Data#3 has reported its first rise in profits since 2011, as its pivot toward services continues to bear fruit.
The company chalked up 40 percent rises in both earnings and net profit in the past 12 months, despite revenue edging up a mere 4.4 percent to hit $870.5 million - an increase of $36.9 million from the previous year.
Data#3 posted a 39.3 percent rise in earnings before interest, tax, depreciation and amortisation (EBITDA), up $4.8 million to $17 million and a 40.9 percent rise in net profit after tax (NPAT), up $3.1 million to $10.6 million.
It marks the first annual report under the stewardship of Laurence Baynham, who was appointed chief executive to replace long-time managing director and industry icon John Grant last November.
Speaking to CRN, Baynham said the stability of Data#3's management team was a core strength. Though he only recently stepped up to the top job, Baynham has been with the business 21 years.
In the past financial year, two more long-serving Data#3 execs were promoted to larger roles: Brad Colledge, a 20-year veteran, is now an executive general manager, and Michael Bowser continued his successful 27-year career at Data#3 by also rising to executive GM status.
From products to services
Baynham said today's upbeat results "reflect the company’s strategy of transitioning from primarily a product-centric approach to an increasingly service-centric approach".
“We have repositioned the business to take advantage of our global partners’ investments in public cloud. In FY15, this represented significant growth with public cloud revenues exceeding $47 million," added Baynham.
Microsoft was the most important public cloud vendor, Baynham told CRN. "Microsoft seem to be the fastest-growing public cloud provider globally and with us being the largest Microsoft partner in the country we capitalising on that growth."
Data#3 is in the top 10 global Microsoft partners in terms of revenue, he added.
Services are far more profitable than Data#3's much larger products business. While products represent 81.5 percent of Data#3's turnover, and service make up the other 18.5 percent, they generated roughly the same gross profit.
Gross margin on services was 39.5 percent, versus 9.3 percent gross margin on products.
Overall, Data#3 eked out a small rise in gross margin, up from 14.3 percent to 14.9 percent.
The company now boasts a workforce of 1,117 people - the first time Data#3's headcount has cracked the thousand-staff mark. The numbers swelled following its acquisition of 70-staff consulting outfit Business Aspect in September 2014, a deal that helped drive those rising profits from services.
Baynham hinted at further deals down the track, with Data#3 remaining "watchful for further acquisitions", and also ready to partner with other IT companies.
The company has shown a willingness to structure deals in many ways, whether its full buyout of Business Aspect, the investment in Discover Technology – which began as a minority stake and has since increased to 56.7 percent – or its strategic alliance with Blink Mobile.
_page-0001.jpg&w=100&c=1&s=0)
-1.jpg&w=100&c=1&s=0)
.png&w=100&c=1&s=0)
