Expansion into global player means US challenges Privately-owned distributor Exclusive has reported year-on-year like-for like growth of over 25% (€464m H1 2016 revenue). Through a process of organic growth and acquisition, it now plans to double in size every two years for the next four years. It has work to do to identify suitable buying targets, however, and is facing a wall of prospective vendors wanting coverage.
With vendors looking for global representation, it now faces the challenge of entering North America. Exclusive Group's latest set of financial results show 60% year-on-year growth for the first six months of 2016, with total revenues of €575m. It claims strong returns on core vendor business achieved in all global territories, and the integration of Exclusive Group’s Asia operations following the acquisition of regional cybersecurity VAD Transition Systems earlier this year. The half-year results are comparable to total income for the whole of 2014, keeping Exclusive Group on target to double revenue every two years.
Exclusive Group COO Barrie Desmond tells IT Europa that, where a couple of years ago it had requests for deals from three or four vendors a month, it is now facing 30 or 40 expressions of interest. “This takes evaluating; it is getting harder to pick the winners as they are all well-advised, and have plenty of financial backing. We act as a proxy for the channel in this respect,” he says.
The growth has come from strong performance from existing vendors who are growing faster than their markets. He cites Palo Alto and Fortinet in this category.
And the data centre business BigTec has also been doing well, he says. “We can credit ourselves with some foresight in setting this up two years ago. The growth of webscale software and social media is pushing consumer-level ease of us into enterprises. Experience and the skillsets in this market are limited and not cheap.” This business looking at over €100m next year and seeing triple-digit growth.
But a US acquisition may not be so straightforward; where a medium-sized distributor in Europe might turn over €5m-€20m, in the US, this becomes a $500m business, with consequent risks. It also needs to find the right mind-set; since the management style is based on local empowerment and devolved decision-making, once vendor selection is achieved globally. Acquisitions is the main focus of Olivier Breittmayer (below), CEO of Exclusive Group, who acknowledges the need for wider global coverage: “The intention to have a more blended business through our VAST strategy is paying dividends, with each of our ancillary services businesses contributing to strong growth,” said. “These results also show how well-balanced the Group is globally, able to absorb fluctuations in regional geographies and economies with little impact on momentum.”
In Europe, revenues were strong in Southern Europe (Spain, Portugal and Italy), with year-on-year growth of almost 40% making it almost up to ‘pre-austerity’ macroeconomic conditions, it says. “A return to confidence,” says Barrie Desmond. Similarly, in France and Africa where improving market conditions helped the region return growth in excess of 30% growth. Over 90% year-on-year growth was achieved in the Nordic region, with Sweden and Finland the pick of the quartet. Key factors included a number of very large deals, but growth would have been 45% even without these.
It appears that the portfolio and ability to offer global support through the ITEC division is helping Exclusive engage with larger systems integrators, including Atos, Accenture, BT Gobal Services and even with comms suppliers like Verizon. The ability to co-ordinate across frontiers, managing local compliance, taxation, regulations etc, is a valuable offering, it seems.