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NextDC ends first half with a AU$3m loss

Data centre services accounted for AU$84.1 million of the company's total six-month revenue.
Written by Asha Barbaschow, Contributor
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Image: NextDC

Australian data centre provider NextDC has announced its results for the first half of the 2019 financial year, reporting an after-tax loss of AU$3.1m, down AU$11.6 million when compared to the same period a year prior.

Underlying earnings before interest, taxation, depreciation, and amortisation (EBITDA) was up 26 percent to AU$42.2 million, and revenue climbed 17 percent -- AU$13.3 million -- to AU$90.8 million for the half-year ending December 31, 2018.

Of the total revenue, data centre services accounted for AU$84.1 million, up AU$11.2 million from H1 2018.

NextDC ended the half with 1,090 customers. It also increased its interconnections by 2,526 during the half to 9,982, representing 7.7 percent of recurring revenue.

"NextDC achieved an unprecedented level of sales in the first half, both across contracted utilisation as well as interconnections," NextDC CEO and managing director Craig Scroggie said. "These results demonstrate the strength of the company's market presence and serve to underpin further growth in revenues and earnings in future periods."

The company said the enterprise segment accounted for 40 percent of NextDC's customers, while government and financial services each accounted for 6 percent.

NextDC provided shareholders on Wednesday with updates on its facilities, noting that S2 in Sydney had opened for early customer access during the first half of 2019.

A fourth data hall in the company's Perth P1 facility also opened in the first half of 2019, but capacity was only available subject to customer requirements. Meanwhile, acquisition of land for P2, also in Perth, was also completed in the same period, with building construction already underway.

NextDC said a P2 microsite and connectivity hub was opened during the half to facilitate early access to the Indigo subsea cable system and other network providers.

See also: Indigo subsea cable system chooses NextDC datacentres

A second data hall was opened during the six month period at NextDC's Brisbane B2 data centre, and the company's Melbourne M2 site undertook capacity expansion of the third and fourth data halls, and is due for completion in H2 of FY19.

In November, NextDC completed the takeover of the Asia Pacific Data Centre Group (APDC), including the underlying data centre properties P1, M1, B1, and S1 that it was previously leasing. The purchase ended a year-long legal stoush between NextDC and APDC.

B1, NextDC said, cost the company AU$24 million, while the other three facilities reflected an underlying valuation of AU$261 million.

According to the company, the acquisitions resulted in approximately AU$15 million of annualised rent savings.

For FY18, NextDC posted a AU$16.4 million drop in profit from its FY17 result to AU$6.6 million. Revenue was up from the AU$123.6 million recorded in FY17 to AU$161.5 million, which comprised mainly of AU$152.6 million in data centre services revenue.

EBITDA for the 12 month period was AU$62.6 million, while in FY17 it was AU$49 million.

MacTel reports profitable first-half

Macquarie Telecom also posted its 2019 first half financial results on Wednesday, reporting AU$8.3 million in after-tax profit, an increase of 4 percent over the AU$8 million reported for the first half of the 2018 financial year.

EBITDA was up 13 percent to AU$25.5 million, while revenue was AU$119.6 million, up 4 percent year on year.

Capital expenditure for H1 FY19 was AU$23.8 million, while customer growth cap expenditure was AU$8.7 million, thanks mostly to the company's data centre sales, MacTel told shareholders.

"Sustained growth in profitability over the last nine halves has allowed Macquarie to consider opportunities to invest for future growth," chief executive David Tudehope said. "Hosting's growing profitability reflects the operating leverage from our investments in data centres and cloud computing."

During the six month period, MacTel announced signing a AU$1 million three-year deal to deliver business-grade National Broadband Network (NBN) services to Regional Australia Bank, saying it would increase network speeds by up to tenfold for the bank's branches.

Under the deal, MacTel will provide fibre connections for the bank's 32 locations, including in Newcastle, Armidale, Dubbo, Bingara, Narromine, and Merriwa.

MacTel had announced signing a AU$100 million six-year deal with NBN back in June. Calling the offering "Business class NBN by Macquarie Telecom", MacTel said it would include access to its data, internet, voice, and software-defined wide-area networking (SD-WAN) business products; support staff based in Australia; and "coast-to-coast access to all sites in Australia".

The company also announced an expansion in its cloud and cybersecurity offerings for government agencies in August.

For 2018, MacTel reported a 20 percent rise in net profit to AU$17 million. EBITDA rose 19 percent to AU$47.8 million on revenue of AU$233 million, up 6 percent -- AU$95 million and AU$142 million from hosting and telecom services, respectively.

See also: MacTel announces AU$85m Macquarie Park datacentre expansion | Macquarie Government claims protected-level cloud accreditation from ASD | Macquarie stands up Australian health cloud

MacTel also announced on Wednesday that its current chief financial officer Brent Henley would take up the role of group executive and chief commercial officer of the Macquarie Telecom business.

Looking forward, MacTel said it expects full year 2019 EBITDA to be approximately AU$51-AU$53 million.

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