Market shift to public cloud drives Data#3 profits up nearly 42%

It comes as public cloud revenues skyrocketed by 77% for the half year to 31 December.

Australian business technology firm Data#3 has released its half-year results to 31 December 2019 and has managed to maintain what it describes as a "longer-term growth trend", fuelled mainly by digital transformation projects and its growth in the public cloud space.

For the period, the reported net profit after tax (NPAT) was up 42% to AU$8.7 million, and earnings before interest and tax were up 44.6% to AU$12.3 million.

Meanwhile, total revenue increased 11.6% to nearly AU$719 million, which includes AU$252 million of public cloud revenues that skyrocketed by 76.5% for the period.

Total gross profit came in at AU$88.6 million, a 7.7% increase, and total gross margin decreased slightly from 12.8% to 12.3%, which the company said reflected a shift in sales mix, with growth in software licensing and public cloud revenues, and a decrease in consulting revenue.

"We are very pleased with the first-half performance, maintaining the longer-term growth trend," Data#3 CEO and managing director Laurence Baynham said.

"The market is growing as digital transformation fuels the overall information technology spend, and we have seen sustained large project activity. The current period result demonstrates the inherent strength and relevance of our solution offerings in an evolving market, and we are delighted with the rapid growth in our cloud-based business."

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

Data#3 added that operating expenses decreased slightly by 1% to $11.8 million, noting that the savings came from decommissioning the Data#3 Cloud platform.

Looking ahead, the company outlined its expectations that the market would remain buoyant, and that it would continue to focus on servicing customers through digital transformation projects and investing in vendor relationships for the remainder of FY20.

"The strong first-half performance and pipeline of opportunities for the second half give us confidence that we will achieve our full-year financial objective, being to deliver sustainable earnings growth over time," Baynham said

Last July, Data3#, 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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