Dotdigital H1 2026: Core ARR up 13% and guidance intact
Dotdigital’s half-year trading update shows the core engine is humming. The customer experience and data platform (CXDP) grew forward-looking annual recurring revenue (ARR) by 13% to £75.4m, with recurring revenue recognised in the period up 11%. Management says trading is in line with full-year market expectations and reiterates confidence in FY26.
There are FX headwinds across the board, so constant-currency growth is roughly 1 percentage point higher than the reported rates. The comparator was also tough, given an unusually strong H1 2025 in the low-margin CPAAS segment.
Key numbers at a glance
| Metric | H1 2026 | H1 2025 | Change / Notes |
|---|---|---|---|
| Core CXDP contracted ARR | £75.4m | £67.0m | +13% reported; +6% organic; c.+1pp higher at constant currency |
| Core CXDP recurring revenue (recognised in H1) | £37.3m | Not disclosed | +11% reported; +4% organic; now 84% of total revenue (vs 80%) |
| Total Group revenue (incl. CPAAS) | £44.2m | £42.4m | +4% reported; +9% normalised; +3% organic normalised |
| ARPC (excl. Social Snowball) | £1,968/month | £1,830/month normalised (£1,916 reported) | +7% on a normalised basis |
| Cash (31 Dec 2025) | £36.1m | £45.7m (31 Dec 2024) | Reduced following US$20m Social Snowball consideration |
| Social Snowball ARPC | US$348/month (Dec) | US$319/month (at acquisition) | +9% since acquisition; ARR up ~30% annualised |
Core CXDP growth: quality recurring revenue doing the heavy lifting
Dotdigital’s strategic tilt toward higher-value customers and a more premium mix is showing up in the right places. Core contracted ARR is up double digits, and recurring revenue now accounts for 84% of total sales, up from 80% a year ago. That higher visibility is exactly what investors want to see in a software model.
ARPC (average revenue per customer) excluding Social Snowball rose 7% on a normalised basis to £1,968 per month, signalling better monetisation and effective cross-sell. Growth came from all regions in the core business, with FX masking roughly 1 percentage point of underlying progress.
CPAAS comparator: normalising a noisy base
The headline Group revenue growth of 4% undershoots the core trend because H1 2025 was flattered by a final contribution from an exited CPAAS contract and exceptional SMS volumes. On a normalised basis (adjusting for that non-core CPAAS contract), Group revenue rose 9%, or 3% organically.
The takeaway: the lower-quality CPAAS drag is fading, while the higher-margin CXDP mix is expanding. That supports the Board’s comment on strong margin performance, even though exact margin figures aren’t disclosed.
Social Snowball: early proof points from the acquisition
Social Snowball, acquired in late June 2025, is bedding in well. ARR has grown approximately 30% on an annualised basis since acquisition, and ARPC has moved from US$319 to US$348 per month (+9%). Management expects growth to accelerate as go-to-market investments kick in.
Strategically, Social Snowball deepens Dotdigital’s Shopify ecosystem presence and adds influencer, affiliate and referral marketing. That broadens the cross-sell surface area and supports the push to lift ARPC across the enlarged base. Integration is on plan.
Product momentum: WinstonAI, WhatsApp, and loyalty in pilot
On the product side, Dotdigital continues to prioritise practical innovation: strengthening WinstonAI, driving WhatsApp adoption, and launching CreatorSearch within Social Snowball. The new loyalty product is now live with early adopters in production environments and delivering positive results, with wider release due later this fiscal year.
Looking ahead, investment will lean into data, AI and partner integrations, alongside internal infrastructure and process improvements. That aligns with customer demand for platforms that unify data and make personalisation measurable and scalable.
Outlook and guidance: in line with market expectations
The Board expects FY26 to be in line with market expectations. Consensus at the time of the update is:
- Revenue: £91.9m
- Adjusted EBITDA: £29.1m
- Adjusted profit before tax: £20.0m
Management highlights ongoing macro pressures – FX volatility, customer cost sensitivity, and industry consolidation – but leans on a strong cash position, a highly recurring revenue base, and a growing product portfolio. The M&A lens remains active with strict criteria.
My take: steady execution, improving mix, and optionality from M&A
- Positives: Double-digit ARR growth in core CXDP, higher recurring revenue mix, rising ARPC, and early wins from Social Snowball. The normalised view of Group revenue (+9%) better reflects the underlying trajectory.
- Neutral to watch: FX is a headwind on all metrics, and H1 comparators in CPAAS muddle optics. Cash has stepped down due to the US$20m acquisition, but £36.1m still provides ample flexibility.
- Risks: Customer cost sensitivity could temper upsell, and market consolidation can cut both ways. Execution on loyalty’s wider release and sustained WhatsApp momentum will matter for H2 growth.
Overall, this reads like a quality-over-quantity story progressing to plan. In-line guidance, improving revenue visibility, and product breadth give Dotdigital a decent hand for FY26.
What to watch into H2 and the March results
- Loyalty product rollout: evidence of broad adoption and uplift in ARPC.
- Social Snowball momentum: sustained ARR and ARPC gains as go-to-market spend lands.
- ARPC trend ex-acquisitions: further proof of mix shift and pricing/cross-sell power.
- FX impact: any stabilisation should reveal slightly stronger underlying growth.
- Margin colour: the update flags strong margin performance; H1 results should provide detail.
Jargon buster
- ARR: annual recurring revenue – contracted, forward-looking subscription value.
- CXDP: customer experience and data platform – software to unify data and personalise marketing across channels.
- CPAAS: communications platform as a service – typically lower-margin messaging volumes.
- ARPC: average revenue per customer – monthly revenue per customer account.
- Normalised: adjusted to remove the impact of the exited non-core CPAAS contract (annual value £4.4m).
- Organic: excludes contributions from Social Snowball, acquired in June 2025.
Bottom line: Dotdigital is navigating the macro with disciplined growth, a heavier recurring mix, and an expanding product set. If the March numbers support the margin narrative and loyalty scales well, FY26 should land as guided.
