Solid growth for Dicker Data business, but restructure ahead for NZ

Dicker Data has posted solid revenue growth of 7.1% for the first six months of 2017, as it looks to software-as-a-service and infrastructure-as-a-service and specialisation in key areas to drive continued growth.

The distributor has reported revenue of $632.5 million for the six months to 30 June, 2017, up from $590.3 million for the same period last year with net profit after tax of $13.0 million, up 3.3%.

Nine new vendors onboarded during FY17 have contributed $17.2 million of revenue, with existing vendors recording 9.4% growth on the previous corresponding period.

Software was a big growth area for the company, clocking 21.1% growth, or $23 million increase. Hardware sales were up $19 million, or 4%, while services climbed $700,000 or 25.5%.

The Australian business posted growth of 7.7%, well ahead of New Zealand's 3.3% growth, with Dicker Data warning that it expects flat revenue for New Zealand for the rest of the year, after the distributor lost Cisco as a vendor.

That loss, which happened earlier this month when Cisco dropped both Dicker Data New Zealand and Ingram Micro New Zealand, opting for an exclusive distributor in Westcon-Comstor for the Kiwi market, will see Dicker Data restructure its New Zealand business.

"We remain committed to the New Zealand market, but to ensure the viability of the business, we will be restructuring so that the cost structure is appropriate to the adjusted level of expected revenue from the remaining vendors, whilst aggressively looking to fill the revenue void with potential new vendor targets," the company says.

Despite the loss, Dicker Data says it expects to achieve its previous guidance of $40.0 million in pre-tax operating profit for the full year.

"We strongly believe that hybrid IT will continue to dominate consumption and the way our partners consume technology will continue to change.

"Our partners need help in navigating an increasingly complex market and Dicker Data's expertise as a trusted advisor will become increasingly critical and demanding," the distributor says.

It says recurring revenue streams with SaaS and IaaS will continue to be a focus, with technical expetise and specialisation in areas including cloud computing, IoT, big data management and data center and hyperconverged infrastructures becoming more critical to provide true value added services for partners.

"Dicker Data will continue to invest in deep technical expertise in these areas in H217 and FY18," the company says.

Dicker Data says it also plans to lodge a development application for a new Sydney distribution centre in Kurnell by the end of this year.