Public cloud brings further growth to Data#3

Public cloud brings further growth to Data#3

Focus on Microsoft Azure, Office 365 and Dynamics offers

Laurence Baynham (Data#3)

Laurence Baynham (Data#3)

Credit: Maria Stefina

Publicly-listed IT solutions provider Data#3 has seen significant growth in its public cloud-based services helping the company close financial 2019 with $1.4 billion in revenue.

The results represent a 19.8 per cent increase compared to the previous reporting year when the company's revenue was $1.2 billion.

Net profit after tax (NPAT) saw a 28.7 per cent increase, posting a total $18.1 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) were $28.3 million, or a 25.8 per cent.

Data#3 managing director and CEO Laurence Baynham told ARN that the business is pleased that public cloud services continue to grow at a rapid rate and "a lot faster than the overall market."

"Last year our public cloud business grew 35 per cent to $363 million. The bulk of that is because we are Microsoft's largest partner in the country and in the region, and one of the largest partners globally," he said.

Baynham added that Data#3 works closely with the vendor and the majority of its public cloud growth is through Azure, Office 365 and the Dynamics products.

Specifically, public cloud revenues increased by 35.3 per cent to $362.2 million. In FY18, Data#3 embarked on a project to decommission the Data#3 Cloud platform, which was completed in the first half of FY19.

This temporarily reduced managed services revenue and profit contribution in both FY18 and FY19 as it gradually transitioned to a new, public cloud-based offering.

"Going right back, we built our own cloud because there wasn't a public cloud available, because Microsoft or Amazon didn’t have an offering at the time," Baynham told ARN.

"This is seven, eight years ago and since that time and in the last two to three years we made a decision to focus on the public cloud with Microsoft in particular and decommissioned our cloud which is now fully decommissioned. Our cloud offerings are either public cloud or assisting our customers build their own private cloud, which is also growing at a rapid rate."

Meanwhile, product revenue went up 21.3 per cent to $1.67 billion and services revenue up 13.3 per cent to $246.9 million.

Business Aspect revenues were also up 5.2 per cent to $26.5 million. Earlier in August it was revealed that WaterNSW had selected the Data#3 business to replace its legacy systems with Microsoft Azure, Dynamics 365 and Office 365.

Data#3 acquired Business Aspect in 2014 for $6 million.

The company has grown its number of staff by approximately 100 people, going from 1,100 to more than 1,200 at the year ended 30 June 2019.

"As we grow in the markets which we operate there will be some growth in our headcount numbers. It's not necessarily dramatic growth as well because the overall growth of the business in the last year has outstripped the headcount growth but of course as we are more successful in various parts of our business we'll bring on board skilled people.

"That is something we'll be actively encouraging and will be the plan going forward for next year as well," Baynham added.

The directors declared a final fully franked dividend of 7.10 cents per share, bringing the total dividend for FY19 to 10.70 cents per share fully franked. This represents an increase of 30.5 per cent and a payout ratio of 91 per cent.

"We see ongoing growth in the Australian IT market, and believe we remain well positioned to capitalise on those opportunities," Baynham said. "We will continue to build on our strengths and enhance shareholder value. Our overall financial goal remains to deliver sustainable earnings growth."


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Tags MicrosoftData#3FY19

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