Data#3 (ASX: $DTL) reports 25% increase in net profit after tax for half year

Data#3 Limited (ASX: $DTL) has reported a 25% increase in net profit after tax (NPAT) for the half year ended 31 December 2023, reaching $21.4 million, up from $17.1 million in the previous corresponding period. The company's total statutory revenue increased by 11.1% to $450.1 million, and Gross Sales increased by 13.4% to $1.32 billion. Data#3's interim dividend has been increased by 26% to 12.60 cents per share, fully franked, payable on 28 March 2024.

Executive Commentary on Half Year Performance

The Australian Information Technology (IT) market has continued to experience solid growth, and Data#3 has continued to grow market share in a highly competitive market and inflationary economic environment. The company's performance continues to be underpinned by its leading market position, unrivalled supplier relationships, large, long-term customer base, and highly experienced and committed team. Despite some delays in customer decision making around larger projects in the first half of FY24 due to the current macroeconomic environment, Data#3 has seen increased tender activity which should support growing its pipeline. The company's long-term strategy with customers allows it to cross-sell higher margin services and solutions, resulting in higher customer profitability over a 3-to-5-year period. Approximately 67% of Data#3's Gross Sales is recurring, reflecting the increase in sales of As-a-Service and longer-term contracts with government and large corporate customers.

Summary of Half Year Results and Outlook

Data#3's half year results have shown a 25% increase in net profit after tax, with total statutory revenue increasing by 11.1% to $450.1 million and Gross Sales increasing by 13.4% to $1.32 billion. The company's performance has been underpinned by its leading market position, unrivalled supplier relationships, large, long-term customer base, and highly experienced and committed team. Data#3 is well positioned to capitalise on a growing market, particularly the opportunities for Software and Services. The company's long-term strategy with customers allows it to cross-sell higher margin services and solutions, resulting in higher customer profitability over a 3-to-5-year period. Data#3 is confident in its ability to continue to deliver on the company's long-term strategy, ensuring that it is well placed to contribute to and benefit from digital transformation and artificial intelligence trends over the next few years. The company expects a sales peak in the months of May and June and aims to continue to deliver sustainable earnings growth. Data#3 has declared a fully franked interim dividend of 12.60 cents per share payable on 28 March 2024, representing an increase of 26% on the previous corresponding period.