NextDC posts mixed first-half results amid major expansion

ASX-listed data centre operator NextDC has reported first-half results, which show net revenue rising 13 per cent to $167.8 million but total revenue declining two per cent to $205.5 million.

NextDC's net loss after tax (NLAT) jumped from $21.5 million for the 1H24 six month period to $42.7 million in the current period.

The company invested more than $1 billion in capital development projects during the period, including $353 million to purchase land in Western Sydney for its new S7 facility that will have a target capacity of 550 megawatt.

"We are pleased to deliver another record result in 1H25, with the business continuing to exhibit solid growth across key metrics during this reporting period," NextDC chief executive Craig Scroggie said.

Underlying earnings before interest, tax, depreciation and amortisation rose 3 per cent to $105.4 million, while contracted utilisation increased 18 per cent to 176 MW.

NextDC is expanding rapidly across Australia and into Asia, with new facilities opened in Adelaide, Darwin and Sydney during the period.

Construction has begun on a facility in Kuala Lumpur, while planning continues for an Auckland site.

The ASX 100-listed company highlighted growing demand from artificial intelligence applications, with Mr Scroggie noting NextDC was "uniquely positioned to meet the growing demands of the hyperscalers, our ICT partners and our enterprise and government customers."

Executive incentive plan with $150m in the pot unveiled

A one-off $150 million incentive scheme for its senior leaders was announced by NextDC, as it battles to retain key staff in an increasingly competitive global market.

The Growth Incentive Plan will allocate $50 million to managing director Craig Scroggie.

A further $100 million will be available to other executives and senior managers through conditional rights that vest over five years.

"The data centre sector is experiencing record levels of demand, characterised by hyperscale clients seeking to secure larger and longer-term capacity deals around the world," NextDC chairman Doug Flynn said.

The company faces mounting pressure to retain talent as international competitors and private equity-backed firms target its executives with more attractive compensation packages.

"We are consistently coming up against very different compensation structures offered by a wide range of privately held organisations backed by global financial sponsors," Stuart Davis, chairman of NextDC's remuneration committee said.

Under the scheme, executives must achieve significant share price growth targets for the rights to vest.

The share price must grow by at least 80 per cent to $26.17 for 40 per cent vesting, while full vesting requires 124 per cent growth to $32.52.

Participants must also pass behavioural assessments and remain employed with the company.

The rights can be exercised up to eight years after being granted and the scheme requires challenging stretch performance targets to be met before any value is realised by participants, the company said.