The Dicker Data Ltd (ASX: DDR) share price is soaring today, up 13.71% at $15.01.
Dicker Data shares popped as the wholesale hardware and software distributor released its Q3 trading update for the period ending 30 September 2021.
Here, we cover all of the salient points from the company's third-quarter performance.
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Dicker Data share price jumps on strong revenue and profit growth
- Total year to date revenue to September 2021 of $1.7 billion, a 16.1% year on year (YoY) increase
- Profit before income tax (PBIT) from January to September 2021 was $76.6 million, an increase of 26.0% YoY
- Excluding the contribution from Exeed Group, total revenue of $1.66 billion was still up 11.7% YoY while PBIT came in at $74.7 million, a 22.9% YoY gain.
What happened in Q3 for Dicker Data?
Despite Dicker reporting "supply constraints being experienced throughout the year", it still managed to deliver a fairly robust quarter of growth.
Total revenue from all sources came in 16% higher than the year prior at $1.7 billion for the year to date to September.
This carried through the income statement where PBIT grew 26% YoY to just over $76.5 million.
The company is adamant that although supply constraints will continue for the foreseeable future, its ability to "forecast and manage allocation of stock continues to strengthen" with each quarter.
Many of the supply issues Dicker alludes to is from a global chip shortage. Currently, the demand for integrated circuits – also known as semiconductor chips – is exceeding supply and production capacity.
According to analysis from investment banking giant Goldman Sachs, the global shortage has impacted more than 169 industries and led to major supply issues with a suite of products that require semiconductors. These include video games, computers, and automobiles.
Yet, despite the challenges, Dicker is "experiencing stock allocations across a large number of categories" in its end markets.
This, it claims, appears to be improving (or, at least, assisting) the overall health of the semiconductor supply chain.
The update also notes Dicker has a significant backlog of orders that it expects to fulfil in the last quarter of 2021.
The company also touched on its Exeed Group acquisition, completed in July 2021. It stated a significant amount of work had been undertaken to successfully integrate Exeed's Australian and New Zealand operations with its own.
As such, Dicker's year to date earnings figures reflect 2 months of Exeed Group contributions.
Taking this out of the equation, Dicker still recognised total revenue of $1.66 billion and PBIT of almost $75 million, up 11.7% and 23% respectively.
That means Exeed recorded sales of $65.2 million and almost $2 million net profit in the 2 months since the acquisition was completed from 30 July to 30 September.
What's next for Dicker Data?
Despite the global shortages, Dicker anticipates meeting the strong demand to fill its backlog of orders in the final quarter of 2021.
The company is also "identifying significant future opportunities within the technology sector" while also aiming to penetrate the cybersecurity market.
As such, Dicker is expecting high growth in the adoption of "automation, machine learning and data capture and analysis tools as business and governments prioritise efficiency and productivity".
The Dicker Data share price has been an outsized winner the last 12 months. It's posted a return of 53% after rallying 42% since January 1 this year.
