As supply chain challenges ease, companies are finally being able to return to profitability. Tech distributor Dicker Data (ASX: DDR) is among them. In H1 2023, the Company reported strong revenue growth with unaudited revenue locking in at $1.6 billion, an increase of 9.4% on H1 CY22.
The rise in revenue can be partially credited to the six-month impact of the $19.35 million Hills acquisition, finalised on 1 May 2022. The remaining portion of the increase is due to the organic growth stemming from both existing and newly added vendors.
After nearly three years of persistent supply chain disruption and chip shortages, the first half of 2023 showed the most promising signs of a returning to a more stable supply-side market. Owing to improved supply, outstanding backorders decreased, contributing to the overall revenue uptick. However, it’s worth noting that the total value of open backorders is still significantly above $200 million.
Dicker Data is an Australian company that has been providing technology hardware, software, cloud services, cybersecurity, access control, and surveillance solutions for over forty years.
The Company’s diversity in its business offerings proved beneficial during a period of declining demand for personal computing devices. It capitalised on the rising demand for networking and storage products and saw positive developments in the access and surveillance segment.
During the first half of the year, its DAS (Dicker Data Access and Surveillance) business segment made a revenue contribution of $73 million, mainly due to the addition of new vendors in this area.
The Company’s more than 10,200 partners across ANZ (Australia and New Zealand) have shown consistent demand, but specific technology segments, like devices, have been affected by businesses and governments adopting accelerated technology refresh cycles to facilitate hybrid work. Nonetheless, Dicker Data’s diverse range of technologies allowed it to balance the decline in certain segments with growth in others, such as networking, data centre infrastructure, and software. Particularly, the software segment exceeded expectations, achieving a 21% growth in the given period.
The gross profit for the completed half year stood at 9.4%, showing a significant increase compared to the same period last year, which was 8.8%. Thanks to the robust gross profit contribution, the EBITDA experienced a growth of 16.4%, reaching a final figure of $71 million. Furthermore, the profit before tax concluded at $54 million, marking an 8.0% increase compared to the previous period.
Dicker Data expects to keep this momentum for the rest of 2023. Cybersecurity remains a top priority across all sectors. Intelligent solutions, like Zero Trust (a security framework) and SASE (secure access service edge tech), are being widely embraced to establish secure and compliant technology environments. The rise in cyber-attacks, fueled by increased reliance on technology, has led to a greater demand for modern cybersecurity solutions, like Dicker Data’s DAS.
Plus, overall, as tech advances, companies are looking to up their adoption of automation, machine learning, and data analysis tools in a bid to prioritise efficiency and productivity in their operations. And as supply chain pressures ease, Dicker Data hopes to be at the forefront of these upgrades.
Alinda is a Business Reporter for The Sentiment
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