S4 hits 71% contracted as utilisation jumps 60% to 667MW
NextDC (ASX:NXT) has added 250MW of contracted utilisation, a 60% jump in its total contracted base since December 2025. That tells us demand is now hitting at a much larger scale and appears increasingly tied to the new S4 development now that approvals are in place.
The size of that jump is what stands out. Across all of FY25, NextDC’s forward order book only grew from 111MW to 134MW. This latest update alone is almost double that.
The key driver is S4 in Sydney, a 350MW development that is now 71% contracted. That is a clear sign that large-scale compute demand is no longer just a theme. It is now showing up directly in contracted capacity.
Management has also guided that its existing 667MW of total contracted utilisation, including current billing and the forward order book, is expected to generate EBITDA of more than A$1.0 billion. Set that against FY26 EBITDA guidance of A$235 million and the gap is hard to ignore.
The contracted base now points to earnings power of more than 4x current year EBITDA, which sets the business up for a significant profitability ramp beyond 2026.
A$2.2 Billion Capital Plan, How It All Fits Together
For investors, the quick snapshot is striking. In June 2025, total contracted utilisation stood at 245MW. By April 2026, that figure had reached 667MW, which means it has more than doubled in less than a year.
That also answers the question from our previous note. We pointed to La Caisse’s A$1.0 billion hybrid commitment and asked what NEXTDC was really building toward. This announcement gives us the answer. The hybrids were pre-positioning for this exact moment.
La Caisse has now increased its total commitment to A$1.7 billion, adding another A$700 million through a new tranche. That matters because it shows the capital is being matched to visible demand rather than being raised on hope alone.
NEXTDC is clearly seeing the demand, but it is also leaning hard into the funding needed to support it. Management has lifted capex guidance by A$300 million, with the increase tied to accelerated inventory purchases and long-lead items such as generators, cooling systems, and power infrastructure for S4.
That takes total capex to A$2.8 billion. So while the demand signal looks very strong, the market also needs to stay focused on how aggressively the company is investing to keep up.
FY26–FY27 Capex Surge, Is this a worry?
What this tells us about NEXTDC’s business model is that the company builds compute capacity ahead of demand. That structure makes sense because building a physical data centre takes years and requires very heavy upfront spending on equipment, power infrastructure, and property, plant, and equipment.
With its cash, hybrid securities, and entitlement offer, the company now has about A$7.4 billion to invest. That gives NEXTDC the firepower to build into strong demand, but it also highlights the trade-off at the centre of the story.
The opportunity is clear, but so is the risk. There are long lead times to deliver capacity, and much of the earnings attached to these contracts still sit in the future rather than in the current numbers. That means the model only works smoothly if execution stays on track.
The real pressure point is financing. NEXTDC is leaning heavily on external capital, so if interest rates stay high, semiconductor supply chains are disrupted, project timelines slip, or demand growth slows, the balance sheet could come under more strain.
That is the part investors cannot ignore. Total debt is rising meaningfully, and if any of these contracts were delayed, resized, or lost, the funding burden would become much harder to absorb.
What are the key metrics investors need to watch
Over the next year, investors should keep a close eye on financing costs in the income statement. With funding still expensive, that line will matter more as NEXTDC keeps leaning on external capital to fund expansion.
It is also important to look beyond EBITDA. For a business like this, EBITDA can overstate the underlying picture because depreciation is so large across data centre infrastructure, chips, and other heavy PPE. That can make the business look more profitable than it really is on a true earnings basis.
What matters from here is that profitability grows in line with management’s expectations, and that the improvement is not just being flattered by adding back heavy depreciation.
