Demand for public cloud and software sees Data#3 grow by 30% in FY20

Public cloud revenue lifted by 60% while software revenue grew by 25% for the period.
Written by Aimee Chanthadavong, Contributor

Australian business technology firm Data#3 has announced that strong growth in public cloud and software licensing revenues have helped the company deliver overall, strong results for the full year ending 30 June 2020.

Consistent with guidance provided in mid-July, the company reported net profit after tax of AU$23.6 million, up 30.5% from last year's AU$18 million, and earnings before interest and tax being up 32.3% to AU$34 million.

Revenue increased by 15% to AU$1.63 billion, which included AU$581 million of public cloud revenue that lifted by 60.4% from AU$362 million, and AU$985 million of software revenue, which increased by 25% for the period.

Other parts of the business, however, were not so lucky. Revenue for its support services decreased 5% from AU$216 million to AU$205 million and its consulting services decreased by 38.6% from AU$26.4 million to AU$16.2 million. Despite these drops, the company said it remains unscathed, noting how 60% of its total revenue is now made up of recurring contracts with government and large corporate customers.

Total gross profit came in at AU$188 million, an 8% increase on the same period last year.

See also: Moving to the cloud: Top challenges organisations face (TechRepublic)

"We are delighted with the performance of the consolidated Data#3 business, which delivered another record result in what has been an extraordinary year. The result demonstrates the inherent strength and relevance of our solution offerings in an evolving market, and the growth in public cloud was a particular highlight," Data#3 CEO and managing director Laurence Baynham said.

Data#3 added operating expenses decreased by 5% from AU$23.4 million to AU$22.2 million, after it managed to claw back funds from decommissioning its Data#3 cloud platform and reduce travel costs as a result of the pandemic.

Baynham added how the company's long-term objectives of maintaining a strong balance sheet with minimal debt and maintaining long-term relationships with customers are on track. However, due to the uncertainty of the current economic environment, the company is unable to provide "meaningful commentary" on the FY21 outlook.

"Our long-term financial goal remains to deliver sustainable earnings growth," he said.

Last July, Data#3, along with partners DQA, oobe, and Veritec, were handed a licensing agreement to manage a three-year, whole-of-government Microsoft deal, which would see Office 365 be made available to all 98 federal government agencies.

Data#3 was also previously handed two contracts for the supply of Microsoft software to the government of Western Australia.

Under the terms of the two three-year deals, Data#3 is the sole provider for Microsoft software to all of the state government's agencies. The first contract that covers Microsoft licensing to the WA government, while the second arrangement continues Data#3's incumbency with the Department of Education.

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