Datacom Group reports FY21 financial results

Datacom Group today reported financial results for the year to 31 March 2021 (FY21). Revenue climbed to $1.41 billion, up from $1.34 billion in the prior year (FY20). Net profit after tax is $35 million, an improvement over the previous year’s $19 million, as the company continues to position for future growth across the Group. Full-year operating cash flow remains solid at $156 million.

FY21 saw Datacom focus on the future sustainability of and reinvestment in its businesses. The company prioritised the safety and wellbeing of its people and customers in the response to COVID-19, while improving its performance and profitability to ensure its businesses had the resources to invest in key areas of growth and opportunity.

Commenting on the results, Datacom Group CEO Greg Davidson said, “After a year of challenges for our countries and communities, it has never been more important for us to ensure the wellbeing of our people, and help our customers stay connected and operational. We’ve learned a lot from our response to COVID-19 and the significant change in the way we work, support our customers and the meaningful impact we can have on the organisations we work with.”

The performance of the company reflects the demand for technology services and data centre capability, a major shift to cloud solutions and a surge in demand for essential services.

“We saw an immediate acceleration in the demand for cloud infrastructure, for digital projects that would help businesses continue trading and enable local authorities and government agencies to increase their connection and services to citizens.”

Organisations across Australia and New Zealand continue to shift their operations to hybrid clouds, careful to avoid an all-in approach to one cloud over another.

Datacom offers the full suite of partnerships, whether the customer chooses AWS, Google, Microsoft, Dell, or VMWare or a hybrid blend.

COVID-19 unleashed demand for business platforms that would enable our customers to continue operating during lockdowns. This initial surge accelerated the shift toward new technologies that delivers a competitive advantage and improves customer and employee experience.

Fidelity Life, a major New Zealand insurance company, ran a whole-of-business transformation project that required a significant shift in people’s mindsets. The data of thousands of Fidelity Life customers is now securely captured in Microsoft’s Dynamics 365 and, with a new cloud platform, the company is also able to scale up capacity, increase efficiency on what could have taken months on their legacy systems, and use collaboration tools to help Fidelity Life’s people work remotely.

Datacom’s Connect business saw short-term expansion to support Australia’s Federal Government COVID-19 response, providing telehealth frontline essential services. Datacom’s Connect business found itself in the unusual position of recruiting hundreds of people, working with airline-industry partners who were impacted, to provide employees who had been stood down with short-term work during COVID-19 lockdowns.

Connect was able to scale rapidly, using its know-how of innovative technology and new ways of working to streamline contact centre operations, leveraging both conversational AI and cloud-based call centre platforms to enable our people to provide frontline assistance at a critical time.

Datacom continues to work closely with local governments, with more than 65 per cent of councils in New Zealand currently using modules from the Datascape suite. Uptake of Datacom’s digital services continues in Australia is driving a 60 per cent growth in the local government team.

As the number and sophistication of cybersecurity attacks increase, so too does the demand experienced by our cybersecurity team, which has grown to more than 100 staff members, making it one of the largest cybersecurity teams across Australasia.

Datacom is frequently called in to help set up and run security operations, but increasingly we are being asked to audit and provide forensic analysis of breaches after the event. As with other parts of the business, creating more opportunities to foster cybersecurity professionals, Datacom is working with tertiary providers to build and run cybersecurity training programmes, which will produce a new generation of professionals for the industry.

One of the highlights of FY20 was our move to take full ownership of SmartPayroll.

SmartPayroll is New Zealand-owned and operated with a world-class team who are highly valued and trusted by the 19,000 businesses they support. Run by CEO Melissa Cheals, SmartPayroll complements Datacom’s existing payroll capability and targets the small to medium-size enterprise market.

“We’ve worked with the SmartPayroll team for some time and in September bought out the last of the smaller shareholders to bring the company fully into the Datacom family.

“We’re looking forward to building out its core offering and supporting Melissa and her team in what sets them apart in the market — their laser-like focus on personalised customer service, in an area that every business needs: reliability, compliance, and accuracy,” said Davidson.

This year saw demand for New Zealand-based data centre capability grow as organisations moved to cloud-based solutions.

Following the $52 million upgrade of the company’s four data centres, Datacom now offers the broadest range of capability, from leasing rack space through to full managed services. Datacom has more than 2,500 racks available in four locations across the country, giving customers the option of full redundancy and back-up in multiple locations. Datacom is spending more than $6 million to replace traditional battery arrays with sustainable lithium batteries, ensuring that while Datacom has one of the largest data centre footprints in New Zealand, its impact on the environment is kept to a minimum.

The year ahead will see Datacom, and the rest of the IT industry, focus on talent with the ongoing immigration challenges leading to a reduced talent pool in both Australia and New Zealand.

“To respond to the challenges faced in hiring technology talent on both sides of the Tasman, we are heavily prioritising and investing in our own people to reskill and upskill, including our Transform programme,” said Davidson.

Alongside traditional graduate programmes, Datacom is also looking at non-tertiary models to bring in new aspiring people.

“We are working with partners in the education field to increase the rates of training for key areas, such as cybersecurity, and with a range of new partners including Ngāi Tahu and intern programme TupuToa to develop our talent, but all these things take time to deliver results so it’s going to be a key challenge we all face in FY22.”

All financial figures in New Zealand dollars.