Data#3 nails first billion-dollar year

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Data#3 nails first billion-dollar year

Australian IT solution provider Data#3 has achieved a milestone $1.1 billion revenue in its 40th year in business.

The Brisbane-headquartered company reported an 11.7 percent rise in sales to cross the billion-dollar threshold, backed up growth of earnings and profit in the 12 months to 30 June 2017.

Gross profit was up 8.4 percent to $158.9 million, and net profit after tax was up 11.2 percent to hit $15.4 million.

NPAT has been on an upward trend over the past three years after falling to a record low margin in the 2014 year.

The company splits its revenue into products and services, and product reselling still represented the lion's share of Data#3's revenue – its product business grew 12.4 percent to hit $889.2 million. Services revenue was up 9.5 percent to $208.1 million.

"We are very pleased to report another year of solid revenue growth and record profit in our 40th year of operation. We have now delivered six consecutive half-year reporting periods of growth," said chief executive Laurence Baynham. 

"In addition to delivering strong financial results, we are also pleased with our progress against our strategic objective to increase our services-related business.”

Source: Data#3 investor presentation
Source: Data#3 investor presentation

Data#3, which now has more than 1100 employees, also referenced cloud-based revenue in the statement to the ASX. Cloud revenues, which are generated in both its product and services segments, were up 71.3 percent to $169.5 million, with Microsoft Office 365 and Azure the big contributors.

Victoria was its best state, with revenues up 61 percent off the back of infrastructure and software wins, while revenue grew 3 percent in both New South Wales and its home turf of Queensland.

Tasmanian revenues were up 22 percent, South Australia was up 19 percent while Western Australia fell 7 percent due to the challenging economic environment.

Data#3's server and storage sales have come under pressure from the rise in public cloud, though the networking business grew.

The company's end user device performance also "remained solid" during the period. Data#3 has announced a series of major end user wins with HP, including 4200 HP devices for Sunshine Coast University Hospital and 12,000 HP devices to Queensland schools.

Source: Data#3 investor presentation
Source: Data#3 investor presentation

Major initiatives during the period include a move to align its business around customer verticals – Data#3 has launched a healthcare practice and an education practice. 

The company has also looked to acquisitions for future growth.

Consulting operation Business Aspect, which Data#3 acquired in 2014, saw "strong revenue growth" but underwhelming profits, which went backwards, while Discovery Technology, the wireless analytics outfit it has progressively acquired since 2014, saw a "significant turnaround" in its financial performance.

Looking ahead to 2018, Data#3 outlined several key priorities: grow revenue and margin in services; get more annuity revenue through cloud services; "continue to adapt and enhance our solutions"; and improve its internal systems.

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