Big drop in Datacom profits as it looks to an AI future

Datacom Group CEO Greg Davidson. Photo / Supplied

Datacom Group reported a $32 million drop in profits, or 81per cent, from $42m in 2022 to $8m for the March 31, 2023, financial year, as it dips a toe into the world of artificial intelligence (AI).

The IT services company’s revenue was $1.49 billion, up from $1.45b in the March 2022 year.

It recorded a full-year operating cashflow of $116m and invested $80m into its strategic products business through the financial year.

Datacom CEO Greg Davidson said in a statement that while net profit before tax was down, the group’s decision to focus on the long term – including continued investment in Datacom’s software as a service (SaaS) and infrastructure products – was a highly strategic one.

That investment also extended to Datacom’s 6650 employees located in Australia, New Zealand and Asia, with training and development remaining a key priority for the group. At the end of its 2022 financial year, the firm - which has its main office in Auckland - said it had 6801 staff.

Datacom was ranked number three in the Technology Investment Network’s (TIN) list of companies by export ranking. The company reported that its SaaS product portfolio, which included its Datapay, Smartly and Datascape offerings, experienced just over 40 per cent year-on-year growth.

Davidson said Datacom had also had strong demand from customers for support to manage and optimise their cloud computing environments.

Artificial Intelligence

In the year ahead, Davidson said Datacom would increasingly focus on how to use AI to support the company’s goals and those of its customers. That included setting up an AI taskforce and working with the Tech Council of Australia and others to use AI in a positive way.

“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,” Davidson said.

Datacom said it had made significant progress towards reaching its goal of being net carbon zero by 2030. In the 2023 financial year, its four NZ data centres had been certified through Toitū Envirocare’s programme, which it said were all powered by 100 per cent renewable energy.

The company had also achieved Toitū Envirocare‘s “carbonreduce” certification for the third year running.