Dotdigital Group reports 20.3% Net Income growth in 2020 and 2.6 pp EBITDA Margin growth from 34.9% to 37.6%
17 Nov 2020 • About Dotdigital Group (
$DOTD) • By InTwits
Dotdigital Group reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Dotdigital Group is a fast growth stock: FY2020 revenue growth was 11.5%, 5 year revenue CAGR was 17.3% at FY2020 ROIC 22.8%
- Dotdigital Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.2%. At the same time it's a lot of higher than industry average of 2.1%.
- CAPEX is quite volatile: £1m in FY2020, £1m in FY2019, £1m in FY2018, £0m in FY2017, £0m in FY2016
- The company has highly profitable business model: ROIC is 22.8%
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 jumped on 11.5%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 13.0 pp from -25.2% to -12.2% in FY2020.
Gross Margin decreased on 3.1 pp from 89.7% to 86.6% in FY2020. SG&A as a % of Revenue decreased on 6.3 pp from 55.1% to 48.7% in FY2020. SG&A as a % of Revenue stuck to a declining trend at -3.7 pp per annum in the last 5 years.
Net Income margin increased slightly on 1.6 pp from 20.0% to 21.6% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 Dotdigital Group had CAPEX/Revenue of 0.58%. CAPEX/Revenue decreased slightly on 0.59 pp from 1.2% in FY2017 to 0.58% in FY2020. It's average level of CAPEX/Revenue for the last three years was 0.92%. CAPEX as a % of Revenue declined at -0.27 pp per annum in the last 5 years.
Return on investment
The company operates at high and attractive ROIC (22.8%) and ROE (22.3%). ROIC decreased on 3.0 pp from 25.9% to 22.8% in FY2020. ROE showed almost no change in FY2020. ROIC declined at -1.6 pp per annum in FY2016-FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.2x and Debt / EBITDA is 0.3x. Debt surged on 89,240% while cash jumped on 31.4%.
Dotdigital Group has no short term refinancing risk: cash is higher than short term debt (2,376.7%).
Valuation and dividends
The company's trades at EV/EBITDA 21.7x and P/E 39.7x.
Financial and operational results
FY ended 30 Jun 2020
Dotdigital Group ($DOTD) key annual financial indicators| mln. £ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 26.926 | 31.966 | 43.094 | 42.522 | 47.404 | 11.5% |
| Gross Profit | 23.531 | 27.507 | 34.020 | 38.145 | 41.038 | 7.6% |
| SG&A | 17.367 | 19.431 | 23.979 | 23.424 | 23.108 | -1.3% |
| EBITDA | 8.197 | 10.135 | 11.576 | 14.859 | 17.820 | 19.9% |
| Net Income | 5.368 | 7.146 | 8.558 | 8.525 | 10.258 | 20.3% |
Balance Sheet
|
|---|
| Cash | 17.313 | 20.428 | 15.005 | 19.320 | 25.383 | 31.4% |
| Short Term Debt | 0.000 | 0.000 | 0.005 | 0.005 | 1.068 | 21,260.0% |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 3.399 | |
Cash flow
|
|---|
| Capex | 0.502 | 0.375 | 0.475 | 0.456 | 0.277 | -39.3% |
Ratios
|
|---|
| Revenue growth | 26.0% | 18.7% | 34.8% | -1.3% | 11.5% | |
| EBITDA growth | 20.0% | 23.6% | 14.2% | 28.4% | 19.9% | |
|
|---|
| Gross Margin | 87.4% | 86.1% | 78.9% | 89.7% | 86.6% | -3.1% |
| EBITDA Margin | 30.4% | 31.7% | 26.9% | 34.9% | 37.6% | 2.6% |
| SG&A, % of revenue | 64.5% | 60.8% | 55.6% | 55.1% | 48.7% | -6.3% |
| Net Income Margin | 19.9% | 22.4% | 19.9% | 20.0% | 21.6% | 1.6% |
| CAPEX, % of revenue | 1.9% | 1.2% | 1.1% | 1.1% | 0.6% | -0.5% |
|
|---|
| ROIC | 28.9% | 29.3% | 26.6% | 25.9% | 22.8% | -3.0% |
| ROE | 25.5% | 27.3% | 26.3% | 21.8% | 22.3% | 0.4% |
| Net Debt/EBITDA | -2.1x | -2.0x | -1.3x | -1.3x | -1.2x | 0.1x |
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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Actual Experience ($ACT) | 2.3% | -49.1% | 195.1% | 79.7% | - |
| Ideagen ($IDEA) | - | 23.6% | 33.2% | 29.2% | 21.2% |
| Eagle Eye Solutions Ltd ($EYE) | - | 71.2% | 24.6% | 22.8% | 20.6% |
| Arcontech Group ($ARC) | - | 7.8% | 9.2% | 12.8% | 4.0% |
| Oxford Metrics ($OMG) | 14.6% | -1.1% | 8.6% | 11.7% | - |
| |
|---|
| Median (15 companies) | 12.2% | 14.1% | 17.5% | 6.5% | 3.0% |
|---|
| Dotdigital Group ($DOTD) | - | 18.7% | 34.8% | -1.3% | 11.5% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Craneware ($CRW) | 94.0% | 93.8% | 94.9% | 93.8% | 93.7% |
| Eagle Eye Solutions Ltd ($EYE) | 78.8% | 88.3% | 89.3% | 93.1% | 93.5% |
| Ideagen ($IDEA) | 88.0% | 89.5% | 91.2% | 91.6% | - |
| Netcall ($NET) | 91.2% | 91.7% | 90.2% | 89.8% | 88.3% |
| Proactis Holdings ($PHD) | 82.4% | 86.0% | 88.6% | 87.7% | 89.2% |
| |
|---|
| Median (14 companies) | 61.1% | 58.2% | 46.4% | 73.8% | 86.5% |
|---|
| Dotdigital Group ($DOTD) | 87.4% | 86.1% | 78.9% | 89.7% | 86.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Arcontech Group ($ARC) | 14.5% | 16.7% | 23.0% | 32.4% | 40.4% |
| Micro Focus International ($MCRO) | 40.9% | 38.9% | 27.5% | 30.3% | - |
| Craneware ($CRW) | 32.3% | 30.4% | 31.1% | 30.3% | 33.4% |
| Ideagen ($IDEA) | 23.9% | 21.8% | 23.8% | 23.5% | - |
| Oxford Metrics ($OMG) | 23.1% | 19.9% | 23.5% | 21.3% | - |
| |
|---|
| Median (15 companies) | 10.5% | 10.9% | 12.2% | 15.4% | 14.8% |
|---|
| Dotdigital Group ($DOTD) | 30.4% | 31.7% | 26.9% | 34.9% | 37.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Netcall ($NET) | 2.7% | 0.7% | 0.8% | 4.7% | 0.6% |
| International Bus Mach Corp ($IBM) | 4.5% | 4.1% | 4.3% | 3.1% | 4.1% |
| Unisys Corp ($USY) | 3.0% | 4.1% | 3.8% | 2.9% | 2.9% |
| Micro Focus International ($MCRO) | 0.8% | 0.9% | 0.8% | 1.7% | - |
| Ideagen ($IDEA) | 1.6% | 1.1% | 1.4% | 1.5% | - |
| |
|---|
| Median (15 companies) | 1.1% | 1.1% | 0.8% | 1.2% | 0.6% |
|---|
| Dotdigital Group ($DOTD) | 1.9% | 1.2% | 1.1% | 1.1% | 0.6% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Craneware ($CRW) | 27.9% | 30.0% | 34.9% | 33.4% | 29.8% |
| Rm ($RM.) | 254.7% | 73.8% | 39.0% | 31.6% | - |
| Arcontech Group ($ARC) | 14.5% | 14.5% | 17.8% | 22.9% | 20.4% |
| Oxford Metrics ($OMG) | 16.3% | 12.7% | 16.4% | 14.7% | - |
| International Bus Mach Corp ($IBM) | 21.5% | 19.5% | 19.8% | 13.0% | 6.7% |
| |
|---|
| Median (16 companies) | 7.0% | 4.7% | 5.0% | 2.0% | 5.1% |
|---|
| Dotdigital Group ($DOTD) | 28.9% | 29.3% | 26.6% | 25.9% | 22.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Micro Focus International ($MCRO) | 2.1x | 6.6x | 4.2x | 4.3x | - |
| International Bus Mach Corp ($IBM) | 1.7x | 1.8x | 1.7x | 3.8x | 4.1x |
| Rm ($RM.) | -2.2x | 0.7x | 0.2x | 0.5x | - |
| Ncc Group ($NCC) | 0.5x | - | 0.8x | 0.5x | 1.0x |
| Unisys Corp ($USY) | -0.3x | -0.6x | 0.1x | 0.4x | -0.6x |
| |
|---|
| Median (10 companies) | -0.9x | -0.5x | -0.1x | 0.3x | -0.6x |
|---|
| Dotdigital Group ($DOTD) | -2.1x | -2.0x | -1.3x | -1.3x | -1.2x |
