DATA#3 LIMITED — Interim / Quarterly Report 2022

Feb 16, 2022

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FY22 Interim Results Briefing

17 February 2022

Presenters:

Laurence Baynham, Chief Executive Officer & Managing Director Brem Hill, Chief Financial Officer

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Agenda

Data[#] 3 Overview

1H FY22 Operational Overview 1H FY22 Financial Performance Strategy & Outlook

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1H FY22 Financial Highlights

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Revenue Gross Profit NPBT
$999.3M $105.4M $18.5M
Up 16.6% Up 17.5% Up 33.0%
NPAT Basic EPS Dividends per share
$12.4M 8.01 cents 7.25 cents
Up 31.7% Up 31.5% Up 31.8%
Payout ratio of 90.5%
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1H FY22 Overview

Public Cloud Revenue

Revenue

$999M $467M

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Direct staff headcount Recurring Revenue increase (mostly in services) 65% 10%

Key awards + certifications

• Strong 1H with positive contributions from all business units and regions despite uncertain operating environment

• Underpinned by leading market position, strength of supplier relationships, long-term customer base and experienced and committed team

• Order backlog benefit in 1H FY22 offset by slippage into 2H FY22; adjusted lead times by customers and suppliers resulting in more normalised operating patterns

• Microsoft Azure Expert Managed Services Provider Certification

• Cisco Global Software Partner of the Year

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• Cisco APJC Security Partner of the Year

• Trend Micro Security Partner of the Year

ESG update

• Sustainability goals

• In line with strategic focus, increase in software and services revenue driving recurring revenue and margin uptick

• Growing pipeline of large integration project opportunities

• ATSI Reconciliation Action Plan

• Ethics global benchmarking

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Digital Transformation
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Artificial Intelligence

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Multi-cloud Modern Workplace

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Internet of Things

Foundation Layer Security

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3D Printing

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Data & Analytics

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Connectivity

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Integrated Solutions

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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 Customer Management Internet of Things Location-Based Analytics

IT-OT Networking Software-Defined Networks Software-Defined WAN Wireless Networks

Support Services

Lifecycle

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#1 partner in Australia

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#1 partner in Australia

#1 partner in Australia

Strategic partnerships with global leaders

Significant investment in technical capability and services 400+ other partnerships

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Top five partner in Australia

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1H FY22 Operational Overview

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FY22 External Factors

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Australian IT Global chip COVID-19 market shortage disruption

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1H FY22 Operational Highlights

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Services

Multi-cloud Growth

Security Growth

$467M in Public Cloud. Private Cloud growth. Customers have multiple clouds.

Strong growth in Consulting and Support Services. Improving gross margins.

Fastest growing solution. Combined D3 and BA offerings. Complements other solutions.

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Customer Experience

ERP System

New Microsoft D365 platform. Multi-year project & investment. System ‘go-live’ in 2H FY22.

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

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Delivering the digital future in South Australia

1H FY22 Financial Performance

1212

Sustained revenue growth, boosted by cloud

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Total revenue ($M) Total Public Cloud revenue ($M)
999.3
1000 500 466.7
856.7
800 718.9 400
346.1
644.4
600 547.3 300
506.0 251.9
457.5
400 200
142.7
86.1
200 100 58.0
0
0
1H17 1H18 1H19 1H20 1H21 1H22
1H16 1H17 1H18 1H19 1H20 1H21 1H22
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Strong revenue growth (CAGR 13.9%) fuelled by software licensing and cloud-based solutions.

Total revenue includes $466.7M of public cloud revenues, up 34.8% on PCP, to 47% of total revenue.

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

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Changing sales mix

0 200 400 600 800 1000 1200 1H15 1H16 1H17 1H18 1H19 1H20 1H21 1H22 Revenue trend by functional area ($M) Infrastructure Solutions Software Solutions Services Public Cloud	Business unit 1H FY22 revenue ($M) Change vs. 1H FY21 Infrastructure Solutions 205.0 + 1.3% Software Solutions 648.3 + 20.5% Business Aspect Consulting 13.0 + 68.4% Project Services 32.5 + 7.8% Support Services 69.2 + 47.9% People Solutions (recruitment) 29.8 + 1.1% Discovery Technology 1.5 - 27.4%

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Gross margin and Gross profit

Overall Gross Margin % varies with the changing revenue mix.

• Strong growth in software licensing and public cloud revenues relative to services in recent years.

• Accelerated services growth will boost total Gross Profit $ and should also increase the blended Gross Margin %.

Gross Margin % within each business unit has remained relatively stable.

Changing vendor rebate programs will increasingly reward Services.

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

	Business unit 1H FY22 revenue ($M) 1H FY22 revenue growth Relative Gross Margin % LOW MED HIGH Infrastructure Solutions 205.0 + 1.3% LOW to MED Software Solutions 648.3 + 20.5% LOW Consulting 13.0 + 68.4% MED to HIGH Project Services 32.5 + 7.8% MED Support Services 69.2 + 47.9% Maintenance ServicesLOW Managed ServicesHIGH People Solutions 29.8 + 1.1% LOW to MED

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Sustained earnings growth

NPBT ($M)

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20 18.5
18
16 13.9
14 12.7
12
9.0
10 8.1
8 6.1
6 4.0
4
2
0
1H16 1H17 1H18 1H19 1H20 1H21 1H22
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NPAT ($M) - excluding minority interests

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14 12.4
12
9.4
10 8.7
8
6.1
5.7
6
4.3
4 2.7
2
0
1H16 1H17 1H18 1H19 1H20 1H21 1H22
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Basic EPS (cents)
9 8.01
8
7 6.09
5.65
6
5 3.99
3.71
4
2.77
3
1.76
2
1
0
1H16 1H17 1H18 1H19 1H20 1H21 1H22
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DPS (cents)
8 7.25
7
6 5.10 5.50
5
3.60
4 3.35
3 2.50
1.60
2
1
0
1H16 1H17 1H18 1H19 1H20 1H21 1H22
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Statement of profit or loss

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• Revenue increased by 16.6%

• Gross profit increased by 17.5% (from $89.7M to $105.4M) and total gross margin increased from 10.5% to 10.6% with changes in the revenue mix

• Internal staff costs increased by 13.3% (from $66.7M to $75.5M) due to 10% headcount growth (predominantly in Services) and general remuneration increases

• Other operating expenses increased by 19.7% (from $9.7M to $11.6M), largely due to expenditure on new Microsoft D365 ERP system:

• $1.3M expensed in 1H FY22

• o $1.8M capitalised in 1H FY22

• Basic EPS increased by 31.5%

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Steady improvement in operating leverage

Total gross profit ($M)

Internal expenses (Staff & Operating costs $M)

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120 120
105.4
100 100
88.6 89.7
82.3
80 74.0 71.8 80
68.4
62.4
60 60 Staff
Operating
40 40
ICR (%)
20 20
0 0
1H15 1H16 1H17 1H18 1H19 1H20 1H21 1H22 1H15 1H16 1H17 1H18 1H19 1H20 1H21 1H22
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Gross margin % has varied with changing sales mix.

Internal Cost Ratio (ICR) = Internal expenses / Gross profit.

The ratio has improved from 93% in 1H FY15 to 83% in 1H FY22 (1H FY21 = 85%)

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Balance sheet

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• Strong balance sheet with no borrowings

• 4[th] quarter revenue spike inflates Trade receivables and Trade payables at 30 June

• Inflated temporary cash surplus at 30 June

• Average DSOS of 26.8 days (1H FY21 = 27.3 days)

• Inventory slightly inflated due to supply chain delays, however all inventory is allocated to customer orders.

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Working capital analysis

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Working capital components
700,000
600,000
500,000
400,000
300,000
200,000
Other current assets
Inventory
100,000
Current receivables
- Cash
Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21
Other current liabilities
-100,000
Current payables
-200,000 Working capital
-300,000
-400,000
-500,000
-600,000
-700,000
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• Short or negative working capital cycles underpin selffunding business model

• Low inventory, allocated to customer orders or projects

• • Average collection cycle around 27 days

• Favourable trade terms with suppliers

• Stable working capital position, despite significant seasonal fluctuation 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 the collections from customers and payments to suppliers around 30 June generate large temporary cash surpluses at year-end, which are paid out in 1H .

• 1H FY22 average cash balance $190M (1H FY21 = $158M)

• Underlying ‘free cash’ is typically in the $15M to $20M range.

• Low capital expenditure

• High dividend (payout ratio approx. 90%)

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Strategy & Outlook

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Strategic Focus Areas

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Customer Security Experience

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Accelerating Services

Protecting our business

Completed rebuild of Managed Services

Long term view, not transactional Lifecycle approach

Market opportunity

Executive leadership

Strong growth in Consulting & Support Services

Go-to-market with Business Aspect

Joint investments with global vendors

Complementing vendor incentive programs

We will continue to focus on driving growth in our services and software businesses to increase recurring revenues and improve our margins.

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Outlook

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Strong growth outlook for AU IT market with biggest opportunity in software & services

Services growth complements software and infrastructure divisions, while improving recurring revenue and margins

Growth in cloud business provides data and insights to enhance lifecycle services

Supply constraints set to continue into FY23, well placed to grow market share

Strong pipeline of major integration project opportunities as large corporates and government drive transformation agendas

“While the strong trading performance has continued at the start of the second half, given pandemic-related uncertainties remain, at this stage it would not be prudent to provide specific guidance for FY22.

In line with previous years, we continue to expect a sales peak in the months of May and June and a higher profit skew in the second half, and to deliver sustainable earnings growth.”

• Laurence Baynham, CEO

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Q&A

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Appendix
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Recent Awards

Cisco Global Software Partner of the Year	Microsoft OEM Device Reseller Partner of the Year	Aruba As a Service Partner of the Year	2021 Employer of Choice, HRD Magazine Trend Micro Security Partner of the Year
Dell Technologies 2021 APJ Channel Excellence in Cloud Sales Award Lenovo Technical Excellence for Australia	ARN Partner Value - Enterprise	Veeam Pro Partner of the Year ANZ	Cisco ANZ Partner of the Year Dell Technologies Solution Provider of the Year for Australia 2021
Poly Hybrid Solutions Partner 2021 ANZ ARN Emerging Technologies – Digital Transformation	Cisco APJC Security Partner of the Year	Palo Alto Networks Growth Partner of the Year	Microsoft Azure Expert Managed Services Provider Certification

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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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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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