The Data#3 Limited (ASX: DTL) share price is sliding today after the market reacted negatively to the technology company’s first-half FY21 financial results.
Data#3 is a Queensland-based software company, helping enterprises with most facets of their technology stack, implementations, IT needs and security. It’s an IT services business which was founded in 1977 and listed on the ASX 20 years later, in 1997.
What did Data#3 report?
Data#3 delivered solid top-line growth in the first half, with total revenue rising 19.2% on the prior comparable period (pcp) to $856.7 million. This included $346.1 million of public cloud-based revenues, which grew by 37.4%.
Around 62% of revenue was recurring, derived from contracts with government and large corporate customers.
Management believes this result demonstrates the inherent strength and relevance of its solution offerings in an evolving market.
Net profit after tax (excluding minority interests) increased 7.9% to $9.4 million. Earnings per share (EPS) lifted similarly by 7.9% on the pcp to 6.09 cents per share.
Within today’s announcement, management also declared a fully franked interim dividend of 5.5 cents per share, representing an increase of 7.8% on the pcp. This puts Data#3 shares on a trailing dividend yield of around 2.5%. Dividends will be paid to eligible shareholders on 31 March 2021.
Data#3 was also pleased to announce it ended the half with $67.9 million cash in the bank and no debt.
Management’s take
Data#3’s Chief Executive Officer & Managing Director Laurence Baynham appeared buoyant about the result, commenting:
“We are pleased with the first half performance, delivering another record result despite the challenging environment and changing market conditions. Once again, this result clearly demonstrates the inherent strength and relevance of our solution offerings in an evolving market. It is also reassuring that approximately 62% of our total revenue is recurring, derived from contracts with government and large corporate customers, fulfilling their essential IT requirements.”
My view
While I think Data#3 is a well-run business, I believe there are more exciting growth shares available. If you are considering buying shares, I would review this article: 10 ASX software shares under $1 billion.
Additionally, you can check out Rask Media’s ASX Growth Shares page for more share ideas.
