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• Revenue Growth: Consistent delivery of 15% CAGR in revenue growth.

• Operating Margin: Targeted at least 20% operating margin, typically exceeding by 1-2 percentage points.

• EBITDA Margin: 30% plus, consistently achieved.

• Recurring Revenue: 95% of revenue is recurring, with 80% contracted recurring revenue.

• Cash Conversion: 100% of EBITDA converted to operating cash.

• APAC Growth: 19% growth in APAC, with Japan contributing $1 million in revenue, growing at 78%.

• North America Growth: 20% growth, aided by large deals, though not sustainable at current investment levels.

• Average Revenue Per Customer: Increased, supported by Fresh Relevance acquisition.

• Tax Rate: Increase in effective tax rate due to changes in UK R&D tax schemes.

• Cash Position: Strong cash position, providing optionality for M&A activities.

• Product Development: Focus on mobile channels and AI capabilities, with significant increase in in-app push usage.

• Partner Network: Expanded to 850 partners globally, with strategic partnerships in e-commerce and CRM.

• Warning! GuruFocus has detected 3 Warning Signs with DOTDF.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• dotDigital Group PLC (DOTDF) reported solid business performance over the last six months, with progress across all three growth pillars: geographic expansion, product development, and strategic partnerships.

• The company has seen an increase in average order value, attracting higher-value enterprise clients and expanding its customer base.

• dotDigital Group PLC (DOTDF) has a very predictable and diversified revenue base, with about 95% of revenue being recurring, providing good visibility for future periods.

• The company has maintained strong cash conversion, with 100% of EBITDA converting to operating cash, allowing for potential M&A activity.

• The company is actively exploring strategic partnerships and acquisitions to broaden its platform, focusing on areas like loyalty platforms and influencer management.

Negative Points

• dotDigital Group PLC (DOTDF) has experienced increased churn in the EMEA and UK markets, driven by insolvency events, which affected growth in these regions.

• The company faces challenges in maintaining earnings growth in line with revenue growth due to adverse changes in tax environments.

• There is a concern about the sustainability of the high growth rate in North America, which was partly driven by the timing of large deals.

• The company has a flat customer base, with growth primarily driven by higher average revenue per customer rather than an increase in customer numbers.

• dotDigital Group PLC (DOTDF) is facing competitive pressures, particularly in pricing, as some competitors have been more aggressive, potentially impacting customer retention.