NextDC Ltd (ASX: NXT) shares are pushing higher on Wednesday.
In early trade, the data centre operator's shares were up as much as 9% to $15.47 after returning from a trading halt, before pulling back.
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Why are NextDC shares rising today?
The catalyst for today's move has been the release of a major update highlighting a surge in customer demand and contracted capacity.
According to the release, NextDC reported a record increase in contracted utilisation, rising by approximately 250MW or 60% since the end of December to reach 667MW on a pro forma basis.
This represents a significant step change in demand for its data centre capacity, particularly from hyperscale and artificial intelligence (AI) customers.
Record demand and forward pipeline
In addition to the strong growth in contracted utilisation, the company revealed that its forward order book has increased by 83% to 544MW.
This forward order book represents capacity that has been contracted but is not yet billing, meaning it is expected to convert into revenue over time.
Management estimates that this existing contracted utilisation could generate more than $1 billion in EBITDA once fully operational, which is more than four times the midpoint of its FY 2026 EBITDA guidance.
But it may not stop there. The release notes that NextDC is currently in discussions with various existing and potential customers about further contracts, which are at various stages of progression.
Expansion plans underway
To support this surge in demand, NextDC is accelerating development at its S4 data centre in Western Sydney.
The company plans to invest approximately $1.5 billion to bring additional capacity online more quickly, ensuring it can meet customer requirements.
Management notes that the rapid increase in contracted utilisation has effectively pulled forward its development timeline, reflecting the strength of demand in the market.
This demand is being driven by structural trends such as cloud computing and the rapid adoption of artificial intelligence technologies.
Capital raising
Alongside the operational update, NextDC announced a capital raising to support its expansion plans.
This includes a fully underwritten entitlement offer to raise approximately $1.5 billion, as well as an expanded hybrid securities offering.
This morning, it revealed that it has successfully raised $1 billion from institutional investors at a 10% discount of $12.70 per new share.
Commenting on the capital raising, NextDC's CEO, Craig Scroggie, said:
This is an exciting new phase of growth for NEXTDC and I am pleased to see such strong support from our shareholders in this Entitlement Offer. This equity raising, coupled with the Hybrid Securities Offer and other funding initiatives announced by the Company, provides NEXTDC with a strong liquidity position to fund our record 544MW4 pro forma Forward Order Book as at 31 March 2026.
Management commentary
Scroggie said the increase in contracted utilisation is unprecedented and highlights the strength of demand. He adds:
The scale of this increase in contracted utilisation and the resulting uplift in the Company's pro forma Forward Order Book are unprecedented, underscoring the record levels of demand we continue to experience. I am particularly pleased to see our Western Sydney expansion strategy coming to fruition, with contracted capacity at S4 representing the culmination of years of planning and investment by NEXTDC.
While raising equity is not a step we take lightly, this is a unique opportunity to materially expand NEXTDC's contracted capacity and de-risk the Company's Western Sydney developments ahead of potential strategic partnership transactions with private capital partners from 2027.
