Datacom has reported a steady financial performance for the year ending 31 March 2025, with both profit and revenue showing a modest rise. The company’s net profit increased to $37 million, up from $34 million the prior year, even as it undertook major internal restructuring and further invested in artificial intelligence.
Revenue Growth, Cash Flow Improvement, and Debt Reduction
Datacom reported a slight increase in revenue, reaching $1.48 billion, up from $1.47 billion. Operating cash flow also saw growth, rising to $164 million, while the company significantly reduced its net debt from $82 million to $45 million.
The company’s improved financials reflect ongoing transformation efforts despite a 12% workforce reduction, from 6131 to 5375 employees. Group CEO Greg Davidson explained that the job cuts were largely due to natural attrition and shifts in contract work.
“As part of our broader transformation, we have taken every opportunity to apply AI and automation techniques to make our business more efficient and productive,” he said.
NZ Faces Economic Headwinds, Australia Outpaces
Datacom’s results were uneven across its markets, with New Zealand experiencing a downturn while Australia thrived. Davidson referred to the local market as being in a “recessionary environment,” which resulted in reduced spending and delays on major projects. “Many organisations had to push the ‘pause’ button on key technology projects,” he explained, pointing to tough conditions that also impacted competitors like Spark.
He noted that the payroll services revealed many small businesses had “a very difficult year.” Australia delivered stronger results, driven by “several notable contract wins, particularly in the government space.”
AI Drives Datacom’s Focus
Davidson called AI “the biggest revolution I’ve seen, maybe including the web. It’s certainly bigger than mobile.” Datacom’s AI strategy has changed from simple chatbots to expert systems and now autonomous agents.
The AI agents are already driving application modernisation, with code generation automation reducing costs by 30–50%.“We’re already using AI agents to write up to 70% of code,” Davidson said, highlighting time and cost savings for clients dealing with legacy software challenges.
One flagship AI deployment is Datapay’s AI assistant, trained on curated data from IRD, MBIE, and ACC. The system passed a payroll practitioners exam with built-in guardrails, “You’ve got to organise your data really carefully… to ensure that it achieves expert outcomes,” Davidson said.
Expanding AI Initiatives Across Diverse Industries
Datacom has launched a range of AI-driven projects across multiple industries, including a legislative content assistant for a New Zealand ministry, an insurance quoting tool, and a virtual assistant for the aged care sector.
The company’s professional services division also developed a timesheet anomaly detection tool to improve billing accuracy. Group CEO Greg Davidson emphasised the importance of careful data organisation and AI governance for the success of these initiatives.
Infrastructure Investment and Collaborative Partnerships
While Datacom collaborates with hyperscalers like AWS, Microsoft, and Google, it continues to invest in its own infrastructure—operating four proprietary data centres. The company also launched the Water Intelligence Asset (WAI) tool, a SaaS product for local councils.
Datacom formalised a partnership with 2degrees to jointly serve enterprise and public sector clients in June.
Greg Davidson remains cautious about New Zealand’s economic prospects, stressing that while AI is increasingly crucial for efficiency and competitiveness, many local businesses may require expert guidance to make their AI investments truly effective. “AI is becoming fundamental to being efficient and competitive these days,” Davidson said.