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Distribution Central revenue, profit up

By Heather Wright
Fri 23 Oct 2015
FYI, this story is more than a year old

Distribution Central has seen ‘every metric’ up for the last financial year, with the company clocking a 14% increase in revenue.

Nick Verykios, Distribution Central chief executive and managing director, says the company logged revenue of $314 million for the year ending June 30, 2015, up from $276 million a year ago.

While Verykios was unable to disclose exact figures as the results have yet to be formally released, he says gross profit and operating profit were up.

“Every metric was up, even though we invested profit was up,” Verykios says.

The New Zealand business contributed $21.7 million for the period, a 17% increase on the previous year.

The profit comes despite heavy investment by the company, with the introduction of the distributor’s CloudSelect Marketplace, and the DC Ibam technology which sits behind Distribution Central’s LEEP strategy.

“That investment was sound, it was strong,” Verykios says.

He says while the company can’t say its investment in those technologies has paid dividends in the latest financial results, ‘we will see the benefit of those investments this financial year’.

“They really only came in to play about the June timeframe, so we will realise the increase in those investments this financial year and beyond,” Verykios says.

He says the LEEP methodology, which helps resellers garner new business from their current customer base, is paying dividends for resellers.

“Where we are seeing a lot of growth in our reseller community is those who are involved in our LEEP strategy. Because the best lead is in front of you.

“And with digital transformation happening so fast, you already have the customer. You need to transform their infrastructure, their applications and the way they go about consuming technology. It’s right there.”

Verykios says three key areas contributed to the company’s growth: advanced security, storage infrastructure, and hyper-converged infrastructure.

Verykios says the security trend is strongest in Australia, while the hyper-converged infrastructure trend is even bigger in New Zealand.

“Advanced security – the whole Palo Alto thing – is going crazy for us,” he says.

Palo Alto is Distribution Central’s ‘fastest growing vendor, by far’, Verykios says.

The distributor is also seeing a resurgence in demand for F5 on the back of the vendor’s new security play, which has seen more focus on data center security and application awareness, delivery and security.

Verykios says while everyone talks about data security as an important part of a CIO or CTO’s considerations in any IT plan ‘even though they say that it tends to be something that only sparks investment when a whole bunch of stuff goes wrong’.

“Last year in particular was a year when a whole bunch of stuff went wrong, not only in terms of denial of service attacks, but all kinds of malware and ugly stuff that brought down big organisations.”

Verykios says that has spurred renewed interest in the likes of F5, with that interest strengthening in Q1 of this year.

“That’s not going to come off. What is coming off is anything that isn’t next generation security.”

Verykios says while security used to be built around the premise that you would get hit and needed to know what to do after the fact, next generation security is focused on prevention.

“The prevention side of security is so important today and that’s the part that is growing the security market – not the prevention and what to do after being hit, that’s dying away. It’s old school and it’s not where we want our resellers focused, because it’s not where they’re going to get revenue.”

Verykios says resellers are seeing ‘significant’ growth in any technology that is about prevention, from the end-point through to the data center.

On the storage front, Verykios says Distribution Central is seeing growth in Pure and NetApp as the world moves to flash.

“The pipeline suggests that’s just going to keep growing,” he says, citing the reducing cost of flash and sophisticated management layers making flash ‘a better storage solution’ as reasons for the growth.

However, it is the hyper-converged infrastructure space that Verykios deems ‘the big one for us’, with SimpliVity the distributor’s fastest growing infrastructure vendor.

Verykios says despite the hype around cloud, most data centers are still staying on-premise and instead being moved to hyper-converged infrastructure.

He says that’s spurring growth in both single vendor offerings, such as SimpliVity, and multi-vendor reference architectures, such as FlexPod, which ‘is one solution but multiple products’.

“We’re seeing our resellers taking the basic reference architecture and turning it into something the customer needs,” Verykios says.

“The channel opportunity is huge for hyper-converged infrastructure, and the really smart resellers are making loads of professional services revenues off that, because it is not trivial and it’s not simple.

“And that’s not because it’s hard, it’s because it needs to be customised every single time. That’s where we’re getting good growth from.”

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