Computerlinks opens up over financial performance

Distributor reveals revenue up by more than a quarter this year as it presses on with re-engineering of business

Computerlinks claims its push into services and higher-margin products is paying off after lifting the lid on its financial performance for the first time since it was taken private in 2008.

The distributor today revealed that sales for the first nine months of 2012 were 26 per cent ahead of last year, at €653m (£523m).

Profits were not disclosed but "followed a similar growth pattern".

In 2010, Computerlinks began a radical "re-engineering" of its business in response to plummeting margins in its traditional security channel stronghold. By focusing more on its own intellectual property and services, the firm set out to more than double EBITDA margin from 4.5 to 10 per cent.

Two years on, talking to ChannelWeb, director of new technologies Dave Ellis was coy about Computerlinks' exact margins but claimed the distributor's transition into a "next-generation distributor" is on track.

"Prior to [2010] we had seen a fairly strong decline in margins and we have managed to steady that and in some cases margins have gone up," Ellis (pictured) said. "Services are now a real contributor to the overall group."

Having recently expanded into Singapore, Australia and India, Computerlinks now operates in 23 countries.

Those have all been greenfield start-ups but Ellis stressed the distributor, which was bought by Equistone Partners Europe (formerly Barclays Private Equity) in 2008 for €104m, may acquire should the right opportunity arise.

"There is no real drive for an exit strategy at the moment," he said.

"We want to continue to grow the business and if the right acquisitions, or opportunities to move into other countries, come up, we will take advantage. An acquisition would need to bring us something we do not do ourselves."

Computerlinks' larger global rivals have struggled for growth in recent quarters and Ellis suggested some had been slow to react to new trends in the market, adding that its ALVEA-branded cloud proposition is now used by 40 UK resellers.

Ellis cited the distributor's recent move into the next-generation datacentre space, working with vendors such as Gigamon, Raritan and ExtraHop Networks, as another example.

"One of things we said we would do all along is get into markets very early and I think we have done that, often earlier than competitors," Ellis said. "We have seen the benefit, as we have had a headstart as those markets get bigger. This has also made it as low risk as possible for our partners to enter these markets."

Computerlinks would not break down its results by country but Ellis said the UK - which is its largest operation - turned over £150m last year.

Its core security business is growing faster than the wider market, Ellis added, thanks to strong performances from vendors including F5 Networks, Check Point and RSA.