Expansion eats into NEXTDC profit
28 February 2020, Written by David Simmons
Data centre operator NEXTDC (ASX: NXT) has posted its second consecutive half yearly loss today as it invests a record amount in infrastructure development.
The company posted a loss of $4.9 million in 1H20, $1.75 million worse than the same time last year.
It comes as the group has been on a path of growth, with costs associated with its second Sydney-based data centre expected to pay off in the second half.
The $4.9 million loss is in stark contrast to its relatively strong EBITDA result of $50.7 million, up 36 per cent on the prior corresponding period.
"This loss was primarily driven by higher depreciation and data centre facility costs incurred as a result of S2 being operational for the full period, while associated revenues increase progressively as installed capacity comes online at S2," says NEXTDC.
Data inventory at its second Sydney facility, which has been limited during 1H20, is expected to come online in the second half.
Once this in place the group is positioned to capture a large customer base according to CEO and managing director Craig Scroggie.
"The company continues to see strong demand across the national portfolio, nothing that we are in advanced negotiations in relation to some large customer opportunities that have the potential to significantly increase NEXTDC's contracted utilisation base," says Scroggie.
"The first half was a record period for new investments in both the development of our next generation of world-class Tier IV data centres P2 (Perth 2) and S2 (Sydney 2), as well as our innovative connectivity service offerings."
Overall, NEXTDC's customer numbers were up 16 per cent in the half, from 1,090 to 1,264.
The group's second Perth facility remains on track for practical completion in 2H20, and a third Sydney centre is in the works after the group received planning approval.
NEXTDC has left its guidance for FY20 unchanged, expecting revenue in the range of $200 million to $206 million.
Shares in NEXTDC are down 1.55 per cent to $7.30 per share at 11.10am AEDT.
Business News Australia
Author: David Simmons