NextDC cuts outlook after M3 power delays

NextDC reduced its fiscal 2027 net revenue guidance to a range of A$475 million to A$500 million, down from a prior range of A$615 million to A$640 million. The company also cut its underlying EBITDA guidance for the same period to between A$245 million and A$265 million, from A$385 million to A$410 million. The revisions follow delays affecting the power supply expansion at its M3 West Footscray data centre in Melbourne.

The company removed approximately A$140 million of contracted revenue associated with M3 from its FY27 guidance. These contracts were taken out of the outlook because the M3 site cannot reliably support the full contracted power ramp under current grid constraints. As a result, NextDC expects materially lower earnings in FY27 than previously indicated.

Electricity distributor Jemena has suspended parts of the network works required to increase grid supply to the M3 West Footscray facility. These works are needed to support the power requirements underpinning the data centre’s contracted capacity. Jemena has indicated it does not expect to restart the suspended works before February 2027.

Jemena attributed the suspension to community and stakeholder opposition as well as the absence of local council consent pending further consultation. The halt in upgrade activity has directly constrained the timing of power availability for M3, which in turn has affected NextDC’s ability to recognise contracted revenue within its previous FY27 timeframe.

In response to the delays and revised earnings outlook, NextDC said it will pause projects that are not backed by customer contracts. This move is intended to align development activity more closely with committed demand under the current infrastructure and regulatory environment.

The company plans to cut fiscal 2027 capital expenditure by about A$750 million, to a new range of roughly A$4.5 billion to A$5.0 billion. NextDC is also evaluating capital recycling options, including potential sales of development sites, as it reassesses its investment program in light of the changed outlook for M3 and associated power upgrades.

The profit warning and guidance downgrade led to a sharp market reaction when trading in NextDC shares resumed after a halt. The stock plunged about 42%, wiping roughly A$2 billion to A$3 billion from the company’s market value in a single session, marking its biggest drop since listing.

In the following session, NextDC shares partially recovered, climbing as much as 8.2% in Sydney trading. The shock from the guidance cut extended beyond the company itself, affecting other Australian Securities Exchange-listed data-centre operators, contractors and suppliers, as investors reassessed execution and power-related risks across the sector.