DATA#3 LIMITED — Annual Report 2024

Aug 20, 2024

FY24 Results Briefing Presented by

Brad Colledge CEO

Cherie O’Riordan CFO

1

• ASX 200 listed IT Services and Solutions provider in Australia and the Pacific Islands

• Our vision is to harness the power of people and technology for a better future

About Data[#] 3

• 47 years evolving solutions and services to enable customers' success, combined with world-leading vendor technologies

• Delivering the digital future through cloud, modern workplace, security, connectivity, data & analytics solutions, combined with consulting, project and managed services

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Agenda FY24 Highlights FY24 Financial Performance Sector Trends and AI FY25 Strategy & Outlook Q&A

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FY24 Highlights

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FY24 Financial Highlights

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NPBT EBIT Gross Sales
$62.1M $53.5M $2.8B
Up 16.6% Up 5.0% Up 7.6%
Gross Profit Basic EPS Dividends per share
$270.1M 28.0 cents 25.5 cents
Up 7.8% Up 16.9% Up 16.4%
Payout ratio of 91.1%
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FY24 Overview

Gross Sales

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$2.8B

Gross Sales growth of

7.6% in line with IT spend forecasts[1]

Recurring Gross Sales 67%

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People

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• 1,400

• In line with strategy, strong sales growth in Managed and Maintenance Services and Software Solutions, supporting recurring Gross Sales

Key awards + certifications

• HRD Employer of Choice – 9[th] year in a row

• Great Place to Work – Workplaces in Technology

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• Achieved solid top line growth in line with market and maintained overall gross margin in subdued and competitive market

• Worldwide Surface Reseller Partner of the Year

• Microsoft ANZ Modern Work Partner of the Year

• Cisco Global Software Partner of the Year

• Profit before tax of $62.1M up 16.6% on prior period

ESG update

• Leading market position, strength of supplier relationships, long-term customer base (>300 customers with tenure of 13+ years)

• Environmental goals - Continuing to develop Net Zero Strategy

• • APAC winner of Frost & Sullivan’s Enlightened Growth Leadership Best Practices Recognition 2024

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1. Gartner Forecasts Australian IT Spending to Grow 7.8% in 2024

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FY24 Operational Highlights

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Services

Multi-cloud Growth AI Accelerating

Cloud is now ubiquitous in our customer solutions

Security Growth

Fastest growing solution and top customer priority ISO 27001 certified

Continued moderate growth in Services should improve future profitability High interest in Gen AI

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Working Capital

Normalised inventory levels Improved DSOS Strong cash position

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Customer Experience

Customer Satisfaction ratings Investment in systems and people driven by data and analytics

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Global Vendors

Awards, certifications and incentives

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Digital Transformation
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Artificial Intelligence

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Internet of Things

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3D Printing

Foundation Layer

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Multi-cloud

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Modern Workplace

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Security

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Data & Analytics

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Connectivity

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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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Our FY24 Awards

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10

FY24 Financial Performance

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Sustained growth in gross sales

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Total Gross Sales ($M)
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3000
2,764.1
2,564.6
2500
2,193.0
1,956.2
2000
1,625.9
1500 1,415.6
1000
500
0
FY19 FY20 FY21 FY22 FY23 FY24
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Gross sales CAGR of 14.3%[1] fuelled by software licensing, multi-cloud solutions and services.

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

~67% of gross sales are recurring, meaning under term-based contracts.

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1. CAGR growth from FY19-FY24

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Sustained earnings growth

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NPBT ($M)
70
62.1
60 53.2
50 44.1
36.9
40 34.1
26.6
30
20
10
0
FY19 FY20 FY21 FY22 FY23 FY24
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NPAT ($M) - excluding minority interests
43.3
45
40 37.0
35
30.3
30
25.4
23.6
25
18.1
20
15
10
FY19 FY20 FY21 FY22 FY23 FY24
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Basic EPS (cents)

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30 28.00
23.96
25
19.61
20
16.51
15.35
15
11.76
10
5
0
FY19 FY20 FY21 FY22 FY23 FY24
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DPS (cents)

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25.50
25
21.90
20 17.90
15.00
13.90
15
10.70
10
5
0
FY19 FY20 FY21 FY22 FY23 FY24
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Change in revenue presentation

Starting in FY24, certain revenues will be presented on a net basis.

• A review has determined that Data[#] 3 is acting as an agent in respect of software licensing and vendor delivered maintenance support agreements

• Resulted in a change to the Company’s revenue accounting policy effective 1 July 2023

• Statutory revenue presented includes the reclassification of these revenues on a net basis

• Comparatives have been restated per table

$M	FY24	FY23	Growth %
Gross Sales*	2,754.2	2,560.7	7.6%
Gross Profit	270.1	250.7	7.8%
Margin on gross sales	9.8%	9.8%
Statutory Revenue**	805.7	808.6	-0.4%
Gross Profit	270.1	250.7	7.8%
Gross Margin (Statutory Revenue)	33.5%	31.0%

This is a statutory presentation change only, and the Company will continue to measure operational performance on a Gross Sales* basis.

• Gross Sales is non-IFRS financial information and does not represent revenue in accordance with Australian Accounting Standards. This represents gross proceeds from the sale of goods and services, both as agent and principal.

** Including the reclassification of Software licensing and vendor delivered maintenance support revenues on a net basis, and excludes other income.

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Sales by functional area

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Gross Sales trend by functional area ($M)
3000
2500
2000
1500
1000
500
0
FY19 FY20 FY21 FY22 FY23 FY24
Infrastructure Solutions Software Solutions Services
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Business unit	FY24 Gross Sales ($M)	Change vs. FY23	Relative Gross Margin %
Business Aspect Consulting	31.4	- 5.5%	MED - HIGH
Project Services	79.0	+ 6.0%	MED
Maintenance Services	158.5	+ 26.8%	LOW - MED
Managed Services	43.9	+ 11.6%	HIGH
People Solutions (recruitment)	60.2	- 11.6%	LOW - MED
Total Services (excluding Other)	373.0	+ 9.6%
Software Solutions	1,833.8	+ 11.0%	LOW
Infrastructure Solutions	547.4	- 3.6%	LOW - MED
Total	2,754.2	7.6%

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Gross margin and Gross profit

Overall Gross Margin % varies with changing sales mix.

• Infrastructure Solutions growth constrained by delayed decision making by customers and consumption of goods ordered ahead of requirements in FY23, resulting in fewer deals in a competitive market

• End User Computing up 3% in declining market

• Sales of collaboration tools up year on year

• Strong growth in software licensing and multi-cloud sales, particularly Public Sector and Education

• Increase in subscription offerings, delivering consistent annuity-based growth

• Services growth, including product Maintenance and Managed Services, has boosted total Gross Profit

Objective continues to be to deliver sustained growth in total Gross Profit.

$M	FY24	FY23	Growth %
Product Gross Sales	2,378.3	2,217.7	7.2%
Product Gross Profit	134.4	125.9	6.7%
Product Margin on Gross Sales	5.7%	5.7%
Services Gross Sales	375.9	343.0	9.6%
Services Gross Profit	135.4	124.7	8.6%
Services Margin on Gross Sales	36.0%	36.4%
Total Gross Profit	270.1	250.7	7.8%
Total Gross Margin	9.8%	9.8%

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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%
270.1
250.7
250
218.2
20.0%
194.7
200 188.0
173.9
150 15.0%
100
10.0%
50
0 5.0%
FY19 FY20 FY21 FY22 FY23 FY24
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250 95.0%
90.0%
200
85.0%
150
80.0%
100
75.0%
50
70.0%
0 65.0%
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24
Operating Staff ICR (%)
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• Steady gross margin % in recent years, despite strong growth in lower margin Software and competitive market conditions

• Internal Cost Ratio (Internal expenses / Gross profit) has improved from 88.0% in FY16 to 80.6% in FY24

• Expect to increase over time as Services contribution increases, but always subject to sales mix and contractor mix in Services cost of sales – focus on gross profit growth rather than gross margin %

• FY24 slightly up vs FY23 (80.3%) due to inflationary operating environment and continued investment in people and systems, particularly in Managed Services

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Statement of profit or loss

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• Interest income $9.7M vs $3.5M predominately due to higher interest rates earned on deposits

• Internal staff costs increased by 7.6% (from $176.9 million to $190.3 million) reflecting 2% headcount growth (predominantly in billable Services and Infrastructure sales) and general remuneration increases

• Other operating expenses increased by 13.3% (from $27.6 million to $24.3 million)

• ✓ General price increases driven by inflationary economy

• ✓ Increase in travel costs relative to increased sales activity

• ✓ Internal systems investments

• ✓ Increase in licensing costs, both internal and to service new managed services contracts

• Basic EPS increased by 16.9%

• Return on equity 57.8% (FY23 54.2%)

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Balance sheet

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• Strong balance sheet with no borrowings

• Q4 sales 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 but lower than PCP due to timing of customer billing

• Average Day Sales Outstanding (DSOS) of 26 days lowest in several years (FY23 = 33 days)

• Inventory holdings returned to normal levels late FY23 and remained consistent in FY24. All inventory is allocated to non-cancellable customer orders

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Working capital analysis

-$830M -$730M -$630M -$530M -$430M -$330M -$230M -$130M -$30M $70M $170M $270M $370M $470M $570M $670M $770M $870M		Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 Dec-23 Jun-24 Working capital components Other current assets Inventory Current receivables Cash Other current liabilities Current payables Working capital	Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 Dec-23 Jun-24 Working capital components Other current assets Inventory Current receivables Cash Other current liabilities Current payables Working capital	Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 Dec-23 Jun-24 Working capital components Other current assets Inventory Current receivables Cash Other current liabilities Current payables Working capital	Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 Dec-23 Jun-24 Working capital components Other current assets Inventory Current receivables Cash Other current liabilities Current payables Working capital

Efficient working capital model.

Short or negative working capital cycles underpin selffunding of business.

Inventory stable in FY24 following significant improvements in FY23 post pandemic.

Average collection cycle approx. 26 days.

Favourable trade terms with suppliers.

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

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• Cash flow ‘seasonality’ consistent with previous years

Statement of cash flows

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

• FY23 higher than normal cash inflow due to more customers paying pre 30 June 2023 and realisation of carried forward debtors following pandemic

• FY24 average daily cash balance $216.7M (FY23 = $120.9M)

• Cash net of current receivables and payables has increased in FY24, but historically trends around

• $15M-$20M

• Cash conversion of 258%[#] for 7-year period (FY18 to FY24)

[# Total Free Cash Flow $494M / Total NPAT $192M]

• Low capital expenditure

• High dividend payout ratio of ~91%

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Sector Trends and AI

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2024 Global Technology Industry Trends[1]

IT Industry Growth

Global spend on IT expected to grow 7.5% in 2024 Organisations to invest in planning and use of GenAI

Software

13% growth expected > US$1Trillion globally

Devices

5% growth expected (decrease of 6.5% in 2023)

IT Services

7% growth expected Organisational efficiency & optimisation projects

Data Centre

24% growth expected

Communication Services

3% growth expected Peaked during pandemic with remote work solutions

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1. Source: Gartner Forecasts of Worldwide IT Spending in 2024

23

Data[#] 3’s Generative AI Journey – one year on

Healthcare Customer Solution example

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Microsoft CoPilot

• Business Aspect consulting engagement

• Invited to Microsoft Early Adopter Program

• Offering Development – Consulting, Readiness Assessments, Proof of Concepts, Adoption

• Copilot licences

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• Copilot Readiness Assessment

• Copilot Pilot support

• Copilot Adoption services

• M365 training

• Highest selling Microsoft Copilot Licensing partner in Australia

• Millions in services gross sales underpinning services growth

Legal Customer Solution example

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• Awarded ANZ Modern Work Partner of the Year

The solution included workshops, analysis of SharePoint Online, OneDrive, and Teams content and permissions, a detailed report to help the customer remediate oversharing before deploying Copilot for M365. Change Management advice.

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Data[#] 3’s Generative AI Journey – one year on

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Technology
Information Organisational Platform
Governance Change Software, Device,
and Security Management and Multi-cloud
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FY25 Strategy and Outlook

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

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Integrated Solutions embedded with AI

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Security

Multi-cloud Modern Workplace

Modern Data Centre Cloud Security Public Cloud Collaboration Data Security and Privacy Private Cloud End User Devices Identity and Access Management Printing Infrastructure and Systems Management Endpoint Security Security Monitoring and Analytics Consulting Project Services

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Data & Analytics

Connectivity

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

Managed Services

Lifecycle

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The Opportunity

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$500Bn[1] in global AI-driven infrastructure by 2027

91% [2]

facing the challenge of building a multi-cloud strategy

73%[3] becoming a “truly sustainable and responsible business” is a top priority

73%[4]

expect a cyber security incident in next 12-24 months and only 4% are ready

Millions[5] devices not ready for Windows 11, not AI-enabled, or up for refresh

1. IDC FutureScape report 2024 2. Innovation Catalysts, Dell Technologies, February 2024

3. Accenture analysis of executive and employee/consumer/citizen survey 2022 4. 2024 Cisco Cybersecurity Readiness Index 5. Data#3 vendor partners and customer surveys

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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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Long term customer relationships

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1800
1600
1400
1200
1000
800
600
400
200
0
1 2 3 4 5 6 7 8 9 10 11 12 13
No. of Customers Spend ('000)
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• Number of customers by length of tenure over a 13-year period

• Average spend increases significantly over time

• Over 300 customers with tenure of over 13 years a testament to Data[#] 3’s customer service and value proposition

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Increasing customer engagement

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Average Sales & Average Gross Profit per Customer
1,600,000 200,000
180,000
1,400,000
160,000
1,200,000
140,000
1,000,000
120,000
800,000 100,000
80,000
600,000
60,000
400,000
40,000
200,000
20,000
0 0
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24
Avg Sales (LHS) Avg GP (RHS) Median GP
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• Average sales 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 returned 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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Outlook

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Services Growth

Accelerated by Generative AI plus continued interest in Managed Services across Devices, the Network and Cloud.

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Multi-cloud and Security Growth

Continued growth in multi-cloud solutions and cyber security. Continued trend towards annuity offerings.

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Infrastructure Growth

Continued delayed decision making based on economic drivers and analysis of the correct way forward. We are, however, expecting growth in Devices, Networking and Data centre.

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Data[#] 3 is well placed to leverage the AI opportunity and to continue to provide sustainable growth, while having a positive impact on the local economies and communities in which we operate.

Brad Colledge CEO and MD, Data[#] 3

35

Consistent with previous practice, we won’t be providing specific FY25 guidance.

Outlook

In line with previous years, we continue to expect a sales peak in the months of May and June, and our goal remains to continue to deliver sustainable earnings growth.

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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 outside Australia 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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data3.com data3.com 1300 23 28 23 1300 23 28 23

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Linkedin.com/company/data3 Linkedin.com/company/data3 Twitter.com/data3limited Twitter.com/data3limited Facebook.com/data3limited Facebook.com/data3limited YouTube.com/data3limited YouTube.com/data3limited

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