Dotdigital Group reports 26.0% revenue growth in FY2016 and 1.5 pp EBITDA Margin decline from 32.0% to 30.4%
18 Oct 2016 • About Dotdigital Group (
$DOTD) • By InTwits
Dotdigital Group reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Dotdigital Group is a fast growth stock: FY2016 revenue growth was 26.0%, 5 year revenue CAGR was 24.6% at FY2016 ROIC 28.9%
- Dotdigital Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.9%. At the same time it's a lot of higher than industry average of 2.0%.
- CAPEX is quite volatile: 0.50 in FY2016, 0.67 in FY2015, 0.61 in FY2014, 0.29 in FY2013, 0.31 in FY2012
- The company has highly profitable business model: ROIC is at 28.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Dotdigital Group ($DOTD) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 9.547 | 12.197 | 16.213 | 21.366 | 26.926 | 26.0% |
| Gross Profit | 8.971 | 11.310 | 14.680 | 19.074 | 23.531 | 23.4% |
| SG&A | | | 11.059 | 13.858 | 17.367 | 25.3% |
| EBITDA | 2.993 | 4.800 | 4.738 | 6.833 | 8.197 | 20.0% |
| Net Income | 2.467 | 0.742 | 3.419 | 4.656 | 5.368 | 15.3% |
Balance Sheet
|
|---|
| Cash | 4.020 | 6.072 | 9.306 | 11.932 | 17.313 | 45.1% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.315 | 0.292 | 0.607 | 0.667 | 0.502 | -24.7% |
Ratios
|
|---|
| Revenue growth | 6.6% | 27.8% | 32.9% | 31.8% | 26.0% | |
| EBITDA growth | 14.8% | 60.4% | -1.3% | 44.2% | 20.0% | |
| Gross Margin | 94.0% | 92.7% | 90.5% | 89.3% | 87.4% | -1.9% |
| EBITDA Margin | 31.4% | 39.4% | 29.2% | 32.0% | 30.4% | -1.5% |
| Net Income Margin | 25.8% | 6.1% | 21.1% | 21.8% | 19.9% | -1.9% |
| SG&A, % of revenue | | | 68.2% | 64.9% | 64.5% | -0.4% |
| CAPEX, % of revenue | 3.3% | 2.4% | 3.7% | 3.1% | 1.9% | -1.3% |
| ROIC | 26.4% | 38.0% | 28.5% | 31.4% | 28.9% | -2.5% |
| ROE | 29.0% | 7.3% | 27.6% | 28.6% | 25.5% | -3.1% |
| Net Debt/EBITDA | -1.3x | -1.3x | -2.0x | -1.7x | -2.1x | -0.4x |
Revenue and profitability
The company's Revenue jumped on 26.0% in FY2016. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.5 pp from 32.0% to 30.4% in FY2016.
Gross Margin decreased slightly on 1.9 pp from 89.3% to 87.4% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign decreased slightly on 1.9 pp from 21.8% to 19.9% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 1.9%. The company showed small CAPEX/Revenue decline of 0.53 pp from 2.4% in FY2013 to 1.9% in FY2016. For the last three years the average CAPEX/Revenue was 2.9%.
Return on investment
The company operates at high and attractive ROIC (28.90%) and ROE (25.50%). ROIC decreased on 2.5 pp from 31.4% to 28.9% in FY2016. ROE decreased on 3.1 pp from 28.6% to 25.5% in FY2016.
Leverage (Debt)
The company has no debt. Cash jumped on 45.1% in FY2016.
Valuation
Dotdigital Group's trades at EV/EBITDA 17.1x and P/E 29.3x while industy averages are 15.6x and 19.1x. The company's EV/(EBITDA-CAPEX) is 18.2x with the industry average at 19.0x.
Appendix 1: Peers in Software & Computer Services
Below you can find Dotdigital Group benchmarking vs. other companies in Software & Computer Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Coms ($COMS) | | 46.8% | 763.3% | 110.4% | 36.1% |
| Centralnic Group ($CNIC) | 15.9% | 4.0% | 98.9% | 71.3% | |
| Proactis Holdings ($PHD) | | 7.0% | 26.2% | 69.6% | 12.5% |
| Progility ($PGY) | | | | 51.0% | 3.2% |
| Galasys ($GLS) | 14.3% | 20.9% | 311.1% | 33.0% | |
| |
|---|
| Median (44 companies) | 8.4% | 6.1% | 4.5% | 3.6% | 7.2% |
|---|
| Dotdigital Group ($DOTD) | | 27.8% | 32.9% | 31.8% | 26.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Lombard Risk Management ($LRM) | 99.0% | 98.8% | 99.2% | 98.6% | 99.3% |
| Phoenix It Group ($PNX) | 97.0% | 97.2% | 97.6% | 97.9% | |
| Wandisco ($WAND) | 91.8% | 80.3% | 80.7% | 93.2% | |
| Netcall ($NET) | 88.2% | 89.7% | 91.0% | 90.9% | 91.2% |
| Idox ($IDOX) | 90.4% | 90.8% | 89.4% | 89.3% | |
| |
|---|
| Median (37 companies) | 62.7% | 62.0% | 58.0% | 60.2% | 48.0% |
|---|
| Dotdigital Group ($DOTD) | 94.0% | 92.7% | 90.5% | 89.3% | 87.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mail.Ru Group Ltd ($61HE) | 43.1% | 47.4% | 50.5% | 34.6% | |
| Idox ($IDOX) | 30.9% | 26.1% | 26.0% | 28.6% | |
| Galasys ($GLS) | 44.0% | 83.6% | 32.6% | 28.5% | |
| Oxford Metrics ($OMG) | 15.7% | 6.0% | 14.7% | 28.4% | |
| Centralnic Group ($CNIC) | 38.7% | 31.1% | 24.8% | 28.3% | |
| |
|---|
| Median (44 companies) | 13.8% | 13.0% | 12.0% | 12.3% | 4.0% |
|---|
| Dotdigital Group ($DOTD) | 31.4% | 39.4% | 29.2% | 32.0% | 30.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Rapidcloud Intl ($RCI) | 1.0% | 23.1% | 11.6% | 19.6% | |
| Coms ($COMS) | 0.5% | 0.9% | 3.4% | 7.5% | 0.1% |
| Csf Group ($CSFG) | 1.5% | 4.0% | 2.4% | 7.1% | 4.9% |
| Nasstar ($NASA) | 17.9% | | 2.1% | 5.2% | |
| Unisys Corp ($USY) | 2.1% | 2.5% | 4.1% | 5.0% | |
| |
|---|
| Median (44 companies) | 1.5% | 1.5% | 1.9% | 1.1% | 0.9% |
|---|
| Dotdigital Group ($DOTD) | 3.3% | 2.4% | 3.7% | 3.1% | 1.9% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Triad Group ($TRD) | 4.1% | -3.8% | 24.5% | 61.5% | 74.4% |
| International Bus Mach Corp ($IBM) | 36.1% | 31.0% | 28.1% | 25.7% | |
| Galasys ($GLS) | 58.7% | 60.9% | 40.8% | 22.2% | |
| Instem ($INS) | 20.6% | 14.7% | 10.9% | 20.4% | |
| Kalibrate Technologies ($KLBT) | 12.5% | 40.2% | 29.2% | 18.8% | 10.2% |
| |
|---|
| Median (44 companies) | 12.5% | 11.5% | 9.4% | 4.3% | 7.1% |
|---|
| Dotdigital Group ($DOTD) | 26.4% | 38.0% | 28.5% | 31.4% | 28.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Progility ($PGY) | 2.0x | | 1.8x | 12.8x | 6.8x |
| Parity Group ($PTY) | 4.7x | | 4.9x | 5.1x | |
| Nasstar ($NASA) | -5.3x | | 0.0x | 1.9x | |
| Phoenix It Group ($PNX) | 4.3x | | | 1.9x | |
| International Bus Mach Corp ($IBM) | 0.9x | 1.2x | 1.4x | 1.7x | |
| |
|---|
| Median (34 companies) | -0.4x | -0.4x | -0.3x | -0.5x | -0.8x |
|---|
| Dotdigital Group ($DOTD) | -1.3x | -1.3x | -2.0x | -1.7x | -2.1x |
