NextDC Cuts FY27 Guidance and Shelves New Projects as Melbourne Power Delay Defers A$140M of Contracted Revenue

NextDC did not lose a customer on Wednesday. It lost the power to serve one on time — and with it, more than a fifth of its expected revenue for the year.

NextDC cut its guidance for the financial year ending 30 June 2027 on Wednesday, Oct. 21, after delays to electricity network works deferred the next increase in grid supply to its M3 Melbourne data centre into FY28. The Australian data-centre operator now expects net revenue of A$475 million to A$500 million, down from A$615 million to A$640 million, and underlying EBITDA of A$245 million to A$265 million, down from A$385 million to A$410 million. Both revised ranges exclude the affected M3 contracts entirely. Capital expenditure guidance was also cut, to A$4.5 billion to A$5 billion from A$5.25 billion to A$5.75 billion, and the company put all new development projects and land acquisitions on hold.

A power line, not demand, did the damage

The cause sits outside NextDC's own construction programme. Jemena Electricity Networks, the distributor that supplies power to M3, suspended parts of its electricity network works in September 2026 because of community and stakeholder opposition, and has formally told NextDC it does not expect to recommence them before February 2027. On Jemena's current indicative estimate, the next increase in grid supply to M3 is now expected during FY28, with delivery and billing of the contracted capacity that depends on it to follow shortly thereafter. Construction of the M3 data halls is continuing, but halls without the additional grid supply cannot bill the contracted capacity. A second delay compounds the first: the Victorian Government's planning decision on M3 Stages 6 and 7 is now expected only after the Victorian state election on 28 November 2026, and NextDC does not expect the decision until 2027.

The guidance reset, line by line

Every main line moved down, and the earnings line moved furthest. TickerGrove's midpoint calculations put the revenue cut at about 22% — a midpoint of A$487.5 million against A$627.5 million before — and the EBITDA cut at about 36%, a midpoint of A$255 million against A$397.5 million. The arithmetic behind the gap is disclosed: the August guidance included approximately A$140 million of each of net revenue and underlying EBITDA from the affected M3 contracts, and that contribution has now been removed from FY27 guidance altogether rather than trimmed. The exclusion even covers capacity already billing, because existing grid supply at M3 cannot be relied on to support the full contracted power ramp. Service level credits payable on those contracts could reduce underlying EBITDA below the revised guidance, the company warned, so even the lower range is not a floor.

The market wiped out nearly half the company

Investors repriced the delay immediately. Reuters reported that shares fell 44% in early trade on Wednesday, wiping about A$3.1 billion from the company's market value, leaving the stock at its lowest since January 18 and making it the biggest loser on the ASX 200. The violence of the move reflects more than one delayed site. Reuters noted that sentiment toward AI data-centre stocks has weakened in recent weeks as investors question whether massive AI spending can justify soaring computing, land and power costs, with a data-centre IPO withdrawn in Australia last week and credit investors becoming more selective toward AI-linked companies. An RBC Capital Markets analyst quoted by Reuters said the M3 delays show community concerns present a real risk to the timing of delivery of contracted capacity — a risk now priced into the whole sector, not just one operator.

Capital discipline replaces expansion

The response is a hard pivot from expansion to contracted delivery. NextDC said it will refocus capital expenditure on near-term contracted customer capacity, eliminate all material discretionary spending, and announce the outcome of a detailed review of its spending programme by its annual general meeting on 20 November 2026. The board will also evaluate capital recycling opportunities, including the potential sale of selected development sites not required in the near term. The balance sheet gives it time to choose: liquidity was A$8.68 billion at 30 September 2026, the company remains in compliance with its financial covenants, and its earliest scheduled debt maturity is December 2029. One caveat was stated plainly — delays to grid supply at M3 could affect the company's ability to draw its undrawn senior debt facilities while staying within its covenants, because those covenants depend in part on expected billing profiles.

What remains unknown

What remains unknown is most of the endgame. NextDC said it cannot yet reliably estimate the FY27 contribution of the affected M3 contracts, which depends on discussions with the customer, the customer's assessment of its rights, and whether relief is available under force majeure and other contract provisions. The affected 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 — so the deferred revenue is under contract, but not unconditionally. The company has also not yet quantified the likely effect on the fair value of its investment properties, which will be reflected in its half-year results to 31 December 2026, and the exact timing of the FY28 power increase rests on Jemena's indicative estimate, not a committed date. The next dated test is the 20 November annual general meeting, when the capital review lands.