NEXTDC (NXT) Shares Plunge 44% After Profit Warning

NEXTDC Limited (ASX: NXT) shares plunged by up to 44% on 21 October 2026 after the data centre operator cut its FY27 revenue and earnings guidance due to delays in electricity supply at its M3 Melbourne facility.

The downgrade raises concerns about how quickly NEXTDC can deliver contracted data centre capacity and convert demand into revenue.

Why Did NEXTDC Shares Crash?

The sell-off followed delays to electricity network upgrades by Jemena Electricity Networks, which supplies power to NEXTDC's M3 Melbourne data centre.

The next increase in grid supply is now expected in FY28, delaying the delivery and billing of contracted customer capacity.

Key developments include:

• Revenue at risk: Approximately A$140 million in FY27 net revenue from affected contracts has been excluded from the previous outlook.

• Earnings downgrade: Approximately A$140 million in underlying EBITDA previously included in guidance has also been excluded.

• Expansion delays: Planning decisions for M3 Stages 6 and 7 are now expected after the Victorian state election on 28 November 2026. 

NEXTDC Cuts FY27 Financial Guidance

NEXTDC revised its FY27 outlook on 21 October 2026.

• Net revenue: A$475 million–A$500 million, down from A$615 million–A$640 million.

• Underlying EBITDA: A$245 million–A$265 million, down from A$385 million–A$410 million.

• Capital expenditure: A$4.5 billion–A$5 billion, down from A$5.25 billion–A$5.75 billion. 

The revised guidance reflects the exclusion of the affected M3 customer contracts. NEXTDC has warned that potential service-level credits could reduce underlying EBITDA further.

What Should Investors Consider?

1. Contracted demand is not the same as revenue

NEXTDC's experience highlights a key risk for data centre operators: customer demand alone cannot generate revenue if the required electricity supply is unavailable.

Investors should monitor whether Jemena restores the planned power supply in FY28 and whether NEXTDC can deliver the contracted capacity on revised terms.

2. The earnings recovery remains uncertain

NEXTDC is working with its customer and Jemena to reduce the impact of the delay. However, the timing and scale of the affected contracts' contribution remain uncertain.

The company has also identified potential customer rights relating to late delivery, including service-level credits and, in some circumstances, termination rights. These risks could affect the eventual financial outcome.

3. Expansion spending is being reassessed

NEXTDC has paused new development projects and land acquisitions for the foreseeable future, prioritising customer capacity expected to be delivered in the next 12–18 months.

The company is reviewing its capital expenditure programme and considering potential sales of development sites that are not required in the near term.

For investors, the key issue is whether these changes protect capital without materially weakening NEXTDC's longer-term growth opportunities.

4. Liquidity provides context, but does not remove risk

NEXTDC reported A$8.675 billion in liquidity as at 30 September 2026, comprising A$1.275 billion in cash and A$7.4 billion in undrawn debt facilities and hybrid securities.

The company also reported compliance with its financial covenants at its most recent half-yearly test. However, liquidity includes financing facilities rather than cash alone, and investors should continue monitoring funding requirements and the effect of project delays. 

What Could Move NEXTDC Shares Next?

Investors should watch four developments:

• Power supply: Whether M3 receives additional grid capacity within the revised FY28 timeframe.

• Customer arrangements: Whether the affected contracts remain in place and when billing can resume or increase.

• Capital expenditure review: NEXTDC plans to announce the outcome by its AGM on 20 November 2026.

• Planning approvals: Progress on the next stages of M3 Melbourne.

These developments will help clarify whether the earnings downgrade is primarily a timing issue or a more prolonged challenge to NEXTDC's growth outlook. 

The Bottom Line

NEXTDC's share price plunge reflects a substantial downgrade to its near-term earnings outlook following delays to power infrastructure at M3 Melbourne.

Although the company continues to report significant liquidity and remains focused on contracted customer capacity, investors face uncertainty around project timing, customer contracts and future earnings.

For investors assessing NEXTDC after the sell-off, the key questions are whether the delayed capacity can be delivered as expected, how much of the deferred revenue can ultimately be recovered, and whether the current share price adequately reflects these risks.

This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell NEXTDC shares.

(Source : Company Reports)

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