Dotdigital Group revenue jumped on 34.8% in 2018 while EBITDA Margin decreased on 4.8 pp from 31.7% to 26.9%
16 Oct 2018 • About Dotdigital Group (
$DOTD) • By InTwits
Dotdigital Group reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Dotdigital Group is a fast growth stock: FY2018 revenue growth was 34.8%, 5 year revenue CAGR was 28.7% at FY2018 ROIC 26.6%
- Dotdigital Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%. At the same time it's in pair with industry average of 3.3%
- CAPEX is quite volatile: £0m in FY2018, £0m in FY2017, £0m in FY2016, £0m in FY2015, £0m in FY2014
- The company has highly profitable business model: ROIC is 26.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Dotdigital Group's Revenue surged on 34.8%. During the last 5 years Revenue growth bottomed in FY2017 at 18.7%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 4.8 pp from 31.7% to 26.9% in FY2018.
Gross Margin decreased on 7.1 pp from 86.1% to 78.9% in FY2018. Gross Margin stuck to a declining trend at -2.6 pp per annum in FY2014-FY2018. SG&A as a % of Revenue decreased on 5.1 pp from 60.8% to 55.6% in FY2018. SG&A as a % of Revenue declined at -2.9 pp per annum in the last 5 years.
Net Income margin decreased on 2.5 pp from 22.4% to 19.9% in FY2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.1% in FY2018. CAPEX/Revenue decreased on 2.0 pp from 3.1% in FY2015 to 1.1% in FY2018. It's average level of CAPEX/Revenue for the last three years was 1.4%. CAPEX as a % of Revenue declined at -0.72 pp per annum in the last 5 years.
Return on investment
The company operates at high and attractive ROIC (26.6%) and ROE (26.3%). ROIC decreased on 2.8 pp from 29.3% to 26.6% in FY2018. ROE decreased slightly on 1.0 pp from 27.3% to 26.3% in FY2018.
Leverage (Debt)
Debt level is -1.3x Net Debt / EBITDA and 0.0x Debt / EBITDA. Debt surged while cash dropped on 26.5%.
Dotdigital Group has no short term refinancing risk: cash is higher than short term debt (300,100.0%).
Valuation and dividends
The company's trades at EV/EBITDA 21.3x and P/E 30.5x.
Financial and operational results
FY ended 30 Nov -0001
Dotdigital Group ($DOTD) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 16.213 | 21.366 | 26.926 | 31.966 | 43.094 | 34.8% |
| Gross Profit | 14.680 | 19.074 | 23.531 | 27.507 | 34.020 | 23.7% |
| SG&A | 11.059 | 13.858 | 17.367 | 19.431 | 23.979 | 23.4% |
| EBITDA | 4.738 | 6.833 | 8.197 | 10.135 | 11.576 | 14.2% |
| Net Income | 3.419 | 4.656 | 5.368 | 7.146 | 8.558 | 19.8% |
Balance Sheet
|
|---|
| Cash | 9.306 | 11.932 | 17.313 | 20.428 | 15.005 | -26.5% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.005 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.607 | 0.667 | 0.502 | 0.375 | 0.475 | 26.7% |
Ratios
|
|---|
| Revenue growth | 32.9% | 31.8% | 26.0% | 18.7% | 34.8% | |
| EBITDA growth | -1.3% | 44.2% | 20.0% | 23.6% | 14.2% | |
|
|---|
| Gross Margin | 90.5% | 89.3% | 87.4% | 86.1% | 78.9% | -7.1% |
| EBITDA Margin | 29.2% | 32.0% | 30.4% | 31.7% | 26.9% | -4.8% |
| SG&A, % of revenue | 68.2% | 64.9% | 64.5% | 60.8% | 55.6% | -5.1% |
| Net Income Margin | 21.1% | 21.8% | 19.9% | 22.4% | 19.9% | -2.5% |
| CAPEX, % of revenue | 3.7% | 3.1% | 1.9% | 1.2% | 1.1% | -0.1% |
|
|---|
| ROIC | 28.5% | 31.4% | 28.9% | 29.3% | 26.6% | -2.8% |
| ROE | 27.6% | 28.6% | 25.5% | 27.3% | 26.3% | -1.0% |
| Net Debt/EBITDA | -2.0x | -1.7x | -2.1x | -2.0x | -1.3x | 0.7x |
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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Pinnacle Technology Group ($PINN) | -17.1% | | | 108.6% | |
| Wandisco ($WAND) | 40.0% | -2.0% | 3.5% | 72.6% | |
| Microgen ($MCGN) | -0.0% | 7.2% | 34.5% | 45.7% | |
| Lombard Risk Management ($LRM) | 21.6% | 5.4% | 10.3% | 44.8% | |
| Zoo Digital Group ($ZOO) | | 19.9% | 1.5% | 41.7% | 73.2% |
| |
|---|
| Median (39 companies) | 0.8% | 4.7% | 10.9% | 10.9% | 3.0% |
|---|
| Dotdigital Group ($DOTD) | | 31.8% | 26.0% | 18.7% | 34.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Lombard Risk Management ($LRM) | 99.2% | 98.6% | 99.3% | 99.6% | |
| Netcall ($NET) | 91.0% | 90.9% | 91.2% | 91.7% | 90.2% |
| Wandisco ($WAND) | 80.7% | 93.2% | 88.1% | 90.0% | |
| Eleco ($ELCO) | 87.8% | 88.9% | 86.7% | 87.9% | |
| Proactis Holdings ($PHD) | 73.6% | 80.4% | 82.4% | 86.0% | |
| |
|---|
| Median (33 companies) | 57.5% | 55.0% | 56.6% | 55.1% | 35.3% |
|---|
| Dotdigital Group ($DOTD) | 90.5% | 89.3% | 87.4% | 86.1% | 78.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Rightster Group ($RSTR) | -146.3% | -64.1% | -19.9% | 114.2% | |
| Sopheon ($SPE) | 6.8% | 19.8% | 22.6% | 27.9% | |
| Mail.Ru Group Ltd ($61HE) | 50.5% | 34.6% | 35.2% | 25.1% | |
| Gresham Computing ($GHT) | 8.8% | 18.1% | 20.6% | 22.6% | |
| Nasstar ($NASA) | 18.4% | 19.1% | 18.7% | 21.1% | |
| |
|---|
| Median (39 companies) | 10.3% | 12.3% | 10.2% | 10.7% | 6.8% |
|---|
| Dotdigital Group ($DOTD) | 29.2% | 32.0% | 30.4% | 31.7% | 26.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Actual Experience ($ACT) | 2.6% | 6.0% | 39.9% | 48.7% | |
| Csf Group ($CSFG) | 2.4% | 7.1% | 4.9% | 8.5% | 16.5% |
| Pennant International Group ($PEN) | 1.4% | 0.2% | 6.3% | 7.1% | |
| Nasstar ($NASA) | 2.1% | 5.2% | 8.9% | 6.5% | |
| Oxford Metrics ($OMG) | 2.8% | 2.4% | 1.8% | 5.8% | |
| |
|---|
| Median (39 companies) | 1.7% | 1.1% | 1.2% | 1.3% | 0.9% |
|---|
| Dotdigital Group ($DOTD) | 3.7% | 3.1% | 1.9% | 1.2% | 1.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Rm ($RM.) | 130.8% | 289.2% | 254.7% | 73.8% | |
| Triad Group ($TRD) | 24.5% | 61.5% | 74.4% | 61.1% | 41.0% |
| Sopheon ($SPE) | -10.5% | 14.7% | 22.7% | 32.3% | |
| International Bus Mach Corp ($IBM) | 31.6% | 29.7% | 21.5% | 19.5% | 19.8% |
| Microgen ($MCGN) | 9.0% | 12.1% | 15.4% | 18.4% | |
| |
|---|
| Median (41 companies) | 9.0% | 4.0% | 7.1% | 6.3% | 5.5% |
|---|
| Dotdigital Group ($DOTD) | 28.5% | 31.4% | 28.9% | 29.3% | 26.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Datatec ($DTC) | 0.3x | 0.4x | 1.1x | 10.2x | |
| Progility ($PGY) | 1.8x | 12.8x | 6.8x | 3.9x | |
| Zoo Digital Group ($ZOO) | | | 38.3x | 3.2x | 0.9x |
| Statpro Group ($SOG) | -0.3x | -0.2x | | 3.0x | |
| Idox ($IDOX) | 1.0x | 1.3x | 1.2x | 2.2x | |
| |
|---|
| Median (31 companies) | -0.3x | -0.5x | -0.8x | -0.5x | -0.2x |
|---|
| Dotdigital Group ($DOTD) | -2.0x | -1.7x | -2.1x | -2.0x | -1.3x |
