Dicker Data Stock

Good morning, everyone, and welcome to Dicker Data's First Half FY '26 Results Webinar. My name is Sam Wells from NWR, and joining me from the company today is Executive Director and Chief Operating Officer, Vlad Mitnovetski; as well as Executive Director and Chief Financial Officer, Mary Stojcevski. [Operator Instructions]. And with that, I'll pass it over to you, Vlad and Mary.

Hi, and good morning, everyone. Thank you for joining us on our Half Year Results Presentation and update. We are going to go through the results, the business update, a relook at our strategy, and the outlook for the rest of the year. To kick it off, just a summary of where we've landed for the half year. It's been an amazing result as a result of significant work by all our teams. We've seen gross revenue increased by 14.2% to $2.1 billion, which was driven by refresh cycles around endpoint and data center and a significant contribution from growth in our Software business. You can see our recurring revenues from Software have increased by -- that increased to $600 million, representing a 20.7% increase. It was approximately $100 million gross sales added in our Software division, and Vlad is going to go into more details in our segment split when we provide a further update around the operational aspects of the business.

Significant improvement in our EBITDA increasing by 37.3% and a very, very pleasing result on net operating profit before tax finishing just over 50% growth on the prior year. And earnings per share finalizing at $0.335 per share, up 53.5%. If we have a closer look at the breakdown and our trends over the years, there's an outstanding result for this half, driven by opportunities around inventory purchasing that we were able to take advantage of during the first half of the year, driving some margin improvement. And as you can see, the half year result margin expansion from the prior year also resulting in significant uplift in PBT margin, whilst there was the sales growth contributing to that margin expansion, but also pleasingly, we're able to have operating leverage and cost control as well, driving that outcome.

If you look at the group results, the gross profit margin expanded to 9.8%, benefiting from some strategic stock purchases that we were able to have the opportunity to buy. We invested heavily in working capital. We did outline that with our full year results at the start of the year that we were investing additionally ahead of price rises and supply constraints, and that strategy has paid off with that contributing margin increasing. But equally, we've been able to control the costs and overall expenses as a percentage of our gross revenue has declined, showing the operating leverage coming through in that PBT margin.

If we take it down a little bit in more detail across our regions, we've had some mixed results between Australia and New Zealand. Very strong results in Australia driven by the elevated endpoint refresh Software growth and our data center refresh demand. The Australian business reflecting very strong gross margins with a lot of investment in inventory made and strategic purchasing decisions probably starting late last year, and we're seeing the benefit of that coming through with operating profit before tax in the Australian business increasing by 55.9%, being a significant uplift and very strong PBT margins as a result.

Alternatively, in our New Zealand business, we're still pleased with the results in a very difficult market. Unfortunately, there were a lot more supply constraints experienced in our New Zealand business across our hardware vendors, particularly around portfolios like HP and Apple, where the opportunity to bring in inventory was limited, which then impacted top line. Even -- despite that, there was some growth recorded across our gross revenue delivered with gross margins coming off slightly, particularly driven by pressures within our consumer business.

We were able to maintain expenses in line with prior year. But unfortunately, the result was a softer result. And when converted in AUD, the NZD results were impacted by the NZD impact and the translation effect coming through on the consolidated basis. However, we have seen some of those supply constraints ease coming into July and August in access to inventory. So we are seeing that turning around in terms of growth on the top line. And we will continue driving portfolio diversification in New Zealand to limit the impact of supply constraints and other issues with specific vendors, which Australia has a much more diversified portfolio. So we are able to leverage anything that impacts a particular vendor, whereas New Zealand has got a slightly more concentrated vendor portfolio, and that's continued work, and I'm sure Vlad will expand on that in his business update.

From a balance sheet perspective, we feel there's been a lot of work and -- work around managing our working capital despite significant investments in increasing inventory. Inventory increased by over $100 million, and they were very strategic buying ahead of price rises. We've seen elevated levels of receivables as well, driven by a strong June finish. However, pleasingly, we're able to still manage the working capital only slightly elevated in total dollars and at the same time, reduced some gross debt, particularly around slight changes to our dividend policy and more participation in our DRP, allowing some repayment of debt for that period.

We'll continue investing in our working capital as required and ahead of changes, market changes. So that debt position can vary over time, but having the outcome for the half year come down by about $10 million was a great result. Also wanted to point out a change in accounting policy that we put in place at 30 June this year. We had the valuation of the building done, a formal valuation. And we feel that this change in accounting policy reflecting the current asset -- the fixed asset of the building at valuation as opposed to cost is better information for our investors, therefore, adopted the change in accounting policy reflecting the building at that valuation, resulting in an uplift of non-current assets of over $107 million, and that's been reflected accordingly and obviously flows through to the ratios that our balance sheet ratios represented across our debt and equity pieces.

The company continues to pay quarterly dividends. We did announce a slight change to our dividend policy and moving away from 100% payout to a number that's going to be determined at each dividend declaration period, but at least at 80%. We also introduced a DRP discount, and we've seen an increased participation in that, therefore, there cash flow impact of that and the -- resulting in some equity contribution that we were able to utilize against debt. The quarterly dividends are continuing to be paid and the last -- the second interim dividend for FY '26 was declared in August at $0.115 to be paid on the 1st of September.

I'll hand it over now to Vlad, who will give you a little bit more detailed business update and strategy and outlook view for the rest of the year.

Excellent. Thank you, Mary. 2026, I called it out at the end of 2025, it would be a year of data center infrastructure modernization, refresh, and AI. And this is exactly what we're experiencing through 2026. Later on, I'll have a look at the overall pie of where the growth came from. And you would see that the biggest growth came from our Software division and from our Advanced Solutions division. And Advanced Solution is all to do with modernizing data centers, enterprise networking, enterprise server, and enterprise storage components, all packed up with the Software solutions. This is where the main growth coming from, and this is where if I look at the second half of 2026, this is where the main growth is going to continue to come for us.

So obviously, with that big focus on areas like power and cooling, server and storage, networking and all AI-enabled software solutions. We have launched a solution connect partner to partner marketplace. At the moment, we're operating in an industry and environment where no single vendor or no single partner can deliver an outcome-based result. Some of them can deliver a good technology or perhaps even some solutions, but no one can have a comprehensive outcome-based conversation with CEO or CFO purely on its own.

This is where Dicker Data play such an important role of a glue of a platform, bringing the entire ecosystem together and driving those conversations. And this is where we had a lot of wins because a lot of partners and vendors rely on us to bring it all together. We have launched our AI Accelerate program initiative internally, again, just driving that AI enablement and AI acceleration.

We have transacted just over $50 million of AI-related revenues in 2025. We have exceeded $50 million transaction of AI-related revenues in the first half of 2026 and we are expecting to do at least $50 million, perhaps more, in the second half of 2026. So we're very, very happy with the acceleration of the AI-related revenues. The pipeline is also very, very strong and also our back orders and open orders that will be fulfilled in the second half of '26 is also very, very strong. We're putting a lot of effort in that AI Accelerate initiative. We do strongly believe that this is going to empower growth for the organization.

The good thing with the whole AI play for us, it's not just a single face and event. It's the software, it's the hardware, it's networking, it's our relationship with Equinix. We're offering to the market various alternative solutions, very strong partnership with Microsoft, offering them AI -- experimental AI platforms on the Azure platform. We also sell a lot of Copilot, which is AI-related software solutions. We offer to the market ResetData, sovereign private GPU as a service offering for a lot of companies who doesn't want perhaps go to the hyperscaler, but want to have more localized sovereign experience and drive and build their models locally.

On the other hand, we're offering them the on-prem AI -- or the edge, where we give a lot of -- where we're offering a lot of on-prem solutions with AI factories for the whole organizations or for the departments within these organization and then move them up the stack. A lot of our technology vendors on the bottom of that slide is supporting that drive. So it's an incredibly powerful and strong story, and we're positioning ourselves as absolute ecosystem champions when it comes to bringing it all together and drive those solutions together.

Now let's have a look through a segment, what actually works. So if we look at the Software and Advance Solutions segment, it's now over 50% of our business. So over 50% of our business is growing at a very good double-digit growth, and we do anticipate a very similar growth in -- not only in the second half of this year, but also all the way into 2027. The Advanced Solution piece with the Software stack, it's a long term. It's starting now and it's going to go through many, many years of evolution because of the AI phenomenon.

So we're investing a lot. We're bringing expertise. We're driving the ecosystem. We're bringing all the partners together, and we're experiencing a fantastic growth out of those 2 segments. If I look at the Endpoint solutions, Endpoint solutions is basically our transactional business. This is where we supply a lot to our SMB community, mid-market community. That transactional business goes through the cycles, and it's very -- it's much driven by the changes in the economic conditions. Last year, we had a lot of tailwinds with the Windows 10 refresh opportunity. We still have Windows 10 refresh opportunity into this year. We actually have now a lot of opportunities with the Windows 11 refresh opportunities. So that's going to continue. However, because majority of the business, that [ M cloud ] computing business is going into our SMB market, the price increases really started to affect our SMB spending.

It's actually very simple here. The price is going up everywhere. The prices on enterprise networking, on leading -- on Advanced solutions on our Software business and our PCs all going up. But the budgets are not going up. Even though we are moving -- we're kind of moving away our conversation from the budget. It's easy to move away the conversation away from the budget when you talk to the mid-sized and enterprise customers because that's a very outcome-based conversation. It's not that easy to have that conversation with a small partner, small customer. Small partners and small customers, they're all about the IT budget, their spend and they're choosing where to spend. So when it comes for them to choose where to spend, a lot of them now are spending, again, modernizing their data centers, modernizing -- because they want to drive some AI activities. They need to buy more software, cybersecurity, and other things. So sometimes it's just what they have budget for and personal computing sometimes is getting put aside and we can sweat those assets, and we'll do it later.

What I'm trying to say is that the price increases in Endpoint solutions, it's starting to affect the number of units we're transacting, and it is slowly, slowly coming down. However, because of the price increases, we're still delivering the growth. I would probably see that the growth in Endpoint solutions, which is about 28% of our overall business, is going to continue to decline. We're still going to continue to grow, but probably not at double-digit rates, whereas Software and Advanced Solutions is going to continue doing really well.

Our Consumer and Retail business had a phenomenal half. We're adding new vendors, both Australia and New Zealand, and we're going to continue to grow maybe even a little bit more than 7.9%. Audio visual segment is very, very strong. It's going to be well over $200 million for us this year. It's growing nicely. We're putting a lot more focus there. Again, the prices is going up and customers choosing where to invest. And even with that, the breadth of portfolio and significant investment and expertise is driving the growth in this segment.

Our AAS business, Access and Surveillance, have shown a phenomenal 22.9% growth in the first half, and we're expecting a very similar growth rate into the second half of 2026. We've added some really strong vendors in 2025. Hikvision doing really well, Ajax, Milestone, and a few other very, very fundamental strong physical security vendors are starting to do well. We're also starting to take some good market share in this segment. So as you can see, most of the segments is performing really well. And when that happens, obviously, then a very strong result is getting delivered. So we're obviously very, very pleased with that.

We continue adding new vendors. ADATA is the memory vendor. We all know there is a shortages and supply constraint on the memory chips. So in adding ADATA into the portfolio of our memories is actually helping us to get more memories into our customers. We've added Sharp as our new audiovisual vendor, very, very big signing. We've signed Sophos and Huntress as our cybersecurity providers, strengthening that cybersecurity play. I've mentioned about ResetData and the GPU-as-a-Service, offering all our partners and customers an alternative to build their AI models on.

We've added Switch Connect and Symbio as part of our unified communications. And Telco division. We're putting a lot of effort to drive that division within Dicker Data. I think -- okay, we always put this slide because it's really good to compare how -- where is the market expected to perform and where Dicker Data is performing. And we're very pleased with how we're tracking against the Gartner prediction and forecast. So Gartner is saying that in Australia, the spend is going to be -- majority main growth is going to come from the data center systems, and that's exactly where Dicker Data is in the growth and continue growing. We have every single technology vendor under this roof. We have a very, very strong lineup of software vendors in Dicker Data Group. So combining it together, make it a very powerful and a very strong solution and outcome-based kind of offering to our partners.

If you look at the devices, the Gartner forecasting 6.6% increase. That's exactly where we feel we're going to finish the year at. This is where we think we're going to end up, which is still a growth, but that's sort of a mid- single-digit growth, very much in line with the Gartner forecast. Software, again, in line with the forecast, double-digit growth. We don't do a lot of services, as you guys know. But when it comes to a data center infrastructure solutions, when it comes to our software marketplace, and devices, I think we're very much in line with the Gartner forecast.

So no surprise here, 4 major drivers and what 4 major pillars of focus. Data center refresh, I think I've said enough. That's going to be our strongest performing segment together with software driving that growth. If I look at our current open orders or back orders as we see, we have, at the moment, over $400 million in back orders in the system right now, waiting for the stock to be fulfilled and a lot of that in the data center space. So that momentum is ongoing. Our new orders are coming in, the back orders just getting fulfilled, and we're going through that motion. If I look at July numbers and August numbers, that momentum is continuing. So that data center piece is very, very solid and very strong.

Artificial intelligence, I think I've said enough, I see that as the biggest growth opportunity for our company, not only now and this year, we are expecting to be well over $100 million of actual invoicing, but the amount of effort we're putting in there, we are expecting a much, much stronger growth in 2027 and 2028 and beyond. Windows refresh is still an opportunity. I just mentioned before, there is a Windows 11 refresh opportunity already. Well, we have more than 0.5 million devices that need to be refreshed. Windows 10 is still an opportunity. And our transactional PC business is an ongoing run rate business as well. So it's always going to be there.

I cannot mention -- I cannot not mention cybersecurity. Cybersecurity is a gift, keeps giving. AI accelerating the threat. AI is accelerating the attacks. This has become more intelligent. It's become less resilient for the companies to block it. So the cybersecurity is a very, very big and important area where even with the limited budget, people will continue to drive their protective mechanism. So we -- as you've seen, we've added 2 new cybersecurity vendors, both Australia and New Zealand. So we're going to continue to double down on our practice. The level of offering we have in the cybersecurity space, expertise and experience, is unparalleled and not matched with any other distributor in this region. So we're very, very proud of what we're doing in this area.

And now looking at the outlook. I think I've been mentioning through the conversation how we see the 2026. We have a very, very strong momentum right now. The industry is buoyant, especially in the data center space, AI space, and the software space. So we're going to continue to drive a very, very strong growth and results in this area. I do believe that our end client computing units is going to decline and going to continue to drop simply because the price rises hit that rate of the increase where it's getting really hard for our SMB partners to participate in this. However, the mid-market and enterprise opportunities are still going to be there.

We're still going to ship thousands and tens of thousands of computers. So where it's going to land us in terms of growth, like I said, it's probably going to be single digit, low-single- to mid-single-digit growth. And we're going to see and understand how the price increase is going to continue in 2027 and how that dynamic is going to change. If the pricing is going to continue, like starting to come down a little bit, we're hoping our SMB customer is going to pick up, the unit is going to pick up, and we're going to balance that.

If I look at our July and August results, they continue the momentum. They continue what we've experienced in H1. So that gives, obviously, us a good confidence to give the guidance. So the guidance for second -- for the whole year results is somewhere between $4.3 billion and $4.4 billion, which is somewhere in around 11% to 14% growth, much higher than we expected. When we started 2026, there was a massive degree of uncertainty, supply chain, price increases, how is SMB going to drive it. We knew that AI is going to accelerate, but how much acceleration we're going to see? Is that going to be a big deal at low margin? Or is it going to be medium sort of sized deals at a reasonable margin. There was a lot of uncertainty. We've lived through that 6 months. We as an organization adapted really well. We've got -- we took the risk. We've got the inventory. We're obviously benefiting from that. But also if I look at the margin composition within the business, margin increased in every single segment. So yes, there was an increase in margin in PCs, especially taking advantage of the inventory that we got.

But we also had a good margin increase in our software business. We're having a pretty stable and slow increase in our margin composition within our Advanced Solutions business because we're driving a lot more complex solutions. So that's kind of giving us a good confidence to see that we will be also upgrading our guidance -- our initial guidance on our NPBT margin, and we're guiding the market that we're going to finish somewhere around $162 million to $165 million, which represents around 3.8% NPBT margin percentage. So this is where the Board is very, very confident on. And now, we open for questions.

Great. Thanks very much, Vlad and Mary. [Operator Instructions] First question comes from James Wilson at Macquarie.

I'll keep it just to 2 today as you asked. First off, just on New Zealand, I appreciate it was a bit weak in the first half given the supply constraints. Can you just talk to us about the underlying level of demand you see there when supply comes back? And also what's giving you confidence that supply will actually come back in the second half? I think you said August is looking a little better.

Okay. So yes, I'll answer. I think there's 2 or 3 questions there, but I'll just quickly unpack it. Okay. So our New Zealand business is a lot more concentrated around Apple and HP. It is a weakness. And we're working very, very hard to diversify the portfolio and scale other vendors. We're bringing more vendors, and it's in progress. It is a little bit harder to do in New Zealand because New Zealand on its own is a much smaller market. So a lot of vendors are only having 1 or 2 distributors. And the significance -- I'm sorry to say, but the significance of the New Zealand business to the overall global portfolio is very, very small. So vendors and partners, they don't change as much. They don't drive that change. So that's one reason.

If HP and Apple don't supply stock, immediately affects our business. And that's what happens in the first half. Now when the supply comes in, it immediately bounced the other way around, which we've kind of noticed through the July and August. So it's kind of been tied in momentum. It's not very good for our New Zealand business. We're totally realizing that, and we're doing everything to kind of really diversify that portfolio.

Confidence. In the beginning of the year, supply was very constrained. New Zealand did not get the right allocation. Australia never experienced it. When I spoke to my New Zealand guys and they're not getting their stock and then I look at my Australian business, we were continually getting that stock. So obviously, the global suppliers were referencing Australian market because it's much bigger market. Also, New Zealand economy is definitely not at the level of the Australian economy. So even to drive penetrating and building a business with other vendors was quite problematic because the SMB in New Zealand is softer than SMB in Australia. The enterprise business in New Zealand are also a little bit slower to lock in the deals than Australian business. So there's a number of factors that kind of gave us.

Yes, there's a lot of enterprise buying by government as well and there's an election coming up.

Exactly.

You're seeing a lot of impact as a result of that.

That's actually a very, very good point. When -- I just came back from New Zealand earlier this week. And when I talk to our partners, they say, we do feel slight softness because of the election. So we're hoping that straight after the election, we're going to have a little bit of uplift.

Okay. Great. And just one second question, if possible. Just on data center refresh and AI-related revenues, can you quantify for us how those sit on a sort of gross profit NPBT margin hierarchy relative to the rest of the business, if possible?

Sure, sure. So AI deals, at the moment, at the lower margin spectrum. So if overall business reports somewhere around 9.8% gross margin, AI deals normally, below single-digit margin deals. So a couple of large AI deals that can come in can actually drive that gross margin slightly under. If I look at the normal data center piece of enterprise networking, normal server refresh, storage refresh, then it holds higher single-digit margins. So that's kind of in line with -- and this is where a lot of growth is coming from.

So when you look at the guidance, we kind of tempered our 9.8% gross margin from H1, slightly tempered it down in the second half because we do believe there are 2 things going to continue happening. One, if we land 1 or 2 larger AI deals that could be slightly lower in the gross margin perspective metrics, but also a continued decline in our SMB unit numbers in our PC division also going to result in slightly tempering that margin. However, the data center refresh and software going to continue to drive with a very good margin expectation. So that's why we're thinking it's probably not going to be somewhere at 9.8%, but it's not going to be definitely below 9%. So yes, somewhere in between.

Next question comes from Lindsay Bettiol at Goldman Sachs.

Can hear me?

We can hear you, yes.

Very good. Just looking at software, which is obviously like the strongest subsegment. Could you just help us understand like if I unpick that, I'm just trying to work out how much of the 18% was like, let's say, volume versus price and upsell versus new vendors coming on? Because it just is a little bit stronger than some of your peers. So I'm wondering like, in particular, how much of a tailwind the new vendors were versus like what we should treat as an organic kind of growth rate in software?

Okay. So 80% organic growth. Every single software vendor, cybersecurity, data management, virtualization, Adobe, VMware, Microsoft, Cisco software...

And some of the AI is in that software, too, because it's [ fast ] data as well.

Correct. There is a few new software vendors that we brought on board. But if you look at overall growth and the margin composition, it's actually like a nice organic growth. Look, Microsoft leading the way. There's no -- we have had an incredible year -- so far had an incredible year with Microsoft. And yes, we're super excited about our future with Microsoft, not only to the end of this year, but into '27 and beyond.

Okay. Brilliant. And then second question for me, just like an update maybe on memory supply. Like I think at the full year result, you weren't seeing any supply issues. You were confident that would continue, same kind of with the AGM. But like we're starting -- like depending on which of your peers or vendors you look at, like you're starting to hear some rumblings that supply is tightening up, like it's still probably okay until the end of the year, but yes, starting to be a little bit tighter. So maybe just an update on memory supply as well, please?

I think what -- I think the actual degree of supply hasn't changed, but I think we're more used to work with that. Also, a lot of vendors is now increasing validity of their quoting. So what it means, it means when the vendor provides a quote for a particular device, or infrastructure, or memory itself, because they couldn't get the right levels of supply and predictability, they're shortening that quoting cycle. What we're starting to see now, the quoting cycle getting longer. So what it means, it means vendors are securing more supply and giving them a little bit more predictability so they can pass that predictability to us. So that's a positive side.

What I can comment on amount of interest in data center infrastructure products that we received did not match with their ability to deliver. So we -- there's no question, it's still a problem. It's still a challenge. And I mean my back order at the moment is the biggest the company ever had. So you can see that we continue to be getting a lot of great momentum, but we can't quite deliver. It's 2 to 3 months lag. Sometimes it's up to 5 to 6 months lag. But the good news is that I don't see any cancellation because any cancellation in these orders will result in much higher pricing new quotes.

And I'd just like to comment again, the price increases are not over yet. I have a very solid visibility in the 1st of September price list from all our vendors and oil prices going up. What I also have to go have is the visibility of the next price increase. And that's going to take a couple of months, maybe 2 to 3 months to increase price again. We've never had this visibility in the beginning of the year. In the beginning of the year, it was a more -- it was a situation of every 2 to 3 weeks, prices were increasing, and we didn't know how long it's going to continue, how much the pricing is going to keep increasing. Now it's a lot more predictable. So it gives us, again, better confidence to forecast to see how we're going to land, what we're going to do. We have a better clarity on ETAs when the stock is going to come and when we're actually going to supply on those back orders.

The next question comes from Josh Kannourakis of Barrenjoey.

Can you hear me okay?

Yes.

Great. Just a question. Obviously, you provide that trading update and looking at that, we can obviously back work a little bit around the last couple of months of the year. I know it is historically stronger in terms of margins, but it does look like a very significant step-up to sort of 4.7% in the last couple of months of the half versus 3.7% for the first 4 months. I'm just trying to understand a little bit about the mix and how much of that was benefited from your more aggressive buying of inventory?

And does -- has that gone into a little bit more alignment into this half? Or do you still think you'll be able to -- given the price, the consistent line of visibility around price increases, do you think you'll still be able to capture some of that margin?

Okay. So good question. So the answer is somewhere in the middle. So we did produce much better margin in our PC business. But remember, our PC business is only 28% of our overall revenue. Yes, margins were uplifted, and we don't see much of that change throughout the second half. Prices keep increasing. We keep doing strategic buy-ins. We're still negotiating. Our market share is very solid. So that kind of dynamic is going to continue to happen. Is that going to continue to happen in '27, '28? I don't think so. I think it's a good momentum. We're taking a good advantage. But remember, it's only 28% of our business. If I look at our Software business, our margin have improved and we're going to continue to drive improvement of those margins. It's the expertise, it's the consultative approach that we're taking selling these opportunities. It's the vendors that we're bringing on board. And I don't know, we're just really driving those solutions into the right areas of the market where we probably would sustain those margins. So that's giving me a good confidence we're going to continue to grow and nicely sustained margins.

When it comes to data center infrastructure, margins are increasing, again, in that modernization and refresh cycle. A little bit of being able to drive some of the good purchases, but majority is back-to-back bid orders. So it's not a lot of opportunities to really drive that momentum and to increase margins. Margin increasing more organically, more on the complexity of solutions. So that is going to continue to be good. If I look at the AI deals, now that's going to impact it negatively. AI deals do not represent margin opportunity at the moment.

And we're doing more and more and more of these AI deals. However, it's a long-term strategy. For the 2026, we're going to do $100 million, $150 million of AI at a very low single margin, but we're really driving that plus work and really doing that buildup, getting ready for the refresh. And when the refresh going to start happening, that's where we're going to make some good margin. Also, the big focus for us is drive that AI adoption from the enterprise customers. When we start receiving orders from enterprise customers and mid-market customers, that's where we're going to make some margin.

So if anything, that piece of AI that we're working on is going to probably put pressure on our margins. We only -- like I said, we already $50 million in H1. So it kind of we didn't feel that pressure as much. I think we will start feeling a bit more pressure in the second half.

Got it. Just second question, just with regard to further on the pricing versus demand environment. So when you do look at the SMB, I'm sort of implying if you've been saying mid-single-digits for growth that is sort of largely second half broadly flattish, maybe up a little bit on the second half of sort of '25 for those endpoint solutions. Is that right? And are you actually seeing, though, in terms of any disconnect between the macro environment where people are -- whilst I know you're saying they've got budgets, they're also seeing the pricing go up as well. Do you think there's any pull forward at all in these numbers? Or is it still wedged to budgets and budget cycles?

So -- okay. So I'll answer the first question. So in our PC business and client computing, I do believe that the second half is going to be close to flat on the second half 2025, which will result in a single-digit growth for the whole year. That's how I see it. I do see the unit numbers going to continue soft. That 28% of our business in second half probably come closer to the flat year-on-year, which the whole thing will result in some single-digit growth.

However, to offset that, I do see a faster growth in our Software business. I see a faster growth in our Data Center business that will kind of offset that trend down. So this is where our guidance is kind of -- when we done our modeling, that's how we kind of feel comfortable orchestrating because knowing -- if I look at our back order report, like my open order, back orders, there's not a lot of PCs there. All of that is enterprise networking, server, and storage kind of segments. A lot of mid-market, Tier 2 that sort of solution vendors that are sitting in those back orders, which, again, quite at a good margin point...

The pull forward. So endpoints, I would say there probably was a bit of pull forward because of the momentum of price rises that were happening. But data center refresh software, they're on regular subscription models. There's not pull forward in any of those numbers. So because of the diversification of the portfolio, it's not a straight answer on the pull forward orders in the numbers that we represented or booked for the half. There's one segment, I would say, would fall in that category.

Yes, I agree.

And so 10% growth.

I completely agree with Mary. And just in touching base on that, data center refresh is a must, like you cannot do it. So like I guess a sense of urgency in getting into the deal probably is there, but that would have happened anyway. But if I look at number of activities, a number of what we're currently having in the marketplace in that space through July, through August, it's not slowing down. It's continuing -- if anything, it's actually growing. So if anything -- and that's putting pressure on supply. So at the end of the year, I'm actually expecting my back order book probably going to be even bigger than this. So while we're filling back orders, I think the new back orders is going to continue to drive good momentum.

Next question comes from Olivier Coulon at Evans & Partners.

You commented a little bit on inventory profits. Is there a sense that you can give us at all on, I guess, the quantum of the benefit from inventory profits in '26 given your earlier statement that you expect not much inventory profits into '27 from end-user devices? Because I mean, it sounds like your business, certainly in Software and Advanced Solutions, is going from strength to strength, but it does seem like there's probably going to be a step down in those inventory profits in a fairly major way in '27 if we assume that at some point, those price rises stop happening.

Look, I personally think it will come down in 2026, but yes, if we will stop seeing the increase in prices for '27, if we start seeing the price normalizing, I definitely see that those advantages is going to go away. However, what it really means that we will pull all our SMB customers back and SMB customers will be able to drive the growth. And SMB as a segment is a very good high-margin segment as it is. So we're thinking we're going to balance it nicely. It's very hard to quantify in terms of the actual percentage...

Again, it's on 28% of the business that there's that opportunity -- I mean there's the price rises across all segments, but it's like software almost non-discretionary spend. It's like a requirement, it's subscription based and it's recurring, and that's evident in the growth, and Advanced Solutions data center refresh is well underway and the budgets are the budgets from the enterprises that are spending.

In terms of endpoints, I think we pointed out that Windows 11 devices are coming up for refresh. And with this AI phenomenon and workloads around operating AI models, there is a sense that there will be refresh happening on endpoints coming for devices that were bought several years ago. So it's hard to quantify what the incremental profit contribution is, hence, why our guidance PBT margin and our gross margin is slightly lower than where we've delivered at June.

Yes. Okay. I appreciate that. I mean on a longer-term basis, though, should we think that gross profit margin is going to base back closer towards that lower 9%? I mean it's pretty clear that I think consensus expectations for '27 for gross profit or for gross sales are too light, given your guidance for the second half of '26. But should we expect that gross profit margin to trend back towards that low 9s? Or do you think you can do a bit better than that based on the mix you're seeing?

I think the mid -- I think it will be somewhere lower than right now, but not too low at like 9.1%. I think it's going to be somewhere in the mid-9s, maybe a little bit 9.3% to 9.4...

The caveat would be size of AI deal...

Exactly. I was about to...

But yes, the expectation is sort of underlying business there is that little opportunity of improving the margins of where we were sort of forecasting around that 9% and the expectation that we would be above that. Obviously, we've delivered above that for the next year, we expect that, like I said, that mid 9% is probably a reasonable expectation. And the caveat being size of AI deals and the quantum and the margin that we would do that.

But also, if you look at our physical security business, I mean, it's not too big, but 22% growth in a segment that is averaging 20% gross margin. So that drives it as well. And we continue to expect that growth. So every little bit helps. We're going to continue to diversify our portfolio in New Zealand. That's going to continue to drive margin up. It's still too much reliant on a lower-margin Apple business. So there's a lot of work that is happening. We know what needs to be done. It's just really driving a strong execution.

Our next question comes from Ary Norozi at Jarden.

Just the first one for me because there's a lot of moving parts. But just into 2027, the outlook for your 3 key divisions being that PC, AI, the data center and software, there's a lot of moving parts. For example, you're obviously cycling the PC refresh from last year, but you've got price rises, you've got the data center refresh. How do we think about the sort of magnitude of growth for those 3 segments in the context of what you're going to be doing in 2026, which is sort of you said of a high teens growth for Software and Advanced Solutions and mid-singles in PCs. How do we think that plays out in 2027, please?

You're asking me to give you the outlook for 2027. Well I'll tell you, it is hard. It is hard. But I kind of have that feel and momentum also where the industry is kind of looking and how all the industry analysis are kind of looking. Data center piece is going to go well beyond 2026. I think just sheer of work that's being done, data center build-outs, power requirements, cooling requirements, complete revamping on the networking required to support those data centers. To me -- and we're just opening up those opportunities. And some of them are so significant and so good. And it's not a week for us where we don't form a new sense of partnership with one of our partners or vendors or collectively where we don't project a great forecast and pipeline for 2027. Sounds very, very buoyant and very excited about that piece, and that's going to continue to grow.

So that's our data center refresh and AI. Software, good, strong, stable. I don't foresee any moves or changes. We're bringing new vendors. I have another 4 or 5 in pipeline. We keep working on them. Some of them are a bit smaller, some of them a little bit more significant. A lot more of my larger software vendors as well. They're putting a lot of more of their direct partners into distribution because they want to take advantage of their diverse platform and MSPs. A lot of our customers is managed service providers who start their software. So if they can't -- if their vendor delivers this solution directly to the MSPs, it just brings that discomfort on the billing cycles. So they're putting it right into the marketplace and they give them that cycle. Microsoft, we have big plans for '27. So software strong, data center strong, AI, very, very hard to predict. It can be $150 million, it could be $1 billion, right? I just don't know. It's such an exciting area, which we're putting a lot of focus to grow.

PCs, look, end client computing to me, it's like that transactional machine that works half on half on half. If there is tailwinds, we do more. If there is headwinds, it's tempered down, we go through the cycles. I think next year is probably going to be -- I'd probably say, flat year-on-year, could be a slight decline. We have an incredible year this year. Price is going up, but it's a transactional machine. Enterprise is still going to buy. If I need a little bit more top line because my margins are very, very strong elsewhere, I can grab more top line from enterprise customers. I just don't have a need for that, nor interest.

Mid-market is doing really well. All the growth you see this year first half, second half going into 2027 is really coming from our shared strong relationship with our mid-market partners. So if I could -- I can give you a very rough guesstimate how I see 2027 is going to be probably flat to a small decline in our PC portfolio and again, very strong growth in our data center infrastructure and software and continued very good growth in our retail, in our physical security and our audio visual.

Great. And then second one, just on the SMB part of your business. I think before the downturn in the SMB segment, that was about 20% of your business and maybe it's sort of much less than that, maybe half that, and as a percentage of your business because enterprise has done well. How do you -- like how do we think about whether that revenue opportunity is structurally gone? Or is that still an opportunity where you can double the SMB business or grow it significantly and that gives you even more upside on the gross margin to the 9.5% that you're talking about? So the question is, is it more cyclical? Or is there something that's happened that you -- the dollar revenues of your SMB business isn't there anymore, please?

Aryan, as always, the answer is rather the same. It's not [ in line, obviously ]. So the market has moved. There's no question. Market has moved. The market and opportunity is within mid-market. So we move with the market. Data center, refresh, AI, it's all conversations for mid-market and enterprise. Enterprise, very low margin. So we're trying to be very selective. SMB, it's not really conversations for SMB, not yet. So that mid-market is becoming -- going from 60% of our business into 70%, 75%. I'd probably say our mid-market rate of our business is somewhere around 75% now, very, very strong.

So enterprise business, we have a very strategic deal, strategic involvement with them. That's probably staying somewhere around 10% to 15%. And the same thing around 10% to 15% in our SMB. SMB market is still there. 12,000 partners is still there. But 12,000 partners is just struggling to allocate their budgets into the areas where they really need it. So if we will have more opportunities to service that market, we would love to. I mean, SMB is very, very good, lucrative market. We just need to find the ways of how we can serve them better. But for that, we need prices to come down. We need offering to go wider. We need more accessible inventory for the SMB.

What we're happening right now and what's been happening in the last 18 months is everything against SMB. So we don't have anything transactional of a very good value to kind of stimulate it. Pricing just keeps going up. But when price is going to continue to come down, when we start doing deals, bundles go active, we still have that 10,000 partners. And that -- and you know what? That's going to get us a really good growth. The question is when that's going to happen. We, at the moment, don't not.

Next question comes from [ Adam dela Verde ] at Blue Ocean.

My sense is your business has really repositioned. I think over -- like if we were talking about this 2 years ago, hearing you talk mid-market and enterprise, like you guys are out there hustling and really going to where the dollars are because it's not just the small business channel that's fighting budgets, it's everywhere, but this kind of data center channel you're into. So like a bit of like well done, I can see you hustling. On that context, headcount, I think, roughly 930 to 1,000, employee costs running ahead of revenue growth. I know there's a lot of variable comp in your employee costs, but I'm just kind of interested because I think you made this comment in the annual -- in the report where you said the company has continued to review headcount to align resources to sales-generating opportunities. That sounds to me like you need more people, not less. So I'm just trying to put all that all together with revenue growth, sales growth, variable comp, and then what you need to kind of meet the market.

Exactly. So you hit the nail on the head. There is a lot of variable comp and there is obviously a very solid results there. And we've always said we're never going to get leverage from our salary line. The growth in terms of headcount has been allocated to our business units that are adding vendors, investments in those categories. And equally, with the volumes leaving our warehouse, we're probably seeing increase in logistics as well.

So it's a constant dilemma as well because as a business, we're also looking how to innovate and use AI within our own business. So we're not having to increase headcount overall or have our people be more productive in other areas and see where we can automate some of the more transactional operations in all parts of our business. So to be able to moderate the amount of headcount growth that would be required in the future. So there's definitely projects underway operationally within our business to address that as well.

Just to add to Adam as well, we're very conscious, obviously, as any business should be on our cost, but also we're very, very hands-on in terms of understanding where the market moves. And like you said before, where is the money, where is the competitive edge? Where is the value we can add? How can we stay relevant? I mean, those sort of questions are very, very important. And what's more important is how do we stay ahead of the curve? How do we utilize our agility in being a local player to be always a couple of steps ahead. And with that, we clearly see that market moves towards consultative selling, towards value that our people bring to the small- and medium-sized partners who cannot further grow without our expertise, but that's where the margins are. And that's what really drives that even in the first half, that's what's driven the margin upside, whether it's software or data center infrastructure segment.

PCs, obviously, we don't need that many people there. And if I look at our cost and people who is operating our transactional business, it actually hasn't changed for a long, long time. We just have a really good people who is making the right buying decisions because that's what makes money in our transactional PC business. But when it comes to the rest of our business, which is now 70%, that consultative expertise really driving that margin. So yes, we're fighting for great people. We're fighting for people with a deep relationship, deep expertise. We're constantly in that battle to drive a better feed internally that can deliver growth in both top line, but more importantly, in bottom line.

Great. And I'll probably put to this question. But in terms of like the hyperscalers have done all the construction or a lot of the construction now. And as we move into these sort of independent people who are standing up or we've got neos who are putting hardware into other people's buildings, right? I've noticed the sales motion from the vendors quite often includes a financing and a maintenance kind of component. And I'm just sort of keen to get your take on do you go to market with the hardware vendors and do you pitch into that maintenance piece because it feels like there's a fair bit of kind of service opportunity there and also a nice hook when you look for that replenish cycle.

Okay. I'll comment on main business, and I'll probably get Mary to comment on how we deal with the neo cloud providers. It's a little bit different. Now with a normal business with bigger -- like say, for example, data center opportunity, we do the quote comes at $2.5 million, customers saying, okay, we're good to go. We go to the vendor. Vendor said ops, unfortunately, it's a $4 million now. It's not $2.5 million. Customer is not happy. Customers saying, we don't have the budget for $4 million. That's where we go with finance. That's where we're saying, look, I know $4 million is not $2.5 million, but if you wait for another 6 months, it's going to be more, how can we help to reduce that burden? How can we drive some finance mechanisms to actually -- we have finance means from vendors. We have deeper data and financial services. We get other things. What is the critical component of that deal? Let's just drive that and maybe add on a little bit later. So we have those conversations. When it comes to our large-scale neo cloud provider, yes, I'll just give to...

Yes. I mean it's something we're navigating ourselves, to be honest. There's been a lot of discussions around quoting, around deals and deal sizes. And the question always comes back to how it's going to be funded. To-date, the transactions we've had have generally been funded through, like you said, Adam, the vendors supporting that through their financial services businesses. Hence, why the credit risk and the ability to transact has been able to happen. With some of the deal sizes that we've been looking at in terms of quotes, that's still work in progress on who takes the risk overall for the equipment investment and how these transactions will be funded. So we are looking at various options there.

So maintenance is just not going to be in your wheelhouse?

That [ service ], isn't it?

You mean like actual services for the equipment and stuff? No. No. That is the beat for our partners, our partners' doing a lot of that. Now what we do, do, we sell our vendor services, our vendor maintenance, and a lot of our partners who don't have a solution or service offering themselves, they complement our vendor services. So -- and that's a very successful part of the business. All our maintenance pack services and vendor services are all part of our Software number.

Great. I think that's all the time we have for questions today. If you do have any follow-ups, please feel free to send them through, and we'll endeavor to get back to you. And maybe with that, Vlad and Mary, I'll just pass it back to you if there's any closing comments.

Okay. Thank you so much for everyone who joined. I know we have a lot of one-on-ones as well. So we're more than happy to answer any follow-up questions. As the Board of Dicker Data, as the management of Dicker Data, we're very, very pleased with our H1 results. We are very optimistic about our second half as well. The outlook looks very positive, very good. All I can say from us, from myself and Mary, we're incredibly committed to continue to drive the best outcome to all our shareholders. So thank you so much for your support and for joining.

Thanks for joining.

Great. Thank you very much for joining today's Dicker Data First half FY '26 Results Call. Enjoy the rest of your day. Thank you, and goodbye.

Good morning, everyone, and welcome to Dicker Data's Full-Year FY '25 Results Webinar.

My name is Sam Wells from NWR. And joining me from the company today is Executive Director and Chief Operating Officer, Vlad Mitnovetski; as well as Executive Director and Chief Financial Officer, Mary Stojcevski.

Following a summary of their results released to the ASX this morning, we will have some time for Q&A with the management team.

There will be a choice of 2 options. First, covering research analysts will be able to raise your hand throughout the presentation should you wish to ask a variable question of the management team, or we will also take written questions via the Q&A function at the bottom of your screen throughout the presentation. We'll endeavor to get to the majority of questions asked, in some cases, combining questions on the same or similar topic.

And with that, I'll pass it over to you, Vlad and Mary.

Thank you, Sam, and good morning, and thank you, everyone, for joining us whilst we run through our FY '25 results presentation.

Just an overview of what we're covering today, the highlights and the results, and then Vlad will take you through a market update and opportunity for questions as Sam has indicated.

So, what we'll start with is a summary of the highlights for the FY '25 year. We are very pleased to be reporting the results for this year, which was a very strong outcome in respect of how the company traded. We did provide guidance towards the later part of the year with our half year results update, and we're very pleased to be reporting that we exceeded guidance in respect of both the revenue outcome and our operating profit outcome.

As you can see, total gross revenue for the group finalized at $3.9 billion, just short of the $4 billion target, which we will be definitely aspiring to reach over and above in FY '26. The revenue number represented a very strong growth of 14.9% on the corresponding previous year. Of this number, over $1.2 billion is software sales. And of that software sales, $1.1 billion is the recurring revenue software. So, very strong quality revenue coming from our software business, representing 22.4% growth.

EBITDA also grew. The lower growth rate, a reflection of slightly lower margins. However, net operating profit before tax, very strong outcome of 10.1% growth, driven by cost management and savings around interest costs and the incremental contribution of GP dollars, even though slightly lower margins. That represents earnings per share of $0.474, being 8.6% up.

If we look at the historical performance, the company continues to deliver strong top line growth, and this year was no exception. Very strong result relative to the forecasted growth rates for the industry, particularly in the Australian market, which we'll cover in a little bit more detail with the country splits a little bit later on.

GP dollars increased to $347 million at a margin of 9%, and that was in line with expectations and as we had indicated at the half year, representing a shift in customer mix, which we will provide a little bit more color around customer segments later on in the presentation. That resulted in a net profit before tax margin of 3.2%, again, within expectations, slightly lower than historical numbers, a lot of the historical earlier years being a reflection of some strong demand drivers around those COVID period and 3.2% is very much in line with expectations.

At a group level, we're reflecting both our statutory and our gross revenue. Whilst a lot of our conversation and numbers are around our gross revenue and total billings for the business, we do have to report statutory revenue, which is net of software sales. But in terms of how we view the business, a lot of the description around market share and drivers is a reflection of our gross billings. Like I said, gross profit margins slightly lower than prior years, reflecting underlying demand and contribution from our enterprise customers.

We had indicated that there was a slightly subdued SMB market, and we had pivoted the business to higher enterprise transactions. And even that was a reflection of a lot of the enterprise customers doing a lot of their PC refresh during the year, and we're yet to see that significant impact from SMB doing the same.

From an operating cost perspective, excluding one-off costs, there's been an improvement in overall cost as a percentage of gross revenue. A lot of that is a reflection of the lower interest rate environment reducing over that period as well and reflected in the PBT growth that we were able to deliver.

At a country level, Australian growth numbers significantly up at 17.2%. In the Australian numbers, this also represents over $45 million in incremental new revenue from AI-specific deals. So just to clarify, this is in respect of project-based AI deals. This does not include things like AI PCs. So, there are other elements of our -- and segments of our business that are part of the AI ecosystem. But what we're referring to here is in respect of new incremental revenue that wasn't in the prior corresponding period, and we're seeing a lot of activity around quoting. So, I just wanted to call out that this move to AI investments is reflected in some of these new revenue streams we're seeing.

Gross margin in the Australian business, obviously compressed from the prior year, more a reflection of the type of customers we're dealing with rather than a systematic issue with margin overall. It was in line with expectations. We are seeing a lot of demand from enterprise customers. We're servicing that segment, and the new AI investments and deals are also coming from that category of customer.

Operating profit before tax in Australia was up 8.2%, benefiting from the reduced interest rate costs, and that was also a reflection of being able to maintain overall debt balances with the interest rate reductions reflected now as a positive contribution to profitability. Australian profit margins, in line with expectations around the 3.5%.

Pleasingly, for New Zealand, whilst revenue wasn't as strong in terms of top line growth, more a reflection of us rebalancing our consumer business and whilst growing our commercial business, we did see strong improvement in profitability. There was a lot of work done in respect of costs in New Zealand. All categories of costs were reduced overall from total cost, headcount costs and interest costs, all contributing to a very strong profit before tax increasing by 37.2%.

Now whilst PBT margins are still not in line with the Australian business, that is the work we're continuing to do. And our aspiration is to get that number well above the 2%, but there was a significant improvement in FY '25. And year-on-year, if we were to look at this measure, you'll see that we're continuing to do the work in New Zealand to keep -- to lift margins -- PBT margins and get a little bit closer to the Australian business margins. Obviously, in New Zealand, we do have a material consumer business, which makes it a little bit more difficult to operate at the higher Australian gross profit margins. Hence, in New Zealand, gross margins were able to be maintained at the prior year percentage of 8.5%.

From a strong balance sheet as at the end of the year, there was a reduction in our overall investment in working capital by $12.2 million. And whilst total debt increased slightly, net debt decreased by $12.8 million, again, reflecting managing debt balances while still strongly growing top line, was a really great outcome for the year and the business is well funded to be able to continue next period of growth. We've got sufficient facilities within our current borrowing structure that are available for us to continue the growth aspirations of the business. Net working capital days improved. Our debt to equity also reduced and net tangible assets increased as well.

We finished the year with strong cash at balance date and strong cash generation for the year, reflected with the biggest contribution, obviously, from the earnings. In terms of our dividend policy and capital management, the company declared a final dividend today of $0.115 in respect of the FY '25 year. This is a slight departure from our previous policy of 100% payout ratio in respect of dividend payments.

The company has reviewed its long-standing dividend policy and will transition to a revised payout framework between 80% to 100%, obviously, subject to our cash and capital requirements. And the intention is undistributed profits to work towards possibly reducing some debt or reinvesting back in the business. And the company will retain its quarterly dividend structure. However, we'll be making decisions around dividend payments in respect of requirements at that point in time. We've also this year introduced a slight discount on the DRP for shareholders that want to participate in the DRP, and hope to see sort of contribution from that if that's going to get taken up.

In terms of segment performance, Vlad is going to delve in a bit deeper. But as you can see, there was strong growth in respect of all our key segments headed up by the software business and the diversified nature of all our segments really positions us well for FY '26.

What I'll do now is hand it over to Vlad, and he's going to go into more detail in respect of each of the categories and provide a little bit more color around the growth and what were the drivers of growth within those segments.

Thanks, Mary, and good morning, everyone.

It's great for all of you to join us. And yes, I'm just joining Mary to saying we are incredibly pleased with our 2025 results. We have performed very, very strongly, and we're absolutely feeling that momentum going in 2026 as well. And the company is carrying the momentum beautifully. So, expecting another very strong result in 2026.

Now, let's go back to 2025 before we look at where the growth is going to come from 2026. Let's unpack a little bit where the growth came in last year. So, software did extremely well. Subscription revenue continued to grow. We're adding new vendors in the portfolio. AI is driving a lot of innovation within new software vendors coming on board and existing vendors doing really well. Every single software vendor showed growth and every single software vendor has continued growing this year as well.

We're having a fantastic momentum around our partner base, really getting into stacking the software solutions one or the other, procuring it through our platform and driving that subscription base. Adobe was one of the big winners, Microsoft, VMware, Citrix, all the data management platforms like Commvault, Veeam and others. Cybersecurity vendors have been doing really well. CrowdStrike added. So, really, really pleased with the results.

Endpoint solutions, we knew it's going to do well. We've done above expectation. We've done above what market have done. And despite that our traditional way of driving the growth always been mid-market and SMB, our driving growth for us last year was a little bit more tailed towards enterprise business. So, a lot of enterprise and a lot of mid-market customers have refreshed. The average refresh cycle percentage depends on which vendor reporting is somewhere between 60% and 70%. We do believe that there is another at least 30% refresh to come, and a lot of that refresh to come from the small business. So 2026 -- and you'll hear me a lot more referring to it, but 2026 is going to get into that SMB business to drive that refresh.

Advanced solutions did really well. Mary mentioned about AI opportunities that we've delivered in 2025. We've been quoting and securing great AI deals. Some of it invoiced in 2025. Some of them will continue to invoicing in '26. We are very, very optimistic about this opportunity. I mean the AI factories and data center infrastructure on the AI platforms is going to be one of the biggest growth opportunities for us in 2026.

The retail business was flattish. A lot of our focus in retail business was to really improve productivity and operational efficiency. So, we have deliberately needed to ensure that our New Zealand retail business, which is the biggest slice of our retail, very heavily Apple-driven is getting back into the really strong growth operating profits, which was achieved. Our Australian retail business, which already operated on a much higher profit margins continued to grow. We've delivered a really good balanced result within our business, but we've definitely improved our operating profits within this business. It's very, very pleasingly to see.

Our audio visual business was stable. We would love to see slightly bigger growth in this market. But again, a lot of budget spend went into software, critical data center infrastructure and personal computing. So, not a lot of spend went into audio visual. We do believe that, that budget spend is going to recalibrate and probably would give us a little bit more tailwinds in the AV sector in 2026. So, we're forecasting a good growth in this segment.

Access and surveillance continue growing well, 16% at a very good profit margins. We've added a couple of really good new vendors in the last couple of years. And this business not only growing well in top line, but continue to driving even stronger growth in our net profit operating of this business. So it's really good.

Now the services. We're not a big service company and part of that services number, what we call our telco business. This is where we work very closely with our telco vendors to drive and being an agent to sell their complex data solution. So we have decided last year, we're going to go away from being an exclusive Telstra distributor, and we're going into the multi-vendor distribution sector. From that, we've lost a little bit of Telstra bookings, but we've signed very, very exciting vendors like Optus, Vocus and a few others, more coming in this year as well. We're going into our -- a very natural and very accepted multi-vendor servicing model.

We do believe it's a great opportunity there. So, we continue to develop it. So all in all, very balanced, very good result. And if we look at the chart, you can see that our software business is now 30% of our overall mix. We still have a very strong hardware business, which is about 70% of our mix. We're very, very pleased with how balanced it actually is.

I've mentioned a couple of new vendors. Again, every sector of what I've just went through started from software, advanced solutions or our DAS business. We're adding new very, very exciting vendors. So, I'm not going to go through all of them one by one, but you can read them through. So again, I've mentioned our software dominance and taking a lot of market share and driving that software stack with all our customers. Materialization of the Windows 10 refresh opportunity at scale. We've driven a lot of activities last year, and it paid off and incredible results for us.

We have deployed our first sovereign AI factory. We've partnered very closely with Dell Technologies to deliver this deal, and we're partnering with them even further to deliver more and more at scale AI solutions. We are building our proof-of-concept solution with not only Dell, but Cisco, HPE and a majority of our data center infrastructure vendors building that stack together. A lot of great opportunities.

We've added a vendor called Vast Data, which is the enterprise storage data platform, supporting the AI deals and supporting the AI platforms. We've locked that contract exclusively with Dicker Data. I do want to mention that most of our data center infrastructure vendors, including NVIDIA and Vast Data and all the others that I mentioned, recognizing the investments that Dicker Data put in, in driving the AI adoption and AI deals into the market. So, we put ourselves in an incredibly strong position to continue that momentum in 2026.

Industry recognitions is our standard slide. I'm probably going to brush them through quickly, not because they're meaningless, they're incredibly meaningful. For us, for a local organization, Australia and New Zealand to get recognized by global giant vendors for what we do. It's not just the results. I feel it's the trust that those vendors putting with us. It's the trust every day that our customers putting with Dicker Data. A lot of our customers, thousands of our customers managing critical infrastructures and very, very important end-user clients on a daily basis and putting that trust with us and getting those recognitions means a lot to us. We know we're driving a great deal of value. We know this value resonates strongly with our vendors, with our partners and obviously, that's reflected in those recognitions.

Okay. So, now we're moving a little bit more into 2026 and outlook. So very interesting times, very exciting times and a little bit of uncertainty with certain segments of the business, which I unlock a little bit further, which represents a huge deal of opportunity for us as an organization. In fact, all distributors all around the world will probably take it as a big opportunity in 2026.

But let's start from the big view. The big view that data center systems, what we call our data center infrastructure or advanced solutions will be growing somewhere around 20% plus. I've mentioned that I see that as one of the biggest growth opportunities. Some of that is AI-driven, and some of that is just the data center modernization refresh cycle. We went through a big refresh cycle with PCs. We're moving into the refresh cycles with data centers.

The budgets will be allocated to data centers this year. No mid-sized or large-sized organization will be left behind without modernizing their data centers. They need to take advantage of AI opportunities. They need to adopt and drive innovation, automation and a productivity level. If they don't do it, they'll leave behind because others is doing it and doing it really well advanced. We're seeing government investing a lot in their infrastructure refresh. We're seeing major segments of our economy is investing heavily in driving it. So, I absolutely agree with this assessment. I do believe that advanced leading solutions is going to drive.

Now if I take it down the step, what does it mean for Dicker Data? Well, we have every single vendor under one roof. We position ourselves as the leading AI knowledge provider, trainer, enabler. All the vendors is putting their AI ports and train hours staff so that we can train our partners to drive adoption of AI. We're positioned incredibly well. We have every single vendor under this roof, starting from the server, then storage, networking, software layers and ability to service it all as well.

Moving into devices. Very predictable after a very large year of refresh, especially with the enterprise and mid-market. We probably would see a slowdown in the PC sales in 2026. The Gartner thinking about 6%, I'm going to come back to this point a little bit later when I start touching point on price increases and some of the supply uncertainties that we currently have in the market because my view is slightly different to this, and I'll explain to you why in a second.

Now if we look at the software, double-digit growth. I expect nothing less from Dicker Data point of view. We're going to continue to grow double-digit growth. I feel that this is a really good opportunity to innovate and bring new vendors on board. So, very, very exciting area for us.

If I look at our internal expertise, if I look at the investments we're putting internally, the software definitely -- software capabilities definitely would be one of them to focus. When we look at the IT services and communication services, we don't do a lot of services. It's really probably -- I mean, we, as an economy, we are very service-driven economy, but a lot of our partners is actually driving that. A lot of our partners, this is their job. This is their responsibility to drive a lot of managed services and drive a lot of secure managed services into the market. We are there to support them with our technical abilities, solution architecture, deployment of stock and giving them the full enablement and training. Their responsibility is to get this and then drive the services. So, this is how we work with the channel.

We're also expecting a very, very strong upside spend in New Zealand. We do believe that New Zealand will demonstrate a stronger growth this year even for us. Now, most important topic that I want to also talk to and then go back into the conversation on devices. So, we're currently experiencing a bit of uncertainty in terms of how the whole pricing works, shortages on RAM memory devices. So, what's happening in the market right now, a lot of RAM supply all around the world has been locked in and forecasted by the big technology companies, where probably limits some supply into some of the vendors that we work with, whether it's the PC vendor or server vendor, I think everybody is feeling that there's less supply of RAM chip coming in.

For us, as Dicker Data as a distributor is an incredible opportunity. I feel all the companies in the world who has big warehouses and a great strong capital backing to hold on to inventory a little bit longer will be winning this year. We're already seeing it. The price increases we're seeing on devices have been close to between 30% and 35% so far. We're probably going to see devices grow in price by about 40%, 45%. And looking at the market and looking where demand is, the volumes and the units is not dropping much at all.

We have already lived through January. We're living through February. I can kind of analyze and I can assure you that the volumes of devices that we're servicing and the price increase that we're currently experiencing is benefiting us. I'll put it in very simple terms. $200-plus million that's sitting in my warehouse today is going to be worth 20% to 30% more in the next couple of months. It's as simple as that.

We're seeing new price lists coming in and distributors who is agile, flexible, close to the vendors, locking in a good supply and good contracts. We can actually take a really good advantage of this opportunity. I see it for us as a great deal of opportunities. We are here to navigate those uncertainties with servicing our mid-market, our SMB. Enterprise businesses, I don't think they'll experience any shortages in supply. Mid-market and SMB, this is our responsibility. But that's where the distributor really comes in place, offering the right alternative, offering the right solutions, offering the right pricing points. And I think we've put ourselves in an incredibly good position, recognizing this phenomenon earlier on, somewhere around October, November. And I think it will deliver a very, very good outcome for us.

I don't want to compare it with COVID days, but I can't help myself to kind of see some degree of similarity of what's happening right now to the COVID days. Again, we've done really, really well in those days, really trying to service our customers and delivering the best. It's more of navigating their needs. The needs for data centers is always going to be there. They need to continue to refresh their Windows 10. It has to be there. They need to have devices that will give them better productivity, better automation and improve their efficiencies. So the need is there. The demand is there. Now, how do we navigate all this pricing situation? So, I'll be able to answer more questions. I'm sure there will be more questions when we come to the end, but I hope I gave you a good sort of base scenario, how we see this translating in 2026.

Look, I spoke a lot about AI. We love this area. We love the innovation happening in this area. We have launched AI Accelerate practice within Dicker Data. We're traveling. We're doing the road shows in the middle of this year. We're partnering with core big partners all around Australia to drive that AI adoption. We have an incredibly strong relationship with a lot of neocloud providers as well. We're driving a lot of engagement with them.

We're assisting them to navigate the complexity of those big AI deals and driving this AI sovereign, AI factories in Australia. A lot of vendors putting a lot of trust with us to drive this innovative approach. So, like Mary have said, we've delivered last year around $45 million of AI deals in 2025. That was invoiced. We have secured a lot more deals, which we'll be invoicing in 2026. I'm very, very confident we're going to beat this number. I'm incredibly confident we're going to double this number in 2026. So, AI is definitely going to drive a lot of growth and momentum for us in 2026.

So this -- I want to define a clear 5 pillars of Dicker Data strategies and where the growth is going to come. I haven't -- I mean, I've touched on AI many times. It's real. It's here. We're invoicing deals. We're getting a good exposure to it. The opportunity in AI is big. It's really an exciting area for us to be in. However, outside of AI, the data center modernization refresh cycle is here. We've started to see it in Q4, and we're seeing it more in Q1 and it's going to continue happening.

The price increases drive the urgency. So, we do see a great momentum, obviously. I wanted to point out, it's very, very important for me to say. The businesses has to refresh their data centers. They cannot run any AI innovative models or drive any efficiencies within their current data center infrastructures and environments if they sit on a 5-year-old data center and 5-year-old data center environments. It's just not possible. So yes, it could be a pressure on budgets. The budgets will be allocated to the critical infrastructure. They have to invest and they have to go.

The prices are continually driving up. So the sense of urgency is there. We have never been busier as we are right now in our advanced solutions segment in the business. So it's a very, very exciting area for us. Software continue to grow. We have 2 or 3 great vendors who didn't even come close to their maturity cycle from getting them on board at Dicker Data last couple of years. We're going to drive that momentum. We're going to take more share in the software business, but also it's a very, very strong natural cycle as well. A lot of our software vendors bringing very, very exciting AI tools, AI bundles and our partners loving it. So, I think that's going to go really, really good.

When we look at the customer segment, we've seen stronger growth in 2025 from mid-market and enterprise. We still -- we saw a single-digit growth from our SMB partner base, which is really good. And that single-digit growth predominantly came from Q3 and Q4 operations last year. We are seeing continued momentum in SMB spend in Q1 this year, which is also very, very pleasing to see. SMB is our bread and butter. SMB is in DNA of this company. We're going to drive a lot of tactical and strategic events this year to really drive SMB momentum. We have some real good tailwinds with continued Windows 10 refresh and other things as well to drive that SMB spend. So, we will be very, very focused there.

And our DAS business, our retail business, smaller parts of our business have a huge opportunity in front of them. Again, continue balanced retail business and drive the profitability on there. DAS has been growing 16%. We're expecting very similar growth again this year, huge opportunity there.

I have to as well mention -- so I've talked a lot about opportunities in Australia and New Zealand. As a Board, we always talk what's the next? How can we increase our total available market? A lot of our vendors asking, we would love to partner with you if you go to the ASEAN market or APAC market. We have now 2 established entities, one in Philippines, one in Singapore, predominantly those entities supporting the back-end operations of Australia and New Zealand business. But those conversations are accelerating. There is no doubt we'll have a number of organic growth strategies and conversations happening. So, I think it's just a matter of time when we're starting to operate in some on all of those markets, but this is where we're putting some of our mind and investment.

We're very careful with going outside Australia and New Zealand because it's very different markets and different environments. So, a very, very measured approach is our approach. So, little steps, small steps, high margin, maybe driving the digital distribution where there is not a lot of cost involved, not a lot of investment alone, but the high-margin returns. So, this is where we're going to test the market.

Big year for us. Every second year, Dicker Data runs an industry big event. It's called TechX. It's one of the biggest industry events. This is the year. So, we're very, very excited. It's actually fantastic because we have the AI explosion happening. We have SMB coming back into spend, where really we need to drive that very -- in a very focused approach. And those TechX events is really helping us out. So it's a Perth, Brisbane, Sydney and Auckland as well in New Zealand.

Okay. So well, this is our presentation. This is our view on last year and a bit of an outlook on next year. And we're happy to take questions now.

Thank you very much, Mary and Vlad. [Operator Instructions]

First question is going to come from Josh Kannourakis at Barrenjoey.

First question just on the topic du jour being AI. Obviously, you've talked about some confidence there moving forward. But can you talk a little bit more about potentially some of the sovereign AI factory opportunities as well as specifically on the neoclouds? And just help us understand, I guess, both the architecture and hardware opportunities there, but I guess also from a software perspective, how you can leverage hardware into some of the software respects?

Yes. Absolutely. So, neocloud providers is basically an alternative to hyperscaler providers. Both doing a similar thing, is offering the platforms to the companies to build their own AI models and drive those efficiencies, automation and productivity levels within their organization. I think the difference is that the neocloud providers, they hold their factories in Australia. So the data that all the companies will be putting in this environment is well protected, full secured. And there's a lot of policies. There's a lot of compliances, especially in the enterprise-grade businesses in the government-grade businesses. So the demand for those neocloud sovereign AI factories is quite strong.

So, what it means? It means a very similar architecture as traditional data centers, but there's a couple of key differences. One is there is traditional architecture of a server storage and a networking with a software stack. The traditional way it's built, it's not strong enough. You need an NVIDIA GPU, AI grade in there. You need a lot more power driving those consumptions and you need a different grade level of software and different grade level of networking.

When we talk AI factories, it's not the same as a data center modernization. It's a revolution. It's completely different. Basically, the data centers that we know right now, as we see right now, in the next 5 to 10 years is going to completely exit the market. In 5 to 10 years, we will be dealing with what we call now AI factories and those powerful super-compute, super processing power, data management platforms. So, we have a handful of neocloud providers in Australia, but also we have some global neocloud providers who is also coming into Australia. We work with a few of them.

Some names, I can name some names. Firmus, you've probably seen them in the report, Sharon AI, you've seen them. ResetData, we're closely working with those guys. So, we're all working very, very closely with them. They're partnering very closely with a number of vendors that we represent. We then lock the deal in and those names that I've just mentioned, buying those equipment from us, we're deploying it, we're delivering it, we're project managing it. And those guys then -- so you know the whole AI game, right? And you see billions and billions of dollars in big 7 tech companies investing, trying to position themselves as leaders in this revolution.

Same thing what we do. What we do? We're trying to lock in those deals. And yes, some of them are large in scale and slightly lower in margin. But what we're doing? We're putting ourselves as a leader in this platform. And guess what, those neocloud providers is going to continue to upgrade their AI factories. They're going to continue to bring higher-level GPU cards in there. They're going to continue to upgrade their network. And if we are partnering with them from the beginning and if we are earning their trust as a trusted partner, then we're going to lock in all their upcoming revenues in coming years. So, this is our strategy. That's the neocloud providers.

The other big opportunity with AI is enterprise business. This is where we currently -- unfortunately, don't see a big adoption and uptake yet. So, this is where a lot of us and vendors in the industry trying to drive that. It's basically businesses like us, like Dicker Data and similar businesses, driving their AI automation and adoption internally. And this is a big, big opportunity as well for us. So hopefully, I answered that question.

That's good. Second question, just cognizant of time. Just obviously, the SaaS-apocalypse as people have sort of been calling has been a big focus in software markets. I think when we look at your vendor mix, you've really pivoted as well to a lot of businesses around data, a lot around security and leveraging that into some of the AI thematics. When we think about -- I know I guess you're in the early stage as well. When we think about that mix going forward, offsetting it, maybe you can give some commentary around some of the risks on the software side versus what you actually see more as the opportunities leveraging to those thematics we discussed.

Sorry, I missed the first part of the question.

The subscription revenue from a lot of software companies valuations have come up. We're partnering with key software vendors like Microsoft and the cybersecurity vendors. We see a lot of our software spend is non-discretionary in that. It is critical for enterprises and businesses to maintain and secure their environments and their operations. So, I think a lot of those single product specific subscription models might sort of be at risk from what I -- you probably have a better idea on that. But the vendors we're partnering on the software space, we feel largely is non-discretionary spend because it's critical for business, and that's a reflection of the software growth we've delivered. Microsoft is our largest vendor by far.

We're talking about software vendors who are so complex in their nature, delivering complex multiple lines of platforms and businesses that a lot of enterprise customers are completely entrenched. We're talking about some of the AI tools that potentially can replace some single functionality by some of the vendors. What I can tell you, when I ask a similar question or I talk to the software vendors, the amount of investments that they put into bringing their own AI innovation, their own AI tooling exceeds any of those other investments that I've seen that possibly.

And the other good thing is there is disruption in the market a good thing because it actually drives those software vendors to continue to innovate and continue to drive this complexity. So look, I've seen the market. I've seen the valuations coming down. I feel it's a little bit of a DeepSeek moment we've had a year ago or so forth. Those vendors are very strong. They invested years and years and years in their innovation, driving their AI tools as well. All the software vendors I've met in the last couple of weeks forecasting a fantastic growth this year. So, I'm very, very confident.

Next question comes from Aryan Norozi at Jarden.

Just first one for me, please. Just on the comments, Vlad, you talked about having $200 million of inventory that will be worth 30% more in 3 months. Just how do we think about how that flows through to the P&L? Because if you -- the $200 million becomes worth $260 million, isn't that an extra $60 million of gross profit that just flows through your profit statement?

Well, what I'm trying to demonstrate is the appreciation of the inventory right now. The inventory globally is appreciating. And a lot of those inventory will go into a bid business. The bid business is going to discount it, of course, and we're going to drive normalized margins. The SMB pickup, the SMB sales, we're currently going through that sort of a transition period. I'll try to articulate it a little bit more.

So, through October, November, a lot of partners and a lot of industries stocked up because they anticipated a price increase. I don't think there is a big shift in supply. I think supply is happening quite nicely, but the price is increasing. Now, a lot of those partners is now flushing that stock into the market. So when we look at the market, if you look at the pricing in the market, it's actually slightly elevated, but nothing to the extent of how the new price list that we're receiving from our vendors. So as they're getting into that, returning their cash into the businesses and moving this inventory out, I think we're getting into that sort of a transition period where customers will then start accepting the new price list and new pricing. And we're really starting to see that transition.

Whether it's going to -- I mean, obviously, I've tried to articulate that our stock and inventory is appreciating. Whether it's going to appreciate from $200 million to $250 million or $260 million, obviously, I don't know. No one knows. I'm trying to demonstrate that the inventory we're currently holding is a good inventory. We have capability as the business at the back-end capital to hold on to that inventory just slightly longer, which will give us a fantastic opportunity then to service SMB market with slightly reduced price of the new increased price list. And that's going to give us a good flow of momentum, obviously, translate in great revenues and uplifted margins.

That's great. And just on the SMB side, which is great to see that the second half has sort of improved in terms of back into growth. Like from my perspective, that's about a $250-odd million annual revenue opportunity for you guys that you've lost and that there's an opportunity there. How do we think about how much the SMB revenue grows in 2026 versus 2025? And maybe in the fourth quarter, which is when the SMBs were improving, like what was the growth rate that you saw there? Was it 10%, 20%?

The SMB growth in Q4 was 8%. So, we grew our SMB by 8%. It was a very, very pleasing result. That was the Q4 '25 versus Q4 '24. It's very difficult to answer your question, but I'll try. So, SMB market is definitely having a bit of a tailwind. They are refreshing. They have to buy new PCs. But also don't forget that SMB market is probably is one that will feel those price rises eventually when it drives into the market the most. I've mentioned before as well, when the price increase is happening, then the IT budget needs to be carefully allocated. Are those IT budgets going to allocate it more into their data center infrastructure or into the end client PCs? Well, that's a bit unknown. So it's very hard to predict.

I personally feel that number of units that we ship into SMB is going to be lower because of the -- because not all SMBs is going to get into refreshing or buying into the higher prices, but the price rise is so significant and our position is so strong where I do believe that revenues is going to continue growing very, very well. So, this is where I see. So, number of transacting partners, hard to say. I think it's going to be a single-digit growth. Volume of shipping units could be flat or slow decline, but the revenue should be very, very solid.

Next question comes from James Wilson at Macquarie.

Can you hear me now?

Yes.

Yes. Cool. The data center opportunity seems pretty exciting. Can you give us some color on the size of those opportunities you actually expect to close in 2026? And maybe also just give us some color on how those margins on data center work sit relative to your typical SMB work?

Yes. Look, we are -- I mean, you've -- I know you've seen that our gross margin have kind of came to around 9%. We're very, very happy with around 9% mark. And this is where I think in 2026, we'll see that balance. Larger AI opportunities will probably put a little bit of pressure on the gross margin, but still an incredible opportunity. I do believe that the second and third modernization of AI factories will drive much higher margins. It's just an initial platform base and securing those opportunities drive slightly lower margin. But that's a different sort of topic of conversation.

On the other hand, the revenue growth in SMB, mid-market, higher prices, our advantage of holding a lot of stock at the lower prices will drive the margin up. So, I think that will nicely balance in 2026. We're still very much aiming at that sort of 9% mark. Which way it's going to swing? It's hard to say. We will definitely -- look, it's a very important measure, but more importantly for us, it's that fundamentally drive that leadership and putting ourselves in this very strong position as an authorized AI distributor for all our major vendors we represent.

Now in terms of qualifying the opportunities, we've quoted well over $200 million in opportunities last year. We've landed around $50 million worth of opportunities, which we've invoiced in 2025. We actually landed a lot more. We're going to continue to invoicing in 2026. I can tell you my feel. My feel is we're going to double that. And obviously, I'm expecting to do more than double of that. We're putting a lot of effort. We're putting a lot of investments. It's a great space to be in.

That was very comprehensive. Just one more question from me, please. That 9% mark that you've effectively anchored yourselves to, I think that's based on a Gartner forecast that was set back in September of 2025. Just if we think about the first 2 months of this year and the interest rate outlook, how confident are you that sort of looking at the forward demand that you have that, that will hold over this half and the rest of the calendar year as well, please?

Look, it's very, very hard for me to conclusively say that it will definitely hold. Look, if tomorrow, I'm going to get a $200 million AI opportunity at 7%, I'm going to take it. So, is that going to put pressure on my half results? Of course, it will. But ultimately, it's a strategic direction of the company. We want to be in this space. GP dollars are still fantastic. So, I'd probably be in more confidence to make a comment around our PBT or EBITDA. Like that's probably where we're really, really focused as an organization. My view is that 9% is here or there like should be maintained, but it's all -- it's very, very hard to...

James, are we referring to margin or growth of 9%? Growth. Yes, so growth.

9% growth. Yes.

Growth, yes. So that's within -- yes, so that's going to be -- and our view is just because of size and scale and we're within -- the market is a good indicator of the growth opportunity.

Apologies. I thought you were referring to 9% growth.

No, it's the Gartner growth, yes.

It's a Gartner growth.

The Gartner growth forecast, yes.

Yes. But then the way to exceed that would be to take some of these very large opportunities, but at much lower margins and that would put pressure on margins. But it will be GP dollars accretive, and that's what Vlad is referring to. Our view is that we look at the profitability of the transaction, but that's indicative that the Gartner is indicative of IT spend. And the size we are now is quite -- we are impacted by the market growth.

Next question from Olivier Coulon at E&P.

Can you hear me now?

Yes.

Sorry. So, I guess when you were talking about the Gartner forecast for devices, you seem to be suggesting 6.6% might be a bit light. If prices are increasing 30-plus percent, only 9% as a market growth looks a bit light as an aggregate kind of number?

That's right. That's right. I believe 6% is light. I believe it's going to be more than 6% purely on the price increases. I just cannot see how it's going to be 6%. If we're growing 30% to 40% price increase on devices, I mean, maybe we're looking at maybe a couple of points decline in units. I mean, how is it going to grow 6%? I just don't see that.

[Technical Difficulty]

Sorry, the line is broken. We can't hear the question.

I was saying it's all great to talk about gross sales growth, et cetera. But obviously, you don't bank gross sales growth, you bank gross profit dollars. And I guess if you look at the last, what, 3, 4 years, you obviously had massive growth in FY '22 in gross profit dollars. In FY '23, you were kind of in the tail end of that where you were banking some of the backlog stuff.

And then FY '24 was a tough year, 3% gross profit dollar growth. FY '25, what was that? 7.2%, right? Should we be expecting it to accelerate in FY '26? Because it sounds like you're going to get top line a fair bit better than 9% realistically. And then if SMB comes back, would you think that you should be able to do better than your 7-ish percent gross profit dollar growth in FY '26 versus '25?

Well, I mean, it will be subject to the customer mix. And whilst the margins were slightly lower, the contribution from the enterprise customers was all incremental in GP dollars. I mean it's likely, but it's hard to know how the volatility in supply and demand from SMB customers is going to come through. But we would be expecting growth overall because the way we would be looking at the individual transactions would be that they're GP accretive. So, margins could be slightly softer as a result of adding additional GP dollar growth. I don't know what that number will be, though, Olivier.

But you -- Olivier, but you're right. Look, conceptually, the way you think is correct. We see this market as opportunity. My team is seeing this market as opportunity. And it's really very favorable environment for distributors overall, not just for us. So, there is an opportunity to drive stronger margin GP dollars. So whether it's the GP dollars coming from big AI deals or GP dollars coming from a great margin.

On SMB.

On SMB, we are very, very focused on GP dollars, 100%. So...

Can it be more than the 7%? We don't know.

We're driving a lot of internal efficiency improvements as well. But we're sort of framing ourselves between 7% and 10%. We'll see where we'll land.

At GP dollar growth, you're saying?

Yes. Yes.

Yes. Okay. No, I appreciate it. Just a question on DAS. That saw a nice acceleration in the second half. Do you think you've got the model where it needs to be there?

We're getting there. We're getting there. More improvement, more improvement, more balancing, more exciting vendors to come, but the model works, model works. And yes, we -- again, we're in a fortunate position. We can hold a little bit more stock. The demand for stock is phenomenal. So, I think we'll have a great year in '26 with DAS, yes.

Okay. Do you mind sharing what sort of contribution margin or EBIT margin it's doing now and where it could go to?

No. I mean the profitability margin is in line with the business. So it's around that 3% to 4%. That's after its individual costs, so the branch costs that are part of it. So, gross margins are obviously much stronger. They've probably moderated a bit from where we were expecting in terms of the 25% plus. I think it's a little bit softer than that. But the PBT contribution is in line with the business margin contribution.

Yes. But it's fair to say that given the fixed cost nature of the business, if you continue to see the type of volume growth that you've seen, you could see quite a lot of operating leverage in that business, right?

That's correct, yes. And that's what -- that's the work that Vlad is referring to that continues to be worked on and how we manage the cost because, obviously, there's an additional cost base with running that business with all the branch networks and there were a lot of the learnings we did in the prior years. We got it to a good position last year. And I think we can continue to improve on that this year. And so yes, there will be an expectation of some cost leverage in that business.

Yes. And maybe just the Southeast Asian kind of expansion opportunity. I mean, would you consider kind of small scale or mid-scale M&A to kind of kickstart that or...

All avenues are considered. As long as it makes strategic sense, all avenues are considered and it is an area that's on our radar. We've had, like Vlad said, conversations with vendors who have indicated strong support. It's just finding a way to actually enter the market, whether it's organic or via a small M&A opportunity and we will continue to explore those.

Next question comes from Adam Dellaverde at Taylor Collison.

Can you hear me okay?

Yes. Great.

Vlad, if I remember the pandemic -- and Mary, if I remember the pandemic correctly and I think there's some contrasts to right now on the supply side. Right now, we're seeing significant price rises, PC, server, storage, networking, but supply is readily available. So, I just wanted to clarify. I guess, you've been able to get stock in that environment. Is your expectation that supply gets tight? Because if I remember the pandemic, as soon as supply got tight, basically all of the hardware went through you guys and everyone became a price taker and they were just focused on when they could get the stock rather than at what margin or what price they could get it.

Okay. So, this is how I'm going to answer this question. Theoretically speaking, when all vendors increasing their prices by 30%, 40%, they are expecting supply shortages. That's given. Now, I have not yet experienced supply shortages. Every single order getting supplied. Every single deal has been fulfilled at a much higher price. So when the customer comes in and they need to buy a pre-configured solution, which we cannot fulfill from the stock that we have and we need to place a new order on the vendor. It's getting fulfilled. All AI deals getting fulfilled.

Pricing is a different conversation. Now how the vendors is moderating, like I spoke with some of our vendors and some of our vendors said, we have enough supply of components in order to deliver our number for the 12 months ahead. What it means? It means obviously fulfilling all the distribution requirements as well. So, I will be able to answer to your question in a bit more precise way, probably sometimes May, June. At the moment, I don't see supply as a major issue, but the price rise is definitely there. Please, you can buy stock. Stock is there, but it's like 40% more expensive.

So to answer your second half of your question, are the customers are believing in the price increase and adjusting to the new price? Yes, they are, they are. There's still a lot of stock at old pricing, including us as well. So, we're probably going to go slowly through this transition. And then yes, the new pricing will kick in and then perhaps we'll have tighter supply chain we're yet to see.

Just the only other caveat on that is if you're drawing the distinction between COVID, the slight differentiator is there was specific demand in COVID that required people to buy irrespective of price. So therefore, price takers. Whilst all the investments are still critical and part of upgrading to solutions to be able to work in new environments, there is a little bit more discretion in that spend. So, that's the only area we can't sort of forecast. But like Vlad said, it's still a great opportunity. Whenever there's disruption, it's good news for us.

Great answer. And just to sort of expand on something you said in your -- before the Q&A, you were talking about volumes holding up and then you -- I mean, you sort of led that you think volumes will tail off. My understanding of what's happened is that the vendors at some point in Q4 said, this is the deadline for you to order at the old price, get your orders in now. And so when I think about your comments on Q1 and Q1 trading, January, February, a lot of stuff that's coming in now could be huge pull forward of people trying to lock in. And so I'm just wondering if you can contrast what are you seeing now in terms of the stuff that got pre-ordered and what are you seeing now in terms of order intake? Is there anything meaningful to call out?

Nothing significant. No, the sense of urgency of placing orders is there, 100%. Are they stocking up and buying more? I really don't see that because it is getting more expensive and the budgets are not quite getting bigger. I think it's the allocation of budgets, what I probably see a little bit more. And Mary is absolutely right. There will be some businesses who will be okay to sweating the existing assets and probably not going into buying at a much high increased prices. I don't think it will affect mid-market and a high-end market. I think these guys are just going to get into the new pricing and just going to drive the business.

SMB is interesting. It's a very interesting area, but we have great stock to service SMB. So, this is where my confidence is coming. SMB don't need to rely too much. They can't buy right now. We have different tools to assisting them. We have Dicker Data Financial Services available for the SMBs. So for example, if SMB doesn't have money right now, but they want to get into the old pricing, we can give them finance option. So, we have different tooling in our disposal to get them. And the most important thing, we have stock. So, we'll see how it's going to keep unfolding. At the moment, what I see, increased sense of urgency, very good dynamic, good, busy environment and spend is quite consistent. So, yes.

Maybe a little sneaky one, if I can. Just want to hear you say that there's no competitive event, no competitive pressure that's driving down that 9% number in GP because I have heard some of your competitors have been quite aggressive.

No. No, no. Well, in different segments of the market, we have different competitors driving different strategies. We've been in this environment.

We're always competing. So, that's not unusual. There's no specific environment in the competitive landscape that's different than any other year. But we definitely have seen an increased share of enterprise business, part of it being our own strategic pivot to where the demand was, part of it being enterprise customers actually. The size of our enterprise customers is growing, and the deals we're doing are of the nature that are enterprise grade. So, even the software deals are of much larger sizes. So, it's more a reflection of customer mix. Our focus is still SMB.

We still will be like to see that segment expand. They were faced by macroeconomic challenges last year. We thought that we would be going into a year where that was going to be improving, but then you've got a new dynamic coming in around pricing. And interest rate environment, whilst they all need to upgrade, we don't know what that demand looks like. So, having this contribution from enterprise and we've established ourselves with those partners in a more stronger working relationship, we feel will hold us well for '26.

Great. Thank you. I think that's all the time we have for questions today. If there are any follow-ups, please feel free to send them through and we'll try and come back via e-mail.

And maybe with that, Vlad and Mary, I'll just pass it back to both of you if you have any closing comments.

Look, thank you. Thank you very much.

We're incredibly pleased and happy with the results. Like I've started from the beginning, I think we feel a great deal of momentum within our business. We're carrying that momentum into 2026. And we're hoping to have another great year. We are having a lot of fun doing it. So it's a new era for us, AI era, SMB, lots of disruption and uncertainties. And we normally, as an organization, doing very, very well in those environments. So yes, looking forward to delivering another great result this year.

Thank you.

Thank you.

Thank you, everyone, for joining. That concludes today's call. Enjoy the rest of your day. Goodbye.

Bye.

Bye.

Good morning, everyone, and welcome to Dicker Data's First Half FY '25 Results Webinar. My name is Sam Wells from NWR and joining me from the company today is Executive Director and Chief Operating Officer, Vlad Mitnovetski; as well as Executive Director and Chief Financial Officer, Mary Stojcevski.

Following a summary of the results released to the ASX this morning, we will have some time for Q&A with the management team. There will be a choice of 2 options. First, research analysts will be able to raise your hand should you wish to ask a verbal question from the management team. Or you can also type a written question by the Q&A function at the bottom of the Teams screen. We'll try and take the majority of questions asked in some cases, combining questions on the same or similar topic. And with that, I'll pass it over to you, Mary.

Great. Thank you, Sam, and good morning, and thank you, everyone, for joining us on this call. We're very pleased to be presenting our H1 FY '25 investor update. Today's agenda basically will go through the FY25, the half year '25 results. That will be followed by a business update from Vlad in respect of what's transpired in the first half and what we can expect for the second half, plus we've got some information around strategy updates and guidance. And then as Sam has indicated, we'll be taking some questions.

So to get on to the results, we are very pleased to be reporting solid increases across all of our categories and segments, including all lines of our profitability and revenue numbers. For the half year, our gross revenue was $1.8 billion, representing 15.7% increase. Equally, EBITDA increased by 9.4%, finalizing at $75.4, very pleasingly, our recurring software revenue is close to the $0.5 billion mark for the half year, putting us well on track for over $1 billion in recurring revenue software sales for the full year. For the half, that represented a 23% increase.

And when we go through the category presentations, Vlad will elaborate on what we're seeing within that software vendor space. Very pleasingly, our operating profit before tax finalized 13.3% higher at $57.6 million, representing $0.21 earnings per share for the half.

Having a closer look at the trends and historical performance on a half-on-half basis, a very solid result for the half year on both gross revenue and profitability. As we indicated in our AGM update in respect of where we were seeing the trends and margins, there was a softness in our gross profit margin, which we've already indicated around the pivot by the business to more enterprise type sales.

However, they have helped deliver a very solid gross sales increase. Equally, with the softer margins, there's slightly lower PBT margins. However, our forecasting and expectations and what we've seen year-to-date, we are expecting a slight improvement of those as we've indicated in our guidance.

The second half trends tend to be a stronger result if you're looking half-on-half in comparative periods, and we are expecting the same for this financial year as well. If we delve a little bit closer around the results, total gross revenue, as I said, for the group was $1.8 billion, which was driven by, we've seen an acceleration of the PC refresh, albeit being driven from more enterprise mid-market customers. And we did have some significant AI-driven deals reported in the period, which we also indicated at our AGM update.

As discussed just earlier, gross profit margin is a little bit softer driven by the shift in business mix where we are driving a lot more enterprise deals, which are a little bit more competitive on margins. And subject to SMB coming back possibly at some stage, it is likely to be the trend at least for this next quarter. And then Q4 is, I suppose the unknown and Vlad will elaborate on the market conditions in his operational update.

Total expenses as a percentage of gross revenue declined, and we have seen costs being largely contained some of it driven by interest rate improvement, but also a very targeted and deliberate strategy around cost management. There was strong profit before tax uplift of 13.3% finalizing at 57.6%. That's the operating profit before one-off costs, finalizing at 3.1% net profit margin.

I'll go through the segments in terms of the segments as we see them within the organization between Australia and New Zealand. Very pleasingly, in the Australian business, and this is where a lot of the enterprise style deals were done, strong gross revenue growth of 18%. That included approximately $30 million in revenue from some large-scale AI deployments recorded in the period. And in terms of the gross profit margin, it was more significantly felt in the Australian business being softer against the comparative period with this focus on enterprise business.

Operating profit before tax in the Australian business was up 14.5%, benefiting from reduced interest costs as a result of the lower rates, but also a lot of concerted effort around maintaining average debt balances and really managing our working capital cycles to allow that to transpire. And within the Australian business, strong profit before tax margins of 3.4%.

In our New Zealand business, again, pleasingly, from a top line perspective, solid growth of 5.2% where we've also been able to largely maintain the gross profit margins. The New Zealand, the mix of our New Zealand business does include a larger proportion of fulfillment retail and there wasn't as much influence in terms of around enterprise deals and there was more opportunity in New Zealand to expand our mid-market and SMB business. So, margins were able to be well maintained.

More pleasingly, on the New Zealand business, where a lot of the work from the last 12 months, 12, 18 months around costs, largely seen a reduction of costs across various line items, including the employee costs, interest costs and other costs, resulting in profit before tax increasing by 10.9% to $5.1 million. And representing still the PBT margins around the 1.7%, and that is still our focus area to keep improving on that to bring it more in line with the Australian business, although that's going to be a lot more work involved and it's harder to achieve with a large proportion of retail fulfillment piece in the gross revenue numbers.

On the balance sheet side, since our last balance sheet update, the key movements around working capital, working capital slightly improved in terms of working capital dollars and net working capital days. Receivables balance increased significantly driven by the large invoicing that happened in June.

June was one of our largest invoicing months ever. This was offset with an increase in the accounts payable whilst inventory remains just increased a little bit, but we've really maintaining within the range and large invoicing meant that inventory levels finalized within expectations.

Net debt decreased by $6.3 million down to $299.5 million, although gross debt net of, excluding the cash slightly increased. We've still got sufficient capacity and more credit lines available to continue supporting the business growing.

On the dividend side, the fully franked dividends paid in H1 FY '25 were $0.2 per share. Throughout FY '25, the company intends to continue paying the interim dividends, and we did announce the next quarterly dividend in August, which will be paid on the 1st of September, and the company will be retaining the DRP for FY '25. We will continue to review our capital management and our dividend policy as and when required over time.

I will now hand it over to Vlad to give you an operational update in terms of what's transpired in the half year and a further breakdown of the categorization of our revenue and also market update.

Thank you, Mary. Thank you very much, everybody, who joined the call. We are very, very pleased, like Mary said, with our results. A lot of exciting things happened in H1 '25.

But about an hour ago, I have done a company update giving them the view of our H1. And I said to the company, it was a very challenging and tough year last year, even though we delivered a relatively strong result as well. But our strong positioning in the market and our resilience internally driven and the results that we received in H1 is a consequence of this incredible operation that we had. A lot of things moving aside, a lot of things happening in our industry, absolutely most exciting time to be alive. I think, and we're super excited about our H2 2025 and beyond.

But now what happened in H1 '25? We secured a first AI infrastructure deal delivering a first Australia's AI factory and Dicker Data has been chosen a partner to deliver this project by Dell Technologies, one of our strongest vendor alliance partners. We've established a proof of concept for the AI workloads, which is collocate with another partner that we have with Equinix I think we're about to see a very, very large AI explosion of opportunities. We're quoting a lot. We're working with a lot of partners, and we already have seen some significant numbers coming through in H1, and we absolutely believe it's only a beginning.

We as an organization are acquiring skill set, talent, expertise internally in order to glue a lot of things together with our partners and with our vendors to truly lead the way with that AI innovation in the marketplace. We have secured a new partnership with advanced technology that is there. This is the software platform layer that actually supports AI workloads. We're building this portfolio in our ecosystem. And we believe that while it was a growth engine in H1, like I said, I don't think we've started yet.

I think we were about to see things. We're also an organization to we will make a couple of announcements around our AI practice, how we build our expertise internally in the upcoming weeks. So, a lot of exciting things happening internally.

We have secured a new contract with CrowdStrike. We're starting to build that expertise. security is one of the biggest growth opportunities that the company has and having CrowdStrike part of the portfolio is great. And another big point of growth came from our PC division, where enjoyed 18.6% growth in H1, all driven by refresh opportunities, still very much focused in mid-market and enterprise. I'll talk a little bit more about it in the upcoming slides. But nevertheless, those 3 very, very critical and important growth areas is coming.

So, if we look at our category performance, many times on these calls, I did mention, I just wanted to see all our segments of the business doing really, really well. And H1 kind of delivered it for us for our organization. We put a lot of work last year in the previous years to really solidify ourselves as a strong expert segment in those areas. And we also put a lot of work to make sure that we nicely diversify our segments. Now the business is growing with 30% software, 30% endpoint solution and 30% advanced solution, nice diverse and balanced portfolio with 3 smaller but continued growing segments of audiovisual retail and services. But I'm going to go one by one just really quickly.

Software was our absolute star performer in H1. Cybersecurity space was booming quite nicely. We are taking share from some of our competitors. We're doing extremely well with companies like Broadcom and cybersecurity Check Point and others like Commvault. So, Adobe is one of our newest vendors that we recruited last year is getting into the maturity stage. We're putting a lot of investments in our platform, and we're driving a lot of momentum.

We win a lot of software recurring revenue by providing a particular edge and differentiator in the market. Very hard to win on commercials. We are not interested in winning on commercials. We're interested to win with value we're adding to both our partners and our vendors. And I think we're delivering that not only through our exceptional skills and expertise and consultative way of approaching those, but also through a superior platform and our website.

End point Solutions grew 18.6%, really strong result. The only thing I would like to point here, most of the business and growth came from the mid-market and enterprise. We were hoping to get some small business driving stronger. We did not see it in Q2. Small business normally performs the strongest in Q2 and Q4 calendar. It did not happen in Q2. We are very, very optimistic that we will see a turn of the small business in Q4. Again, it's a great opportunity for us.

Looking at the mid-market and enterprise, it was fantastic. We've strived those partnerships very heavily last year. If you remember, we've started to see the softness in the market in the small business. We went and really start partnering closer with some of our larger mid-market partners and enterprise partners. And when the refresh cycle kicked in, it kicked in with those segments, and we're starting to see some good growth there. Great, but I think we need small business to go there. That will lift our margins a little bit up. That's one of the reasons why our gross margin has softened a little bit because we've just processed and transacted a lot of larger deals.

Advanced Solutions drove17.2%. We've had our enterprise networking vendors back into the good growth, Cisco, Juniper, Fortinet Enterprise. We've had a phenomenal growth in our AI portfolio. Again, delivering the first AI factory in H1, for a lot more and partnering with Dell Technologies here is really breaking through. If I look at the, and I'll look through the slides later, if I look at the trends in the market, if I look at the spend happening in the AI area, we positioned ourselves so good to take advantage of those opportunities.

Access and Surveillance business is growing nicely. We have restructured that business slightly last year. We've introduced some new exciting vendors in there. We've changed our approach slightly and it's now paying dividends, good steady growth, very high margin, very good business. We're going to continue to see double-digit growth in this segment.

Audio visual, if you remember last year, we were flat kind of with the PC market, PC growing, audio visual supporting that growth, more and more people refreshing their meeting rooms, their collaboration rooms. We're seeing some really good uplift.

H1 traditionally is a very soft half for our retail business. Remember, we are not interested in fulfilling big retail deals into our large-scale retailers. We are a boutique exclusive distributor. We're doing it with a lot of value. We like to do, we'd like to partner exclusively with vendors, delivering the full service. We've worked really hard to get a couple of new contracts with the new vendors, which we're launching very, very soon. H2 is a much stronger half for the consumer and retail business. We're definitely going to see a good uplift in the growth rates in our retail business in H2. So again, it's a really good opportunity.

Services. So services department going through a lot of change and transformation. For many years, we've been a single Telstra sort of focused distributor, upselling and selling complex data into our telco managed service providers. We have decided to change that strategy. It was a deliberate change. We decided to go multi-vendor. We have added Optus focus and a couple of more telco vendors in our portfolio. We transformed the business. We're going wider. We feel it's the right strategy. We have a fantastic team and expertise. We're rebuilding it. It's probably going to be slightly softer this year, and we're going to see some really good growth opportunities in this segment next year.

Just a couple of new vendors that we've put on board that, that work is ongoing work. We continue reviewing our vendor relationships. Are we adding value to those vendors? Are they adding value to us? We know where our expertise line, some really, really good signings.

We got Optus, like I've mentioned to you, it's a part of our strategy, CrowdStrike, the world and global leading cybersecurity vendor. We've been chasing that vendor for many years and we've locked it in and we're starting really to see upside. So H1 CrowdStrike is very little. We're starting to see some really good opportunities coming along. It's going to be one of our growth areas in H2. It is a very critical vendor in our AI play in our AI expertise and practice. So again, we're building that ecosystem to drive AI enablement into our partner base. We can't do it with just one single vendor. It's the conglomerate and ecosystem of various tenders.

I think I've touched like, and you probably see where I'm going with that, like what's driving the market? What's happening in Australia and New Zealand, where is people spending and how it's growing. So, from various analysis from Gartner, from IDC, we're seeing somewhere around a prediction of 8.7% growth this year. We're definitely growing beyond that because we're focusing on areas that is growing beyond 8.7%. It's really good to see.

I would say that 8.7% growth of spend on IT in our region is predominantly driven by enterprise and mid-market. We have deliberately positioned ourselves well with this market last year, and now we're the rewards from that. However, SMB and small business is very, very important to Dicker Data. It's part of our DNA. We've always been servicing small business. It's finding it really tough and especially in New Zealand. I think New Zealand was hit much harder with the economic conditions.

We've had an interest rate cut last month. We're hoping for another 1 or 2 interest rate cuts. We just need more stimulus for the small business to really get on that IT spend and trying to take advantage of all this incredible IT transformation and innovation happening in the market. We don't see it yet. This is clearly an opportunity. We're hoping that Q4 will break that cycle. If not, it's definitely going to be 2026 opportunity.

When you look at the spend, AI is going to be a big part of spend, software with cybersecurity leading the way, the backup management risk management and resiliency. A lot of large organization is really eye of how are they going to get better automation, better resilience, better cybersecurity protection. So, we lead the way with a consulting approach, consulting selling, and it's really working really, really well for us.

Again, yes.

[Fire Alarm]

Okay. Excellent. All good Please continue

All right. Sorry, everyone, for the alarm testing. We'll continue. That's good. I'm talking about AI a lot. I think, again, look, just give me another 5 minutes is very, very important because we live through the era of Internet, era of cloud, multi-cloud, this has all changed our life. AI is changing our life. We, an IT organization. We work with a lot of companies who spend billions and billions of dollars believing in this and driving this.

We are huge believers ourselves. We use AI inside our organization at Dicker Data. It helps us to be more efficient. It helps us to be more innovative. And to be honest, it helps us to stay ahead of competition. We know how important AI is, and we know that if we drive the right enablement of training, we tell people how to use it and how to go ahead with that, we will get a lot of business out of it.

We look at other regions in the world, we look at United States and Europe and some of the Asian markets, they're way ahead of adoption. They're way ahead of how they're actually using AI, not only building the infrastructure on their store lens, but also actually utilizing it. If I look at the Copilot adoption and other things, when Microsoft came with the cloud in the world, Australia was one of the early adopters. But we're looking at the Copilot and others, we're actually one of the latest adopters. But that's going to change because it's all about powering GPUs and getting the capacity of the available GPUs at powers with NVIDIA. That's basically where it comes from. A lot of areas already filled. Australia is getting a lot of attention. A lot of vendors and a lot of partners is bringing and investing in Australia. And I think the next couple of years is going to drive a huge difference in your everyday life, in our everyday life, how we operate, but most importantly, it brings one of the biggest growth opportunities that Dicker Data ever had before.

And we absolutely believe in it. We're skilling ourselves. We're investing in expertise and skills. We're investing in the right partnerships and we're building that momentum internally.

So that's what's happening from the market point of view. Now we look at our strategy and how are we actually driving. Again, 3 main points of focus of where Dicker Data is seeing the growth is coming from in Australia and New Zealand. I talked a lot about AI and again, how do we position ourselves, how do we place ourselves and the investments we're making to driving that momentum, very, very important.

Windows 10 refresh, while we're seeing 17% plus growth H1 2025, I do believe we can do better. I do believe we can do better in H2. Historically, our H2 always been stronger than H1. October 14 kind of lies in between of the half. I think it's going to be great momentum. Looking at July and August, looking at the back orders we currently have, looking at the number of quoting we're doing, it gives me a great deal of confidence to sell that the whole motion of the Windows 10 refresh is going to drive another wave of a very strong accelerated growth in H2.

Cybersecurity is super critical. Like myself and Mary, our entire Board of Directors, there's not a meeting where we don't look at us as an organization, what are we doing in Dicker Data, how do we treat our resilience strategies, our cybersecurity protection strategies. And with doing that, we know how we do feel the sense of responsibility for the entire ecosystem and the market to go out there and provide them with the best quality advice with the best quality solutions with the best quality cybersecurity vendors. Hence, it's very important for us to reinvest under the portfolio.

We have an incredibly strong portfolio and CrowdStrike is a very welcome addition to that portfolio. So again, 3 major strong lines of expertise and growth. We're investing with our people, we're investing in the infrastructure. We're investing with coding and developing. We're trying to get ourselves and position ourselves as a true value-added distributor in those 3 items.

Commercially, we're not interested to go and drive commercial conversation. What we want to drive is the truly consultative value-add conversation. We've always been winning with that. We're going to continue to win with that. So again, those 3 areas are important. It describes what we're doing. So yes, we talk a lot about it.

We see what's happening in the market. We know what's driving the growth. What are we actually doing as a company? So, this is really describing our real tactical execution matters of how are we doing it, how we're driving it, how we're partnering with it. And it brings a really, really good result, and that work is ongoing and continuing.

Again, it's just drilling on some of the segments of the business. We're adding more software businesses. We're winning a lot more larger enterprise and mid-market business with software. We are going to hit $1 billion in recurring revenue for the year. We are $0.5 billion now, and we're absolutely streamlining to $1 billion. It's going to be a big milestone for our organization. And we continue chasing those innovative vendors who can really add to our AI ecosystem.

We now have hunting units who are bringing these things together to make a very compelling and very real offering into the market. At the moment, a lot what we do with AI is kind of focusing around mid-market and enterprise. I don't think it's quite a small business area. In the next couple of years, it's going to get a lot more simpler. We'll be able to drive a particular bundles, and we'll be able to scale it. At the moment, it's not quite a scale game, but very, very exciting opportunities.

End point solutions, we've got every single vendor under this roof. We have our dominance in mid-market and SMB. SMB doesn't work. At the moment, mid-market is doing really, really well and the large enterprise deals are coming and we're quoting on them. So, in H2, we'll have education season coming as well. So that's going to drive an additional growth opportunities with PCs. And we're still figuring it out in terms of how accelerated the growth in End point solutions is going to be in H2 because like I said, 14th of October is coming. We're seeing a lot of activities there. We have a great coverage of the inventory in the warehouse. We just need the SMB to really drive that momentum for us.

Advanced solutions like AI is driving it. Enterprise networking, I haven't spoken a lot on that, but it's been a phenomenal half for our large enterprise networking vendors. Cisco performed extremely well. Juniper performing really good. We're driving some incredible opportunities. AI driving the enterprise networking refresh. It's all connected together.

So we're putting a lot more effort into CX motion, customer success motion as well. A lot of complex solution within the enterprise networking we're selling, and a lot of customers maybe not knowing how to utilize and use. So, we have a dedicated unit who actually goes and talks to the end user customers, really enable and train them how to use the technology. And if they like what they're using, obviously, it's the renewal opportunities. So, we're covering it from the [depth], from the presales motion to the aftersales motion.

And access surveillance, AV, retail, smaller divisions, all very important, all driving very good high-margin business, balancing our portfolio nicely. I think access and surveillance is going to go from growth to growth. We're putting a lot of very interesting internal compositions to drive and accelerate the growth will continue to grow for the PC growth. So again, I am expecting every segment of the business to continue with double-digit growth in the next half.

Now talking a little bit more about international expansion. So last couple of years, as market was a little bit tough and we experienced slower growth areas, slower growth rates in the business. We're all incredibly passionate people. We love our company. We love what we're doing in the market, and we have the edge. A lot of vendors telling us, you guys have that edge. We would love to see you coming outside of Australia and New Zealand. We would love to bring this value that you have outside Australia and New Zealand.

So, we've started slowly to look at different potential markets, how do we open those opportunities. We started to talk to the key vendors. And we started slowly to really understand how the international markets are working. We have 2 entities at the moment, one in Singapore, one in Philippines. Those, the people who we have there, they're servicing Australia and New Zealand market. We don't have any business outside of Australia and New Zealand at the moment.

But what we're doing, we're getting a little bit of a feel for the markets. We're having a little bit of, we're talking to different vendors, and we're seeing the organic growth could be explored. We're also open to see if there is any opportunity for maybe a smaller type of acquisitions. We're not because there's so much opportunities in Australia and New Zealand at the moment, and we probably would see it for the next couple of years. We're just trying to understand the opportunity in other markets.

We're taking a very cautious approach, and we're going to continue to explore what does it mean for us. And it's all going to be based on those conversations we're having with larger vendors. The way we're thinking about going into international markets is probably through our software division, our digital platform and the value-added partnerships that we currently have and we can take it.

Actually, a lot of global partners who are dealing with us would love to see us to provide their services in other markets as well. So we're currently gathering a lot of information. We're learning, we're building expertise and then we're slowly, slowly moving until 1 or 2 things will put in place and we'll look into it in more specific in more like a concrete way of expansion. At the moment, it's just experimenting and kind of viewing what's happening in the other markets.

I think throughout my conversation, I've kind of given you enough to see where my enthusiasm is coming from, right? And where I see opportunities of growth is coming. And everything that's been driving the growth in H1, going to drive the growth and H2 in accelerated mode. This is my conviction. This is what I see in the market. This is the first couple of months of the Q3 numbers is giving me that enthusiasm.

Obviously, we have provided guidance from H2. We haven't, as a company, we haven't provided guidance for many, many halves. And having that guidance, you can probably notice our strong conviction and enthusiasm and looking at the market and seeing where the market is going. Certain areas, there is still a little bit of uncertainty, uncertainty predominantly in small business.

I'd love to say that we'll see a better growth from small business in H2. I don't think anyone can guarantee that. This certainty though, coming from the mid-market enterprise. The certainty come from the partnership we're building and the certainty coming from the vendors and new partner relationships that we're building. There's certainty coming from the expected AI deals that are driving our enthusiasm for the H2. Those sort of things is we have a good degree of control. SMB, we continue stimulating.

We continue driving and scaling programs, promotions, different, we're working very closely with all the vendors to drive that small business spend. It's not quite there yet. It's a great opportunity, and we're really, really hoping for it. So obviously, we're guiding the market that we're going to finish somewhere between $3.7 billion and $3.8 which is around 10% to 13% growth.

If you look at the historical trends for somewhere before COVID years, we've always been trying to get to around 10% to 11% growth. It feels really, really strong for this year to deliver those results. Same way in operating profit before tax, we do believe we're going to end up somewhere between $120 million and $124 million. Again, slight pressure on gross margins, but making it slightly challenging, but a really good way of controlling the cost, investing in our platform, utilizing AI internally at Dicker Data, giving us confidence we'll be able to deliver it.

Okay. That's the end of my presentation. And now we're opening up for questions.

Great. Thank you very much, Vlad and Mary. [Operator Instructions] So first question comes from Apoorv at UBS.

First question, on the second half implied sales guidance, it implies sales growth of about, call it, 7%, 8% year-on-year, which is obviously slower than the first half where you've done 16%. I'm just curious why the guidance has that level of a slowdown? Because I think Vlad and correct me if I'm wrong, earlier, I thought you might have said that every segment probably shows double-digit growth in the second half. I think there was a comment made. Obviously, you've also talked qualitatively about further momentum in the PC refresh cycle, AI deals coming. So I'm just -- in light of those comments, I just want to unpack the implied second half sales guidance.

Yes. Apoorv, thank you very much for the question. So, if you remember, Q4 2024, this is where we started to land some really strong enterprise deals, especially in December. December was one of our biggest month ever. Look, we need to go a little bit caution because when you deal with the large enterprise deals, it can be quite lumpy and 1 or 2 large enterprise deals can swing the percentage up and down. At the moment, it looks really good and strong. Are we going to get 20% growth in December '25 on December '24? -- really does. We had a really, really good December last. So the way it goes, we had a really soft H1 '24. We're delivering a really good year-on-year comparable. We still think H2 is going to be stronger. We still think it's going to grow well. But comparables on a strong Q4 '24, that's where perhaps a little bit of caution coming from...

Okay. So yes, it is the comps you're cycling, I guess. I just want to clarify

H1 comps in 24.

Yes. Okay. Okay. That makes sense, the lumpiness of the enterprise deals, too. I just want to also clarify one other comment, Vlad. I think on Slide 19, when you're talking about the outlook on Slide 19, you're saying I heard second half End point solutions growth should be higher than the first half, which is up 19%. Did I interpret that correctly that with the refresh cycle, actually the endpoint solutions probably pick up?

Correct. Correct. Looking at July and August, looking at the 14th of October actually lending in H2, looking at historicals, those 3 will tell me and giving me good confidence that the End point solutions in H2 will be growing faster than in H1.

And that's really on the back of still enterprise as opposed to small business. It's really the big stuff still flowing through.

Unfortunately, yes. Unfortunately, yes. We're quoting big deals and back orders, if you look at the construct of the back orders, larger deals, mid-market deals, yes.

Got you. Okay. One final question for me then, please. Just on AI. So I think one of the slides showed that AI delivered more than $30 million of revenue in the first half. can you talk to what kind of dollar number you might expect in the second half? It sounds like with the pipeline of deals, it's probably going to be a bigger number. And could you also maybe share what kind of gross margins do these AI deals typically generate?

Probably should clarify that $30 million was a specific deal; AI business would be higher than that generally, but we were calling out the one large infrastructure deal that was, could be one of the lumpy deals that may not be in the comparatives in the subsequent periods. But AI as a category is delivering more than $30 million.

So AI, so if we talk about AI like a Copilot sales, for example, a Copilot Plus, the growth is fantastic. We're going to continue growing it. I'll probably expect a good double-digit growth on a Copilot Plus. When we look at infrastructure deals, again, I have to be very careful here because they could be either incredibly substantial or none of that will happen. So it's a fine line between lending $100 million deal or not lending anything at all. In the first half, we've quoted a couple of larger scale, deals much larger than $30 million, none of that landed. So opportunity is great. excitement is strong. We are quoting. The great thing is we are a distributor. And distributor normally classified as a value-added channel member for the mid-market and SMB and a little bit of a transactional type of assistance to the Tier 1s.

We are now considered in the massive AI projects. The distribution provides the value that completely changes the whole perspective on traditional distribution values, and that's what's really important. So what I'm driving internally, I'm trying to build more and more of those expertise to show our OEM partners, you can't do it on your own. It's ecosystem of people. I build this ecosystem of people. I build expertise, partnerships to drive.

Now at the moment, the larger deals that we're quoting, they're on a relatively low margin. They are not large margin opportunities. But as the deal is going to become a little bit smaller and we drive a lot more through our traditional infrastructure partners, and we bring that true ecosystem in place that it becomes better margin. So I'll give you an example. That particular deal we did it was a Dell Tech, NVIDIA and a few other sort of software components into the deal was an ecosystem deal. Some of the components of the deal was on the lower margin, some of the components of the deal was on the higher margin. It was a great way of starting the whole motion. Our partner is happy. Our vendor is very happy. We can now, based on this, continue to build those expertise.

Next question comes from Aryan from Barrenjoey. Ary please go ahead.

Just the first one on the revenue side. So just going into maybe 2026. So like this year, your revenue will be up about sort of 12% year-on-year. So you've added a lot of incremental sales dollars. And you've said you've pivoted into the larger customers and mid-market and enterprise deals. Is there a component of that uplift in revenue that won't repeat in 2026? So you've sort of tried to win a lot of these enterprise contracts to plug the hole for SMB. Is that the new base? Or will those deals drop off and then you have to rely on SMB recovering, please?

No, no. The partnerships are built. The relationships are strong. The trust is great. A lot of those Tier 1 and Tier 2 large partners have tried to work with Dicker Data maybe for the first time because remember, it's only the last couple of years when we said, you know what, we can provide the value, we can do those deals at a slightly lower margin, but we are very confident in our capabilities. They tried us, they love us. Now that the market growth for them, they get a lot more opportunities. They're using us a lot more. I don't see that ever going to change.

What I need to see is the balance of the construct of the business change a little bit. Continue to grow through enterprise. Well, look at H1, very successful, very strong. So holding the cost right, providing the right level of expertise and investing in the right areas of the growth really paid the dividends, and it's working really well. Can I continue to grow 10% year-on-year with just enterprise business? I can. And I'll tell you what, even now, even in the moment, Dicker Data has relatively low share in enterprise business compared to some of our competitors. I can get more share of that business, and it's a good profitable business. But I also need to ensure that my expertise and my professional historical build that I built with small business is not going to get based. So that's why I need the small business to come back and work. So it's our ability to adapt to where the market is. However, saying all that, small business is our priority. It's always were and it always will be.

Awesome. And then just historically, when you look at companies in the PC refresh cycle, they have a lot of growth during the cycle or the refresh cycle. And then the next year, the year after that, demand goes backwards or the revenue goes negative because you're cycling a big uplift and you go back to the trend line. Considering your PC revenues are up 18% plus this year, is it fair to say next year or the year after your PCs should fall 10% to 15% because you're above trend now when you go back to trend?

Yes. Thank you for the question. It's a good question. Looking at historical and looking at the trends, you're absolutely right. However, the refresh cycle is, when I look at an enterprise business, I think it's around 60%, mid-market, somewhere around 50%, SMB, not even 20%. So we don't know the time line of the refresh cycle. So it can go for another 12 months, another 18 months. They're moving a lot of production into the AI PCs. By end of this year, probably every single PC will have an NPU chip, which classified as an AI PC. So that is on a higher dollar bracket. So that's going to drive a little bit of growth.

So my feel is probably we will continue to see a good growth, very good growth in H2, a good growth in first half of '26. And I would probably, if I would make a prediction, I'll probably predict H2 of '26, the growth rate is going to slow down. I agree with you.

Slow down, but not go to negative, you don't think it would actually fall year-on-year at some point because of this.

Very hard to say. We don't want to think it's going to go to negative, but the growth rates will definitely slow down

Got you. And last one, in the lower and upper end of the guidance range, to what, on the PBT, to what extent do you assume an SMB recovery? So if you are assuming that at all. So if the SMB was pretty flat or down in the first half, do you assume any change to that in the second half in the guidance?

At the moment, we assume no SMB recovery for this year.

Next question comes from Ross at Wilsons.

Mine is just around the AI opportunities. Vlad, can you just clarify something around, I guess, the deal sizes? When we've spoken in the past, you've mentioned that there have been some, there's a big spread of deal sizes, obviously, and there are a bunch of opportunities coming up as you've alluded to, and you've won some so far, some got delayed and some went direct. I guess the bit that I'm looking to explore a bit is just in terms of the customers that have bypassed and gone directly with their order. Are you still seeing that? And maybe just help us understand, are you still able to capture some of those larger transactions? Are they going direct? And are you able to just incrementally get bigger and bigger deals over time? And it seems like even if that's the case, there's still plenty of opportunities that are below those, the Tier 1 opportunities, if you want to phrase it that way.

Yes. Thank you for the question. I think actually is going to get reversed. So, at the moment, we have a few but large deals. We have a few deals that are going around. I know there was about 4 or 5 large deals. But large deals, let's just say, between $100 million and $200 million. Those opportunities are there. A lot of them is large enterprise customer spend, government, federal government spend and they've done, a lot of them done with the OEMs and NVIDIA direct. We, when the deal done by a particular partner that is not a premium Tier 1 partner for a particular OEM, they involve distribution to the partner with the project management. Some of these deals are also quite large and some are medium sized.

What we need to see, we need to see more deals of a smaller size. We need to see, we need to quote for 25, various opportunities of a deal sizes of $5 million to $10 million. That's where we're heading. That's what's coming. We're now trying to make ourselves positioned to take those $100 million and $200 million businesses, it's very difficult. The margins are tight. The investments are strong. It's a very heavily involved conversation between the customer itself who is building the infrastructure with the OEM, with the media, with the software guys like because it's such a significant deal, you can imagine all the executives of those companies will be right in the deal, and it would be hard to really position ourselves to drive a significant value.

With the smaller deals we can. And that's what I'm trying to achieve. I'm trying to actually drive demand myself, not to rely on someone else to come and actually give me the opportunity to be part of that project, which I'm incredibly grateful and we continue quoting for some really good opportunities. I want to go in the market and drive that enablement and training, trying to get the people to understand AI deal doesn't have to be a size of $50 million. They can be $2 million, $3 million and make a significant difference to the end users. And we can bring it all together and go with that. That's my aim.

That's really clear. So maybe just to summarize, it sounds like the $5 million to $30 million window is kind of the sweet spot for you?

Correct. Correct. $5 million to $30 million. I mean, if we can land 3, 4 of those deals every year, it will be fantastic. But what I really want, I want to land 25 to 30 deals of about $5 million to $10 million.

Understood. And just very quickly, that comes through the Advanced Solutions segment. Is that correct?

Correct

And software... Some elements are software.

Next question comes from Olivier at E&P

Just another AI one. I mean I think that partner, I believe, is that you did the little AI deal with is calling for maybe 10 more of those. And I don't know over what time period. But your confidence that you'll continue to be kind of involved in that pipeline?

Yes. Yes. We've built a very strong relationship with this particular partner. We're going both ways kind of partnership. They're going to do a lot of work for us as well. So yes, we are quite confident we're going to continue to drive this with this partner.

Yes. I mean on that front, so they're obviously selling a bunch of AI solutions and starting revenue generation pretty much now. Are you sourcing customers for them?

We will be...

Yes. Okay. So just on the software business, I mean, obviously, incredible growth. I'm really interested in your point there that you're getting good growth in enterprise and medium business. I mean what's the potential here? Like you're calling for $1 billion this year. Presumably, you'd expect to grow well above market for a lot longer if you've actually cracked the code for mid-market and enterprise?

I think we did. We cracked the code. I think the code is, go into the partners and drive the solutions on a consultative way of selling. Before we were very aligned to our vendors, we understood the strength of their solutions. We will drive a lot of seminars, a lot of interesting webinars and training and enablement sessions. And then the partners just, they can choose one vendor or the other vendor.

Now we're going into a particular partner, and we're saying this is the solution with constructs of 2 or 3 different vendors. This is how we're going to do it. We're going to do the migration services for you. We're going to do the bidding for you. We're going to do CX, which is the customer success motion for your customers. We're going to give you a white glove service for everything. And we're going to do it as a post sales and customers love it. So that consultative outcome-based presales, after sales approach started to resonate really well with our customers. And then most importantly, it takes the conversation away from commercial conversation because the commercial conversation of going and talking to someone and just saying, well, someone else is offering for 2% if you can match it, we'll give you the deal, it's not interesting anymore. I mean we do this, but we want to drive, we want to get control of our own destiny.

We want to drive that innovative way, consultative way of selling those solutions to our partners and their customers, we're starting to engage more and more with their customers because remember, a lot of mid-market partners don't have skills and expertise. We do that. We try, but sometimes we don't know about it. So when we go and we tell them and they're like, we have no idea, you guys can do this and this and I say, and we're going to do it all for your customer on your behalf.

Yes. No, it sounds pretty exciting. And then just on CrowdStrike, I mean obviously, a massive vendor for cyber. Like how does that really unlock a much larger market that you haven't been able to access having them as a cyber vendor?

Correct. Correct. I mean, look, CrowdStrike is predominantly the enterprise-grade solution for the enterprise customers. I mean timing is good. We now have a lot of enterprise customers. They all want to deal with us, fantastic. The opportunity with CrowdStrike, I mean, getting the enterprise customers trading with us and dealing with us, it's just a market share. It's the share shift. We're going to share shift, of course, and we're going to take a lot of business. The opportunity with CrowdStrike in that mid-market to kind of a low end of mid-market. This is where they feel they have an opportunity. We have an expertise there, and we have the market there. So it's all about their process, trust in the process. We've been doing that for many, many years. We know how to take enterprise-grade solution into the smaller and medium-sized customers. So we're going through this motion, unlocking the opportunities. So that's where the opportunity with CrowdStrike for us with Dicker Data, especially on the margin piece for the next couple of years.

Yes. So just the last one maybe for me. I think when I look at December '26, and I take the point that obviously, the PC refresh cycle, you're going to get an acceleration in SMB over '26, but a plateauing or maybe a slight drag in mid-market and enterprise as they largely will have already refreshed. But I think the market is currently calling for like 6% or 7% revenue growth. I mean, based on what you're seeing at the moment, does that feel like that might be a bit conservative?

When we do the guidance, we're trying to be as close and as realistic to the market we feel where the market is. Our December last year was super strong. I've never seen anything like this. And I think top up with a double-digit growth in December would be a very heavy lift. Is it impossible? Nothing is impossible. But we're trying to be more realistic. We know that the Q3 is going to be great. We think that October, November is going to be in line, but December could be slightly flattened. And that's why a slight conservatism in getting the number. If we feel that's going to change, we're obviously going to update the guidance. At the moment, we're quite certain that that's where we see the market is going.

You're referring to FY '26.

It wasn't '26, but I mean, obviously, the color on '25 handy. Yes. I guess I was saying because obviously, you've got PC refresh that might not give the same sort of growth in '26 of '25.

Yes. And that's correct. Vlad answered that question earlier. We are expecting that would come off more likely in that second half of '26, but we've got SMB driving most likely in the first half.

Yes. And then obviously, your view on software and advanced solutions is those growth rates potentially continue at kind of pretty elevated levels?

Correct.

Yes, correct.

Correct. And then like you've seen how much effort we're putting into the AI motion that definitely is going to be our biggest growth engine for '26. Yes. Sorry, I misunderstood the question.

Just last question coming from Ed at Jarden.

I guess following on from Aryan s good question regarding PC cycle. Just wanted to make sure that like we understand like your views on this. And maybe just if you could make a comparison to previous PC cycles, is this one proving to be a little bit more elongated, I guess, and smoother and therefore, maybe any of the kind of drop off if there was any, would be a lot less radical. And then you're also benefiting from like a mix shift to AI PC. So is that part of the reason that you feel pretty comfortable that the growth rates won't become negative, just moderate?

Yes, AI PC is definitely a good point. I think because we're getting into this enterprise motion and delivering this larger project and economies of scale working quite well for us. Remember, in previous years, we were very, very heavy SMB and mid-market. So we could kind of, if SMB stopped spending, we could feel it straight away. I think now we have a little bit more balanced approach. If SMB is not spending with the enterprise. If SMB is bad, then we can be a little bit more sort of selective with enterprise. So that's putting us in a really comfortable position. [Up for each cycle, there could be a slowdown]. There's no question. How big is that slowdown is going to be, when it's going to happen, we'll see. But I agree with the whole concept of H2 2026 will probably start to see it flattening the growth is flattening, even with the larger ASPs on AI.

Sure. So yes, okay. So not a massive, so not negatives, but also supplemented by the areas of business. And then just on New Zealand, I appreciate that market has been challenged. Can you just talk to what do you need to see for that revenue to reaccelerate? Is it the macro continuing to improve? Is it you need to continue to add new vendors? How do you see that? And where do you think you can get to?

Look, definitely. Look, saying that, we are around $600 million business in New Zealand. Looking at the commercial spectrum of the business, it's going to be about $400 million, maybe just a little bit over $400 million. It's the biggest commercial space that we're occupying in New Zealand with the vendors we represent. We need more vendors in New Zealand. We need more scale in New Zealand. We need stronger SMB buy in New Zealand. But the truth is the construct of the business in New Zealand never was as heavy SMB as in Australia. And we were going through this motion. We were building our customer base. We were driving that mid-market and SMB presence. And we started to get better and better than, of course, last couple of years, it was very, very difficult. So that has slowed down. Our mid-market business is good. Our enterprise business there is very low.

We did not pivot our New Zealand business to the enterprise customers as much as we did in Australia because we were believers that, that mid-market is still have ample of growth and opportunities, and that's kind of what's happening. If we slice down New Zealand business slightly differently, and we look at our consumer retail business and Apple distribution versus the commercial, commercial is actually growing well. You're right. We need more vendors. We need more presence in mid-market. We need to unlock a few more enterprise opportunities and we need small business to come back.

It's a lot of opportunities in New Zealand business. We're putting a lot of focus there. I think there is definitely good growth. We have changed operationally our New Zealand business. You can see that profits are coming up quite significantly. We're going to continue that work. So it's just the slow steps there.

Okay. So the vendor side of things, I guess, is the upside and given your track record in Australia and the opportunity to work with specific brands should come on market?

Yes. The problem with New Zealand is it's a small market. It's a very small market. And vendors in Australia, you can have 2 or 3 distributors, and each provide its own sets of values. In New Zealand, there's a small market. Vendors are not as keen to open up. It takes a long time to drive those contracts. So probably a bit slower motion, especially in a tough market. If the market was buoyant growth, I'd probably say we would accelerate the growth with adding more vendors and faster. But at the moment, it's a bit tough...

Thanks very much, Ed. I think that's all the time we have for questions today. If there are any follow-up questions, please feel free to send them through via e-mail, and we'll endeavor to come back to you. And maybe with that, Vlad and Mary, I'll just pass it back to you if there's any closing comments.

Thank you. Thank you, everyone, who joined the call. Look, it's always nice to present on the very strong results, pleasing results. We're very proud to what we've achieved. We're very proud of what the organization have achieved and how we position ourselves for future growth. The amount of passion, enthusiasm, growth and talent that we have in the organization is exceptional. So, we're looking forward to a very successful H2. Historically, our H2 has always been stronger than H1, and it absolutely will be the case in this H2. So yes, we're looking forward to seeing you all again on, in early 2026, hopefully delivering a very, very strong result.

Great. Thanks very much. Thank you for joining today's Dicker Data first half call. Thank you and enjoy the rest of your day. Goodbye. Thank you.