COVID-19 Update

RNS Number : 4519J

dotDigital Group plc

14 April 2020

 

14 April 2020

dotdigital Group plc

("dotdigital" or "the Group")

COVID-19 Update

dotdigital Group plc (AIM: DOTD), the leading 'SaaS' provider of an omnichannel marketing automation and customer engagement platform, today provides an update in response to COVID-19.

Outlook

Best estimates show a slight softening of revenue this year, however we expect to deliver consensus earnings and cash for the full year to 30 June 2020. The impact of a prolonged COVID-19 lock down on customers is harder to forecast, impacting our ability to be more precise about mid to long term guidance. We believe the strong fundamentals of the Group remain unchanged, with a proven contracted recurring revenue business model and strong financial position. We remain confident in our ability to continue to deliver against our strategic growth pillars.

Operational trends

Messaging volumes and omnichannel usage (predominantly SMS) from existing customers are continuing to grow. There is some evidence of new business being affected both by lead flow volumes, due to cancellations of tradeshows/events, and decision deferral. Inevitably temporary closures by customers in some industries has had an impact but this is being mitigated in part by customer's digital transformation related decisions having slowed, resulting in a reduction in the usual level of natural churn. In summary, there has been an expected slowdown of new business wins, but also an increased customer loyalty which plays to our core services and business model.

Robust financial position

The business has 90% recurring revenues, (of which 90% is contracted), giving us strong future revenue visibility. We achieve a high operating margin and enjoy good operating cost flexibility. Cash at the end of March was on target at £22.0m with zero debt. Customers come from a diversified mix of industry types and company sizes, with no client representing more than 1.5% of revenue. Stress test modelling gives a high level of confidence that we could, if required, maintain our business model through a prolonged global downturn.

Actions taken

All of our 340 employees worldwide have now transitioned to home working. Staff engagement is high. There has been minimal operational impact and customer support teams, engineers and sales and marketing are all fully functioning. Business continuity plans are tested, working and scaled. As ever, operating costs are closely scrutinised, and all discretionary spending has been curtailed.

Milan Patel, CEO of dotdigital, commented: "Our colleagues have responded brilliantly to what is a challenging and unprecedented time and I would like to extend the Board's gratitude to all of them for their continued hard work and determination in maintaining a top-quality service for our customers. Our people have always been at the heart of what we do and that has never been more evident than in the last few weeks.

"The rapidly evolving nature of the global pandemic means it is difficult to gauge what the impact will be on our customers as we look beyond the current financial year. However, with the high level of visibility, strong balance sheet and diverse customer base that we have worked hard to build, we believe we are well-placed to weather the situation."

For further information please contact:

dotdigital Group Plc Milan Patel, CEO Paraag Amin, CFO	Tel: [phone] [e-mail]
Alma PR (Financial PR) Hilary Buchanan Josh Royston David Ison	Tel: [phone] [e-mail]
Canaccord Genuity (Nominated Advisor and Joint Broker) Bobbie Hilliam Georgina McCooke Jonathan Barr, Sales	Tel: [phone]
finnCap (Joint Broker) Stuart Andrews, Corporate Finance Rhys Williams, Sales	Tel: [phone]
N+1 Singer (Joint Broker) Shaun Dobson, Head of Corporate Finance Alex Bond, Corporate Finance	Tel: [phone]

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

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