NEXTDC share price on watch after hitting the high-end of its guidance in FY 2020

The NEXTDC Ltd (ASX:NXT) share price will be on watch on Friday following the release of an FY 2020 that hit the top end of its guidance…

| More on:
nextdc share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The NEXTDC Ltd (ASX: NXT) share price will be on watch on Friday following the release of its FY 2020 results.

How did NEXTDC perform in FY 2020?

For the year ended 30 June 2020, NEXTDC delivered a 14% or $26 million increase in revenue to $205.2 million. This was at the high end of its guidance range of $200 million to $206 million.

This growth was driven by strong demand for capacity at its data centres. During the 12 months, NEXTDC's contracted utilisation grew 17.4MW or 33% to 70 MW. This comprises new sales of 17.8MW before adjusting for a one-off clawback of wholesale capacity of 0.4MW.

Interconnections rose 2,079 or 19% to 13,051 during the year, representing 8.1% of recurring revenue.

Also growing at a quick rate was its customer numbers. They increased by 180 or 15% to 1,364 during FY 2020.

This led to NEXTDC reporting underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $104.6 million. This was an increase of $19.5 million or 23% and was at the top end of its guidance range. Operating cash flow was up $14.6 million or 37% to $53.9 million

NEXTDC spent heavily in FY 2020 in order to take advantage of the increasing demand for data centre capacity. Capital expenditure rose $40 million or 11% to $418 million, which was ahead of guidance of $340 million to $380 million. Management notes that its build progress accelerated towards the year end, and the land acquisition for M3 Melbourne was settled for $22 million.

Nevertheless, the company finished the year with a very strong balance sheet. At 30 June 2020, NEXTDC's cash and undrawn debt facilities stood at $1,193 million. This was supported by capital raisings totalling $862 million during the 12 months.

NEXTDC Chief Executive Officer and Managing Director, Craig Scroggie, commented: "Today's results are a testament to the Company's pursuit of excellence to provide the industry's highest standard of data centre services. Whilst everyone is adjusting to the new normal presented by the COVID-19 global pandemic, it is pleasing that NEXTDC has been able to continue delivering on market expectations, with its FY20 result coming in at the top-end of earnings guidance provided at the start of the financial year."

FY 2021 guidance.

NEXTDC has provided guidance for FY 2021 and expects more strong growth.

Based on current billing, contracted utilisation levels, and expected new customer contracts, NEXTDC expects data centre services revenue in the range of $242 million to $250 million. The high end will be a 24.5% increase year on year.

It expects its underlying EBITDA to be in the range of $125 million to $130 million. This also implies growth of approximately 24.5% at the high end.

Finally, the company will be spending big again in FY 2021 and has forecast capital expenditure in the range of $380 million to $400 million.

Should you invest $1,000 in Nextdc Limited right now?

Before you buy Nextdc Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Nextdc Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Person pretends to types on laptop drawn in sand.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors had a rough start to the week today.

Read more »

Happy man working on his laptop.
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

Two funeral workers with a laptop surrounded by cofins.
Broker Notes

Macquarie just forecast this ASX 300 dividend share could surge 37%. Here's why

Atop its passive income payouts, Macquarie expects this ASX dividend stock could leap 37% in a year.

Read more »

A person in a gorilla suit leaps really high holding a banana, nearly doing the splits.
Share Gainers

Up 1,238% in a year, why is this ASX gold stock surging again on Monday?

The ASX gold stock is now well into ten-bagger range and still rising fast today.

Read more »

A happy investor sits at his desk in front of his laptop and does the mexican wave with his arms to celebrate the returns from his ASX dividend shares
Share Gainers

Why EOS, Gorilla Gold, Lendlease, and OFX shares are charging higher today

These shares are starting the week on a positive note. But why?

Read more »

A young male investor wearing a white business shirt screams in frustration with his hands grasping his hair after ASX 200 shares fell rapidly today and appear to be heading into a stock market crash
Share Fallers

Why Appen, DroneShield, Gentrack, and New Hope shares are dropping today

These shares are starting the week in the red. But why?

Read more »

An unhappy man in a suit sits at his desk with his arms crossed staring at his laptop screen as the PointsBet share price falls
Materials Shares

Does Macquarie rate James Hardie shares a buy, hold or sell?

The company is set to report FY25 earnings this week.

Read more »

A man looking at his laptop and thinking.
Industrials Shares

Which ASX 200 industrials stock does Macquarie expect to sink 40% over the next 12 months?

Can this name build it's way out of such negative sentiment?

Read more »