The Nextdc Ltd (ASX: NXT) share price has been a strong performer today and in afternoon trade finds itself up almost 7% to $4.54 following the release of its full-year results.
Here are key highlights from the release:
- Revenue increased 33% to $123.6 million (Guidance range of $115-122 million).
- EBITDA up 77% to $49 million (Guidance range of $46-50 million).
- Statutory net profit after tax of $23 million, up from $1.8 million in FY 2016.
- Earnings per share of 8.3 cents.
- Operating cash flow of $44.9 million.
- Contracted utilisation up 21% to 31.5MW.
- Outlook: Underlying EBITDA in the range of $56 million to $61 million.
Overall I thought this was yet another strong result from the data centre operator and can't say I'm surprised to see its shares race higher.
The strong performance was driven by a significant increase in contracted utilisation as a result of strong demand and an expansion in capacity.
Ultimately this led to a whopping 77% increase in EBITDA to $49 million, which was at the high end of its guidance range.
One thing which I find particularly appealing with NEXTDC is its diversified recurring revenue model.
Enterprise customers account for 33% of its customer base, closely followed by Cloud and Connectivity customers which provide 20% and 17% of its customers, respectively.
I believe this diversity, and the fact that 90% of its revenue is recurring, bodes well for its future growth and will allow the company to build on this strong result in FY 2018.
What's next?
Based on its current contracted utilisation levels, expected new customer contracts in FY 2018, a lift in operating cost increases from the opening of three new facilities, and higher energy costs, management expects EBITDA in the range of $56 million to $61 million this year.
Whilst this means a slowdown in growth in FY 2018, I believe the following year the company will reap the rewards of its investments, leading to EBITDA growth accelerating once again.
As a result, I think that NEXTDC continues to be one of the best growth shares to buy on the ASX at the moment. It may be expensive, but I believe the significant growth that lies ahead of it over the next decade more than justifies the premium.
