The Data#3 Limited (ASX: DTL) share price is down 1.16% in early trade today.
Most tech shares have been selling off this morning, as witnessed by the 1.9% drop in the S&P/ASX All Technology Index (ASX: XTX).
Data#3 shares closed yesterday trading for $6.45 and are currently trading for $6.38.
This follows the release of the information technology services company's results for the financial year ending 30 June (FY22).
Data#3 share price dips despite rising profits
- Revenue of $2.2 billion, up 12.1% from FY21
- Net profit after taxes (NPAT) increased 19.1% year on year to $30.3 million
- Basic earnings per share (EPS) of 19.61 cents per share, up 18.8% from FY21
- Full-year dividend fully franked of 17.90 cents per share, up 19.3% year on year
What else happened during the year?
Data#3's strong revenue growth over FY22 was spurred by a 31.3% leap in its public cloud revenue, which reached $1.0 billion as large companies and government agencies picked up the pace to migrate to cloud-based infrastructure.
The NPAT result was in line with guidance the company provided in July.
Data#3 advised its performance was impacted throughout FY22 by extensive product delivery delays due to ongoing supply chain issues. It ended the year with a "significant backlog of orders" yet to be invoiced as at 30 June.
How significant?
According to Data#3, at least $6 million of pre-tax profit associated with the backlog should be realised in FY23. That's twice the amount of backorder the company had on its books at the end of FY21.
The company said it was "well-positioned" to manage ongoing supply chain disruptions expected in the current year, yet those looming disruptions may put some pressure on the Data#3 share price today.
What did management say?
Commenting on the results, Data# 3 chairman Richard Anderson said:
We are pleased to deliver another record result, underpinned by our leading market position built up over 45 years, the strength of our supplier relationships and customer base, and our exceptional team.
In line with our strategy, it reflects the growing contribution from our higher-value services offerings, demonstrating the growing demand for our solutions especially for large infrastructure and digital transformation projects.
The result would have been even stronger were it not for a significant order backlog as global supply chain delays persist, although this gives us a fast start to FY23.
What's next?
Looking ahead, Data# 3 CEO Laurence Baynham said, "We continue to experience a steady increase in the pipeline of large integration project opportunities across our corporate and public sector customers, and our services growth strategy will improve our overall margin profile while complementing our growing software and infrastructure business units."
Baynham also cited the $6 million of FY22 orders that have yet to be delivered or invoiced.
"The backlog from FY22 has again provided a fast start to the current year, and we are well-positioned to capitalise on opportunities this provides," he said.
Data#3 expects to deliver "sustainable earnings growth" for FY23.
Data#3 share price snapshot
The Data#3 share price is up 7% in 2022. That compares to a year-to-date loss of 7% posted by the All Ordinaries Index (ASX: XAO).
