NEXTDC slashes FY27 guidance after M3 Melbourne power delay

The NEXTDC Ltd (ASX: NST) share price is in focus today after the company revised its FY27 guidance due to delays in increasing grid supply at its M3 Melbourne data centre. FY27 net revenue guidance has been cut to A$475–500 million, down from A$615–640 million, with underlying EBITDA also reduced.

What did NEXTDC report?

• FY27 net revenue guidance lowered to A$475–500 million, previously A$615–640 million
• FY27 underlying EBITDA guidance revised to A$245–265 million, from A$385–410 million
• FY27 capital expenditure guidance now A$4,500–5,000 million, reduced from A$5,250–5,750 million
• Liquidity at 30 September 2026: A$8,675 million (cash and undrawn facilities)
• Company remains in compliance with all financial covenants

What else do investors need to know?

Delays in electricity works by Jemena have pushed back the delivery and billing of contracted capacity at M3 Melbourne to FY28. This means revenue and earnings previously expected from these contracts are now excluded from NEXTDC’s FY27 outlook.

Construction of the M3 data halls is continuing, and the company remains engaged with both the affected customer and the community. Planning decisions on further M3 development (Stages 6 and 7) are now expected only after the Victorian State election in November 2026.

NEXTDC is reviewing its capital expenditure program, pausing new developments not backed by customer contracts, and considering the sale of development sites that aren’t needed soon.

What did NEXTDC management say?

CEO and Managing Director Craig Scroggie said:

Jemena has suspended parts of the network works required for the next increase in grid supply to M3 Melbourne. Jemena has attributed the suspension to community and stakeholder opposition to the works and to the absence of local council consent pending further consultation. On Jemena’s current indicative estimate, we expect that increase during FY28.

We have taken the affected M3 contracts out of FY27 guidance until we can reliably estimate their contribution. The August guidance included approximately A$140 million of each of net revenue and Underlying EBITDA from those contracts. The timing and scale of their contribution remain uncertain.

With M3 revenue deferred, we have paused projects not backed by customer contracts and put that capital behind the capacity our customers have already contracted. We have approximately A$8.7 billion of liquidity at 30 September 2026 and we are in compliance with our covenants.

What’s next for NEXTDC?

NEXTDC plans to update the market after a detailed review of its capital expenditure, with further announcements expected by the Annual General Meeting on 20 November 2026. The Board is also looking at ways to recycle capital, including possibly selling some development sites.

The company says its focus will be on delivering capacity for existing customer contracts and further community and stakeholder engagement around the M3 Melbourne site, especially as it works through planning and grid supply challenges.

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The post NEXTDC slashes FY27 guidance after M3 Melbourne power delay appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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 Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.