from, where we're getting traction across all of our industries. Investment in relationship where I talked about strategic partnerships, we're seeing strong growth from the partners both from a pipeline and customer perspective,

38:16 but also where the relationship is today and how we expand further in terms of go to market. In terms of other areas, we've seen greater uptake of omnichannel and continuous delivery against our product road map and continue to monetize that coming through in that functionality recurring revenues. In terms of the outlook, as we look forward, strong and clear market opportunity that we can capitalize on. Revenue guidance up, strong momentum coming into the new fiscal year. We've continued to invest further within the platform but also international regions to continue driving that double digit growth from an organic perspective.

39:05 Obviously, we continue to monitor the evolving COVID-nineteen situation. But to date, we are seeing customers increasing their online presence. They're increasing their sophistication in terms of creating those experiences, both from a marketing and a transaction perspective and combining that together so that their end customer has a positive experience both pre and post acquisition. In terms of as we look forward, long term vision and the value proposition for us remains unchanged where we've got these foundations, and we can now continue to capitalize on the opportunities that present themselves.

39:48 Fantastic. Thank you. You, Milan. Thank you, Parekh. Thank you very much for updating investors. Ladies and gentlemen, do please continue to submit your questions using the Q and A tab situated in the top right hand corner of your screen. Simply type your question and press send. Just while the company take a few moments to review those investor questions submitted already, I'd like to remind you that recording of the presentation, along with a copy of the slides and the published Q and A, can be accessed via your investor dashboard on the Investor Meet company platform. And lastly, before I hand back to Milan and Parag, I'd like to remind you that your feedback is important to the company. Immediately after the presentation has ended, you'll be redirected to the opportunity to provide your feedback in order the company can better understand your views and expectations. Milan Parag, I know I haven't perhaps given you a huge amount of time. We've had a number of questions that have come through during the presentation.

40:35 But if I could possibly hand back to you and ask you to read out the question, perhaps who it's from, and just sort of start at the top and work your way down, that would be great. Sure. No problem. So we've got a question from James C. Milan, probably one for you to take. So what's the strategy for organic growth in North America? And are there any opportunities for acquisitions that we've identified in that market? Yes. Thanks, James, for your question. And I guess that is an important one. We've whenever we went into the North American market, we we didn't want to go in and just put lots of sales and marketing dollars and lots of salespeople from a satellite sales perspective. What we had to do was really focus on that niche to make sure we continue driving returns from the investments we make with, I guess, a modest amount that we were going into that market.

41:30 And part of with our strategic partnerships, they're obviously global vendors. We built a strong integration into Magento at the time. And that was probably the niche that we backed from a sales and marketing perspective that would really help drive the addressable market further. So effectively, we saw strong uptake within Magento. That naturally built brand awareness in e commerce. We now added more integrations into people like Shopify and into big commerce. More recently, we've now with that approach into North America with the addressable market has got even bigger through Microsoft.

42:16 I think, we will continue to build on that addressable market through natural brand awareness that we're creating with a little bit more sales and marketing dollars. In terms of opportunities from an acquisitions perspective, we've had a look, but the valuations within the North American market at this moment in time are a little bit more unrealistic. Most of the competitors in our space have been taken out at 10 to 12 times revenue. None of them are profit making. They're all loss making. And when you look at it from a consolidation play perspective, when we've looked, it's not that we want their technology. It's more of the customer base. And when you run your simple DCS, the biggest percentage there in terms of, I guess, what we're willing to pay versus what the vendor is expecting, We've never been able to work make it work because it's the percentage you can migrate onto your platform.

43:14 And I think it's 60 something percent. The vendors think it's 90 something percent. So I haven't made it work from a consolidation play perspective. In terms of synergy technology, most of the tech that we could probably afford, we look at it, and it's still at startup scale. So they haven't really made much of the monetization opportunity. So we haven't really looked at it from that point. So at this moment in time, we're very much focused on spending our own sales and marketing dollars to generate top line within the North American market. And obviously, we'll continue to look at acquisitions. But at this moment in time, we've not made it work. Okay.

43:59 And another question, and I'll probably take this one, from Paulo C is, could you please tell us a little bit more about the acceleration in growth that we've seen in 1Q in October leading to the revised guidance? So just to address that, what we have seen this year versus where we were looking at things in June and July prior to giving the guidance for the the original guidance for the year is an acceleration in SMS in particular. So where initially we were quite conservative, I suppose, again in our guidance for the year, and we started the year with around a 5% to 6% top line growth. We upped that after 1Q, and we've upped it subsequently again where consensus is now showing a 17% growth. But the vast majority of that upside has been so far from SMS.

44:50 To add to that, though, we have actually seen new business coming back where there was a hiatus in March, April, and probably the first half of May, starting to come back to normalized levels where we are winning customers of all sizes. And, you know, Milan touched upon some of the international geographies that that we're we're playing in, and and we're winning business across some new markets as well. So albeit because of the recurring revenue nature of longer term contracts with, our email customers, they're they're essentially buying minimum twelve months, but average, you know, two year contracts. That revenue, you'd see across a a period of time. With SMS, as sending happens, it's more on a pay as you go basis.

45:39 So you you immediately see that that revenue fall through. So we have seen strong demand from SMS, particularly in the b to b space, messaging for schools, messaging for the NHS, that sort of thing in the first quarter and in October. But we're looking at that, you know, the entire platform actually being used and growing over the course of this financial year, which gives us confidence in the numbers that are out there and potential for upside. And then another question, which is coming from Richard H. Any view on Klaviyo, which apparently is a well financed business, which is looking to play more in our space? Will this make life more difficult? So Milan, I don't know if you want to touch on that.

46:29 Yes. So Clavier has got more money that has been injected, I guess, over last week. They've obviously had money in in the past, which they've used up quite quickly. They are noisy neighbors, but if you if you kind of look at where their platform plays, it's more at small business where you see that Mailchimp graduation. We would probably see ourselves as the Klaviyo graduation. And we can see that within when we play with Shopify from an integrations perspective, they would probably win more of the smaller business in the Shopify space. We win probably more of the business due to the sophistication of our platform in that mid market. Okay.

47:17 And I think one question, which I think is from Origin T, who just wants a bit of clarification around our shareholders. The question is, is Liantrust actively involved with the company? What's the story here given they own 20% of shares? Yeah. So thanks, Arjun, for your question. In terms of Liantrust, they are not active in the business. They let the management team get on with what they need to do. They obviously, from a fund perspective, like recurring revenues, like that strong visibility. So what we did see was prior to myself arriving at or sorry, prior to myself being promoted into being CEO, they had 10% as I came on to the seat in terms of the opportunities that were there, they increased their holding. So effectively, they they are just like a normal institutional holder with no active from a management team perspective.

48:27 I think that's probably it in terms of questions that we haven't addressed. I know there are other questions out there, but I think most of them have actually run through when talking about the when talking through the presentation. Yeah. Thank you. Thank you very much, Parag. I do think you have pretty much covered most of those. Obviously, you can review those. So thank you very much indeed. And as I said, I think you have addressed all those questions you can. And review the ones that you may want to look at afterwards, and that will be available on the Investor Meet company platform post the event. Milan, perhaps I could just ask you to, for a couple of words, just to wrap up before we redirect investors to give you some feedback. Yes. I think from a business perspective, we've continued to grow from strength to strength with the double digit recurring revenues that are coming up coming through. We've got a strong business model in terms of that focus, but strong from a financial perspective as we continue to look through the situation.

49:22 In terms of product and the strategic partnerships as well as the geographic, we've got quite a lot of opportunities that present themselves where we continue to capitalize those opportunities and then turn them into profitable growth. So I think we are in a strong position as we look forward. And I guess, finally, thank you so much for listening to our story and how we're continuing to drive return for our stakeholders. That's fantastic. Thanks again. Thanks, Milan. Thanks, Parag, for updating investors today. If you've accessed the meeting from our website, the feedback page will appear just a few seconds after the end of the webinar. If you've accessed from the link sent to you in the email, you'll be asked to log in to submit your feedback. It will only take a couple of seconds, and it will be much appreciated by the company. So on behalf of DOTDIGITAL GROUP PLC, we'd like to thank you for attending today's presentation. That concludes the presentation. Good afternoon to you all.