Data#3 sees gross profit growth despite decreased revenues

The Queensland-based IT solutions provider has grown its profit in what the company says is a challenging market.
Written by Chris Duckett, Contributor

Data#3 has seen its total revenue fall by 5 percent for the 2013 financial year, yet it increased its gross profit by AU$2.6 million to AU$122.5 million. Earnings before interest, tax, depreciation, and amortisation (EBITDA) for the company was down 3.8 percent, from AU$19.4 million to AU$18.7 million.

Blame for the revenue loss was placed at the feet of changes in invoice timing and a shift to a commission structure.

A saving grace for the company in the first half of the year was its contract with the Fiona Stanley hospital in Western Australia, which "contributed significantly to product and contract maintenance services".

"This fuelled strong growth in our Western Australian business, which somewhat offset the much flatter conditions for our businesses in Queensland, New South Wales, and Victoria, and for our services businesses other than software asset management, software development, and contract maintenance," the company said in its annual results.

The company's licensing solutions business had revenue down 11.4 percent to AU$428.1 million, but underlying gross profit growth.

"Licensing Solutions exceeded all its targets, growing gross profit in a market that was flat at best and very competitive. This growth was achieved through a combination of increasing market share, maximising vendor channel incentives and further gains in operational efficiency," the annual report said.

Software delivered as a service from Microsoft and other partner clouds made 10 percent of licensing solutions' revenue.

On the infrastructure side of the business, it saw total revenue increase by 7.5 percent to AU$306 million, with products up 3.2 percent to AU$215 million, project services falling by 2.2 percent to AU$30 million, and managed services revenue growing by 33.5 percent to AU$61 million.

The company's personnel contracting business revenue saw a 13.7 percent drop to AU$35.7 million.

"The market for contract and permanent labour cycles with general economic conditions and hence was challenging," the report said.

"This was exacerbated by the bias in our revenues to Queensland government where the contraction was more marked, and the scale of our businesses outside Queensland where costs remained high relative to revenue."

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