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

More customer wins for the operator of independent data centres.

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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.

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.

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