Dicker Data on track for billion-dollar goal

Dicker Data is on track for a projected revenue of at least $1 billion by next year as it sets its sights on becoming the industry's number one distributor. 

The newly acquired Express Data helped generate a $211.18 million or 46.8 percent increase in sales revenue to $662.76 million for the financial year ended 30 June 2014.

Acquisition costs added up though, contributing to a 43.9 percent fall in net profit after tax from $9.2 million last year to $5.2 million in the 2014 financial year.

Operating expenses nearly doubled to $47.18 million. Almost $9 million of these costs were attributed to employment expenses of Express Data and an increase in headcount at Dicker Data to support expected growth.

The combined company saw a big boost in gross profit, though most of these gains came from Express Data, rather than Dicker Data's existing business.

Of the $211.18 million increase in revenue, Express Data contributed $186 million from three months of sales.

Excluding the contribution from Express Data, gains in revenue were smaller, but would have been higher had it not been for "strategic vendor reorganisation costs" that impacted revenue.

In the months following the acquisition, Dicker parted ways with Apple, which it had inherited from Express Data's Express Online unit, as well as Adobe.

Gross profit was up $16.9 million or 45.1 percent to $54.2 million. Again, much of the gain was from Express Data, which contributed $15 million.

Excluding Express Data, gross profit was also only marginally better than the year before. Dicker Data reported lower upfront margins due to competition and lower selling price on clearing some larger stock holdings in the first half of the year.

On the upside, HP and Lenovo were standout performers, with a higher vendor rebate on Lenovo due to higher sales volume and strong growth in Lenovo sales in the second half of the year. Dicker Data extended its HP offerings into printing and supplies at the end of June 2013 and reported higher discounts received on HP purchases.

This growth offset some of the shortfall in product revenue due to a declining PC market and "exit on some of these vendors."

While Dicker Data was previously a "fairly distant number four distributor", in CEO David Dicker's words, he argues the company now has a platform to contend for number one.

The company's annual report states: "The acquisition of Express Data provides the platform for the company to achieve over $1 billion in sales in the 2015 financial year."

Dicker Data boasts over 5,000 resellers and in excess of 40 vendors, as well as a soon-to-be-completed extension to its warehouse, bringing warehouse capacity to 13,000 square metres and office space to 2,000 square metres.