Newport Beach-based technology service provider DynTek Inc., which has drawn little attention on Wall Street, is on a growth spurt as more businesses and public agencies aim to secure data and link employees’ personal devices with workplace equipment and systems.
“It’s the new IT problem,” said Chief Executive Ron Ben-Yishay. “They’re showing up with every gadget known to man.”
The ongoing shift, which has come in tandem with the popularity of smartphones and tablets, is presenting plenty of opportunity for DynTek to win business and strengthen ties with existing customers that include the city of New York, federal agencies and Newport Beach-based Pacific Investment Management Co., the world’s largest bond manager.
The company is fresh off its best quarter, posting record revenue of $50.4 million in the December quarter, up 58% from a year earlier.
Net income topped $2 million, up 120% from a year ago.
The strong performance was driven by several multimillion-dollar deals with government agencies and commercial customers in New York and Southern California, Ben-Yishay said.
“Most of the work is time and materials.”
Pimco was among the deals after DynTek won a bid to install the network backbone for the financial firm’s new 398,000-square-foot, 20-story headquarters at 650 Newport Center Drive.
Redmond, Wash.-based Microsoft is a key strategic partner of DynTek, which also has close ties to Ft. Lauderdale security software maker Citrix Systems Inc. and Cisco Systems Inc. in San Jose, the world’s largest networking equipment maker.
DynTek is getting strong demand to enable cloud computing services, wireless connectivity, and Microsoft applications as the April 8 end of Microsoft maintenance support for Windows XP nears. The software is one of the most widely used business operating systems in the world.
Recent data breaches at national retailers have also led more companies to hire IT firms to run security vulnerability assessments and health checks.
The developments come in an explosive era for data transfer and storage, prompting startups and smaller companies to invest in the cloud, a trend that’s led to more consolidation in the data center market.
“It’s driving significant business,” Ben-Yishay said.
The trends led DynTek to grab the No. 40 spot on last year’s Business Journal list of fastest-growing public companies. It posted a 37.1% sales increase over two years to $117.4 million in the 12 months through June.
Most of its deals are less than $1 million. Its largest to date was a $21 million, five-year security services contract with the city of New York that’s set to expire next year.
The company was established in 1989 as Universal Self Care Inc. and, a decade later, it acquired Data Systems Network Corp., which had operations in Florida, Michigan and New York. It changed its name to TekInsight Inc. in 1999. Two years later, it acquired the state and local government division of DynCorp and changed its name to DynTek Inc.
In 2004, it bought Irvine-based Redrock Communications, which added locations in Southern California and Las Vegas, paving DynTek’s move out West.
The company has operations in Boston, Florida, New Jersey, upstate New York and New York City, where its chief executive lives.
It employs about 50 in Newport Beach and 210 companywide.
DynTek is traded under the symbol DYNE on the low-profile pink sheets and is not covered by analysts.
It had long been a small-cap Nasdaq company. But high regulatory costs related to the implementation of the Sarbanes-Oxley Act of 2002, which aimed to standardize accounting practices in the wake of corporate scandals at Enron and Tyco, led the company to the less-onerous pink sheets.
DynTek’s thinly traded shares rose more than 16% over the past year to a market value of about $19.1 million.
Activist investor and Florida resident Lloyd I. Miller III controls about 80% of company stock.
“He’s very bullish on us,” Ben-Yishay said.
