Good discussion. The counter argument is that you invest the cash up front but find that it is not being utilised (P1 and C1) and then the financial metrics do not look so good.
I suspect that it would be extremely difficult for the CFO, CEO and the board to manage the cash, ROIC, shareholders demands and industry growth. I do not envy them. They are still growing and we need to remember that they are 1/30th the size of Equinix (by market cap). They have very little room to move as they weave their path to growth through all the financial metrics that are demanded by the analysts. Again, I repeat, I do not envy them their job.
IMO, NXT has actually crossed an inflection point with respect to FCF. Consider the following
Revenue grew by 52% YOY (60.9 to 92.8)
FCF grew by 324% YOY (6.9 to 22.3)
FCF as a percentage of revenue grew from 11% to 24%
See what is happening? FCF is growing (as a %) quicker than revenue. I would suspect that with the $440m cash for B2, M2, and S2, and with FCF growing at a rate greater than revenue, then I would not be surprised to see the capital raising just done as the last, as increased FCF will be able to support any more new data centres.
HT1
NXT Price at posting:
$3.33 Sentiment: Buy Disclosure: Held
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