NextDC shares dip on lower-than-expected FY25 guidance
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The news: NextDC shares dipped on the ASX after the data centre operator extended its net loss in the 2024 financial year and set lower-than-expected guidance for FY25.
The numbers: Shares fell 3.5% to $17.31 by 11:50am AEST, having gained more than 30% over the last 12 months.
NextDC reported a net loss after tax of $44.1 million, widening its loss from $25.6 million last year. However, the Brisbane-based company saw underlying EBITDA rise 5.5% year on year to $204.3 million, ahead of its full-year guidance of $190 million to $200 million. Revenue grew 11.6% to $404.3 million, meeting its guidance range of $400 million to $415 million.
NextDC guided net revenue of between $340 million and $350 million for FY25. It expects underlying EBITDA in the range of $210 million to $220 million, short of consensus forecasts of $230.1 million.
Capital expenditure is expected to be between $900 million and $1.1 billion, in line with average estimates of $950.3 million.
The context: NextDC said it remains focused on pursuing strategic investments to take advantage of the "unprecedented" level of customer demand. It noted that it will focus on further growth investment in FY25 as the company targets new capacity in line with existing customer orders and expansion into new markets.
E&P analyst Paul Mason said that the FY24 result was "reasonably ahead" of guidance and consensus, but noted that scaling costs are "the big impost" on otherwise higher growth. He said that analysts may end up modelling a FY25 EBITDA figure above NextDC's guidance, due to the company's inclination to set a low range.
What they said: "The company looked like it was low-balling at the half-year result, having gone more than half way through the underlying EBITDA top end range already, and looks sort of like it is doing it again in its FY25 guidance," Mason said.
"Stock reaction -2% to 3% so far seems probably like about right given guidance down but small bickies in the scheme of them scaling for the next few years and the size of developments coming."
NextDC CEO and managing director Craig Scroggie said: "FY25 will be a landmark year for NextDC as we make strategic investments to expand our platform, positioning us at the forefront of the digital infrastructure boom driven by the fourth industrial revolution".
"As AI and cloud technologies increasingly drive global enterprise, the demand for speed, scalability, and reliability in digital infrastructure will continue to surge," he said.
"NextDC is at a pivotal inflection point, strategically building the foundational systems that will empower hyperscale customers, enterprises, and government agencies to excel in this new era."
The source: ASX announcement
