NEXTDC reported a $142.6 million swing from loss to profit in FY26, moving from a $60.5 million loss in FY25 to an $82.1 million profit in FY26. The bulk of this turnaround, however, stems from a $128.8 million fair value gain on data centre properties following significant accounting policy changes. Investors need to distinguish between this one-off revaluation gain and the underlying operational performance of the business.
The accounting changes were triggered by new major customer contracts entered during FY26. Management reassessed how these arrangements should be treated under Australian Accounting Standards and determined that certain contracts should be classified as operating leases under AASB 16 rather than revenue transactions under AASB 15. This reclassification led to a parallel review of the underlying data centre assets, which NEXTDC concluded should be measured at fair value under AASB 140 Investment Property, moving away from the cost-based approach under AASB 116. The transition generated the $128.8 million fair value gain and associated income tax benefits that flow through the comprehensive income statement.
Underneath the accounting impacts, NEXTDC demonstrated solid operational growth. Revenue increased 16.2 percent to $496.5 million from $427.2 million, reflecting sustained customer demand for data centre capacity and services. This growth is bolstered by continued industry recognition, with NEXTDC named Australian Data Centre Company of the Year. The underlying revenue expansion provides genuine evidence of business traction, even if the accounting treatment overshadows the profit narrative.
Net tangible asset backing per share climbed to $7.95 from $6.40, a 24 percent increase that combines the fair value revaluation with retained earnings from the reported profit. While this represents material book value growth, a significant portion flows from non-cash fair value adjustments rather than cash-based returns.
The board proposed no dividend for FY26, potentially signalling a preference to retain capital or a cautious approach during the accounting transition period. Looking ahead, investors should scrutinise cash flow generation relative to the fair value accounting gains, monitor how the lease and investment property reclassifications affect future comparisons, and assess the sustainability of the new fair value measurement regime. This announcement is price sensitive and has been classified as material by the ASX.
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About NEXTDC Limited (ASX: NXT)
NEXTDC Limited develops and operates data centers in Australia and the Asia-Pacific region. The company offers data center colocation solutions, high-performance computing, disaster recovery services, and various digital infrastructure solutions to enterprise clients, government agencies, and cloud providers. Headquartered in Brisbane, Australia, NEXTDC provides critical connectivity and infrastructure services across its network of facilities.
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