Summary: Australia’s NEXTDC reported its FY1H16 (CY2H15) results which continued to show healthy signs of continued growth from both a colocation and interconnection revenue standpoint. NEXTDC reported its first positive net profit and revealed metrics that point to encouraging uptake for its data centre services in the Australia market with two new builds in the works.
Performance details: NEXTDC’s top-line came in at $42.1m (all figures in AUD), up 50% y/y and up 28% h/h. Its data centre services line, which represents revenue from colocation and interconnection services, represents the bulk of NEXTDC’s revenue and came in at $41.3m, up 55% y/y and 29% h/h with recurring revenue accounting for 85% (1H15: 87%) of overall data centre services revenue. Colocation continues to represent over 90% of overall revenues while interconnection accounted for around 5% of recurring revenues, up from 4% in CY1H15. Customer count grew over 50% y/y to 566, while the number of cross-connects grew 75% y/y to 3,843 – representing an average of just under seven cross-connects per customer and trending upward.
Segments: Cloud (26%), enterprise (29%) and connectivity (19%) continue to be the top three verticals and collectively represents around 74% of revenue with the remainder coming from digital media (5%), SIs (13%), financial services (5%) and government (6%). The enterprise vertical has overtaken the cloud vertical as NEXTDC’s top vertical and management noted that those two verticals continue to drive a material amount of interconnection revenue. Contracted utilisation by power density (kW/rack) fell relatively in line with the previous period with a notable increase in low-density deployments of mostly 2 kW and less. The percentage share of higher-density workloads 6 kW and above accounted for around 42% of deployments. It is also worth pointing out that just under 50% of workloads are still operating at industry norms of 3 kW per rack and below. 4-5 kW workloads only represent 12% of revenue and points to an interesting divide between low- and high-density workloads.
Facility financials: Melbourne (48%) and Sydney (29%) were the top performing markets for NEXTDC followed by Brisbane (17%), Canberra (2%) and Perth (5%).
Facility details: Contracted utilisation came in at 22.8 MW, up 59% y/y and 5% h/h and equates to a occupancy rate of 93.4% relative to its installed base of 24.4 MW.
Revenue per MW/sqm: NEXTDC reported a new set of KPIs – annualized revenue per MW and square metre. Annualized revenue per MW for CY2H15 came in at $4.45m, up from $3.9m the year before. Management noted that it expects a small decrease in the next reported period due to the commencement of some large deployments which takes time for power usage to ramp up. Annualized revenue per sqm for CY2H15 was $8,359, up 12% y/y and management expects the upward trajectory to continue.
Expansions: NEXTDC did not complete any expansions during the period though management did reveal plans to build new data centres in Melbourne (M2) and Brisbane (B2). Management confirmed during the earnings call that it was deep into the due diligence process to acquire and prepare those two sites. NEXTDC is targeting a FY2H17 launch date for both facilities. M2 is expected to support 25 MW of critical IT load and B2 is targeted to support 6 MW.
NEXTDC FY1H16 Financials & KPIs (all figures in $m AUD)
| FY2H15 | FY2H14 | Y/Y% Change | |
|---|---|---|---|
| Rev: Total | $42.1 | $28.0 | 50.4%  |
| Rev: Data Centre Services | $41.3 | $26.7 | 54.6% |
| Rev: Data Centre Development | $0.8 | $0 | – |
| Customers | 566 | 375 | 50.9% |
| Cross Connects | 3,843 | 2,198 | 74.8% |
| Contracted Customer Utilisation (MW) | 22.8 | 14.3 | 59.4% |
| Installed Capacity (MW) | 24.4 | 20.25 | 20.5% |
Source: NEXTDC filings
Guidance: Management guided FY16 revenues to fall between $85-90m, a 45% y/y increase at the midpoint and EBITDA in the range of $25-28m.
Angle: NEXTDC continues to establish itself as a prominent pureplay colocation provider in Australia. Interconnection growth momentum was the biggest takeaway from this period’s results and NEXTDC’s ecosystem approach is showing material dividends from being able to attract marquee customers into its data centres, namely Microsoft, AWS and CenturyLink to name a few.
