Rising Costs and Pricing Pressures Challenge Macquarie’s Cloud Services Growth

Consistent Growth Amid Market Pressures

Macquarie Technology Group Limited has once again demonstrated resilience and strategic foresight in its FY25 financial results, reporting revenue of $369.6 million and EBITDA of $113.6 million. This marks the eleventh consecutive year of EBITDA growth, with a compound annual growth rate of 8.7% over the past three years. Despite rising cost pressures, the company maintained robust EBITDA margins and achieved a healthy cash conversion rate of 115%, underscoring operational efficiency across its business segments.

The company’s revenue is predominantly recurring, with 97% derived from contracted monthly sources, providing a stable foundation amid a competitive technology landscape. Earnings per share rose modestly to 135.2 cents, while net profit after tax increased by 6% to $34.9 million.

Data Centre Expansion, The Growth Engine

Central to Macquarie’s growth story is its data centre division, which continues to expand its footprint and capabilities. The IC3 SuperWest data centre in Macquarie Park is progressing on schedule and within budget, with phase one delivering 6MW of AI-ready IT load capacity. Once complete, the campus will offer a total of 65MW, positioning Macquarie as a key player in sovereign data centre infrastructure tailored for cloud and AI workloads.

Further bolstering its pipeline, Macquarie has secured a put and call option to acquire a large parcel of land in Sydney for a new data centre campus. Subject to approvals, this development aims to add over 150MW of IT load capacity in three stages, potentially expanding the company’s total data centre capacity to more than 215MW over the next decade. This strategic move reflects the company’s commitment to meeting growing demand for sovereign, secure, and AI-optimised infrastructure.

Cloud and Government Services, Leadership and Innovation

Macquarie’s Cloud Services and Government segment remains a cornerstone of its business, supported by its status as Microsoft’s number one Azure partner nationally across multiple sectors. The company leverages deep expertise in Microsoft security and hybrid cloud solutions, helping customers reduce cloud costs and enhance cybersecurity postures. Notably, 42% of Australian government agencies are clients, with significant contracts such as a three-year extension with the Australian Taxation Office for a major Security Service Edge deployment.

Investment in AI and data-driven products is a clear priority, both to empower customers and improve internal operations. This focus aligns with broader industry trends and positions Macquarie to capitalise on emerging opportunities in cloud transformation and cybersecurity.

Financial Strength and Outlook

Macquarie’s balance sheet remains strong, with $62 million in cash and deposits and an undrawn $450 million debt facility available to fund growth initiatives. Capital expenditure in FY25 was substantial at $150.1 million, primarily directed towards data centre development, including $106 million for IC3 SuperWest. The company plans to increase FY26 capex to between $206 million and $234 million, reflecting ongoing investments in infrastructure and customer growth.

Looking ahead, the company expects marginal EBITDA growth in FY26, with continued investment in AI capabilities and data centre expansion. While some margin pressures are anticipated in cloud services due to new product investments and cost optimisation efforts by customers, Macquarie remains confident in its strategic positioning and pipeline.