Dotdigital Group (LSE:DOTD) — Full Year Results

0:01 Good morning, ladies and gentlemen, and welcome to the DOTDIGITAL GROUP PLC full year results investor presentation. Situated on the right hand corner of your screen. Please just simply type in your questions and press send.

0:21 The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all of the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, Milan Patel. Good morning, sir. Thanks, Jake. Firstly, I'd like to thank everyone that's attending our full year results presentation and giving up your time. Some of you will know the story and have followed the story throughout the journey, and some of you are new. So what I'll try and encapsulate within the presentation is give you a bit of background around DOTDIGITAL and then what we've been doing post the half year results. So if we move on to where we are today, we have 400 employees across the globe. And as we get through the presentation, you'll see that dispersion of employees across the different hubs that we have. We're centered out to three main hubs, UK being a hub into EMEA, our New York offices being a hub into North America, and our Sydney offices being our hub into APAC.

1:25 Now when we describe hubs, it's having every single department that you can really scale from as you penetrate further, other international regions from that central hub. In terms of the business, we have nine international locations, a very strong partnership network that works around one of our pillars of growth. We're very much focused in that mid market, larger enterprise type of customer. So I guess what do we do? There are four main components to the platform. First, around our data capabilities. That's about customers bringing data in very easily from a data ingestion perspective, really to build up a view on the recipients that they're talking to. The markets and the world has evolved from a marketing strategy perspective.

2:11 It's not just about one content to everybody, but also today is about a personalized experience, a one to one experience based on what they know, what your interests are, and that starts with the data. The second part of the platform is around, what we describe as the orchestration layer, and that's automating your customer journey across all touch points that you have with your end customers if you're in the ecommerce market or communities if you're using it from a non for profit, education, or government perspective. We normally talk about in the presentation from an ecommerce angle, but what we have is a customer that's very diverse across our portfolio.

2:56 The third part to that, once you've created your campaigns where you don't have to have any expertise within your marketing departments, it's all drag and drop technology, easy to use. You've got all the different channels that you could communicate on, whether it's email, which generates the highest return on investment from all digital marketing channels, where you're trying to enhance that experience or be front of mind to people you're speaking to. We have all the other channels like SMS that you can complement with email, social, push, and the list goes on. In terms of you can see some of the customers we we actually serve, but we have over 4,000 brands that use our platform in varying degrees of challenges that they're trying to solve. If we look at how many active customers, we have 50,000 active customers that use our platform on a monthly basis.

3:49 So down on the bottom, from a business split perspective, we have three main organic growth pillars: one, around geographic secondly, around our strategic partnerships and the integrations that we've built within e commerce or integrations that we've built into CRM platforms for B2B marketers. In terms of the third pillar of growth for us is around product innovation, and and that's about spending the R and D dollars of product development to create that feature rich platform but also monetizing the technology that we build. If we look at the journey of the business, we talk about sustainable growth, profitable growth, and our key KPIs and the focuses are around revenue, profitability and cash conversion. So if we look at the year end review, some of you would have been here or following us around the time of the interim results. There's a couple of key things that we talked about where we saw some headwinds. But what I can say is we've seen growth across all regions.

4:50 Part of the headwinds that we had, we were some of the COVID winners where we were having SMSs that were vaccine related, whether it was the schools that were sending out SMS, and that normalized through the period. What we did see is some decline in revenue from the transactional SMS messaging, but we did see marketing SMS that was that grew substantially in the period absorbing some of that decline. Some of the other areas was around our U. S. Team and The U. S. Region. And what I'm pleased to say as we fast forward nine months since the last time I spoke to you, really put the foundations in place, whether it's the management team that continue to execute against the strategy that we have in play for the long term or it's the supporting teams around the go to market, sales or customer success.

5:43 In terms of one of the things that pretty much all companies was talking about was around employee attrition, was around difficulties in hiring, I guess the world has changed where some of the private equity and VC backed businesses are really looking at their cash burn, and there's a supply to from an employee or talent based perspective at a reasonable price today. One of the other elements that I was having to change was around the chairman and CFO. You would have seen some of the RNSs that went out, and I'm pleased to say we have a very strong team and a board that believe in the vision and the long term prospects of the business. You'll hear a little bit about, sorry, you'll hear a little bit from our CFO, Alastair Gurney. He'll give you an introduction, his background and why he chose DOTDIGITAL to come here. But we've also got the chairman in place, John Connolly, who has worked with larger businesses within the public markets.

6:46 And that, together with the strong experience and skill set, completes the board. In terms of some of the areas and the macro drivers or from the macro environment, some of the market drivers, we're still continuing to see digital marketing growing as a proportion of overall marketing budgets. And from the outlook statement that I talked about, Q1 is in line, and we have a positive outlook as we look forward and having strengthened those foundations. So Alastair will go into a lot more detail around some of these metrics, but what we continue to do is deliver growth. We've seen a 20% plus operating margin, which has been consistent throughout the life of us as a business on the public market. We've seen over a 30% EBITDA margin. And what's also pleasing to see is that cash conversion coming through.

7:37 No debt within the organization. And if we go back to majority of our group revenues, 94 percent in this case is recurring. International revenues just represents under onethree of our total revenues, and that will continue to increase as part of our vision is to diversify more revenues outside of The UK. What's also pleasing to see is the ARPC or ARPU ARPU has continued to go up, and that's with a combination of larger customers coming on board to solve the challenges that they may have, but also we're seeing existing client growth both from data coming into the platform, contact sizes continuing to increase and more message volumes, not only from the components that they were using but also the complementary channels that we have within the platform and them using that as part of their overall digital experience.

8:35 We propose a final dividend in line with EBITDA growth of 0.98p, which will be paid at the end of January, and that will be proposed at the AGM. So I normally get asked the questions, well, Milan, what are the challenges of the marketeers?

8:54 And we have that diverse customer base, and everyone's trying to solve slightly differently, some of the challenges that they have. And the return on investment to different types and verticals of businesses means different things to different people. I always you know, from Converse's perspective, and I'll take you through three different examples. Converse wanted to increase their global presence from a brand awareness perspective, particularly in the LatAm market to start out and then broaden that out. In terms of other elements that they were looking for was more personalized and scalable marketing campaigns and the ability to use other channels that we had within the platform so that they could capture all that data and then use that to really get one to one personalized with who they were speaking to.

9:45 So what we were able to provide Converse was not only the customer data capabilities that we have built in the year, where they can aggregate that data and store the data from the campaign statistics or the campaigns that they were sending out. But what was able to use that data, whether it's around segmentation, using machine learning or AI capabilities that we have in the platform to really get content personalized or help them support what they were looking to do. They also used our live chat product in not only talking to the customers from a customer service perspective, but they also used that as a chance to connect with who they were speaking to, really understand that through what we describe a single customer view while we are talking to them. That's things like how often do they purchase in this retail environment, how often do they purchase, and also average order values, but at how have they interacted with your brand.

10:46 They were able to increase their marketing list by 29%. Of that 29%, they were able to convert those contacts that they were adding into paying customers. And as the focus of digital marketing is not just on customer acquisition but also retention tactics from a marketing perspective, they saw a 300% uplift in repeat purchasing. KISSDIRTH, they had a slightly different challenge. There was the element of they had a lot of data in different silos within their organizations or across different business systems. What they wanted to do was aggregate that all in one place so that they could get more cleverer, more personalized with who they were speaking to.

11:34 What they were suffering or one of the with a previous vendor that they had was they weren't really getting that conversion rate coming through. So what we're able to provide them, which is a theme across the across the different solution sorry, across the different challenges people are trying to solve, which is data has to be centric to your marketing campaigns. With the CDP capabilities, were they not only able to easily bring that data into the platform, they're able to use that data to really drive the return that they were looking for. What Kisteuf were able to see was an increase in their database growth. They

12:14 were also seeing improved metrics around customer retention and increased repurchase rates through replenishment. The other elements that Kisteirth wanted to, which is a client of ours in APAC, was really optimize the ad spend that they were doing from retargeting or pay per click to really look at that and see how they could generate that return on investment. So as part of DOTDIGITAL, we have the ability to create those ads and use the ad networks. But the slight difference to a generic ad platform, you have the demographics, and you have to use those. With the DOTDIGITAL platform, you actually know about the person you're speaking to, who you're engaged with, and you can optimize your ad spend to engage the user base and understand what they're doing from a journey metrics perspective.

13:08 So they were able to carry out all the solutions or use the solutions to solve those challenges. DHL was a slightly different, challenge. What they were looking for was the ability to have an account structure that gave them control at the central marketing level, but the field marketing teams, they were able to do customization around these different territories or different brands that they had. The other element they were looking for was a multilingual user interface and so that their users could use it in their local language. They were looking for more productivity gains across the marketing department. We're unique, out there that can really provide a user interface at that user level and still be able to use the account, control the templates, control automation across these different territories and different brands in their local language.

14:10 The other element was around onboarding. A lot of the enterprise clients want to get up and running very quickly, more cost effectively, And with our professional services teams really understanding what DHL were trying to solve, we're able to onboard a large enterprise client like that within a three month period. The other element that, we were able to provide was, obviously, our data capability from a personalization perspective. But what DHL saw was not only a gain in productivity of over 75%, where we've really built a platform for ease of use. You don't have to have the expertise quicker to deploy campaigns or get onboarded, and they saw the productivity gains.

14:59 With the use of personalization within their organization and creating those campaigns through the use of data, as I mentioned, they were able to see an increase in open rates of over 150%. And not only did they see increases in open rates, but also the click through rates that they were getting on their campaigns increased in the period.

15:24 So I'm not going to read out all these different market drivers, but what really gives us the confidence of growth. What we have is environment which is really focused not just on customer acquisition but with market uncertainties also focused on retention and communicating with their existing customers. So we're very well placed for both of these different marketing tactics. If you look at some of the independent reports, whether it's through Forrester, whether it's through Gartner, what and we can and we carried out a survey within CMOs and head of marketing, What you're continuing to see is digital marketing as is increasing as a proportion of overall marketing budgets.

16:12 What you continue to see within digital marketing is it's low lower cost. You can measure who you're speaking to. You can also measure the return on investment, that you're getting from these digital marketing campaigns. Other elements, the market continues to grow double digit, and digital marketing still generates the highest return on investment for more marketing channels. And some of the verticals in the industries that were affected previously, through COVID, I guess, have now gone to normalized volume levels post pandemic, and some have continued to increase. So in terms of the competitive landscape, excuse me, everybody really builds platforms that are optimized for these different segments of sizes of customers, whether it's easy to use platforms, which give you some level of sophistication that are credit card sign up. You don't talk to anybody, and you are able to get those basic campaigns. They're very much platforms that are optimized for the micro or small business.

17:26 And then you've got platforms within that mid market segment. And for the mid market segment, it's all about making sure you have a feature rich and depth within the the the platform to solve the challenges of what the mid market is seeing. And then you've got the large enterprise clouds, which is about combining all your different business systems into one organization where that's typically the enterprise client, and it's fully customized product to serve what your business processes look like. So I guess we all play in these three different segments. What we have is customers looking at platforms like Cars where they want that sophistication in marketing strategies.

18:13 They want the ability to communicate in multiple channels, the ability to really aggregate that data to drive that optimization and return on investment metrics. We see clients that graduate to a platform like ours. We also see enterprise clients that come on board where they're looking to rationalize their tech stack and effectively come to best of breed solutions that are quicker to deploy and more cost effective. I guess some of the reasons why people choose us. For us, we've we talk about democratizing enterprise functionality for the mid market, having the aspirations and bringing reality closer from a platform adoption perspective as well as being able to serve that enterprise market.

19:04 Things like multistore, multi brand, we're able to, within our platform, able to do that. Areas where I talk about more feature rich or depth in our capabilities, things like SMS. Some of these vendors have SMS capability, but they can send to 10 countries, six countries. We have the ability to send to over 200 countries. For us, also, we have a fast evolving product continuously. Quarterly, we release new functionality within the platform from the r and d spend that we we do on a regular basis and making sure we we produce functionality and solutions that are really built for that mid market where they don't have expertise and the marketing departments don't have to talk to other departments within the organization.

19:58 I've already talked about some of the democratization of functionality, but as the world moves to a more one to one personalized experience, And what I mean by that is creating those positive experiences regardless of whether it's a transactional message or a marketing message at every touch point that they have with the end recipient pre acquisition or post acquisition from a retention perspective. So those are some of the core reasons, more feature rich, built to play with others from extensibility. We've talked about some of the integrations that we've built off the shelf, but also some of our strategic partnerships that really gives us our focus in the sales and marketing that we're carrying out.

20:47 I'm gonna pass you over to Alister to introduce himself, but also take you through some of the detail behind the financial metrics. Thanks, Milan. Firstly, it's my first time presenting to you guys in this context, So it's a pleasure to be here. I've I joined the business a couple of months ago now after after a period of time talking to Milan and the wider boards about the opportunity here. My background previously was in, most recently, a couple of software businesses, private equity backed IRAS software group, which was principally UK based but had significant session expansion, and then unit four, which was an established global vendor, both a little bit larger than DOTDIGITAL.

21:35 Prior to that, I had done some work with marketing technology business, so coming to DOTDIGITAL feels a little bit like closing that circle. I had a I mean, reasons for joining, like, first of all, I had a a good rapport and sort of immediate, let's strategic alignment with with Milan, the the other board members. But also the the track record of the business, the long term growth profile speaks for itself, and I think it's exciting to be part of a business with that history and a proven ability to pivot as time passes and the market moves. The leadership team that's in place, not just at a board level, but but sort of just one layer below the board, has been with the business for a long period of time and has shown that flexibility time and time again. So I believe we're we're very well placed to continue to evolve with the market over the coming years.

22:30 From a from a performance point of view, I won't dwell too heavily on individual numbers because they are all available in in the accounts. So there's no way I can cover that full detail now. So I'll just point to a few highlights. So the the revenue growth in year was 8% by our historical standards, not not high, but on the back of 23% in the prior year, I think it's actually a really strong performance. It was driven in part by the the increase in average revenue per customer, but but also we've started to see strong signs of growth coming through towards the end of the year in North America as as that as that market starts to to recover from challenges we had there earlier.

23:21 Our the the the heart of our business, in my opinion, is the contracted recurring piece. This is where our customers are paying for we describe this functionality recurring revenue, paying for the platform and also paying for contracted messaging volume. This is recurring revenue. It's SaaS based revenue and has shown very robust growth characteristics over over the last many years. It's also our highest margin revenue by far. So that so from my perspective, that gives us a a fantastic future to drive further further net revenue expansion in that area and also to to target new logos who can combine to our product vision or our current product and vision for the product for the future.

24:09 McMahon will touch on has has already touched on strategic partners. These are the these partners give give us access to to the market in a far more effective way of our lower customer acquisition cost than if we did not work with them. And in some cases, our agreements are exclusive or or at least we are a preferred supplier. So we we we get a good good access to the customer base of some of these these other providers. EBITDA grew 10%. The the long term EBITDA growth is is now 20% CAGR, which I think is is excellent and cash generation in the year was was obviously very strong once again.

24:57 On the revenue, couple of points that that jump out. We've got a a well dispersed customer group. So we've got relatively low or very low revenue concentration with any given customer In light of the current macroeconomic stress that we see globally, that gives me a lot of comfort that we're not overly exposed to any one customer, and therefore, we have relatively low insolvency risk in the customer base. We've also done a lot of work on the software, actually building the but working on the containerization of the software so that the cost of sale will automatically scale with the consumption our customers have. That protects us that gives us some level of downside protection in the event that individual customers consume less data for any period of time.

25:47 Our expenses in the year grew largely with inflation, but also with some further investment in r and d. We have an ongoing policy to invest in r and d, and we will do so as a substantially as a proportion of revenue. We'll as as the years pass, we will decide how we invest split between products and go to markets. But one way or another, we target an operating margin of 20% or greater. Any any excess profits from revenue growth, we would plan to reinvest in business. Balance sheet is very healthy. Cash balance obviously gives us a lot of opportunity. And at the moment, we're we're seeing signs of assets becoming more favorably priced, let's say. So we will we will be exploring those options over the coming months.

26:42 But actually, the number which I think from a finance perspective, I'm proudest of there is the other current assets. This is our principal trade debtors, slight reduction year despite growing revenues. But also, if you go to the back of our accounts, you see the death aging of those debtors. And for them, that aging profile has improved significantly year on year. And I think that's testament both to the customers' satisfaction with our products that they're willing payers, but also the performance of the finance team. Obviously, performance, I take no credit for because they did it before I joined, but it's it's comforting for me that it's not anything I need to fix. On on which note, looking at our cash flow, cash cash generation, fantastic in year, over a 100 and well over a 100% cash conversion at an operating level.

27:35 The working capital profile was strong as a result of debt control, but also we had

27:44 the timing of some invoices related to our SMS cost of sales did us a favor towards year end. So our payable balance actually increased a little bit at year end. We because of the business model we have whereby we invoice on booking, so we invoice effectively invoice in advance, I would expect to maintain close to a 100% cash conversion going forwards. On which note, I'll pass back to Milan who can tell you about how we plan to develop the business over the coming months and years. Thanks, Alastair. So if we go back to the growth strategy, and I mentioned the pillars of growth earlier on in the presentation, very much focused on a well, focus within the organization and simplicity around three main pillars, geographic expansion, product innovation and strategic partnerships.

28:42 So if we look at how do we do that, well, it's continuing to expand our product suite, really meeting the needs of that mid market and continuing to democratize that enterprise functionality, making it quicker to deploy through ease of use and providing it at, good value for money. The other element is about continuing to deepen our relationships, continuing to market to the user bases around whether it's our e commerce platforms that we integrate into, whether it's our CRM platforms. And as you would have seen, we're continuing to build out those integrations as we look forward. In terms of other areas, very much focused on our customer relationships with our clients.

29:28 Delivering on the needs and delivering on why our customers chose us generally leads to cross selling and also making sure that they're successful. The three variable levers as they become more successful, which in turn means ARPU expansion for us, is around more data coming into the platform, them increasing their subscriber base from a contacts perspective, or them continuing to send more messages and committing to more message sends. Also, what is important is making sure we continue to grow our customer base globally. Part of the strategies within our organization with some of the larger enterprise clients is working with a subsidiary or multiple territories and then showing them the benefits of our platform and expanding further within their groups.

30:17 So for us, growing and creating demand across all our regions is absolutely important. So we've talked a lot about the organic growth and the people that followed that story. That's been consistent in what we focus on from a strategy perspective. But also looking at some of the capital deployment from growth by acquisition. I know somebody has just asked a question in, well, how are you going to deploy funds? Is adjacent technology to really build up your CDP capabilities or customer data capabilities? For us, it's adjacent relevant technology, which makes the most sense. One, it can help grow the TAM that we play within in our market, which is around about $3,000,000,000 It also attracts a different type of customer from the sophistication curve perspective.

31:09 But adjacent technology, a bit like the three organic growth pillars, we have three acquisition pillars, makes total sense. In terms of deeper functionality with our core USB, that's where there's missing functionality that the market is trying the mid market is looking for. At this moment in time, that's not an area we're looking at. Typically, we have a future long term road map of our own r and d efforts, and, typically, we we build that element within that. In terms of expanding geographical coverage, there are areas and strategic territories that may make sense for us from a talent acquisition perspective or creating that foundation within a region that you can really grow from. So those are not only our three organic but also our three acquisition pillars.

32:08 So what's been actually happening over the last twelve months? Where we described that functionality recurring revenue, that grew 18% in the period to $22,300,000 And as I mentioned earlier, that growth in not only additional functionality our existing customers are using as they get more sophisticated with creating those experiences at every touch point, but also with volumes that they're sending out. We're also attracting a larger customer base as they come onboard, and that naturally increases

32:46 ARPU or ARPC. If we strip out the transactional SMS and the professional services arm from a one off revenue perspective and really look at that contracted revenue and access to the platform that Alistair mentioned earlier, the value in the platform, as I describe it, where, I guess, you can't compare against the different competitive landscape, now represents 45% of our recurring revenues. Prior to myself taking over as CEO around about eight years ago, that was zero, and that naturally builds and that is naturally built, if you see, throughout the period. Some of the areas that we've continued to bolster from a product road map perspective.

33:36 The fourth component to our platform is around the optimization layer, and that's reporting analytics. We always really describe marketing as a test and continuing to optimize. You can't just do it once, and that's gonna yield your benefits forever. So we've been able to provide all of the advanced analytics as well as the reporting for our customers to continually optimize their campaigns. We launched a customer data platform in the period that was really to remove all the different data silos these businesses have so that you can really get to a point where you're connecting with who you're speaking to. We've also increased. And as we look into FY 'twenty two, 'twenty three, we are continuing to build out off the shelf integrations, both from a data ingestion perspective but also to capture more zero party and first party data.

34:34 So if we look at some of the stats, we're continuing to see customers use more than one channel to really connect with. We saw that up 11% in the number of customers using that, more than one channel. We saw more and more data coming into the platform. That was up 56%. And not to forget where we've come from. Volume of emails continued to increase, which is high gross margin business, but also from all digital marketing channels still has the highest return on investment. So where are we going? What's actually happening in the market over the next three years? And for us, it's about long term vision of our product.

35:21 We had all of the orchestration capabilities prior to last financial year. That was about automating or feeding drip campaigns across all of the the whole customer journey, but also giving them the tool set to build these campaigns. We also put in all the different channels post our acquisition of Comappi back in 2017 that really allowed our customers to augment their marketing campaigns with the use of additional channels, but also give them the opportunity to ask the recipients how would they like to be communicated with and what types of information do you want to be communicated on those different channels. As we started to put in our CDP capability, which I mentioned around aggregation of data, use of data through whether it's segmentation, whether it's using that for from an AI perspective for content personalization or triggering off behavioral and targeted automation as well as being able to put data into the platform and in near real time trigger more automation campaigns on the back of that.

36:34 That naturally takes us into a market where it's higher spending clients, have a more sophisticated marketing strategy that are looking to use our platform to see the benefits of that full feature set. As you look at three years on, and I've always talked about where the market came from, where it used to be point solutions that were providing individual feature sets, getting closer to the ability to create an experience across the whole platform, moving from these different point solutions to a more, rounded platform that is able to deliver on that. Over the the next three years, at the moment, it's very aspirational, with the large enterprise client base or a feature set from a feature set perspective, sorry, where they are looking to create outcomes not only for brand awareness, very much that one to one personalization across every channel that, an individual connects with that brand, really staying front of mind and making whether it's negative experience into positive or providing those positive experiences.

37:55 As the I guess you have some macro uncertainties, it's not just about bringing new customers on. People are really focused on retention marketing as a form of connecting with or connecting or engaging with their customer base, continuing to see that increase in marketing driven ROI and very much the outcomes of operational efficiencies. And we went through some of the case studies, but productivity gains within their organization. So that's where the market is going over the next three years. Mid market typically aspires to do the the tactics and strategies and use functionality sets of enterprise. Enterprise at the moment is very aspirational in order to use a CEXP.

38:43 That's becoming more reality. And at some point, the mid market will continue down that route. So if we look at the longer term road map themes from the r and d that we are doing as an organization, it's continuing to make it very easy to bring data into the platform. That's about integrations into business systems like ERP, into point of sales data as customers start to marry up, online sales with in store purchases. Or if it's b two b marketing or noncommerce, it's about bringing data from whether it's your accounting system, whether it's, other forms of business, systems that you're using to really aggregate that data around our single customer view. So from a CDP capability, it's the data visualizations of all of that data and bringing it more from near real time to real time, events that we're capturing.

39:47 In terms of around that data, it's also continuing to build the AI and machine learning technology and optimize algorithms that are suggesting to our marketeer what to do next to really optimize their campaigns, really putting the power of the technology to do the thinking, but for the marketing departments then to just deploy, strategic vision opposed to having to do the doing. And some of the other channels that we we are looking at is not only from what we have. We've got stronger foundations. We're continuing to build out a feature set around these different channels and one of them being web personalization. Now when I talk about website personalization, that's all of us could be going onto a website and having a different experience, different content, whether it's if it's in an ecommerce market perspective, it's about products that are relevant to us at the header of the website, etcetera, and having content that is really optimized to you. From a noncommerce perspective, it's about capturing interests and using those interests to make sure that the content on your website is really relevant to you.

41:05 So those are some of the areas that we're looking at. If we look at, well, adjacent technology, Milan, you talked about potential acquisitions. What are the different verticals that make sense? For me, adjacent technology acquisitions is really to accelerate our path into CDxV or customer data experience platforms. And some of the adjacent technology that really makes sense at this moment in time, excuse me, is around whether it's website person website personalization and giving us a foundation to build from or around loyalty as retention marketing becomes very important to our marketers or things like the ability, or an iPass platform, integrations platform as a service.

41:55 I'm throwing out some acronyms and, I guess, some buzzwords, but taking what iPass is in its basic form is platform that has already built lots of different integrations into business systems, but you are able to connect once and have the ability to use those many integrations from a data synchronization perspective. For us, it's about continuous data ingestion, which ultimately drives that return on investment. If we look at, well, the revenue that we've created or the growth that we've had in our third pillar around strategic partnerships, that increased 14% in the period. Magento or now known as Adobe Commerce, that increased 10% in the period.

42:45 And that is our longest serving relationship. But what is also nice to see is some of the other deep integrations, as we call it, that we've done into what we describe as our strategic partners are continuing to grow, but also starting to feature in terms of a percentage of revenue. Areas like Shopify, BigCommerce is more newer in terms of the integration that we've built, but also that relationship with the management teams and across the board is continuing to build from a joint go to market perspective. And not forgetting our B2B marketers around the CRM connectors that we have. Microsoft Dynamics is up in the period. Salesforce is up in the period.

43:32 With the Microsoft Dynamics and Salesforce in The UK where the brand awareness is very strong, we sell to a multitude of different verticals and multitude of different integrations. Where we have international regions that are developing in their brand awareness, they're very much focused on the e commerce market through using the global presence of the e commerce platforms whilst we enhancing their value proposition for the end merchants. So if I look at what's been going on from a geographical standpoint and growth in the different regions, I'll address the two in terms of what we've always, sorry, what we already talked about in the half year, some of the headwinds that we've had in Americas, building that team out, and really getting them focused.

44:26 Around the interim results, I was talking to you guys about turning slightly the tap off in new customers and really focused on protecting our annuity revenue stream from a customer base perspective. As we started to put the key management in and started to feed in, as the market got less challenging for talent and we were able to hire And as they were ramping up through the period, we started to turn the tap back on. As some of you may know or will know now, annuity revenue stream, obviously, booking in a SaaS business to recognize revenue, there is a slight disconnect because you have the, the booking coming in, but, also, it, there's the onboarding stage. There's also the training stage and making sure that our customers can use our feature set end to end.

45:24 So there's time lag between that. But, also, as you turn the tap back on, it takes, you're signing up customers through the period. It's when you see the twelve months of that compounding is when you see the benefits of the bookings that we've seen in q four and q one of this financial year. And that's grown substantially as we've turned the tap back on. In terms of EMEA revenue, that grew 8% in the period. At the half year, we were talking about some of the COVID related messages from an SMS perspective. That's continuing to unwind. I initially mentioned that where that was declining. We did see marketing SMS substantially increase in the period, which absorbed some of that revenue decline.

46:17 APAC led the charge from a growth perspective and grew 18% in the period, and that's a combination of brand awareness within our ANS market, but also from selling into the Far East from our Singapore office. We've continued over FY 2122 to put headcount and investment into Singapore. As we've built out our partnership network, we were seeing strong demand coming through and conversion of those clients. One of the things I mentioned was around Japan. That's where we were dipping our toe in the water really to understand the market, really to see where how our value proposition fitted within that marketplace.

47:03 And also from a pricing and marketing strategy perspective, what our go to market was from an entry from an entry. Where we are today, we've seen a very strong partnership network build around the strategic partners. Our strategic partners are doing very well within the Japanese market. Our user interface has already translated into Japanese as well as us having our sales enablement collateral and partner enablement collateral, and we're seeing strong pipeline building. As we look into FY 'twenty two, 'twenty three, some of our investment will be going into putting feet on the ground now within the Japanese market. So I always talk about, well, for us as a business, the right ingredients in our organization is not just the technology.

47:55 It's also the people that really bring the platform to life. And I wanted to take you through some of the stats and what we were seeing. A lot of companies, around the time of our half year results were talking about not only inflation, but the difficulties in hiring across the globe as, I guess, lots of, whether it's private equity, VC backed business, or even businesses were really going for the talent, which was pushing up price. We've seen a slight reversal in that, with the macro uncertainty where there is a supply of good talent at a reasonable price. If you look at my half year results presentation, we talked about some of the things we were doing to from a, a culture perspective, but also from a employee attrition perspective.

48:50 So where are we now? We are over 400 employees. We've seen applicant rates continuing to increase. Job security is higher priority for people, and what we have is a strong vision within the organization, but also a strong business model that backs up, what employees are looking for. Our employee attrition has gone down, so retention going up to 17%, but that continues to fall as we went into q one. But more importantly, what I look at is how engaged are our employees or our people within the organization, and I can proudly say over 90% of our employee base is engaged with the company.

49:39 You can also see the geographical spread of our business. So looking ahead, I like to have focus. I like to have key priorities that we're addressing when we look at any future year. For us, it's about building pipeline coverage across all of our regions. It's about create using our marketing dollars to create brand awareness in some of the newer markets that we play in, but also customer marketing is an important factor for us. Building partnerships. We've we talked about some of the strategic partnerships, but we also have a plethora of other agency partnerships and technology partnerships around the ecosystems that we play in. So it's continuing to build brand awareness across the user base and working with our teams from a relationship basis to drive return.

50:35 Absolutely important to us, which is continuing to attract and retain staff. I think from the engagement statistics, we've done really well in terms of having that one culture within the organization as we move to a more hybrid working environment. And I guess where we've come from in the early days of the business from a point solution of email serve from an email marketing perspective to where we are today is vast in terms of technology. And that's continuing to educate the market both from a product offering perspective, but also from a brand positioning perspective, really showing the benefits of how you can use different functionality, use the data or the different channels amongst their overall marketing strategies.

51:28 So those are the core areas we will look to focus on in FY 'twenty two, 'twenty three. And for us, ESG is very well ingrained within our organization. It's at the heart of what we do, whether it's around what we describe as our dot voice within the organization. And that's a multiple of groups that are really passionate across all levels within the organization around these subject matters. They have good ideas, what they're looking to do. They all have budgets to be able to make sure that they can deliver on the ideas that are coming through for each of these matters as well as accountability and responsibility to change the business.

52:17 If you look at where we were three years ago, but over the last three years, we've been very, we've been carbon neutral as a business. We talk about a sustainable business. Not only does it help us attract new employees, it helps us retain, but also as newer customers are coming on board as well as existing customers, this is something that they look at. So we have four groups. We talk about DOTD well-being, which is around our people, whether it's support and education, whether it's areas like mental health, which is is obviously a topic that people talk about. There's around diversity, equity, and inclusion. We have a team or group that works within that. We have a group that works around DOT community and social areas, but also we have our DOT Green team.

53:11 What we have continued to do, we joined the Terra Cotta using best practice to reduce our carbon footprint, where we talk about 100 renewable energy. That's our office space. That's around the cloud infrastructure that we use, and we have a net zero commitment by 2030. We've also put environmental management systems, within our organization, which are independently audited, things like ISO 14,001 from an environmental perspective, but also around data security and data privacy. So we have ISO qualifications or or certifications of twenty seven seven zero one, 27,001, which are our key tenets of how we build our products.

54:02 So in summary and outlook, Q1 positive trading momentum continues into the new financial year. We've improved or enhanced our operational foundations to really return back to double digit growth in the midterm, highly visible, something Alistair talked about around our SaaS recurring revenues, a robust balance sheet, no debt within the organization that allows myself and the teams to really focus on that capital deployment, which is going to be ultimately increasing the return that we make. Clear strategic vision, whether it's around organic growth or inorganic growth, and what we're trying to achieve. And for me, the market and the market drivers that I talked about look favorable for us to give us confidence for growth into the future.

54:57 Thank you very much for listening to our presentation. Let's turn over to questions, if that's okay. Absolutely. Milan, Alastair, if I may just jump back in there, thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the top right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Milan, Alister, as you can see in the q and a tab, we have received a number of questions during your presentation today. So thank you to everyone on the call for taking the time to submit their questions. And, guys, if I could just hand back to you to make your way through the q and a tab to respond to those questions where it's appropriate to do so, and then I'll pick up from you at the end.

55:48 Thank you. Yep. No problems at all. So I'm just quickly going through the questions. One of the questions we've had was from Mark. The question I'll read out the question so that everybody can see what's coming in. You reported a eight percent organic revenue growth, whereas you report that the marketing automation market is growing at 12% to 13% per annum, which means you're losing market share. Why is this, and what are you doing to address it? So if I go back to some of the headwinds that we talked about, the unwinding of the SMS from a transactional standpoint, that was absorbed but not fully to the point of market growth. The other area is around North America. North American growth was higher than that prior to some of the challenges or headwinds that we saw.

56:39 We've really put the team in place now that is ramping up through the period that can return us back to the levels of growth from a market perspective. So I think throughout the presentation, I've tried to address what we are doing with the foundations that we've built and what our future strategy looks like both from an organic and inorganic perspective. So the second question from Sam. Thank you for your question. Good to see progress in North America. How important is The U. S. To your growth plans? And what investment is needed here? For me, what I needed to do, over the half year, I did have a few spinning plates as you can as you can see from when I first came out at the half year, what I needed to do was put those plates down safely.

57:32 And I'm pleased to say we've addressed each and one of those challenges. Now it's about optimization and opportunities as we look forward. What we have done and part of what I'm looking at here is really seeing the metrics that are coming out to the region from our sales teams, our customer success teams. Some of the quite a lot of them are new, so I need to get them up to the ramp up through the training programs that we have. And then we can actually see what the metrics look like, how they are performing, and then push further from a sales and marketing perspective. Part of what we are doing, from a growth plan perspective is really looking at a couple of metrics that drive more salespeople or business development people within the organization or within North America or customer success people. And these are metrics like, well, what does my sales pipeline coverage look like? If I have enough pipeline coverage, that's when we would add from a sales perspective.

58:37 We also look at how much revenue from an MRR perspective our customer success teams manage. And as customers continue to increase, that team will continue to expand as well. So we're looking more at metric driven investment. Obviously, quite a lot of people from a foundational perspective are new, so let's get to that end of the period from the results, and then we can see what other investment is required. A question from David. Do new customers tend to come from replacing competitor solutions or greenfield opportunities? So if I answer that in a couple of ways.

59:28 Firstly, each market, if we look at a regional, from a region, is at different stages of the life cycle from the market that we play in. So North America is one of the largest markets that is very well developed, and it is a displacement market. So you're replacing competitors. Also with the, EMEA market is in that life cycle, it's further up the curve. In areas, like the Far East Asia market, that's slightly different. There are green greenfield opportunities, as they as these customers within these countries start to adopt a more digital approach, They may not be using email marketing.

1:00:24 They are very well versed in using more mobile channels as a basis of communication. There is probably greenfield opportunity in LatAm LatAm where we are seeing demand. We are seeing, growth in that, but I just wanted to make sure we secured our foundations over the last nine months. And then, as I said, we would look at the different opportunities, whether we want to start to dip our toe in the water in additional territories or really focus on the territories that we have and put further investment. Question from David. Can you explain how your strategic partners give you any competitive advantage?

1:01:10 Presumably, they also work with your competitors as well. So stuff that we touched on a little bit in the presentation. So we did touch on that. But just to conclude, the answer on that, effectively, what they do is they they work with us to drive brand awareness across their user base. It's not a traditional reseller model with any of our strategic partners. We work very closely on producing case studies, how we drive value proposition, how we drive return for these merchants as well as working with the teams where the strategic partner endorses our platform. But it does give us a focused approach to, to that market.

1:01:58 Yes. There are competitors with, I'd say, maturity in integration or what the integration does. There are some competitors that play only from a data synchronization perspective. There are obviously competitors that play within having some capability in that. Where some of our strategic partners are, we work jointly on the product road map of marketing automation and what they're looking to do to make sure we can develop the products out. Strongest relationship is obviously with Adobe. We are one of their premier partners and only premier partners in that marketing automation space and as we move further into that CDxV space. Some of the others like Shopify, there are quite a lot of competitors at which are really built for that small business platform, which is working very closely with that Shopify core market.

1:02:58 Where we play is around that Shopify Plus where you typically see more midsize and small enterprise clients that are looking for a more feature rich product or the ability to scale, and there are only a small number of players there. Within both BigCommerce and we talk about some of our strategic partnership. We also have integrations into commerce tools. We have integrations into other, a plethora of other ecommerce platforms. So within BigCommerce, there are a few competitors that play play within that space as well. But we don't mind having a platform agnostic approach because for us, it's about solving the challenges from a solution perspective.

1:03:48 And we know that we can solve quite a lot of the the ecommerce merchant challenges as we've played and matured from a expertise perspective. A question from Nigel. I'm sorry. There's quite a lot of questions. I'm not gonna get through all of them, but we'll see what we can answer. But, Nigel, do you see any white labeling, opportunities in markets not yet addressed, e. G, China? So what we've continued to do is really work on our partnership program. And what I mean by that is whether it's agency partners or technology partners, At the moment, what we've done is really refined that for referral model as well as some level of reselling in strategic territories that we're not playing in.

1:04:46 White labeling, as we as we look forward, that's an area that we are discussing. We originally started out in, in The UK when we were a lot smaller, probably around about seventeen, eighteen years ago, where we did we we did offer white labeling. But as you mature in the market, that does also have its own challenges when you start to compete with each other. So we are looking at the pros and the benefits as well as some of the challenges and the lessons we've learned from a white labeling perspective as we look forward to some of the other strategic territories that might make sense, whether it's through white label opportunities or a reselling nature.

1:05:35 I have ten minutes to get to my next one. I'm sorry. We've got probably that was the last question I can answer. I will try and get through the questions that we've had, and type a response back once we've we've finished our roadshow. Milan, if I may just jump back in there. And Alastair as well, thank you very much indeed for addressing all of those questions that came in from investors this morning. Of And, course, as you did kindly mention, we'll give you back all of the questions that were submitted today as well as any further questions that do come through post today's event for you to review and then add any additional responses, of course, where it's appropriate to do so. Milan, perhaps before redirecting those on the call to provide you their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that would be great.

1:06:32 No problems at all. So if we look at the outlook, currently, we're tracking in line with expectations for revenue growth. We've really secured the foundations and addressed the challenges that we had at the half year. In terms of our technology, it has that proven ROI and a compelling value proposition, whether it's through our strategic partners or areas that we're very developed in terms of our brand awareness. We have a a diverse customer base across many different industries, which gives us which gives us confidence for future growth. The market drivers are also, from a digital marketing perspective, are continuing to give us that confidence for growth. If we look at, I guess, our growth strategy, very clear in our three pillars, both from an organic but also an inorganic perspective, a very strong balance sheet for us to evaluate investments.

1:07:31 And this gives us confidence in the ability to continue growing profitably and sustainably. Thank you very much, everyone, for listening to our presentation. Thank you. Milan, Alastair, that's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations? It's gonna take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of DOTDIGITAL GROUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session, so good morning to you all.