14/04/2020 7:00am
RNS Number : 4519J
dotDigital Group plc COVID-19 Update
Robust financial position
zero debt.
The business has 90% recurring revenues, (of which 90% is contracted), giving us strong future revenue visibility. We achieve a high operating margin and enjoy good operating cost flexibility. Cash at the end of March was on target at GBP22.0m with zero debt. Customers come from a diversified mix of industry types and company sizes, with no client representing more than 1.5% of revenue. Stress test modelling gives a high level of confidence that we could, if required, maintain our business model through a prolonged global downturn.
Actions taken |
Solid RNS and as expected operations will continue largely uninterrupted as being a software business, much can be done remotely. Fully accept that it is hard to predict what effect Covid 19 will have longer term, but I particularly liked this bit :-
"Cash at the end of March was on target at GBP22.0m with zero debt. Customers come from a diversified mix of industry types and company sizes, with no client representing more than 1.5% of revenue. Stress test modelling gives a high level of confidence that we could, if required, maintain our business model through a prolonged global downturn."
There are a lot of companies that would love to be in that position right now imo. Will continue to hold and look to add as a LTH. |
I have sold my holding in DOTD over the last couple of days. DOTD has many attributes in this market with a very strong net cash position and a solid business model, where it can still operate in the current lockdown. But on the negative side it has a significant number of clients (particularly in retail) whose business is affected. If you just view this as a 3 month hiatus, then DOTD will be fine - but I sold on the basis I wanted to free up cash for elsewhere and limit risk, if lockdown is extended. |
Wish I had more free cash to buy more here! |
Some serious trading of DOTD shares happening today. |
Agree nhb001, which is possibly why is is climbing back again today. |
Also SaaS so revenues should be sticky & secure and customer fees are low enough (£500-£1000 pm) for churn to be low. Personally, I would have thought this would be one of the safer investments. If there is such a thing. |
On what do you base that? Majority of sales are EU (inc UK)and N America, not Asia and it's a software company. |
Too much exposure to Asia and virus |
Excellent set of results. Good partnerships and repeat business. Cash generative and debt free. Good to see that 34% of their business is overseas and expanding. Congratulations to the BOD. |
DOTD H1 results overview - video |
tipped on share.com today |
In again here. Good luck all |
"It does look like nearly all revenue growth is from higher ARPU, rather than from winning new clients."
True
Presumably that is the case for just the EMEA region, rather than the faster growing US and APAC regions. In which case, they may actually have been losing customers in the EMEA region?
I would expect / hope that was due to GDPR and that going forward, the EMEA division can focus on growth in new clients again, rather than helping existing clients through GDPR.
Would be good to get a clearer picture of exactly how much the European data protection laws clogged up, or drained the company's time and resources over the last year and how that affected the growth in new clients in Europe.
If that is all done and dusted now, maybe we can expect the EMEA client win rate to start growing strongly again this year? Would be good to see. |
Very solid numbers from DOTD and good to see good cash generation. It does look like nearly all revenue growth is from higher ARPU, rather than from winning new clients. |
PHD on fire |
The CEO is sounding as bullish as he has ever done. The latent market for new customers seems huge. |
Good trading update on first impressions - good progress in the US and APAC and making real cash.
Also, it's looking like the GDPR problems are behind them now. Without the adverse effects of that dragging them back, I think they can increase those growth rates even more over the coming years.
Really good company, really good progress, imo. Looking forward to the results to get a more in-depth picture |
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