Data#3 boosts H1 profit for first time in four years

Data#3 has posted a rise in first-half profits for the first time in four years as its strategic shift away from product and toward services gains traction.

The Brisbane-headquartered IT firm grew net profit after tax (NPAT) by 39.2 percent to hit $3.6 million for the six months to December 2014.

The last time Data#3 managed to increase first-half NPAT was back in the first half of the 2011 financial year, when NPAT rose 68 percent to hit $7.9 million for the six months.

Data#3 had posted second-half profit increases over that four-year period, and NPAT has always been in the black; this turnaround from profit decline to increase in the first half is "early evidence of our strategic shift to an increasingly service-centric business", said managing director John Grant.

The impact of Data#3's shift from products to services was also apparent across the top line: first-half product revenue fell 0.9 percent to $329.7 million while services revenue grew 16.4 percent to $75.8 million.

While Data#3 remains a product-heavy company, there was some good news in the hardware and software space: margin on product increased 0.7 points to 9.3 percent.

Margin on services fell 2.2 points but it's easy to see why Data#3 is so focused on expanding this part of its business: services boast a margin of 42 percent.

In terms of headline figures, the 750-staff company saw a subtle increase in overall revenue for the period, up $7.3 million or 1.8 percent to $406.4 million.

Data#3's push into higher-growth areas have included the acquisition of consultancy Business Aspect Group and its investment in wireless analytics company Discovery Technology.

Laurence Baynham, who was recently appointed as chief executive, taking over from John Grant, said: "With the changes we’re seeing in the way our customers are choosing to consume and pay for technology, our strategic shift from primarily product centric to increasingly service centric is the right strategy to underpin sustainable growth in long-term shareholder returns."