Interim dividend up 32%: Data#3 (ASX:DTL) share price edges higher on ‘strong first half performance’

Data#3 just dropped it first-half results for FY22…

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Key points

  • Data#3 shares push 0.92% higher on back of robust H1 FY22 performance
  • The company achieved double-digit growth across all key metrics
  • Fully franked interim dividend of 7.25 cents per share, representing a payout ratio of 90.5%

The Data#3 Limited (ASX: DTL) share price is edging higher on Thursday. This comes after the company released its half-year results for the 2022 financial year.

At the time of writing, the business technology solutions company’s shares are fetching for $5.47, up 0.92%.

Data#3 share price advances on half-year result

The Data#3 share price is in the green today after the company delivered its result for the six months ending 31 December 2021. Here are some of the key highlights:

  • Revenue of $999.3 million, up 16% (H1 FY21 $856.74 million)
  • Earnings before interest, tax, depreciation and amortisation (EBITA) of $19.11 million, up 35% (H1 FY21 $14.06 million)
  • Net profit after tax (NPAT) of $12.35 million, up 31.7% (H1 FY21 $9.38 million)
  • Earnings Per Share (EPS) of 8.01 cents, up 31.5% (H1 FY21 6.09 per share)
  • Fully franked interim dividend of 7.25 cents per share, up 31.8% (H1 FY21 5.50 cents).

What happened in FY22 for Data#3?

Data#3 highlighted that the growing demand for its solutions led to strong revenue and earnings growth. This included a surge in public cloud revenues, up 34.8% to $466.7 million, as major organisations and government departments transferred to a cloud-based infrastructure.

Recurring revenues grew to reach approximately 65% of total revenue, up from 62% in the previous corresponding period. Contracts with government and large corporate customers attributed to the positive result.

The consolidated net profit before tax (NPBT) increased by 33% to $18.5 million, slightly ahead of the guidance provided on 18 January 2022.

While the FY21 backlog caused by the global shortage of computer chips and integrated circuits provided a fast start to FY22, the group experienced a similar backlog at the end of December.

Data#3 advised that it has adapted to the continued supply chain shortages and delays, with early ordering and contingency planning now being widely adopted.

What did management say?

Data#3 CEO and managing director, Laurence Baynham touched on the result, saying:

We are very pleased with the strong first half performance, which reflects solid contributions from each of our business units and regions. This was underpinned by diligent execution of our strategy as we grew our software and services businesses and recurring revenue base.

We maintained strong levels of service to our large, long-term customer base while further strengthening key supplier relationships through our highly experienced and committed team.

What’s the outlook for Data#3?

Looking ahead, Data#3 revealed that it’s well-positioned to capitalise on large-scale digital transformation projects, particularly in software and services.

While the Australian IT market is predicted to grow at a record rate in 2022, the company will seek to expand its services businesses.

The ongoing supply constraints caused by the global shortage of computer chips and integrated circuits is expected to run into FY23. However, the industry has adapted to these longer lead times, thereby minimising the impact.

Data#3 stated that while the robust performance is continuing in the second-half, no guidance could be given for FY22. This is due to pandemic-related uncertainties which remain.

Nonetheless, the company did note that it is forecasting a sales peak in May and June, and a higher profit skew in the second half.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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