Australian data centre operator NextDC has sharply reduced its FY2027 revenue and earnings guidance after delays to electricity network works at its M3 Melbourne campus, with the company also pausing new development projects and land acquisitions while it reviews capital expenditure.
NextDC has cut its FY2027 net revenue guidance to AU$475 million-AU$500 million, from AU$615 million-AU$640 million previously. The revised guidance excludes the affected M3 customer contracts, including capacity already billing, because NextDC said it could not reliably estimate their FY2027 contribution amid uncertainty over power supply and contractual obligations.
Underlying EBITDA guidance has been reduced to AU$245 million-AU$265 million, down from AU$385 million-AU$410 million, according to an ASX announcement on 21 October.
The revisions primarily reflect delays to 66kV electricity network augmentation works by Jemena Electricity Networks, which supplies power to the M3 campus in Melbourne’s inner west. Jemena suspended parts of the works in September and has since advised NextDC that it does not expect them to recommence before February 2027.
Jemena has attributed the suspension to safety concerns and a lack of access to work sites amid community and stakeholder opposition, as well as the absence of local council consent for the works while further consultation takes place.
NextDC said the next increase in grid supply to M3 is now expected in FY2028, based on Jemena’s current indicative estimate. Delivery and billing of the contracted capacity dependent on that increase are expected to follow shortly afterwards.
The company had requested a trading halt on 19 October while it assessed the financial implications of the delay, including its FY2027 guidance.
Customer contracts and potential service-level credits
The revised revenue and EBITDA guidance excludes revenue and attributable EBITDA from the affected M3 customer contracts, including capacity that is already billing and any potential service-level credits.
The company’s previous guidance, issued on 27 August, included approximately AU$140 million in net revenue and AU$140 million in underlying EBITDA from the affected contracts. NextDC said the exclusion of those contracts is the main reason for the revised guidance.
The company said it cannot yet reliably estimate the contracts’ contribution to FY2027 results. That will depend on discussions with the customer, the customer’s assessment of its contractual rights and obligations, whether NextDC can obtain relief under force majeure or other relevant provisions, and the accounting treatment of any service-level credits.
The contracts provide for service-level credits where capacity is delivered late or is not fully powered and, in some circumstances, give the customer rights to terminate. NextDC said it is assessing the potential implications of the delays under those contracts.
The company stressed that the capacity remains under contract, subject to the customer’s rights, and that construction of the data halls is continuing. It is working with the customer on a revised power ramp and with Jemena to bring forward power delivery.
NextDC chief executive and managing director Craig Scroggie said the company had removed the affected contracts from its FY2027 guidance until it could reliably estimate their contribution. “The timing and scale of their contribution remain uncertain,” Scroggie said.
NextDC added that service-level credits payable on the affected contracts could reduce underlying EBITDA below the revised guidance.
Capital expenditure review and development pause
NextDC has also reduced its FY2027 capital expenditure guidance to AU$4.5 billion-AU$5 billion, from AU$5.25 billion-AU$5.75 billion previously, a reduction of AU$750 million, or 13%-14%. The previous guidance did not include capitalised interest.
The revised range includes approximately AU$500 million of reimbursable customer fit-out costs and AU$230 million of capitalised interest. Excluding capitalised interest, the company said the revised guidance represents a like-for-like reduction of approximately AU$980 million, or 17%-19%, from its previous range.
The reduction primarily reflects the deferral of expenditure on uncontracted data centre expansion projects, corporate technology and other projects.
NextDC said it had put all new development projects and land acquisitions on hold for the foreseeable future, focusing capital expenditure on contracted customer capacity expected to be delivered over the next 12–18 months and development work already close to completion.
The board has begun a detailed review of the capital expenditure programme and has committed to announcing its outcome by the company’s annual general meeting on 20 November. It will also evaluate capital-recycling opportunities, including the potential sale of development sites not required in the near term.
The company said that, with M3 revenue deferred, it had paused projects not backed by customer contracts and put that capital behind capacity its customers have already contracted.
Liquidity and debt position
NextDC reported liquidity of AU$8.675 billion at 30 September 2026, comprising AU$1.275 billion in cash, AU$6.7 billion in undrawn senior debt facilities and a AU$700 million delayed-draw hybrid securities commitment, subject to customary conditions.
The company said it remained compliant with its financial covenants at the most recent test date of 30 June 2026 and expected to remain compliant at the next test date on 31 December.
However, NextDC noted that its ability to draw all undrawn senior debt facilities while remaining within covenant requirements would depend on the timing of drawdowns and the expected billing profiles of new customer contracts. It said a material change in expected customer billing profiles, including delays to M3 grid supply, could adversely affect its ability to draw senior debt.
The company said the earliest scheduled debt maturity is December 2029, although holders of its convertible notes may require redemption on 17 September 2029.
NextDC has not yet quantified the potential effect of the delays on the fair value of its investment properties. It expects to reflect any impact in its half-year results for the six months ending 31 December 2026.
Further delays to M3 expansion approvals
The power supply delay is not the only timing issue affecting M3. NextDC said the Victorian government’s decision on a planning permit for M3 Stages 6 and 7 is taking longer than expected. The application, lodged in February 2026 under the government’s Development Facilitation Program, covers the planned expansion of the existing, partly operational campus.
With the Victorian government due to enter caretaker conventions from 3 November, ahead of the state election on 28 November, NextDC now expects the planning decision in 2027. Assuming the permit is granted, the later decision and delayed grid supply will affect the timing of delivery of the final stages of capacity at M3.
The company said later increases in grid supply also depend on upstream transmission projects to install new transformers at Brooklyn Terminal Station. NextDC now expects the first of these projects to be completed later than previously anticipated, affecting the timing of capacity expected to convert to billing after FY2028.
NextDC said it would continue working with Jemena and its customer to minimise the impact of the delays and provide further updates, including at its AGM on 20 November.
The community dispute has attracted wider attention. ABC News reported in September on residents’ objections to 15-metre power poles being installed in Melbourne’s inner west as part of network upgrades intended to support increased electricity demand, including that associated with data centres. Jemena said it had heard feedback that its communication and engagement could have been better, and that it had paused works to listen to community concerns.
NextDC said it already engages with the community around M3 through dedicated engagement staff and newsletters, and intends to build on this with a community engagement plan covering construction and operation of the campus, overseen by its board.
NextDC withdraws Auckland consent application
Separately, BusinessDesk in New Zealand has reported that NextDC withdrew a resource consent application submitted to Auckland Council on 17 July for a proposed data centre site between Nelson and Hobson Streets in Auckland’s CBD.
The initial development was valued at approximately AU$140 million. The withdrawal has not been independently confirmed by other sources, and it is not known whether NextDC intends to submit a revised application or abandon the project.