Earnings call transcript: DigiCo H2 2026 profit beat lifts outlook, shares fall

DigiCo’s FY2026 underlying EBITDA rose to AUD 127m, slightly above its AUD 125m target, and revenue increased to AUD 239m (21% higher in H2 vs H1). However, shares fell 2.5% to $2.72 as investors focused on the required next phase of expansion, including ~AUD 1.2bn incremental capex over two years to expand SYD1 and Adelaide 1, with the first SYD1 10MW tranche targeted for energization by late FY2027. Management guided FY2027 underlying EBITDA to AUD 120m–125m (AUD 110m–115m excluding Chicago) and FY2027 distributions to AUD 0.15 per security (+25%), backed by expected net proceeds of ~AUD 470m from U.S. asset sales in H1 FY2027 and pro-forma liquidity of AUD 1.2bn.

Analysis

This is less a clean earnings beat than a valuation tug-of-war between contracted demand and a very capital-intensive delivery schedule. The market is signaling that near-term EBITDA is not the bottleneck; funding certainty, construction cadence, and whether the asset base can actually turn today’s scarcity into cash flow before the next capex wave are what matter. That usually keeps the multiple capped until the first tranche is physically energized and the asset sale proceeds are in hand.

Second-order, the most important beneficiaries are not the obvious data-center peers but the upstream ecosystem: contractors, power/interconnect suppliers, and any Australian infrastructure platform with scarce power rights and brownfield expansion optionality. For listed comps, NEXTDC should keep a scarcity premium if Sydney remains capacity-constrained, while any operator without near-term energized capacity risks being repriced as a promise rather than a production asset. On the loser side, high-leverage “land bank” stories without power, approvals, or contracted tenants look increasingly vulnerable to multiple compression.

The contrarian miss is that investors may be underweight the duration of the shortage: if new customer LOIs convert into long WALE, the equity is effectively buying a more valuable annuity with embedded scarcity rents, not just a build-out story. The main falsifier is simple: if asset-sale close slips, capex drifts above plan, or lease docs don’t convert quickly, the stock can stay range-bound despite operational progress. If the first tranche lands on time, this becomes a 6-12 month de-risking rerate rather than a one-day earnings reaction.

Key Decisions for Investors

• DGT: do not chase the print; wait for binding lease documentation and U.S. asset-sale completion before adding. If both de-risk by H1 FY27, buy for a 6-12 month rerate toward higher certainty of FY28 cash flow.
• DGT: if the shares pull back another 5-8% on capex fatigue without deterioration in contract conversion, accumulate on weakness; cut risk if U.S. divestment timing slips beyond H1 FY27 or FY27 capex guides higher.
• Pair trade: long NEXTDC (NXT) vs. short DGT if you want data-center exposure with less event risk; the market should reward the cleaner balance sheet and de-risked execution profile while still capturing Sydney scarcity.
• Watch-item, not trade yet: if final customer docs show >10-year WALE and ~3% escalators across the remaining SYD1 capacity, the terminal value case improves enough to justify a higher-quality rerating.