Digital marketing group dotDigital has announced that, driven by its email marketing business, dotMailer, revenues grew by over 35% in the year to 30th June 2010. This was on the back of customer numbers across the group up from 2,282 to over 3,500 and excludes contributions from the May acquisition of Netcallidus, a Northamptonshire based Search Engine Optimisation (SEO) business. Netcallidus has been integrated into dotDigital, with the existing SEO business now working as a single unit and having won a number of new customers.

This is another excellent performance from dotDigital and comes on the back of some very strong comparables. We expect that the strong revenue growth has filtered through into profits and therefore another record performance should be seen when results are announced in October.

With the shares at 1.05p dotDigital is capitalised at £13.57 million. The company should make post tax profits of at least £1 million for the full year to June 2010 – £0.52 million was already posted by the half way stage. That means the historic price earnings multiple is around 13 times. We believe that looks good value for a company which is growing very strongly and which had net cash of £2 million at the end of December 2009. Buy.