Dicker Data Limited (DDR) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Dicker Data's First Half FY '26 Results Webinar. My name is Sam Wells from NWR, and joining me from the company today is Executive Director and Chief Operating Officer, Vlad Mitnovetski; as well as Executive Director and Chief Financial Officer, Mary Stojcevski. [Operator Instructions]. And with that, I'll pass it over to you, Vlad and Mary.

Hi, and good morning, everyone. Thank you for joining us on our Half Year Results Presentation and update. We are going to go through the results, the business update, a relook at our strategy, and the outlook for the rest of the year. To kick it off, just a summary of where we've landed for the half year. It's been an amazing result as a result of significant work by all our teams. We've seen gross revenue increased by 14.2% to $2.1 billion, which was driven by refresh cycles around endpoint and data center and a significant contribution from growth in our Software business. You can see our recurring revenues from Software have increased by -- that increased to $600 million, representing a 20.7% increase. It was approximately $100 million gross sales added in our Software division, and Vlad is going to go into more details in our segment split when we provide a further update around the operational aspects of the business. Significant improvement in our EBITDA increasing by 37.3% and a very, very pleasing result on net operating profit before tax finishing just over 50% growth on the prior year. And earnings per share finalizing at $0.335 per share, up 53.5%. If we have a closer look at the breakdown and our trends over the years, there's an outstanding result for this half, driven by opportunities around inventory purchasing that we were able to take advantage of during the first half of the year, driving some margin improvement. And as you can see, the half year result margin expansion from the prior year also resulting in significant uplift in PBT margin, whilst there was the sales growth contributing to that margin expansion, but also pleasingly, we're able to have operating leverage and cost control as well, driving that outcome. If you look at the group results, the gross profit margin expanded to 9.8%, benefiting from some strategic stock purchases that we were able to have the opportunity to buy. We invested heavily in working capital. We did outline that with our full year results at the start of the year that we were investing additionally ahead of price rises and supply constraints, and that strategy has paid off with that contributing margin increasing. But equally, we've been able to control the costs and overall expenses as a percentage of our gross revenue has declined, showing the operating leverage coming through in that PBT margin. If we take it down a little bit in more detail across our regions, we've had some mixed results between Australia and New Zealand. Very strong results in Australia driven by the elevated endpoint refresh Software growth and our data center refresh demand. The Australian business reflecting very strong gross margins with a lot of investment in inventory made and strategic purchasing decisions probably starting late last year, and we're seeing the benefit of that coming through with operating profit before tax in the Australian business increasing by 55.9%, being a significant uplift and very strong PBT margins as a result. Alternatively, in our New Zealand business, we're still pleased with the results in a very difficult market. Unfortunately, there were a lot more supply constraints experienced in our New Zealand business across our hardware vendors, particularly around portfolios like HP and Apple, where the opportunity to bring in inventory was limited, which then impacted top line. Even -- despite that, there was some growth recorded across our gross revenue delivered with gross margins coming off slightly, particularly driven by pressures within our consumer business. We were able to maintain expenses in line with prior year. But unfortunately, the result was a softer result. And when converted in AUD, the NZD results were impacted by the NZD impact and the translation effect coming through on the consolidated basis. However, we have seen some of those supply constraints ease coming into July and August in access to inventory. So we are seeing that turning around in terms of growth on the top line. And we will continue driving portfolio diversification in New Zealand to limit the impact of supply constraints and other issues with specific vendors, which Australia has a much more diversified portfolio. So we are able to leverage anything that impacts a particular vendor, whereas New Zealand has got a slightly more concentrated vendor portfolio, and that's continued work, and I'm sure Vlad will expand on that in his business update. From a balance sheet perspective, we feel there's been a lot of work and -- work around managing our working capital despite significant investments in increasing inventory. Inventory increased by over $100 million, and they were very strategic buying ahead of price rises. We've seen elevated levels of receivables as well, driven by a strong June finish. However, pleasingly, we're able to still manage the working capital only slightly elevated in total dollars and at the same time, reduced some gross debt, particularly around slight changes to our dividend policy and more participation in our DRP, allowing some repayment of debt for that period. We'll continue investing in our working capital as required and ahead of changes, market changes. So that debt position can vary over time, but having the outcome for the half year come down by about $10 million was a great result. Also wanted to point out a change in accounting policy that we put in place at 30 June this year. We had the valuation of the building done, a formal valuation. And we feel that this change in accounting policy reflecting the current asset -- the fixed asset of the building at valuation as opposed to cost is better information for our investors, therefore, adopted the change in accounting policy reflecting the building at that valuation, resulting in an uplift of non-current assets of over $107 million, and that's been reflected accordingly and obviously flows through to the ratios that our balance sheet ratios represented across our debt and equity pieces. The company continues to pay quarterly dividends. We did announce a slight change to our dividend policy and moving away from 100% payout to a number that's going to be determined at each dividend declaration period, but at least at 80%. We also introduced a DRP discount, and we've seen an increased participation in that, therefore, there cash flow impact of that and the -- resulting in some equity contribution that we were able to utilize against debt. The quarterly dividends are continuing to be paid and the last -- the second interim dividend for FY '26 was declared in August at $0.115 to be paid on the 1st of September. I'll hand it over now to Vlad, who will give you a little bit more detailed business update and strategy and outlook view for the rest of the year.

Excellent. Thank you, Mary. 2026, I called it out at the end of 2025, it would be a year of data center infrastructure modernization, refresh, and AI. And this is exactly what we're experiencing through 2026. Later on, I'll have a look at the overall pie of where the growth came from. And you would see that the biggest growth came from our Software division and from our Advanced Solutions division. And Advanced Solution is all to do with modernizing data centers, enterprise networking, enterprise server, and enterprise storage components, all packed up with the Software solutions. This is where the main growth coming from, and this is where if I look at the second half of 2026, this is where the main growth is going to continue to come for us. So obviously, with that big focus on areas like power and cooling, server and storage, networking and all AI-enabled software solutions. We have launched a solution connect partner to partner marketplace. At the moment, we're operating in an industry and environment where no single vendor or no single partner can deliver an outcome-based result. Some of them can deliver a good technology or perhaps even some solutions, but no one can have a comprehensive outcome-based conversation with CEO or CFO purely on its own. This is where Dicker Data play such an important role of a glue of a platform, bringing the entire ecosystem together and driving those conversations. And this is where we had a lot of wins because a lot of partners and vendors rely on us to bring it all together. We have launched our AI Accelerate program initiative internally, again, just driving that AI enablement and AI acceleration. We have transacted just over $50 million of AI-related revenues in 2025. We have exceeded $50 million transaction of AI-related revenues in the first half of 2026 and we are expecting to do at least $50 million, perhaps more, in the second half of 2026. So we're very, very happy with the acceleration of the AI-related revenues. The pipeline is also very, very strong and also our back orders and open orders that will be fulfilled in the second half of '26 is also very, very strong. We're putting a lot of effort in that AI Accelerate initiative. We do strongly believe that this is going to empower growth for the organization. The good thing with the whole AI play for us, it's not just a single face and event. It's the software, it's the hardware, it's networking, it's our relationship with Equinix. We're offering to the market various alternative solutions, very strong partnership with Microsoft, offering them AI -- experimental AI platforms on the Azure platform. We also sell a lot of Copilot, which is AI-related software solutions. We offer to the market ResetData, sovereign private GPU as a service offering for a lot of companies who doesn't want perhaps go to the hyperscaler, but want to have more localized sovereign experience and drive and build their models locally. On the other hand, we're offering them the on-prem AI -- or the edge, where we give a lot of -- where we're offering a lot of on-prem solutions with AI factories for the whole organizations or for the departments within these organization and then move them up the stack. A lot of our technology vendors on the bottom of that slide is supporting that drive. So it's an incredibly powerful and strong story, and we're positioning ourselves as absolute ecosystem champions when it comes to bringing it all together and drive those solutions together. Now let's have a look through a segment, what actually works. So if we look at the Software and Advance Solutions segment, it's now over 50% of our business. So over 50% of our business is growing at a very good double-digit growth, and we do anticipate a very similar growth in -- not only in the second half of this year, but also all the way into 2027. The Advanced Solution piece with the Software stack, it's a long term. It's starting now and it's going to go through many, many years of evolution because of the AI phenomenon. So we're investing a lot. We're bringing expertise. We're driving the ecosystem. We're bringing all the partners together, and we're experiencing a fantastic growth out of those 2 segments. If I look at the Endpoint solutions, Endpoint solutions is basically our transactional business. This is where we supply a lot to our SMB community, mid-market community. That transactional business goes through the cycles, and it's very -- it's much driven by the changes in the economic conditions. Last year, we had a lot of tailwinds with the Windows 10 refresh opportunity. We still have Windows 10 refresh opportunity into this year. We actually have now a lot of opportunities with the Windows 11 refresh opportunities. So that's going to continue. However, because majority of the business, that [ M cloud ] computing business is going into our SMB market, the price increases really started to affect our SMB spending. It's actually very simple here. The price is going up everywhere. The prices on enterprise networking, on leading -- on Advanced solutions on our Software business and our PCs all going up. But the budgets are not going up. Even though we are moving -- we're kind of moving away our conversation from the budget. It's easy to move away the conversation away from the budget when you talk to the mid-sized and enterprise customers because that's a very outcome-based conversation. It's not that easy to have that conversation with a small partner, small customer. Small partners and small customers, they're all about the IT budget, their spend and they're choosing where to spend. So when it comes for them to choose where to spend, a lot of them now are spending, again, modernizing their data centers, modernizing -- because they want to drive some AI activities. They need to buy more software, cybersecurity, and other things. So sometimes it's just what they have budget for and personal computing sometimes is getting put aside and we can sweat those assets, and we'll do it later. What I'm trying to say is that the price increases in Endpoint solutions, it's starting to affect the number of units we're transacting, and it is slowly, slowly coming down. However, because of the price increases, we're still delivering the growth. I would probably see that the growth in Endpoint solutions, which is about 28% of our overall business, is going to continue to decline. We're still going to continue to grow, but probably not at double-digit rates, whereas Software and Advanced Solutions is going to continue doing really well. Our Consumer and Retail business had a phenomenal half. We're adding new vendors, both Australia and New Zealand, and we're going to continue to grow maybe even a little bit more than 7.9%. Audio visual segment is very, very strong. It's going to be well over $200 million for us this year. It's growing nicely. We're putting a lot more focus there. Again, the prices is going up and customers choosing where to invest. And even with that, the breadth of portfolio and significant investment and expertise is driving the growth in this segment. Our AAS business, Access and Surveillance, have shown a phenomenal 22.9% growth in the first half, and we're expecting a very similar growth rate into the second half of 2026. We've added some really strong vendors in 2025. Hikvision doing really well, Ajax, Milestone, and a few other very, very fundamental strong physical security vendors are starting to do well. We're also starting to take some good market share in this segment. So as you can see, most of the segments is performing really well. And when that happens, obviously, then a very strong result is getting delivered. So we're obviously very, very pleased with that. We continue adding new vendors. ADATA is the memory vendor. We all know there is a shortages and supply constraint on the memory chips. So in adding ADATA into the portfolio of our memories is actually helping us to get more memories into our customers. We've added Sharp as our new audiovisual vendor, very, very big signing. We've signed Sophos and Huntress as our cybersecurity providers, strengthening that cybersecurity play. I've mentioned about ResetData and the GPU-as-a-Service, offering all our partners and customers an alternative to build their AI models on. We've added Switch Connect and Symbio as part of our unified communications. And Telco division. We're putting a lot of effort to drive that division within Dicker Data. I think -- okay, we always put this slide because it's really good to compare how -- where is the market expected to perform and where Dicker Data is performing. And we're very pleased with how we're tracking against the Gartner prediction and forecast. So Gartner is saying that in Australia, the spend is going to be -- majority main growth is going to come from the data center systems, and that's exactly where Dicker Data is in the growth and continue growing. We have every single technology vendor under this roof. We have a very, very strong lineup of software vendors in Dicker Data Group. So combining it together, make it a very powerful and a very strong solution and outcome-based kind of offering to our partners. If you look at the devices, the Gartner forecasting 6.6% increase. That's exactly where we feel we're going to finish the year at. This is where we think we're going to end up, which is still a growth, but that's sort of a mid- single-digit growth, very much in line with the Gartner forecast. Software, again, in line with the forecast, double-digit growth. We don't do a lot of services, as you guys know. But when it comes to a data center infrastructure solutions, when it comes to our software marketplace, and devices, I think we're very much in line with the Gartner forecast. So no surprise here, 4 major drivers and what 4 major pillars of focus. Data center refresh, I think I've said enough. That's going to be our strongest performing segment together with software driving that growth. If I look at our current open orders or back orders as we see, we have, at the moment, over $400 million in back orders in the system right now, waiting for the stock to be fulfilled and a lot of that in the data center space. So that momentum is ongoing. Our new orders are coming in, the back orders just getting fulfilled, and we're going through that motion. If I look at July numbers and August numbers, that momentum is continuing. So that data center piece is very, very solid and very strong. Artificial intelligence, I think I've said enough, I see that as the biggest growth opportunity for our company, not only now and this year, we are expecting to be well over $100 million of actual invoicing, but the amount of effort we're putting in there, we are expecting a much, much stronger growth in 2027 and 2028 and beyond. Windows refresh is still an opportunity. I just mentioned before, there is a Windows 11 refresh opportunity already. Well, we have more than 0.5 million devices that need to be refreshed. Windows 10 is still an opportunity. And our transactional PC business is an ongoing run rate business as well. So it's always going to be there. I cannot mention -- I cannot not mention cybersecurity. Cybersecurity is a gift, keeps giving. AI accelerating the threat. AI is accelerating the attacks. This has become more intelligent. It's become less resilient for the companies to block it. So the cybersecurity is a very, very big and important area where even with the limited budget, people will continue to drive their protective mechanism. So we -- as you've seen, we've added 2 new cybersecurity vendors, both Australia and New Zealand. So we're going to continue to double down on our practice. The level of offering we have in the cybersecurity space, expertise and experience, is unparalleled and not matched with any other distributor in this region. So we're very, very proud of what we're doing in this area. And now looking at the outlook. I think I've been mentioning through the conversation how we see the 2026. We have a very, very strong momentum right now. The industry is buoyant, especially in the data center space, AI space, and the software space. So we're going to continue to drive a very, very strong growth and results in this area. I do believe that our end client computing units is going to decline and going to continue to drop simply because the price rises hit that rate of the increase where it's getting really hard for our SMB partners to participate in this. However, the mid-market and enterprise opportunities are still going to be there. We're still going to ship thousands and tens of thousands of computers. So where it's going to land us in terms of growth, like I said, it's probably going to be single digit, low-single- to mid-single-digit growth. And we're going to see and understand how the price increase is going to continue in 2027 and how that dynamic is going to change. If the pricing is going to continue, like starting to come down a little bit, we're hoping our SMB customer is going to pick up, the unit is going to pick up, and we're going to balance that. If I look at our July and August results, they continue the momentum. They continue what we've experienced in H1. So that gives, obviously, us a good confidence to give the guidance. So the guidance for second -- for the whole year results is somewhere between $4.3 billion and $4.4 billion, which is somewhere in around 11% to 14% growth, much higher than we expected. When we started 2026, there was a massive degree of uncertainty, supply chain, price increases, how is SMB going to drive it. We knew that AI is going to accelerate, but how much acceleration we're going to see? Is that going to be a big deal at low margin? Or is it going to be medium sort of sized deals at a reasonable margin. There was a lot of uncertainty. We've lived through that 6 months. We as an organization adapted really well. We've got -- we took the risk. We've got the inventory. We're obviously benefiting from that. But also if I look at the margin composition within the business, margin increased in every single segment. So yes, there was an increase in margin in PCs, especially taking advantage of the inventory that we got. But we also had a good margin increase in our software business. We're having a pretty stable and slow increase in our margin composition within our Advanced Solutions business because we're driving a lot more complex solutions. So that's kind of giving us a good confidence to see that we will be also upgrading our guidance -- our initial guidance on our NPBT margin, and we're guiding the market that we're going to finish somewhere around $162 million to $165 million, which represents around 3.8% NPBT margin percentage. So this is where the Board is very, very confident on. And now, we open for questions.

Great. Thanks very much, Vlad and Mary. [Operator Instructions] First question comes from James Wilson at Macquarie.

I'll keep it just to 2 today as you asked. First off, just on New Zealand, I appreciate it was a bit weak in the first half given the supply constraints. Can you just talk to us about the underlying level of demand you see there when supply comes back? And also what's giving you confidence that supply will actually come back in the second half? I think you said August is looking a little better.

Okay. So yes, I'll answer. I think there's 2 or 3 questions there, but I'll just quickly unpack it. Okay. So our New Zealand business is a lot more concentrated around Apple and HP. It is a weakness. And we're working very, very hard to diversify the portfolio and scale other vendors. We're bringing more vendors, and it's in progress. It is a little bit harder to do in New Zealand because New Zealand on its own is a much smaller market. So a lot of vendors are only having 1 or 2 distributors. And the significance -- I'm sorry to say, but the significance of the New Zealand business to the overall global portfolio is very, very small. So vendors and partners, they don't change as much. They don't drive that change. So that's one reason. If HP and Apple don't supply stock, immediately affects our business. And that's what happens in the first half. Now when the supply comes in, it immediately bounced the other way around, which we've kind of noticed through the July and August. So it's kind of been tied in momentum. It's not very good for our New Zealand business. We're totally realizing that, and we're doing everything to kind of really diversify that portfolio. Confidence. In the beginning of the year, supply was very constrained. New Zealand did not get the right allocation. Australia never experienced it. When I spoke to my New Zealand guys and they're not getting their stock and then I look at my Australian business, we were continually getting that stock. So obviously, the global suppliers were referencing Australian market because it's much bigger market. Also, New Zealand economy is definitely not at the level of the Australian economy. So even to drive penetrating and building a business with other vendors was quite problematic because the SMB in New Zealand is softer than SMB in Australia. The enterprise business in New Zealand are also a little bit slower to lock in the deals than Australian business. So there's a number of factors that kind of gave us.

Yes, there's a lot of enterprise buying by government as well and there's an election coming up.

Exactly.

You're seeing a lot of impact as a result of that.

That's actually a very, very good point. When -- I just came back from New Zealand earlier this week. And when I talk to our partners, they say, we do feel slight softness because of the election. So we're hoping that straight after the election, we're going to have a little bit of uplift.

Okay. Great. And just one second question, if possible. Just on data center refresh and AI-related revenues, can you quantify for us how those sit on a sort of gross profit NPBT margin hierarchy relative to the rest of the business, if possible?

Sure, sure. So AI deals, at the moment, at the lower margin spectrum. So if overall business reports somewhere around 9.8% gross margin, AI deals normally, below single-digit margin deals. So a couple of large AI deals that can come in can actually drive that gross margin slightly under. If I look at the normal data center piece of enterprise networking, normal server refresh, storage refresh, then it holds higher single-digit margins. So that's kind of in line with -- and this is where a lot of growth is coming from. So when you look at the guidance, we kind of tempered our 9.8% gross margin from H1, slightly tempered it down in the second half because we do believe there are 2 things going to continue happening. One, if we land 1 or 2 larger AI deals that could be slightly lower in the gross margin perspective metrics, but also a continued decline in our SMB unit numbers in our PC division also going to result in slightly tempering that margin. However, the data center refresh and software going to continue to drive with a very good margin expectation. So that's why we're thinking it's probably not going to be somewhere at 9.8%, but it's not going to be definitely below 9%. So yes, somewhere in between.

Next question comes from Lindsay Bettiol at Goldman Sachs.

Can hear me?

We can hear you, yes.

Very good. Just looking at software, which is obviously like the strongest subsegment. Could you just help us understand like if I unpick that, I'm just trying to work out how much of the 18% was like, let's say, volume versus price and upsell versus new vendors coming on? Because it just is a little bit stronger than some of your peers. So I'm wondering like, in particular, how much of a tailwind the new vendors were versus like what we should treat as an organic kind of growth rate in software?

Okay. So 80% organic growth. Every single software vendor, cybersecurity, data management, virtualization, Adobe, VMware, Microsoft, Cisco software...

And some of the AI is in that software, too, because it's [ fast ] data as well.

Correct. There is a few new software vendors that we brought on board. But if you look at overall growth and the margin composition, it's actually like a nice organic growth. Look, Microsoft leading the way. There's no -- we have had an incredible year -- so far had an incredible year with Microsoft. And yes, we're super excited about our future with Microsoft, not only to the end of this year, but into '27 and beyond.

Okay. Brilliant. And then second question for me, just like an update maybe on memory supply. Like I think at the full year result, you weren't seeing any supply issues. You were confident that would continue, same kind of with the AGM. But like we're starting -- like depending on which of your peers or vendors you look at, like you're starting to hear some rumblings that supply is tightening up, like it's still probably okay until the end of the year, but yes, starting to be a little bit tighter. So maybe just an update on memory supply as well, please?

I think what -- I think the actual degree of supply hasn't changed, but I think we're more used to work with that. Also, a lot of vendors is now increasing validity of their quoting. So what it means, it means when the vendor provides a quote for a particular device, or infrastructure, or memory itself, because they couldn't get the right levels of supply and predictability, they're shortening that quoting cycle. What we're starting to see now, the quoting cycle getting longer. So what it means, it means vendors are securing more supply and giving them a little bit more predictability so they can pass that predictability to us. So that's a positive side. What I can comment on amount of interest in data center infrastructure products that we received did not match with their ability to deliver. So we -- there's no question, it's still a problem. It's still a challenge. And I mean my back order at the moment is the biggest the company ever had. So you can see that we continue to be getting a lot of great momentum, but we can't quite deliver. It's 2 to 3 months lag. Sometimes it's up to 5 to 6 months lag. But the good news is that I don't see any cancellation because any cancellation in these orders will result in much higher pricing new quotes. And I'd just like to comment again, the price increases are not over yet. I have a very solid visibility in the 1st of September price list from all our vendors and oil prices going up. What I also have to go have is the visibility of the next price increase. And that's going to take a couple of months, maybe 2 to 3 months to increase price again. We've never had this visibility in the beginning of the year. In the beginning of the year, it was a more -- it was a situation of every 2 to 3 weeks, prices were increasing, and we didn't know how long it's going to continue, how much the pricing is going to keep increasing. Now it's a lot more predictable. So it gives us, again, better confidence to forecast to see how we're going to land, what we're going to do. We have a better clarity on ETAs when the stock is going to come and when we're actually going to supply on those back orders.

The next question comes from Josh Kannourakis of Barrenjoey.

Can you hear me okay?

Yes.

Great. Just a question. Obviously, you provide that trading update and looking at that, we can obviously back work a little bit around the last couple of months of the year. I know it is historically stronger in terms of margins, but it does look like a very significant step-up to sort of 4.7% in the last couple of months of the half versus 3.7% for the first 4 months. I'm just trying to understand a little bit about the mix and how much of that was benefited from your more aggressive buying of inventory? And does -- has that gone into a little bit more alignment into this half? Or do you still think you'll be able to -- given the price, the consistent line of visibility around price increases, do you think you'll still be able to capture some of that margin?

Okay. So good question. So the answer is somewhere in the middle. So we did produce much better margin in our PC business. But remember, our PC business is only 28% of our overall revenue. Yes, margins were uplifted, and we don't see much of that change throughout the second half. Prices keep increasing. We keep doing strategic buy-ins. We're still negotiating. Our market share is very solid. So that kind of dynamic is going to continue to happen. Is that going to continue to happen in '27, '28? I don't think so. I think it's a good momentum. We're taking a good advantage. But remember, it's only 28% of our business. If I look at our Software business, our margin have improved and we're going to continue to drive improvement of those margins. It's the expertise, it's the consultative approach that we're taking selling these opportunities. It's the vendors that we're bringing on board. And I don't know, we're just really driving those solutions into the right areas of the market where we probably would sustain those margins. So that's giving me a good confidence we're going to continue to grow and nicely sustained margins. When it comes to data center infrastructure, margins are increasing, again, in that modernization and refresh cycle. A little bit of being able to drive some of the good purchases, but majority is back-to-back bid orders. So it's not a lot of opportunities to really drive that momentum and to increase margins. Margin increasing more organically, more on the complexity of solutions. So that is going to continue to be good. If I look at the AI deals, now that's going to impact it negatively. AI deals do not represent margin opportunity at the moment. And we're doing more and more and more of these AI deals. However, it's a long-term strategy. For the 2026, we're going to do $100 million, $150 million of AI at a very low single margin, but we're really driving that plus work and really doing that buildup, getting ready for the refresh. And when the refresh going to start happening, that's where we're going to make some good margin. Also, the big focus for us is drive that AI adoption from the enterprise customers. When we start receiving orders from enterprise customers and mid-market customers, that's where we're going to make some margin. So if anything, that piece of AI that we're working on is going to probably put pressure on our margins. We only -- like I said, we already $50 million in H1. So it kind of we didn't feel that pressure as much. I think we will start feeling a bit more pressure in the second half.

Got it. Just second question, just with regard to further on the pricing versus demand environment. So when you do look at the SMB, I'm sort of implying if you've been saying mid-single-digits for growth that is sort of largely second half broadly flattish, maybe up a little bit on the second half of sort of '25 for those endpoint solutions. Is that right? And are you actually seeing, though, in terms of any disconnect between the macro environment where people are -- whilst I know you're saying they've got budgets, they're also seeing the pricing go up as well. Do you think there's any pull forward at all in these numbers? Or is it still wedged to budgets and budget cycles?

So -- okay. So I'll answer the first question. So in our PC business and client computing, I do believe that the second half is going to be close to flat on the second half 2025, which will result in a single-digit growth for the whole year. That's how I see it. I do see the unit numbers going to continue soft. That 28% of our business in second half probably come closer to the flat year-on-year, which the whole thing will result in some single-digit growth. However, to offset that, I do see a faster growth in our Software business. I see a faster growth in our Data Center business that will kind of offset that trend down. So this is where our guidance is kind of -- when we done our modeling, that's how we kind of feel comfortable orchestrating because knowing -- if I look at our back order report, like my open order, back orders, there's not a lot of PCs there. All of that is enterprise networking, server, and storage kind of segments. A lot of mid-market, Tier 2 that sort of solution vendors that are sitting in those back orders, which, again, quite at a good margin point...

The pull forward. So endpoints, I would say there probably was a bit of pull forward because of the momentum of price rises that were happening. But data center refresh software, they're on regular subscription models. There's not pull forward in any of those numbers. So because of the diversification of the portfolio, it's not a straight answer on the pull forward orders in the numbers that we represented or booked for the half. There's one segment, I would say, would fall in that category.

Yes, I agree.

And so 10% growth.