Publicly listed distributor Dicker Data has cracked A$2 billion in annual revenue for the first time, despite a year of challenges thrown up by the COVID-19 pandemic.
The new milestone does not come as a major surprise. As reported by ARN in October last year, Dicker Data CEO and chairman David Dicker had planned to push the company towards a record A$2 billion revenue this year despite planning only one year ahead.
With the company reporting half-year revenues of A$1.0061 billion for the six months ending June last year, the goal of a $2 billion annual revenue run rate appeared to be well within the realm of possibility.
Regardless, the new revenue record for the 12 months ending 31 December 2020, which hovered a touch above the A$2 billion mark, represented a rise of 12.8 per cent, year-on-year.
Specifically, the Australia-headquartered company’s revenue from sales of goods and services, excluding other revenue, was A$1,998.8 million, up by A$240.3 million, representing an increase of 13.7 per cent.
The company saw incremental revenue growth of A$9.8 million from eight new vendors added to its portfolio during the period, while its existing vendor business grew A$230.5 million, up 13.1 per cent.
At a country level, Dicker Data’s Australian business grew revenue by A$211.8 million, or 12.9 per cent, and its New Zealand business grew by A$27.0 million, roughly 23.3 per cent.
Net operating profit before tax, meanwhile, increased by 27.7 per cent, year-on-year, to A$81.9 million, and gross profit for the reporting period was up 20.8 per cent at A$191.4 million.
In the company’s annual financials, released on 25 February, Dicker Data CFO Mary Stojcevski told shareholders that at a sector level, it maintained strong growth across all business units, with hardware and support sales up by 12.9 per cent, or by A$170.3 million, software sales up by A$66.8 million, equating to 15.6 per cent and the services business unit up A$3.1 million, 38.7 per cent.
“Within our software business the strongest growth came from our recurring revenue products, increasing to A$434.9 million (2019: A$366.5 million) or 18.7 per cent,” Stojcevski said.
Overall, gross profit for the year was up by 20.8 per cent, at A$191.4 million, while gross profit margins improved markedly in the year at 9.6 per cent, driven by increased focus on the mid-market and small- to medium-sized business (SMB) segments.
Operating costs for the reporting period were A$101.0 million, increasing as a proportion to revenue at 5.1 per cent, with the company attributing much of this to an increase in salary related expenses.
Indeed, strong performance-based remuneration packages increased salary costs, driven by strong revenue and operating profit growth, while headcount across the group finished at 525 people, an increase of 8.2 per cent.
The company told shareholders that although the COVID-19 pandemic posed extraordinary global health, business, and economic challenges in 2020, the business to date had proven resilient to local and global economic impacts, with the priority for Dicker Data over the last 12 months to ensure continuity of services to reseller partners and retain its role as a reliable partner to its vendors.
“Our FY20 result represents over 42 years of experience and a significant growth trajectory,” Dicker told shareholders. “Since being listed on the ASX [Australian Securities Exchange] on 24 January 2011 at an initial market cap of A$25 million, today shares have recently traded around A$12 with a market cap of just under A$2 billion.
“The commitment of our people and the focus of the company over the last twelve months has demonstrated the flexibility of our business. We continue to excel in a challenging environment and deliver a service to our vendors and reseller partner community that they value and is unmatched in the local market,” he added.
The company pointed to its ability to quickly adapt to remote working conditions and mobilise warehouse staff as one of the reasons it was able to maintain business continuity amid COVID-19 and maintain profitability and growth.
And while the company conceded that there continues to be uncertainty in the economy and SMB market, the IT hardware and software in which it trades, as well as the internet, will continue to be business critical services for a remote and digital workforce.
Dicker Data’s confidence in the market and its place in it, despite the challenges, can be seen in the company’s decision to plough ahead with major capital projects during the year, including the construction of its new distribution centre in Kurnell, which was completed at the end of 2020.
The new Dicker Data headquarters and distribution centre comprises a 22,965 sqm warehouse and office, and amenities space of 5,960 sqm, representing almost 80 per cent increase in warehouse capacity.
Moreover, an additional 18,620 sqm has been approved by development application as part of a second stage opportunity for future expansion options.
The large-scale expansion will pave the way for substantial inventory growth and technology portfolio diversification to meet emerging and evolving needs of the Australian market, the company said.
Looking ahead, Dicker Data told shareholders that 2021 presents significant opportunity for the technology sector, with digital transformation accelerating, businesses becoming digital natives and the evolving hybrid workforce driving the need for smarter, faster and collaborative technology solutions.
Specifically, the company sees 5G connectivity as likely to play a major role across the government, enterprise, and education sectors, as well as communities and individuals, as people and businesses become increasingly attuned to a connect-from-anywhere environment.
Recurring revenue models, cyber security and automation are also becoming increasingly important, the company noted.
“We are seeing everything-as-a-service (XaaS) gain commercial confidence in the adoption of technology via subscription models, an area that supported many businesses throughout the pandemic as they scaled their subscription commitments to meet the changing needs of their business,” the company told shareholders.
“There is no doubt cybersecurity will continue to be a key focus for all sectors in 2021, with intelligent solutions like Zero Trust enabling secure, compliant, and protected technology environments. We saw an unprecedented spike in demand for devices throughout 2020 and expect this to continue this year.
“We are anticipating a high level of growth in automation, machine learning and data capture and analysis tools as businesses and governments prioritise efficiency and productivity within their operations," it said.