RCS - Westcon Intnl. Ltd - Full Year 2024 Results

MicrosoftAnnouncement

28/05/2024 09:00

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RNS Number : 9445P  Westcon International Limited  28 May 2024

 

 

 

 

Westcon-Comstor announces strong financial results, propelled by data-driven
strategy and shift to recurring revenues

 

Robust performance sees double-digit increase in both gross profit and
adjusted EBITDA in FY24, with strong growth in cybersecurity and networking

 

LONDON, UK - 27 May, 2024 - Westcon-Comstor (https://www.westconcomstor.com/)
, a global technology provider and specialist distributor, today announced its
results for the year ended 29 February 2024 (FY24).

 

Financial highlights

·      Total revenue up 8% to $3.69bn (FY23: $3.42bn), driven by strong
software results

·      Gross sales across strategic vendors increases by 10%, with a
CAGR of 10% over the last five years

·      Gross profit up 23% to $403m (FY23: $329m), with double-digit
growth across all regions

·      Focus on recurring revenues with growth of 24% to $1.63bn,
representing 44% (FY23: 38%) of total revenue

·      Adjusted EBITDA increases by 26% to $120.2m (FY23: $95.1m), with
further 0.5pp improvement in margin to 3.3%

·      Revenue CAGR of 8% over five years demonstrates the success of
the change in strategic focus introduced in FY18

·      Net debt remained stable despite strong growth and product
lead-time challenges

 

Operational highlights

·      Launch of innovative Amazon Web Services (AWS) Marketplace
programme

·      Acquisition of Rebura as part of wider cloud growth strategy and
opportunity

·      Acceleration of data-driven approach with launch of Partner
Insights tool

 

 US$ millions            FY24    FY23    Change
 Revenue                 3,685   3,421   +7.7%
 Recurring revenue       1,631   1,317   +23.8%

 (% of total revenue)    44%     38%     +6pp
 Gross profit            403     329     +22.7%
 Adjusted EBITDA*        120     95      26.4%
 Adjusted EBIDA Margin*  3.3%    2.8%    +0.5pp
 Net debt                (88.9)  (68.4)  +$20.5m

 

 

David Grant, CEO at Westcon-Comstor, said: "It has been another year of
excellent growth and operational success for Westcon-Comstor. These results
demonstrate our resilience and efficiency when operating in dynamic market
conditions, whilst continuing to advance our vision of being the leading
data-driven technology provider and specialist distributor of cybersecurity
and networking solutions and services globally.

 

"Looking ahead, we are optimistic for the coming year as we continue to
innovate to deliver an exceptional experience for our partners. As we look to
maintain our growth, we are focused on identifying opportunities to further
expand our capabilities through strategic acquisitions and other
forward-thinking initiatives such as our Rebura acquisition and AWS
Marketplace programme, cementing our successful position in the market.

 

"With our data-driven approach at the fore, coupled with our commitment to
Partner Success and environmental and social responsibility, our robust
performance throughout the year highlights our ability to deliver value and
service excellence. We are optimistic that the coming year will be another
year of growth for the company."

 

 

 

Strategy in action

 

Westcon-Comstor, which connects the world's leading IT vendors with a channel
of technology resellers, systems integrators and service providers, has a
unique data-driven approach which has driven a growth in sales in all
geographies, resulting in another year of exceptional progress. Total revenues
increased 7.7% to $3.69bn (FY23: $3.42bn) driven by a strong performance in
cybersecurity and networking. Gross profit increased 22.7% to $403m (FY23:
$329m), with double-digit growth across all regions.

 

Results for the year ending 29 February 2024 reflect an acceleration in
Westcon-Comstor's shift to a software, services and subscription-based
recurring revenue model, with recurring revenues now representing 44% of total
revenues, up from 38% in FY23.

 

Adjusted EBITDA increased by 26.4% from $95.1m to $120.2m, reflecting the
continued growth in revenue and drive for efficiency, which has resulted in a
further 0.5 percentage point increase in adjusted EBITDA margin to 3.3% (FY23:
2.8%).

 

FY24 has seen an easing in the supply chain constraints experienced in the
previous year, as there has been a steady improvement in hardware supply chain
and product availability. The overall backlog on a net revenue basis has
declined from $768m to $446m.

 

Data-driven approach

 

Intelligent Demand, Westcon-Comstor's proprietary data-driven lead generation
programme based on advanced analytics and the company's own customer insights
platform, continues to go from strength to strength. Continued growth in this
area demonstrates the company's ability to empower channel partners to put
data at the heart of their growth strategy.

 

FY24 also saw the launch of Partner Insights, a new tool that sits within
Westcon-Comstor's PartnerCentral digital marketplace platform and allows
partners to monitor key performance metrics and embed a data-driven approach
to performance analysis.

 

Growth across all regions

 

The company's excellent operating performance has driven double-digit growth
in gross profit across all regions during the year, reflecting the growth in
revenue across each region.

 

 Revenue                 Change

 US$ millions
 Europe                  +6.7%
 Asia-Pacific            +12.9%
 Middle East and Africa  +3.4%

 

Key technology domains and software sales drive growth

 

Growth during FY24 has been driven by strong performance in cybersecurity and
networking, which together now account for 89% of revenue. Ongoing innovation
in the company's offering to vendors and channel partners has resulted in
several market-leading initiatives.

 

For example, during FY24 it was announced
(https://www.westconcomstor.com/global/en/news/announcements/3d-lab-attracts-1500-users-plus-new-business-for-cybersecurity.html)
that Westcon-Comstor's 3D Lab - which allows multi-vendor cybersecurity
solutions to be tested against specific use cases in a dynamic virtual demo
environment - had attracted more than 1,500 users and generated in excess of
US $25m in new business for partners since its launch the previous year.

 

Created in response to changes in end-user needs and buying behaviour, 3D Lab
enables Westcon-Comstor's partners and their customers to experiment with
different combinations of solutions from vendors prior to purchase and
implementation.

 

Combined, across all technology domains, software and services now account for
46% of revenue (FY23: 40%), illustrating the company's shift to recurring
revenues.

 

Milestones during the year

 

In January 2024, Westcon-Comstor announced the launch
(https://www.westconcomstor.com/global/en/news/announcements/collaboration-with-aws-to-accelerate-partners-marketplace.html)
of its AWS Marketplace programme. This signified a more streamlined route to
transacting on AWS Marketplace for partners and vendors, fostering new growth
opportunities and securing the role of the channel in the cloud marketplace
economy.

 

Westcon-Comstor's acquisition of Rebura
(https://www.westconcomstor.com/global/en/news/announcements/westcon-comstor-acquires-aws-service-partner-rebura.html#:~:text=Westcon-Comstor%20today%20announced%20it%20has%20acquired%20Rebura%2C%20an,strengthen%20its%20cloud%20capabilities%20and%20channel-focused%20services%20offering.)
in January 2024 represents another significant leap forward in strengthening
its cloud capabilities and channel-focused services. This strategic move
empowers partners to offer a comprehensive suite of AWS solutions to their
customers. Rebura's expertise, combined with Westcon-Comstor's cybersecurity
specialisation, forms a robust cloud offering for channel partners, further
bolstering the company's offering as part of wider cloud strategy.

 

Market dynamics

 

Throughout the year, market dynamics were influenced by various factors,
including high inflation and interest rates, geopolitical tensions, a high
number of elections globally, fallout from climate risks, and increased
cyber-attacks. These challenges underscored the critical importance of robust
cybersecurity measures and solutions, driving organisations to prioritise
investments in technologies that enhance their cyber-defence capabilities.
Investment in cyber-resilience remained a top priority for organisations,
reflecting the heightened threat levels of cyber-attacks. Despite ongoing
macroeconomic uncertainty and constrained IT budgets, the worldwide
cybersecurity technology market experienced notable growth, generating
opportunities for Westcon-Comstor and its partners.

 

Outlook

 

Looking forward, although there are challenging conditions, the company is
expecting continued robust performance and growth in FY25. Westcon-Comstor's
growth is expected to benefit from its continued focus on cybersecurity and
networking during the coming year, with the company's cloud strategy also
fuelling momentum.

 

Westcon-Comstor's data-driven approach, alongside its focus on Partner Success
and environmental and social responsibility, will continue to drive
performance, positioning Westcon-Comstor as a leader in delivering unmatched
value and service excellence.

 

We are optimistic that FY25 will be another year of strong performance and
growth as we execute on our strategy.

 

*Adjusted EBITDA excludes restructuring costs, share-based payments and
one-off tax items impacting EBITDA

 

ENDS

 

About Westcon-Comstor

Westcon-Comstor (Westcon International) is a global technology provider and
specialist distributor, operating in more than 50 countries. It delivers
business value and opportunity by connecting the world's leading IT vendors
with a channel of technology resellers, systems integrators and service
providers. It combines industry insight, technical know-how and more than 30
years of distribution experience to deliver value and accelerate vendor and
partner business success. It goes to market through two lines of business:
Westcon and Comstor.

 

WestconComstor.com (https://www.westconcomstor.com/) | LinkedIn
(https://www.linkedin.com/company/5853/) | X
(https://twitter.com/WestconComstor) | Facebook
(http://www.facebook.com/Westcongroup) | Instagram
(http://www.instagram.com/westconcomstor)

 

 

 

FOR MORE INFORMATION, CONTACT:

Michael Youds

PR Director, Westcon-Comstor
Phone: +44 7732 694 173

Email: michael.youds@westcon.com (mailto:michael.youds@westcon.com)

 

 

Tavistock

Lulu Bridges / Katie Hopkins / Ruairi Millar

Phone: +44 20 7920 3150

Email: westcon@tavistock.co.uk

 

 

 

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