NextDC Shares Plunge 40% as Melbourne Data Centre Delays Slash Earnings Forecast

NextDC Ltd (ASX: NXT) shares plunged 40% after the data centre operator cut its revenue and operating earnings forecasts due to delays affecting its M3 data centre in West Footscray, Melbourne. The setback follows disruptions to electricity network upgrades and ongoing planning challenges, pushing back the expected delivery of additional power capacity.

The company now expects net revenue of $475 million to $500 million for the current financial year, down from its previous forecast of $615 million to $640 million. Its operating profitability forecast has also been reduced to $245 million to $265 million, compared with the earlier range of $385 million to $410 million.

Power Supply Delays Hit Revenue Outlook

NextDC attributed the downgrade to delays in electricity network upgrades being carried out by energy supplier Jemena. The upgrades are required to increase power supply to the M3 Melbourne facility, but parts of the work have been suspended following community opposition to planned power infrastructure in Yarraville.
Jemena’s delays mean the next increase in grid supply to West Footscray is now not expected until 2028. As a result, NextDC has removed affected M3 contracts from its FY2027 guidance until it can reliably estimate their contribution.
The delay is significant because data centres depend on substantial and reliable electricity supplies to support their operations and expand capacity. Without the expected grid upgrades, the company faces uncertainty over when additional contracted capacity can be delivered and billed.
Community Opposition and Planning Uncertainty
The West Footscray facility has faced resistance from nearby residents over concerns about noise, diesel pollution and the installation of 15-metre-high power poles. Residents and local councils have also raised concerns about consultation surrounding the electricity infrastructure upgrades.
NextDC has been exploring alternatives, including relocating the power poles or installing underground cables. However, the company acknowledged that undergrounding would take time and would not provide an immediate solution.
A separate application to expand the data centre across a 10-hectare site has also been delayed until after Victoria’s November state election. These issues have added uncertainty to the company’s expansion plans.
NextDC Pauses New Development Projects
Following the setbacks, NextDC said it had placed new development projects and land acquisitions on hold for the foreseeable future. It will also evaluate capital recycling opportunities, including potential sales of selected development sites.
The company has 17 operational data centres in Australia, with another nine in development or planning. Its recent financial results outlined planned capital expenditure of $1.3 billion and an increase in the planned capacity of the West Footscray centre from 200 megawatts to 225 megawatts.
The latest downgrade raises questions about the timing of future capacity additions and the company’s ability to deliver its expansion plans amid infrastructure and planning constraints.
What Investors Should Watch Next
Investors will be watching for progress on the West Footscray power connection, revised project timelines and any further changes to NextDC’s financial guidance.
Disclaimer:

General Financial Product Advice and Regulatory Framework: Pristine Gaze Pty Ltd (ABN 66 680 815 678, ACN 680 815 678) operates as Corporate Authorised Representative (CAR No. 001312049) of Alpha Securities Pty Ltd (AFSL 330757), which is licensed and regulated by the Australian Securities and Investments Commission under the Corporations Act 2001 (Cth). This report contains general financial product advice only and has been prepared without consideration of your personal objectives, financial situation, specific needs, circumstances, or investment experience. The information is not tailored to individual circumstances and may not be suitable for your particular situation. Before acting on any information contained herein, you should carefully consider its appropriateness having regard to your personal objectives, financial situation, and needs, and consider seeking personal financial advice from a qualified financial adviser who can assess your individual circumstances and provide tailored recommendations.

Investment Risks and Market Warnings: All investments carry significant risk, and different investment strategies may carry varying levels of risk exposure including total loss of invested capital. The value of investments and income derived from them can fluctuate significantly due to market conditions, economic factors, company-specific events, regulatory changes, commodity price volatility, currency fluctuations, interest rate movements, and other factors beyond our control. Securities markets are subject to market risk from general economic conditions and investor sentiment, liquidity risk affecting the ability to buy or sell securities at desired prices, credit risk from issuer default or deterioration, operational risk from inadequate internal processes, sector-specific risks including industry regulatory changes, technology obsolescence, management changes, competitive pressures, supply chain disruptions, and mining-specific risks including resource estimation uncertainty, operational hazards, environmental compliance, permitting delays, commodity price cycles, geopolitical factors affecting mining operations, and exploration risks. Small-cap and speculative mining stocks carry additional risks including limited liquidity, higher volatility, dependence on key personnel, limited operating history, uncertain cash flows, and potential failure to achieve commercial production.

Information Accuracy and Limitations: While we endeavour to ensure information accuracy and reliability, we make no representations or warranties (express or implied) regarding the accuracy, reliability, completeness, timeliness, or suitability of information provided, except where liability cannot be excluded under applicable law. This report may include information from third-party sources including company announcements, regulatory filings, research reports, market data providers, financial news services, and publicly available information, which we do not independently verify and for which we assume no responsibility. Past performance, examples, historical data, or projections are not indicative of future results, and no guarantee of future returns is provided or implied. To the maximum extent permitted by law, Pristine Gaze Pty Ltd and Alpha Securities Pty Ltd, together with their respective directors, officers, employees, representatives, and related entities, exclude all liability for any errors, omissions, inaccuracies, loss or damage (including direct, indirect, consequential, or special damages) arising from reliance on information provided, investment decisions made based on this report, market losses, opportunity costs, and technical issues or system failures.