Data#3's public cloud business is still booming

Data#3 has reported another half-year of massive growth in its public cloud division.

In the six-months ending 31 December 2019, Data#3’s public cloud sales rose 76.5 percent to hit $251 million. Public cloud growth also boosted overall software licensing revenue by 18.1 percent to reach $425.3 million, making it by far the largest division within the Brisbane-based solutions provider.

Data#3’s infrastructure business grew too, up 4.8 percent to $180.3 million.

However consulting revenue dropped 36.4 percent to $8.5 million. The company said soft consulting results reflected the decision to narrow focus on the division in the 2020 financial year, which includes avoiding large, fixed-price application projects. Approximately 60 percent of Data#3’s revenue is now under contract.

Project services also took a hit, but only by half a percent to $27.6 million.

Support services rose 8.9 percent to $45.1 million, and recruitment grew 5.9 percent to $28.5 million.

Overall, Data#3’s revenue for the half grew 11.6 percent to $718.9 million, while net profit after tax rose 41.5 percent to $8.7 million.

Chief executive Laurence Baynham said the results were indicative of Data#3 maintaining its longer-term growth trend.

“The market is growing as digital transformation fuels the overall information technology spend, and we have seen sustained large project activity,” said Baynham.

“The current period result demonstrates the inherent strength and relevance of our solution offerings in an evolving market, and we are delighted with the rapid growth in our cloud-based business.”

The success of Data#3’s public cloud business represents a marked turnaround from late 2017, when the company scrapped its own cloud platform in favour of pushing customers towards public cloud options. The company’s bottom line suffered in the short term, but Data#3 appears to be on track to achieve its financial objectives for the full 2020 financial year, which ends 30 June 2020.

Data#3 is also the federal government’s sole provider of Microsoft licenses, a role that will surely continue to generate public cloud revenue for years to come.