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Cloud services drive Data#3 1H16 profit after tax up 19 percent

Data#3's ongoing shift towards delivering cloud services is starting to pay off, with the company reporting net profit after tax of AU$4.3 million for the 2016 financial half year.

Data#3 has announced that as it continues to make the strategic shift towards services, it has delivered positive results all round for the six months ended December 31, 2015.

The company reported that for the period, revenue increased by 12.6 percent to AU$457.5 million, with product revenue up 12.6 percent to AU$371.1 million, and services revenue up 12.9 percent to AU$85.6 million.

Total gross profit also lifted by 9.6 percent to AU$68.4 million, due to a 12.6 percent increase in product gross profit to AU$34.4 million, and services gross profit increasing by 6.7 percent to AU$34 million.

Data#3 said that as a result, revenue and gross profit growth drove net profit after tax up 19.2 percent, to AU$4.3 million.

Data#3 CEO Laurence Baynham said over the first half of the 2016 financial year, the company continued to deliver solid revenue and profit growth results.

"We continue to see a trend to move cloud-based solutions, and I am confident that we are well positioned to fulfil our customers' current and future requirements," he said.

At the same time, the company reported that expenses jumped by 8.5 percent during the six-month period, to AU$63.1 million. The company blamed the lift on internal staff costs that rose by 4.4 percent to AU$51.4 million, which it said was largely due to the growth in headcount from completing the acquisition of Discovery Technology.

Operating expenses also increased by 31.3 percent to AU$11.7 million, with Data#3 attributing it mostly to higher rent, as well as depreciation and amortisation costs.

Data#3 bought an additional 14.2 percent share in Discover Technology last July, after it had bought a 42.5 percent share in the company in 2014. As a result, it makes the company the majority shareholder of the Wi-Fi firm.

Looking ahead, Data#3 is eyeing growth in the education and health sector, and believes there will be continued adoption of consumption-based cloud services, particularly public cloud.

It also outlined some main priorities for the remainder of FY16, including establishing new security practices, expanding partnerships, accelerating public cloud opportunities, delivering sales development programs to support the transition strategy, and leveraging its Discovery Technology acquisition.

"We are confident that we have the right strategy to underpin sustainable growth in long-term shareholder returns. Our first-half performance and pipeline of opportunities provides a solid foundation to achieve our objective of improving on the company's 2015 full-year profit," Baynham said.

The company posted for FY15 earnings before interest, taxes, depreciation, and amortisation (EBITDA) of AU$17 million, a figure up 39.3 percent year on year, and total revenue up 4.4 percent, to AU$870.5 million.

2.31p.m 22 February, 2016: Net profit after tax value in the headline has been corrected from 6.7 percent to 19.2 percent.