NEXTDC (ASX: NXT) Cuts FY27 Guidance on M3 Power Delay

NEXTDC has cut its FY27 net revenue and underlying earnings guidance after delayed electricity network works pushed the next increase in grid supply to its M3 Melbourne data centre into FY28.

The data centre operator now expects FY27 net revenue of A$475 million to A$500 million, down from A$615 million to A$640 million. Underlying EBITDA guidance has fallen to A$245 million to A$265 million from A$385 million to A$410 million.

The revised ranges exclude the revenue and attributable EBITDA from affected M3 customer contracts, including capacity already being billed. NEXTDC’s August guidance had included about A$140 million of net revenue and the same amount of underlying EBITDA from those contracts.

NEXTDC cannot yet reliably estimate their FY27 contribution. Its actual results will include any contribution, but potential service-level credits could push underlying EBITDA below the revised guidance range.

Grid connection holds back contracted capacity

Electricity distributor Jemena suspended parts of the network augmentation works needed to increase M3’s grid supply in September 2026. It attributed the suspension to safety and site-access issues arising from community and stakeholder opposition, as well as the absence of local council consent while further consultation occurs.

Jemena has told NEXTDC that it does not expect to restart the affected work before February 2027. Based on Jemena’s current indicative estimate, NEXTDC expects the next power increase during FY28, with delivery and billing of dependent contracted capacity to follow shortly afterwards.

Construction of data halls within M3’s existing buildings is continuing. However, a Victorian Government planning decision covering Stages 6 and 7 is also taking longer than expected and is now anticipated in 2027, after the state election scheduled for 28 November 2026.

The deferred capacity remains contracted, subject to the customer’s rights. The contracts provide for service-level credits where capacity is late or not fully powered and, in some circumstances, allow the customer to terminate. NEXTDC is assessing whether force majeure or other contractual relief is available.

Spending curtailed as uncertainty rises

NEXTDC reduced FY27 capital expenditure guidance to A$4.5 billion to A$5 billion from A$5.25 billion to A$5.75 billion. The new range includes about A$230 million of capitalised interest, which was excluded from the previous guidance. On a comparable basis before capitalised interest, the reduction is about A$980 million, or 17% to 19%.

The company has put new development projects and land acquisitions on hold and will prioritise contracted capacity due for delivery over the next 12 to 18 months, along with projects already close to completion. The board will also consider selling selected development sites that are not needed in the near term.

NEXTDC reported A$8.675 billion of liquidity at 30 September 2026, comprising A$1.275 billion of cash and A$7.4 billion of undrawn senior debt facilities and hybrid securities. It remains compliant with its financial covenants, although access to all undrawn senior debt will depend partly on drawdown timing and expected customer billing profiles.

The company plans to provide a further update, including the outcome of its capital expenditure review, at its annual general meeting on 20 November 2026.