This article first appeared on GuruFocus .
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Net Revenue:$405 million, up 16% on FY25.
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Underlying EBITDA:$248.8 million, up 15%, almost 4% above the top end of the guidance range.
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Total Revenue:$496.5 million, up 16% on FY25.
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Net Profit After Tax:$82.1 million, including a $129 million fair value gain on investment properties.
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Contracted Utilization:Tripled to 740 megawatts on a pro forma basis, up 202%.
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Billing Utilization:Increased 58% to 175 megawatts.
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Forward Order Book:Reached a record 565 megawatts, with 495 megawatts contracted during the year.
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Facility Costs:Grew $11.3 million, or 17%, due to targeted investments ahead of record capacity expansion.
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Corporate Costs:Increased by $11.1 million, or 17%, due to investments in systems and people.
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Total Assets:$10.2 billion, including $5.8 billion of property, plant, and equipment and $3.2 billion of investment properties.
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Available Liquidity:$8.7 billion.
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Capital Raised in FY26:$9.75 billion, including senior debt upsizing of $5.8 billion, subordinated notes of $750 million, hybrid securities of $1.7 billion, and $1.5 billion of new equity.
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FY27 Net Revenue Guidance:$615 million to $640 million, reflecting annual growth of more than 50%.
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FY27 Underlying EBITDA Guidance:$385 million to $410 million.
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FY27 Capital Expenditure Guidance:Between $5.25 billion and $5.75 billion, including an estimated $500 million of reimbursable customer fitout.
Release Date: August 27, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Record FY26 contracting year with contracted utilization tripling to 740 MW on a pro forma basis, exceeding guidance on net revenue and underlying EBITDA.
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Forward order book hit a new high of 565 MW, all under binding customer contracts, providing high revenue visibility and a clear path to quadruple billing utilization by FY30.
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Strong financial position with $8.7 billion in available liquidity, no debt maturities until FY30, and no leverage ratio covenants, offering substantial balance sheet flexibility.
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Record development year with 42 MW delivered at M3, 12 MW at M2, and KL1 opened to foundation customers, while S4 and other expansions are on track.
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FY27 guidance indicates over 50% net revenue growth and significant EBITDA growth, driven by 197 MW of new billing activations and accelerating operating leverage.
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High-quality customer base with 95% of contracted capacity from cloud and AI customers, including AA-rated hyperscalers and NVIDIA-backed neoclouds, reducing credit risk.
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Improved capital efficiency with hyperscale and AI deployments targeting over 10% yield on cost, and potential for higher yields on larger sites like S7 and M5.
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Strategic positioning for AI inferencing demand, leveraging metro presence and sovereign data requirements, which is expected to drive future growth.
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Proactive engagement in energy policy reforms, with the entire forward order book unaffected, and written confirmation from Transgrid that new policies do not apply to S4.
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Strong ESG and safety performance, including first sustainability report under AASB S2, low LTIFR, and high waste diversion rates, enhancing long-term sustainability.
Negative Points
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High capital expenditure guidance of $5.25-$5.75 billion for FY27, reflecting significant investment requirements and potential execution risks.
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Dependence on a few large hyperscale and AI customers, with over 70% of billing capacity from hyperscale workloads, leading to customer concentration risk.
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Uncertainty around future regulatory changes, particularly energy reforms in New South Wales and federal level, which could impact future developments and costs.
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Potential for lower revenue per megawatt due to shift to hyperscale and AI deployments, which may affect long-term profitability if not offset by cost efficiencies.
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Construction and delivery risks, including potential delays in development approvals for S5, S7, and M5, which could impact future growth timelines.
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Accounting policy changes, including reclassification of assets to investment properties, introduce volatility in reported earnings and may complicate financial analysis.
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The forward order book's conversion to revenue is subject to timely delivery of data halls, and any delays could affect revenue recognition and growth targets.
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High reliance on third-party capital partnerships and JV structures for funding, which may involve complex negotiations and potential dilution of returns.
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Market competition and rapid technological changes, such as GPU architecture evolution, could impact the company's ability to maintain competitive advantages.
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The company's growth is heavily dependent on continued AI and cloud demand, which could be affected by macroeconomic conditions or shifts in technology adoption.
Q & A Highlights
Q: Can you unpack the composition of the order book between traditional cloud operators, neoclouds, and LLMs, and discuss the credit quality and yield expectations for these different customer types? A: Craig Scroggie, CEO: While we haven't split out the mix, the majority of the 0.5 gigawatts contracted in FY26 is with AA-rated credit counterparties or better. Where we do have neocloud customers, they are financially backstopped by NVIDIA for a decade or more. All current AI deployments in Australia are for inferencing, not training. The 10% yield on cost forecast is a conservative minimum; there is substantial opportunity to improve this on larger sites like S7 (650MW) and M5 (1,200MW) due to the scale of containerization and single-story manufacturing-style construction, which reduces weather exposure and speeds up timelines.
Q: Is the math correct that your historical $9.2 billion spent on land, building, and fitout could be worth $14 billion, and that S4 and S7 could be worth $23 billion once complete, implying $2-3 billion of value for NEXTDC's 20% stake? A: Craig Scroggie, CEO: The numbers are directionally right, but the yield on cost is a forward-looking estimate focused on hyperscale and AI deployments. Regarding JVCo, no final decisions have been made on the structure. The 20% figure is just one end of the spectrum; there are many varied structures under negotiation with partners. The S4 and S7 capital requirements commentary is reasonable, but the final equity and management structure remains undecided.
Q: What has changed that allows you to be so open about the 10% target yield on cost for hyperscale deals, which hasn't been discussed publicly before? A: Craig Scroggie, CEO: The key change is the shift from speculative colocation builds to build-to-suit contracts at scale. When doing 250-500MW or even 1,000MW build-to-suit projects, the economics are locked at the contract point. The cost estimates, long lead time items, bulk procurement, and general contractor negotiations are all certain on day one. While returns on scale business may be lower than historical colocation, they are absolutely certain, giving us high confidence to communicate return expectations more openly.
Q: Regarding the 73MW NVIDIA announcement, is it fair to assume it's back-end weighted and will deploy rapidly, and what constraints exist on gear availability and power drawdown? A: Craig Scroggie, CEO: The 73MW is under construction and will be delivered in record time. The FY27 activation is back-ended, but it will all turn on largely at one time without the traditional ramp associated with cloud deployments. On constraints, our scale gives us advantages in securing long lead time items like generators. We have all the certainty required for the 0.5GW contracted in FY26. Regarding regulatory changes, none are law yet, and they don't change our confidence in the existing program, though they will be considered for future developments.
Q: How do financiers view higher gearing levels for unlisted assets, and how should we think about reported group-level metrics versus how lenders view the capital structure? A: Oskar Tomaszewski, CFO: Financiers view the capital stack differently than traditional equity analysis. The $1.7 billion of hybrids and $750 million of subordinated notes are subordinated to senior lenders, providing flexibility. We have the ability to exclude projects like S4 from the guarantor group, allowing project finance funding. Project financiers are attracted to our highly creditworthy counterparties under long-duration contracts and our strong track record of on-time, on-budget delivery. This project finance approach doesn't count toward reported covenants.
Q: Do you need to secure DAs for S7 and power allocation before contracting in FY27, and will the new wind power requirements and Transgrid allocation policy hold S7 back? A: Craig Scroggie, CEO: For FY27, 100% of what we require is already locked in. For future years, we'd like to see DAs for S5, S7, and M5. S5 and S7 have been in the approval process for considerable time, and we've addressed all required issues. On regulatory changes, we don't know what we don't know, but regardless of cost arrangements on network augmentation, we've always been required to pay transmission infrastructure costs. Our customers have always been responsible for electron procurement. We have high certainty over things we've always controlled; there's more uncertainty for customers on final net energy costs.
Q: Are you considering reclassifying further assets into investment properties, and does it have to be single-tenanted sites? A: Oskar Tomaszewski, CFO: We'll assess sites on a case-by-case basis, and it's likely we'll have further sites under lease and investment property accounting. S7 is a candidate, but no determination has been made. It depends on the customer basetraditional sites with many smaller customers taking quarter racks would be messy under lease accounting. Larger sites with three to five customers taking significant portions would lend themselves to this treatment. In the short term, covenants remain on a constant accounting basis, but over time, higher valuations will allow more gearing capacity.
Q: What is the latest cost per megawatt for large deployments, and does straight-line revenue recognition mean higher revenue per megawatt and EBITDA in early years? A: Craig Scroggie, CEO: It's not possible to put a single cost per megawatt on future developments because every hyperscale or AI build is build-to-suit specific to the customer's design, including liquid-to-chip versus air cooling, water usage, and other variables. Oskar Tomaszewski, CFO: The straight-line accounting impact on FY26 is less than $1 million, and approximately $10 million for FY27. In the first half of contract terms, we'll report higher revenue; in the second half, lower. Net-net over the contract life, recognized revenue and earnings are exactly the same. This treatment aligns us with domestic and international peers.
Q: What key milestones are needed before signing a JVCo or third-party funding deal for S4, and could S7 be included ahead of funding? A: Craig Scroggie, CEO: To maximize shareholder returns, we need to lock in the final 115MW available at S4 at the best possible terms. Once we have a fully completed 365MW site with AA or better credit quality counterparties, we can secure the lowest cost of funding
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
