Australian data centre operator NextDC has posted a stronger-than-expected profit for the fiscal year ending June, even as its water and energy usage effectiveness metrics worsened for the third consecutive year, reflecting growing operational demands and resource challenges.
- NextDC profits rebound to A$82.1 million with 16% revenue growth
- Water usage and power efficiency metrics worsen for third year
- Regulatory pressure mounts on data centres' environmental impact
What happened
NextDC reported a strong financial performance for the year to June, with a profit of A$82.1 million reversing last year’s loss of A$60.5 million. This was supported by a 16% rise in revenue and an underlying EBITDA increase of 15% to A$248.8 million, beating market expectations. The company attributed some gains to an accounting change that recognized increased property values.
However, alongside these positive results, NextDC disclosed that its operational resource use has increased. The water usage effectiveness ratio climbed from 2.25 to 2.40 litres per kilowatt-hour, while power usage effectiveness went up from 1.44 to 1.49. The company noted these metrics had worsened steadily over three years due to portfolio growth, commissioning activities, and detection of leaks and utility meter discrepancies.
Why it matters
The worsening water and power efficiency ratios highlight the growing resource demands of Australia's expanding data centre industry. Data centres require significant cooling and power, and water use is a critical factor, especially in regions facing environmental stress. NextDC’s rising ratios signal increased strain on local water supplies and electricity grids, raising sustainability concerns.
These developments come amid increasing scrutiny by governments and regulators who are considering restrictions on new data centre developments. Policymakers in Canberra have proposed introducing mandatory standards for energy and water use, as well as requiring data centres to source renewable power for their operations. The sector’s environmental impact is becoming a significant factor in operational planning and public acceptance.
What to watch next
Market watchers and industry stakeholders will be closely observing how NextDC and its competitors respond to regulatory pressures and rising resource costs. Efforts to improve water and power efficiency, incorporate renewable energy, and minimize environmental footprints will be key to sustainable growth in the data centre sector.
Investors will also focus on how NextDC balances expansion with operational sustainability, especially as governments weigh regulatory measures that could affect site selection, energy sourcing, and water use. The company’s ability to innovate around resource management and comply with evolving standards will influence its long-term market position in Australia’s competitive data centre landscape.