Datatec has come a long way from its hardware-heavy roots. In the first-half of FY2026, more than 70% of its gross invoiced income came from software, services and annuity streams, signalling a business that’s more consistent, cash-generative, and better aligned with long-term tech trends. That shift is now showing up in the numbers, with stronger margins, higher profits, and growing shareholder returns.
Disclaimer: Past performance is not an indication of future performance. Time period taken 20 November 2025. Source: EasyEquities Platform. Images are for illustrative purposes only.
Stronger revenue, smarter mix
Gross invoiced income rose 9.4% to US$4.1 billion, driven by growth in high-margin, recurring software and service streams. This means Datatec’s selling more, and more of what it sells earns better profits and comes back every month.
Profitability on the rise
Adjusted EBITDA (a measure of operating cash flow before tax and debt costs) rose 22% to US$129.2 million, while gross profit margins expanded to 26.3% from 24.2%. The business is making more from every dollar earned, with better control of costs and smarter income sources.
Returns for shareholders
Headline earnings per share more than doubled to 22 US cents, and the interim dividend increased 133% to 175 ZAR cents per share. Shareholders are seeing rewards with stronger profits translating into a much higher dividend.
From Hardware to High-Value Services
Datatec’s mix continues to tilt toward software and annuity income, now accounting for over 70% of total gross invoiced income (GII). That shift lifted group profitability even as reported revenue growth slowed.
For the six months ended August 2025, GII rose 9.4% to US$4.1 billion while IFRS revenue increased 2.9% to US$1.84 billion. Gross profit grew 11.7% to US$483 million and gross margins expanded to 26.3% from 24.2% a year earlier. Adjusted EBITDA climbed 22% to US$129.2 million and profit after tax almost doubled to US$59 million. Headline earnings per share more than doubled to 22 US cents, with all divisions contributing to the margin improvement.
Operating profit rose 50% to US$108 million and underlying earnings per share were up 43%. Net finance costs fell 27% to US$21 million on the back of better working capital control and lower funding costs. The balance sheet remained strong with a small net debt position and a net cash balance excluding leases.
Operating cash flow of US$62 million supported a sharply higher interim dividend of 175 ZAR cents per share, up 133% from the prior year.
Westcon International delivered another strong half. Gross profit rose 14% to US$246 million and margins expanded to 25% from 22.2% a year ago. Operating profit increased by a 34.3% to $76.7m and profit before tax rose 61.5% to $61.2m. Software, cybersecurity and cloud networking continue to drive the business as it aligns with enterprise AI and digital infrastructure upgrades.
Logicalis International reported double-digit growth, with GII up 11% to US$1.04 billion and operating profit 54% higher at US$39 million. The gross margin expanded 1.4% to nearly 29.8% as demand for annuity and cloud solutions increased. Cost control remained excellent, lifting the adjusted EBITDA margin from 6.7% to 8.5%.
Logicalis Latin America showed a solid recovery despite difficult regional conditions. Gross profit increased 6% to US$51 million while adjusted EBITDA more than doubled to US$12 million (+110%). Profit before tax rose 920% to US$5 million, helped by cost discipline and stronger pricing in Brazil.
Datatec’s shift to software and services is now entrenched, creating more predictable revenue and higher operating leverage. CEO Jens Montanana described the first half as evidence of a “remarkable business mix transformation” and expects the momentum to continue into the second half.
The global AI build-out is driving a new investment cycle in networking, cloud and cybersecurity as well as other downstream technology and IT investments. Datatec is well positioned across these areas, supported by its global reach and deep vendor partnerships. Management expects continued progress through FY2026 as recurring income and efficiency gains underpin steady earnings growth.
At EasyAssetManagement, we take a thematic approach to investing, focusing on long-term structural trends that are reshaping industries and economies. As part of this strategy, we currently hold a position in Datatec within our EasyETFs Balanced Actively Managed ETF, as part of our Tech Advancement theme.
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