Dotdigital Group (LSE:DOTD) — Interim Results 2024

0:01 Good afternoon, and welcome to the DOTDIGITAL GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Milan Patel, CEO. Good afternoon, sir. Thanks, Lily. Good afternoon,

0:34 everyone, and thank you for joining today's half year results presentation for the six months ended 12/31/2023. I know some of you who have registered have followed the story, and some of you will be new to the story. So I I will take you through some of the the history of the business. In terms of the business itself, it's very much a global business centered out to three main hubs, UK being a hub into EMEA, and New York offices being a hub into North America, and our Sydney offices being our hub into APAC. Now when we describe hubs, it's effectively having every single department within region that you can really scale from as you either push further into the continent or you gain market share and support the customers. For us, it's having most of the customer or all of the customer facing, departments within region, not only to understand why a customer has chose us, but also to deliver on the goals, marketing marketing strategies that they would like to implement within DOTDIGITAL.

1:37 Across the globe, we have about 475 employees. And more recently, we did an acquisition, mid September, which added 65 to that count. In terms of number of locations, we operate out of in eight main offices, and effectively, we have hybrid working environments to help coverage across to make sure that we're supporting the customers. Not only do we have our own direct marketing activities, we also have a strong agency partner and solution partner, tech solution partners, that really assist us in driving brand awareness across these three different regions. In terms of what we do, for the people that haven't followed us, we are a customer experience platform, and I'll go through a lot more detail of what the platform consists of and the sorts of use cases people use us for.

2:29 In terms of the the customers we help, our core, market would be within mid market. We continue to see an increase in enterprise clients that use the platform, whether it's across many different territories or many different brands that they may have within their group. In terms of the organic growth strategy, it's centered around three main pillars of geographic, and we continue to grow within the three different continents. And I'm pleased to see the growth that is coming through our three geographic regions. In terms of strategic partnerships, we like to look at the number of connected clients or using one of the partners and integrations that we we have, and it represents just over half of our customers. In terms of the the characteristics of connected clients versus nonconnected, we find that they are a lot more sophisticated.

3:20 They adopt more of the platform. They have higher ARPCs. The third part is the product innovation pillar of our growth strategy, and we spend about 12% of our group revenues in r and d. One, to stay ahead of the competition. Secondly, making sure we're delivering on the use cases our customers choose us for. And thirdly, looking down the line of what will be coming next over the next two to three years. In terms of the pricing strategy, it's based on three main components. One being the number of contacts that they're bringing into the platform, which, starts the license fee. The amount of data that's being brought in expands the license fee, and thirdly, the volume of messages that they will be sending out.

4:08 We've worked over the fifteen years we've been a public company around three main metrics. One, being around organic growth. We've continued to over the last ten years, but also from the start of us becoming a public company, driven double digit organic growth rates, along with profitability of operating margins greater than 20% and EBITDA margins greater than 30%. We talk about sustainable growth opposed to hyper growth, which puts us in a good position as we look forwards. So over the last six months, strong revenue growth, 15%. It includes approximately three months of the acquisition consolidated into numbers.

4:53 But removing that, we've grown 11% in constant currency. Some of you may have heard from me, we were moving as the market continued to evolve. We continue to move further into the customer experience data platform space. Not only has our organic, development, things like adding channels around MMS, particularly for our North American market, but also some of the development we've done in the AI capabilities and really enhancing our data platform through our organic road map. We've also, with the acquisition of Fresh Relevance in mid September, pushed further into the personalization space, taking us closer and wider into the customer experience market.

5:41 In terms of the integration, and we'll talk a little bit around, the the integration from an operations and people perspective as well as the tech integration and our go to market as we go through the presentation. We continue to win larger customers. We can see that coming through in the ARPC, which is pleasing to see that continuing to increase. And, also, we've seen some early cross selling, into our existing customer base as well as new customers that have looked at us, which we may or may not have won with the broader proppes without the broader proposition. Strong trading momentum, really moving into h two, and a low staff attrition rate within the organization. We pride ourselves in the culture we build and the talent that we continue to acquire.

6:30 Very much a strong balance sheet. No debt on the balance sheet. Everything we've done has been organic, and that gives us really good visibility in terms of further investment we can make within organic means and also looking at other acquisitions that can really accelerate our road map. If we look at the the key metrics, we've already talked about revenue growth. We've talked about organic revenue growth. A strong proportion of our revenues is recurring, so 94% of which 79% is contracted. We're seeing some operating leverage coming through, the period in FY 2223. We invested quite, heavily around the people, solidifying the foundations, which really bodes well for future growth.

7:17 An average revenue per customer, that's a combination of higher value new customers that are coming on board, but also existing customers buying more, whether it's bolt on functionality or sending more messages out the platform. That has increased 9% in the period. So for the people that are new, there are four main parts to our customer experience platform. And I I like to think, you know, you start with the data. So we've built over the last twelve to eighteen months our customer data platform. That allows our customers to bring data in easily, the ability to use that data without having to think about what data mapping do they need to do, what hygiene work do they need to do within their databases.

8:03 What that does is it allows our customers to understand more around the data recipient oh, sorry, around the recipient that they're sending to, but also allow you to visualize the data whether it's through the use of single customer view or some of the the ways that their customers engage with them enriching the data platform. The middle layer to the platform is all around orchestration. You don't have to have any technical expertise within the marketing department whether to create the campaign or deploy the campaign. And within there, there's lots of functionality, around life cycle modeling, the ability to create automate automations across their life cycle or across their journey customer journeys, the ability to have drag and drop technology to create your campaigns, as well as some of our newer win Winston AI, functionality sets that is really making marketing departments more efficient or allowing our customers to drive a higher return on investment from their marketing campaigns.

9:08 There, you can see a pie, with green and the orange elements. That's the functionality that Fresh Relevance adds to our broader platform. And then we have all the different channels that you can communicate on more recently, obviously, through the acquisition. We've now got website nine times out of 10, a, from a customer acquisition perspective or even a retention marketing standpoint, the experience starts on a website. And I'll take you through some of the functionality that Fresh Relevance, has built and will be combined into the DOTDIGITAL platform as we go through the the presentation. And what wraps it all together is the reporting and analytics, effectively helping our customers really drive that return on investment.

9:59 So we've talked a little bit about the product developments, the amount we spend in r and d, but that helps in terms of competitive differentiation. But, what we've seen from our upper mid sized businesses as well as larger enterprise, they're really focused on driving marketing efficiencies across their departments, making it easy, allowing them to use their time elsewhere in more productive areas. In terms of some of our smaller customers, they're really focused around driving return on investment.

10:31 How do I make more money from sending campaigns, or how do I engage with the audience a lot more? So from marketing efficiencies, we use natural language processing to assist our customers to to create campaign, review campaign, also making it easier for a marketing department to build one campaign, for example, an email campaign here, and then being able to turn that into an 160 character text SMS. So with a click of a button, it's just making life and time to value a lot easier. Lots of work has gone on from our data science teams, and our own proprietary algorithms around things like predictive next purchase, predictive churn, predictive engagement, and a lot more functionality there, which is just infused across our platform.

11:31 So what does the competitive landscape look like? And within the competitive landscape, each player typically optimizes their platform for a category or a segment of customer size. So you've got people like Mailchimp and Constant Contact, which are really optimized for that micro business, the ones that are really starting out the journey of digital marketing or being able to capture more data so that they can be more relevant and targeted. You've got others, then take that next step further. And then when you outgrow some of those platforms, you look for a mid market platform that has a lot more sophistication, more flexibility, and we can we can provide that and a broader subset of use cases that they're looking to solve.

12:21 So it's down at the the small business. It's more about ease of use and winning against some of the the other competitors as well as being able to provide off the shelf integrations to bring data in easily. At the top end is fully customized products, typically have an implementation fee of at least $500,000. And at that point, what we're seeing in the market is a lot of the the large enterprise looking to find more cost effective solutions, quicker to deploy solutions that they can roll out across geos, across different brands, and we've been taking some of those enterprise clients that rolled us out across the globe. And then within the mid market, it's about certain use case differentiation.

13:10 It could be the the the expertise that we have within particular verticals, whether it's around just really making it easy from an ease of use perspective, but also giving them deeper and richer, more all in one from a single provider.

13:33 So I'll pass you over to Alistair to go through the financials. Thank you, Milan. I'll start with a so summarizing how we shape the p and l and how we invest the the resources we have available, and and the returns that drives, and then then dive into some of the highlights of the recent performance over the half year. So we we and the business has, for a long time, managed the p and l to achieve a 20% plus operating margin, 30% plus EBITDA margin.

14:08 What that means in practice is we invest a fairly consistent amount in r and d in the order of 12% of our revenue And similarly, a a consistent amount of sales and marketing and then minimize the the cost delivery to the customer and the back office costs we have. From from the amount we we invest and go to market, we typically get in the order of a a six times return on customer lifetime value. And that has has supported the sustained growth we've seen, which has a CAGR close to 20%, seventeen seventeen and a half percent over the last, I mean, twelve years. We've throughout that time, we've maintained that profit margin, and thus the the profits have grown substantially in line with the revenue growth as you can see from the the blue EBIT outline on this chart.

14:55 Now over the last few years, we had a a rapid growth in in revenue going to the COVID period. There's a short period of normalization after that, and we we spent a little bit of time rebuilding our team in North America also. And it's good to see that the magenta line, I think it's I think that's the name of the color, ticking up to the right, showing how how profit has started growing again in in the most recent period along with the acceleration of revenue we've seen. Now the revenue growth of 15% is slightly flattering because that includes the acquisition half partway through the periods, two and a half half months into the the half year of FreshRelevance. Without the FreshRelevance acquisition there, organic revenue growth on a constant currency basis would have been 11%, which is a a gradual improvement over the over the each of the past past couple of years, we've been steadily stepping that that up from from the sort of mid to high single digits through to now now back into double digit territory, more in line with the group's long term achievements.

15:59 Now we'll talk briefly about the quality of that revenue. So about 94% of our revenue is either recurring or repeating, and 79% of the revenue is contracted recurring revenues. That ratio has not been affected by the acquisition of FreshRelevance. They have very similar metrics. And I should point out that our ARR growth is consistent with our overall revenue growth, just in the quality of revenue is undiminished despite the growth in the period. Similarly, cash generation remains very much on track with historical trends, close to that 100% level. Now, of course, there's some normalization in there relating to the acquisition of relating to the acquisition and the the working capital fluctuations that caused, but but the underlying cash generation of the business remains very strong. Looking at some highlights of the year, I think it's it's worth drawing out the performance in regions.

16:52 In particular, in APAC, we had underlying growth of 33% year on year. Now it's the smallest region, represents 9% of group revenues at the moment, but there are some countries in there, in particular Singapore and Japan, are growing at over a 100% year on year. And there's real optimism in the business about how far we can push that region. What we we've got significant investment in in f y twenty three in the form of additional sales heads and marketing spends, particularly in Singapore and Japan. It's good to see that the productivity of those teams is now consistent with that of the more established teams in in UK, for example, and that gives us the the confidence that we should be further investing in that area in the in the coming year. Now our admin expenses, when you when you strip out the the cost that's being layered in as a result of the acquisition, grew by a little bit under 5%, which is good to see given the the level of inflation in the in the wider macro environment.

17:52 I think it shows fairly strong cost control in the wake of a period of substantial investment in the prior year. We've maintained our organic head count head count in line with the head count we had leaving the the past financial year, I should have.

18:10 Now the balance sheet has a a very similar shape to previous years. We've spent some of the cash we had. We have at the at the end of the prior half year, we have close to 50,000,000, just over 50,000,000 at year end. That's now down in the the high thirties as a as a result of the acquisition, but that still leaves us with sufficient funds to consider further acquisitions if we can find the appropriate target from a functional perspective at the right price point. Our working capital profile is substantially unchanged by by the acquisition as you would expect given the the cash generation I've already described. I'm not sure there's a lot to add when talking about the cash flow because it's really it's really covered by the the p and l and balance sheet comments. Our our tax expenditure in the year is just a question of timing of when we pay the bill. There will be an increase in the effective tax rate on the business over the over this year and the following year. First is that we get the full impacts of the growth in or increase in the corporation tax rate, and next year as the changes that have been announced regarding r and d credits as we move from the small companies r and d scheme to the unified RDEK scheme.

19:23 But those the impacts of that is built into the forecast numbers that are in the market.

19:32 Just to touch on our capital allocation policy, there's I I won't go into the the detail of how we screen potential acquisitions or or exactly how we we assess investments through our budgeting process, but just to highlight the priorities or the the order of priority in which we we allocate our resources. So our first priority is our organic growth and making sure that we could put as as much as we can afford into go to market activities and r and d to to provide the best quality product to our sales team to have the best opportunity to to sell and give value to our customers.

20:08 Where it is not efficient to build something organically, or we're unable to spend more and and meet the margin targets that we set ourselves, we would consider acquisitions if the technology is a good fit with our own, is in the in the right areas of functionality we're looking at to build out the CXTD platform, and and the pricing is right that it takes account of the quality of technology we're getting and the savings we and the the opportunity cost we're saving by accelerating the time to market by acquiring the technology as opposed to building it ourselves. In the event we have no sensible acquisition targets or or don't see an opportunity to create money through acquisitions, and there is and we're we're limiting or we're we're limiting the ability we can drive further organic growth through investment, then we would, of course, return cash to shareholders through whatever is the most effective mechanism of the time.

21:11 With that, I'll pass back to Matt.

21:14 Thank you, Alastair. So just taking you through the strategic update both for the half of the year and what we're looking for in going forwards. Going back to our three organic growth pillars, whether it be around geographic, product innovation, strategic partnerships. Well, how do we do this? We're very much focused on building relationships with customers, whether it's a smaller brand of a larger business or whether it's a brand in its own right that is continuing to adopt more of the sophistication of marketing strategies and focused on that cross selling, whether it's around the functionality or continuing to assist our customers to drive more messaging through ideas, through working with them in order to achieve what they want to.

21:59 Growing our customer base globally across the three hubs that we operate out of further into APAC. One of the recent, or last year, was talking about was the market entry into Japan, and we'll talk a bit more about that as, as we go through onto the next slide. Expanding our product suite, we spend about 12% of our revenues really looking at what customer needs for today, what customers need into the future. Whilst it may be aspirational, reality catches up with aspirations. Globalizing our talent, I talked about the technology and the people being the right recipe for us of success, and that continues. In terms of deepen deepening our strategic partnerships, we've built strong connectors into ecommerce, which can address at least 80% of the mid market, ecommerce merchants, and we continue to look out and build into new technologies within the ecommerce space.

23:01 Excuse me. And then growing our customer base globally. Alistair's already touched on growth through acquisition and where it takes us multiple years, to build. We always go through the cycle of deciding whether we build it organically or acquire a piece of technology that really accelerates our route to market.

23:27 So if we go through the geographic, after rebuilding the team within The US, where we had some issues in staff attrition when private equity and VC backed businesses were really not focused on cash breakeven, but effectively were increasing the price of talent within particular regions. We did lose a number of people within the North American market. What's pleasing to see is what I discussed around the u shaped recovery. So when we started having some problems, we came down to about 3% at the bottom of the u. We were flat as our new sales teams and customer success teams were ramping up, and it's nice to see as we were building on the bookings that coming through to recognize revenue.

24:13 In terms of EMEA, still very strong, from newer, higher value customers that are coming on board as well as a recovery in our professional services growth. And that's a combination of increase in the number of new customers that have signed up over the six month period, but also some of the projects that were being put on hold now coming through from a decision making perspective. Alastair also touched on the APAC side. Whilst Singapore or Far East Asia is a smaller market from an overall growth perspective, it is a opportunity for a significant proportion of market share that we could take, but also forms a bigger part of the APAC revenues. That grew over a 128%

24:59 in the period, and that assists in the growth that APAC has been seeing of over 30%. In terms of product innovation, some of the key drivers and KPIs that we measure is the amount we get from the functionality recurring revenues, which consists of license, data, and bolt on functionality. And in the last six months, that's grown very nicely and in line with my management expectation. We continue to see increasing message volumes. And one of the other areas that we look at is how many customers are using more than one channel, and that's over half the customer base today. Nice to see some of the in independent, accolades that we've achieved within the three customer segments that use our platform.

25:49 And g two, it's based on customer reviews, not just market analysts. Over the last, six months, we've significantly increased the amount of integrations that we have within technology partners. That's gone from about 70 to a 180. So some of our efforts from an r and d perspective are really focused on building integrations into business systems and other technology around the partner ecosystem.

26:19 In terms of strategic partnerships, we've been growing, in both the ecommerce sec connectors as well as CRM connectors. And it's not a traditional channel model where they're resellers or OEMs. Effectively, they refer customers to us. Our sales teams will close that business, the contract lies with DOTDIGITAL, and the relationship is with DOTDIGITAL. So that's been growing very nicely. We've broadened that, partnership network out. So not only are we focused on building more integrations or deep integrations into other ecommerce platforms, more recently into Shopline. Shopline is one of the largest ecommerce platforms in Asia, has about 500,000, ecommerce merchants that are using their platform, which poses as a great opportunity for us as we push further into Far East Asia.

27:10 We also have connectors into CRM, but we've matured the partnership, model into building around agency partners that could be partners that build the ecommerce website for our customers. It could be other technology partners that work within the ecosystem. For us, the strategic partners really help drive brand awareness across the different territories or different regions that we want to play in. We enhance the value proposition from a digital marketing standpoint. That continues to grow with the active partners across the three different regions is continuing to accelerate. So from our APAC region, around about 70% of our new bid or inbound opportunities comes from partner referrals and the remainder from our direct marketing activities.

28:01 Around about 30% of our EMEA revenues come from, partner referrals, the rest from our direct marketing activities. Obviously, EMEA being the largest market we we

28:12 play in sorry, being the largest for us from the market we play in, but also where the brand awareness of our product and brand is the highest. North America, around about 40% of our revenue comes from in sorry, from partner referrals and 60% from our direct marketing activities. And we'll continue to build on the focus of bringing data in easily, building into more integrate technology integrations as well as other business systems. So FreshRelevance. For the people that don't know what FreshRelevance do, it's effectively taking data, whether it's behavioral data, whether it's web behavior, and being able to personalize that web experience.

29:01 So we could all be going on to a website, the placement of content, placement of images above the fold, below the fold, effectively are very different on an individualized basis based on what data a particular brand could have. Combining both of them, it allows us to not only deanonymize more of the traffic that's coming on to site, so giving you the ability to really understand what's happening, from a traffic perspective. But, also, we are able to enrich the data from the campaigns that we're sending out and bringing that all together. What it does is really drive higher ARPUs or ARPCs as we describe it. It is increasing the the market we can go after. We can go after a broader market now, and that could be size of client or the different verticals that we can go into.

29:56 We see increased customer stickiness and large enterprise deals that are looking for a more all in one solution. One, to drive cost efficiencies across their business, but also the ability to deploy quickly and effectively across their organization. So going back to the integration of Fresh Relevance, I look at things in threes. So along with the integration, we look at the operation and people, and a lot of the people have been integrated into DOTDIGITAL. We had a similar culture before we acquired Fresh Relevance. They're within the management structure of DOTDIGITAL. Other areas, I guess, people don't really look at or take slightly lightly.

30:46 We've aligned all of the business systems or most of the business systems across the two businesses. We've aligned business process, whether it's sales order processing or a wider, wider change to their processes, and that has been on track and continuing to, see cost savings slightly ahead from a synergy perspective. In terms of tech integrations, I typically look at, the tech integration from, I guess, two by two matrix, high perceived value, and the amount of resource it takes to integrate. So from a lot of the high perceived value, low resource, most of the integration has been completed. So things like single sign on, some of the functionality being integrated into our marketing automation studio.

31:37 And as we look over the next, next twelve months, the platform will be fully integrated into DOTDIGITAL. In terms of the go to market, there's a number of different ways we go to market, whether it's through the use of Fresh Relevant's brand and converting their pipeline, whether it's cross sales to our existing customers, which adds another variable recurring revenue stream onto our overall, overall revenue, as well as looking at it from the new customers that we're, signing up from a joint value proposition more all in one and how we determine the license fee and consumption based pricing. In a relatively short period prior to the acquisition, we had 60 joint clients.

32:22 Fresh Relevance had about 300 customers prior to the acquisition. In that short period, we've seen 10 cross sells or new customers that we may or may not have won with the the broader proposition. It adds about 50% to our ARPC on top of the spend that they have typically with DOTDIGITAL. So looking ahead, strong first half performance, return or continuation on that double digit growth, organic growth, fresh relevance integration on track. We haven't talked much about the macro environment, but what you have seen, obviously, in uncertain markets, marketing budgets do, shrink a little bit. But with digital marketing, it's taken a bigger proportion of the wallet.

33:13 One, it's a lot more cost effective. You can measure the return on investment. You know who you're talking to. So it is, displacing some advertising as well as some of the traditional marketing activities. And from what we can see in the visibilities, we have strong recurring revenues, good trading momentum moving into H2, which really gives management confidence in achieving the current market expectations. So that concludes the formal part of the presentation, and we'll turn over to questions. Milan, Alastair, thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd 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.

34:08 As you can see, we have received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end? Yep. No problems at all. Thanks, Lily. First question comes in from Tony. Can you go back to the profit figure and explain the 1,600,000 special item without which interim profit would have fallen, Alister? I think you're on mute, Alister. Thank you. It's detailed in the interim accounts. We've got there's a share based payment, which we adjust so we always adjust out adjust out the share based payments from profits. That's 364,000 in this period. It is unusually high for us in part because of various incentives given to the management we took on from Fresh Elements, but which which has skewed it a little bit versus previous periods. And then there's exceptional costs of 1,200,000.

35:08 They relate to amortization of acquired intangibles, $6,600,000 so 500,000 of acquisition of pure acquisition costs. So there's professional fees substantially associated with the acquisition. And then there are little bits of employers, national insurance on some share options that were exercised in periods making up the balance. Excellent. Thank you, Alastair. I think another question for yourself from Lawrence. Given the strong cash position, could there be scope for an increase in the dividend or a special dividend? Scope for it, but not yet. I think as as suggested when we're looking at how we allocate capital, we we still think there is a lot we can do, which is which is valuable with regards to either organic investment or acquisitions.

36:04 I think there's, we've we've had a very good, very positive experience with Fresh Relevant so far with the inspiration work being on track and really positive signs from a go to market perspective there as well. And I think with that in mind, there's various other piece of functionality which we're looking at, and we're we're working on a pipeline. So I think it's it's highly likely that we would try and deploy some of the cash in that area if time passes and the the market moves in a way that makes that look like a a bad option for shareholders, at that point, we would consider returning cash directly to shareholders. For now, the dividend policy is in line with EBITDA growth, which will be paid annually.

36:53 Another question is, can you discuss the role of strategic partnerships in your growth strategy and how you plan to expand these relationships moving forward? So I think I've covered that off in the presentation, but what we can the the role of the strategic partner is to really help endorse the platform, drive more brand awareness across their user base, and the ability for us to do joint marketing activities on the user base of the strategic partners. It's the agency partners that are quite influential in terms of the martech stack that they use as well as the technology partners. So over the last eighteen months, twenty four months, as the partnership network has continued or the partnership program has continued to mature, we've got a lot more active agency partners, technology partners, as well as we look at within the categories of whether it's ecommerce, CRM, service clouds, ERP.

37:51 We look at what our customers are using, what they're asking for in terms of integrations, but also where we think the biggest opportunity lies by, integrating into a particular technology. Given the emphasis on next sorry. Next question. Given the emphasis on AI and machine learning, could you provide more insights on the r and d pipeline where, of course, you can and what impact you foresee in future revenue. So in terms of the r and d pipeline around AI, obviously, we're gonna be doing a lot more stuff around making the marketeer's life easier. And one of those elements is really taking the reporting data and the analytics data and telling them what the the the numbers actually tell you from a story perspective as well as how you can enhance your return, from the campaigns that you're sending out.

38:49 In terms of monetization of AI for now, it's across all of our users get to use some form of our AI capability, whether it's in basic or more advanced functionality. It's used as package differentiation at this moment in time. Another question. In Japan at an earlier stage of development, less mature market than EMEA, is Japan earlier stage development? Yes. Japan is an earlier stage development. If you were at the annual results presentation, we were really dipping our toe in the water, putting some resource in market. So that was about three people, really to understand the market proposition, what the pricing strategy needs to look like, as well as the marketing strategy as we push forwards.

39:43 We're also building a partnership network in region to really help drive brand awareness amongst the user base that we were looking to bring on. The value of customers in region is a lot higher. And as we look into q four, of this financial year as well as bad budget planning season for next financial year, we're looking to deploy more of our investment into the Asia markets. Another question is how are you handling the branding of Fresh Relevance post acquisition? So for us, Fresh Relevance branding yet to be decided what we do with the Fresh Relevance brand. At this moment in time, it assess us. They have a pipeline that they're converting. They have inbound inquiries that come on. And also within the current market, they have a very strong brand within the personalization space.

40:53 So it'll be kept for the foreseeable future. Another question. It's three questions. And for you, Alister, Your cash flow is still down despite normalization of acquisition items. You mentioned a normalizing of working capital. Receivables less payables used to be circa 1% of sales, but now it's 2% to 3%. Historically, it has been as high as six to 8%. Where should it be sustainably? What is the market forecast for cash flow that you mentioned?

41:41 The is it it's a it's not the lens through which I look at it, but I I believe that the ratio of payables and receivables that maybe is barely representative of where we would stay. We particularly, the the half year point, we always have a bit of, volatility around the level of risk, payables we have in respect of SMS because it it varies depends on the timing of invoicing we get, from suppliers purse post the surge of activity around Black Friday and the buildup to Christmas. So there there will there will forever be a bit of volatility in the half year numbers at that time. That's my only caution about looking at that ratio at this moment. The the market forecast on cash flow consensus numbers for our cash position at the end of the year, I will just confirm is circa 40,000,000, 40,500,000 based on the latest research notes that we've reviewed.

42:51 I appreciate it's cash balance at year end as opposed to a cash flow per se, but that is how it's presented. The one h revenue from strategic partners was 15.5, but in the one h presentation last year, it was 16.3. What's the difference? The difference is a basis of preparations in in simple terms. So looking at how how revenue is out. So if you say quite often, we'll have customers who have revenue with multiple partners. And in some cases, we we think it's more appropriate to allocate revenue based on the level of activity with a partner as opposed to the order in which the partner was signed. So what we've done is recalculate historical and present numbers on the same basis, showing a more representative view. Hence, it's slightly reset the the prior period figures. So we do believe that is the appropriate way of looking at it.

43:58 Third part of this question, you pay 42 times EBITDA for fresh relevance. We we did. I don't think an EBITDA valuation of a subscale business is so relevant, frankly. We're more interested in the cost of the revenue and the cost of the technology. The the value of the technology to build, we we estimated between $1,015,000,000. And even by a very conservative measure, just the customer base in runoff mode is probably worth more than that again. So we're we're very comfortable with the level of valuation we get to for fresh relevance, not using an EBITDA basis. What I should then add just to, say, give comfort as to where that's going and how it contributes to the group Through the the cost synergy, the actions we've taken so far to realize cost synergies, we would already expect the the margins delivers the the run rate that is, and it won't be reported in year this year because the the actions take place through the year. But the run rate would already be in the sort of 20% region by the end of this year. And then by the end of the next financial year, we would expect margin contribution from the acquisition to be in line with that of the wider DOTDIGITAL GROUP. Thus, any any revenue they have is accretive to group

45:29 profits, if that's the right way of describing it. And final part of this question, given our own stock trades at only 10.5 times EBITDA, why not buy back your own shares? Well, I think we cover that in talking about the priorities of how we would like to use our cash. At the moment, we believe there's a huge amount of opportunity investment in both both organic growth and potential acquisitions. And I think if we start to consume our cash buying back shares, it will limit the opportunity for real growth of equity value. Thank you, Alastair. There's no more questions on the board. Milan, Alastair, thank you for answering all those questions you can from investors. And, of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet company platform.

46:23 Just before redirecting investors to provide you with their feedback, which I know is particularly important to yourself and the company, Milan, could I please just ask you for a few closing comments? Yeah. No problems at all. And thank you for attending today's, results presentation. Just a few key messages, that to be picked out from the presentation itself. So strong growth in line with expectation, really expanded the addressable market, both from the enhancements to the proposition, but also the type of customers that we are winning today. In terms of integration of FreshRelevance, that's very much on track. It is helping us win larger customers, but also making our customer base a lot more stickier. Significant, product enhancements, whether it's the integrations that we've added, over the last six months, but also some of the AI capabilities that differentiates us from the competitive landscape.

47:17 International footprint, we've seen a return back, to high growth over the over the medium term. We should see North America returning back to double digit organic growth. Strong entry into Japan, which gives us good confidence to put more investment into the Far East Asian market as we penetrate further from a market share perspective. In terms of revenue from strategic partners, that continues to grow. We've expanded the number of strategic partners, but also broadening out that partnership network into agency partners, technology partners as well. Our position is supported by market trend that continues to grow. The we're taking a higher share of marketing budgets.

48:06 Growing new business pipeline, we've seen strong pipeline growth, but also bookings in the period. Thank you very much, everyone, for listening to our presentation today. Thank you. Milan Milan, Alastair, thanks for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This may only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of DOTDIGITAL GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.