Data#3 delivers record FY26 with gross sales up 12.7% to $3.4B
In its FY26 results briefing, Data#3 reported a record year, with gross sales rising 12.7% to $3.4B and net profit before tax (NPBT) climbing 14.0% to $78.8M. The presentation was delivered by Managing Director and CEO Brad Colledge alongside Chief Financial Officer Cherie O’Riordan.
The ASX 200-listed IT services and solutions provider, which has operated for over 48 years across Australia and the Pacific Islands, recorded statutory revenue of $907.3M, up 6.4% and a distinct figure from gross sales. Management noted record years across Infrastructure Solutions, Software Solutions, Business Aspect and Managed Services.
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FY26 headline results at a glance
The company outlined its key financial metrics across the full-year period.
| Metric | FY26 | Change |
|---|---|---|
| Gross Sales | $3.4B | up 12.7% |
| Gross Profit | $305.2M | up 5.3% |
| EBIT | $69.8M | up 16.6% |
| NPBT | $78.8M | up 14.0% |
| Basic EPS | 35.16 cents | up 13.0% |
| DPS | 31.75 cents | up 13.0% (90.3% payout ratio) |
Management highlighted three standout achievements from the year:
- Gross sales growth above the Australian IT industry
- Recurring gross sales lifting to 70% (up from 69% in FY25)
- Customer satisfaction rating of 4.36/5 (up from 4.32)
Over the five years from FY21 to FY26, the company reported compound annual growth rates (CAGR) of 11.6% for gross sales, 9.4% for gross profit, 16.3% for basic EPS and 16.0% for dividends per share, signalling consistent long-term growth.
Divisional performance: Infrastructure and Software lead the charge
Infrastructure Solutions — record year
The division recorded gross sales of $651.1M, up 14.1%, with management profit surging 78.3% to $31.2M and gross margin lifting to 13.0%. Growth was driven by End User Compute, underpinned by Windows 11 upgrades and device refresh cycles, alongside Data Centre storage and servers, which grew over 19% as customers moved to hybrid cloud and prepared for AI adoption.
Management noted the division expertly managed supply variability related to global memory shortages and significant hardware price increases, while automation and process improvements delivered cost efficiencies.
Software Solutions — record year
Software Solutions delivered gross sales of $2.3B, up 14.1%, with management profit rising 7.7% to $41.0M. Demand was led by security products, cloud subscriptions, Adobe and Azure. The company reported that the impact of Microsoft incentive program changes was successfully mitigated, and it secured strong Enterprise Agreement renewals including the Federal Govt Microsoft Volume Sourcing Agreement (VSA). Data#3 was also named 2025 Microsoft Country Partner of the Year.
The Federal Government Microsoft VSA panel reappointment, secured earlier in 2026 under the Digital Transformation Agency’s VSA6 framework, extends Data#3’s incumbent licensing position through to FY31 and creates a structured platform for cross-selling higher-margin cloud, security, and consulting services to Commonwealth agencies.
Services — mixed but resilient
Services gross sales reached $412.3M, up 3.6%, with divisional results varying across business units:
- Business Aspect Consulting: record year, up 22.1%
- Maintenance Services: up 11.5%
- Managed Services: up 9.4%
- Project Services: down 15.3%, impacted by project delays and extended procurement processes
- People Solutions: down 8.7%, reflecting a tight labour market
The company framed Project Services softness as a period of developing new solutions and capability during FY26, for execution starting FY27.
Why AI is Data#3’s next growth engine
As enterprises adopt AI tools such as Microsoft Copilot and Azure, they require supporting infrastructure, security, licensing and managed services, all areas Data#3 supplies. This positions the company across the fastest-growing segments of enterprise IT spending.
The presentation detailed standout solution growth, with Device as a Service and AI both recording over 100% growth, Public Cloud Azure up 29%, Security up 21%, Data Centre up 19% and End User Compute up 18%.
Management pointed to a positive read-through from Microsoft’s FY26 result, reported on 29 July 2026, where Azure passed a US$100B annual run-rate, Microsoft Cloud reached US$214B and AI demand outstripped supply. These trends reinforce demand across Data#3’s fastest-growing lines.
Internally, the company reported using AI to deliver $5m+ in cost avoidance, deploying 260+ AI agents across the business and analysing 650+ security events per second to protect against cyber threats.
Financial position and cash management
The company reported a strong headline cash position alongside softer operating cash flow, which management attributed to timing rather than deterioration.
- Closing cash of $326.0M (FY25: $356.7M), with average daily cash of $276M, up over 3%
- Operating cash flow of $23.3M (down from $126.3M), driven by the timing of June peak receipts and payments
- Inventory increased to $73.4M (FY25: $18.4M) to manage supply and memory shortage risk
- Average Day Sales Outstanding maintained at 25 days
- Dividends paid of $44.2M, at approximately a 90% payout ratio
- Internal Cost Ratio (ICR) improving to 77.5% (from 79.7%), signalling improved operating leverage
The Australian IT market backdrop
Management referenced Gartner forecasts pointing to an expanding, AI-driven runway across the Australian IT market for calendar 2026.
- Total IT spend expected to grow 8.9% to $172B
- Software expected to grow 13.6% to $60B
- Data Centre expected to grow 22.5% to $10B, AI-driven
- IT Services expected to grow 5.6% to $59B
These forecasts position Data#3 within markets expanding on the back of generative AI adoption.
Strategy and outlook: investing for FY27 growth
The company outlined two deliberate FY27 investments designed to accelerate the growth and profitability of its Services business: a new Artificial Intelligence Practice and a 24×7 Sovereign Security Operations Centre.
On leadership, management noted that Michael Bowser retired from the Executive General Manager – Services role effective 31 December 2025, after more than 38 years of service. David Gold was welcomed to the role in March 2026, bringing more than 30 years’ experience across consulting, professional services and managed services.
The outlook highlighted continued Infrastructure growth across AI infrastructure, End User Computing, networking and hybrid cloud, a return to normal Software growth, and expanded Managed and Project Services offerings.
Consistent with previous practice, the company is not providing specific FY27 guidance. Management reiterated the expectation of a sales peak in May and June, with earnings skewed to the second half.
Brad Colledge
“We have a growing market, excellent support from our vendor partners and momentum generated by AI. As a leader in the Australian IT industry, there is no better place to be.”
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