Dotdigital Group plc (LSE:DOTD) reported an 18% increase in forward-looking contracted annual recurring revenue (ARR) to £85.4 million for the financial year ended 30 June 2026, supported by growth across its marketing technology platform and contributions from recent acquisitions.
Organic ARR growth reached 8%, accelerating from 6% at the half-year stage, while group revenue increased 8% to £90.9 million from £83.9 million in FY2025.
Adjusted EBITDA rose 10% to £29.4 million, maintaining a margin of 32%, while adjusted profit before tax increased 2% to £19.4 million.
The AI-powered marketing platform provider said trading during the first four months of FY2027 had been in line with expectations and reaffirmed its confidence in achieving full-year market forecasts.
Recurring Revenue Growth Strengthens Financial Performance
Dotdigital’s recognised recurring revenue increased 14% to £76.8 million, representing 84% of total group revenue, compared with 80% in the previous financial year.
On an organic basis, recognised recurring revenue grew 3%.
Group revenue increased 9% at constant currency, although revenue excluding acquisitions was unchanged year on year.
The company attributed the flat organic revenue performance to its previously announced exit from a low-margin communications platform as a service (CPaaS) contract and a reduction in one-off revenue.
Gross margin improved to 80% from 79%, reflecting the increasing contribution from recurring platform revenue.
Adjusted EBITDA increased from £26.8 million to £29.4 million, while adjusted diluted earnings per share rose 3% to 4.94p from 4.80p.
The company also reported continued growth in average monthly recurring revenue per customer across its principal platforms.
For the Dotdigital Marketing platform, the figure increased 6% to £1,943, compared with a restated £1,829 in FY2025.
Alia and Social Snowball Deliver Strong ARR Growth
Dotdigital’s acquisitions of Alia and Social Snowball contributed to the expansion of its recurring revenue base and product offering.
Alia, which was acquired during FY2026, recorded a 45% increase in ARR during the group’s four months of ownership, reaching £10.0 million.
Social Snowball generated ARR growth of 33% during its first full year under Dotdigital ownership, reaching £5.4 million.
Average monthly recurring revenue per customer at Social Snowball increased 35% to US$327 from US$243.
At Alia, the equivalent figure rose 5% to US$261 from US$248 at acquisition, representing annualised growth of approximately 16%.
Both businesses have been integrated with the Dotdigital Marketing platform at product and data levels.
Following the financial year-end, Alia expanded beyond the Shopify ecosystem, while Dotdigital’s commercial teams began introducing its capabilities to the wider group customer base.
The company expects these integrations to create additional cross-selling opportunities as it develops a broader customer acquisition and retention offering.
AI Product Development and Loyalty Platform Expansion
Dotdigital continued investing in artificial intelligence and automation capabilities during FY2026.
The company launched a Model Context Protocol (MCP) server, enabling customers to connect the Dotdigital platform with their preferred AI tools.
AI-powered content creation and customer segmentation agents were also introduced in preview to approximately 250 customers.
These tools are designed to simplify marketing workflows and support more effective use of customer data.
Following the year-end, Dotdigital launched Dotdigital Loyalty, extending its platform capabilities into customer retention and loyalty management.
The company said its expanded product portfolio now covers more stages of the customer journey, including acquisition, engagement, retention and advocacy.
Chief Executive Officer Milan Patel said the broader offering was intended to help customers improve marketing performance while creating opportunities for Dotdigital to expand relationships with existing users.
North American Revenue Rises 37%
Dotdigital reported continued growth in international markets, with revenue generated outside its domestic market increasing to 37% of group recognised revenue from 33% in FY2025.
International operations also accounted for more than 40% of forward-looking contracted ARR.
North American revenue increased 37% to US$25.0 million, driven primarily by contributions from Alia and Social Snowball.
The company also reported growth among customers using technology integrations with its core marketing platform.
Excluding the impact of Alia and Social Snowball, revenue from Dotdigital Marketing platform customers using named technology connectors increased 5% to £38.7 million.
Within this category, revenue associated with Shopify-connected customers rose 37% to £11.4 million.
Dotdigital said these developments reflected the importance of platform integrations in supporting customer acquisition and account expansion.
Customer Retention Improves as Commercial Operations Strengthen
Gross customer retention within the Dotdigital Marketing platform improved to 85%, compared with 84% in the previous year.
The company also strengthened its global sales operations under a new Chief Revenue Officer and introduced a new customer relationship management system.
These changes are intended to improve sales execution, customer retention and cross-selling across the enlarged product portfolio.
Management said its commercial priorities include increasing adoption of recently acquired products among existing customers and improving the consistency of its global sales processes.
The company expects these initiatives to support faster organic growth over the medium term.
Cash Balance Reflects Acquisition and Shareholder Returns
Dotdigital ended FY2026 with cash of £17.1 million, compared with £36.2 million at the end of FY2025.
The reduction followed the US$30.0 million acquisition of Alia, alongside shareholder distributions during the year.
The group paid £3.7 million in dividends and completed £3.0 million of share repurchases.
Despite the lower closing cash balance, Dotdigital continued investing in product development, platform integration and international expansion.
The board proposed a final dividend of 1.33p per share, representing a 10% increase from the 1.21p declared for FY2025.
The proposed dividend remains subject to shareholder approval.
FY2027 Revenue Expected to Reach £104.7 Million
Dotdigital reported that trading during the first four months of FY2027 had been consistent with the board’s expectations.
Management expects revenue growth to accelerate as the financial year progresses, supported by the expanded product portfolio, cross-selling initiatives and improvements in commercial execution.
The company reaffirmed its confidence in achieving current market expectations for the year ending 30 June 2027.
Consensus forecasts at the date of the announcement indicated revenue of £104.7 million, adjusted EBITDA of £32.8 million and adjusted profit before tax of £22.3 million.
Compared with FY2026, these forecasts imply revenue growth of approximately 15%, adjusted EBITDA growth of around 12% and an increase in adjusted pretax profit of approximately 15%.
Patel said the company’s larger recurring revenue base was providing greater visibility over future performance, although market conditions remained mixed.
He also highlighted the opportunity to introduce Alia, Social Snowball and other platform capabilities to existing Dotdigital customers.
Outlook
Dotdigital enters FY2027 with a larger contracted recurring revenue base, improved organic ARR momentum and an expanded range of marketing technology products.
The integration of Alia and Social Snowball, together with new AI capabilities and the launch of Dotdigital Loyalty, provides additional opportunities for cross-selling and customer expansion.
Management expects organic growth to accelerate over the medium term as these initiatives develop and the group’s commercial improvements take effect.
Although wider market conditions remain mixed, the board continues to expect FY2027 results to meet current market forecasts.
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