Margin Pressures Loom as Dicker Data Shifts to Enterprise Focus
Dicker Data has reported a robust first half of FY25, with revenue climbing 15.7% driven by AI-related deals and an accelerated PC refresh cycle. The company raised its full-year guidance, signaling confidence despite ongoing market challenges.
- H1 FY25 gross revenue up 15.7% to $1.84 billion
- Net profit before tax increased 11.4% to $56.6 million
- Strong growth fueled by Windows 10 refresh and AI transactions
- FY25 guidance raised – revenue $3.7-$3.8 billion, profit before tax $120-$124 million
- New vendor partnerships including CrowdStrike and launch of Telco division
Strong First Half Performance
Dicker Data (ASX, DDR), a leading Australian technology distributor, has delivered a compelling first half for FY25, with gross revenue rising 15.7% to $1.84 billion. This growth marks a return to double-digit expansion, driven primarily by an accelerated PC refresh cycle prompted by the Windows 10 end-of-support deadline and significant Artificial Intelligence (AI) related transactions. The company’s net profit before tax also rose 11.4% to $56.6 million, underscoring operational strength amid a competitive and subdued market environment.
Strategic Shifts and Margin Dynamics
While revenue surged, Dicker Data’s gross profit margin narrowed slightly to 9.1% from 9.8% in the prior corresponding period. This margin compression reflects a deliberate strategic pivot towards higher-value, lower-margin enterprise customers and increased upfront investments in expanding its software business. CFO Mary Stojcevski highlighted that these investments are expected to yield benefits in the second half, positioning the company for sustainable growth despite ongoing softness in the small and medium business (SMB) segment.
Expanding Market Footprint and Vendor Portfolio
The company’s Australian operations led the charge with an 18% revenue increase, complemented by a 4.9% rise in New Zealand. Dicker Data also broadened its vendor ecosystem, securing new distributorships with cybersecurity leader CrowdStrike, as well as adding BMC, Vast Data, and others to its portfolio. The launch of a new Telco division, supported by partnerships with Optus and Vocus, signals an ambitious push into adjacent markets, diversifying revenue streams and enhancing competitive positioning.
AI Leadership and Future Growth Catalysts
Dicker Data continues to cement its leadership in AI distribution, maintaining its position as the top distributor of Microsoft Copilot in Australia and New Zealand for ten consecutive months. Notably, the company was selected to supply technology for Australia’s first sovereign AI factory, A1-F1, in Melbourne, a project that contributed significantly to H1 results and is expected to expand in coming quarters. Further announcements on AI ecosystem partnerships are anticipated soon, underscoring the company’s commitment to innovation-led growth.
Outlook and Guidance
Looking ahead, Dicker Data raised its FY25 guidance, forecasting gross revenue between $3.7 billion and $3.8 billion, representing growth of 10% to 13%. Net operating profit before tax is expected to reach $120 million to $124 million, with a margin of approximately 3.2% to 3.4%. Despite persistent challenges in the SMB market and a competitive landscape, the company’s diversified approach and strategic investments provide a solid foundation for continued momentum.
Bottom Line?
Dicker Data’s strategic investments and AI leadership set the stage for sustained growth, but margin pressures and SMB softness warrant close watch.
Questions in the middle?
- How will Dicker Data’s AI ecosystem partnerships impact revenue and margins in FY26?
- What is the expected timeline and scale for the next phases of the A1-F1 sovereign AI factory project?
- Can the new Telco division meaningfully diversify revenue amid intensifying competition?
