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Data#3 share price climbs higher after AGM update

The Data#3 Limited (ASX: DTL) share price has risen 3.50% to $3.55 in today’s trade so far, after yesterday’s trading update at the company’s AGM.

Profit expectations rise for Data#3 

The information technology services and solutions provider announced on Wednesday that it has made a strong start to FY20. The extent of that strength is still dependent on the realisation of opportunities through November and December.

Data#3 currently projects its first half pre-tax profit to be in the range of $11.0 million to $12.5 million. This would represent a substantial rise over the prior corresponding period when it reported $9.0 million in pre-tax profit.

Moreover, the guidance is particularly impressive when considering the business was cycling a strong result in the prior corresponding period. For the first half of FY19, Data#3 delivered revenue growth of 17.7% to $644.4 million and pre-tax profit soared 123.3% to $9.0 million. 

Data#3 will announce its first half result for FY20 and interim dividend on 19 February 2020. In addition, the company reaffirmed its intention to maintain its usual dividend practice. As a result, investors can expect the majority of earnings to be paid out as dividends with Data#3 paying out 91% of earnings in FY19. 

Building off a strong FY19

At the time of writing, shares in Data#3 have risen by 136% in 2019. The strong rise was underpinned by a record result in FY19 where Data#3 saw revenues grow 19.8% to $1.4 billion and pre-tax profit rise 30.2% to $26.6 million.

The top-line growth was attributed to solid revenue growth in the company’s core business and significant growth in public cloud-based revenues. Data#3 continues to benefit from digital transformation projects that are driving growth in its core infrastructure, software and services businesses. 

Other small cap technology companies that have enjoyed strong returns in 2019 include Alcidion Group Ltd (ASX: ALC)Audinate Group Ltd (ASX: AD8), Bigtincan Holdings Ltd (ASX: BTH) and Mach7 Technologies Ltd (ASX: M7T)

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Tim Katavic has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Alcidion Group Ltd and MACH7 FPO. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO and BIGTINCAN FPO. The Motley Fool Australia has recommended Alcidion Group Ltd and Data#3 Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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