It also reported an income tax benefit of $16.6m versus its year-ago income tax expense of $28.2m.
Notes with Microsoft 6399 NZ’s accounts for the year to June 30 say total current liabilities exceeded total current assets by $430m, compared with FY2024’s $303.4m.
Microsoft’s data centre in Westgate, Auckland, near completion in August 2024. Photo / Chris Keall
“The company has a commitment from its [ultimate] parent company, Microsoft Corporation, that they [sic] will provide financial support as required to enable the company to meet its liabilities as they fall due.”
The “interest-bearing loans and borrowings” section of Microsoft 6399 NZ’s accounts lists current liabilities as including $300m in related-party loans and $33.4m in lease liabilities – at $448.5m, from the year-ago $291m.
Non-current liabilities – $145.0m in related-party loans and $641.5m in lease liabilities – totalled $786.5m from the year-ago $560m.
Microsoft Global Finance has provided three loan facilities: $145m (at 2.31%, maturing on December 15, 2026), $200m (at 5.54%, repayable on demand) and $205m (at 5.96%, repayable on demand).
Lease liabilities have maturity dates between December 2031 and July 2024 with interest rates between 2.29% and 5.04%.
Property, plant and equipment cost was reported as $1.54 billion as of June 30, with a net book value after depreciation of $1.34b.
December launch at Westgate
Microsoft officially opened its first local “hyperscale” data centre on a 4ha site it bought at 7 Kakano Rd, Westgate – near the Costco – in Auckland’s northwest.
The facility was officially launched in December last year after a process that began with Overseas Investment Office approval in 2020.
Auckland Transport, Fonterra, ANZ, BNZ and The Warehouse Group were among those named as early customers of the Microsoft Azure cloud services hosted by the tech giant’s new data centre “region”.
Whenuapai property in the wings
The tech giant also received Overseas Investment Office permission (in 2022) to buy a $15m, 6ha site at nearby 151 Brigham Creek Rd, near the Whenuapai air base, also for the purpose of building a second giant data centre. The site has yet to be developed.
Microsoft said no one was available for interview about the financial results. A spokesman said the firm could not comment on plans for the second data centre site, citing commercial confidentiality.
The company – like most of its multinational peers – even refuses to reveal the location of its Westgate facility, despite it being listed by multiple public sources (Amazon even refused to confirm the location of its site for an – ultimately scrapped – AWS hyperscale data centre on an adjoining site, despite Government and council references to the property it bought and the AWS event featuring on Google Maps for Westgate).
A frenzy of data centre building in the northwest has also included facilities built by Brookfield-owned DCI immediately behind Microsoft at Westgate and at a giant site in Albany, and hyperscale data centres built by half-Infratil owned CDC at Hobsonville and Silverdale.
Likely drawing revenue from leased spaces, too
A Microsoft data centre “region”, like the one it has launched in Auckland, involves several data centres for redundancy.
While the firm has only built one itself, which was fully operational for just over half the FY2025 financial year, it presumably co-locates with third-party operators like CDC and DCI as well (that is, leases space inside their data centres). Microsoft has declined comment on its set-up.
Microsoft said earlier it had signed a deal with Genesis-owned Ecotricity to supply 100% renewable power for its data centre operations – and that cutting-edge air cooling means one lot of water can be recirculated.
And Genesis said in December last year: “A 10-year contract with Microsoft supported Contact Energy’s investment decision to construct the Te Huka 3 geothermal power station, which can generate 51.4 megawatts of reliable and renewable generation throughout the year.”
Core business strong
Late last week, Microsoft New Zealand reported revenue that increased by 17% from $1.32b to $1.54b for the year to June, as net profit rose 13% from $47.4m to $53.4m. Read more on that result here.
The local operation’s success reflects Microsoft’s global fortunes. On October 30, Microsoft Corp reported an 18% revenue jump to US$77.7b ($134b) for its September quarter as demand for AI services boosted its cloud computing business, with net profit rising 12% to US$27.7b.
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While its partnership with OpenAI (in which Microsoft holds a 27% stake) helped fuel revenue growth, related losses of US$3.1b from the investment in the ChatGPT maker impacted net income for the quarter.
Threat of tax on revenue melts away
In May, Revenue Minister Simon Watts discharged the Digital Services Tax Bill (introduced to the House under the Labour Government), which would have levied a flat 3% tax on Big Tech firms’ New Zealand revenue.
“We have been monitoring international developments and have decided not to progress the Digital Services Tax Bill at this time,” Watts said.
“A global solution has always been our preferred option, and we have been encouraged by the recent commitment of countries to the OECD work in this area.”
Earlier this year, US President Donald Trump said he did not support the OECD’s push to implement a global minimum corporate tax.
Former Finance Minister Grant Robertson first floated the idea of a 3% or 6% digital services tax in 2019 but then put it on the back-burner for most of the next four years.
The Digital Services Tax Bill (for a 3% tax) was introduced in the final days of Parliament before the 2023 election. It didn’t have time to get to a select committee, let alone pass.
Ahead of the 2023 election, the Ministry of Foreign Affairs and Trade warned that a digital services tax would raise less than $100m, with that amount likely to be lost to retaliatory tariffs and measures against cloud software firms like Xero who sell into the US market.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.