The Dicker Data Ltd (ASX: DDR) share price is out of form on Monday after weakness in the tech sector offset the release of a strong half-year update.
In afternoon trade, the technology distributor's shares are down 7% to $12.13.
Image source: Getty Images
Dicker Data share price lower despite strong growth
- Revenue up 36% to $1,459 million
- EBITDA up 20% to $61 million
- Operating profit before tax up 11% to a record of $51 million excluding acquisition costs
What happened during the half?
For the six months ended 30 June, Dicker Data delivered a 36% increase in unaudited revenue to $1,459 million. This was driven by a combination of organic growth from existing and new vendors and a full six-month contribution from the Exeed acquisition.
The latter completed on 6 August 2021, which means it was not part of the business during the prior corresponding period. For the half, Exeed contributed $192 million of the $390 million increase in revenue.
In addition, the first half result includes a two-month contribution from the Dicker Data Access and Surveillance (DAS) business following the acquisition of the Hills Security and IT (SIT) division. It generated revenue of $18 million during those two months.
Excluding the acquisitions, Dicker Data's revenue would have still been up a very strong 17% over the prior corresponding period. This reflects robust demand for its offering due to the continued digital transformation of the corporate, commercial and Government sectors in Australia and New Zealand.
Softer but in line margins
Management notes that its gross margin softened year on year to 8.8% for the first half. This is in line with expectations and reflects supply chain disruptions, the introduction of the Exeed retail business, and increased freight costs.
Management continues to expect gross margins of approximately 9% for the full year ending 31 December 2022.
Outlook
While no sales or earnings guidance has been provided for the full year, management spoke positively about demand. It commented:
Demand remains strong across the Company's product portfolio highlighting IT distribution's essential role in enabling access to technology and the appetite of the local market for technology services and products. This trend shows no signs of slowing as the digital transformation continues. Advanced solutions, such as infrastructure, networking, security and software have returned high levels of growth as business confidence also edges higher. Demand for end-user computing and devices has normalised, while the Company's Professional AV division continues to grow above expectations.
And while Dicker Data is not immune to supply chain headwinds, it is managing them well. It explained:
Stock and logistical challenges remain constant and are forecast to continue into 2023. However, the Company is fulfilling more orders and shipping more stock than in previous years, demonstrating a significant shift from supply-driven constraints to demand outstripping supply. The Company has a wealth of knowledge in managing these challenges and is proactively working with its customers to manage expectations and reduce the impact of the supply chain on their businesses.
Dicker Data's audited results will be released towards the end of August.
