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10th November: DC Two Commences Trading on the ASX Read more

DC Two Commences Trading on the ASX

10th November 2020

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Highlights:

  • DC Two (ASX: DC2) lists on the ASX today after an oversubscribed $5.5 million capital raising at $0.20 per share with a market capitalisation of $11.7 million.
  • The Company designs, owns and operates cloud platforms and data centres, while also developing software solutions in-house. It has a diverse and growing customer base.
  • Achieved 5 years of consecutive recurring revenue growth, securing AUD$1.8m in FY20 with the resources, strategy and funding in place to scale.
  • Will soon become Western Australia’s only hosting and ISO 27001 accredited cloud provider, integrated with a company owned Tier 3 accredited data centre which will help secure mid-market and enterprise customers requiring heightened security.
  • Launching a number of high density and transportable data centres to locate ‘behind the meter’ at sustainable power generation sites for reduce operating costs.
  • Developing an innovative software solution to manage licensing for complex multi-tenant cloud environments, specifically targeting Microsoft Service Provider License Agreement (SPLA) partners.
  • Funds raised from the IPO will allow DC Two to exploit one of the fastest growing global technology sectors, by accelerating the delivery of their cloud, data centre and telecommunications solutions, while expanding into NSW, VIC, QLD, and SA.

10 November 2020: DC Two Limited (ASX: DC2) (“DC Two” or the “Company”), a vertically integrated revenue generating data centre, cloud and software business, has today commenced trading on the Australian Securities Exchange (ASX) following a well-supported Initial Public Offering (IPO).

The Company raised $5.5 million before costs a total of 27,500,000 fully paid ordinary shares issued at $0.20 per share, under the IPO. The Company listed on the ASX with a market capitalisation of $11.7 million. Alto Capital acted as Lead Manager and Corporate Advisor to the IPO.

Funds raised from the IPO will allow DC Two to exploit one of the fastest growing global technology sectors, by accelerating the delivery of their cloud, data centre and telecommunications solutions, while expanding into NSW, VIC, QLD, and SA. A systemic growth strategy is currently underway to increase revenue across all business verticals and launch Western Australia’s only accredited Tier 3 data centre integrated with a certified cloud platform, all controlled, managed and owned by the same entity.

The Company will also pursue the roll out of its innovative modular, high density and transportable data centers that enable quick and easy deployment in any location. This is an Australian first opportunity to locate ‘behind the meter’ at sustainable power generation sites for reduced energy costs and “green powered” service to Australian customers.

DC Two’s Managing Director Justin Thomas said “We are excited about becoming a listed company and welcome our new shareholders and thank them for the level of interest and support. We anticipate continued demand for our integrated and accredited services as businesses rapidly transform their digital activities and enterprise customers increasingly seek compliance, privacy and security.

The capital raised through the IPO will be directed towards growth activities, in particular into sales and marketing activities. Our priority will be to secure enterprise customers and we hope to follow other Australian data centre technology companies like NEXTDC, in expanding Australia’s data centre and cloud innovation capabilities.”

DC Two Overview

DC Two designs, owns and operates its own cloud platforms and data centres and also develops hardware and software solutions in-house. This approach has delivered a loyal customer base, hosting over 300 end user businesses on its platform, serviced either directly or through 40+ channel partners who promote and sell its products and services primarily in the West Australian and Northern Territory markets.

The business has seen strong and consistent growth over the last 5 years, with recurring revenue of AUD$1.8m in FY20 achieved with limited capital and minimal customer marketing to date. This recurring revenue provides stable, predictable income and is setting a strong underlying commercial foundation for the business, with the scope and strategy in place to scale.

Previous revenue history for DC Two Limited
Figures represent total net revenue | FY16 and FY17 figures are unaudited.
DC Two new Bibra Lake data centre
Our new Bibra Lake data centre currently undergoing Tier 3 accreditation

DC Two recently signed a lease agreement for a larger premise in Bibra Lake which achieved Tier 3 accreditation under previous ownership. The Company is in the process of completing the largely finished facility and re-applying for Tier 3 accreditation, which will help secure mid-market and enterprise customers requiring Tier 3 compliance, security and access accreditations.

It is estimated that the prior tenants invested circa $8m to $12m into the project. This left the landlord with a nearly finished, design accredited, Tier 3 data centre with no route to completion or market. Since then the site has remained unfinished and unoccupied. After completion, DC Two will have the only accredited Tier 3 data centre in Western Australia and ISO 27001 ISMS accredited cloud platform.

This acquisition unlocks access to the significant CAPEX already invested in the property. DC Two will now be able to bring the site to operation and market at a much lower CAPEX and in a much shorter time frame than would otherwise be required for such a large and high-quality facility.

DC Two Bibra Lake switchboards
Some of the existing infrastructure already at Bibra Lake.
DC Two Bibra Lake data center structure
Existing data centre structure at Bibra Lake facility.

A Modular Approach

DC Two have developed a high density and transportable data centre that enables quick and easy deployment in any location. Based on durable ISO standard sea containers and non-ruggedized insulated variants, the transportable data centre only requires power and data connectivity and is suitable for high performance or supercomputing specific workloads.

DC Modular allows data centres to locate in close proximity to power generation sites in regional locations to access reduced power prices for data centre operation. Access to globally competitive power prices decreases the operational costs of running the data centres and increases margins. The Company also sees significant opportunity to utilise wind, solar and other renewable power sources to offer a “green powered” service to Australian customers seeking more eco-credentials across their business.

IPO funds will accelerate a number of projects, some of which have already generated significant customer interest. The first of these regional deployments is occurring in Western Australia’s Mid-West on an operational wind farm.

Diagram on how the DC Modular solution works, leveraging renewable energy to provide cost-effective power solutions.

Industry Undergoing Rapid Expansion

Data centres are the cornerstone of today’s global economy. Almost every modern business, government and consumer has data stored in a data centre. According to Deloitte, the Australian data centre market is expected to grow to AUD$3.76Bn in 2025, and has resulted in a cumulative productivity benefit of $9.4 billion towards the Australian economy over the last 5 years.

COVID-19 has pushed more users online and increased reliance on digital tools for remote working, remote learning, video conferencing and online shopping. This has led to a surge in demand for Australian data centre capacity and cloud services, with Frost and Sullivan estimating US$600 million will be invested into the Australian data centre market over the next 2 years.

DC Two’s market-proven offering is perfectly positioned to benefit from these industry tailwinds.

Near term milestones

The Company will continue to focus on executing its long-term growth strategy with funds raised from the IPO used to increase revenue across all areas of the business while generating sustained shareholder value in 2020 and beyond. DC Two will hire additional sales staff to increase local market share with SME customers and expand DC Two’s primary cloud computing activities into VIC, NSW, QLD and SA markets.

The Company aims to deploy its three regional, high-performance and modular data centres capable of delivering internationally competitive solutions in Australia for the first time. DC Two has already begun engaging with additional renewable energy projects across the country and will explore potential opportunities to sell the modular units internationally.

Focus will also be on developing and launching critical control and management software tools which are currently missing in the cloud and data centre space. DC Two is in the final stages of launching a highly innovative software solution to manage licensing for complex multi-tenant cloud environments, specifically targeting Microsoft Service Provider License Agreement (SPLA) partners.

This announcement has been approved for release by the Board of DC Two.

For more information please contact: investors@dctwo.com.au

About DC Two

Established in 2012, DC Two offers a suite of vertically integrated services covering every part of the data centre and cloud technology stack.

The Company offers a number of managed and integrated cloud services delivered from datacentres in Perth and Darwin and is currently rolling out DC Modular - a containerised "data centre in a box" innovation. DC Two also develops software assets to support our internal operations and provide enhanced control and flexibility, through automation and self-service, to our customers and technology partners, wherever they are.

Contact us today if you have any questions, or contact your broker to invest in our exciting future.

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Testimonials

We’ve partnered with DC Two for nearly ten years, and love their friendly approach to looking after their clients. DC Two are always happy to help when something needs quick attention. They’ve even helped pitch a few solutions to our end clients as well!

Top marks to the DC Two team and we’ll continue partnering with them for many years to come.

- Steve Edwards, activIT Systems