Data centre operator, NextDC, re-rated after reporting a strong result, which demonstrated the operating leverage in the business model. Revenue grew 36% to $56m but the company reported EBITDA growth of 110% highlighting the high fixed-cost leverage, which is one of the key attractions of the stock.
We expect development costs for new data centres will moderate second-half margin growth, although the longer-term outlook for the business remains strong.
Although the company did not upgrade its full-year guidance, this looks conservatively framed and we remain confident management will continue to meet or exceed expectations.
NextDC remains our preferred play on the cloud computing thematic with the explosive growth in data usage likely to continue for some years to come. (VIEW LINK)
Robert was appointed Head of Investments in 2009 and has been a Portfolio Manager since joining OC Funds Management in 2001. Robert is also an Executive Director of parent company, Copia Investment Partners. Robert is responsible for the...
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