Why is the NextDC (ASX:NXT) share price climbing today?

More customer wins for the operator of independent data centres.

| More on:
a group of three cybersecurity experts stand with satisfied looks on their faces with one holding a laptop computer while he group stands in front of a large bank of computers and electronic equipment.

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

Shares in ASX 100-listed technology company NextDC Limited (ASX: NXT) are rallying after dropping from the open today following a company announcement.

At the time of writing, NextDC shares are fetching $10.63 apiece, up 2.36%, after hitting a low of $10.15 early in the session.

It's a welcome sign for the data centre-as-a-service company which has seen its shares slip more than 19% year to date amid a tech-heavy selloff across the ASX.

The broader S&P/ASX All Technology Index (ASX: XTX) is also having a better start to the trading week, up 2.45% at the time of writing.

Let's have a look at NextDC's latest news.

What did NextDC announce?

This morning, the company advised that "following recent customer wins", it has secured an increase in contracted utilisation for the 6 months ending 31 January 2022.

According to the company's announcement, specifically-contracted utilisation (excluding expansion options and reservations) has increased by approximately 5.5MW since 30 June 2021 to roughly 81MW at 31 January 2022.

NextDC says it will book sales for "most of the new contracted capacity" from next year. As such, revenue is expected to be recognised from FY23 "following completion and commissioning of the associated data halls".

The company has been building on momentum in contracted utilisation for some time. For instance, in its FY21 results, it announced that contracted utilisation increased 5.5MW, or 8%, to 75.5MW, while "interconnections" accounted for 7.7% of recurring revenue.

At the time, NextDC also advised that approximately 80% of built capacity was contracted at 30 June 2021, whilst 87% of contracted utilisation was billing at the same time.

Back then, in August 2021, the company said it had "significant expansion potential with total planned capacity of 400MW". This excluded Sydney's "target capacity of around 300MW announced 28 July 2021".

It had guided capital expenditures of $480-$540 million for FY22, focused mainly on building key expansion networks in Melbourne and Sydney (M3 and S3/4 respectively).

NextDC's CEO and Managing Director Craig Scroggie said the company's "sales pipeline remains robust":

The demand for our premium data centre services remains strong and we are pleased to have secured these new material customer commitments, including new hyperscale orders, across our national network of world class facilities.

Furthermore, the sales pipeline remains robust, with the Company seeing the strong sales momentum carry forward into the second half of FY22.

NextDC is also prioritised securing and developing new contracted capacity. That, in turn, will generate "annuity-style economic returns", according to Scroggie.

"We remain on track to bring our third generation hyperscale data centre campuses, M3 and S3, into service at the end of FY22, further expanding our muti-site, multi-zone availability solutions for customers".

NextDC share price summary

The NextDC share price is already down 19% this year to date after sliding 19.63% in the past month. The selloff in ASX tech shares has been brutal so far this year and the company isn't immune.

As such, over the last 12 months, shares are down more than 10% after trading as high as $14.04 in September last year.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

Two smiling work colleagues discuss an investment or business plan at their office.
Technology Shares

Why Goldman Sachs rates this ASX tech share as a top buy

Let's see why the broker rates this stock highly right now.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Technology Shares

WiseTech shares have surged 34% since April. Is it too late to buy?

Can WiseTech shares keep charging higher? Here’s what this investing expert expects.

Read more »

A man in full American NFL playing kit crouches over with his arms across his chest in a defensive stance against a dark background.
Technology Shares

ASX 300 tech stock charges 7% higher to record high on stellar results

This tech stock delivered another impressive result this morning.

Read more »

a man sits at his desk wearing a business shirt and tie and has a hearty laugh at something on his mobile phone.
Technology Shares

Up 87% in 12 months: Why this ASX tech share is still a top buy

This technology business still has loads of potential, according to a fund manager.

Read more »

a group of three cybersecurity experts stand with satisfied looks on their faces with one holding a laptop computer while he group stands in front of a large bank of computers and electronic equipment.
Technology Shares

2 ASX 200 tech stocks Morgans rates as buys

The leading broker has named a couple of shares to buy right now.

Read more »

Man smiling at a laptop because of a rising share price.
Technology Shares

Is it time to buy ASX data centre shares?

ASX data centre shares have been rebounding lately. Will they continue to?

Read more »

a group of people sit around a computer in an office environment.
Earnings Results

Guess which ASX 200 tech stock is rocketing 12% on record results

Another half, another record result from this high-quality company.

Read more »

Man on his laptop standing next to data centres.
AI Stocks

3 reasons to buy this $9 billion ASX 200 AI stock today

A leading expert forecasts this $9 billion ASX 200 AI stock will deliver “meaningful earnings upside”.

Read more »