dotDigital Group Regulatory News (DOTD)

FOR IMMEDIATE RELEASE 15 JULY 2016

dotdigital Group plc

("dotdigital" or the "Company")

Trading Update

"Strong organic growth in line with market expectations"

dotdigital Group plc (AIM: DOTD), the leading provider of intuitive email and marketing automation software as a service ("SaaS") and managed services to digital marketing professionals, today gives a trading update prior to the Company's full results for the year ended 30 June 2016. The trading performance in this statement is based on unaudited initial management estimates.

Highlights:

· Overall revenue up 26% to approximately £26.9m (FY15: £21.4m)

· EBITDA* will be slightly ahead of market expectation

· Monthly recurring revenues from dotmailer's SaaS based usage up approximately 31% to £21.1m (FY15: £16.1m)

· Creative and managed service email marketing revenues grew by approx. 11% to £1.8m (FY15: £1.7m)

· Average revenue per client has grown by 29% from c. £445 to c. £575 per month

· Monthly recurring revenue from Magento Clients continues to show strong growth of 25%

· The total number of emails sent by the dotmailer platform has grown by 39% to 8.6 billion (FY15: 6.2 billion)

· Strong cash balances at 30 June 2016 of £17.2m (FY15: £11.9m)

· Growth of 58% in revenue outside of the UK

A summary of approximate revenues by region for the full year to 30 June 2016 is provided below:

(* EBITDA is the profit before tax adjusted for depreciation, amortisation, finance income, finance expenses relating to share option schemes)

dotdigital's organic growth strategy continues to be focussed around four core areas:

· Product innovation

· Geographic expansion

· Developing strategic partnerships

· Identifying new customer niches

In the 12 months to 30 June 2016, key performance highlights against these areas were:

· Recurring revenue charges from enhanced product functionality has increased by approx. 106% to over £4.0m (FY15: £2.0m)

· Growth of our US region revenues, up approximately 49% from US$3.0m to US$4.4m. We continue to deliver good channel partnerships and direct sales opportunities both in the Magento and CRM connector space

· Strong partnerships have now been established with key partners, initially in Australia, which have generated AUS$0.6m. We are making good progress but slightly slower than planned due primarily to these trusted new relationships taking longer to be established. These partnerships span more broadly into the APAC region where we are carrying out detailed market research on the opportunities that exist for integrating the dotmailer platform

· Good initial traction has been achieved within the Nordics, Benelux and the Middle East regions

· dotmailer's deep integrations both in the B2C and B2B space are now used by over 670 clients and represent annualised revenues of more than £8.4m. This continues to be an area of investment

Comment on Brexit

The Board has assessed the impact of the decision from the UK referendum on EU membership, and continues to monitor the effects of the decision. Whilst still in the early stages, the Board's initial view at this time is that it will not have a material adverse impact on dotmailer's ongoing business. This is primarily due to a diverse spread of clients across many sectors and geographies.

Based on experience of the market, the Board also believes that the long term effects of Brexit will be limited as clients and prospects will continue to invest more of their marketing budgets into digital marketing channels which generate high returns on investment. This has also been echoed by independent research carried out by the two leading digital marketing commentators, Econsultancy and the Direct Marketing Association which confirms that 'Email Marketing' is still the most effective marketing channel.

Milan Patel, CEO & CFO of dotdigital, commented: 

"This continued strong performance with revenue growth of 26% is again extremely encouraging and illustrates that our profitable organic growth strategy continues to deliver against strong contracted recurring revenues in the business.

The dotmailer platform continues to evolve and innovate, providing highly sophisticated yet 'easy-to-use' marketing automation tools for our clients and this we believe is part of the true essence of our continued success.

We look forward to providing a full update on the year's trading and continued growth strategy when we announce our full year results in mid-October.

I would like to take the opportunity to thank our staff for their tremendous enthusiasm, commitment and performance over the past year and our shareholders for their continued support."

Ends

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