NEXTDC share price on watch after material contract update

The NEXTDC Ltd (ASX:NXT) share price will be on watch today after releasing a material contract update…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The NEXTDC Ltd (ASX: NXT) share price will be one to watch on the ASX 200 on Wednesday.

This follows the release of a very positive announcement out of the data centre operator this morning.

What did NEXTDC announce?

This morning NEXTDC announced that contracted commitments at its Victorian data centre facilities have now increased by 40% from 15MW at December 31 to approximately 21MW.

This figure could still increase further from here. When including contracted expansion options, NEXTDC now has more than 28MW.

In light of these new commitments, management has decided to bring forward the fourth stage of construction at its M2 facility to provide up to 12MW of incremental capacity.

This has had a knock-on effect on its capital expenditure guidance for FY 2020. NEXTDC has lifted its guidance to the range of $320 million to $340 million compared to its previous guidance of $280 million to $300 million.

Management has advised that revenue recognition for these new contracted commitments will commence after completion and commissioning of the associated data halls at M2.

The company's chief executive officer, Craig Scroggie, was pleased to lock in these commitments.

He said: "This is a very exciting new phase in development of NEXTDC's operations in Victoria. We advised the market at the time of our FY20 results that the Company's sales pipeline was very strong and the timing of large sales to the hyperscale cloud providers is long running given the planning cycle and the scale of these investments. We are very pleased to have now locked in material commitments against these expectations."

"The demand for our data centre services continues to accelerate and requires discipline and patience as the nexus between hyperscale capacity planning, site development, infrastructure deployment and revenue recognition can, in practice, be up to 2-3 years. This is simply reflective of the nature of NEXTDC's digital infrastructure business model, which continues to build long term value through contracted capacity and tangible asset backing," he added.

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A neon sign says 'Top Ten'.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors lost some of this week's mojo this Thursday.

Read more »

Man in suit plummets downwards in sky.
Share Fallers

This ASX stock just crashed 24% after a $1.7bn deal. Here's what spooked investors

Investors dump Maas shares despite a $1.7 billion dollar deal.

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Broker Notes

Morgans names 2 ASX shares to buy now

The broker has good things to say about these shares.

Read more »

Woman leaping in the air and standing out from her friends who are watching.
Broker Notes

5 ASX 200 shares forecast to soar 100% (or more) in 2026

Are any of these in your portfolio already?

Read more »

A young woman sits with her hand to her chin staring off to the side thinking about her investments.
Opinions

Why I'm bullish on these buy-rated ASX shares in February

When execution, growth, and industry trends align, I’m much more willing to lean bullish.

Read more »

A young man clasps his hand to his head with a pained expression on his face and a laptop in front of him.
Share Fallers

Why Beach Energy, Elders, Maas, and Neuren shares are dropping today

These shares are under pressure on Thursday. But why?

Read more »

a group of rockclimbers attached to each other with a rope hang precariously from a steep cliff face with the bottom two climbers not touch the rockface but dangling in midair held only by the rope.
52-Week Lows

Bargain hunting? Here are 3 ASX 200 shares plumbing 52-week lows today

Investors just sent these three ASX 200 stocks tumbling to multi-year lows. Time to pounce?

Read more »

A miner stands in front of an excavator at a mine site.
Capital Raising

Why this ASX uranium miner's shares are frozen today

This ASX uranium miner is halted as the market waits for further clarity.

Read more »