DATA#3 LIMITED — Annual Report 2023

Aug 21, 2023

FY23 Results Briefing

22[nd] August 2023

Presented by

Laurence Baynham CEO

Cherie O’Riordan CFO

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FY23 Financial Highlights

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Revenue Gross Profit NPBT $2.5B $250.7M $53.2M Up 16.9% Up 14.9% Up 20.7% NPAT Basic EPS Dividends per share $37.0M 23.96 cents 21.90 cents Up 22.4% Up 22.2% Up 22.3% Payout ratio of 91.4%

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Agenda

Data[#] 3 Overview FY23 Operational Overview FY23 Financial Performance FY24 Strategy Customer Success Summary and Outlook

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FY23 Operational Overview

4

FY23 Overview

Revenue growth rate relative to IT market

Revenue

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$2.5B

3x

• In line with strategy, strong revenue growth in Managed Services and Software Solutions, supporting recurring revenue

Recurring People Revenue + 65% 1,400

Key awards + certifications

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• HRD Employer of Choice – 8th year in a row

• Cisco Global Partner of the Year - Security

• Microsoft Surface PC Reseller Worldwide Partner of the Year

• Improvement in supply chain and normalisation of backlog

• Large integration projects across multiple years

• Leading market position, strength of supplier relationships, long-term customer base

• Microsoft Surface+ Worldwide Partner of the Year

ESG update

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• Environmental goals - Defining and Improving Net Zero Strategy

• Delivered Reconciliation Action Plan vision and direction

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FY23 Operational Highlights

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Multi-cloud Growth

Cloud is now ubiquitous in our customer solutions

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Major Contract Wins

e.g. Multi-year Enterprise Managed Services contract with Future Fund Management Agency

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Security Growth

Fastest growing solution and top customer priority ISO 27001 certified

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Customer Experience

Investment in systems and people driven by data and analytics. Global recognition with Cisco

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Services

Strong growth in Consulting and Managed Services should improve future Gross Margins

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Growth Markets

In line with our strategy growing in NSW (+15%) and VIC (+13%), Australia's two largest IT markets

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Digital Transformation
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Operational Technology

Foundational Technology

Digital Milestones

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Multi-cloud

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Internet of Things

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Hybrid Work

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Computers

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Robotics

Extended Reality

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Security Data & Analytics Connectivity

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The Internet

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Artificial Intelligence

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Artificial Intelligence

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We are at the beginning of a new era of IT. Generative AI will be as impactful as cloud or the internet. Satya Nadella, CEO of Microsoft

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• AI is a major digital milestone with operational technologies like robotics becoming integral to our transformation solutions.

• We are already seeing rapid product development incorporating cloud, hybrid work, security, connectivity and data analytics.

• We are assessing widespread applications across our customers’ transformation projects.

• We are aligning ourselves with the global market leaders in AI so are at the forefront of this change as customer technology is increasingly AI-driven.

• We are also looking at opportunities to apply AI within our own business to further improve operational efficiencies.

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Integrated Solutions embedded with AI

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Multi-cloud Modern Workplace

Modern Data Centre Collaboration Public Cloud End User Devices Private Cloud Printing

Systems Management

Consulting

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Security

Cloud Security

Data Security and Privacy Identity and Access Management

Infrastructure and Endpoint Security Security Monitoring and Analytics Project Services

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Data & Analytics

Connectivity

Business Analytics

IT-OT Networking Customer Management Software-Defined Networks Internet of Things Software-Defined WAN Location-Based Analytics Wireless Networks

Support Services

Lifecycle

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#1 partner in Australia

Top five partner in Australia

Strategic partnerships with global leaders

Significant investment in technical capability and certifications

400+ other partnerships with emerging vendors

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FY23 Awards

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NEWS Data[#] 3 wins HRD Employer of Choice for 8[th] consecutive year

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FY23 Financial Performance

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Sustained earnings growth

NPBT ($M)

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60
53.2
50 44.1
36.9
40 34.1
30 26.6
20.4
20
10
0
FY18 FY19 FY20 FY21 FY22 FY23
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NPAT ($M) - excluding minority interests
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40 37.0
35
30.3
30
25.4
23.6
25
18.1
20
14.1
15
10
5
0
FY18 FY19 FY20 FY21 FY22 FY23
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Basic EPS (cents)

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23.96
25
19.61
20
16.51
15.35
15
11.76
9.14
10
5
0
FY18 FY19 FY20 FY21 FY22 FY23
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DPS (cents)

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25
21.90
20 17.90
15.00
13.90
15
10.70
10 8.20
5
0
FY18 FY19 FY20 FY21 FY22 FY23
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Sustained revenue growth

Total revenue ($M)

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3000
2,564.6
2500
2,193.0
1,956.2
2000
1,625.9
1500 1,415.6
1,181.4
1000
500
0
FY18 FY19 FY20 FY21 FY22 FY23
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Revenue CAGR of 15.3%[1] fuelled by software licensing, multi-cloud solutions and services.

Strong customer spend in higher growth education, health and resource sectors.

~65% of revenue is recurring, meaning under term-based contracts.

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1. CAGR growth from FY18-FY23

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Changing sales mix

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Revenue trend by functional area ($M)
3000
2500
2000
1500
1000
500
0
FY18 FY19 FY20 FY21 FY22 FY23
Infrastructure Solutions Software Solutions Services
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Business unit	FY23 revenue ($M)	Change vs. FY22
Business Aspect Consulting	33.2	+ 25.0%
Project Services	74.5	+ 11.9%
Maintenance Services	125.0	- 3.9%
Managed Services	39.3	+ 31.1%
People Solutions (recruitment)	68.1	+ 9.3%
Total Services	340.1	+ 7.7%
Software Solutions	1,652.5	+ 15.3%
Infrastructure Solutions	566.2	+ 28.6%

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Gross margin and Gross profit

Overall Gross Margin % varies with changing revenue mix.

• Infrastructure Solutions benefiting from strong growth in networking and storage, and easing supply chain constraints

• Strong growth in software licensing and multi-cloud revenues

• Services growth has boosted total Gross Profit $

Total Gross Profit up 14.9% to $250.7M with Gross Margin % down slightly from 10.0% to 9.8%:

• Services Gross Profit up 24.8% to $124.7M with Gross Margin % increasing from 31.4% to 36.4%

• Product Gross Profit up 6.5% to $125.9M with Gross Margin % decreasing from 6.3% to 5.7% due to relative mix of higher volume, lower margin products and gradual shift in vendor rebates to services

Objective continues to be to deliver steady, sustained growth in total Gross Profit $

Business unit	FY23 revenue ($M)	FY23 revenue growth	Relative Gross Margin %
Business Aspect Consulting	33.2	+ 25.0%	MED - HIGH
Project Services	74.5	+ 11.9%	MED
Maintenance Services	125.0	- 3.9%	LOW - MED
Managed Services	39.3	+ 31.1%	HIGH
People Solutions	68.1	+ 9.3%	LOW - MED
Software Solutions	1,652.5	+ 15.3%	LOW
Infrastructure Solutions	566.2	+ 28.6%	LOW to MED

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Steady improvement in operating leverage

Total gross profit ($M) & Total gross margin (%)

Internal expenses (Staff & Operating costs $M)

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300 25.0% 250 95.0%
250.7
250 90.0%
218.2 200
20.0%
194.7
200 188.0 85.0%
173.9
160.1 150
150 15.0% 80.0%
100
100 75.0%
13.6% 12.3% 11.6% 10.0% 10.0% 9.8%
10.0%
50
50 70.0%
0 5.0% 0 65.0%
FY18 FY19 FY20 FY21 FY22 FY23 FY18 FY19 FY20 FY21 FY22 FY23
Operating Staff ICR (%)
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• Steady gross margin % despite higher than expected Software growth

• Expect to increase over time as Services contribution increases

• Internal Cost Ratio (Internal expenses / Gross profit) has improved from 88.0% in FY16 to 80.3% in FY23

• • FY23 slightly up vs FY22 (80.1%) due to travel costs and investment in people and systems, particularly in Managed Services, which will generate future leverage.

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Statement of profit or loss

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• Revenue increased by 16.9%

• Interest income $3.5M vs $273K predominately due to higher interest rates earned on deposits

• Internal staff costs increased by 15.7% (from $153.0 million to $176.9 million) reflecting headcount growth (predominantly in Services) and general remuneration increases

• Other operating expenses increased by 12.2% (from $21.7 million to $24.3 million) ✓ Amortisation of ERP project costs ✓ Increase in travel costs post pandemic

• Basic EPS increased by 22.2%

• Return on equity 54.2% (FY22 49.0%)

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Balance sheet

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• Strong balance sheet with no borrowings

• 4Q revenue spike (in line with normal customer spend patterns) inflated Trade receivables and Trade payables at year end

• As in prior periods, this created a large temporary cash surplus at 30 June

• Average Day Sales Outstanding (DSOS) of 33.0 days (FY22 = 28.1 days)

• Inventory holdings reduced at the end of FY23 with easing of supply chain constraints. All inventory is allocated to non-cancellable customer orders

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Working capital analysis

Working capital components

-830,000 -730,000 -630,000 -530,000 -430,000 -330,000 -230,000 -130,000 -30,000 70,000 170,000 270,000 370,000 470,000 570,000 670,000 770,000 870,000									Jun-23 Other current assets Inventory Current receivables Cash Other current liabilities Current payables Working capital
			D		D	2	D2	2 D2 22 D22
		Jun-18	ec-18	Jun-19	ec-19	Jun-0	ec-0	Jun-1 ec-1 Jun- ec-

Efficient working capital model.

Short or negative working capital cycles underpin selffunding of business.

Inventory reduced in FY23.

Average collection cycle approx. 33 days.

Favourable trade terms with suppliers.

Stable working capital position, despite seasonal fluctuations at period end.

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Statement of cash flows

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• Cash flow ‘seasonality’ consistent with previous years

• Timing differences in collections from customers and payments to suppliers around 30 June generate temporary cash surpluses

• FY23 average daily cash balance $120.9M (FY22 = $117.2M)

• Underlying ‘free cash’ is typically around $15M, however this was temporarily reduced during FY23 as supply chain delays inflated inventory and receivables

• Cash conversion of 280%[#] for 7-year period (FY17 to FY23)

• [# Total Free Cash Flow $459M / Total NPAT $164M]

• Low capital expenditure

• High dividend payout ratio of ~91%

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FY24 Strategy and Outlook

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Remarkable
People
Innovative Customer Exceptional
Solutions Success Performance
Organisational
Excellence
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Strategic Framework

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FY23 Customer stories

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Leading the Future of Digital Transformation in Australia

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Data[#] 3 Competitive Advantages

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Our People

Ability to attract and retain the best people

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Our Partners

Partnerships with leading global vendors

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Our Expertise

Expertise and breadth of solutions across the customer lifecycle

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Our Innovation

At the forefront of industry change

Our Agility

Agility internally and externally to respond to changing market dynamics

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Our Financial Stability

Financial stability with strong balance sheet

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Our Brand

Market-leading brand and reputation

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Increasing customer engagement

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Average Revenue & Average Gross Profit per Customer
1,400,000 140,000
1,200,000 120,000
1,000,000 100,000
800,000 80,000
600,000 60,000
400,000 40,000
200,000 20,000
0 0
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Avg Revenue (LHS) Avg GP (RHS)
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• Average revenue and GP per customer group has increased as we extend engagement across our portfolio of solutions, including higher GP services.

• Average GP per customer group returning to growth after pandemic spend shift toward lower margin product.

• Almost 5,000 active customer accounts and the largest customer groups are State and Federal Government accounts in the health and education sectors.

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Strategic Focus Areas

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Customer Experience

Long-term view, not transactional Lifecycle approach

Joint investments with global vendors

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Security

Protecting our business

Market opportunity

Go to market with Business Aspect

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Accelerating Services

Continued investment in Managed Services

Strong revenue growth in Consulting & Managed Services

Complementing vendor incentive programs

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ESG

To further develop and enhance our initiatives across ESG

To benchmark in our sector

Increased ESG commitment with increased financial growth

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Continued focus on driving growth in Services and Software to increase recurring revenues and improve margins

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Outlook

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Services growth will continue to complement Software and Infrastructure divisions, while improving recurring revenue and margins

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Growth in multi-cloud solutions and cyber security continues to provide data and insights to enhance lifecycle services

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Gen AI

fuelling digital transformation growth

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Growing pipeline of major integration project opportunities as large corporates and government drive transformation agendas; and planned infrastructure projects

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We continue to experience a steady increase in the pipeline of large integration project opportunities across our corporate and public sector customers, and are seeing strong growth in our higher margin Managed Services business, complementing our growing Software and Infrastructure business units.

With our leading market position, strong supplier relationships, long-term customer base and experienced team we are confident in our outlook as we enter FY24, despite an expected slowdown in general economic activity. The industry is rapidly progressing and we are well positioned to benefit.

Laurence Baynham Chief Executive Officer, Data[#] 3

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Q&A

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Disclaimer

This presentation has been prepared by Data[#] 3 Limited (“the Company”). It contains general background information about the Company’s activities current as at the date of the presentation. It is information given in summary form and does not purport to be complete. The distribution of this presentation in jurisdictions outsideAustralia may be restricted by law and you should observe any such restrictions.

This presentation is not (and nothing in it should be construed as) an offer, invitation, solicitation or recommendation with respect to the subscription for, purchase or sale of any security in any jurisdiction, and neither this document nor anything in it shall form the basis of any contract or commitment. The presentation is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate.

The Company has prepared this presentation based on information available to it, including information derived from publicly available sources that have not been independently verified. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, correctness or reliability of the information, opinions and conclusions expressed.

Any statements or assumptions in this presentation as to future matters may prove to be incorrect and differences may be material. To the maximum extent permitted by law, none of the Company, its directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising from fault or negligence on the part of any of them or any other person, for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it.

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www.data3.com.au 1300 23 28 23 Linkedin.com/company/data3 Twitter.com/data3limited Facebook.com/data3limited YouTube.com/data3limited

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