Data#3 transition pays off to the tune of AU$17m

Business technology solutions firm, Data#3 yesterday reported earnings before interest, taxes, depreciation, and amoritisation (EBITDA) of AU$17 million for the financial year ending June 30, 2015, a figure up 39.3 percent year-on-year.

The Australian-listed company boasted an operating cash flow of AU$24.3 million, with total revenue up 4.4 percent to AU$870.5 million.

"The FY15 results reflect the company's strategy of transitioning from primarily a product centric approach to an increasingly service centric approach in a rapidly changing IT environment," CEO Laurence Baynham said.

"We are very pleased to have returned the business to solid growth through diligently managing our cost-base, while building market share. We have repositioned the business to take advantage of our global partners' investments in public cloud."

In FY15 Data#3 saw significant growth in the public cloud, with revenues surpassing AU$47 million.

Earlier this year, Data#3 projected that its net profit after tax (NPAT) would far exceed its 2014 annual result of AU$7.5 million, with the CEO providing shareholders with a pre-audit estimate of AU$10 to AU$11 million. The audited statistic released on Thursday confirmed his approximation, coming in at AU$10.6 million, representing a 40.9 percent increase, year-on-year.

Last year, Data#3's continued product commoditisation, lower margins due to competitive pressure, and longer decision cycles -- combined with smaller transactions -- took the blame for the company posting a 38 percent decline in net profit after tax.

Richard Anderson, chairman for Data#3 said that the 12 months had been a period of transition for the business.

"In a highly competitive and transforming technology market, Data#3 has not only been able to increase revenues, but has delivered much stronger growth in earnings," he said.

In September last year, Data#3 acquired business and technology consulting firm, Business Aspect Group and its subsidiaries for AU$6 million. At the time, Data#3 agreed to further invest in the firm, under the proviso of Business Aspect Group achieving contractually outlined EBITDA results. Data#3 will pay an additional AU$1.6 million in FY15 and AU$1.9 million in FY16, as well as issue AU$2 million in shares at the end of FY16, if no shortfalls to the contract occur.

In July, Data#3 upped its stake in Sydney-based Wi-Fi analytics company, Discovery Technology to 56.7 percent after it pumped a further AU$500,000 into the firm. Data#3 originally held a 42.5 percent interest in Discovery Technology when it paid AU$1.5 million for the privilege a year earlier.

During the course of the 2015 financial year, Data#3 welcomed its new CEO, appointing Baynham to take the reins from John Grant, who moved on to chairman at Discovery Technology.

Brisbane-based Data#3 told shareholders that its FY16 outlook was a positive one, hoping to achieve further growth and expand on its FY15 results.

"We see economic conditions remaining challenging in FY16 with traditional technology investments remaining flat. However, we are seeing digital disruption as a high priority for commercial and public sector organisations, and this is attracting increased investment," Baynham said.

"Data#3 has access to a very large marketplace and is well positioned to address these emerging opportunities.

"As we continue to grow organically, we will also remain watchful for further acquisitions that can add value to the business and to shareholders."