Dotdigital Group reports 33.1% Net Income growth and 18.7% Revenue growth
17 Oct 2017 • About Dotdigital Group (
$DOTD) • By InTwits
Dotdigital Group reported FY2017 financial results today. Overall looking at the company's long term financial model we can say that:
- Dotdigital Group is a fast growth stock: FY2017 revenue growth was 18.7%, 5 year revenue CAGR was 27.3% at FY2017 ROIC 29.3%
- Dotdigital Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.5%. At the same time it's in pair with industry average of 2.1%.
- CAPEX is quite volatile: 0.28 in 2017, 0.51 in 2016, 0.22 in 2015, 0.24 in 2014, 0.56 in 2013
- The company has highly profitable business model: ROIC is at 29.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Dotdigital Group ($DOTD) key annual financial indicators
| mln. £ | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 12.197 | 16.213 | 21.366 | 26.926 | 31.966 | 18.7% |
| Gross Profit | 11.310 | 14.680 | 19.074 | 23.531 | 27.507 | 16.9% |
| SG&A | | 11.059 | 13.858 | 17.367 | 19.431 | 11.9% |
| EBITDA | 4.800 | 4.738 | 6.833 | 8.197 | 10.135 | 23.6% |
| Net Income | 0.742 | 3.419 | 4.656 | 5.368 | 7.146 | 33.1% |
Balance Sheet
|
|---|
| Cash | 6.072 | 9.306 | 11.932 | 17.313 | 20.428 | 18.0% |
| 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 | 0.292 | 0.607 | 0.667 | 0.502 | 0.375 | -25.3% |
Ratios
|
|---|
| Revenue growth | 27.8% | 32.9% | 31.8% | 26.0% | 18.7% | |
| EBITDA growth | 60.4% | -1.3% | 44.2% | 20.0% | 23.6% | |
| Gross Margin | 92.7% | 90.5% | 89.3% | 87.4% | 86.1% | -1.3% |
| EBITDA Margin | 39.4% | 29.2% | 32.0% | 30.4% | 31.7% | 1.3% |
| Net Income Margin | 6.1% | 21.1% | 21.8% | 19.9% | 22.4% | 2.4% |
| SG&A, % of revenue | | 68.2% | 64.9% | 64.5% | 60.8% | -3.7% |
| CAPEX, % of revenue | 2.4% | 3.7% | 3.1% | 1.9% | 1.2% | -0.7% |
| ROIC | 38.0% | 28.5% | 31.4% | 28.9% | 29.3% | 0.4% |
| ROE | 7.3% | 27.6% | 28.6% | 25.5% | 27.3% | 1.8% |
| Net Debt/EBITDA | -1.3x | -2.0x | -1.7x | -2.1x | -2.0x | 0.1x |
Revenue and profitability
Dotdigital Group's Revenue surged on 18.7% in FY2017. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.3 pp from 30.4% to 31.7% in FY2017.
Gross Margin decreased slightly on 1.3 pp from 87.4% to 86.1% in FY2017. SG&A as a % of Revenue decreased on 3.7 pp from 64.5% to 60.8% in FY2017.
Net Income marign increased on 2.4 pp from 19.9% to 22.4% in FY2017.
Capital expenditures (CAPEX) and working capital investments
Dotdigital Group's CAPEX/Revenue was 1.2% in FY2017. Dotdigital Group's CAPEX/Revenue decreased on 2.6 pp from 3.7% in FY2014 to 1.2% in FY2017. Average CAPEX/Revenue for the last three years was 2.1%.
Return on investment
The company operates at high and attractive ROIC (29.33%) and ROE (27.30%). ROIC showed almost no change in FY2017. ROE increased slightly on 1.8 pp from 25.5% to 27.3% in FY2017.
Leverage (Debt)
The company has no debt. Cash jumped on 18.0% in FY2017.
Valuation
Dotdigital Group's trades at EV/EBITDA 22.2x and P/E 34.4x.
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 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Pennant International Group ($PEN) | 29.1% | -4.7% | -44.4% | 74.0% | |
| Sopheon ($SPE) | 5.3% | -16.6% | 23.0% | 69.7% | |
| Coms ($COMS) | 46.8% | 763.3% | 110.4% | 36.1% | |
| Microgen ($MCGN) | -7.7% | -0.0% | 7.2% | 34.5% | |
| IMImobile ($IMO) | | 12.7% | 12.6% | 26.1% | 23.5% |
| |
|---|
| Median (34 companies) | 5.5% | 4.4% | 3.1% | 10.5% | 23.5% |
|---|
| Dotdigital Group ($DOTD) | | 32.9% | 31.8% | 26.0% | 18.7% |
Top companies by Gross margin, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Lombard Risk Management ($LRM) | 98.8% | 99.2% | 98.6% | 99.3% | |
| Netcall ($NET) | 89.7% | 91.0% | 90.9% | 91.2% | 91.7% |
| Wandisco ($WAND) | 80.3% | 80.7% | 93.2% | 88.1% | |
| Idox ($IDOX) | 90.8% | 89.4% | 89.3% | 86.8% | |
| Sanderson Group ($SND) | 87.6% | 84.9% | 84.5% | 84.1% | |
| |
|---|
| Median (24 companies) | 62.0% | 57.8% | 58.8% | 56.6% | 86.0% |
|---|
| Dotdigital Group ($DOTD) | 92.7% | 90.5% | 89.3% | 87.4% | 86.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Mail.Ru Group Ltd ($61HE) | 47.4% | 50.5% | 34.6% | 35.2% | |
| Idox ($IDOX) | 26.1% | 26.0% | 28.6% | 27.3% | |
| Proactis Holdings ($PHD) | 18.3% | 22.8% | 26.4% | 23.7% | 3.7% |
| Oxford Metrics ($OMG) | 6.0% | 14.7% | 28.4% | 23.1% | |
| Escher Group Hldgs ($ESCH) | 16.2% | 9.8% | 17.6% | 22.7% | |
| |
|---|
| Median (27 companies) | 12.8% | 11.1% | 12.3% | 11.0% | 11.0% |
|---|
| Dotdigital Group ($DOTD) | 39.4% | 29.2% | 32.0% | 30.4% | 31.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Mail.Ru Group Ltd ($61HE) | 5.8% | 3.0% | 3.6% | 5.2% | |
| Csf Group ($CSFG) | 4.0% | 2.4% | 7.1% | 4.9% | |
| International Bus Mach Corp ($IBM) | 3.7% | 4.0% | 4.4% | 4.5% | |
| IMImobile ($IMO) | 3.3% | 3.9% | 2.0% | 3.3% | 2.8% |
| Unisys Corp ($USY) | 2.5% | 4.1% | 5.0% | 3.0% | |
| |
|---|
| Median (27 companies) | 1.5% | 1.9% | 1.0% | 1.2% | 0.7% |
|---|
| Dotdigital Group ($DOTD) | 2.4% | 3.7% | 3.1% | 1.9% | 1.2% |
Top companies by ROIC, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Rm ($RM.) | 48.6% | 130.8% | 289.2% | 263.8% | |
| Triad Group ($TRD) | -3.8% | 24.5% | 61.5% | 74.4% | |
| International Bus Mach Corp ($IBM) | 31.0% | 28.1% | 25.7% | 18.7% | |
| Oxford Metrics ($OMG) | -0.1% | 0.8% | 14.6% | 16.3% | |
| Idox ($IDOX) | 12.6% | 12.5% | 14.8% | 15.8% | |
| |
|---|
| Median (34 companies) | 11.6% | 9.8% | 5.3% | 8.4% | 7.5% |
|---|
| Dotdigital Group ($DOTD) | 38.0% | 28.5% | 31.4% | 28.9% | 29.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Zoo Digital Group ($ZOO) | 3.2x | | | 38.3x | |
| Progility ($PGY) | | 1.8x | 12.8x | 6.8x | |
| International Bus Mach Corp ($IBM) | 1.2x | 1.4x | 1.7x | 2.2x | |
| Idox ($IDOX) | 1.3x | 1.0x | 1.3x | 1.2x | |
| Datatec ($DTC) | -0.3x | 0.3x | 0.4x | 1.1x | |
| |
|---|
| Median (24 companies) | -0.4x | -0.3x | -0.5x | -0.8x | -1.6x |
|---|
| Dotdigital Group ($DOTD) | -1.3x | -2.0x | -1.7x | -2.1x | -2.0x |
