dotDigital sales surge excites

Born in the dotcom boom 15 years ago, dotDigital has made good, steady progress since moving from the PLUS market to AIM four years ago. Then, its shares changed hands for about 7p. Now, it's almost five times that, and earnings growth is beginning to take off. First half sales hint at what's to come.

Digital marketing firms use dotDigital's Software as a Service (SaaS) technology, including the dotmailer email marketing automation platform which has now sent 2.6 billion emails. Revenue jumped by 31% during the six months to December, driven by monthly recurring revenue from dotMailer's SaaS-based usage charges up 28% at £7.4 million. Creative and managed service email marketing revenue was up 57% at £1.1 million, US sales rocketed 150% to $1.14 million, and net cash is up £1.2 million at £9.5 million.

"The dotmailer platform continues to develop to provide high levels of marketing automation to our clients and the product release due in January 2015 includes some exciting new multi-channel marketing capabilities," said boss Peter Simmonds who, after six years at the helm, hands over to Simone Barratt later this year.

And Barratt will provide an update on growth plans and investment strategy for the next two years when dotDigital reports interim results on 24 February. This is clearly a crucial time for the firm and her comments will be watched closely.

N+1 Singer expects adjusted pre-tax profit of £5.2 million for the year ending June 2015, giving adjusted earnings per share (EPS) of 1.6p. That's up from £3.6 million and 1.2p in 2014 and puts dotDigital shares - currently at 33.4p - on almost 21 times prospective earnings.

However, strip out forecast year-end 2015 net cash of £10.8 million, or 3.8p cash per share, and that forward multiple drops to 18.5 times, justified by forecast average annual EPS growth of 41% for this year and next.

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