Dicker Data grows 19% in Q3 2022, with AU$775.5 million

Dicker Data has announced the company's Q3 2022 earning result and operational trading update for the quarter ended 30 September 2022. Unaudited revenue in Q3 2022 was finalised at AU$775.5 million, representing an increase of AU$124 million, or a 19% increase on the previous comparative period. 

Summary of results and highlights for the 9 months ended September 30 and Q3 2022 include strong revenue growth year to date, with unaudited revenue finalising at approximately AU$2,234.9 million, an increase of 29.9% on the corresponding prior period.

Australia delivered 82.0% of YTD (year-to-date) revenue, with New Zealand delivering the remaining 18.0%. 

The company said it is pleased with its profit performance in Q3 2022, particularly when factoring in the higher-than-normal growth experienced in Q3 2021, with profit growth for that quarter at over 63% and year to date at over 26%.

Increased revenue growth was attributable to a surge in demand for existing lines of business and the company reaping the benefits of expanded, and new, exclusive vendor partnerships.

YTD gross profit margin finalised at 9.0%, in line with guidance. While the YTD EBITDA for the nine months was finalised at AU$92 million, an increase of 8.9%.

Overall profitability has been impacted by costs associated with rising interest rates, freight costs and increased depreciation and amortisation as a result of recent acquisitions. Moreover, salary costs increased in the prior corresponding period but have remained stable at 4.8% of revenue.

"A very pleasing increase in sales year on year. While profit didn't do as well, remaining flat, but that in comparison to with what was a very big previous year. Almost feels like a gain. With all the increases in costs, and other factors navigated, we have a very good platform for the future," says David Dicker, Chairman and CEO, Dicker Data. 

The Q3 2022 results include the first full quarter contribution from the creation of Dicker Data Access and Surveillance (DAS) which is now fully integrated and focused on business development.

The company reported it has returned the acquired portfolio to growth four months after taking ownership and control of the operations. 

Revenue, profitability and active customer count are on a positive trajectory with the DAS division now focused on business development and growth. 

The consolidation of the DAS distribution centre into the Company's Kurnell headquarters is underway, as is the expansion and refitting of the national DAS branch network. The branch works are expected to be completed in calendar Q1 2023, providing the division with the platform to deliver on its growth ambitions in FY 2023.

The Company's flagship roadshow event, TechX, was completed in August, September and October 2022. 

Visiting Sydney, Melbourne, Brisbane, Perth and Auckland, TechX provided the company with an opportunity to showcase its technology portfolio and speak directly to thousands of Dicker Data's partners. 

Reaching record audiences across most cities in Australia and New Zealand, TechX was sponsored by over 60 of the world's leading technology vendors. 

In line with the Company's growth ambitions, the New Zealand event was particularly strategic, as it provided Dicker Data with a platform to present its consolidated offering following the local acquisition and integration efforts. 

TechX generated a large number of leads for the Company, with deals already closing as a result of the roadshow.

Dicker Data New Zealand is now fully operational from its CBD office and separate distribution facility. 

The new distribution facility has enabled the Company to benefit from scale and provides significant scope for future growth opportunities in the local market. 

Dicker Data is exploring opportunities in adjacent technologies, such as distributing the technology associated with harvesting solar power, in New Zealand. Initial sales are encouraging, with the electrical wholesale market in New Zealand converging with IT, like Australia.

Access to stock continues to impede closed revenue across Australia and New Zealand, with backorders now in the vicinity of AU$390 million. However, the market is showing continual signs of improvement. 

The company expects the supply constraints experienced over the last two years to ease by the third quarter of 2023. 

Despite the supply challenges, demand for technology remains strong across both Australia and New Zealand. 

The breadth of technologies and solutions represented by the company has enabled it to effectively navigate the challenging market dynamics. Its approach to managing customer expectations has proven superior throughout the last two years, leading to positive outcomes for all stakeholders.

Cybersecurity continues to be an area of growth for Dicker Data, particularly following the high-profile attacks on Australian companies in recent months. 

The proliferation of breaches and their impact on consumer confidence is driving awareness of the need for comprehensive cybersecurity solutions and the company is well-positioned to assist its vast partner network to scope, design and deploy the technologies needed to keep Australians, and Australian businesses, secure.

The Company's outlook for Q4 2022 is buoyant, with demand across the technologies represented remaining strong. 

Increasing complexity is driving more opportunity for the company's partner community and is further entrenching the company as a technology enabler, providing trusted advice, technical know-how and solution-building capabilities. 

Hybrid cloud has become the clear model of choice for most ANZ businesses which aligns well with the company's cloud strategy and technology portfolio.

Dicker Data recently announced its successful capital raising, providing balance sheet flexibility and funding the construction and fit-out of a new warehouse expansion at the company's headquarters in Kurnell, New South Wales. 

A builder has now been appointed and construction is slated to commence in December 2022 and be completed by the end of June 2023. The build cost has been confirmed at AU$12 million, and with the site preparation and fits, total warehouse expansion could cost up to AU$15 million, which is below the initially anticipated amount. Surplus funds from the capital raise will be used to increase balance sheet flexibility and to support the company's long-term growth objectives.