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Mayank Bansal
Mayank Bansal, CFA
Mayank Bansal is a CFA Charterholder and heads the Equity Research team at Kapitales Research, with over 5 years of experience analysing global equity markets. He leads fundamental, data-driven research combining rigorous financial analysis with macro trends.

NEXTDC Lowers FY27 Outlook After Power Upgrade Setback at Melbourne M3 Site

NEXTDC Lowers FY27 Outlook After Power Upgrade Setback at Melbourne M3 Site Source: Kapitales Research

Highlights:

  • Setbacks to grid upgrades serving the M3 data centre in Melbourne have led NEXTDC to trim its FY27 revenue and earnings forecasts.
  • Net revenue guidance for FY27 is now AU$475 million to AU$500 million, and underlying EBITDA is projected at AU$245 million to AU$265 million.
  • Available liquidity stands at AU$8.675 billion, and capital spending will be directed mainly to capacity already contracted by customers.

Guidance Revised After Grid Delays

NEXTDC Limited (ASX: NXT) updated its financial guidance on October 21, 2026, after delays to electricity network works linked to its M3 data centre in Melbourne. The company said the holdup pushes back the next step-up in grid power, which in turn delays both the delivery and billing of capacity customers have already contracted.

The works are being carried out by Jemena Electricity Networks (Vic) Ltd, which paused parts of its upgrade program in the face of community and stakeholder opposition. NEXTDC now expects the next power increase at M3 to arrive in the 2028 financial year (FY28), with the related customer capacity becoming billable soon after. Separately, NEXTDC shares were quoted at AU$5.600, a rise of AU$0.250 or 4.67%, based on the market data provided. That move is unrelated to the guidance update.

Lower FY27 Revenue and EBITDA Outlook

FY27 net revenue is now expected to land between AU$475 million and AU$500 million, down from the earlier range of AU$615 million to AU$640 million. Underlying EBITDA is forecast at AU$245 million to AU$265 million, compared with the prior AU$385 million to AU$410 million.

The new ranges leave out revenue and attributable EBITDA from the affected M3 contracts, including capacity already being billed and any possible service-level credits. In its August guidance, NEXTDC had counted roughly AU$140 million of both net revenue and underlying EBITDA from those contracts. The company noted that the eventual contribution is unclear while talks continue with the customer and Jemena, and that service-level credits or other contractual outcomes could also affect earnings.

Capital Spending Under Review

FY27 capital expenditure guidance has been cut to AU$4.5 billion to AU$5 billion, from AU$5.25 billion to AU$5.75 billion. Spending will be focused on contracted customer capacity due for delivery within the next 12 to 18 months and on projects nearing completion. New developments and land purchases are on hold for the foreseeable future.

The board is reviewing the capital program and plans to share its conclusions by the Annual General Meeting on November 20, 2026. It will also consider selling certain development sites that are not needed in the near term.

Liquidity

At September 30, 2026, NEXTDC held total liquidity of AU$8.675 billion, made up of AU$1.275 billion in cash and AU$7.4 billion in undrawn debt facilities and hybrid securities. The company said it is meeting its financial covenants and expects to stay compliant at the next testing date. It cautioned, however, that shifts in customer billing timelines could limit its ability to draw on senior debt facilities.

Outlook

According to NEXTDC, the revised guidance stems from infrastructure delays and not from any change in the contracted status of the affected capacity. The timing of extra power supply, customer billing and possible contractual obligations will remain key as the company reassesses its investment plans.

Note: All data presented is based on information available at the time of writing.

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