Losses soar for Aussie data centre king NextDC

NextDC has announced plans to build Australia’s first AI factory as the company reported that losses had grown tenfold over the six months to the end of last year.

NextDC boss Craig Scroggie at the company’s data centre at Fortitude Valley. Picture: Mark Cranitch

NextDC has announced plans to build Australia’s first AI factory as the company reported that losses had grown tenfold over the six months to the end of last year.

The company booked a net loss of $22.5m for the six months to December 31, a deterioration from a loss of $2.8m over the same period a year earlier.

But analysts have praised the result as strong, noting that both revenue and earnings before interest and tax and depreciation beat expectations.

Investors agreed, with shares in the company rocketing to an all-time high of $17.19 before retreating slightly to a record close of $17.15, up 13.1 per cent for the day. The stock has jumped almost 69 per cent in the past year.

That latest surge came on the back of company revenue jumping 31 per cent to $209.1m, with underlying earnings up 5.3 per cent at $96.8m.

The company was set to capitalise on the AI boom, CEO Craig Scroggie told The Australian as he defended the result.

“Infrastructure businesses require capital to grow and also take a decade to build,” he said. “We are about to go through the fourth industrial revolution as a result of AI over the next decade … we’re in the single greatest demand environment that I’ve ever seen in my 30-year career.”

Mr Scroggie did not disclose where the AI factory would be built, only that it would be announced soon and it had the “densification” and “cooling” required to power AI computing.

“As demand continues to be bolstered by the broad adoption of new technologies such as generative AI, the business remains in an outstanding position to support customer growth requirements across the enterprise, government and hyperscale verticals,” he said.

NextDC operates 13 data centres across Australia and has five under construction, including in Malaysia and Auckland. The company also has plans for six more.

The company has its sights set on Singapore, Japan and Thailand as its next targets, with previous reports suggesting a 13.76 billion Thai baht ($600m) data centre has received approval in Bangkok.

On Wednesday, Mr Scroggie said the company was firm on working across the Asia-Pacific and that it also had its eyes on The Philippines. Demand in Asia would eventually outstrip that of Australia, he said.

“Southeast Asian countries represent significant opportunities, huge populations where the digital divide is still significant and the opportunity to serve them with world-class digital infrastructure exists for us,” he said.

“It is my expectation that the development plan across Asia over time will be greater than the development plan has been in Australia in the last decade.”

E&P’s Paul Mason foreshadowed the share price surge, as NextDC had noted it expected a record contract win before the end of the 2024 financial year.

“My guess is that the stock will probably be reasonably supported,” he said. “Capex for the half has come in materially lower than expected.”

In the first half of the current financial year, NextDC interconnections increased 5 per cent to reach 18,207, which represents 9.2 per cent of net revenue.

Guidance for the year remains unchanged, with NextDC expected to reach between $400m and $415m in revenue. Capital expenditure is expected to be more than double, ranging between $850m and $900m for the year. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) guidance remains at $190m-$200m for the full year.