DXN (ASX:DXN) used its recent earnings call to outline how the modular data center provider is positioning itself for growth, while also addressing a softer quarterly revenue result tied to project timing and milestone receipts.
Business mix and product focus
Management said the business currently operates across three divisions. The company’s modular division is its largest segment, representing about 85% of FY25 revenue. This division covers end-to-end delivery, including design, engineering, manufacturing and deployment of prefabricated modular infrastructure.
The third segment, data center as a service (DCAS), was about 3% of FY25 revenue, but management said it expects the segment to be larger in FY26 and continue growing. DXN described DCAS as combining the company’s modular build capabilities with ongoing operations and maintenance, including owning and operating infrastructure deployed to customer sites. Management highlighted a completed deployment for a satellite operator in the Northern Territory, which it said includes site acquisition, power and fiber design, deployment, and ongoing maintenance and operations.
Industry tailwinds: speed, labor constraints, and prefabrication
Executives emphasized that DXN’s value proposition is centered on speed to market, arguing that prefabrication helps customers address both longer build timelines for traditional brick-and-mortar projects and constraints around on-site resources and know-how.
Management said industry requirements are increasingly pushing data center builds toward prefabrication, including in hyperscale environments where portions of a site can be prefabricated to reduce overall deployment timelines. The company also noted that each deployment tends to be customized to location and customer requirements, which it believes favors providers with in-house design and engineering capability.
DXN said it has historically operated in edge markets—including cable landing stations, satellite operator deployments, mining modules, defense, and government work—but is increasingly targeting larger “builds at scale” where elements such as powertrain units, chiller rooms, pump rooms, and hot aisle containment can be prefabricated. Management referenced its “StructCore” solution and an extension described as “StructCore HAC” (hot aisle containment) as part of this push, noting it has developed standard designs for a project with Ventia.
Quarterly financial update: project delays and backlog
On the financial side, DXN reported that quarterly revenue was softer than prior years due to delays in a small number of contracts carrying over from Q1. The company reported:
- Quarterly revenue of AUD 1.7 million, down 63% year-on-year, which management attributed primarily to contract delays and the project-based nature of the business.
- Cash receipts of AUD 2.2 million for the quarter.
- Cash balance of AUD 1.7 million as of December 25.
- Backlog of AUD 14.5 million, which management said provides revenue visibility.
Cash movements during the quarter were described as being driven by planned year-to-date capital expenditure at the company’s data centers, along with milestone receipts deferred by delayed project progress. Management stressed that the delayed cash receipts were “deferred, not lost,” and said it expects cash to come in as projects progress in the second half of the year.
DXN said it estimates about 65% of the current backlog will be delivered in FY26, while also noting it is not factoring in additional contracts that may close in the remaining months of the year. Management also cited a “healthy pipeline” of 80 projects under exploration.
DCAS early traction and recurring revenue expectations
DXN said its first DCAS site has been completed and recurring service fees have commenced, with AUD 80,000 received in the quarter. The company said that figure was driven by a combination of service fees and setup fees, and it expects the remaining 30% setup fee milestone to be recognized in Q3, pending client sign-off despite contractual conditions being met.
In the short term, management expects ongoing quarterly service revenue of approximately AUD 80,000 to AUD 100,000, with the potential to increase alongside higher power usage and services. The company said it has received positive feedback from its US-based client and is seeing early indications the client may seek DXN’s support on additional sites.
Management also framed DCAS as a strategic effort to diversify the revenue profile and reduce the peaks and troughs associated with project revenue, with the CEO describing a focus on growing the DCAS business “no matter what.”
Indonesia joint venture and funding strategy
DXN discussed a newly announced joint venture with Indonesia-based Super Sistem Indonesia (SSI), described as a subsea operator and existing customer. Management said the JV was driven by market demand for high-quality infrastructure but constrained by import taxes, noting that exporting from Australia to Indonesia can attract more than 40% in import taxes, making the business case challenging.
The company said the JV—based in Singapore—is intended to support a local manufacturing footprint in Indonesia by renting space and replicating DXN’s systems, processes, and designs, while building localization over time. Management described the approach as not capital-intensive and said the sequencing is designed to reduce upfront investment by leveraging customer purchase orders and down payments to “kick things off.”
When asked about timing for a Jakarta factory opening, management said it could not provide a specific date, but reiterated it aims to crystallize an MOU into an order as soon as possible and use the customer’s purchase order to fund initial steps such as staffing and leasing.
Management referenced an estimated pipeline of $7 million over the first three years tied to SSI requirements, while noting it has not included other potential customers in that estimate and is targeting additional prospects directly, including those associated with hyperscale build activity in Jakarta.
On capital and growth, management said “business as usual” projects are structured to be cash flow positive through milestone payments, but growth—particularly expansion into larger opportunities—requires funding consideration. The CEO said the company is exploring alternative funding avenues and partnership structures, including offshore entities and potential access to various funding pools, while arguing that raising equity at the current share price would be highly dilutive.
In Q&A, management also clarified that staff bonuses paid in the first half of FY26 related to FY25 KPIs, and that while the expense was accrued in the FY25 profit and loss statement, the cash payment occurred in FY26.
Closing the call, the CEO said the company remains bullish on prefabricated modular data centers and pointed to increased industry interest and investment in prefabrication globally.
About DXN (ASX:DXN)
DXN Limited engages in the design, manufacture, ownership, and operation of data centers and related infrastructure in Australia. It operates through two segments: Data Centre Manufacturing and Data Centre Operations. The Data Centre Manufacturing segment engineers, constructs, and commissions modular data centre solutions for mining, gas and energy, subsea, and defense industries, as well as telecommunication applications, such as satellite, radio centers, and cable landing stations. The Data Centre Operations segment operates data centres that provides space, power, cooling, and physical security for clients to house their computer servers and related storage and networking equipment, as well as offers cloud and co-location hosting services.
