NextDC guidance cut sinks shares nearly 40% on power delay

A NextDC guidance cut wiped out a large part of the company's market value on Wednesday, Oct. 21. Shares of the Australian data center operator fell 39.5%, CNBC reported, after it said delays to grid works at its M3 Melbourne site would push contracted revenue into a later year.

What happened

NextDC now expects net revenue of A$475 million to A$500 million for the year to June 2027, down from A$615 million to A$640 million. Underlying EBITDA guidance is now A$245 million to A$265 million, versus A$385 million to A$410 million before. Capital spending guidance was trimmed to A$4.5 billion to A$5 billion from A$5.25 billion to A$5.75 billion.

The cause is power. Jemena, the local electricity distributor, suspended parts of a 66kV line upgrade needed to raise supply to M3, citing community and stakeholder opposition and the lack of local council consent. NextDC now expects the next increase in grid supply in fiscal 2028.

The company removed the affected M3 contracts from guidance until it can estimate their timing. Its August outlook had included about A$140 million each of revenue and EBITDA from them. A Victorian planning decision on expanding the site is now expected only after the state election on Nov. 28.

Why it matters

The West Footscray centre sits about 15 metres from homes, and residents have fought over diesel, noise and tall power poles, ABC News reported. In September, Jemena halted pole installation in Yarraville after locals blocked crews. "Undergrounding does take time," chief development officer Simon Cooper told investors.

The site matters to the whole business. NextDC runs 17 data centres in Australia and has nine more in development or planning, ABC News said. M3 covers 41,000 square metres about 10 kilometres west of Melbourne's centre, and in March the company applied under a fast-track scheme to double it to a 10-hectare site. The new poles would carry up to 66,000 volts, about 160 times the voltage of the old ones.

The NextDC guidance cut shows that grid access, not just chips, can decide AI infrastructure returns. It mirrors the power problems that sank a U.K. project in our Nscale Microsoft Loughton report, and it lands while lenders are already nervous about data center debt, as our CoreWeave credit default swaps story showed.

The company stressed its balance sheet. It reported about A$8.7 billion of liquidity at Sept. 30, said it complies with its covenants and has no scheduled debt maturity before December 2029.

What's next

NextDC has paused projects not backed by customer contracts and will report the results of a capital spending review by its annual meeting on Nov. 20, including possible sales of development sites. The full statement is in its market announcement.

Holders of NextDC's A$1.1 billion of convertible notes due 2031 were also notified, since those notes trade on the Vienna MTF, and the company said its earliest scheduled debt maturity is December 2029.

Politics may add pressure. Independent senator David Pocock proposed a 5% levy on data centers in Australia on the same day. Investors will watch whether the NextDC guidance cut prompts other operators to flag similar grid risks.