Cloud application and data centre service provider Nextdc Ltd (ASX: NXT) showed further business growth as interim revenue from data centre services more than doubled in the first half of financial year 2015. However, Nextdc reported a half-year net loss as the company is still developing its data centre network.
Here are the key half-year results:
- Revenue reported revenue from continuing operations $27.95 million, down 2.94% / data centre services revenue $26.7 million, up 134%
- Earnings before interest, tax, depreciation and amortisation (EBITDA) $3 million, up from a loss of $3.4 million
- Net profit after tax (NPAT) reported net loss of $5.8 million, an upward improvement from a net loss of $7.3 million
- Earnings per share minus 3 cents per share, up from minus 3.8 cps
- Dividend per share no interim dividend was declared
Half-year business highlights:
— Nextdc generated its first half-year of positive EBITDA as well as positive operating cash flow. This indicates the company is approaching a certain amount of critical mass as revenues begin to total more than development and operating costs.
— The amount of recurring revenue increased 48% over the 12 months ended December 2014, which gives Nextdc's ongoing income streams more stability. Now the revenue breakdown is 85% recurring revenue and 15% contract revenue.
Nextdc CEO Craig Scroggie said, "The half-year ended December 2014 represents a pivotal period with NEXTDC generating its first positive EBITDA as well as operating cash flows. We are starting to see the benefits of the inherent leverage of the company's scalable infrastructure start to flow through to earnings and operating cash flows."
2015 Outlook
Financial year 2015 EBITDA is expected to be $6million – $8 million, well up from the $16.1 million underlying EBITDA loss in financial year 2014. Nextdc's full-year revenue target is for $55 million – $60 million, up from financial year 2014's $33.4 million. Network and facility capital expenditures will also rise as Nextdc builds out its infrastructure.
The neutral cloud network company will be providing direct cloud connectivity to Microsoft for the software giant's Azure cloud application service. This will help make Azure's service offering thorough and seamless for its Australian business customers.
Nextdc's revenue and operating earnings growth shows investors that perhaps in the near future the company could begin turning a profit. As much as I might like the business, my investing side would say wait until a steady net profit can be generated.
Data centres and data management will be key industries to handle the mountains of data created each year as the world moves toward greater online connectivity so investors should watch the progress because the business is promising.
