The Dicker Data Ltd (ASX: DDR) share price has been amongst the best performers on the All Ords on Thursday.
This morning the shares of the distributor of information technology products stormed over 9% higher to $7.60.
Why did Dicker Data's shares storm higher?
Investors have been scrambling to buy Dicker Data's shares today after it provided an update on its third quarter performance.
According to the release, Dicker Data's revenue for the first three quarters of FY 2019 came in at $1,289.1 million. This was a 17.8% increase on the same period last year.
Management attributed this top line growth to the strong performance across all its vendor partnerships and the realisation of full value for new vendors.
It notes that there has been a particularly strong increase in its subscription revenue year to date. This area of the business is tracking well ahead of the revenue growth experienced in the other segments.
Dicker Data's profits have been growing at an even quicker rate. The release explains that its operating profit before tax for the nine months increased by 38.6% on the prior corresponding period to $47.4 million. This excludes the realised profit of just over $12 million on the sale of property in August.
Whilst this is an impressive level of growth, it is a slowdown on what it achieved in the first half.
Management advised that this is due to a rise in costs relating to an increased headcount investment. This is expected to continue into the fourth quarter in order to support new vendor additions and future growth. Year to date, the company's net profit margin stood at 3.7%.
Based on its performance during the first three quarters, management appears confident it will smash its full year guidance.
Dicker Data's guidance was for operating profit before tax of $51.4 million. However, it now expects its full year operating profit before tax to be over $60 million. In light of this, I can't say I'm surprised to see its shares storm higher today.
