Dicker Data bets on end of Windows 7 support to increase hardware sales

Dicker Data bets on end of Windows 7 support to increase hardware sales

Half year profit grew by more than 50 per cent

Dicker Data CEO, David Dicker

Dicker Data CEO, David Dicker

Credit: Dicker Data

With hardware sales as its main revenue generator, Dicker Data expects to see further growth in device and PC sales in the next 12 months with Microsoft Windows 7 support ending in January 2020.  

This is expected to drive a major refresh cycle in all corporate and commercial devices moving to Windows 10 Operating System platform, the publicly-listed distributor told shareholders on 28 August.

Dicker Data's revenue for the half year ended 30 June was $852 million, of that $607 million came from the sale of hardware products. Software licensing, including cloud products, brought $176 million for the distributor, with the remaining revenue generators being sales of third-party warranties and services, third-party logistics and configuration services and agent commission, or partner services.

Net profit after tax experienced a 50.5 per cent increase, from $15.7 million in the first half of 2018 to $23.7 million in H1 2019.

During 2018 and the first half of 2019, Dicker Data added a total of 10 new vendors, which contributed an incremental $18.8 million in H1 2019. Of its pre-existing vendors it saw growth of $115.6 million or 16.2 per cent.  

Some of these vendors include Nutanix and Honeywell across Australia and New Zealand and Telesmart in New Zealand.

Australia revenue sales increased by $120.4 million, or more than 17 per cent and in New Zealand sales revenue grew by $14 million, more than 36 per cent.

According to the distributor, the key growth areas for the second half will be hybrid IT infrastructure, edge computing and as-a-service procurement.

"Managed services providers are the fastest growing partner segment and our vendors are capitalising on it. We are seeing strong adoption of multi-cloud environment: on-premise, private and public clouds are all experiencing strong double digit growth," the company explained.

Dicker Data expects to achieve previous guidance of $51.4 million in pre-tax operating profit for FY19, which is currently $32 million.

The company grew its headcount from 420 to 471, a six per cent increase to support new vendors. Dicker Data plans further investments in its headcount in the current half.

In 1 August, the distributor announced the sale of its distribution location in for $36 million as it makes way to build a bigger distribution facility next door.

In June it launched a new financial services division to help address the services market shift from IT procurement to as-a-service models. Called Dicker Data Financial Services (DDFS), it offers by-the-month payment solutions that can be tailored to suit partners and their customers' requirements, and will be led by the general manager of the division, Drew Ritchie. 

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