Good morning to everybody that's attending today's interim results presentation. I'll take you through some of the detail as we go through the presentation, but we will start with a quick disclaimer. I'm sure you can all read it, and I don't need to read that out. Going on to the business, I have seen quite a lot of people have joined today. Thank you very much for that. There are quite a lot of existing investors as well as new investors. I'll take you through some of the highlights of the business. For the new people attending today's presentation, I'll tell you more around the platform, where we're focused, and take you through the strategy of what we've seen in the last six months, but also what we think we are doing into the future.
In terms of the business itself, very much a global business centered out of three main hubs: U.K. being our hub into EMEA, our New York office being our hub into North America, and our Sydney office being our hub into APAC. Now, when we describe hubs, it's having every single department within region to really continue scaling, whether it's new markets around the continent or continuing to expand within the market that we operate. We've got about 500 employees across the globe, half of them within the product development, around about 50 employees within the back office, and the rest within sales and marketing. In terms of locations, we operate within the Benelux market, the Nordics market, certainly the North American market, and within Far East Asia and Australia, New Zealand, and newer entry, around about 18 months, but within the Japanese market too.
I'll take you through some of the things we've been seeing over the last six months and where we see that going next. In terms of the platform itself, there are four main parts to the platform. You've got the Customer Data Platform, and where I use buzzwords or words that we would, from a terminology perspective, understand, I'll try and explain it. Within the Customer Data Platform, it warehouses all the information or data points across business systems that our customers want to use. Within that, effectively, you can start doing things like segmentation, data visualization, and really understand who you're talking to, what their behaviors look like, some of the attributes of that recipient. You've got the middle layer of the platform, and that's the Orchestration Layer. That's where you can start creating the creatives.
You can start automating your customer journeys, whether it's a customer acquisition marketing strategy or a retention marketing strategy. You have all the different channels that you can communicate on, whether it's email, whether it's SMS, and you want to augment the experience of email, all the way through to if you have that mobile, if you've got a mobile application. For us, it's about creating a platform that can deliver a consistent message or consistent experience across these different channels, but also use the data to become more relevant and targeted in your communications. What wraps everything together is the reporting analytics layer. That's really about driving and testing campaigns and making sure you're ultimately driving that return on investment and also suggesting what to do next to continue improving that ROI statistic. We carried out a total economic impact study with Forrester or commissioned it.
What we typically find, customers using Dotdigital for their spend generate a 406% return over a three-year period. Quite a lot of the whether it was in November when we did our full-year results presentation or more so now, we have been really talking about the depth of the platform attracting some higher value customers. Alistair can go into that in a little bit more detail as he goes through the financials. What we are not doing is moving away from that mid-market segment. We have seen an increase in average order values. We have seen very nice enterprise clients, whether we go into a single brand, single territory, and then expand from there, land and expand strategy, or also global brands that want to consolidate their tech stack.
We're seeing more of that around the enterprise clients that are looking for a more cost-effective platform, quicker to deploy, and the ability to have more of their point solutions consolidated by an all-in-one platform. You can see some of the clients that we help. Effectively, since listing about nearly 15 years ago, we've taken an approach of sustainable growth, driving profitability as well as top-line growth, and then really turning that into cash. In terms of our organic growth strategy, it's centered around three main pillars, whether it be from a geographic and continuing to expand from the hubs that we operate, whether it's around our partnerships, and I'll take you through that as we go through the presentation, or around the product and continuing to innovate and differentiate from the competitive landscape.
We spend around about 12%-13% of our revenues in R&D, and we have teams that are not only scanning the market for table stake functionality, we also take feedback from customers what would help the mid-market really drive further in their marketing strategy and working with the likes of Forrester, Gartner, and our teams to really understand where the market is going next. Some of the key messages for the last six months, solid business performance over the last six months, and progress against all three of those growth pillars. In terms of product development, over the last six months, we've really focused around the mobile channels. You're starting to see the era of social commerce.
What I mean by that is effectively consumers have lots of different mediums now to really transact with the business or consume information if you do not have a shopping cart attached to the end of your customer journey. We have been doing quite a lot of stuff around social media and some of the newer channels that are coming and continuing to educate the marketeers on how to use that within their own marketing strategies. Finally, from a key message from the visibility that we have on our revenues to date, we see momentum continuing in H2, in line with market expectations. I will pass you over to Alistair to take you through a bit more of the financials.
Thank you, Milan.
No problems at all.
I appreciate many of the people in the call are familiar with the stock and will have seen the profile of earnings over a long period of time. I will not dwell on that too long. In summary, since the business was floated, it has consistently delivered in excess of 10%, more like kind of CAGR around 15% revenue growth. Earnings growth has grown alongside that, albeit at a marginally slower rate, and has remained cash-generative throughout. I will talk a little bit about the structure of the P&L, how we choose to manage it, because I think that is as useful as talking about the specifics of any single year. It is more of a guide as to how the business may continue to operate in future.
We quite deliberately set out with a margin target in mind, and we build a cost structure so that we can deliver at least a 20% operating margin, 30%+ EBITDA margin. We normally exceed those numbers by a percentage point or two. Within that, the constraints of that, we try and balance short-term growth requirements by investing in sales and marketing and the longer-term growth and sustainability of the business by investing in research and development. You do not see operating leverage come through in the form of profit, but what we do do is reallocate costs internally when we can achieve savings and achieve leverage on certain departments. Finance or HR are obvious examples. Any savings that we make in those areas go back into either the product development or the go-to-market activities.
You can see that if you look at the amount we've invested in products and development as a percentage of revenue, that has gradually increased over the years. Looking at the revenue stack, the quality of revenue we have, we have a very predictable, very diversified revenue base. About 95% of our revenue is repeating or recurring, and around 80% of it is actually contracted recurring revenues. The repeating piece is the high volume of SMS sending we have, which is from customers who technically pay as you go, but we have long-established relationships with them and good visibility of the volumes and phasing of the sending that they will do through the year.
You can see that our ARR, this is the contracted piece, has grown in line with revenue, and that allows us to have the same quality of revenues going forward into future periods and gives us good visibility of revenue in H2 of this year and going into the following financial year as well. Cash conversion remains strong. Our cash conversion was around 100% of EBITDA going to operating cash. We try and manage the business to stay at that level. Because of the typical working capital cycle of our customers, that's possible. There's always a few lumps and bumps through the year, in particular around the H1 period end, which is due to the timing and volumes of SMS supply and consumption. That, as a longer-term average, will remain at that level. There's been no structural change in the business that would tweak that.
I mentioned the diversity of the customer base. Now, around half of our revenue comes from commerce customers, which are what we describe as commerce. This is typically where there is a shopping basket at the end of the end user's journey.
There is the other 50% that comes from what we describe as engagement customers, which could be any number of use cases, an incredibly diverse range of use cases that continue to surprise me when I find out about some of them, ranging from police forces or councils communicating with their constituents to businesses who want to do emergency communications to employees and have a way of seeing who has read what message at what time to know that things have been communicated appropriately and have an auditable record, or charities who are communicating with donors to let them know what projects have been done and what is on the horizon upcoming. The likes of the ICAEW, for example, the accounting body, use the platform to communicate to various faculty members who specialize in tax or transactions or whatever.
That requires quite a high degree of personalization across a large customer base. Lots of different use cases. What's good about that from our perspective is that we have very low concentration in any one part of the economy, which gives us a level of resilience when any one part suffers. Now, going on to the P&L for the half year, I'd say the shape of it is largely in line with prior periods. You can see slightly accelerated profit growth relative to revenue growth. That's in part helped by the other income line, which I'll get on to, to do with a change in tax treatment. I think we're maintaining the margin profile that I described earlier in this period. We had good growth across all regions. Our growth in APAC continues to be around 20%.
I think it was 19% in the half year, led in part by the young Japanese business we have, which is around just about two years old, I think, since we made our first hire there. That's now got over $1 million of revenue and growing at 78% now. The high percentage is achievable in part because of the small base. I think it shows that we are getting a return on the investment we've put in there. With that in mind, we're putting in an extra two to three heads over the remainder of this financial year to support that ongoing growth into next year. The North American business has recovered very nicely from a flat period around two and a half years ago. We've taken that from flat to 3%- 10%, and now we're up to 20% in the period.
Now, I would flag that we don't believe that's the sustainable level of growth for the level of investment we're currently making. The period has somewhat been flattered by the timing of two particularly large deals, one very big upgrade with an existing customer and one, I say new logo. Really, it was a consolidation of brands. So we had great, nice to go on a little digression and tell you about it. It was a business where they had nine global brands. We serviced them for one brand in one region, which was APAC. We then got another of their brands in the EMEA market. From there, got into a global tender process and kicked out, I believe it was Salesforce, but Interjector, I've got that wrong, Milan, and won their nine brands on a global basis.
That contract is now worth about $1.5 million a year to us. Really nice example of land and expand and leveraging the global capabilities that we have against really strong enterprise-level competition. Anyway, the timing of that deal really helps us grow significantly in H1 in North America. The 20% is probably not the sustainable level. That is probably low to mid-teens based on the current trajectory of pipeline and the level of investment we have there. Although in the medium term, we do intend to bring that up to the sort of mid to high teens where it was prior to the issues around COVID and that period of time. Average revenue per customer has increased. It is supported by the Fresh Relevance acquisition, albeit Fresh Relevance customers that we have actually had a lower average value than that 1,916.
The growth, though, is supported because where we sell Fresh Relevance in conjunction with our core organic product, let's say, it tends to add around 60% or around GBP 2,000 a month to the ticket size. We haven't done a significant amount on pricing this year. We did last year because there was a high inflationary environment. There was an opportunity. This year, we've been much more measured in our approach to pricing with small price increases in EMEA and APAC, particularly focused where we had actually released new functionality to support and justify that change. I think that sets us apart from some of our competition who have been far more aggressive on pricing and seen a level of disruption.
If you look at the sort of message board feedback that you see and Twitter and so on, I think it's not unnoticed that some companies have been more aggressive on price. We intend to try and capitalize on that with the goodwill we retain from our customers. Now, one slight blemish on the P&L and the growth period over the last year or so, or last year. In EMEA and our U.K. business, we have had a little bit more churn, which is driven by insolvency events. That was really noticeable in Q4 of last financial year. That's April through June. Q1 of this financial year probably increased churn by a couple of percentage points. That seems to be stable again when I look at the Q2 results. It's obviously too early to give you the update on Q3.
We believe that's trending in the right direction and will provide a more stable base from which to achieve better growth rates in future. The balance sheet is we've got a very simple balance sheet insofar as we don't have any debts. We've got very consistent working capital position. We balance debtors and creditors to make sure there's no significant detrimental impact to working capital in the period. We tend to have a slight outflow in H1, slight inflow back again in H2. That's fairly normal for us. I think the general trend here is we're comfortable with even those slightly expanding balances of both the debtors and the creditors.
We've actually recently been implementing a bunch of changes to our credit control process, not so much to reduce the debtor position, albeit I think that might be a good side effect of the changes we're making, but more to improve the customer experience further and try and take a level of work away from our customer success and account management team so they can be more focused on selling. Now, the cash pile, yes, yes, there's a cash pile. We're aware. This gives us a lot of optionality with regards to M&A activity. I think Milan will go into more detail on that and some of the potential areas in which we would like to deploy that money.
If in the event that we are not having a high degree of confidence that we'll be spending the money on M&A in the medium term, we would, of course, look to return that to shareholders in the most appropriate way. I won't spend a long time on the cash flow, save to talk a little bit about the tax. We had high cash tax in the periods, part of that through the phasing of the payments and just as they were calculated. I think more significantly, we've moved from the SME R&D scheme in the U.K. to the merged RDEC scheme. This isn't a choice, unfortunately. The government just merged the schemes, and it was relatively late in the process. After a long period of consultation, it actually confirmed the exact structure that would take. That does have an adverse impact on us in total.
The scheme is less generous than the previous scheme we were in, but it also changes the shape of the P&L. Now, you remember that other income you saw of around $400,000, it's $390,000, actually. Now you get relief in the form of a credit in your overheads, which is that other income, and then you have a larger tax bill at the bottom of the page. You will see that significant increase in effective tax rate partially offset by other income in the period. That increase in effective tax rate has been ongoing over a number of years as corporation tax first went up and then the R&D tax scheme has been diluted and then now very significantly changed. That change has been a drag on EPS growth relative to our PBT or revenue growth.
You can see that if you look at the results for this period, that PBT grew ahead of revenue, whilst obviously earnings is not doing that. We are conscious of that. We try and manage the tax position as best as possible, but we are somewhat subject to the whims of whichever government is in power. On that note, I'll pass back to Milan to talk about the growth strategy going forward.
Thanks, Alistair. Going back to the growth pillars around geographic, product, and partnerships, growing up what we do, growing our customers globally, what we've seen in the last six months is very much on that land and expand as brands continue to consolidate.
We've won really nice logos in particular regions over the last six months that we will be working on in terms of getting them to not only adopt more platform or functionality, but also work with their other brands on how we can make a difference. In terms of focused on cross-selling, one of the things over the last six months we've been doing is really working on the go-to-market for the international regions on the Fresh Relevance capabilities that we acquired around about 18 months ago. We've really packaged some of the pricing models of the Fresh Relevance offering and been able to really scale that from an enablement perspective across the international regions.
What's nice to see, not only are we seeing a growing demand from our existing customers, it's attracting newer customers at a higher value, but also it's assisting with some of the attrition in region. In terms of expanding our product suite, we've done quite a lot of work around mobile and also enhancing some of our AI capabilities over the last six months and enriching further the customer data platform that we've continued to build. For us, it's not just the technology. It's also our people from globalizing our talent. We've invested in more this six months in some of our international regions, places like Japan, as well as into North America to support the customer success side of things.
Exploring strategic partnerships or deepening our strategic partnerships, we can see as we go through the presentation, both our e-commerce as well as our CRM connectors or customers using those connectors continues to grow in the double digit. We will talk about some of the newer areas that we are looking to go into, as well as some vertical-specific technologies that will really help us drive value in that industry time. One of the areas that Alistair mentioned was using, from a capital deployment perspective, using some of our cash for acquisitions. We have early-stage conversations, as you would when you have an acquisition strategy. There are some key verticals that really make sense to broaden out our platform into more all-in-one and how we describe that all-in-one experience or all-in-one platform.
Some of the areas, whether we build it, whether we buy it, or whether we partner around, I believe, three main verticals that really complete what we describe as the all-in-one definition. As we play further into the web personalization space and we have a customer data platform, the next logical evolution to that would be search and merchandising. That is about using data to really serve the right search results based on behavior, based on pattern, based on what they've purchased previously. The other area, there is a focus from marketers on retention marketing. Loyalty platforms make total sense, and being able to incorporate that further into the journey or automation journey makes total sense.
Not only does it increase the number of contacts, which in turn increases the license fee, it expands the amount of data that's coming into the platform, which also increases the license fee, and it increases messaging and the use of other channels. In theory, increasing the third recurring lever. Another area which is up and coming as more and more people use social media to either transact or consume information is around influencer management and being able to not only manage your creators or influencers, but being able to tally that up with brands and then match them both together. Those are the three areas that we're looking at at some point. What we've been seeing with the valuations in terms of private company valuations, expectations are becoming a little bit more realistic in terms of completing a transaction.
If we go to the geographic pillar, Alistair's already talked about North America. With the investment in customer success, we've seen early fruits in region. It had the lowest attrition rate in the last six months. It's probably looking more like where we were before we really changed the management team, and we saw some of that issues through COVID. We are back on the front foot in region. We've got good visibility in pipeline, as well as the teams now being enabled to cross-sell the web personalization capabilities. In terms of EMEA, when a customer buys both the organic platform, I believe Alistair's touched on this, as well as buys the Fresh Relevance capabilities, it adds an additional $2,000 per month.
But it's also helping attract newer customers that may start small with us and have the ability to continue growing as their marketing strategies continue to mature. The other area the web personalization technology is also helping on, which is quite hard to really have an inorganic value to the revenue that Fresh Relevance brings in, is assisting with attrition across the business. I'll give you an example. We had a customer that was spending GBP 13,000 per month with us, so a fairly big customer for Dotdigital. They were looking around. They were looking at a competitor who was telling them more about the web personalization element. Our customer success team said, "Well, we do that as well," which helped save the customer. Not only that, it increased the monthly value to GBP 31,000 per month. Only GBP 5,000 of that is directly attributable to that Fresh Relevance platform.
The capabilities have a lot more value than just the revenue it gets associated to the platform. We've seen stabling attrition levels. Alistair also talked about Q4 and Q1 in terms of attrition and a more normalized Q2 of our financial year. We continue to see SMS and adoption of SMS within the EMEA market, but also into the international regions continues to enhance. One of the things we will talk about on the next slide is how the other channels are doing, and we see the rise of in-app push and some of the newer channels that we'll be deploying for public release shortly. In terms of APAC, very strong growth led by Far East Asia, which grew 45%. Within Japan, that was a standout performer, albeit from a smaller base.
That's now running at about $1 million of ARR in a relatively short period, a strong partnership network within the market. We are looking in H2 to add further headcount to really support our direct marketing activities in region. Talking about product, just very much on the increased channel usage, we've seen an 877% increase, predominantly led by in-app push as more and more customers build their own mobile applications. We've done quite a lot of work around integrations into TikTok, integrations into LinkedIn for more of our B2B customers who want to enrich the data profiles on who they're speaking to, as well as around the WinstonAI , continuing to build further on our strategies. We have two main strategies around AI.
We use ChatGPT from an NLP perspective to really drive content creation, using a knowledge base to then drive using the algorithms from the knowledge base to then drive further enhancements to making marketing departments more efficient. We also have our data science teams that are building proprietary algorithms for predictive capabilities. That could be things like predictive next purchase if you have a shopping basket attached to the end of the journey, predictive engagement, predictive churn, etc. We will continue on that path from a product roadmap perspective. In terms of some of the things we have been doing around the customer data platform, things like being able to use customer identifiers to join all that data. What that effectively means is not just email address to join all the different business systems data together or telephone number. You can now have your own.
It could be TikTok ID. It could be a variety of different ways of really joining profiles together. Lots of work has been done around cross-account reporting, so quite a lot more enterprise features as we attract higher-value customers, as well as we're excited around WhatsApp and what that will mean, what's coming down the line. In terms of WhatsApp, they have significant users around EMEA, around APAC. What we've seen from the beta program is our customers get a higher return on ad spend generally, as well as strong open rates. That's about really having those conversations, being able to take a transactional conversation into a marketing conversation, as well as the ability to have global templates approved by Meta to really drive marketing across the WhatsApp user base.
If we go to the partner network, if we showed you this or when we came out in November, there was about 650 partners. We now have 850 partners globally. We've really been focused in our partner program in terms of partner enablement, being able to serve up an academy for partners to be really certified, as well as them understanding more of the value proposition as the depth of the platform has continued to expand. However, looking back at the strategic partners, one of the things we did in early stages of our life is really build strong integrations into e-commerce or CRM that would allow us to address at least 70% of the mid-market e-commerce merchants or mid-market CRM users. That's really working well.
Adobe Commerce, which used to be Magento, still very much the largest partner, but a fast-growing partner from an e-commerce perspective is Shopify in the period. Along with that, CRM for non-commerce customers, that continues to grow. It kind of shows that the customers, 50% of our customers continue to be in that non-commerce, 50% of our customers continue being commerce, and that continues to grow double digit. Some of the newer partnerships that we're really excited about, one being Oracle NetSuite, that could move over to left. We describe strategic partners as having 10% or we have 10% of our revenues with that particular strategic partner or have the opportunity to be 10% of our group revenues. We are excited about Oracle NetSuite. That paves the way for ERP and integration into ERP.
That's all about making it very easy for customers to bring data into our platform. The other area, we've done integrations into technology partners like Donorfy, Blackbaud. Blackbaud is a CRM product for not-for-profit. We have strong vertical expertise within that, and we continue to see some of these progressing and expanding as we look forward. Looking ahead, solid half-year performance across all three of our growth pillars, whether it be around geographic, whether it be around product, or whether it be around our strategic partnerships. In terms of market drivers, depends what research you look at. The TAM approximately is around $8 billion. Dependent on which analyst report you read, it's somewhere between 10%-15% growth in its own right. What we've seen is displacement of some of the traditional marketing activities, as well as customers doing more from a digital marketing strategy perspective.
The other areas we're seeing is from that high recurring revenue. We have very good visibility in terms of the second half, which gives us comfort in terms of meeting consensus numbers. Some of the priorities are very focused on driving platform adoption within our existing customers. As I mentioned earlier in the presentation, working on the customers that wanted to start small and continue to grow with us and making sure that they are using the platform to really achieve their objectives. Driving more of the Fresh Relevance capabilities in our international regions, whether it be from a cross-sell or new business perspective, as well as launching. Our WhatsApp channel launches in April. The beta program has been a success, both from our customers driving a higher return on investment, but also a channel demand perspective.
are very much working with our strategic partners from a brand awareness perspective across their user base, but also the technology ecosystem that works around our strategic partners. As mentioned earlier, some of the capital deployment around our acquisition strategies, we continue to actively explore acquisitions. Lily, over to you.
Milan and Alistair, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab situated on the top right-hand corner of your screen. While the company takes a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via our investor dashboard. As you can see, we received a number of questions throughout today's presentation. I'll please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. ,
Thank you, Lily. Alistair, do you want to take the first one?
I will. I'm not going to read the whole of this because it's quite a long question with a level of hypothesis as opposed to question there. I think it boils down to that. Why is earnings growth or when can we get earnings growth back into double digits as opposed to mainly revenue growth? I think that the answer to that is twofold. One is I touched on while I was presenting, which is we need a stable tax environment to be able to get there.
That will help as we have successive adverse changes in tax that obviously makes it very difficult to maintain earnings growth in line with revenue or PBT growth. I think the other thing which can help with that is as we start to see the commercial leverage we get from acquisitions coming through as well. I think while absorbing an acquisition, it is necessarily, well, not necessarily. It is in the case of most targets we're going to look at in the short term, going to be earnings dilutive, but in the longer term, earnings accretive. I think we're still at the short-term phase post the acquisition of Fresh Relevance. A period of stability post-acquisition and a period of stability in tax would allow that progression.
Thanks, Alistair.
I was going to say, given I'll just carry on. You interject when you want, Milan. Next question.
Given cash on the balance sheet, what are your thoughts on buybacks? I think we touched on that. I think a buyback probably based on the way the market is at the moment, our current thinking, if we were to return cash to shareholders, that's probably the route we would choose. First priority is to identify good M&A options. Not yet, but yes, that is the route we would choose if we get to that point. This is one for you, Milan. On the last call regarding the WhatsApp integration, you said that this will differentiate you with only one other competitor able to do this, which is Braze. Why is no one else doing this? Or do you expect competitors to follow?
Yep. At some point, the competitors will follow. We've obviously got USPs against Braze as well, with global templates being approved by Meta. At this moment in time, Meta have made this a closed program or more closed program until they see what the effects are from their user base.
Great. In recent years, you also pointed to further innovation investment in the innovations team. Are you expecting a meaningful uptick in R&D costs? No. I think we'll continue to grow R&D in the next year or so broadly with inflation, maybe slightly ahead to get back to around 12% of revenue in R&D. We're slightly ahead of that at the moment, having bought Fresh Relevance, which had a high proportion. Once that's absorbed back to 12%, we'll then grow R&D in line with revenue, assuming, and I think it's a pretty safe assumption, we continue to have visibility of a good range of options, which we believe would give a positive return if we pursue them.
I'll take the next question, Alistair. It is a question from one of our investors. I can see from the Cavendish website that you are all valued at about 2.7 times EV over sales compared with the Cavendish Tech 40 index at 3x . That equates to 13.6 times EV over adjusted EBIT compared with the Cavendish index at 15.1x . How do you think your valuation compares with private companies? Whilst I mentioned at the start of the presentation, valuation expectations have come down from private companies. They are still a lot higher than public company valuations. You can buy corporate turnarounds or businesses that are subscale at probably 1-3x revenue. None of these businesses that we have seen from a tech perspective make the similar levels to operating profit that we do. Most of them are at break-even at this moment in time.
However, there are good companies within that that are either growing fast but are sub-$5 million revenues, sub-$10 million. Then you've got some companies which are reasonable growth and are good companies, but with them, they are typically valued between three and five times ARR because they're all running at break-even. I think if anybody does want to actually look at some of our analyst notes, Cavendish, very kind. If you self-certify as a sophisticated investor at cavendish.com, you'll be able to see the notes and tech index valuations. Next one, I think, is for you, Alistair.
When do you think your R&D investment will translate into higher product growth? Sorry, higher growth product revenue, and could you better spend more of the cash in the bank on R&D?
I think at the level we spend at at the moment, if we are selective and we are efficient, we are able to grow our product suite in a way which is competitive with but not ahead of some of our very well-funded competitors. I think it enables us to hold our competitive position with that level of investment to create step changes through acquisition or through occasional new products work, such as the work on the loyalty platform that we're doing at the moment. We could spend more, definitely, and it would be beneficial in the longer term. However, it would also require a compromise on margin in the shorter term or a compromise on the amount we spend in other customer-facing or go-to-market positions, which I think would also be detrimental.
We will continue to try and balance that as things stand, sort of with the ratios that I mentioned. Yes, there is a long list of things our products and development team would love to work on if they were given the budgetary freedom to do so. Let me add to that because it is not just the R&D spend that keeps you advanced. It gives you product differentiation to the competitors. We would also need to spend on marketing to really drive brand awareness across the regions, as well as educate within our existing customer base and new customers on the expanded offering. Whilst you can spend in R&D, you need to support that with your marketing efforts to drive the value proposition as well as brand awareness across the different regions. Milan, you can take the next one.
When do you anticipate the three new products of loyalty, etc., to be live and revenue-generating?
I think we've got to look into the medium to long term to have all three because some of these will be acquisitions. Some of it might be built. We've already got partners in these different categories. As always, we will continue to talk to targets in these different categories. It is difficult to give you a complete timing. However, we are testing with the innovations team where we put in about GBP 0.5 million, which would be working on a bit like Skunk Works, working on new products around our platform. We'll be testing some of the verticals and building some of the capabilities out ourselves.
Okay. It is clear from the data you share with investors that ARPU is rising, which is clearly good.
It is hard to see customer numbers growing. Can you share any KPIs with us to help us understand the change in customer numbers? They are substantially flat. You're right. I think there is still a tail of a few hundred very low-value customers, very low-revenue customers, shall I say, who we, for the most part, probably acquired when the platform was a much simpler email solution. They tend to, or they often churn at a, or they churn at a higher rate, shall I say, than our larger customers who take advantage of more inspiration, more functionality, more of the sort of multi-region benefits of the product. Although they churn at a high rate by number, it obviously has a relatively low impact on revenue. Meanwhile, we win a smaller number of larger contracts, which offsets it.
Overall, we achieve revenue growth with a flat customer number base. I think if you sort of backsolve the numbers that we provide, you'll see that trend fairly clearly for the last few years. Next question. Do you insure against bad debts? No. Simple answer. However, we do go to a lot of lengths to minimize our exposure to bad debt. I would say there's very little, we're well provided for those debts in our financial statements. The other bit to add there, Alistair, is quite a lot of collection gets done on direct debit, ACH collection, and customers pay one month in advance, typically. Exactly. We invoice in advance. We have the ability to turn off the product. Remember, it's a SaaS platform. Customers can't keep benefiting from it if we don't allow it. They have to remain within terms and so on.
We have pretty good control, which stops us getting into any really tricky debt situations. Final question. How will Alistair leaving the business affect the ability to execute acquisitions? I think it's probably a fairer question for you, Milan. I can say I will add, although it's not been asked, I'll just add to try and give some comfort around the ongoing operational side of it. I've got a very competent, very experienced finance director who's been working for me. He was covering the role before I joined the business and is more than capable of continuing to do that as I leave. From a day-to-day operational perspective, there's nothing around the running of the finance team or the treasury management, which absolutely requires me.
With regards to high-level exec oversight, obviously, Milan was previously the CFO and is a chartered accountant and is more than capable of providing the oversight that George would require to kind of finish the job, if you like. From an operating perspective, I do not see any short-term risk. Milan, maybe you can.
In terms of— He's covered. The ability to execute acquisitions, I do not think it would affect the ability. We have quite a lot of experience now around the leadership team to not only start sourcing all the way through to negotiation, but also doing the integration planning across our business. Hopefully, we get a CFO in short order, but that would not affect our acquisition strategy as we look forward.
Milan, Alistair, thank you for answering all those questions you can. Investors, and of course, the company can review all questions submitted today and will publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide their feedback, which I know is particularly important to the company, Milan, could I please just ask you for a few closing comments?
No problems, Lily. If we kind of go back to our three organic growth pillars, we're really moving in the right direction from a geographic standpoint. We see the opportunity of driving some of the cross-sells within the international market through the newly enabled sales and customer success team. A lot of work has been going on in there. We're seeing continued momentum in Far East Asia for our APAC market, as well as higher-value customers coming across three different continents.
If we look at the product innovation part, we're continuing to be excited about some of the product, sorry, some of the functionality that we've launched to date, but also some of the newer functionality like WhatsApp, being able to connect into social media channels, a focused approach around in-app push, but also the channel usage across the platform. In terms of strategic partnerships, growing very much in line with where we expect, as well as some of the newer partnerships with NetSuite and Blackbaud coming down the line. We continue to look at capital deployment from an acquisition standpoint, early-stage conversations, but we're really building a pipeline behind that. In terms of final remarks, the market continues to move in the right direction for us.
We are seeing increases in consumption, as well as customers becoming more sophisticated in their marketing strategies, which increases the platform adoption within our business. On that note, thank you so much for everyone that attended today. I look forward to speaking to you soon.
Milan, Alistair, thank you for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure it will be greatly valued by the company. On behalf of the management team of Dotdigital Group, we'd like to thank you for attending today's presentation, and good morning to you.