Public cloud demand drives Data#3 half-year revenue close to AU$1b mark

Data#3 public cloud revenue contributed 47% to total revenue during 1H21.
Written by Aimee Chanthadavong, Contributor

Data#3 has reported it had an all-round positive first half year, with all business units and regions making strong contributions despite uncertain operating environment.

For the six months ending 31 December 2021, the Australian IT solutions provider recorded net profit after tax of AU$12.4 million, climbing 32% year-on-year from last year's reported AU$9.4 million.

Revenue came in at AU$999 million, following a 17% uplift.

According to the company, revenue growth was underpinned by solid public cloud revenue, which was up 35% to AU$466.7 million as major organisation and government departments migrated to cloud-based infrastructure. This contributed 47% to total revenue.

As the company continued to secure contracts with government large corporate customers, recurring revenue grew from 62% to now making up 65% of total revenue. 

Breaking revenue results down by business units, the largest contributor was AU$648 million from software solutions, which experienced a 20.5% year-on-year bump, followed by infrastructure solutions that remained stable contributing AU$205 million to total revenue.

The business unit that experienced the largest increase during the half year was business aspect consulting, which experienced a 68.4% year-on-year boost to AU$13 million.

"We are very pleased with the strong first-half performance, which reflects solid contributions from each of our business units and regions. This was underpinned by diligent execution of our strategy as we grew our software and services businesses and recurring revenue base," Data#3 CEO and managing director Laurence Baynham said.  

"We maintained strong levels of service to our large, long-term customer base while further strengthening key supplier relationships through our highly experienced and committed team."  

During the half-year, Data#3 also increased its headcount, mainly in the services teams, by 10% compared to the previous corresponding period. This was reflected in the 14% year-on-year jump to AU$87 million in total staff and operating expenses for the reporting period.

Data#3 noted that while the company continued to experience backlog due to the global chip shortage, the impact was minimal.  

"Along with its customers and suppliers, Data#3 has adapted to continued supply chain shortages and delays, with early ordering and contingency planning now being widely adopted, resulting in a return to more predictable business activities," the company said.

Looking ahead, the focus for Data#3 will be to secure additional digital transformation projects, particularly in software and services, Baynham said, while also navigating the uncertain operating environment.

"The ongoing supply constraints caused by the global shortage of computer chips and integrated circuits is expected to continue into FY23, however, the industry has adapted to these longer lead times, thereby minimising their impact. Conversely, we are well placed to capitalise on the opportunities this provides by working closely with customers and suppliers and leveraging the strength of our vendor relationships," he said.

"While our strong trading performance has continued at the start of the second half, given that pandemic-related uncertainties remain, at this stage it would not be prudent to provide specific guidance for FY22.

"In line with previous years, we continue to expect a sales peak in the months of May and June and a higher profit skew in the second half, and to deliver sustainable earnings growth."

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