dotdigital Group Plc (DOTD) Earnings Call Transcript & Summary

Good afternoon, and welcome to the dotdigital Plc investor presentation. [Operator Instructions] I'd now like to hand you over to Milan Patel, CEO. Good afternoon, sir.

Thanks, Lilly. Good afternoon, everyone, and thank you for joining today's half year results presentation for the 6 months ended 31st of December 2023. I know some of you who have registered have followed the story and some of you will be new to the story. So I will take you through some of the history of the business. In terms of the business itself, it's very much a global business centered out to 3 main hubs, U.K. been a hub into EMEA, and New York office has been a hub into North America, and our Sydney office has been our hub into APAC. Now when we describe hubs, it's effectively having every single department within a region that you can really scale from as you either push further into the continent or you gain market share and support the customers. For us, it's having most of the customers -- or all of the customer-facing departments within region, not only to understand why a customer chose us, but also to deliver on the goals marketing strategies that they would like to implement within dotdigital. Across the globe, we have about 475 employees, and more recently, we did an acquisition mid-September, which added 65 to that count. In terms of number of locations, we operate out of in 8 main offices. And effectively, we have hybrid working environments to help coverage across to make sure that we're supporting the customers. Not only do we have our own direct marketing activities. We also have a strong agency partner and solution partner, tech solution partners, that really assist us in driving brand awareness across these 3 different regions. In terms of what we do, for the people that haven't followed us, we are a customer experience platform, and I'll go through a lot more detail of what the platform consists of and the sorts of use cases people use us for. In terms of the customers we have -- our core market would be within mid-market. We continue to see an increase in enterprise clients that use the platform, whether it's across many different territories, or many different brands that they may have within their group. In terms of the organic growth strategy, is centered around 3 main pillars of geographic, and we continue to grow within the 3 different continents, so, and I'm pleased to see the growth that is coming through our 3 geographic regions. In terms of strategic partnerships, we like to look at the number of connected clients or using 1 of the partners and integrations that we have, and it represents just over half of our customers. In terms of the characteristics of connected clients versus non-connected, we find that they are a lot more sophisticated. They adopt more of the platform. They have higher ARPCs. The third part is the product innovation pillar of our growth strategy, and we spend about 12% of our group revenues in R&D. One, to stay ahead of the competition. Secondly, making sure we're delivering on the use cases our customers choose us for. And thirdly, looking down the line of what will be coming next over the next 2 to 3 years. In terms of the pricing strategy, it's based on 3 main components: one, being the number of contacts that they're bringing into the platform, which starts the license fee. The amount of data that's being brought in expands the license fee. And thirdly, the volume and messages that they will be sending out. We've worked, over the 15 years, we've been a public company around 3 main metrics: one, being around organic growth. We've continued to -- over the last 10 years, but also from the start of us becoming a public company, driven double-digit organic growth rates, along with profitability of operating margins greater than 20% and EBITDA margins greater than 30%. We talk about sustainable growth of both the hyper growth, which puts us in a good position as we look forward. So over the last 6 months, strong revenue growth, 15%, it includes approximately 3 months of the acquisition consolidated into numbers. But removing that, we've grown 11% in constant currency. Some of you may have heard from me, we were moving as the market continues to evolve. We continue to move further into the customer experience data platform space. Not only has our organic development, things like adding channels around MMS, particularly for our North American market, but also some of the development we've done in the AI capabilities and really enhancing our data platform through our organic road map. We've also, with the acquisition of Fresh Relevance in mid-September push further into the personalization space, taking us closer and wider into the customer experience market. In terms of the integration, and we'll talk a little bit around the integration from an operations and people perspective as well as the tech integration and our go-to-market as we go through the presentation. We continue to win larger customers. We can see that coming through in the ARPC, which is pleasing to see, that continuing to increase, and also we've seen some early cross-selling into our existing customer base as well as new customers that have looked to us, which we may or may not have won without the broader proposition. Strong trading momentum, really moving into H2, and the low staff attrition rate within the organization. We pride ourselves in the culture we build and the talent that we continue to acquire. Very much a strong balance sheet, no debt on the balance sheet. Everything we've done has been organic, and that gives us really good or visibility in terms of further investment we can make within organic means and also looking at other acquisitions that can really accelerate our road map. If we look at the key metrics, we've already talked about revenue growth. We've talked about organic revenue growth. A strong proportion of our revenues is recurring, so 94% of which 79% is contracted. We're seeing some operating leverage coming through the period in FY '22, '23. We invested quite heavily around the people, solidifying the foundations, which really bodes well for future growth. And average revenue per customer, that's a combination of higher value new customers that are coming on board, but also existing customers buying more, whether it's bolt-on functionality or sending more messages out of the platform, that has increased 9% in the period. So for the people that are new, there are 4 main parts to our customer experience platform. And I'd like to think -- now you start with the data. So we've built over the last 12 to 18 months, our customer data platform. That allows our customers to bring data in easily, the ability to use that data without having to think about what data mapping do they need to do? What hygiene work do they need to do within their databases. What that does is it allows our customers to understand more around the data recipients -- around the recipient that they're sending to, but also allow you to visualize the data, whether it's through the use of single customer view or some of the ways that their customers engage with them enriching the data platform. The middle layer to the platform is all around orchestration. You don't have to have any technical expertise within the marketing department whether to create the campaign or deploy the campaign. And within there, there's lots of functionality around life cycle modeling, the ability to create automations across their life cycle, across their customer journeys, the ability to have drag-and-drop technology to create your campaigns as well as some of our newer WinstonAI functionality set that is really making marketing departments more efficient or allowing our customers to drive a higher return on investment from their marketing campaigns. There you can see a pie with green and the orange elements that's the functionality that Fresh Relevance adds to our broader platform and also that you can communicate on, more recently, obviously through the acquisition. We've now got website, 9x out 10 from a customer acquisition perspective or even a retention marketing standpoint, the experience starts on the website. And I'll take you through some of the functionality that Fresh Relevance has built and will be combined into the dotdigital platform as we go through the presentation. And what wraps it all together is the reporting and analytics, effectively helping our customers really drive that return on investment. So we've talked a little bit about the product developments, the amount we spend in R&D, but that helps in terms of competitive differentiation. But what we've seen from our upper midsize businesses as well as larger enterprise, they're really focused on driving marketing efficiencies across their departments, making it easy, allowing them to use their time elsewhere in more productive areas. In terms of some of our smaller customers, they're really focused around driving return on investment. How do I make more money from sending campaigns? Or how do I engage with the audience a lot more? So from marketing efficiencies, we use natural language processing to assist our customers to create campaign, review campaign, also making it easier for marketing department to build 1 campaign, for example, an e-mail campaign here and then being able to turn that into a 160-character text SMS. So with a click of a button, it's just making life and time to value a lot easier. A lots of work has gone on from our data science teams and our own proprietary algorithms around things like predictive next purchase, predictive churn, predictive engagement, and a lot more functionality there, which is just infused across our platform. So what does the competitive landscape look like? And within the competitive landscape, each player typically optimizes their platform for a category or a segment of customer size. So you've got people like Mailchimp and Constant Contact, which are really optimized for that micro business. The ones that are really starting out the journey of digital marketing or being able to capture more data so that they can be more relevant and targeted. You've got others, then take that next step further. And then when you outgrow some of those platforms, you look for a mid-market platform that has a lot more sophistication, more flexibility, and we can provide that in a broader subset of use cases that they're looking to solve. So it's down at the small business, it's more about ease-of-use and winning against some of the other competitors as well as being able to provide off-the-shelf integrations to bring data in easily. At the top end it's fully customized products, typically have an implementation fee of at least $0.5 million. And at that point, what we're seeing in the market is a lot of the large enterprise looking to find more cost-effective solutions, quicker to deploy solutions that they can roll out across geos, across different brands. And we've been taking some of those enterprise clients that rolled us out across the globe. Then within the mid-market, it's about certain use case differentiation. It could be the expertise that we have within particular verticals, whether it's around just really making it easy from an ease-of-use perspective, but also giving them deeper and richer, more all-in one from a single provider. So I'll pass you over to Alistair to go through the financials.

Thank you, Milan. I'll start with summarizing how we shape the P&L and how we invest the resources we have available and the returns that drives, and then dive into some of the highlights to the recent performance over the half year. So we and the business has, for a long time, managed the P&L to achieve a 20% plus operating margin, 30% plus EBITDA margin. What that means in practice is we invested a fairly consistent amount in R&D in the order to [indiscernible] our revenue, and similarly a consistent amount of sales and marketing and then minimize the cost of delivery to the customer and the back office costs we have. From the amount we invest in go-to-market, we typically can get in the order of a 6x return on customer lifetime value. And that has supported the sustained growth we've seen, which as a [indiscernible] 20%, 17, 17.5% over the last 12, years. We've -- throughout that time, we've maintained that profit margin and thus the profits have grown substantially in line with the revenue growth, as you can see from the blue EBITDA line on this chart. Now over the last few years, we had a rapid growth in revenue going to the COVID period. There's a short period of normalization after that. And we spend a little bit of time rebuilding our team in North America also, and it's good to see that the magenta line, I think it's -- I think that's the name of the color, ticking up to the right showing how profit has started growing again in the most recent period, along with the acceleration of revenue we've seen. Now the revenue growth of 15%, slightly flattering because that includes the acquisition [ partway ] through the periods of 2.5 months into the half year of Fresh Relevance. Without the Fresh Relevance acquisition there, organic revenue growth on a constant currency basis would have been 11%, which is a gradual improvement over the past couple of years, we've been steadily stepping that up from the sort of mid- to high single digits through to now back to double digits are actually more in line with the group's long-term achievements. Now we'll talk briefly about the quality of that revenue. So about 94% of our revenue is either recurring or repeating and 79% of the revenue is contracted recurring revenues. That ratio has not been affected by the acquisition of Fresh Relevance. They have very similar metrics. And I should point out that our ARR growth is consistent with our overall revenue growth just on the quality of revenue is undiminished despite the growth in the period. Similarly, cash generation remains pretty much on track with historical trends, close to that 100% level. Now of course, there's some normalization there relating to the acquisition of -- relating to the acquisition and the working capital fluctuations that caused, but the underlying cash generation of the business remains very strong. Looking at some highlights of the year. I think it's worth drawing out the performance in regions. In particular, in APAC, we have underlying growth of 33% year-on-year. Now it's the smallest region, represents 9% group revenues at the moment. But there are some countries in there, in particular, Singapore and Japan are growing over 100% year-on-year. And there's real optimism in the business about how far we can push that region. We put significant investment in FY '23 in the form of additional sales heads and marketing spend, particularly in Singapore and Japan. It's good to see that the productivity of those teams is now consistent with the more established teams in the U.K., for example. And that gives us the confidence that we should be further investing in that area in the coming year. Now [ around admin ] expenses when you strip out the cost that's being layered in as a result of the acquisition, grew by a little bit [ under 5% ] which is good to see, given that the level of inflation in the wider macro environment, I think that shows pretty strong cost control in the wake of the period of substantial investment in the prior year. We've maintained our organic head count in line with the head count we have leaving the past financial year, we should have. Now our balance sheet has a very similar shape to previous years we've spent some of the cash we had. We have at the end of the prior half year, we had close to GBP 50 million -- just over GBP 50 million at year-end. That's now down in the high 30s as a result of the acquisition. But that still leaves us with sufficient funds to consider further acquisitions if we can find the appropriate target from a functional perspective at the right price point. Our working capital profile is substantially unchanged by the acquisition, and as you would expect, given the cash generation I've already described. And I'm not sure there's a lot to add when talking about the cash flow because it's really covered by the P&L and balance sheet comments. Our tax expenditure in the year is just a question of timing of when we pay the bill, there will be an increase in the effective tax rate on the business over this year and the following year. First, as we get the full impacts of the growth in -- or increase in the corporation tax rate. And next year as the changes that have been announced regarding R&D credits as we move from the small companies R&D scheme to the unified RDEC scheme. But those -- the impact of that is built into the forecast numbers that are in the market. Just to touch on our capital allocation policy, there's -- I won't go into the detail of how we screen potential acquisitions or exactly how we assess investments through our budgeting process. But just to highlight the priorities or the order of priority in which we get resources. So our first priority is our organic growth and making sure that we can put as much as we can afford into go-to-market activities and R&D to provide the best quality product to our sales team to have the best opportunity to sell and give value to our customers. Where it is not efficient to build something organically or we're unable to spend more and meet the margin targets that we set ourselves, we would consider acquisitions if the technology is a good fit with our own, is in the right areas of functionality we're looking at to build out the CXDP platform. And the pricing is right that it takes account of the quality of technology we're getting and the savings and the opportunity cost we're saving by accelerating the time to market by acquiring the technology as opposed to building ourselves. And in the event, we have no sensible acquisition targets or we don't see an opportunity to create value through acquisitions. And there is -- and we're limiting or we're limited in the ability we can drive further organic growth through investment then we would, of course, return cash to shareholders through whatever is most effective mechanism at the time. With that, I'll pass it back to Milan.

Thank you, Alistair. So I'm just taking you through the strategic update, both for the half of the year and what we're looking for in going forward. Going back to our 3 organic growth pillars, whether it be around geographic, product innovation, strategic partnerships. Well, how do we do this? We're very much focused on building relationships with customers, whether it's a smaller brand of a larger business or whether it's a brand in its own right, that is continuing to adopt more of the sophistication and marketing strategies and focus on that cross-selling, whether it's around the functionality. We're continuing to assist our customers to drive more messaging through ideas through working with them in order to achieve what they want to. Growing our customer base globally across the 3 hubs that we operate out of further into APAC. One of the recent -- or last year, I was talking about was the market entry into Japan, and we'll talk a bit more about that as we go through on to the next slide. Expanding our product suite. We spend about 12% of our revenues, really looking at what customer needs for today, what customers need into the future, whilst it may be aspirational, reality catches up with aspirations. Globalizing our talent. I talked about the technology and the people being the right recipe for us of success and that continues. In terms of deepening our strategic partnerships, we've built strong connectors into e-commerce, which can address at least 80% of the mid-market e-commerce merchants, and we continue to look out and build into new technologies within the e-commerce space. And then growing our customer base globally. Alistair has already touched on growth through acquisition, and where it takes us multiple years to build. We always go through the cycle of deciding whether we build it organically or acquire a piece of technology that really accelerates our route to market. So if we go through the geographic after rebuilding the team within the U.S., where we had some issues in staff attrition when private equity and VC-backed businesses were really not focused on cash breakeven, but effectively, we're increasing the price of talent within particular regions. We did lose a number of people within the North American market. What's pleasing to see is what I discussed around the U-shape recovery. So when we started having some problems, we came down to about 3% at the bottom of the year. We were flat as our new sales teams and customer success teams were ramping up. And it's nice to see as we were building on the bookings that coming through to recognize revenue. In terms of EMEA it's still very strong from newer, higher-value customers that are coming on board as well as a recovery in our professional services growth. And that's a combination, increase in the number of new customers that have signed up over the 6-month period, but also some of the projects that were being put on hold now coming through from a decision-making perspective. Alistair also touched on the APAC side, whilst Singapore or Far East Asia is a smaller market for an overall growth perspective, it is an opportunity for a significant proportion of market share that we could take, but also formed a bigger part of the APAC revenues. That grew over 128% in the period, and that assists in the growth that APAC has been seeing of over 30%. In terms of product innovation, some of the key drivers and KPIs that we measure is the amount we get from the functionality recurring revenues, which consists of license, data, and bolt-on functionality and in the last 6 months, that's grown very nicely and in line with management expectations. We continue to see increasing message volumes and one of the other areas that we look at is how many customers are using more than 1 channel, and that's over half the customer base today. Nice to see some of the independent accolades that we've achieved within the 3 customer segments that use our platform. And G2, it's based on customer reviews, not just market analysts. Over the last 6 months, we've significantly increased the amount of integrations that we have within technology partners has gone from about 70 million to 180 million. So some of our efforts from an R&D perspective are really focused on building integrations into business systems and other technology around the partner ecosystem. In terms of strategic partnerships, we've been growing in both the e-commerce connectors as well as CRM connectors. And it's not a traditional channel model where they're resellers or OEMs effectively, they refer customers to us. Our sales teams will close that business and the contract lies with dotdigital, and the relationship is with dotdigital. So that's been growing very nicely. We've broadened that partnership network out. So not only are we focused on building more integrations or deep integration into other e-commerce platforms more recently into SHOPLINE. SHOPLINE is 1 of the largest e-commerce platforms in Asia, has about 500,000 e-commerce merchants that are using their platform, which poses as a great opportunity for us as we push further into Far East Asia. We also have connectors into our CRM but we've matured the partnership model into building around agency partners that could be partners that build the e-commerce website for our customers. It could be other technology partners that work within the ecosystem. For us, the strategic partners really help drive brand awareness across the different territories with different regions that we want to play in. We enhanced the value proposition from a digital marketing standpoint. That continues to grow. The active partners across the 3 different regions is continuing to accelerate. So from our APAC region, around about 70% of our new bid or inbound opportunities comes from partner referrals and the remainder from our direct marketing activities. Around about 30% of our EMEA revenues come from partner referrals, the rest from our direct marketing activities. Obviously, EMEA being the largest market, we play in -- being the largest for us from the market we play in, but also where the brand awareness of our product and brand is the highest. North America, around about 40% of our revenue comes from in that -- from partner referrals and 60% from our direct marketing activities. And we'll continue to build on the focus of bringing data in and easily, building into more technology integrations as well as other business systems. So Fresh Relevance. For the people that don't know what Fresh Relevance do, it's effectively taking data, whether it's behavioral data, whether it's web behavior, and being able to personalize that web experience, so we could all be going on to a website, the placement of content, placement images above the fold, below the fold, effectively are very different on an individualized basis based on what data a particular brand could have. Combining both of them, it allows us to not only de-anonymize more of the traffic that's coming on to site. So giving you the ability to really understand what's happening from a traffic perspective, but also we are able to enrich the data from the campaigns that we're sending out and bringing that all together. What it does is really drive higher ARPUs or ARPCs as we describe it, it is increasing the market we can go after, we can go after a broader market now, and that could be size of client or the different verticals that we can go into. We see increased customer stickiness and larger enterprise deals that are looking for a more all-in-one solution. One to drive cost efficiencies across their business, but also the ability to deploy quickly and effectively across their organization. So going back to the integration of Fresh relevance. I look at things in 3. So along with the integration, we look at the operation and people, and a lot of the people have been integrated into dotdigital. We had a similar culture before we acquired Fresh Relevance. They're within the management structure of dotdigital. Other areas I guess people don't really look at or take slightly lightly. We've aligned all the business systems or most of the business systems across the 2 businesses. we've aligned business process, whether it's sales order processing or a wider change to their processes. And that has been on track and continuing to see cost savings slightly ahead from a synergy perspective. In terms of tech integrations, I typically look at the tech integration from I guess, 2x2 matrix, high perceived value and the amount of resource it takes to integrate. So from a lot of the high perceive value, low resource, most of the integration has been completed. So things like single sign-on, some of the functionality being integrated into our marketing automation studio. And as we look over the next 12 months, the platform will be fully integrated into dotdigital. In terms of the go-to-market, there's a number of different ways we go to market, whether it's through the use of Fresh Relevance brand and converting their pipeline. Whether it's cross sales through our existing customers, which adds another variable recurring revenue stream on to our overall revenue as well as looking at it from the new customers that we're signing up from a joint value proposition more all-in-one, and how we determine the license fee and consumption-based pricing. In a relatively short period, prior to the acquisition, we had 60 joint clients. Fresh Relevance had about 300 customers prior to the acquisition. In that short period, we've seen 10 cross-sells or new customers that we may or may not have won with the broader proposition. It adds about 50% to our ARPC on top of the spend that they have typically with dotdigital. So looking ahead, strong first half performance, return or continuation on that double-digit growth, organic growth. Fresh Relevance integration on track. we haven't talked much about the macro environment, but what you have seen, obviously, in uncertain markets marketing budgets do shrink a little bit. But where digital marketing has taken a bigger proportion of the wallet. One, it's a lot more cost effective. You can measure the return on investment, you know who you're talking to. So it is displacing some advertising as well as some of the traditional marketing activities. And from what we can see in the visibility is, we have strong recurring revenues, good trading momentum moving into H2, which really gives management confidence in achieving the current market expectations. So that concludes the formal part of the presentation, and we'll turn over to questions.

Milan and Alistair, thank you very much for your presentation this afternoon. [Operator Instructions]

First question comes in from Tony. Can you go back to the profit figure and explain the 1.6 million special item without which interim profit would have fallen. Alistair?

It's detailed in the interim accounts. We've got -- there's a share-based payments, which we -- I guess, that we always adjust out the share-based payments from profit. That's 364,000 in this period. It is unusually high for us in part because of various incentives given to the management we took on from Fresh Relevance, but which is skewed a little bit versus previous periods. And then there's exceptional costs of 1.2 million. They relate to amortization of acquired intangibles, 600,000 -- a 500,000 of acquisition of pure acquisition costs, professional fees substantially associated with the acquisition, and then there are a little bit of employer's national insurance on some share options that are exercised in the periods, making it a balance.

I think another question for yourself from Lawrence, given the strong cash position, could there be scope for an increase in the dividend or a special dividend?

Scope for it but not yet. So I think as suggested when we're looking at how we like at capital, we still think there is a lot we can do, which is valuable with regards to either organic investment or acquisitions. I think there's -- we've had a very good, very positive experience with Fresh Relevance so far with the integration work being on track and really positive signs from a go-to-market perspective there as well. And I think with that in mind, there's various other pieces of functionality, which we are looking at, and we're working on a pipeline. So I think it's highly likely that we would try and deploy some of the cash in that area, if time passes and the market views in a way that makes that look like a bad option for shareholders. At that point, we would consider returning cash directly to shareholders.

For now, the dividend policy is in line with EBITDA growth, which will be paid annually. Another question is, can you discuss the role of strategic partnerships in your growth strategy and how you plan to expand these relationships moving forward? So I think I've covered that off in the presentation, but what we -- the role of the strategic partner is to really help endorse the platform, drive more brand awareness across their user base and the ability for us to do joint marketing activities on the user base of the strategic partners. It's the agency partners that are quite influential in terms of the MarTech stack that they use as well as the technology partners. So over the last 18 months, 24 months as the partnership network has continued -- or the partnership program has continue to mature. We've got a lot more active agency partners, technology partners as well as we look at within the categories of whether it's e-commerce, CRM, Service Cloud, ERP, we look at what our customers are using, what they're asking for in terms of integrations, but also where we think the biggest opportunity lies by integrating into a particular technology. Given the emphasis -- sorry, next question, given the emphasis on AI and machine learning, could you provide more insights on the R&D pipeline, where, of course, you can -- and what impact do you foresee in future revenue? So in terms of the R&D pipeline around AI, obviously, we're going to be doing a lot more stuff around making the marketeer's life easier. And one of those elements is really taking the reporting data and the analytics data and telling them what the numbers actually tell you from a story perspective as well as how you can enhance your return from the campaigns that you're sending out. In terms of monetization of AI for now, it's across all of our users get to use some form of our AI capability, whether it's in basic or more advanced functionality. It's used as package differentiation at this moment in time. And another question. In Japan at an earlier stage of development, less mature market than EMEA, is Japan earlier stage development? Yes, Japan is an earlier stage of development. If you were at the annual results presentation, we were really dipping our toe in the water, putting some resource in market. So that's about 3 people ready to understand the market proposition, what the pricing strategy needs to look like as well as the marketing strategy as we pushed forward. We're also building a partnership network in region to really help drive brand awareness amongst the user base that we were looking to bring on. The value of customers in region is a lot higher. And as we look into Q4 of this financial year as well as budget planning season for next financial year, we're looking to deploy more of our investment into the Asian markets. Another question is how are you handling the branding of Fresh Relevance post-acquisition? So for us, Fresh Relevance branding is yet to be decided what we do with the Fresh Relevance brand. At this moment in time, it assess us. They have a pipeline that they're converting. They have inbound inquiries that come on. And also within the current market, they have a very strong brand within the personalization space. So it will be kept for the foreseeable future. Another question. There's three questions, and for you, Alistair. Your cash flow is still down despite normalization of acquisition items. You mentioned a normalizing of working capital. Receivables less payables, used to be circa 1% of sales, but now it's 2% to 3%. Historically, it has been as high as 6% to 8%, where should it be sustainably? What is the market forecast for cash flow that you mentioned?

It's not the lens through which I look at it, but I believe the ratio of payables and receivables and maybe is there the presentative of where we will stay. We -- particularly the half year point, we always have a bit of volatility around the level of risk payables we have in respect to SMS because it very depends on the timing of invoicing [indiscernible] from suppliers post the surge of activity around Black Friday and the buildup to Christmas. So there will forever be a bit of volatility in the half year numbers at that time. That's my only caution about looking at that ratio at this moment. The market forecast on cash flow, consensus numbers for our cash position at the end of the year I will just confirm is circa 40 million, 40.5 million based on the latest research notes that we've reviewed. I appreciate the cash balance at year-end as opposed to be cash flow per se, but that is how it's presented. The 1H revenue from strategic partners was 15.5%. But in the 1H presentation last year, it was 16.3, what's the difference? The difference is a basis of preparation in simple terms. So looking at how revenue is at -- so if you say quite often, we'll have customers, you have revenue with multiple partners. And in some cases, we think it's more appropriate to allocate revenue based on the level of activity with a partner as opposed to the order in which the partner was signed. So what we've done is calculate historical and present numbers on the same basis shown a more representative view. Hence, it's slightly reset the prior period figure. So we do believe that is the appropriate way of looking at it. Third part of this question, you pay 42x EBITDA for Fresh Relevance. We did. I don't think an EBITDA valuation of a subscale business is so relevant, frankly. We're more interested in the cost of the revenue and the cost of the technology. The value of the technology to build, we estimated between 10 million and 15 million, and even by very conservative measures, just the customer base in runoff mode is probably worth more than that again. So we're very comfortable with the level of valuation we get to for Fresh Relevance not using an EBITDA basis. What I should then add just to say, give comfort as to where that's going and how it contributes to the group, through the cost synergy, the actions we've taken so far to realize cost synergies, we would already expects the margins delivered the run rate that is, and it won't be reported in year this year because the action takes place through the year. But the run rate will already be in the sort of 20% region by the end of this year. And then by the end of the next financial year, we would expect margin contribution from the acquisition to be in line with that of the wider dotdigital Group, thus any revenue they have is accretive to group profits, if that's the right way of describing it. And final part of this question, given our in stock trades at only 10.5x EBITDA why not buy back your own shares? I think we cover that in talking about the priorities of how we would like to use our cash. At the moment, we believe there's a huge amount of opportunity investment in both organic growth and potential acquisitions. And I think if we start to consume our cash, buying back shares, it will limit the opportunity for real growth of equity value.

Thank you, Alistair. There's no more questions on the board.

Milan, Alistair, thank you for answering all those questions you have from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors that feedback, which I know is particularly important to yourself and the company, Milan could I please just ask you for a few closing comments?

No problems at all. And thank you for attending today's results presentation. Just a few key messages that to be picked out from the presentation itself. So strong growth in line with expectation, really expanded the addressable market, both from the enhancements to the proposition, but also the type of customers that we are winning today. In terms of integration of Fresh Relevance, that's very much on track. It is helping us win larger customers, but also making our customer base a lot more stickier. Significant product enhancements, whether it's the integrations that we've added over the last 6 months, but also some of the AI capabilities that differentiates us from the competitive landscape. International footprint, we've seen a return back to high growth over the medium term. We should see North America returning back to double-digit organic growth. Strong entry into Japan, which gives us good confidence to put more investment into the Far East Asia market as we penetrate further from a market share perspective. In terms of revenue from strategic partners, that continues to grow. We've expanded the number of strategic partners, but also broadening out that partnership network into agency partners, technology partners as well. Our position is supported by market trend. That continues to grow. We're taking a higher share of marketing budgets. Growing new business pipeline, we're seeing strong pipeline growth, but also bookings in the period. Thank you very much, everyone, for listening to our presentation today.

Thank you.

Milan and Alistair, thank you for updating investors today. [Operator Instructions] On behalf of the management team of dotdigital Group Plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.