Publicly-listed Dicker Data has reported a significant start to its financial year with post-tax profit up by nearly a quarter despite the ongoing coronavirus pandemic.
For the last six months to 30 June, Dicker Data recorded a net profit after tax (NPAT) increase of 23.6 per cent, up to A$29.4 million, over the corresponding period last year.
David Dicker, chairman and CEO, said in a statement to the Australian Securities Exchange (ASX) that the distributor “has proved resilient to the negative economic impact of COVID-19”.
“One of Dicker Data’s key priorities over the last few months has been to ensure continuity of service to our customers and be a reliable partner to our suppliers amid the global pandemic,” he said.
“With the recent surge in remote work, the company experienced a surge in demand for remote and virtual working solutions across our hardware and software portfolios, highlighting IT distribution’s essential role in enabling business continuity.”
The distributor also said that it is in a position to absorb any potential losses if COVID-19 causes greater economic downfalls.
However, because of the pandemic, financial guidance for the full year wasn’t given, with the distributor citing the uncertainty around the future economic impacts.
It also reaffirmed its revenue reached A$1.0061 billion, an increase of 18.1 per cent, which was last announced in its unaudited results in July.
Part of this revenue growth was attributed to the remote working boom with a surge in demand for virtual solutions and an uptake in digital transformation projects.
During the six month period, 10 vendors were added to the distributor’s portfolio, including Veeam, Heimdal Security, Five Faces and Cohesity. This vendor increase keeps Dicker Data in line with its vendor additions seen this time last year.
The average headcount also increased by 11.8 per cent, up to 504, with the rise attributed to the vendor increase.
Breaking down Dicker Data’s revenue growth by region, Australia’s sales revenue increased by 17.2 per cent, to A$137.3 million.
Meanwhile, its New Zealand business saw total revenue up by 31.7 per cent, to NZ$72.9 million and pre-tax earnings (EBITDA) up by 66.7 per cent, to NZ$1.5 million. Overall, its New Zealand NPAT was up by nearly double at 92.3 per cent, to NZ$800,000.
At a business segment level for the group, software sales were the standout for growth percentage-wise, increasing by 43.6 per cent, to A$253.4 million, with 53.1 per cent of its overall sales, at A$224 million, being recurring.
Following this was service revenue at 38.7 per cent, to A$5.6 million and then hardware and virtual sales at 11.4 per cent, at A$746.6 million.
It also provided an update on its financial services arm, Dicker Data Financial Services, claiming it has supported its business with A$13 million in originations over 87 transactions to date. The bulk of this is PC devices at 40 per cent, followed by server and storage at 24 per cent and networking at 18 per cent.
Looking to the next six months, Dicker added that demand continues to be strong for the distributor, with the greatest opportunity for the next six to 12 months being supporting businesses with return to work strategies.
Past this to the next 12 to 24 months, the one of the priority shifts for Dicker Data will be towards 5G-powered solutions.
“The rollout of 5G connectivity is going to have a revolutionary effect within our industry driving the explosion of data and strong acceleration of AI and machine learning technologies,” Dicker said.
Also a year from now, the distributor also sees “tremendous opportunity” with its hardware and software vendors, as well as continuing to support both customers and strengthen relationships with vendors.
“The company will continue to evolve to differentiate its offerings and value proposition to both vendors and reseller partners. Dicker Data is well positioned to assist all partners through this ongoing wave of digital transformation,” the CEO said.
Another factor driving Dicker Data’s growth is the construction of its new distribution centre, which is estimated to be completed by the end of the year.
“The new distribution centre represents an increase in capacity of almost 80 percent and there is a further 20,000 sqm warehouse space approved as part of the Development Application to be built as part of a second stage providing future expansion options,” Dicker added.