Data#3 Shares Surge 7.8% as IT Services Firm Forecasts Up to 70% Jump in First-Half Profit at Annual Meeting

Data#3 Ltd shares rose nearly 8% on Wednesday. The Brisbane-based information technology services company told shareholders it expects first-half profit to surge as much as 70%, helped by large one-off transactions and higher interest income.

Data#3 shares gained A$1.08, or 7.78%, to close at A$14.97. In the session they traded between A$13.50 and A$15.145. About 1.2 million shares changed hands, and the company's market value rose to about A$2.3 billion.

The stock is up about 64% over the past year.

The broader S&P/ASX 200 ended flat at 8,847.3, though technology stocks outperformed.

Upgraded guidance

At its annual general meeting on Wednesday, Data#3 said it expects pre-tax profit for the first half of fiscal 2027 of A$52 million to A$57 million. That would be growth of 55% to 70% from the same period a year earlier.

The company said the forecast was driven by:

Gross profit growth of about 20% Estimated interest income of A$8.8 million Several large one-off transactions expected in the first half

Data#3 said it expects growth to return to more normal levels in the second half and across the full year.

Record year

The guidance follows record results for the 2026 fiscal year:

Gross sales of A$3.4 billion, up 12.7% Profit before tax of A$78.8 million, up 14% Net profit after tax of A$54.5 million, up 13.1% Fully franked dividends of 31.75 cents a share, up 13%

The company has no debt and held A$326 million in cash.

Landmark government contract

A key driver of Data#3's growth has been its appointment as the sole panel provider of Microsoft products and services to the Australian government for five years, which the company has described as the largest contract in its history.

Data#3 is one of Australia's largest technology solutions providers. It resells software and hardware and provides cloud, cybersecurity, networking and managed services to businesses and government agencies. Microsoft is its most important vendor partner.

AI demand

Data#3 is also positioned to benefit from businesses investing in artificial intelligence, cloud computing and cybersecurity. As organizations upgrade systems and adopt AI tools such as Microsoft's Copilot, IT services providers have seen strong demand for software licenses, infrastructure and implementation services.

The large one-off transactions in the first half reflect lumpier, larger deals, which can boost profit in individual periods but may not repeat.

Strong share run

Data#3's shares have risen sharply over the past year, reflecting its consistent earnings growth, the government contract and high dividend payouts. Wednesday's gain pushed the stock close to its highs.

Interest rate impact

The company's large cash balance means it benefits from higher interest rates through interest income. Inflation data released Wednesday increased expectations that the Reserve Bank of Australia will raise rates at its meeting on Nov. 3, which could add to that income.

What to watch

Investors will look for confirmation of the profit surge when Data#3 reports first-half results early next year. They will also watch whether growth normalizes as expected in the second half, and for further contract wins with government and enterprise customers.

_This article is for information only and does not constitute financial advice._