Slides
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1 FY25 Interim Results Briefing Presented by Brad Colledge, MD/CEO Cherie O’Riordan, CFO For personal use only
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2 About Data#3 • ASX 200 listed IT Services and Solutions provider in Australia and the Pacific Islands • Our vision is to harness the power of people and technology for a better future • 47 years evolving solutions and services to enable customers' success, combined with world-leading vendor technologies • Delivering the digital future through cloud, modern workplace, security, connectivity, data & analytics solutions, combined with consulting, project and managed services For personal use only
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Agenda 1H FY25 Highlights 1H FY25 Financial Performance IT Sector Trends FY25 Strategy & Outlook Q&A 3 3 For personal use only
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1H FY25 Highlights 4 For personal use only
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1H FY25 Financial Highlights 5 Gross Sales $1.4B Up 7.4% Gross Profit $143.6M Up 10.0% NPBT* $32.0M Up 4.1% EBIT* $26.0M Up 4.6% Basic EPS 14.43 cents Up 4.2% Dividends per share 13.10 cents Up 4.0% Payout ratio of 90.8% 5 *Underlying NPBT growth of 7.0% and underlying EBIT growth of 8.1% after adding back one-off restructuring costs of $0.9 million. For personal use only
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Key awards + certifications • HRD Employer of Choice – 9th year in a row • Great Place to Work – Workplaces in Technology • Cisco APJC Collaboration Partner of the Year • Dell Technologies Solution Provider Partner of the Year • Aruba Partnership Excellence Partner of the Year • HP Amplify Partner of the Year 1H FY25 Overview 6 Recurring Gross Sales 70% (FY24: 67%) • In line with strategy, strong sales growth in Managed and Maintenance Services and Software Solutions, supporting recurring Gross Sales • Achieved solid top line growth of 7.4% in line with market, and improved overall gross margin in subdued and competitive market • Profit before tax of $32.0M up 4.1% on prior corresponding period and in line with AGM guidance of $31M to $33M (up 7.0% after adding back one-off restructuring costs of $0.9M) • Leading market position, strength of supplier relationships, long-standing customer base People 1,400+ Gross Sales $1.4B Gross Sales 5-year CAGR 14.6% ESG update • Environmental goals - Working towards carbon neutrality by 2032 and development of Net Zero Strategy • APAC winner of Frost & Sullivan’s Enlightened Growth Leadership Best Practices Recognition 2024 For personal use only
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Cloud Software infused with AI Cloud is now ubiquitous in our customer solutions Working Capital Normalised inventory levels Improved DSOS Strong cash position Customer Experience Customer Satisfaction ratings Investment in systems and people driven by data and analytics 1H FY25 Operational Highlights Security Growth Fastest growing solution and top customer priority ISO 27001 certified Services Maintenance, Professional and Managed Services 7 Global Vendors Awards, certifications and incentives For personal use only
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Vendor Awards Leading together: Data#3’s award-winning partnership with HPE and Aruba Data#3 clinches triple crown at HP Partner Awards: Amplify, Sustainability, and Poly Growth Excellence recognised Data#3 sets the standard in Modern Workplace, securing multiple Cisco awards Data#3 wins Customer Experience Partner of the Year for APJC at Cisco Partner Summit 2024 Data#3 receives Dell Technologies award for Workforce Transformation Project Data#3 recognised by Lenovo for infrastructure solutions excellence For personal use only
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1H FY25 Financial Performance 9 For personal use only
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Sustained growth in earnings and Gross Sales 12.7 13.9 18.5 24.6 30.8 32.0 5 10 15 20 25 30 35 1 H 2 0 1 H 2 1 1 H 2 2 1 H 2 3 1 H 2 4 1 H 2 5 NPBT ($M) 5.65 6.09 8.01 11.04 13.85 14.43 2 4 6 8 10 12 14 16 1H20 1H21 1H22 1H23 1H24 1H25 Basic EPS (cents) 5.10 5.50 7.25 10.00 12.50 13.10 2 4 6 8 10 12 14 1H20 1H21 1H22 1H23 1H24 1H25 DPS (cents) 10 718.9 856.7 999.3 1,166.1 1,321.9 1,419.4 500 700 900 1100 1300 1500 1 H 2 0 1 H 2 1 1 H 2 2 1 H 2 3 1 H 2 4 1 H 2 5 Total Gross Sales & Other Revenue ($M) For personal use only
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Gross margin and Gross profit 11 $M 1H FY25 1H FY24 Growth Product Gross Sales 1,207.3 1,143.1 5.6% Product Gross Profit 69.2 64.9 6.7% Product Margin on Gross Sales 5.7% 5.7% - Services Gross Sales 205.4 172.2 19.3% Services Gross Profit 74.2 65.7 13.0% Services Margin on Gross Sales 36.1% 38.2% (2.1pp) Total Gross Profit 143.6 130.6 10.0% Total Gross Margin 10.2% 9.9% 0.3pp 11 Strong growth in Services and recurring revenue streams, in line with strategy. Improved overall gross margin in 1H FY25, despite competitive market conditions. pp = percentage point For personal use only
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Sales by functional area – Services Business unit 1H FY25 Gross Sales ($M) Change vs. 1H FY24 Business Aspect Consulting 14.7 (8.6%) Project Services 42.2 9.9% Maintenance Services 87.3 38.2% Managed Services 26.7 27.7% People Solutions (recruitment) 32.2 1.5% Other Services 2.3 Total Services 205.4 19.3% 12 20.0 30.0 40.0 50.0 60.0 70.0 80.0 0 50 100 150 200 1 H 2 0 1 H 2 1 1 H 2 2 1 H 2 3 1 H 2 4 1 H 2 5 Services Gross Sales & Gross Profit ($M) Total Gross Sales Total Gross Profit • Maintenance Services benefitted from the shift with vendors such as Cisco to multi- year Enterprise Agreements • Managed Services boosted by large contract wins in 2H FY24 and 1H FY25, with ongoing success in the resources sector • Project Services saw steady demand for digital transformation and CoPilot engagements, offset by some customer driven project delays • People Solutions performance reflects stagnant labour market with low unemployment and temporary slow down in Public Sector demand for contingent labour • Consulting impacted by the Queensland State election and challenging economic conditions For personal use only
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Sales by functional area – Product Business unit 1H FY25 Gross Sales ($M) Change vs. 1H FY24 Infrastructure Solutions 234.0 (12.9%) Software Solutions 975.6 11.4% Other Services (2.3) Total Product 1,207.3 5.6% 13 • Software Solutions growth driven by demand for security products, cloud subscriptions and Adobe, particularly in the education and public sectors. Also, higher adoption and services rebates aligned with vendor incentive programs. • Infrastructure Solutions impacted by ongoing delays in customer decision making, the Queensland election and a slower ramp in end user compute sales than anticipated. 40 45 50 55 60 65 70 75 0 300 600 900 1200 1 H 2 0 1 H 2 1 1 H 2 2 1 H 2 3 1 H 2 4 1 H 2 5 Product Gross Sales & Gross Profit ($M) Total Gross Sales Total Gross Profit For personal use only
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Reconciliation of Gross Sales to Statutory Revenue • Statutory revenue presented includes the reclassification of Software licensing and vendor delivered maintenance support revenues on a net basis 14 $M 1H FY25 1H FY24 Growth Gross Sales* 1,412.8 1,315.3 7.4% Gross Profit 143.6 130.6 10.0% Margin on Gross Sales 10.2% 9.9% 0.3pp IFRS Adjustments (1,021.6) (916.4) Statutory Revenue** 391.2 398.9 (1.9%) Gross Margin (Statutory Revenue) 36.7% 32.7% 3.9pp * Gross Sales is non-IFRS financial information and does not represent revenue in accordance with Australian Accounting Standards. This represents gross proceeds from the sale of goods and services, both as agent and principal. ** Including the reclassification of Software licensing and vendor delivered maintenance support revenues on a net basis, and excludes interest and other income. 1H FY24 Statutory Revenue was restated at 30 June 2024. pp = percentage point Certain revenues are presented on a net basis following a change in revenue accounting policy in FY24. This is a statutory presentation change only, and the Company will continue to measure operational performance on a Gross Sales* basis. For personal use only
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1H FY25 Financial Results – Profit and Loss Includes Software Solutions & vendor delivered Maintenance Support revenues presented on a net basis 15 Consolidated Profit & Loss $’000’s 1H FY25 1H FY24* Change Change Revenue and Other income (ex interest) 391,322 398,876 (7,554) -1.9% Cost of goods sold 247,733 268,321 (20,588) -7.7% Gross Profit 143,589 130,555 13,034 10.0% Gross profit margin 36.7% 32.7% 3.9pp Operating Expenses 114,354 102,536 11,818 11.5% EBITDA** 29,235 28,019 1,216 4.3% EBITDA margin 7.5% 7.0% 0.4pp Depreciation and amortisation 3,216 3,136 80 2.6% Interest Income 6,532 6,455 77 1.2% Finance costs 526 577 (51) -8.8% Net profit for the period 32,025 30,761 1,264 4.1% Earnings per Share (cents) 14.43 13.85 0.58 4.2% *1H FY24 revenue was restated to present vendor delivered maintenance revenues on a net agency basis. **Earnings before Interest, Tax, Depreciation and Amortisation pp = percentage point Includes general wage increases of 6%, net headcount increase of 1%, IPT Project investments, increase in billable Services and licensing costs and one-off redundancy costs of $0.9M. Earned off strong average cash position and high cash rate Before one-off redundancy costs, change in PBT was 7.0% and aligns with the Non-IFRS gross sales growth of 7.4% For personal use only
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1H FY25 Financial Results – Balance Sheet 16 Consolidated Financial Position $’000’s 31 December 2024 30 June 2024 Cash 131,008 276,381 Other current assets 250,772 547,733 Non-current assets 36,474 42,033 Total assets 418,254 866,147 Current liabilities 320,948 770,368 Non-current liabilities 18,928 20,863 Total liabilities 339,876 791,231 Net assets 78,378 74,916 Current ratio 1.2 1.1 Payments relating to May/Jun 24 sales peak made Q1 FY25 Trade debtors higher in June with EOFY sales peak. Average Day Sales Outstanding 25 days (Jun 24: 27 days) Depreciation of fixed assets Trade creditors higher in June with EOFY sales peak Current assets / current liabilities For personal use only
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1H FY25 Financial Results – Cash Flow 17 Consolidated Cash Flow $’000’s 1H FY25 1H FY24 Change Change % Cash flows from operating activities (123,818) (266,936) 143,118 -53.6% Cash flows from investing activities (429) (252) (177) 70.2% Cash flows from financing activities (21,852) (20,116) (1,736) 8.6% Net decrease in cash held (146,099) (287,304) 141,205 -49.1% Opening cash balance 276,381 404,766 (128,385) -31.7% Effect of FX movements 726 (335) 1,061 -316.7% Closing cash balance 131,008 117,127 13,881 11.9% Operating cash outflows in 1H FY25 returned to more normal levels (1H FY24 outflows abnormally high due to normalisation of post pandemic working capital) Property, plant and equipment (predominately internal computer equipment) Dividends paid of $20M (1H FY24: $18.4M) - 91% payout ratio Average daily cash balance $284M (1H FY24: $300M) For personal use only
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Positive Trend in Operating Leverage • Before the $0.9M in redundancy costs, the 1H FY25 ICR was relatively flat year on year • Pleasing considering the ongoing inflationary and competitive economic conditions • Internal Cost Ratio (Internal expenses / Gross profit) or ICR, has improved from 88.0% in FY16 to 82.2% in FY25 • 1H FY25 slightly up vs 1H FY24 (81.5%) due to redundancy costs, increase in billable Services staff costs (net headcount growth of 1%) and IPT project investments (including new payroll system and part implementation of CSP management platform) 18 70.0% 75.0% 80.0% 85.0% 90.0% 95.0% 100.0% 0 20 40 60 80 100 120 1H19 1H20 1H21 1H22 1H23 1H24 1H25 Internal expenses (Staff & Operating costs $M) Operating Staff ICR (%) 18 1H FY24 Staff costs & Opex Redundancy costs IPT Projects Billable Services staff costs General wage increases (6%) Depreciation Software licensing - billable & internal Other expenses (audit, insurance, etc.) 1H FY25 Staff costs & Opex Operating and staff cost increases 106.4 118.1 For personal use only
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19 IT Sector Trends For personal use only
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20 1. Source: Gartner Forecasts Australian IT Spending to Grow 8.7% in 2025 Driven by spend relating to GenAI adoption Communication Services 3.2% growth expected Devices 9.1% growth expected IT Industry Growth Spend on IT expected to grow 8.7% in 2025 Software 13.4% growth expected Data Centre 11.3% growth expected Biggest opportunity for hyper-scalers IT Services 7.2% growth expected Organisational efficiency 2025 Australian Technology Industry Trends1 For personal use only
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21 FY25 Strategy and Outlook 21 For personal use only
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22 Exceptional Performance Customer Success Remarkable People Innovative Solutions Operational Excellence Strategic Framework 22 For personal use only
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Multi-cloud Modern Data Centre Public Cloud Private Cloud Modern Workplace Collaboration End User Devices Printing Systems Management Security Cloud Security Data Security and Privacy Identity and Access Management Infrastructure and Endpoint Security Security Monitoring and Analytics Data & Analytics Business Analytics Customer Management Internet of Things Location-Based Analytics Connectivity IT-OT Networking Software-Defined Networks Software-Defined WAN Wireless Networks Consulting Project Services Managed Services Lifecycle Integrated Solutions embedded with AI 23 For personal use only
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The Opportunity 73%3 becoming a “truly sustainable and responsible business” is a top priority $500Bn1 in global AI-driven infrastructure by 2027 91%2 facing the challenge of building a multi-cloud strategy 24 1. IDC FutureScape report 2024 2. Innovation Catalysts, Dell Technologies, February 2024 3. Accenture analysis of executive and employee/consumer/citizen survey 2022 4. 2024 Cisco Cybersecurity Readiness Index 5. Data#3 vendor partners and customer surveys 73%4 expect a cyber security incident in next 12-24 months and only 4% are ready Millions5 Windows 10 end of Life, AI PC and refresh For personal use only
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Glencore Technology Business Problem • Legacy disparate systems • End of support • Time consuming data gathering and reporting IT Outcome • Modern and flexible cloud-based solution with Microsoft Dynamics 365 and power apps Business Outcome • Automated processes • Increased efficiency, less errors • Quality and timeliness of information The IT industry is evolving at such a pace that it’s hard to stay current on emerging trends and technologies, so having experts in this field and being able to get trusted advice is a wonderful part of the relationship with Data#3. Jo Hardie, Senior Business Analyst, Glencore Technology. For personal use only
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Microsoft Channel Incentives Cloud Solution Provider (CSP) Small Medium and Corporate With Scale and Automation Copilot Security Azure Migrations Vendor Partners For personal use only
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Our People Ability to attract and retain the best people Our Partners Partnerships with leading global vendors Our Expertise Expertise and breadth of solutions across the customer lifecycle Our Innovation At the forefront of industry change Our Agility Agility internally and externally to respond to changing market dynamics Our Financial Stability Financial stability with strong balance sheet Our Brand Market-leading brand and reputation Data#3 Competitive Advantages 27 For personal use only
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Long term customer relationships 28 • Number of aggregated customer groups by length of tenure over a 14-year period • Average spend has increased significantly over time • Over 300 customer groups with tenure of over 14 years a testament to Data#3’s customer service and value proposition $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 1200 1300 1400 1500 1600 1700 1800 1900 2000 No. of Customers Spend ('000) For personal use only
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29 Services Growth Accelerated by Generative AI. Continued interest in Managed Services Maintain Software Profitability Focus on CSP, Copilot, Azure and growth in vendor partners Security Multi-cloud and Device Growth Multi-cloud, Networking, and Devices Outlook For personal use only
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Our Services businesses continue to grow faster than the market with Security solutions leading the way. Data#3 is well placed to deliver sustainable growth in FY25. We have a growing market, pent up demand for devices, and increased interest in multi-cloud solutions and AI. Brad Colledge MD and CEO, Data#3 30 For personal use only
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31 Outlook Consistent with previous practice, we do not intend to provide specific FY25 guidance. In line with previous years, we continue to expect a sales peak in the months of May and June, and our goal remains to continue to deliver sustainable earnings growth for our shareholders. For personal use only
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32 Q&A For personal use only
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Disclaimer This presentation has been prepared by Data#3 Limited (“the Company”). It contains general background information about the Company’s activities current as at the date of the presentation. It is information given in summary form and does not purport to be complete. The distribution of this presentation in jurisdictions outside Australia may be restricted by law and you should observe any such restrictions. This presentation is not (and nothing in it should be construed as) an offer, invitation, solicitation or recommendation with respect to the subscription for, purchase or sale of any security in any jurisdiction, and neither this document nor anything in it shall form the basis of any contract or commitment. The presentation is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate. The Company has prepared this presentation based on information available to it, including information derived from publicly available sources that have not been independently verified. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, correctness or reliability of the information, opinions and conclusions expressed. Any statements or assumptions in this presentation as to future matters may prove to be incorrect and differences may be material. T o the maximum extent permitted by law, none of the Company, its directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising from fault or negligence on the part of any of them or any other person, for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it. 33 For personal use only
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data3.com 1300 23 28 23 Linkedin.com/company/data3 Twitter.com/data3limited Facebook.com/data3limited YouTube.com/data3limited data3.com 1300 23 28 23 Linkedin.com/company/data3 Twitter.com/data3limited Facebook.com/data3limited YouTube.com/data3limited For personal use only