Exclusive Networks delivers solid H1

Distributor continues to provide investors with cheer after sharing details of its first-half performance

Exclusive Networks has demonstrated the benefits of serving the cyber security market with a strong set of numbers for its first half.

The distributor produced a 20% improvement in revenue gross sales to €2.3bn. Net margin also improved by 18% to come in at €222m for the six months ended 30 June 2023.

The performance in the first six months of 2023 gave the firm the confidence to restate its full-year outlook, with adjusted EBIT expected to finish in the higher range.

Exclusive has produced strong results since going public in September 2021 and is one of a group of channel players that provide an insight into the strength of the market, particularly the security space, which has provided a reality check against a backdrop of uncertain economic conditions.

The channel player saw its business across EMEA improve by 12% year on year in the second quarter, with overall gross sales of €1,152m across the group, representing an increase of 12%. For the first half, the region delivered gross sales of €1,822m, up 19%. After a strong first quarter, business returned to more normal levels in the second quarter. Profitability increased, with adjusted EBIT rising by 27% to €89m.

Most of the growth came from sales with existing vendors, but the firm has been making efforts to expand the portfolio and enter fresh geographies.

The firm’s net vendor retention rate on a rolling 12-month basis at H1 2023 was up 131% (compared with 122% in H1 2022), with net reseller retention rate for the same period at 130% (compared with 122% a year earlier).

The Americas, which account for 13% of group sales, produced €298m in gross sales, a 49% climb on the same period last year. The US has entered the top three largest countries for the group and has been an opportunity for the business to add fresh vendors.

APAC was the weak area in the first half of 2023, with gross sales declining by 4%, coming in at €211m. That performance could be explained by a comparison with a period in 2022 when the business struck some large deals that were not repeated in 2023.

Jesper Trolle, CEO of Exclusive Networks, said it had been able to continue driving the business forward after a decent first quarter.

“Our momentum reflects the differentiation, resilience and operational gearing of our model, combined with a laser focus on efficiency and cost control. As a result, we have moved closer to our long-term target of adjusted EBIT margins of circa 40% with high cash generation,” he said.

Trolle added that the global nature of the business was also a benefit because it meant it could generate revenues from a larger base. “We continue to grow strongly in the US, a significant market with exciting long-term growth potential,” he said.

The other advantage Trolle cited was its well-established position in the cyber security market, which has continued to perform strongly. “After a surge in demand for cyber technology in 2022 – reflecting the shift to hybrid working, increasing use of cloud technology and threats linked to the war in Ukraine – we are now seeing sales activity return to a normalised long-term trend of double-digit growth,” he said.

“Notwithstanding a lengthening in sales cycles and continued macro uncertainty, our market-leading portfolio of cyber security vendors, proven ability to grow our addressable market and strong balance sheet support our confidence in achieving our 2023 guidance,” Trolle added.

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