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Data#3 share price on watch as record results expected

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The Data#3 Limited (ASX: DTL) share price is on watch this morning after the technology company reported it expects another record full year result. Data#3 advised that consolidated net profit before tax for FY20 is expected to be approximately $34 million, up from $26.6 million in FY19. 

What does Data#3 do? 

Data#3 delivers technology solutions spanning cloud, mobility, security, data and analytics, and IT life cycle management. It offers services across consulting, procurement, projects, resourcing, and managed services. Headquartered in Brisbane, the company has facilities across 12 locations in Australia and Fiji. Now the largest enterprise software supplier in the Asia Pacific, Data#3 targets enterprise and government customers. 

How has Data#3 been performing? 

In 1HFY20, Data#3’s sales revenue increased 11.6% to $718.9 million with gross profit up 7.7% to $88.6 million. Sustained revenue growth was boosted by digital transformation projects and cloud-based solutions. Total revenue included $251.9 million in public cloud revenues, a 76.5% increase on the prior corresponding period. 

Net profit after tax increased 41.5% to $8.7 million in the first half of FY20. This led to a 41.5% increase in earnings per share, which reached 5.65 cents. The board declared an interim dividend of 5.1 cents per share, an increase of 41.7% on the prior corresponding period. This represented a payout ratio of 90.3%. 

Data#3 has seen sustained earnings growth since FY18, with NPAT increasing from $2.7 million in 1H FY18 to $8.7 million in the most recent half. Over the same period, the interim dividend has increased from 1.6 cents per share to 5.1 cents. The company reports it has a strong balance sheet with no material borrowings. 

What’s next for the Data#3 share price?

Today, Data#3 announced it is expecting a record full year result, with consolidated net profit before tax expected to grow 28% to $34 million. A solid pipeline of integration projects across hardware, software, and services contributed to the result. Data#3 sees strong growth in the Australian IT market, with digital technologies leading business transformation in both commercial and public sectors. The company believes it is well positioned to capitalise on these opportunities. 

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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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Kate O'Brien