Data#3 Shares Soar Nearly 14% as IT Firm Guides to 40% Profit Jump, Bucking Sharp ASX Sell-Off Thursday

SYDNEY — Shares of Data#3 Ltd. surged nearly 14% on Thursday after the Australian IT services provider said it expects first-half profit to jump more than 40%, well ahead of analysts' forecasts, making it one of the standout performers on a day when the broader market tumbled.

The stock rose A$1.52, or 13.68%, to close at A$12.63. Shares had climbed as much as 23.3% to A$13.74 shortly after the announcement before paring some of those gains.

The rally came as the benchmark S&P/ASX 200 index fell nearly 2% to a four-month low, weighed down by rising global bond yields and a late sell-off on Wall Street.

Profit guidance well above forecasts

In an update released at noon AEST, Data#3 said its consolidated net profit before tax for the first half of fiscal 2027, the six months ending Dec. 31, is expected to be more than 40% higher than the A$33.5 million reported in the same period a year earlier. That implies first-half pre-tax profit of more than A$46.9 million.

The company also said gross profit for the half is expected to rise more than 15% from the prior corresponding period, to above A$165.5 million.

The pre-tax profit guidance came in at least 20% above Macquarie's estimate of A$39.1 million, according to Market Index. The gross profit outlook was modestly ahead of the broker's forecast of A$164.5 million.

Data#3 shares were briefly halted after the announcement and resumed trading at 12:11 p.m. The stock had been up about 1.8% before the halt and gapped up to a gain of 7.4% when trading resumed, before rallying further.

What's driving the result

Data#3 said the stronger first half reflects several factors, including a number of one-off larger transactions, increased activity across its Infrastructure and Software Solutions businesses, and the timing of planned investment spending.

The result will also include about A$1.5 million in interest income above expectations, driven by favorable cash flow timing in the first quarter.

Profit skewed to first half

The company cautioned that its full-year earnings will now be weighted toward the first half because of the significant, non-recurring items boosting the current period.

That marks a shift from analysts' previous expectations. Macquarie had forecast second-half pre-tax profit of A$49 million, ahead of its first-half estimate, according to Market Index.

The guidance suggests some of the first-half strength reflects timing rather than a permanent step-up in earnings, an important consideration for investors assessing the stock's sharp gains. Still, the scale of the upgrade signaled strong demand for the company's technology services and solutions.

Strong year for the stock

Thursday's gain extended a strong run for Data#3 shares. The stock was up about 37% over the past 12 months as of mid-afternoon Thursday, according to Capital Brief, giving the company a market value of roughly A$2 billion.

Data#3 is one of Australia's largest IT services and solutions providers. The Brisbane-based company helps businesses and government agencies design, buy, deploy and manage technology, including cloud services, cybersecurity, software licensing, networking and data center infrastructure. It is a major partner of large global technology vendors, including Microsoft.

The company has benefited in recent years from strong demand for cloud migration, cybersecurity and digital transformation projects, as well as growing interest in artificial intelligence tools among corporate and public sector customers.

Bucking the market

Data#3's surge stood in sharp contrast to the broader Australian market on Thursday. The ASX 200 fell to its lowest level since mid-June, with every sector in the red, as investors reacted to rising bond yields at home and abroad.

Australia's policy-sensitive three-year government bond yield rose to 4.98%, while U.S. 10-year and 30-year Treasury yields climbed toward multi-decade highs. Higher yields tend to weigh on stock valuations, particularly for growth-oriented companies.

Earnings and guidance updates have been among the few catalysts strong enough to cut through the cautious mood. Earlier this week, defense and communications company Codan soared after upgrading its first-half profit guidance.

Other companies posting notable moves on Thursday included Lynas Rare Earths, which fell after announcing a A$968 million all-scrip deal for Meteoric Resources, and Liontown Resources, which slid 15% as investors weighed the cost of its Kathleen Valley lithium expansion.

Data#3 said it will provide a business update at its annual general meeting on Oct. 28. The company is scheduled to report its first-half results and interim dividend on Feb. 22, 2027.

Investors will be watching for further detail on how much of the first-half strength comes from one-off transactions and how the company expects demand to hold up in the second half. Analysts are likely to revise their forecasts following Thursday's update, which could shape the stock's next move after its sharp rally.