Dotdigital Group – in a significant deal this UK influencer buys US influencer and boosts recurring revenues, shares 72p, brokers TP 150p

26.06.2025

Just as it closes its current year to the end of this month, the UK-based SaaS technology and provider of tools for digital marketing, Dotdigital Group (LON:DOTD), has made a significant acquisition in the States.

The Business

Dotdigital's solutions empower over 4,000 brands across 150 countries.

Set up in 1999, the £225m-capitalised Dotdigital, which is headquartered in London, also has offices in Manchester, Southampton, New York, Melbourne, Sydney, Singapore, Tokyo and Cape Town.

This group is a leading provider of cross-channel marketing automation technology to marketing professionals.

Its customer experience and data platform (CXDP) combine the power of automation and AI to help businesses deliver hyper-relevant customer experiences at scale.

With Dotdigital, marketing teams can unify and enrich their customer data, identify valuable customer segments, and deliver personalised cross-channel customer journeys that result in engagements, conversions, and loyalty.

This Morning’s Trading Update

The company stated that it remains focussed on driving high margin, high quality recurring SaaS revenue through the continued development of its leading all-in-one CXDP platform.

In line with its growth strategy, the Board has decided not to renew a non-core, low-margin £4.4m per annum transactional SMS contract due to unprofitable pricing requirements.

The FY25 revenue to end-June is expected to be in line with market consensus on a constant currency basis and after adjusting for a £0.7m current year revenue impact of this contract non-renewal.

The full revenue impact will take effect in FY26, however, given the low-margin nature of the contract, the impact to current FY25 and FY26 market expectations (before taking account of the Acquisition) for adjusted EBITDA and adjusted PBT will be minimal.

The Board believes this decision aligns the group's business model and resources to support the scaling of its innovative, higher margin solutions within fast-growing market segments.   

“Underpinned by a robust balance sheet, the Board continues to explore strategic M&A while assessing targeted investment aligned with its strategic priorities, including strengthening go-to-market leadership and reinforcing the operational foundations of the business to support the Group's long-term growth ambitions.”

The Social Snowball Acquisition

Paying up to $35m, based on cash and earnouts, the company is buying Social Snowball, a US-based influencer, affiliate and referral marketing platform for e-commerce brands.

The deal adds complementary capability to Dotdigital in the fast-growing influencer, affiliate and referral marketing segments.

Social Snowball is available through Shopify with over 1,500 active subscription-based customers, including G Fuel, Blume and True Classic, strengthening Dotdigital's Shopify channel partner foothold.

The deal extends the capability of Dotdigital's all-in-one CXDP platform, strengthening the group's competitive positioning and increasing its total addressable market.

CEO Milan Patel stated that:

"This acquisition marks another milestone in our CXDP vision.

Social Snowball brings a highly complementary asset to our product portfolio, enhancing our market position as a one-stop-shop for seamless, cross-channel marketing automation and creating valuable cross-sell opportunities.

Against an evolving landscape, we are seizing the opportunity with innovative technologies to help enterprises adapt quickly, personalise at scale, and build trust with their customers through authentic, data-driven engagement.

We are delighted to welcome Noah and his team to the Dotdigital family, and we look to the future with confidence."

Analyst Views

Analysts Andrew Darley and Kimberley Carstens at Cavendish Capital Markets have a Buy rating on the group’s shares, with a 150p Target Price.

Their estimates for the end-June 2025 revenues are for £85.3m (£79.0m) with adjusted pre-tax profits of £18.3m (£16.8m), earnings steady at 4.7p per share and with an increased dividend of 1.2p (1.1p).

For the coming year the analysts go for £92.7m sales, £19.8m profits, earnings of 5.0p and a 1.3p per share dividend.

Then jumping into the year to end June 2027 they see £101.6m revenues, profits £22.7m, earnings of 5.7p and paying a 1.5p per share dividend.

In My View

At the current 72p I would also rate this group’s shares as a Buy, looking for an early attempt at breaking above the 100p barrier.