dotDigital (DOTD) : Corp

Prelims to June – building on the pillars

Key data

  • Share price (p) 91.0
  • Target price (p) 135.0
  • Market cap (£m) 270.6
  • Enterprise value (£m) 251.3

Prelims to June indicate performance in line with expectations, with EBITDA of £14.7m (£15.0mE) delivered from revenue of £42.5m (£42.5mE) leading to adj.dil.EPS of 3.9p (3.4pE, outperformance due to a lower tax charge) and free cash flow of £6.2m (£6.3mE). In a post GDPR, pre Brexit world, DOTD has simply got on with the job, driving increased ARPU of £966 (FY18: £845) from more customers taking more products in more territories, with a greater number of channels and partners. This has led to 15% organic growth from continuing operations with 86% recurring revenue (90% contracted) – with the strong visibility supported by a hearty balance sheet including £19.3m net cash, giving DOTD strategic opportunities to add to its existing operational strength. There are few companies we can point to which consistently deliver 15% organic growth, PBT margins over 25%, and reliable cash conversion (>80% op cash/EBITDA). Target 135p reiterated.

Andrew Darley 020 7220 0547

LiDCO (LID) : Corp

Key data

  • Share price (p) 3.9
  • Target price (p) 11.0
  • Market cap (£m) 9.5
  • Enterprise value (£m) 8.3

LiDCO reported interims to 31 July 2019, which contained no surprises in light of the 20 August trading update, although the revenue mix was slightly different to the anticipated figure. H1 performance continued to be influenced by the transition, particularly in the UK, from capital sales to SaaS licenced High Usage Programme (HUP) monitors, which typically results in destocking of older smartcard consumables ahead of the transition, as well as being able to recognise only part of the annual licence fee depending on timing. Despite this, LIDCO product revenues increased 10%, resulting in substantially reduced adjusted LBITDA and pre-tax loss of £0.2m (vs. -£0.8m) and £0.8m (vs. -£1.3m), respectively, demonstrating the operational leverage within the business. We remain confident that the pipeline of HUP interest, given the inherent economic benefits that HUP offers to high volume users, will convert to long-term licence revenue. We leave our adjusted pre-tax forecast unchanged and reiterate our 11p price target.

Mark Brewer 020 7220 0556

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