NextDC stock falls 39.5% after Melbourne power delay forces earnings forecast cut

NextDC cut its fiscal 2027 earnings forecast on Wednesday after electricity network delays pushed back the next increase in power supply to its M3 data center in Melbourne, the company said. NextDC stock fell 39.5% the same day.

The data center operator expects underlying EBITDA of A$245 million to A$265 million for the year ending June 30, 2027, down from A$385 million to A$410 million. Net revenue guidance fell to A$475 million to A$500 million from A$615 million to A$640 million.

The revised figures exclude the affected M3 customer contracts, which made up about A$140 million each of net revenue and underlying EBITDA in the company's August guidance. NextDC said it cannot reliably estimate the contribution of those contracts for the year. It added that service level credits payable on them could push underlying EBITDA below the new range.

Jemena Electricity Networks, which supplies power to M3, suspended parts of its 66kV line works in September. It has told NextDC it does not expect to resume them before February 2027. Jemena pointed to safety concerns, a lack of access to work sites amid resistance from residents and other interested parties, and the local council's refusal to grant consent until more consultation is completed. NextDC expects the next increase in grid supply during fiscal 2028.

"We have taken the affected M3 contracts out of FY27 guidance until we can reliably estimate their contribution," CEO Craig Scroggie said in a statement. "The capacity remains under contract, subject to the customer's rights, and construction of the data halls is continuing," Scroggie said.

The affected contracts provide for service level credits when capacity is delivered late or is not fully powered. In some circumstances they give the customer rights to terminate. NextDC said it is assessing the implications, including whether force majeure provisions give it relief.

The Victorian Government's decision on a planning permit for M3 Stages 6 and 7 is not expected until 2027, the company said. The state election is scheduled for Nov. 28.

NextDC lowered its fiscal 2027 capital expenditure guidance to A$4.5 billion to A$5 billion from A$5.25 billion to A$5.75 billion. The new range includes about A$230 million of capitalised interest, which the earlier guidance did not include. The company put all new development projects and land acquisitions on hold and said it will announce the outcome of a capital expenditure review by its annual general meeting on Nov. 20.

NextDC had A$8.68 billion of liquidity at Sept. 30 and said it complies with its financial covenants. It said a material change in expected customer billing profiles could affect its ability to draw down senior debt, and that grid supply delays at M3 could be such a change.

NextDC stock has now dropped in each of the last seven weeks and is heading toward an eighth consecutive weekly decline.