Despite the market dropping sharply in morning trade, the Nextdc Ltd (ASX: NXT) share price has rocketed higher by 13% to $3.58 following the release of an impressive first-half result from the data centre operator.
Here are key highlights from the release:
- Revenue up 39% on the prior corresponding period to $58.7 million.
- EBITDA up a massive 110% to $23.9 million.
- Profit before tax of $8 million, compared to $0.6 million a year earlier.
- Operating cash flow increased to $25.4 million.
- Contracted utilisation up 32% to 30 MW at 31 December 2016. Interconnections up 42% to 5,472.
- Number of customers up 23% to 699.
One metric that I like to look at to judge NEXTDC's performance is its revenue per square metre. Pleasingly for six halves in a row now this has increased, rising 4.3% since the end of FY 2016 to $8,837.
Management has pointed to the deployment of large, high density, ecosystem enhancing deals over time as the reason behind the strong growth.
The decision by NEXTDC to develop new facilities designed to take advantage of industry movements toward higher density requirements has clearly paid off.
Another key driver of growth has been the increase in interconnections. Thanks to increasing use of hybrid cloud and connectivity both inside and outside the data centre, the number of cross connects per customer rose to 7.8.
Should you invest?
I believe this was yet another impressive result from the data centre operator, putting it in a strong position to achieve its full-year guidance.
For the full-year, management reiterated its guidance for revenue between $115 million and $122 million, with EBITDA in the range of $46 million and $50 million.
Whilst at 8x annualised sales its shares are a little on the expensive side, I do believe that NEXTDC has explosive growth prospects thanks to the fast-growing demand for cloud services that justifies the premium.
I think this makes it a great long-term investment, up there with fellow tech company Altium Limited (ASX: ALU).
