In a second more detailed trading update for FY24, Datatec confirmed revenue growth of 6% to $5.46bn, with Westcon International delivering excellent performance, Logicalis International having a strong H2 and Logicalis Latin America affected by difficult market conditions in Argentina and Brazil. The company also provided provisional EPS data, with reported EPS likely to come in ahead of our forecast and underlying EPS just below our forecast. We maintain our forecasts pending FY24 results on o...
Datatec expects to report revenue of $5.44bn for FY24, up 5.8% y-o-y, and noted that the quality of earnings improved in the year. During H224, Westcon International continued to deliver a strong financial performance. Logicalis International also had a strong half, although its reported revenue growth has been suppressed by a higher proportion of net revenue-reported software sales. Logicalis Latin America had a tougher H2 due to difficult market conditions in Argentina and Brazil. We maintain ...
Datatec reported a strong performance in H124, with revenue up 15% y-o-y, adjusted EBITDA up 2% and underlying EPS up 336%. As supply chain issues have eased, the company has been able to reduce its backlog from previously elevated levels. Datatec expects improved performance in all divisions in FY24. While the company closely manages working capital, higher revenues and a gradual reduction in supplier extended payment terms drive our higher net debt forecasts. Our estimates are broadly unchange...
For H124, Datatec reported 15% y-o-y revenue growth, gross margin expansion, EBITDA growth of 39% and adjusted EBITDA growth of 2%. Underlying EPS increased 336% to 9.6c. After incurring restructuring charges and elevated share-based compensation in FY23, H124 provided a cleaner set of numbers. Supply chain issues eased during H1 allowing Datatec to reduce its order backlog by 21% from the end of FY23. The company is seeing strong demand for cyber security and networking solutions, and while cha...
In its H124 trading update, Datatec noted that all divisions reported improved performance versus H123. Westcon’s performance was described as excellent, with a strong performance from Logicalis International and a much-improved performance from Logicalis Latin America, although macroeconomic pressures remain in the region. The company continues to see good demand for its solutions and services and is actively managing supply chain challenges to service customers. We maintain our forecasts pendi...
Datatec reported solid results for FY23 with revenue and adjusted EBITDA ahead of our forecasts. As supply chain issues eased in H2, all divisions accelerated revenue growth as they started to work down order backlogs, and working capital was tightly managed to reduce net debt by 18% at year-end. Further unwind of the backlog combined with sustained strong demand drives our revenue and adjusted EBITDA upgrades for FY24 and FY25. After factoring in higher interest rates, our underlying EPS reduce...
Datatec reported group continuing revenue growth of 13% for FY23 (20% in constant currency) with adjusted EBITDA from continuing operations also increasing 13%. Supply chain issues started to ease allowing the company to accelerate delivery of its order backlog. Demand remained robust, resulting in a flat order backlog at the year-end, despite double-digit revenue growth. At a divisional level, Westcon delivered excellent results, Logicalis International performance was solid and, while down for...
As Datatec expects to report EPS measures for FY23 that differ from FY22 by more than 20%, it has provided an update prior to reporting full FY23 results on 23 May. Reported EPS is expected to be 36.9c (FY22: 16.7c) and underlying EPS (which excludes one-off items such as the gain on the September 2022 sale of Analysys Mason) is expected to be 7.9c (FY22: 18.7c). Adjusting for exceptionally high share-based payments, underlying EPS would be 29.5c (FY22: 27.4c). We plan to update our forecasts wh...
Datatec expects to report FY23 revenue of $5.16bn, which represents growth of 13% compared to FY22 and is 3% ahead of our forecast. Westcon performance was well ahead of our expectations, with Logicalis International slightly ahead and Logicalis Latin America below. Overall, the group saw signs of improvement in the supply chain, although the backlog remained elevated at the year-end. The secular growth in networking and cyber security solutions continues to be the main driver of demand. We main...
Since embarking on a restructuring of the Westcon International (Westcon) division in FY18, management has grown divisional revenue at a CAGR of 5.7% (FY18–22) and improved profitability. Westcon has set ambitious targets in its latest medium-term plan (FY23–27), supported by its ongoing digital transformation programme. With our valuation of Westcon higher than the current enterprise value of the group, we believe that successful achievement of this plan could unlock significant shareholder val...
Datatec reported a mixed performance in H123: strong demand for cloud infrastructure, cybersecurity and networking solutions drove revenue and order growth, while supply chain issues continued to hamper the ability to deliver orders. Currency headwinds further impacted profitability, however, healthy order backlogs across all divisions should support better revenue growth in H223/FY24 as supply chain issues ease.
Datatec’s H123 results suggest continuing revenue momentum in H123 driven by enterprise demand for cybersecurity, networking and cloud infrastructure, although with a mixed picture across the group. Excluding Analysys Mason, group revenues rose 9% y-o-y to US$2.41bn, while gross profits fell 5% to US$338m and adjusted EBITDA rose by 16% to US$88m. Underlying EPS fell by 67% to 2.2 US cents (3.6 US cents including Analysys Mason), particularly impacted by share-based payment charges. Net debt (fo...
Datatec’s trading update indicated slowing momentum in H123, with geopolitical and economic headwinds and the strengthening dollar offsetting demand-driven technology tailwinds. Weakness was principally down to Logicalis LatAm. Management expects reported EPS of between 4.5 and 5.5 US cents, a year-on-year fall of between 13% and 29%, with underlying EPS expected to be between 3.0 and 4.0 US cents, a year-on-year fall of between 52% and 64%. Our estimates anticipate a year-on-year rise in FY23 r...
As a first step in its ongoing strategic review, Datatec has announced the management buyout of Analysys Mason, its TMT research and management consultancy arm, backed by Bridgepoint Development Capital for an EV of up to £210m (US$260m), 2.9x FY22 EV/sales and 14.4x FY22 EV/adjusted EBITDA (excluding share-based payment charges). Management’s strategic review, which has not necessarily concluded, has started to unpick the group’s embedded value, with the sale of Analysys Mason leaving Datatec a...
FY22 was a year of robust global demand for technology solutions, with supply chain issues and semiconductor shortages constraining Datatec’s ability to meet that demand, leading to a growing backlog of pending orders. Datatec’s three divisions all had a strong year, which would have been even stronger for Westcon and Logicalis if orders could have been fully met. We note management’s cautious tone on H123 in particular, although we believe Datatec remains a defensive player in an uncertain worl...
FY22 could be characterised as a year of robust global demand for technology solutions, with the ability to meet that demand constrained by supply chain issues, semiconductor shortages and a growing backlog of pending orders. This led to a strong year for all three of Datatec’s divisions, which would have been even stronger if orders could have been fully met. Datatec’s reported revenue for FY22 was US$4.64bn, up 13%, with adjusted EBITDA rising by 16% to US$177m, representing a 3.8% margin (FY2...
Today’s trading update follows the group’s post-close trading update in March 2022, where management confirmed FY22 group revenue would be up 13% year-on-year to US$4.65bn. As a listing requirement, and as expected, Datatec has now been required to confirm EPS will be more than 20% above the FY21 figure. Underlying EPS (uEPS) is expected to be 18.0–19.0 US cents (FY21: 13.6 US cents), 32–40% higher than in FY21, with headline and reported EPS both multiples of their FY21 comparators. uEPS ranges...
In a post-close trading update, Datatec’s management has released FY22 revenue figures. Group revenue is expected to have risen c 13% y-o-y to US$4.65bn (FY21: US$4.11bn), implying H222 revenues of US$2.39bn with 11% growth y-o-y, continuing the impressive growth seen in H122 (15% growth y-o-y). In particular, the group’s performance reflects robust demand for networking, security and cloud infrastructure. These results are c 3% ahead of our FY22 revenue estimates (FY22e: US$4.51bn), which we in...
Westcon is Datatec’s technology distribution business, representing 62% of H122 group revenues and 37% of EBITDA. With global demand currently outstripping the market’s ability to supply hardware and solutions, Westcon is transitioning from being a specialist value added distributor to becoming a higher-growth, higher-margin technology provider. This transition unlocks the potential for double-digit y-o-y revenue growth, with our estimated gross profit margins of c 11% and EBITDA margins expecte...
Westcon is Datatec’s technology distribution business, representing 62% of H122 group revenues and 37% of EBITDA. With global demand currently outstripping the market’s ability to supply hardware and solutions, Westcon is transitioning from being a specialist value added distributor to becoming a higher-growth, higher-margin technology provider. This transition unlocks the potential for double-digit y-o-y revenue growth, with our estimated gross profit margins of c 11% and EBITDA margins expecte...
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