Morning Note – 5 March 2024

dotDigital - Strong interims leave upgrade potential

DOTD’s interims are in line with expectations with a mild 3% upgrade to adj PBT and adj EPS from higher interest income. Revenue delivery echoes the January trading update, demonstrating the successful combination of organic and acquired growth, with 15% group revenue growth (vs 13% FY target) in the six months to December 2023. Organic revenue growth of 11% (at constant currency: 9% reported) was boosted by the contribution from Fresh Relevance, acquired in September, adding c£1.9m revenue (Cav

Strength in depth

H1 revs are consistent with Jan’s update: +15% y/y to £38.7m, reflecting improved organic growth (+11% y/y) as all geographies grew, while DOTD also saw a maiden contribution from Fresh Relevance (‘Fresh’). Meanwhile - new today - adj. PBT performed better still: +16% y/y to £8.9m, as ‘core DOTD’ margins grew. This combination of strong operational execution, product improvement/enhancements (achieved through Fresh & organically) and margin improvement, all provide significant optimism, both for

Hitting the right notes

Improving growth, strategic bets paying off

+11% cc. organic H1 growth represents a meaningful improvement on the comp. (c.+7%) driven by growth in all regions and also DOTD’s broader product portfolio, which now includes a CXDP, with personalisation capabilities (thanks to Fresh Relevance). This deeper/broader offering is key to continued cross-selling, while also should enable the pursuance of larger new customers. Success in these regards is reflected by a further 8% growth in ARPC in H1. At a Group level, sales grew +15% to £38.7m, po

Morning Note – 31 January 2024

In the zone

Morning Note – 7 November 2023

dotDigital - Delivering organic and acquired growth expectations

Finals to June 2023 detail performance in line with expectations, but outperforming by +6% for adj PBT and adj dil. EPS: revenue of £69.2m (£69.1mE); adj EBITDA of £22.0m (£22.3mE); adj EBIT £14.3mE (£14.3m); adj. PBT of £15.4m; (vs £14.5mE with the benefit of interest); and adj dil EPS also +6%. £52.7m cash at 30th June enabled the £25m September acquisition (incl £18.9m cash consideration) of personalisation functionality provider Fresh Relevance, in line with the acquisition strategy and acce

Off the radar…but for how long?

Judging by the share price and valuation (>5% FCF yield) you might think DOTD hasn’t refound its mojo, however actually the picture is far more positive: FY22 growth: +8% y/y (vs. a record comp.) and then +10% in FY23 (despite a tough backdrop). We think this trend further improves looking ahead following a step-change in DOTD’s product portfolio, thanks to organic and acquired investment, as this is driving upsells, traction with larger customers and also is reducing churn. Furthermore, numbers

Growth on the dot plot

GenerAIting momentum

The Joy of Techs - Cavendish Technology quarterly sector note

£23.3bn in enterprise value has been returned to AIM technology shareholders over the past six years in the form of 51 public to private takeouts, including 10 in 2023 alone with the takeovers of Smoove* and Tribal announced in early October. With UK valuations appearing cheap and looking more attractive to potential acquirers, we take a moment to reflect on the trends of corporate and private equity bidders targeting AIM-listed technology companies going back to 2017, through the uncertainties

Joining up online marketing, it’s getting personal

Today Dotdigital has taken significant strides in advancing its personalisation capabilities by acquiring Fresh Relevance - an established leader in this field, for £25m. What’s more Fresh Relevance also increases DOTD’s Group’s addressable market by offering personalised web design, such that the enlarged Group can now deliver consistent and compelling cross-channel experiences, across all stages of a customer journey. We therefore see how this acquisition both accelerates growth prospects and

Morning Note – 6 September 2023

Audioboom Group - Q1 24 revenue growth of +11%, FY24E forecasts reiterated

Audioboom’s FY23 results and Q1 trading update show Q1 24 revenue growth of +11% yoy, $6.7m of March 2024 revenue marking the platform’s highest revenue month since May 2022, and a confident outlook that leads us to reiterate our FY24E forecasts. Following the focus on new initiatives through FY23, the platform is now in its strongest ever operational position, with a record 1.1bn monthly ad impressions created in March 2024, record global audience reach of 38.6m unique global listeners in Janua

Alphawave Semi: FY23 trading update, amended forward guidance

Alphawave Semi has reduced guidance for FY23 and prospectively citing lower revenues from China, changes in expected revenue recognition from long-term contracts, and continuing investment in R&D. The share price has reacted negatively, giving up most of the gains since the trading statement at the end of January. Current consensus, which is a good match for pre-existing guidance, should be reduced, most likely following release of the FY23 results and full 1Q24 trading update due on 23 April. H

Crimson Tide - FY23 reports +15% revenue; investment phase complete

Crimson Tide has reported FY23 results to December in line with expectations, with additional operating leverage benefitting updated FY24 and maiden FY25 and FY26 forecasts. FY23 delivered +15% revenue growth to £6.2m at 86% GM, of which over 90% is recurring, and maintained £5.8m ARR even after unexpected customer churn in the year as we previously noted. Crucially, the Group achieved milestone adj EBITDA profitability of £0.4m at 7% EBITDA margin, and edges closer to adj PBT profitability expe

Morning Note – 16 April 2024

Morning Note – 15 April 2024

Checkit - New product launch and contract wins

Checkit has won contracts with two customers worth at least £417k over the three-year lives of the contracts, confirming its ability to upsell to its existing customer base and supporting our forecasts. Having trialled the new technology with multiple customers, Checkit has launched its Asset Intelligence module, which uses advanced analytics and machine learning to enhance customer sustainability, reduce costs and increase revenue.

Devolver Digital (DEVO LN) - Rebuild year

Devolver Digital encouragingly delivered 2023 results slightly ahead of expectations and provided a steady medium-term outlook that leads us to reiterate our 2024 Adjusted EBITDA estimates. Longer term, the company is now planning to further develop its two major planned titles, Human Fall Flat 2 and System Era's next major new release. We now expect those major titles to be released in 2026 rather than 2025, meaning we lower our 2025 Adjusted EBITDA forecast to $10.6m from $17.6m but introduce

Soft growth patch

Auction Technology Group - H1/24 Trading update

ATG’s H1/24 trading statement indicates revenue for the six-month period to 31 March 2024 was $86m, a 6% increase on H1/23 (1% organic growth), helped by the addition of the EstateSales.Net (ESN) marketplace last year, which performed well in the period. Total marketplace revenue increased 2% (organic), driven by growth in value-added services (VAS) and event fees, offsetting a decline in commission revenue (mainly through lower asset prices).

Morning Note – 17 April 2024

Touchstar - Full year results: Recurring revenue strategy delivers further profit growth

Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning's full year results reflect the outcome of a multi-year strategy coming to fruition for the group, with recurring revenue growth of 8.7% delivering overall revenue growth of 7.1% and in turn a 60% increase in PBT to £0.7m. Over the past few years, Touchstar has focused on enhancing the returns from their product offering through a shift towards recurring software licen

It’s not what you sell, it’s the way that you sell it

This report is intended to help UK small- and mid-cap investors gain a better understanding of software companies’ routes to market, and to highlight how one of the most important facets of the way in which they grow and deliver value is routinely ignored.  We examine sales processes for six UK-listed companies and one that has recently been taken over, and consider why they have followed their respective paths.

Engage XR Holdings - Expanding from FY23, FY24E forecasts reiterated

ENGAGE XR’s FY23 results show revenue and net cash in line with the February trading update, EBITDA ahead at -€4.0m vs -€4.5m due to the split of cash outflow between opex and working capital, and a confident outlook that leads us to reiterate our FY24E forecasts. FY23 revenue for the core ENGAGE platform was unchanged vs FY22 at €3.3m, as H2 23 revenue was impacted by the record seven-figure contract announced in February shifting to 2024, and several enterprise customers scaling back renewals

Initial Equity Trading Comments - 19 February 2024

FY23 results in line – and a flying start to FY24

ENGAGE XR has published its FY23 full year results, the headlines of which reflect the details provided in February’s post close trading update in terms of revenue, EBITDA loss and net cash. ENGAGE XR has signed a rapidly growing number of strategic and commercial partnership agreements with companies invested in promoting the VR medium and the development of corporate metaverses.