More contract wins for Nextdc (ASX:NXT), shares jump 7%


Companies and indices mentioned:


Nextdc (ASX: NXT) announced more contract wins for its NSW data centre facilities. Nextdc shares are up 7% in early trading.

What is Nextdc?

Nextdc offers a service of data centres for clients. It provides the infrastructure for the digital economy. It provides power, security and connectivity for global cloud computing providers, enterprise and government.

What did the data centre business announce?

Its contracted commitments at its NSW data centre facilities have increased by approximately 4MW, to more than 36MW.

Contracted customer commitments and expansion options at the NSW data centres are now approaching 60MW. With these customer wins, Nextdc has committed to completing the S2 (its second Sydney data centre) fit out to a total of 30MW.

The revenue from these new commitments is expected to commence during FY21 after completion and commissioning of the associated data halls.

Nextdc CEO and Managing Director Craig Scroggie said: “The demand for our data centre services continues to accelerate and exceed our expectations, yet requires discipline and patience as the nexus between the hyperscale and capacity planning, site development, infrastructure deployment and revenue recognition can in practice be two to three years for these very large hyperscale developments. This is all part of Nextdc’s digital infrastructure business model, which continues to build long term value through contracted capacity and tangible asset backing.”

Summary

Nextdc has a solid business model and it’s clearly in high demand. The shift to online by many businesses during COVID-19 will help adoption of cloud services. However, I don’t know enough (yet) about the profit potential and expected lifespan of data centres to know if today’s Nextdc share price is compelling or expensive.

3 stocks to own in July 2020...

Amidst the COVID-19 confusion, there are some companies still growing FAST (think: online meetings through Zoom, streaming companies like Netflix and eHealth services provided by Teledoc).

While the world grapples with COVID-19, some companies are still growing rapidly. The entire cloud computing market is valued around $US210 billion but if you ask me, it seems clear as day that this market is only going to get bigger in 2020 and beyond.

That's why our top investment analyst has just identified 3 growth stocks in a net cash position, with strong competitive forces... and obvious tailwinds at their back. He owns all three of them right now!

Claim a FREE investing report on our analyst's "3 best share ideas for the cloud revolution" when you create a free Rask Australia account.

Our report is 100% free and unlocks hundreds of hours of bonus content.

Simply click here to access the report.


Disclaimer and warning: This information is published by The Rask Group Pty Ltd and contains general financial advice and information. That means, the information/advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Terms of Service and Financial Services Guide before using this website.

Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned. 

Jaz Harrison

Jaz Harrison

Jaz is a keen investor who loves to thoroughly poke holes in an investment idea before it has a chance of making it into her portfolio. Jaz invests for the long-term and doesn't sweat the small stuff. She strongly believes that empowering people with knowledge is the best way for them to take charge of their finances, which is exactly the approach she takes with her own money and investments.