Dye & Durham Reports Record-Breaking Q4 Revenue

Dye & Durham announced a record-breaking revenue of $120 million for the fourth quarter of fiscal year 2024, marking a 15% increase year-over-year. The company reported substantial growth in adjusted EBITDA, reaching $69 million for the quarter and $258 million for the fiscal year 2024. Dye & Durham, trading under the ticker symbol DND, is focused on generating free cash flow while expanding its legal technology software and services.

Key Takeaways

• Highest-ever quarterly revenue of $120 million, a 15% increase YoY.
• Adjusted EBITDA for Q4 reached $69 million; full-year adjusted EBITDA hit $258 million.
• Acquisition strategy resulted in $113 million in EBITDA from acquired companies at a cost of 16.6x EBITDA.
• Aim to reduce leverage ratio below 4x total net debt to adjusted EBITDA.
• Targeting an annual recurring revenue (ARR) mix of 40% by the end of the current fiscal period, with a goal of 50% in the next.
• Gradually expanding mortgage discharge product in Canada after success in Quebec.

Company Outlook

• Commits to a disciplined acquisition strategy focusing on tuck-in acquisitions.
• Ongoing efforts to reduce leverage ratio below 4x.
• Continuous effort to increase ARR mix to 50% in the upcoming fiscal period.

Bearish Highlights

• Identified $26 million in cost savings, mainly personnel-related.
• Sluggish Canadian real estate transaction revenue, despite growth in other business areas.

Bullish Highlights

• Organic revenue growth of $103 million since the IPO.
• Post-synergy EBITDA acquisition multiple reduced to 8.7x.
• Success expected in bundling search with practice management in the U.K. market.

Misses

• Higher severance costs recorded in Q4, with similar costs anticipated in Q1.

Q&A Highlights

• Discussed cash flow benefits from minimum payment contracts and strategy for negotiating minimum spend tiers with clients.
• Update provided on the slow expansion of the mortgage discharge product in Canada.
• Future decrease in investment in intangibles anticipated, targeting $20-25 million annually.

Dye & Durham’s focus on consolidating its platform through strategic acquisitions and organic growth is positioned to capture more market share in legal services and fintech sectors. Despite sluggishness in Canadian real estate transactions, optimism remains for future growth in corporate commercial transactions. With a disciplined acquisition approach and strategy to increase ARR, the company is set for continued success in the evolving legal technology landscape.