dotDigital (DOTD) : Corp

Confidence, and investment in growth

Key data

  • Share price (p) 107.5
  • Target price (p) 140.0
  • Market cap (£m) 320.2
  • Enterprise value (£m) 297.7

Interims to December 2019 reveal performance in line with the January trading update: EBITDA of £9.3m was delivered from revenue of £23.1m, comfortably achieving 47% and 53% of FY expectations respectively (1H19: 47% and 41%). We review expectations towards consensus, reflecting confident additional investment in 2H20 and FY21. The three strategic pillars (geographic expansion, strategic partnerships, product innovation) demonstrate opportunities for growth, while £22.6m cash maintains potential through the options of investment, R&D and M&A. Strong KPIs abound: 90% recurring revenue; international revenue growth of 33%; 4% strategic partner revenue growth but 16% Magento-derived revenue growth; ARPU growth of 14%; EBITDA (post IFRS16) growth of 40% and margin of 40%; and operating cash generation of 72% of adjusted PBT. We adjust forecasts to accommodate additional investment, against unchanged revenue forecasts (15% growth), reducing adj EBIT 3% FY20 and 6% FY21 (adj dil EPS -4% and -5%), and reflecting board confidence in growth through new hires, while the omnichannel Engagement Cloud enjoyed levels of emails and messaging at +30% versus the immediate GDPR aftermath. 12-month target price of 140p (135p).

Andrew Darley 020 7220 0547

InnovaDerma (IDP) : Corp

Interims – strong H1 offsets challenging macro backdrop

Key data

  • Share price (p) 77.0
  • Target price (p) 180.0
  • Market cap (£m) 11.2
  • Enterprise value (£m) 9.0

Interim results to 31 December were 2% ahead of the 9 January trading statement, with revenues rising 33% to £5.1m, resulting in a pre-tax loss of £0.3m and period-end cash of £0.4m. Against a challenging retail background, these are strong results, with revenues also up 17% in the first seven weeks of H2. However, with key trading months (Mar-June) still to come, we have taken a more conservative stance with Roots revenues cut to reflect challenges to the bran, which should partially offset by the launch of Nuthing into the hair removal category. In doing so, InnovaDerma should thereby diversify its product concentration risk further. We reduce FY 2020 sales by 7% and PBT by 9%, reflecting weaker Roots expectations. Consequently, we lower our target price to 180p (-10%), which implies an adjusted FY 2020 P/E of c.19x and EV/EBIT of 13.2x, falling to 16.0x and 10.8x, respectively, underpinned by EPS growth of 19% in FY 2021.

Mark Brewer 020 7220 0556

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