MIDAS SHARE TIPS UPDATE: Profit surge at Dotdigital

MIDAS SHARE TIPS UPDATE: Annoying emails drive a profit surge at Dotdigital

Dotdigital is another fast-growing British tech business but the majority of its customers are firmly rooted in the private sector. 

The company helps firms to increase sales through targeted emails and text messages. Independent research has shown that for every £1 businesses spend on email marketing, they generate more than £40 in sales so increasing numbers are turning to the online world to improve their results. 

Such emails can be annoying but Dotdigital’s systems help companies to be a little cleverer. Rather than sending the same message to everyone, Dotdigital allows users to personalise emails, working out what customers might want from what they have bought before, from jeans in certain colours to particular brewing recipes to tailored promotions, on special occasions. 

Clever: Dotdigital is another fast-growing British tech business but the majority of its customers are firmly rooted in the private sector. 

The group also helps businesses to offer ‘live chats’ to customers so they can ask questions and solve problems with orders online. 

Chief executive Milan Patel has 4,000 customers in more than 150 countries around the world. Retailers are high on the list but gyms, restaurant chains and charities, such as Help for Heroes, also use Dotdigital. The firm works with big international partners, too, such as Microsoft and Shopify, which help businesses to sell their wares online. 

Dotdigital has some public sector customers as well, including the Police, the NHS and the Department for Environment, Food and Rural Affairs, which use the firm’s IT to send out information, such as appointment reminders or news about forthcoming events. 

Like The Panoply, there were concerns Dotdigital would be hit by the pandemic. Patel admits there were disruptions at first but the business has bounced back and is now stronger than ever. Results for the year to June, released last week, showed a 12 per cent increase in sales to £47million, while profits climbed 10 per cent to £13million. 

Patel also said trading has been robust in recent months so results for the current year should be ahead of expectations. 

Highlighting his confidence in Dotdigital’s prospects, Patel is increasing the 2020 dividend by 23 per cent to 0.83p, payable to all shareholders on the register by January 8.

Midas verdict: Midas recommended dotdigital in 2015, when the shares were 37p. Online shopping has grown by leaps and bounds since then, Dotdigital’s technology has become more sophisticated and customer numbers have soared. The stock has surged in sync, closing at £1.42 last week. Existing investors may choose to sell some stock and use the cash for Black Friday online shopping. But they should not sell out completely. Continual lockdowns has made ecommerce more popular than ever and Dotdigital is well placed to benefit. The shares should continue to rise. 

Traded on: AIM Ticker: DOTD Contact: dotdigitalgroup.com or 020 3953 3072