MacTel profit jumps 178% after closing Ninefold

Macquarie Telecom has returned to profit after the collapse of its cloud business Ninefold.

The Australian communications and data centre giant reported a $2 million net profit for the half year ending 31 December 2015, compared to the $2.5 million loss from the same time last year.

Revenue was also up slightly, going from $95 million to $100.1 million.

During the 2015 full year results, MacTel blamed a $4.3 million loss in part to its cloud business Ninefold, an approved federal government supplier of cloud server hosting and virtual servers.

Ninefold then announced it was shutting down in November, saying on its website at the time: “Significantly more investment is required if we are to make what we’ve built go to the next level... After an evaluation of the underlying technical platform, much consideration and deep reflection, we have decided not to embark on this journey.”

Ninefold launched in 2011 as one of the first locally hosted public cloud providers in Australia. It struggled to compete with the likes of cloud giants AWS and Microsoft after they set up their own Australian-hosted services.

MacTel’s pointed out that the overwhelming majority of cloud services are still conducted through the Macquarie Hosting business. The hosting business alone accounted for $32.5 million revenue for the half, up an additional $2 million from last year. The company also sold the land and core building of Sydney data centre Intellicentre 2, which had a carrying value of $43 million.

“Our commitment to world class customer services has translated into strong customer retention and revenue growth. We are also leveraging our investments in our data centre facilities in Sydney and Canberra to drive profit growth,” Macquarie Telecom chief executive David Tudehope said.

Given the strong results, MacTel expects the full year earnings depreciation to reduce from $31.3 million to $24-26 million.

Shares were up 50 cents from $8.50 to $9 from the end of trading on Tuesday to 11:30am on Wednesday.