Datacom Group net profit falls into the red

Datacom Group has taken a tumble in net profit after tax, from NZ$28 million in 2022 dipping to NZ$2 million into the red for the year ending 31 March. 

During the period, group revenue lifted from NZ$1.45 billion to NZ$1.49 billion, while net profit before tax fell considerably from NZ$41 million in 2022 to NZ$8 million.

Full-year operating cash flow remains strong at NZ$116 million and the business continues to perform with low debt levels as it continues to pump NZ$80 million investment into strategic product businesses. 

Datacom Group CEO Greg Davidson noted that while net profit before tax is down, the business’ decision to focus on its long-term strategy to deliver customer value -- which includes continued investment in its software-as-a-service (SaaS) and infrastructure products -- is highly strategic.

"Over the past year, the group invested NZ$80 million in its SaaS product portfolio, technical and structural upgrades to its four New Zealand data centres, regional expansion initiatives and the opening of new state of the art warehouse facilities in Australia and New Zealand to support the IT asset management and logistics needs of customers in the region," Davidson said. 

"Investing locally and for the long-term to ensure our customers have access to the services and solutions they need -- whether that be SaaS, data centres and solutions for their cloud transformations, or local distribution hubs that enable us to deliver a more efficient IT service to customers -- remains a critical part of our group strategy."

Davidson pointed out this investment also extends to Datacom's 6,650-strong team of experts located throughout Australia, New Zealand and Asia, with training and development remaining a key priority.

"Over the coming year our focus is to help customers extract as much value out of their technology investments as possible and better anticipating their future needs and those of their customers," he said. "To do this, equipping our people with the leadership and technical skills needed to help customers succeed in a rapidly-evolving market is key - as is ensuring we play an active role in the development of future tech talent.”

Davidson noted in the coming year it will increase its focus on identifying how the use of artificial intelligence (AI) can better support the strategic goals of Datacom and its customers.

This involves the establishment of an AI taskforce, stepping up to support industry working groups tackling the role of AI, including the Tech Council of Australia, and collaborating with global technology partners.

"We know AI has the potential to unlock opportunities - for our business, our customers and the wider community. We also know that a considered and carefully governed approach needs to be taken to ensure AI technology is used as a force for good," he said. 

"For decades, we've had the privilege of helping our customers embrace and adapt to new technologies. With AI bringing both challenges and opportunities, specifically in the areas of healthcare, transport and logistics, education and financial services, we hope to take a leading role in supporting our customers as they navigate the use of AI."

Growth in SaaS and strong pipeline in cloud transformation

Datacom's SaaS product portfolio, which includes its Datapay, Smartly and Datascape offerings, experienced just over 40 per cent year-on-year growth.

"Datascape in particular has had a good year, with the Council ERP platform and service playing a complimentary role in digital transformation and community engagement efforts of local councils throughout Australia and New Zealand," Davidson said. 

He also said Datacom witnessed strong demand from customers for support to manage and optimise their cloud environments.

"After a strong push for digital transformation in recent years, where organisations were focused on becoming 'cloud-first operations', the focus is now shifting to ensuring this investment in cloud is delivering value," he said. 

Growing a pipeline of talent

As demand for skilled technology workers rise, Datacom is continuing to place a focus on training and development through both internal and external initiatives. Over the past year, staff completed almost 6,000 external training certifications and courses.

Creating opportunities to nurture talent, build learning pathways and attracting new and diverse people to the industry is also a key priority, with the group having forged strong partnerships with a range of organisations to drive initiatives at scale.

"Datacom aims to be at the forefront of developing new ways to attract, train and retain talent. Over the past year, we welcomed more than 220 graduates and interns and supported a wide range of initiatives designed to showcase the bright future a career in technology offers," he said.

"This includes the development of Datacom's first Virtual Work Experience simulation programme which allows students across Australia and New Zealand to complete self-paced learning modules that are designed to give them a taste of what a career in technology might look like.

"To help achieve greater inclusion in the technology sector, we also continue to partner with a wide range of organisations and talent development initiatives including Tuputoa, Take2 and Kokiri, the start-up accelerator for Maori-led businesses. 

"In Australia we launched our first Aboriginal and Torres Strait Islander Traineeship Programme, while in New Zealand we have now welcomed seven First Foundation scholarship recipients."

Sustainability

Over the past year, Datacom has made significant progress in reaching its goal of being net carbon zero by 2030. In conjunction with Toitu Envirocare, Datacom Group achieved Toitu carbon reduce certification three years running and, in the last financial year, certified its four data centres in New Zealand.

"We strongly believe technology has a significant role to play in addressing the critical challenges we face. Our environmental and climate change initiatives not only aim to embed sustainability into everything we do as a business, but also enable our customers to shape their own sustainable future through smart use of technology," Davidson added. 

"In New Zealand, Datacom's ability to meet our customers' local data storage requirements serves as a true differentiator, as does the fact our four data centres are now powered by 100 per cent renewable energy. 

"Not only does this support our own sustainability initiatives, but also those of our customers with many increasingly seeking to partner with organisations that compliment and support their own sustainability initiatives."