FY17 was a year of strong growth for DATAGROUP AG (DE:D6HG), with revenues rising by 28% and EBITDA surging 42%. The EBITDA margin rose by 120bp to a record 12.1%. The core cloud services continue to grow strongly, rising by 64% and recurring sales represented 70% of total revenue (which translated to 88% of gross profit), up from 66% in FY16. In August 2017, DATAGROUP acquired ikb Data to extend the group’s offering into the financial services sector and in January 2018 it announced the acquisition of Almato, a pioneer in Robotic Process Automation. Consequently, DATAGROUP is building a number of key differentiators in its markets.
Consolidating a fragmented IT services market
DATAGROUP is consolidating the highly fragmented German IT services market, focusing on Mittelstand companies with €100m-€1bn revenues. This involves both buy-and-build and buy-and-turnaround approaches, transitioning the acquired businesses to DATAGROUPs more effective business model. DATAGROUP’s CORBOX solutions are cloud-based, focused on fixed-price contracts, based on standardised processes that are certified according to ISO 20000 and backed by service level agreements (SLAs). DATAGROUP believes there is a huge opportunity in the Mittelstand space, as these companies typically rely on their own expensive in-house IT departments and have difficulty adapting to new technologies. The broad range of services allows customers to fully outsource their IT operations. Much of the work is done remotely, and the group can scale its data centre services and shared services desk to support a large number of customers.
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