Dicker Data posts strong FY result: revenue up around a quarter

Shares in Dicker Data Ltd (ASX: DDR) were trading up 2.7% at noon on Monday, after the group reported a 28.6% lift in FY21 net profit after tax (NPAT), to $73.5m, or 42.63 cents per share, which was below Morningstar’s estimate of 53 cents per share.

The Sydney-based hardware, software and cloud technology distributor, whose shares have doubled since January 2020, has benefited greatly from the coronavirus pandemic, as Australian companies moved more quickly to adopt digital IT and cloud computing services amidst lockdowns and disruptions to supply chains.

Result highlights

• The company declared its biggest-ever final dividend of 15 cents per share - in line with Morningstar estimates - bringing total FY21 distribution to 42 cents per share.

• That was a 27.3% jump on the total distribution of 33 cents per share in FY20.

• Total revenue jumped 24.2% to $2.48bn reflecting growth in existing business plus a near-doubling of revenue from the company’s NZ division after the acquisition of Kiwi competitor Exceed last year.

• Recurring software sales revenue grew 19.7%, to $520m, while gross margins fell slightly, to 9.3%, from 9.6% in FY20. Dicker attributed the drop in margins to the “market normalisation” that reduced pandemic-induced opportunities.

• Management advised that Exceed’s Australian business was largely complete, while the absorption of Exceed into Dicker Data’s NZ business would continue in 2022.

• The $68m acquisition, announced in July last year, gives Dicker greater scale and also provides expertise at retail distribution - an area not previously explored by the company.

Future Growth

The company highlighted plans to buy the physical security and IT division of ASX-listed Hills Ltd (ASX: HIL) for $20m.

The deal would bring nearly 2000 new customers, and 50 net new vendors from the physical security market, bringing synergies as that market converges with traditional IT services. 

“Physical security, such as security cameras, network video recorders (NVRs) and many more technologies, represent a significant untapped opportunity for the company,” Dicker Data noted. 

The company also said Australia’s digital transformation “has only just begun”.

The company expects software distribution to grow 25% in 2022, driven predominantly by hybrid cloud adoption among companies, and increased use of security, collaboration and productivity software solutions.

Management also expect the work-from-anywhere trend to “continue to drive demand for devices”.

Based on Morningstar’s fair value of $13.55, the stocks looks to be fairly valued.

Dicker Data share price performance: A one year snapshot