I was pleased to provide an update to the ASX today about what we’ve been up to in the last quarter (Q2), through to 31 December 2019. It’s been busy!

The team has achieved a large number of wins as we continue on our journey to become Australia’s largest edge modular DC company for both colocation and turnkey solutions.

  • Successful commissioning of Niue Prefabricated Cable Landing Station
  • Successful commissioning of two Cook Islands Cable Landing stations
  • SES modular satellite earth station for PNG design acceptance and in production with a full completion in Q3
  • Three Radlink radio container modules shipped to site with two awaiting factory acceptance testing
  • Customer win SX Next cable landing stations $2.4m
  • SES Satellite Earth station in PNG $200k (reported in last quarterly update but sale was recorded in Q2)
  • Additional security overlay for Sydney data centre completed and marketing activity has begun
  • Total work in hand for modules now at $7m.

Our colocation division has been focused on marketing the new Sydney Data Centre and signing up new partners. Our ‘channel first’ focus has been really well received with three new partners coming on last quarter, bringing total partners to 12. This dramatically extends our sales reach to customers.

The modular division is focused on selling modular DC solutions with attached life of asset maintenance contracts to create a strong annuity revenue model. Two recently signed contracts were AGIG for $700k turnkey modular DC as well as a three-year maintenance contract with Synergy Energy for $75k. The maintenance contract is a good demonstration of DXN comprehensive capabilities for full life cycle management; being able to support customers from the concept and design phase of a project through ongoing use and maintenance.

The team recently returned from the PTC conference in Hawaii. There was strong validation during discussions with global industry executives that the vertically integrated, edge focused DC model will succeed. This is because demand for compute closer to population centres to assist in latency issues is the right model and a significant number of new opportunities have been uncovered.

We are seeing good interest in becoming a channel partner for our colocation product from systems integrators, facilities managers and alternative telcos and expect a further eight to sign soon. We expect these channel partners and our direct sales team to deliver several new customers in the near term. Australian Modular DC growth is expected to increase off the back of the NSW Government RFP release in Q3/Q4 for regional DC and recent announcements around 5G roll out and capacity increases for Telstra and Optus.

We are seeing a good demand in our modular product which will be driven by both external sales and our Sydney DC demand.

Matthew Madden