X2M Connect, an ASX-listed smart-city technology company, has moved into the AI data centre market, establishing a dedicated subsidiary and signing its first two data centre deals within the space of a week.
The Mount Waverley-based company, best known for connecting water, gas and electricity sensors for utility and government customers, set out its data centre ambitions late last month when it established a wholly owned subsidiary, X2MDC Pty Ltd, to hold and execute the strategy.
“X2M has spent more than a decade connecting and optimising devices across water, gas and energy, and that is exactly the challenge for every AI facility being planned or built today,” chief executive Mohan Jesudason said at the time.
X2MDC is taking two products to market.
Platform Services is an AI integration and management layer that brings a facility’s cooling, power, water and environmental systems into a single real-time view, priced per megawatt to generate recurring revenue over a facility’s life.
Managed Delivery is an end-to-end service covering the contracting and delivery of a complete data centre - from design, establishment and supplier selection through energy, cooling, compute and networking to long-term operations - on which X2M aims to earn a margin plus, where negotiated, recurring revenue.
Platform Services is intended to be a mandatory component of every Managed Delivery contract.
The company is targeting Australian data centres of up to 100MW, and expects revenue from cost recovery, partner commissions, success-linked payments, platform and SaaS fees, and long-term operations, with scope to add precinct energy infrastructure, networking, behind-the-meter energy management and private 5G over time.
Days later, X2M announced its first binding customer contract - the first conversion of an Australian prospect pipeline it put at about 150MW.
Under the deal, X2M will provide Managed Delivery for an AI-enabled, GPU-accelerated data centre and then manage it over its life.
The company estimated the project cost in excess of $250 million across design, delivery and commissioning over a three-to-five-year period, plus recurring platform and management fees, and said it expects to recognise the full project cost as revenue and earn a margin.
The agreement is conditional on development approval being granted, with X2M engaged first to provide the design services supporting that approval; the company said there are no other conditions precedent. The customer, which X2M did not name, has pre-approved a panel of global compute, AI chip, networking, energy and telecommunications suppliers that X2M can contract for the build, with X2M holding exclusive access to that agreed panel.
“This agreement is transformational for X2M,” said Jesudason.
“We play a key role in the data centre delivery, and that in turn creates a materially large business opportunity for us. We are excited at the prospect of delivering services from some of the top providers in the world and offering a comprehensive service to this customer and land and data centre owners across the country.”
Yesterday, X2M signed a second data centre agreement - this one a non-binding, five-year partnership with an unnamed Australian master development company to develop high-density GPU data centre and energy precincts of between 10MW and 100MW in regional Queensland, as part of what it described as an innovative technology precinct.
X2M is being engaged to deliver the infrastructure and potentially manage it on an ongoing basis, earning revenue across both phases, with its platform connecting the precinct’s energy generation, storage, distribution and environmental sensors into a single AI-powered management system.
The partnership lifted X2M’s prospective data centre pipeline above 200MW and provides a framework for expansion to further sites across Queensland and Australia.
X2M is positioning the AI-enabled management layer as its market edge, arguing that high-density GPU compute places the greatest demand on power, cooling and water, and that squeezing more usable compute from every megawatt is where the gains lie.
It pointed to its existing platform - connected to more than 500,000 devices globally - which it said has delivered a 19% uplift in water leak detection, 20% logistics cost savings in gas monitoring and around $1,000 per home in annual electricity savings, and which can connect equipment regardless of manufacturer or communications standard.
“Securing a second partnership agreement is encouraging validation of X2M’s data centre strategy and underlying demand in the sector,” Jesudason said.
"Our strategy of taking two products to market, Managed Delivery and Platform Services appears to be working in our favour with prospective customers. From the Company’s perspective it provides an attractive balance of upfront revenues and on-going SaaS revenues for our platform which is a mandatory component of any commercial arrangement in this space.
"Meanwhile our established Smart City digitisation portfolio continues to grow strongly, with over 90 enterprise and government customers and a total addressable market of over $750m within this customer group.”
In June, X2M Connect announced a partnership with property developer Resi Ventures to develop integrated data centre and energy infrastructure precincts across regional Australia, and in July, the company announced a $2 million raise for data centre sensor integration and platform enhancement, energy management systems and storage for data centre precincts and smart communities.
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