Data #3 has growth locked for FY23

Australia | 11:43 am

Supply chain constraints did not hinder Data#3’s ability to deliver another record year, with the company describing the backlog related to the constraints as a timing issue that will benefit FY23.

-Data#3 delivered record result in FY22, despite multiple challenges
-Supply chain issues led to record delivery delays, but left a backlog of $6 million that is expected to benefit FY23
-Large backlog and contracted revenue provide investors with good near-term visibility

By Danielle Austin

The delivery of a record result by cloud computing and ICT solutions provider, Data#3 ((DTL)) proved the company’s ability to generate growth despite supply chain constraints that led to record delivery delays during the year.

The company posted 12% year-on-year growth in revenue and gross profit, 15% growth in earnings, and 19% growth in pre-tax earnings, earnings per share and dividends per share. Full-year cash flow was negative, impacted by supply chain constraints, but the company attributed this to a timing issue that will reverse in the first half of FY23.

Supply chain constraints resulted in a $6 million backlog that will carry over into the new year, with the company noting that while this impacted gross margins in FY22, it will benefit from it during the coming year.

Data#3 will enter the new fiscal year not only with a backlog of $6 million to fulfill, but also with 65% of its revenue targets already contracted for the year. This combination offers a solid starting financial position and a good level of visibility on the short-term outlook.

Broader industry feedback on demand resilience seems likely to support the continuation of major projects underway in the sector.

The market is positive on pipeline visibility and continued growth in the year ahead

Of FNArena’s database brokers, Ord Minnet, Morgans and Morgan Stanley were all updated following the release of Data#3 results. Two of these brokers are rated equivalent to buy and one equivalent to hold, and between them have an average target price of $6.94, ranging from $6.42 to the lower end at $7.50.

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