Small Caps | Aug 23 2022
Supply chain constraints have not hampered Data#3's ability to deliver another record year, with the company describing constraint-driven backlog as a timing issue that will benefit FY23.
-Data#3 delivered a record result in FY22, despite multiple challenges
-Supply chain issues drove record delivery delays, but left $6m backlog that should benefit FY23
-Sizeable backlog and revenue under contract provides investors with good near-term visibility
By Danielle Austin
Delivery of a record result by cloud computing and ICT solutions provider, Data#3 ((DTL)) has proven the company's ability to deliver growth despite supply chain constraints that drove record delivery delays in the year.
The company reported 12% year-on-year growth to both revenue and gross profits, 15% growth to earnings, and 19% growth to profit before tax, 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 caused a $6m backlog of work that will be carried over into the new year, with the company noting while this did impact on gross margins in FY22, it will see the company benefit in the coming year.
Data#3 will enter the new financial year not only with the $6m backlog to be realised, but also with 65% of its revenue targets already under contract for the year. This combination provides a strong financial starting position, and with a good level of visibility over the near-term outlook.
Broader industry commentary around demand resilience looks likely to support a continuation of large project pipelines across the sector.
Market positive on pipeline visibility and further growth in the coming year
Of FNArena's database brokers, Ord Minnet, Morgans and Morgan Stanley have all updated following the release of Data#3's results. Two of these brokers are Buy equivalent rated, and one Hold equivalent rated, and between them have an average target price of $6.94, ranging from $6.42 at the lower end to $7.50.