Tech Data Corp.’s increasing focus in recent years on cloud-based technology services is helping it produce positive revenue numbers despite currency headwinds in its European markets, which account for just over half of its worldwide sales.
For the fiscal first quarter ended April 30, the company’s cloud strategy produced the most noticeable results in its Americas region, where net sales—accounting for 45% of worldwide net sales—increased 5% year over year to $3.79 billion. That helped to absorb an 8% drop in net sales to $4.31 billion in Europe, where sales accounted for 51% of worldwide sales. Along with a 15% increase in Asia-Pacific sales to $307.7 million, total worldwide Q1 sales increased 2% to $8.41 billion.
Tech Data didn’t break out ecommerce sales for the quarter, but the company has said that ecommerce sales account for more than half of all sales, and that more than 95% of its inventory is purchased digitally. Tech Data is a top-tier distributor that sells to thousands of resellers and other businesses. It defines ecommerce as sales through its ecommerce site, Shop.TechData.com, and through electronic data interchange, or EDI.
StreamOne Digital Marketplace
Among services Tech Data has launched in recent years that are driving up sales are its StreamOne Digital Marketplace, which lets its resellers access cloud technology services to use within their own ecommerce operations or to resell them to their customers. Tech Data says StreamOne is designed to deliver “immediate provisioning of cloud subscriptions and services, allowing channel partners to add or reduce cloud services and receive credentials in minutes.”
Tech Data also has been expanding its “tech-as-a-service” or TaaS offerings, which allow resellers to pay for technology products ranging from laptops to data centers through a consumption model based on how much they or their reseller customers use Tech Data’s products.
Such internet-based services, by addressing widespread demand among companies for digital transformation projects, are helping Tech Data handle various market pressures. “Our worldwide teams executed well in the quarter despite the backdrop of concerns around Brexit, global trade relations and semiconductor shortage, among others,” CEO Rich Hume said recently on a first-quarter conference call with investment analysts, according to a transcript from Seeking Alpha. “While many of these macro-economic concerns remain, it is clear that the requirement for businesses of all sizes to digitally transform is transcending the noise.”
Hume added that Tech Data is out to maintain strong relationships with its reseller channel partners as it invests more in cloud, data analytics, internet-of-things technology “and in our StreamOne digital platform, which we view to be foundational to delivering all other next-generation technologies to the market.”
For the first fiscal quarter ended April 30, Tech Data reported:
- Gross profit increased 26.2% year over year to $509.38 million, resulting in a gross profit margin of 6.06%, little changed from 6.12%;
- Net income of $55.40 million, up from $33.70 million (the year-earlier figure factored in restructuring and other expenses.)
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