Datacom profit falls as data centre spending rises

Datacom has reported FY26 revenue of NZD $1.58 billion, while net profit after tax fell to NZD $20 million.

The result covers a year in which the technology company increased capital investment and expanded its New Zealand data centre footprint.

Revenue rose from NZD $1.48 billion in FY25, while EBITDA declined to NZD $133 million from NZD $147 million. Operating cash flow fell to NZD $75 million from NZD $164 million a year earlier.

Strategic capital spending increased during the year, including infrastructure upgrades and the acquisition of T4's East Auckland data centre. The Highbrook facility is being upgraded for high-density computing and more energy-efficient operations.

Datacom now has five data centres in New Zealand. The additional site is intended to strengthen domestic data hosting and support organisations that want local infrastructure while retaining links to global platforms.

Greg Davidson, Group Chief Executive Officer, linked the weaker profit result to market conditions and investment decisions.

"Heading into the year, we knew conditions would be challenging. We've navigated supply chain constraints and cost volatility while making deliberate investments that strengthen the foundations our customers depend on. Those decisions affect short-term profit, but they are the right choices for resilience and future growth," said Greg Davidson, Group Chief Executive Officer, Datacom.

Customer spending softened in some parts of the market amid broader global uncertainty. Hardware supply also remained tight, which Datacom attributed to AI-related demand and geopolitical pressures affecting availability and pricing.

Supply pressure

To manage those conditions, the group has monitored markets in real time, combined purchasing across its New Zealand and Australia operations, and bought and warehoused stock in advance. It has also developed alternative system configurations to reduce exposure to constrained components.

"Supply conditions remain highly volatile. Our job is continuity: secure allocation early, design for options and keep customers moving despite volatility," said Davidson.

Alongside those supply chain measures, Datacom has been talking to business and government customers about digital resilience and the risks tied to offshore dependence. It framed that discussion around continuity of service, local backup and recovery, and the ability to switch operations domestically if international links are disrupted.

"The need to build in-country capability and ensure our local organisations are digitally resilient is a conversation we are having with many customers across Australia and New Zealand. Relying solely on global providers and offshore data storage creates dependencies you don't control. If a cable is cut, a region goes offline or borders tighten, how will you keep essential services running? Do your critical systems have onshore backup and recovery, and can you fail over locally without waiting on a global fix? That's what resilience looks like," said Davidson.

Local infrastructure

Datacom presented sovereign infrastructure as a central part of its strategy in Australia and New Zealand. The focus reflects demand from customers that want greater certainty over where data is stored, how it is governed, and how quickly services can be restored if disruption occurs.

"Sovereign infrastructure gives organisations certainty over where their data lives, how it's governed, and how reliably it can be accessed. We're building the local foundations customers need, with the ability to connect to global platforms where it adds value," said Davidson.

Datacom also spent the past year helping customers modernise older technology systems as AI adoption gathered pace. It said legacy systems can hinder AI projects and has advised customers to use hybrid cloud arrangements to manage costs, retain portability, and keep data onshore where required.

"Resilience is practical: portability over lock-in, continuity over single-vendor risk and clear sight of cost drivers as AI scales," said Davidson.

AI work

Across New Zealand and Australia, the group delivered several AI projects over the past 12 months. They included AI-driven search tools for the New Zealand Financial Markets Authority website, an AI simulator for a food production company to model weather, livestock growth, and feed costs, and AI agents designed to reduce manual quality checks for a large organisation serving citizens.

Datacom reported 5,935 employees and 32 locations. It also held the number four ranking in TIN export listings.

Mixed market conditions and supply constraints are likely to continue, while Datacom signalled further investment in infrastructure and domestic technology operations.

"In the year ahead, we'll continue to deepen our commitment to investing in data centre infrastructure and work closely with hardware and hyperscale partners to ensure customers have the traditional and GPU capacity they need. Our focus is straightforward: build the right foundations, use our engineering expertise to accelerate value, and help our customers implement technology solutions that provide growth and resilience for their operations," said Davidson.