dotDigital FY26 trading update: ARR growth accelerates as acquisitions deliver

dotDigital Group plc has closed FY26 with revenue, profit and cash in line with market expectations, alongside faster growth in its contracted recurring-revenue base.

The AIM-listed marketing software group reported revenue of £90.9 million for the year ended 30 June 2026, an increase of 8%, or 9% at constant currency. Forward-looking contracted annual recurring revenue, or ARR, rose 18% to £85.4 million.

The most encouraging detail is that organic contracted ARR growth improved to 8%, up from 6% at the half year. Acquisitions still provided a substantial part of the reported growth, but the underlying direction strengthened as the year progressed.

The figures are based on unaudited management information. Investors can also read the original company announcement.

dotDigital's FY26 figures at a glance

Metric	FY26	FY25	Change
Revenue	£90.9 million	£83.9 million	8%
Forward-looking contracted ARR	£85.4 million	£72.6 million	18%
Organic contracted ARR growth	8%	Not disclosed	Improved from 6% at H1
Core CXDP recurring revenue	£76.8 million	£67.3 million	14%
Organic core recurring revenue growth	3%	Not disclosed	Not disclosed
Gross margin	80%	79%	Up 1 percentage point
Closing cash	£17.1 million	£36.2 million	Down £19.1 million

CXDP stands for customer experience and data platform. It is dotDigital's core software offering, combining customer data, marketing automation and campaign execution.

Core CXDP recurring revenue represented approximately 84% of total group revenue, compared with 80% in FY25. That shift matters because recurring software revenue tends to offer better visibility than one-off or transactional activity.

ARR momentum is the main positive

Forward-looking contracted ARR increased by £12.8 million to £85.4 million. Organic growth was 8%, excluding the £6.9 million of ARR acquired with Alia, although growth generated by Alia since acquisition is included in that organic calculation.

The improvement from 6% organic ARR growth at the half year suggests that commercial momentum strengthened during the second half. It also gives dotDigital a larger pool of contracted business entering FY27.

Recognised recurring revenue tells a slightly more restrained story. Core recurring revenue rose 14% to £76.8 million, but organic growth was only 3%, or 4% at constant currency.

The difference between contracted ARR and recognised revenue is important. ARR is a forward-looking measure based on contracted recurring business, while recognised revenue reflects what was recorded during the financial year. Stronger ARR growth can therefore point towards improved future visibility, but investors will want to see that momentum convert into reported organic revenue growth.

Acquisitions are performing strongly

Alia was the standout performer. Its ARR increased from £6.9 million at acquisition on 3 March 2026 to £10.0 million at the year end. That represents growth of 45% during roughly four months of ownership.

Social Snowball also performed well, increasing ARR by 33% during its first full year under dotDigital's ownership, from £4.1 million to £5.4 million.

That performance is expected to trigger approximately US$1 million of first-year deferred consideration, payable in FY27. Deferred consideration is an additional acquisition payment linked to the acquired company's subsequent performance.

These additions have expanded dotDigital beyond engagement and retention into customer acquisition, loyalty and advocacy. Management's argument is that a broader platform can address more of each customer's marketing budget while reducing the need for multiple suppliers.

The early numbers support the strategic rationale, although both acquisitions still need to demonstrate durable growth over a longer period.

Revenue quality improved, but underlying growth remains mixed

Gross margin increased from 79% to 80% as the revenue mix moved towards higher-margin core CXDP activity.

However, excluding acquisitions, total group revenue was flat. Management attributed this to two previously disclosed factors: the exit from a low-margin messaging contract and a tough comparison with strong non-recurring core revenue in the first half of FY25.

Both factors are now fully reflected in the FY26 comparator, which should make future comparisons cleaner. Even so, flat acquisition-adjusted group revenue shows why accelerating organic growth remains central to the investment case.

The low-margin transactional messaging business, known as CPaaS, is included in total group revenue but excluded from core CXDP measures. Its weakness can drag on headline revenue without necessarily having the same effect on gross profit.

Profit expectations and cash position

Profit measures are expected to be in line with FY26 market consensus. At the date of the announcement, consensus stood at adjusted EBITDA of £29.1 million and adjusted profit before tax of £19.7 million. Actual profit figures were not disclosed in this update.

Management said margins improved during the second half as the planned rise in first-half investment moderated and go-to-market initiatives began contributing.

Closing cash was £17.1 million, down from £36.2 million a year earlier, following the initial US$30 million payment for Alia. The balance was slightly ahead of the stated £16.3 million consensus expectation.

The decline therefore reflects acquisition spending rather than an unexplained deterioration in the update. Nevertheless, the lower cash balance reduces the financial cushion, while the Social Snowball deferred payment will create a further FY27 outflow.

AI products broaden the platform

DotDigital launched its own model context protocol, or MCP, server during FY26. An MCP server helps software connect with AI tools and workflows in a standardised way.

After the year end, the group also launched Agents in Dotdigital and Dotdigital Loyalty. Management believes these products can embed the platform more deeply within customers' increasingly AI-enabled marketing processes.

The commercial opportunity is clear enough: more capabilities could support cross-selling, customer retention and new contract wins. The unanswered question is how quickly those launches will translate into meaningful revenue. No product-level forecasts were disclosed.

What investors should watch in FY27

The board says it is confident of delivering FY27 market expectations and accelerating organic growth over the medium term. It enters the year with a larger recurring-revenue base and improved visibility, although management also acknowledges that market conditions remain mixed.

The key indicators to monitor are:

• whether contracted organic ARR growth continues to accelerate from 8%;
• whether stronger bookings feed through into recognised organic revenue growth;
• the durability of Alia and Social Snowball's expansion;
• progress in converting new AI-enabled products into customer spending;
• margins following the FY26 investment programme; and
• cash generation after acquisition-related payments.

Overall, this is a reassuring update with particularly strong acquisition performance and better second-half ARR momentum. The next step is proving that the expanded platform can lift organic recognised revenue growth, not just contracted ARR.