DATA#3 LIMITED — Interim / Quarterly Report 2024

Feb 14, 2024

FY24 Interim Results Briefing

15[th] February 2024

Presented by

Laurence Baynham CEO

Cherie O’Riordan CFO

Brad Colledge Executive General Manager (Incoming CEO)

1

Agenda

Data[#] 3 Overview

1H FY24 Operational Overview 1H FY24 Financial Performance IT Sector Trends and AI FY24 Strategy & Outlook Q&A

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1H FY24 Financial Highlights

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NPBT NPAT Gross Sales
$30.8M $21.4M $1.3B
Up 25.3% Up 25.5% Up 13.4%
Gross Profit Basic EPS Dividends per share
$130.6M 13.85 cents 12.60 cents
Up 8.8% Up 25.5% Up 26%
Payout ratio of 91%
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1H FY24

Operational Overview

4

1H FY24 Overview

Gross Sales growth rate relative to IT market >2x

People

Recurring People Gross Sales up from 65% to + 67% 1,400

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Recent key awards + certifications

• Continued sustainable earnings growth across several years

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

• Strong growth in Gross Sales of 13% in Managed Services and 14% in Software Solutions, supporting recurring Gross Sales​

• Cisco Global Software Partner of the Year – 6[th] Global Cisco award in a row

• Microsoft Surface PC Reseller Worldwide Partner of the Year

• Microsoft Surface+ Worldwide Partner of the Year

• Winning market share through breadth of offering and strength of supplier and customer relationships

• Record interest income of $6.5m off strong cash position, improved stock and higher cash rate

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Succession Planning

• New Chair announced October 2023

• Managing Director and CEO succession March 2024

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5

1H FY24 Operational Highlights

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Multi-cloud Growth

Cloud is now ubiquitous in our customer solutions

Security Growth

Fastest growing solution and top customer priority ISO 27001 certified

Services

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

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Working Capital

Improved supply chain Improved DSOS Strong cash position

Customer Experience

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

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Global Vendors

Awards, certifications and incentives

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6

1H FY24

Financial Performance

7

Sustained earnings growth

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NPBT ($M)
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35
30.8
30
24.6
25
18.5
20
13.9
15 12.7
9.0
10
5
0
1H19 1H20 1H21 1H22 1H23 1H24
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Basic EPS (cents)

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13.85
14
12 11.04
10
8.01
8
6.09
5.65
6
3.99
4
2
0
1H19 1H20 1H21 1H22 1H23 1H24
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NPAT ($M) - excluding minority interests
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DPS (cents)

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25
21.4
20
17.1
15 12.4
9.4
8.7
10
6.1
5
0
1H19 1H20 1H21 1H22 1H23 1HY24
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14 12.50
12
10.00
10
7.25
8
5.50
6 5.10
3.60
4
2
0
1H19 1H20 1H21 1H22 1H23 1H24
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8

Change in revenue presentation

• Review of software licensing agreements to reassess whether the company is acting as principal or agent

• Determined that the company is acting as an agent in respect of these sales, which resulted in a change to the Company’s revenue accounting policy effective

• 1 July 2023

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

• Comparatives have been restated

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

ntation
$M	1H FY24	1H FY23	1H Growth %
Gross Sales*	1,315.3	1,164.4	13.0%
Gross Profit	130.6	120.0	8.8%
Margin on gross sales	9.9%	10.3%
Statutory Revenue**	443.5	403.5	9.9%
Gross Profit	130.6	120.0	8.8%
Gross Margin (Statutory Revenue)	29.4%	29.7%

• 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 revenues on a net basis and excluding other income.

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Sustained growth in Gross Sales

Total Gross Sales ($M)

Gross Sales CAGR of 15.5%[1] fuelled by software licensing, multi-cloud solutions and services.

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1400
1,321.9
1200 1,166.1
999.3
1000
856.7 Strong customer spend in higher
growth education, health
800
718.9
and resource sectors.
644.4
600
400
200
~67% of Gross Sales is recurring,
0 meaning under term-based contracts.
1H19 1H20 1H21 1H22 1H23 1H24
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1. CAGR growth from 1H FY19 – 1H FY24

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Changing sales mix

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Gross Sales trend by functional area ($M)
1400
1200
1000
800
600
400
200
0
1H19 1H20 1H21 1H22 1H23 1H24
Infrastructure Solutions Software Solutions Services
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Business unit	1H FY24 Gross Sales ($M)	Change vs. 1H FY23
Business Aspect Consulting	16.1	+ 0.9%
Project Services	38.4	+ 5.9%
Maintenance Services	63.2	+ 36.1%
Managed Services	20.9	+ 12.6%
People Solutions (recruitment)	31.8	- 12.8%
Total Services	172.2	+ 11.1%
Software Solutions	875.7	+ 14.2%
Infrastructure Solutions	268.5	+ 10.7%

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Gross margin and Gross profit

Drivers of first half Gross Profit growth of 8.8%:

• Strong growth in software licensing and multi-cloud revenues

• Services growth has boosted total Gross Profit, in line with strategy

• Infrastructure Solutions impacted by customer pre ordering in prior year

• Competitive product market and rebates moving to service based, putting downward pressure on product margins, however pleasingly consistent with FY23

• Expect to see continued improvement in Services profitability, as contracts onboarded during FY23 complete transition and become more profitable

Objective continues to be to deliver steady, sustained growth in total Gross Profit $, as shown by several years of consistent financial performance.

	1H FY24	FY23	1H FY23	1H Growth %
TotalGross Profit ($M)	130.6		120.0	8.8%
TotalMargin on gross sales	9.9%	9.8%	10.3%
ProductGross Profit ($M)	64.9		62.2	4.3%
ProductMargin on gross sales	5.7%	5.7%	6.2%
ServicesGross Profit ($M)	65.7		57.8	13.6%
ServicesMargin on gross sales	38.2%	36.4%	37.3%

Overall Margin on gross sales % varies with changing revenue mix.

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Steady improvement in operating leverage

Internal expenses (Staff & Operating costs $M)

Total Gross Profit ($M) & Total Margin on gross sales (%)

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140 130.6 15.0% 120 100.0%
120.0 14.0%
120
100
105.4 13.0% 95.0%
100 88.6 89.7 12.0%
80
82.3
11.0% 90.0%
80
10.0% 60
60
9.0% 85.0%
40
40 8.0%
7.0% 80.0%
20
20
6.0%
0 5.0% 0 75.0%
1H19 1H20 1H21 1H22 1H23 1H24 1H18 1H19 1H20 1H21 1H22 1H23 1H24
Operating Staff ICR (%)
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• 1H FY24 Margin on gross sales consistent with FY23

• • Relatively steady gross sales margin % since FY21, despite continued strong Software growth at lower margins

• • Expect Margin on gross sales 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

• • 1H FY24 slightly up 81.4% vs 1H FY23 (80.9%) due to wage inflation and annualised impact of 2H FY23 investment in people, automation and systems ahead of returns

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13

Statement of profit or loss

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• Revenue increased by 11.1% (including other income)

• Interest income $6.5M vs 1H FY23 $1.6M. ~ $2.5M forecast for 2H FY24, assuming no change to cash rate or cash flow seasonality

• Internal staff costs increased by 10.1% on 1H FY23, due to increase in permanent employees (predominately related to investments in growing Services) and general remuneration increases/ wage inflation

• Other operating expenses increased by 5.1%:

• Increase in travel costs

  • Software licensing (predominately Managed Services)

• Internal IT projects

• Basic EPS increased by 25.5%

• Return on equity 29.9% (1H FY23 22.6%)

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Balance sheet

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• Strong balance sheet with no borrowings

• December sales spike (in line with normal customer spend patterns) inflated trade receivables and trade payables at half year end. As in prior periods, this created a large temporary cash surplus at 31 December, but to a lessor extent than 30 June

• Inventory holdings returned to pre pandemic levels. All inventory is allocated to non-cancellable customer orders

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15

Working capital analysis

Efficient working capital model.

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Working capital components
870,000
770,000
670,000
570,000
470,000
370,000
270,000 Other current assets
Inventory
170,000
Current receivables
70,000
Cash
-30,000 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 Dec-23 Other current liabilities
Current payables
-130,000
Working capital
-230,000
-330,000
-430,000
-530,000
-630,000
-730,000
-830,000
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Short or negative working capital cycles underpin self-funding of business.

Inventory reduced in 1H FY24.

Average collection cycle ~ 27 days (PCP 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

• Ended FY23 with higher than normal cash position due to customer prepayments, causing higher net outflow in 1H FY24

• 1H FY24 average daily cash balance $300M due to surplus carried over from June 2023 (1H FY23 = $147M)

• 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

Annual spend on IT expected to grow 6.8%

Organisations to invest in planning for use of GenAI

Software

13% growth expected > US$1Trillion globally

Devices

5% growth expected (decrease of 9% in 2023)

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IT Services

9% growth expected Organisation efficiency & optimisation projects

Data Centre

7.5% growth expected

Communication Services

2% growth expected Peaked during pandemic with remote work solutions

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1. Gartner: Top 5 tech markets in 2024 by global spending

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We've moved from talking about AI to applying AI at scale.

By infusing AI across every layer of our tech stack, we're winning new customers and helping drive new benefits and productivity gains across every sector.

Satya Nadella, CEO of Microsoft

20

The Data[#] 3 AI opportunity - M365 Copilot Readiness Assessments and associated services

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Information Governance and Security

Organisational Technology Change Platform Management

Significant services opportunity for consulting and adoption of AI Solutions 120 plus opportunities since November and growing

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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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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

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Security

Cloud Security Data Security and Privacy

Identity and Access Management

Infrastructure and Endpoint Security

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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

Security Monitoring and Analytics

Consulting

Project Services

Lifecycle

Support Services

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2424

Lifecycle

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Recent Customer Stories https://www.data3.com/knowledge-centre

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Royal Flying Doctor Service

Business Problem

The Royal Flying Doctor Service (RFDS) (Queensland Section) was dependent on disparate data sources and wanted to integrate aircraft, patient, and crew data to give a clear picture of availability.

IT Outcome

• Access to integrated, real-time data

• • Improved accuracy

• Increased data analytics capabilities

Business Outcome

• Accelerated ability to respond to calls

• • Reliable information available at all locations

• Staff able to make better supported decisions under time pressure

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Data[#] 3 Competitive Advantages

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Our People

Ability to attract and retain the best people

Our Partners

Partnerships with leading global vendors

Our Expertise

Expertise and breadth of solutions across the customer lifecycle

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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Strategic Focus Areas

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 growth in Consulting & Managed Services sales

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

29

Outlook

Multi-Cloud & Security Growth Continued growth in multi-cloud solutions and cyber security solutions

Services Growth

Services growth is expected to be accelerated by interest in AI and overall improvement in gross sales margins

Software and Infrastructure Growth

Steady growth in Software Solutions as public sector and large corporates continue their digital transformation journeys. Lower growth expected in Infrastructure Solutions where networking spend will slow, however End User Computing will continue to improve

Consistent with previous practice, we are unable to provide specific FY24 guidance at this stage.

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 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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