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Microsoft New Zealand's sales surge but impairment dents profit

Microsoft New Zealand's sales surge but impairment dents profit

Any impact from a 2019 tax settlement in Microsoft NZ's accounts is hard to discern.

Credit: Supplied

Microsoft New Zealand reported another year of surging sales with revenue up from $627 million in 2020 to $774.9 million in 2021.

Services sales were the biggest contributor to the uplift, increasing from $284.4 million to $405.6 million.

Gross profit increased from $117 million to $135.5 million, but a $14.8 million impairment took the gloss of the company's profit before tax. Employee expenses also lifted from $69.3 million to $90.8 million year-on-year.

Gross profit dropped from $35.8 million last year to $21.4 million while net profit also slumped from $27.2 million to $11.4 million.

The impairment was made on goodwill from the acquisition of a subsidiary, a note in the accounts explained. Microsoft has only one subsidiary in New Zealand, Open Cloud, which it bought from UK-based Metaswitch Networks, which it acquired in a global deal last year. Metaswitch is a provider of virtualised network software and voice, data and communications solutions.

"The convergence of cloud and communication networks presents a unique opportunity for Microsoft to serve operators globally via continued investment in Azure, adding additional depth to our hyperscale cloud infrastructure with the specialised software required to run virtualised communication functions, applications and networks," Microsoft said at the time.

Two years ago, Microsoft NZ reached a $24.7 million tax settlement with the Inland Revenue Department. While tax paid has doubled since 2018, the year before the settlement, Microsoft's reported sales are also well up over the same period. It remains hard to discern much ongoing impact from the settlement among the many other changes to the company's local business

Among these changes, Microsoft is building local cloud datacentre regions in Auckland in a project managed by another new local entity, Microsoft 6399. This company, like Microsoft NZ, is owned by an Microsoft Corporation subsidiary based in Ireland.


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Tags Microsoft NZmicrosoft new zealandMetaswitch Networks

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