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Cloud, security and service management segment stars in strong Spark half

Cloud, security and service management segment stars in strong Spark half

While Spark's ICT service-related revenues surged, margins were somewhat tighter year-on-year

Cloud, security and service management delivers a growing contribution to Spark's revenue gains.

Cloud, security and service management delivers a growing contribution to Spark's revenue gains.

Credit: Supplied

$24 million of Spark's $70 million half-year revenue lift reported today came from its cloud, security and service management businesses, including the now merged CCL/Revera.

While mobile revenues, up $31 million, made the biggest contribution to Spark's 4 per cent overall revenue gain in the first half of 2020, a 12.3 per cent year-on-year lift in the company's ICT segment revenues also helped to offset declines in voice and other managed services.

Spark's first half revenues from cloud, security and service management have grown strongly year-on-year.Credit: Spark
Spark's first half revenues from cloud, security and service management have grown strongly year-on-year.

Cloud, security and service management growth benefited from the further penetration of cloud services and the on-boarding of new contracts that were delayed during the 2019 financial year, Spark said.

As reported by Reseller News last month, Revera is currently struggling to renew its Department of Internal Affairs certification for the use of its infrastructure as a service (IaaS) product by government agencies.

This has resulted in delays in at least one known project, a shared IaaS datacentre for northern region DHBs.

While cloud, security and service management segment revenue was up 12.3 per cent year-on-year, gross margin for the segment only increased by 8 per cent, or $13 million, to $176 million.

Product costs in the segment increased 34 per cent ($11 million), from $32 million in the fist half of 2019 to $43 million for the same period 2020.

The segment's contribution margin (defined as gross margin minus labour and other costs attributable to the implementation and support of the services) was 34.2 per cent, down 2.7 percentage points year-on-year to total around $75 million. 

For the same period in 2019, the segment contributed around $72 million.

Contribution margin represents the total earnings available to pay for fixed expenses and to generate profit.

Spark tightened its focus on core business by finalising the divestment of Lightbox and CCL’s network assets during the half and completing the merger of Revera and CCL, CEO Jolie Hodson said today.

Spark said it was continuing to target revenue growth from the cloud, security and service management segment of 8 per cent to 10 per cent for the full year 2020.


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