Data#3 falls just short of $1 billion half year revenue

Brisbane-based solution provider Data#3 has come close to $1 billion in revenue for the first half of the financial year, boosted by a near 35 percent growth in its public cloud earnings.

The company’s overall revenue was up 16.6 percent to $999.3 million and reported that its public cloud business grew 34.8 percent to hit $466.7 million. Gross profit was up 17.5 percent to $105.4 million boosted by services growth, the company told shareholders.

Data#3 boss Laurence Baynham said the company was pleased with the performance and that it reflected solid contributions from each of the business units and regions. 

“This was underpinned by diligent execution of our strategy as we grew our software and services businesses and recurring revenue base,” he said.

“We maintained strong levels of service to our large, long-term customer base while further strengthening key supplier relationships through our highly experienced and committed team.”

The public cloud growth was attributed to cloud migrations from enterprise and government customers and the company said that while the margins were lower in public cloud, the data gained from customers provided a competitive advantage.

Recurring revenues are now around 65 percent of total revenue, up from 62 percent in the previous corresponding half year. 

The company said that while the backlog caused by the global shortage of computer chips and integrated circuits provided a fast start to FY22, it saw a similar backlog at the end of December. It described the impact on the first half result was as ‘not material’.

It said it adapted to continued supply chain shortages and delays, with early ordering and contingency planning, resulting in a return to more predictable business activities, it said.

In addition, Data#3 revealed that it had increased direct headcount by 10 percent compared to the previous corresponding period, predominantly in the services teams. 

Data#3 said it was well positioned to capitalise on a growing market and an ongoing trend for large scale digital transformation projects, particularly in software and services.

“The Australian IT market is predicted to grow at a record rate this calendar year, allowing us to further cement our market leadership and expand our services businesses,” Baynham added.

“The pipeline of large integration project opportunities continues to build, and services growth is an integral part of our software and infrastructure offering while further improving our margins.

“The ongoing supply constraints caused by the global shortage of computer chips and integrated circuits is expected to continue into FY23, however the industry has adapted to these longer lead times, thereby minimising their impact. Conversely, we are well placed to capitalise on the opportunities this provides by working closely with customers and suppliers and leveraging the strength of our vendor relationships.

“While our strong trading performance has continued at the start of the second half, given that pandemic-related uncertainties remain, at this stage it would not be prudent to provide specific guidance for FY22. In line with previous years, we continue to expect a sales peak in the months of May and June and a higher profit skew in the second half, and to deliver sustainable earnings growth.”