Exclusive Networks hails Q3 results and lands NetApp UK&I deal

Revenues in EMEA see modest growth as the distributor becomes part of NetApp’s roster

Exclusive Networks is hopeful to end the year on a positive note despite deals slipping as it posts a double-digit revenue increase for the third quarter ended September 30, 2024.

Overall IFRS revenues for the group grew 11 per cent in constant currency to €415m in Q3, up from €378m in the same period last year.

The global distributor’s EMEA operations saw a modest revenue uptick of three per cent to earn €281m.

The cybersecurity specialist’s APAC business saw the largest Q3 spike of 43 per cent to €55m in revenues.

“In APAC, the integration of the Nextgen Group has strengthened and accelerated our growth, demonstrating that our M&A strategy aimed at geographic consolidation in the ANZ is paying off,” said Exclusive CEO Jesper Trolle.

Gross sales rose nine per cent to €1.3bn in Q3 2024.

Part of this success (5.5 per cent) was driven by M&A activities with the integration of NextGen Group.

Exclusive attributed the remainder of the uplift to a combination of existing vendors in their current geographies (1.6 per cent), vendors entering into new geographies (one per cent) and new vendor relationships (0.5 per cent).

The gross sales mix grew towards software and support and maintenance, in line with the distributor’s strategy and confirming the relevance of the value proposition.

Hardware on a rolling 12-month basis decreased to 23 per cent (vs 26 per cent in Q3 23), software was up at 51 per cent (vs 48 per cent in Q3 last year) and support & maintenance was stable at 26 per cent (vs 26 per cent in Q3 23).

Cloud-based business accounted for 34 per cent of the group’s gross sales in Q3 24 on a rolling 12-month basis, up six points compared to Q3 23 in line with its digital growth strategy.

Exclusive said gross sales have been impacted by slippage of deals into Q4.

However, the distie is confident it will achieve a “solid” Q4 as it is the last quarter of the year.

“Even though deals have slipped due to lengthening decision-making processes, we see the year ending on a positive note, with a double-digit booking growth in the second and third quarters, confirming our confidence in achieving our 2024 guidance,” added Trolle.

Reeling off its Q3 highlights, Exclusive’s net vendors retention rate was at 105 per cent on a rolling 12-month basis at Q3 24 (vs 122 per cent in Q3 23).

Net customers retention rates at 104 per cent on a rolling 12-month basis at Q3 24 (vs 121 per cent in Q3 23), supported by the sustained demand for its vendors' solutions and the continued engagement of channel partners.

“Our fundamentals are solid, our reputation as a trusted partner continues to be appreciated by vendors and customers alike, with retention rates consistently above 100 per cent, paving the way for continued growth,” Trolle continued.

Exclusive said it remained confident in meeting its FY24 guidance in an environment still challenged by macroeconomic volatility.

The distie expects gross sales growth in a range between ten per cent and 12 per cent at constant currency.

It also predicts net margin in the range of €500m to €515m and EBIT in the range of €200m and €210m.

New NetApp partnership

In other expansion news, NetApp has signed Exclusive in a distribution partnership to provide highly secure, data-centric solutions to channel partners in the UK and Ireland.

The collaboration represents an opportunity for the duo to provide organisations with exceptional value, increasing the availability of cybersecurity solutions that protect critical data.

While Exclusive’s portfolio includes advanced cyber resilience solutions, from today partners and customers will have access to NetApp’s top-rated data protection services. Today’s news builds on the cybersecurity success both businesses have achieved over recent years clearly demonstrating growth well above market expectations.

“While this leverages Exclusive Networks’ specialist cyber expertise and partner ecosystems, it will introduce NetApp’s intelligent data infrastructure to new customers, empowering businesses to navigate today’s complex security landscape with unmatched data protection and recovery capabilities,” said Sonya Mathieu, partner leader for NetApp UK&I.