Logicalis hunts acquisitions in bid to triple revenue

The Australian arm of multinational reseller Logicalis has swung back into profit, as the chief executive told CRN of his vision to diversify away from its traditional networking infrastructure work.

Logicalis Australia saw a revenue boost of $12.7 million in its latest annual results, ending up with $69.1 million for the year ending 28 February. A loss of $1.34 million last year was turned into a $1.12 million profit.

Chief executive Basil Reilly downplayed the result, attributing the turnaround to the billing of a single project.

"It wasn't like the market had grown or we came up with some new stuff to sell," Reilly told CRN. "We had one customer who had a $10 million dollar project, and that's what really drove the results."

Aside from that project – a modernisation of the network at Swinburne University in Victoria – Logicalis deployed several other major works for large clients over 2013-14. However, Reilly said that the "market was still flat".

Logicalis Australia also earnt almost $4 million of dividend from a subsidiary – an offshoring operation in Cyberjaya, Malaysia – that didn't produce any direct income the previous year.

"It's the Silicon Valley of Malaysia," said Reilly. "Cyberjaya has been in place for 10 years and it is our global support centre. So we support customers, it's built for Australia but we also support customers in China, Vietnam, US, UK, et cetera."

Reilly said that the off-shoring capability is unique for a firm of its size.

"We're the only level-two system integrator with an offshore capability. Large organisations like IBM and CSC have it but we're the only tier-two [integrator] who has gone down that path," said the chief executive.

"As things get tougher and tougher in the Australian economy, people are looking more cost-effective solutions. People who may not have thought about it five years ago have decided to offshore, so we're providing that capability."

Reilly was appointed in December with a remit to "triple the local business". He said that this would be achieved through acquisitions and shaking off its "Cisco specialist" image in a four-year plan.

"We're not looking to be the biggest – we're looking to be known for something. The aim is to go to $300 million [in sales]," he said. "We're looking at acquisitions. To get to $300 million we need to make three or four acquisitions, I'd say."

Cisco work currently takes up 80 percent of business, and that figure will not change overnight, said Reilly. However, in the long term he would like to aim for the 60 percent mark as Logicalis gradually offers a wider portfolio to each customer.

"We're known as the sixth-largest Cisco system integrator. So we've got to invent new sources of income, new divisions, and we've got to get the brand known for things other than Cisco," he said.

Logicalis has spent $3 million dollars on building its own cloud and developing backup-as-a-service as a part of its diversification drive. Reilly said seven customers are already on backup-as-a-service, including Toyota.

The chief executive said creating new income streams is a challenge for not just Logicalis but all systems integrators. "Everybody is trying to figure out, 'Where am I going to make money in the future'? That's the big challenge."