Is NextDC profitable after 1H FY26?

On a statutory basis, NEXTDC reported a net loss after tax of A$(39.4)M — an 8% improvement on the prior period. On an underlying basis, EBITDA rose 9% to A$115.3M. The company is profitable at the operating level and loss-making at the net level due to depreciation, interest, and growth investment.

What is NextDC's Eastern Creek project and why does it matter?

Eastern Creek is a planned A$7 billion, 550MW AI campus in Western Sydney with anchor hyperscale demand linked to the OpenAI/Microsoft ecosystem. It sits within the 3.5GW development pipeline and is not yet reflected in contracted utilisation. If it converts, it would represent one of the largest single AI infrastructure commitments in APAC history.

Why did NextDC raise capex but keep guidance unchanged?

Higher capex reflects accelerated build-out to match contracted demand, particularly at S3, M3, KL1, and the planned S4, S7, M4 facilities. Revenue guidance is unchanged because the contracted pipeline already underpins FY26 targets; the capex acceleration is an investment in FY27–FY29 revenue

What is NextDC's share price target after the 1H FY26 results?

As at February 2026, the broker consensus on ASX:NXT following the 1H FY26 result is broadly bullish. Of 17 analysts covering the stock, 15 hold a Buy or Strong Buy rating and none hold a Sell. The average 12-month price target sits between A$19.96 and A$21.44 depending on the data source, against a post-results share price of approximately A$14.00. Individual broker targets include Morgans at A$18.80 (Buy), RBC Capital at A$20.00 (Buy), CLSA at A$19.80 to A$20.50 (Buy), Macquarie at A$17.95 (Outperform), Morgan Stanley at A$16.50 (Overweight), and Goldman Sachs at A$19.00 (Buy). The range of targets runs from A$16.50 at the low end to A$28.66 at the high end, reflecting differing views on the timing and magnitude of the FY27 billing ramp. This does not constitute financial advice.

NEXTDC 1H FY26 Analysis: Billing Ramp, AI Demand and the FY27 Outlook

NEXTDC released its 1H FY26 half-year results on 25 February 2026, covering the six months ended 31 December 2025. The company reported net revenue of A$231.8M, underlying EBITDA of A$115.3M and a forward order book of 297MW of contracted capacity not yet converted to billing. CEO Craig Scroggie described the result as solid, with the larger story still playing out through construction and conversion of contracted demand over the coming years.

Key Points

297MW contracted but not yet billing — that is 2.5x NEXTDC's entire current revenue base
FY27 alone adds 152MW to billing — more than the whole current billed base of 119.8MW in a single year
88% of contracted MW is cloud and AI
A$4.2B liquidity, zero debt maturities before December 2029
240MW of new contracts signed in the past 12 months — the order book is being refilled as it converts
3.5GW development pipeline including a planned A$7B AI campus at Eastern Creek, Western Sydney with anchor hyperscale demand

NEXTDC posted record 1H FY26 numbers: net revenue up 13% to A$189.2M, total revenue up 13% to A$231.8M, and underlying EBITDA up 9% to A$115.3M, while deploying A$1.285B of growth capex in a single half. The net loss after tax narrowed 8% to A$(39.4)M. FY26 guidance was held unchanged. Capex guidance was lifted to A$2.4–2.7B.

Snapshot: 1H FY26 At A Glance

NEXTDC delivered net revenue of A$189.2M (up 13%) and total revenue of A$231.8M (up 13%) for the half, with underlying EBITDA rising 9% to A$115.3M. The net loss after tax narrowed by 8% to A$(39.4)M. Contracted utilisation surged 137% to 416.6MW while billing utilisation grew 29% to 119.8MW, leaving a forward order book of 297MW (up 257%) that is contracted but not yet generating revenue. The company deployed A$1.285B in growth capex during the half and closed the period with A$4.2B in total liquidity.

Five Things Worth Watching Closely

1. Operating leverage has not shown up yet

A material portion of the cost structure supporting FY27 and FY28 revenue is already in place. The fixed costs for S3 Sydney, M3 Melbourne and KL1 Kuala Lumpur are being absorbed now, ahead of the revenue curve. When 152MW hits billing in FY27, incremental revenue falls through to EBITDA at a structurally higher rate. The operating leverage is not visible in today's numbers but is likely to become apparent over the next four to eight quarters.

2. Power access is a long-lead constraint

Securing grid connections, long-term energy agreements and planning approvals for large-scale data centres is a multi-year process in every major market. NEXTDC has been securing power capacity at scale across Sydney, Melbourne, Brisbane and Kuala Lumpur for years. A new entrant cannot replicate that position quickly.

3. High-density AI deployments tend to be sticky

High-density deployments above 9kW per rack represent approximately 68% of contracted capacity. Once a customer builds out AI infrastructure inside a data centre (custom power distribution, liquid cooling, high-capacity fibre), the operational cost and complexity of relocating is significant. This is not standard colocation.

4. The Eastern Creek campus sits outside current numbers

The planned A$7 billion, 550MW AI campus at Eastern Creek in Western Sydney is not yet reflected in contracted utilisation figures. It sits within the 3.5GW development pipeline. Any conversion of that project into contracted MW would materially extend the forward order book beyond its current 297MW.

5. The JV structure reduces balance sheet exposure on the largest builds

NEXTDC is progressing joint venture structures for S4 and S7 in Sydney, with Barrenjoey appointed as Lead Financial Adviser. The structure brings in external capital while retaining operational control. On a portfolio with A$2.4 to 2.7B of planned FY26 capex, that is a meaningful risk management tool for existing shareholders.

What To Watch: Next 2–3 Quarters

2H FY26: Watch for 77MW of the order book converting to billing, net revenue hitting the upper end of A$200–210M range for the half, and further detail on S4/S7 JV structure. If construction milestones at S3 and M3 land on schedule, management may upgrade FY27 guidance language.

FY27 (the big year): The 152MW billing ramp should drive a step-change in revenue growth rate, a material expansion in EBITDA margin, and the first signs of free cash flow inflection as the revenue base outruns fixed cost growth. Watch for additional hyperscale signings at Eastern Creek which could extend the forward order book well beyond the current 297MW.

Early FY28: KL1 Kuala Lumpur ramps beyond its initial 10MW contracted utilisation into Southeast Asian hyperscale demand. Playbook is exportable if KL1 replicates the high-density, AI-heavy utilisation profile of Australian sites.

Analysis written by CertifiedStrategic Editorial Team

CertifiedStrategic.com - Australia's independent data centre index tracking capacity, certification and market news across the country's critical infrastructure providers.