Nextgen Distribution cracks $100 million in revenue, focuses on "hyper growth" with Oracle, SAP and Micro Focus

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Nextgen Distribution cracks $100 million in revenue, focuses on "hyper growth" with Oracle, SAP and Micro Focus
John Walters, Nextgen

Nextgen Distribution's "hyper-growth" focus helped the Oracle, SAP and Micro Focus partner sail past $100 million for the first time in its six-year history.

The Nextgen group, which includes Australia and New Zealand, grew revenues by 20 percent to $109.6 million for the 2017 financial year, backing up a successful 2016 and making investments while maintaining a steady net profit margin.

The Sydney-headquartered distributor generates roughly 70 percent of its revenue in Australia, with the remainder coming from New Zealand.

About 81 percent of Nextgen's 2017 revenue came from enterprise software and most of its hardware sales underpinned an enterprise software solution.

Nextgen chief executive John Walters revealed the milestone in an interview with CRN. The private company's annual report is yet to be made available from corporate regulator ASIC.

Walters did not break out Nextgen's exact profit, but told CRN its gross profit margin was 6.7 percent of revenue, and net profit margin was around 1.6 percent, up from 1.5 percent last year.

Last year was Nextgen's first profitable year since being founded in 2011. Now with its second year of profitability, Walters said the company wouldn't rest on its laurels.

The current focus was on revenue growth, he added.

"We’re now in a position where we’ve got over $100 million in business, we’ve got some really good vendors on board, we’ve got some loyal partners, and if we just wanted to pull our head in and just focus maximising the profitability out of those then we could probably double our profit year-on-year,” he said.

“But that’s not really where we want to be. We’re in hyper-growth mode, our vendors want us to be in hyper-growth mode, our staff want us to be in hyper-growth mode.

“A long as we manage our service levels well and we stay true to our word there, our partners want us to be in hyper-growth mode. Our partners today love the fact that we’re growing so quickly and love the fact that we're bringing new opportunity and innovative ideas both in the product sense and in services.”

Walters said the company had reinvested heavily around major vendor partners Oracle, SAP and Micro Focus as well as into its five main business divisions, including its creative and digital agency Bang and its consulting service offering, Optima, which specialises in governance and cloud migrations.

Dominic Calandra, recently appointed as Nextgen's group CFO, said the company was “in hyper-growth mode”, investing across its individual businesses and aiming to generate between 40 to 50 percent of its revenue through recurring services, while still being on track to hit a FY2018 revenue target of $146 million.

“We’re heavily investing in all our silos across the board. And while we’re investing, we’re still maintaining our EBITDA percentages, we’re putting ourselves in the right position the grow the business forward,” he said.

Nextgen recently moved its offices from St Leonards to North Sydney. 

Complementing its new office, the distributor also updated its branding in 2017, assisted by Bang, the digital marketing agency it acquired in July 2017, which the company merged into the business formerly known as Nextgen Create.

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