Coming in FY20 at the top of guidance is great but what the...

Coming in FY20 at the top of guidance is great but what the market is really looking at is the forward guidance.

The loss isn't really an issue. This is common at the start of large capital projects before the billing really kicks in. There will be large depreciation write downs. The key metric I look at is cash flow and that is up 37% and is positive. In short for tax purposes its a loss but there is net money coming in the door.

The outstanding metric from the FY20 report was that the billing utilisation was up 40% since 30th June. This would be due to the S2 contracts now contributing. Look at that lovely kick up above trend.




With respect to the forward guidance. The midpoint of the NXT ($242-$250mil revenue) guidance is coming ahead of Goldman Sach's expected revenue (GS $242mil) metrics by $4mil. EBITA metrics are inline with GS expectations ($128 mil). GS price target was $12.10. On this metric alone i am expecting the stock price to increase at least to $12.10.

But wait there is more! This is where the good stuff and nuggets of information are in the annual reports for the savvy investor. Given the hyperscaler space can take up to 2-3 years to bill, attention needs to be placed on the "Build in Progress". This is the best indicator of future sales and a lead indicator.


Please note the red "contracted utilisation" lines is incorrect and in the wrong spots in yesterdays report.

Things we can learn from the above comparisons of 6 month charts

- M2 total target capacity has been upgraded by 20MW facility - this is big news as this means quicker time to market for additional capacity, considerable lower costs and margin expansion. This also explains why NXT had options for M2 exceeding planned capacity of 40MW. M2 now will be a 60MW facility. This alone for me supports a jump in the share price.
- S2 is finally open to Enterprise customers. 0.2MW sold. For the last 2 years we went dark and didn't have spare capacity to sell. The troubles of the S2 build is behind us now!
- Building 20MW (8MW at S2 and 12MW at S3) of capacity in Sydney
- M2 building out 15MW of capacity

So in summary we have 17MW contracted and yet not billing and we have 33MW of additional capacity being built that is not contracted. Thats 50MW of capacity we expect to sell in the next 2+ years and bill over the next 3-4 years or so. At a conservative $3.3 mil Per MW (using GS's estimates). we have $165mil in revenue in the coming 3-4 years at a minimum. I personally prefer to use a $4mil per MW metric which comes in at $200 mil in additional revenue in 3-4 years. These are big numbers. We could expect NXT to double in sales in 4 years time about a 20% CAGR which in a low growth environment is phenomenal.