Dicker Data expects “AI-driven device refresh” in the second half of FY24

Dicker Data expects an “AI-driven device refresh” in the second half of FY24, following a “subdued market” in the first quarter of its 2024 financial year.

Dicker Data’s Q1 FY24 earnings results, announced last week, reported $694.8 million non-IFRS gross revenue for the first quarter, a 9.6 percent decrease from the same period a year earlier.

The company stated that gross revenue was impacted on a quarter-on-quarter basis by a "large backorder book from FY22 being invoiced in Q123 as supply chain disruptions eased."

"Over $300M backorder book was brought forward and most of it invoiced out in Q1 2023. As at the end of FY23 our backorder book was within normalised levels of approximately $200m."

Net profit before tax was down by 3.1 percent.to $24.6 million for the quarter, which Dicker Data stated was impacted by higher interest costs for the period.

Net new booking, pipeline strengths and quoting activities were "either flat or even slightly up" compared to Q1 FY23.

David Dicker stated that "following three years of a high-growth environment, the market was more subdued in the first quarter."

"Despite this, our market share with the majority of vendors either grew or remained steadfast, highlighting the strength of the [Dicker Data’s] market position and performance."

"We are optimistic for the second half, with [Dicker Data] well-positioned to capitalise as the market returns to growth, as well as having several strategic growth initiatives underway.”

The company talked-up its “ability to hold our market share, despite the challenging economic climate,” which “underscores our competitive strength and the effectiveness of our strategic market positioning.”

AI-driven device refresh "expected"

In its ASX statement, the distributor stated that "we expect the AI-driven device refresh to materialise in the second half of FY24, with the market showing early positive signs.”

It cited Canalys prediction that 19 percent of PCs shipped in 2024 will be AI-capable, increasing to 60 percent by 2027, “with a strong inclination towards commercial adoption.”

Dicker Data is “investing ahead in securing the right inventory mix to support refresh cycles as they commence at a larger scale.”

The company claimed a "leadership position in the Artificial Intelligence (AI) arena" and ranking as "the number one distributor for Microsoft Copilot" in ANZ.

In March 2024, Dicker Data partnered with Microsoft to offer its AI Compass tool to ANZ partners and their customers so they can assess their readiness for AI.

Dicker Data also talked-up its appointment in Q124 as “the only end-to-end NVIDIA distributor in the ANZ region.” It positioned its business as a provider for “large scale, complex AI deployments”.

Access and surveillance revenue, profitability up

Dicker Data’s gross margins were "slightly higher than the prior corresponding period" due to distribution partnerships forged in the previous 12 months.

Higher gross margins were also attributed to Dicker Data entering "new, higher margin markets," including the access and surveillance market.

Its access and surveillance business unit, DAS, added Hikvision’s portfolio in February 2024.

"The DAS business unit improved revenue and profitability year on year in Q124 thanks to growth in new and existing vendors but was impacted by the building and construction sector slowdown," Dicker Data stated.

The company "is expecting better market conditions in the second half of FY24 to enable the continued growth of the access and surveillance business."