Dotdigital Full-Year Results: ARR Growth Accelerates as Acquisitions Expand the Platform

Dotdigital Group plc published its audited full-year results on 3 November 2026, covering the financial year ended 30 June 2026.

The headline is stronger annual recurring revenue, helped by the acquisitions of Alia and Social Snowball. The less flattering detail is that Group revenue excluding acquisitions was flat, with the core operation affected by the planned exit from a low-margin contract and weaker one-off revenue.

Investors can read the original company announcement for the complete audited statements.

Dotdigital's FY26 key figures

Metric	FY26	FY25	Change
Revenue	£90.9 million	£83.9 million	8%
Forward-looking contracted ARR	£85.4 million	£72.6 million	18%
Recognised recurring revenue	£76.8 million	£67.3 million	14%
Gross margin	80%	79%	1 percentage point
Adjusted EBITDA	£29.4 million	£26.8 million	10%
Adjusted EBITDA margin	32%	32%	Unchanged
Adjusted profit before tax	£19.4 million	£19.0 million	2%
Adjusted diluted EPS	4.94p	4.80p	3%
Closing cash	£17.1 million	£36.2 million	Down £19.1 million
Proposed final dividend	1.33p	1.21p	10%

ARR means annual recurring revenue. Dotdigital uses this as a forward-looking measure of contracted subscription revenue, excluding one-off revenue and its low-margin transactional messaging business.

The strongest signal is ARR momentum

Company-reported forward-looking contracted ARR increased by 18% to £85.4 million. Organic ARR growth was 8%, accelerating from 6% at the half year.

That matters because ARR gives investors an indication of the contracted revenue base carried into the next financial period. It is not the same as revenue already recognised in the accounts, but it can improve visibility when customer retention remains stable.

Recognised recurring revenue rose 14% to £76.8 million and represented 84% of Group revenue, up from 80%. The increasing weight of higher-margin subscription income helped gross margin improve from 79% to 80%.

However, the distinction between acquired and organic growth is important. Excluding acquisitions, total revenue was flat. Dotdigital attributed this to the planned exit from a low-margin Communications Platform as a Service contract and lower one-off revenue, alongside softer new business and longer customer decision cycles.

My interpretation is that the quality and visibility of revenue improved, but the existing business has not yet returned to strong top-line growth.

Alia and Social Snowball delivered the growth

Alia appears to be the standout acquisition so far. Dotdigital acquired the business in March 2026 for an initial US$30.0 million, with total potential consideration of up to US$60.0 million.

Alia's ARR increased by 45% during Dotdigital's four months of ownership, rising from £6.9 million at acquisition to £10.0 million at the year end. It contributed £2.7 million of recurring revenue during that period.

Social Snowball's ARR increased by 33% to £5.4 million in its first full year of ownership. Growth accelerated from a 30% annualised rate in the first half to 36% in the second.

Together, Alia and Social Snowball accounted for around 18% of Group ARR, compared with 6% in FY25. Their rapid growth is therefore becoming material to the Group rather than remaining an interesting side project.

The next test is cross-selling. Both products have been integrated with the main Dotdigital Marketing platform at product and data level. Alia has also expanded beyond Shopify, and Dotdigital's revenue teams began selling it across the wider customer base in September 2026.

Profitability held up, but adjusted profit growth was modest

Adjusted EBITDA increased by 10% to £29.4 million, with the margin holding at 32%. Maintaining that margin while integrating acquisitions and investing in commercial execution is encouraging.

Adjusted profit before tax increased by a more modest 2% to £19.4 million. Its margin fell from 23% to 21%, principally because interest income declined after cash was used for acquisitions and interest rates reduced.

Statutory profit after tax rose 18% to £13.2 million, while statutory diluted earnings per share increased from 3.55p to 4.20p. Investors should note that statutory profit benefited from a £5.2 million gain caused by the revaluation of Social Snowball's contingent consideration.

That accounting gain reflects lower expected earn-out payments and should not be treated as recurring operating income.

Why cash fell sharply

Closing cash declined from £36.2 million to £17.1 million.

My calculation: the £19.1 million reduction represents a fall of approximately 53%, using the reported opening and closing cash balances.

This was primarily a capital-allocation story rather than an operating loss. Dotdigital funded the US$30.0 million initial Alia consideration, paid £3.7 million in dividends and spent £3.0 million repurchasing shares.

The Group still generated £19.0 million of net cash from operating activities, although this was below £22.3 million in FY25. It invested a further £10.9 million in intangible assets, mainly internally generated development costs.

Future acquisition payments remain relevant. Contingent consideration liabilities totalled £12.4 million at the year end, and potential earn-outs for Alia and Social Snowball extend over the following two years. Dotdigital expects cash balances to rebuild as these commitments reduce, but that is a company expectation rather than a certainty.

Retention, international growth and AI products

Gross retention in the main Dotdigital Marketing platform improved from 84% to 85%. That is progress, although it still means the business must replace a meaningful amount of lost revenue before producing net growth.

Average monthly recurring revenue per customer rose by 6% to £1,943 for the Dotdigital Marketing platform. Social Snowball's figure increased 35% to US$327, while Alia's rose to US$261 from US$248 at acquisition.

International revenue increased from 33% to 37% of Group revenue. North American revenue rose 37% to US$25.0 million, led by Alia and Social Snowball, although the core platform lost three significant customers in the region.

Product development included an MCP server, which lets customers connect Dotdigital data to their chosen artificial intelligence tools. Content and segmentation agents were also previewed by around 250 customers. Dotdigital Loyalty launched after the year end, while WhatsApp message volumes increased from approximately 326,000 to 2.6 million.

These developments broaden the product set, but investors will ultimately need evidence that adoption converts into higher retention, cross-selling and organic revenue growth.

FY27 outlook and investor watchpoints

Trading during the first four months of FY27 was in line with the Board's expectations. Management expects growth to accelerate as the year progresses and remains confident of delivering market expectations.

The RNS lists FY27 consensus expectations as:

• Revenue of £104.7 million
• Adjusted EBITDA of £32.8 million
• Adjusted profit before tax of £22.3 million

Those figures imply further growth, but the Board also described market conditions as mixed. The proposed final dividend increased by 10% to 1.33p per share, subject to shareholder approval.

The positive case rests on strong acquisition performance, improving ARR momentum, a richer recurring-revenue mix and a stable EBITDA margin. The concerns are flat revenue excluding acquisitions, slower adjusted profit growth, lower cash and continuing earn-out obligations.

The key measure for FY27 is organic growth. Dotdigital has built a broader platform and acquired faster-growing products. It now needs to prove that cross-selling those products into its established customer base can lift the underlying business, rather than leaving acquisitions to carry most of the expansion.