Ann: DTL expects to report a record second half result, page-8

Hi meesee,

I think it says that 2h result NPBT this year is 16.4M up from $14.3 2h result last year. So it is up.

However the full year result is $20.4M NPBT and is DOWN almost 10% from last year.

They run a lumpy business so I am not overly concerned about the ups or downs if the market need for IT is sustainable and growing ( I think it is) and there is a belief that they can continue to execute and compete well (I do.)

It is sort of a management own goal that they asserted at the 1H result that they would perform so well in 2H that they would make up for the poor 1H performance and grow NPBT yoy. Why they would decide to set the bar so high, when they did not have to, is a mystery and now they have "missed" their own guidance.

So a mostly solid 2h gets somewhat lost with an unforced error guidance miss.

My guess is that their "core" business will continue to perform and grow. What is less clear is what will happen with the acquisitions? Will they be put on track or are they to some extent unravelling?

I am not a big fan of professional services rollups. It is harder, in my opinion, to scale up smart people vs pure products/platforms. People can decide to not follow process, they can quit, they can exaggerate pipelines, they can compete, etc etc. I have not often found, at professional services/consulting companies, that many people suffer from a lack of personal confidence. Or ambition. It is so easy to quit, start a business and try to lure "your" customers over.

So can Data 3 get the processes right and ensure that they are driving their yield every day on utilization/billable hours and hitting target billable rates? Can they manage their contracts and risks well? We will see.

For now I will hold and give the management some time due to their long history of solid performance.