Nextdc Ltd (ASX: NXT) shares are under pressure on Wednesday morning.
At the time of writing, the data centre operator's shares are down almost 3% to $17.35.
This follows the release of the company's full year results after the market close on Tuesday.
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NextDC shares falls on results release
- Total revenue up 12% to $404.3 million
- Net revenue up 10% to $307.9 million
- Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) up 5% to $204.3 million
- Capital expenditure up $1,002.6 million
What happened in FY 2024?
For the 12 months ended 30 June, NextDC reported a 12% increase in revenue to $404.3 million and a 10% lift in net revenue of $307.9 million. The former was at the low end of its guidance range, whereas the latter was ahead of its guidance.
This was driven by a record level of new contracted sales (50.5MW) during FY 2024, as well as strong ecosystem growth. Management notes that interconnection revenues increased 12% to $28.3 million.
Also coming in ahead of guidance was NextDC's underlying EBITDA. It increased 5% to $204.3 million, which compares favourably to its guidance range of $190 million to $200 million.
One negative, though, was that its capital expenditure was greater than expected at $1,002.6 million. Management had guided to a $850 million to $900 million capex spend for FY 2024. It notes that this spending was due to its focus on "pursuing strategic investments to take advantage of the unprecedented level of customer demand."
What are analysts saying?
Goldman Sachs was pleased with the results. It noted:
NXT reported FY24 underlying Sales/EBITDA/NPAT of A$404mn/A$204mn/-A$38mn which was +1%/+5%/-A$4mn vs. GSe – with net revenue & EBITDA +1%/+2% vs. top end of guidance. Cash conversion was consistent with FY23 (GOCF = 89% of underlying EBITDA in FY24, vs. 90% in the pcp) while FY24 capex of A$938mn was ahead of GSe/guidance (GSe A$883mn, guidance A$850-900mn).
However, it was disappointed with the company's guidance for FY 2025, noting that its net revenue and EBITDA guidance is 3% and 4% below its own estimates. This appears to be due to "a slower ramp in NXT order-book (vs. 1H24 commentary)." Though, it concedes that "NXT is historically conservative on guidance (5Y average EBITDA beat of +2.8%)."
Management commentary
NextDC's CEO, Craig Scroggie, was pleased with its FY 2024 results. He said:
We are pleased to deliver another record result in FY24, with underlying EBITDA above the top end of the Company's guidance range, a record increase in pro forma contracted utilisation as well as finishing the year with a record contracted forward order book of 86.6MW.
With liquidity of A$2.7 billion and a low gearing ratio of 3.4%, the Company is well placed to continue to accelerate its development activities and deliver inventory in line with customer orders, in addition to taking advantage of the opportunities presented by the strong ongoing demand from traditional enterprise and cloud computing segments, edge computing, as well as the rapid acceleration of AI applications that are underpinning the fourth industrial revolution.
Outlook
For FY 2025, management is guiding to net revenue in the range of $340 million to $350 million, which represents growth of 10.4% to 13.7%.
Underlying EBITDA is expected in the range of $210 million to $220 million, which will be up a modest 2.8% to 7.7% year on year.
Finally, capital expenditure guidance is $900 million to $1,100 million for FY 2025.
Scroggie commented:
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 data centres become the factories of the future, transforming data into actionable insights, our focus is on capitalising on this historic technological transformation. These investments will reinforce our role as a critical enabler of innovation, where robust digital infrastructure is the foundation of tomorrow's enterprises.
