NEXTDC share price on watch after hitting the high-end of its guidance in FY 2020

The NEXTDC Ltd (ASX:NXT) share price will be on watch on Friday following the release of an FY 2020 that hit the top end of its guidance…

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The NEXTDC Ltd (ASX: NXT) share price will be on watch on Friday following the release of its FY 2020 results.

nextdc share price

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How did NEXTDC perform in FY 2020?

For the year ended 30 June 2020, NEXTDC delivered a 14% or $26 million increase in revenue to $205.2 million. This was at the high end of its guidance range of $200 million to $206 million.

This growth was driven by strong demand for capacity at its data centres. During the 12 months, NEXTDC's contracted utilisation grew 17.4MW or 33% to 70 MW. This comprises new sales of 17.8MW before adjusting for a one-off clawback of wholesale capacity of 0.4MW.

Interconnections rose 2,079 or 19% to 13,051 during the year, representing 8.1% of recurring revenue.

Also growing at a quick rate was its customer numbers. They increased by 180 or 15% to 1,364 during FY 2020.

This led to NEXTDC reporting underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $104.6 million. This was an increase of $19.5 million or 23% and was at the top end of its guidance range. Operating cash flow was up $14.6 million or 37% to $53.9 million

NEXTDC spent heavily in FY 2020 in order to take advantage of the increasing demand for data centre capacity. Capital expenditure rose $40 million or 11% to $418 million, which was ahead of guidance of $340 million to $380 million. Management notes that its build progress accelerated towards the year end, and the land acquisition for M3 Melbourne was settled for $22 million.

Nevertheless, the company finished the year with a very strong balance sheet. At 30 June 2020, NEXTDC's cash and undrawn debt facilities stood at $1,193 million. This was supported by capital raisings totalling $862 million during the 12 months.

NEXTDC Chief Executive Officer and Managing Director, Craig Scroggie, commented: "Today's results are a testament to the Company's pursuit of excellence to provide the industry's highest standard of data centre services. Whilst everyone is adjusting to the new normal presented by the COVID-19 global pandemic, it is pleasing that NEXTDC has been able to continue delivering on market expectations, with its FY20 result coming in at the top-end of earnings guidance provided at the start of the financial year."

FY 2021 guidance.

NEXTDC has provided guidance for FY 2021 and expects more strong growth.

Based on current billing, contracted utilisation levels, and expected new customer contracts, NEXTDC expects data centre services revenue in the range of $242 million to $250 million. The high end will be a 24.5% increase year on year.

It expects its underlying EBITDA to be in the range of $125 million to $130 million. This also implies growth of approximately 24.5% at the high end.

Finally, the company will be spending big again in FY 2021 and has forecast capital expenditure in the range of $380 million to $400 million.

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.

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