Public cloud demand helps Data#3 achieve full year growth amid global chip shortage

Public cloud revenue accounted for 40% of Data#3's total revenue during FY21.

Data#3 has reported for the 2021 full year it continued to experience strong increases in software licensing and public cloud revenues, which helped delivered sustained growth across the company.

For the year ending 30 June, the Australian IT vendor reported net profit after tax of AU$25.4 million, 7.5% higher than last year's AU$23.6 million.

Revenue came in at AU$1.96 billion, 20.3% higher the previous year's AU$1.62 billion, with public cloud revenue accounting for 40% of total revenue. Public cloud revenue for the fiscal year was AU$796 million, a 36% year-on-year increase from AU$581 million. The company attributed the growing demand for public cloud to major organisations and government departments accelerating their migration to cloud-based infrastructure.

When breaking down total revenue by business units, its software solutions business contributed AU$1.25 billion, up nearly 27% year-on-year, followed by its infrastructure solutions business that achieved close to AU$467 million for the fiscal year. The company's other business units -- project services, support services, consulting, and discovery technology -- all experienced slight increases. Its people solutions recruitment business, however, was the only one that experienced a year-on-year decline of 2.7%.

As for revenue by region, the Australian Capital Territory is still the largest market for Data#3 contributing a 22% share of total revenue, followed by Queensland at 21%, Victoria with 19%, and then New South Wales at 15%.

Despite overall positive results, Data#3 admitted the FY21 results were impacted by increased product delivery delays in the second half, which is related to the current global computer chip shortage and resulted in a "significant" backlog of orders not being delivered or invoiced at the year-end.  

"The pre-tax profit associated with this backlog is approximately AU$3 million, which will be realised in FY22," the company said.

"Through excellent working relationships with its global vendor partners, Data#3 has been able to secure critical deliveries for customers, thereby mitigating some of the supply chain delays. Supply constraints for various product sets are expected to continue in FY22, and Data#3 is well placed to manage the best possible outcome for its customers."

Data#3 also recorded a slight increase in internal staff costs to AU$138 million due to headcount growth to 1,290, while operating expenses associated with travel and rent declined by 8.1% from AU$22.2 million to AU$20 million. The company said the rent reduction was associated with datacentre space it no longer required due to an increase in demand for public cloud services.

As for the company's outlook for FY22, Data#3 CEO and managing director Laurence Baynham explained given the supply chain backlog in FY21, the new financial year is off to a "fast start".

"We expect technology, and specifically digital transformation, to play the leading role in Australia's economic future, irrespective of any ongoing impacts of the pandemic.  We are already seeing a return of larger infrastructure projects across our corporate and public sector customers," he said.

"The Australian IT market is predicted to grow at a record rate this year, and this will allow us to accelerate growth of our services businesses and further cement our leadership position. We are experiencing a steady increase in the pipeline of large integration project opportunities, and our services growth strategy will continue to improve our margins and complement our growing software and infrastructure business units.

"The backlog from FY21 has provided a fast start to FY22 and we are well-positioned to capitalise on a growing market."

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