Thank you for standing by, and welcome to the NXDC 1H21 Results Briefing. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. I would now like to hand the conference over to Mr. Craig Scogby, CEO.
Please go ahead.
Thank you, Harmony. Good morning, ladies and gentlemen, and welcome to the Nxplc results presentation for the first half of FY 'twenty one, joined today by our CFO, Oscar Tomasecki. Beginning on Slide two, we're pleased to present another set of record results. Total revenue of $122,000,000 and underlying EBITDA of $66,000,000 Contracted utilization now stands at 71 megawatts. Our networks continue to expand, growing to more than 13,900 interconnections, up 15% in the last twelve months.
Our ecosystem continues to evolve with over fourteen sixty customers, more than six sixty partners, including 70 connectivity service providers. Turning to Slide three. A strong performance in 1H 'twenty one is highlighted by robust key operating metrics. Revenue from data center services increased by $26,000,000 or 27% to $122,000,000 Contracted utilization increased by a net 18 megawatts or 33% to 71 megawatts. While interconnection revenue accounted for 7.6% of first half recurring revenue.
Our results continue to demonstrate the company's operating leverage. Underlying EBITDA increased 29% to 66,000,000 operating cash flow grew 219% to $64,000,000 and billing utilization, which grew at 32% over the last twelve months, reflects the company's focus on delivery of its strong order book, which in turn is expected to lead to customers exercising of existing reservations in the future orders. We remain well capitalized to support our growth plan. Total liquidity at thirty June was approximately $1,800,000,000 inclusive of over $1,000,000,000 of undrawn headroom in our senior debt facility, which achieved financial close in December 2020. Our balance sheet remains underpinned by $2,600,000,000 of total tangible assets.
And at December 31, we held property with a carrying value of over $900,000,000 and plant equipment with a carrying value of $820,000,000 Our data center fleet continues to evolve at a rapid pace. The fit out of our M2 and S2 facilities in the high growth markets of Sydney and Melbourne, with 10 megawatts of installed capacity added in the six months to December 31. Our S3 development is on schedule for practical completion of Phase one in the second half of FY 'twenty two. Groundworks are now largely complete and base building construction has commenced. N3 is well progressed with its design and development approval formally submitted to council where it has received endorsement.
I'll now hand over to Oscar to discuss our financial results in greater detail.
Thank you, Craig. Let's now turn to Slide six, which provides a summary of our profit and loss for the year for the half year. The statutory results reflect data center services revenue of $121,600,000 an increase of 27 on the same period last year. Net loss after tax of $17,500,000 a result which primarily reflects increased depreciation and finance costs. Our non statutory highlights include underlying EBITDA of 65,700,000.0 an increase of 29% on the same period last year direct costs of $23,300,000 which rose in line with customer power consumption and energy costs, offset by improved efficiency Facility costs, which increased to $11,800,000 as we ramped up operations across our facilities, particularly at S2 as well as increased property holding costs.
And corporate costs increased to 20,500,000.0 reflecting the investments NextDC is making into the ongoing growth of our business as well as the market wide increase in insurance costs, particularly for P and O cover. On to Slide seven. Revenue generated from racks, suites, cross connects and other recurring sources accounted for 96% of total data center services revenue with project revenues representing a lower proportion of revenue each year. The underlying EBITDA performance highlights NextDC's operating leverage as demonstrated by the 29% growth in earnings relative to 27 growth in data center services revenue. This trend is further demonstrated by the longer term revenue and earnings CAGR figures on this page.
Slide eight sets out our revenue per unit metrics. Annualized revenue per square meter continued to grow during first half of 'twenty one, benefiting from contracted price escalation and increased connectivity, power density and power recharge revenues. Annualized revenue per megawatt reflects some new large customer deployments coming online over the past few reporting periods. And it's worth noting that revenues from larger ecosystem enhancing customer deployments increase over time due to high usage of contracted power capacity, increased demand for interconnection and the use of ancillary services over time. Slide nine summarizes our balance sheet position and cash flows.
At thirty one December, NextDC held property with a carrying value of $9.00 4,000,000 as well as plant and equipment with a carrying value of $819,000,000 Our net assets stood at just under $1,700,000,000 Finally, we remain well capitalized to continue our growth trajectory with total liquidity comprising cash and undrawn debt facilities of close to $1,800,000,000 I'll now hand you back across to Craig to go through our business performance and outlook for the 2021 financial year.
Thanks, Oscar. On Slide 11, our key nonfinancial metrics are set out. Total number of customers up 16% year on year to fourteen sixty five. Total interconnections were at 16% year on year to 13,911. And total cross connects are at 9.5 per customer.
On Slide 12, further insight into the diversity of our business. Background of customers by industry shows strong representation from enterprise and cloud as well as system integrators and connectivity partners. The increasing skew towards higher density deployments reflects growth of hyper converged infrastructure and hybrid clouds. Turning to Slide 13. At thirty one December, 80% of installed capacity was under contract and 80% of the contracted capacity was billing and generating revenue.
In the past twelve months, we've seen a 32% increase in billing capacity, which now stands at 56.8 megawatts, with over 14 megawatts of contracted capacity at December 31 still to commence billing, first got out the continued improvement in operating leverage and strong revenue and earnings growth. On Slide 14, our capacity and utilization. In New South Wales and AC2, we added four megawatts capacity at S2, taking total capacity installed at S2 to 26 megawatts. Work is in progress on the final radar haul. S3 development continues at a rapid pace with building construction commenced.
We are fitting out the first 12 megawatts and on a target for practical completion in the second half of FY 'twenty two. In Melbourne, M2's expansion is on track with six megawatts delivered in the first half and a further nine megawatts still under construction. At M3, design and development approval was formally submitted to council where it received endorsement. Also preparing for Tier four certifications of construction facility and gold certification of operational sustainability at S2 and P2. On Slide 16, our upgraded guidance.
Data center services revenue is increased to a range of $246,000,000 to $251,000,000 up from the range of $242,000,000 to $250,000,000 previously. The updated revenue guidance remains underpinned by strong growth in recurring revenues and long term customer contracts with substantial contracted capacity yet to commence billing. Our underlying EBITDA guidance is increased to $130,000,000 to $133,000,000 versus the range of 125,000,000 to $130,000,000 previously. The scale and earnings growth continued to be driven by generation two facilities. Total CapEx for the year is expected to be between $380,000,000 and $400,000,000 which is unchanged from our earlier guidance.
FY 'twenty one is a year of continuing acceleration of growth for NxDC. The foundations have been put in place over recent years, and we'll see the company continue to scale rapidly through the second half of FY 'twenty one and beyond. Operator, could you now open the line for questions, please?
Thank you. Your first question comes from Cain Hannon from Goldman Sachs. Please go ahead.
Good morning, guys. Just three quick ones for me, please. Firstly, just keen to understand the comments in the media release in a little bit more detail. I think you're talking about expected new customer contracts in the second half. Is that referencing more enterprise contracts coming online?
Or is that in reference to expectations around hyperscalers? Secondly, just is there any more details you can provide around the design specs on M3 and some of the plans that you've submitted? And finally, just confirming, had there been any change to that 57 in options that you previously disclosed in the half?
Thanks, Kay. Commentary in relation to second half sales, Obviously, enterprise and hyperscale continue to grow. We've had a very strong start to the second half. The enterprise performance in the first half is very solid. Clearly, we expect that as a result of COVID related circumstances and changes to the office environment that we'll see further moving out of on premise data centers.
So many well, just our customers recognize that the change in the office is a permanent state and that they need to accelerate that moving to colo and cloud. So second half sales, we expect to see both enterprise and hyperscale opportunities accelerate. But needless to say, it has been a very, very good start to the second half, and we have a number of large scale opportunities. Obviously, delivering the initial capacity, particularly for S3 and M2 sorry, S2 and M2 means that once those are delivered, we can continue to follow along with additional capacity. In relation to M3 came the development approval for the initial design has been endorsed by the council.
That is now being stamped, and we'll be able to start development of M3 very soon. So we're in a good position with M3. Quite excited, obviously, because we had a number of early customer engagements who are working through contracting with clients for expansion capacity into M 3, and that's both in a in a price and a hard scale sense. So M 3 is certainly shaping up to be a very, very exciting development for us and the potential for another 10s of megawatts worth of expansion capacity in a similar vein to what we've experienced with M2's demand. Finally, in relation to the 57 megawatts worth of options, we continue to work on the conversion of those options into orders both in Sydney and in Melbourne.
So whether that be M2 into M3 or F2 into F3, both of those markets obviously performing extremely well. Thanks, Kate.
Thanks, Craig. Cheers.
Your next question comes from Nick Harris from Morgan.
Great results. Three questions from me, please, Craig. First one, just the guidance upgrade. It looks like the EBITDA dollar kind of uplift is more than the revenue dollar uplift when you've kind of looked the change. Just wondering, does that mean you're running the business more efficiently than you expected six months ago?
Or are just pushing things out a little bit? That's question one. Question two, M1, it's running at 100% utilization, which is a pretty amazing outcome. And despite being totally full, it's doing 1,500,000.0 project fees in the half. Just curious, is that a temporary spike, some over usage because of the COVID?
Or could it actually run around those levels going forward? And then my third question was just on B1. It's over ten years old now. So just curious, mean, is that utilization broadly holding? Is the return profile broadly holding?
And it's basically charging long printing money? Or how should we think about, I guess, a more mature facility?
Thanks very much, Nick. Just in relation to the guidance upgrade EBITDA versus revenue. So clearly, you would have noticed the power prices have shifted and for us in a positive sense that it's down. So we have certainly benefited from that change. The operational efficiency, operational leverage of the business plays a key role as well.
So certainly positive catalyst in that regard to improve the operating leverage, and that's what you're seeing come through in the numbers there. In relation to M1, we're 100% utilization. We have managed, as we have done previously, to continue to optimize the facility both for its efficiency and the space and designs. We continue to find opportunities to optimize pockets of space. They're critically important for us to look for opportunities both in S1 and M1.
And both of those facilities being highly utilized continue to improve from a performance perspective. So as we optimize the operation of the facility, we're seeing very, very good performance there. So both S1 and M1 are reflecting that. And B1, yes, our first facility, and as you would recognize, Nick, has been an extremely strong performer from a financial perspective and continues to be a great business in its own right. So utilization continues to be full.
And for us, the small scale facilities ultimately, but highly enterprise and government very, very strong from a margin contribution perspective.
Next question comes from Jonathan Atkin from RBC Capital Markets. Please go ahead.
Thanks. So I guess I've
got three questions as well. And we seem to be talking about older facilities. Actually the question kind
of arose in my mind about any kind of lumpy CapEx items around maintenance on some of these older sites to keep in mind as we sort of think about the free cash flow profile going forward on the first generation sites? And then the second question is just around of the commercial momentum that you're seeing and book to bill number of months or calendar quarters till commencement, have you noticing any changes in what your customers are telling you? Is it solely a function of you delivering the inventory? Or are there any potential delays in customers moving in based on their timeframes? And then thirdly, the council approval for M3, I'm just interested, in the year 2021, are there any kind of different questions that you are getting or that the public sector is grappling with when they give you development approval?
Is it a different set of topics now than would have been the case on earlier projects years back? Or is it pretty similar? Thank you.
Thanks, John. So first question on lumpy CapEx. Now look, I think, obviously, the ironing protocol, we have a fairly well mapped out maintenance program where we're continuing to maintain and upgrade the fleet. Even in the facilities that were built first in the first generation, there's nothing that we would see outside of where we would have already planned. And in the ordinary course, the R and M line primarily goes through OpEx.
So you're seeing everything that we see there on a half on half basis. Second question in relation to commercial momentum. Number of months in book to bill largely really is just driven by customers' capacity to get site and deploy. One of the things that we experienced in the COVID time frame, John, was that it was difficult, particularly for our North American customers, to get to site. So for us, playing a deeper role in so far as the service delivery support for customers became critically important for those that didn't have the same flexibility to travel.
Largely, the timing of that is dependent on the customer's ability to be able to stand up infrastructure. So nothing out of the ordinary despite COVID being a challenging environment and challenging both in terms of operational support, getting people to site, getting infrastructure to site and then just in the capital work sense. But very, very strong performance from my perspective in disciplined way in a challenging environment. We managed to ensure that we delivered on time, on budget. In some cases, it was a early for customers in that COVID circumstance.
So very positive from our perspective. No delays on the customer side really, nor any delays from us in terms of capital works delivery. Strong from a commercial momentum perspective and leaning in quite heavily. Quite good at Melbourne market is evolving rapidly. And obviously, the size and the success that we've had in M2 is starting to shape up to be potentially replicated in M3 as well.
So certainly, a very strong growth in the Melbourne market for us. And I expect there'll be more to come soon. The third question, John, in relation to the M3 Council approval, I was on the call with the councilors in Melbourne just last Tuesday night. Questions from council, Largely, they're quite excited, obviously, just with the base building over the quarter of a billion dollar infrastructure investment before we scale that side out. It's a big deal for the community there.
It's a great opportunity. What they are focused on very heavily in from a community engagement perspective is local employment and ESG. Most of the questions in relation to the development were about what we can do to support the local community and jobs as the nature of work changes. Those communities are looking to grow employment for their own constituents, and they're extremely sensitive to ESG. So we spend a lot of time talking about, obviously, our investments in solar, the technology that we use that's highly sustainable, our participation in carbon neutrality programs that are all leading in the industry in that context.
They're all very, very well received. So many of the efforts much of the effort that we're putting over time, John, to focus on leadership and sustainability, carbon neutrality, renewable energy is extremely well received by those local communities. A positive and great experience now with the DA endorsed by the council members. They stamped the development approval and we can get underway with construction, which we're pretty excited about given the demand profile for M3. Thank you, John.
Thank you.
Your next question comes from Enzo Rakowski from Credit Suisse.
So my first question is just on the contracted utilization. I noticed that grew by one megawatt over the past six months after much higher growth in the previous six months. Can you perhaps comment on the reason for the slowdown? Was a lot of the activity effectively pulled forward to the start of calendar year 2020? And secondly, has this in any way been impacted by the supply environment?
Obviously, we're seeing news there. Connection Digital Realty have both set out plans to expand and build new facilities in recent months. So I guess in conjunction with that, if you can comment on how you see the supply environment at the moment. And finally, your comments that sales in 2H 'twenty one have already exceeded expectations. Just for the avoidance of doubt, should we then see an increase in contracted utilization in the second half?
Thanks, Sveincha. So the first question is in relation to one megawatt of sales in Enterprise in the first half, a very strong performance. That's exactly what we expect with Enterprise. So from a run rate perspective, despite the environment, if you think that, you know, getting around and transitioning out of office, we've seen people recognize very quickly that the office environment is challenging to operate the data center out of. But we managed to still deliver that full megawatt despite the challenging circumstances in the enterprise.
So strong performance from that perspective. And then as that relates to what we've sold in hyperscale, as I think everyone's pretty familiar with hyperscale business generally moving waves. We had our largest year in the history of the company, obviously, in new South linings in FY 'twenty. And not a surprise that you have to digest what you sold and delivered at, and it's becoming fairly commonly understood that when you have very large scale commitments that are signed, you then deliver those and you move on to the next set of large scale commitments. So the more we deliver, the more momentum we have, the deeper the relationship with our customers.
And obviously, that flows to new business in multiple locations. So as far as we're concerned, strong performance and leaning into a very strong second half for us. And the answer to I'll go to the last question now before I tackle the supply environment question. And that was the second half. Yes, we've already exceeded our first half sales, already totally exceeded our first half sales by a number of multiples in the second half and have a number of large commitments that we're working through with customers.
So again, very strong environment. I don't think the strength of the environment will be a surprise to anyone. Most people would expect that we're going to be experiencing that level of demand given what's happening in the industry, migration to public and private clouds. Obviously, enterprise migration out of offices has continued to be a key topic because people recognize getting access to the office and living in a COVID COVID normal environment means that that will be a challenging circumstance. So certainly, you know, what we've seen on a global scale has been larger enterprises wanting to ensure that they are operating out of Colo at a minimum, and then they can manage their migration to public and private cloud.
Just in relation to the question on the supply environment, I also don't think that that would be a surprise to anyone, particularly for two big global players like Equinix and Digital Realty to continue to invest in the local market, both being very successful around good businesses, disciplined competitors. We enjoy competing against them because they run quality businesses. They certainly raise the bar in terms of educating the market and customers on what a world class quality data center product looks like. And there's, you know, no real concern from us in the context of the the further developments and the expected capacities that we're seeing. I mean, this is going to be another 10x opportunity over the course of the next three to five years.
And we've got plenty more to come ourselves. I would expect that as we start to make further announcements, we're obviously very, very close to announcing the total size and scale of the opportunity at M3 as we're now well advanced into the base building development of S3. We'll be revealing more about S4 in the not too distant future as well. So whether it be Equinix Digital Realty or ourselves, I would expect the sort of 10x opportunity that most people would be comfortable with today as a result of that acceleration is not going to be a surprise. And I don't see the supply environment as out of sync with the demand environment.
Our biggest challenge today really is obviously just keeping up with delivery of that demand. Very few of us build in advance of those commitments. All of our competitors have been and largely continue to be very disciplined with how they deploy their capital. You don't know where you're going to need it. Capital is a scarce resource, and we see that demand coming in many and very different markets and we need to be sure that obviously we're investing that capital where the opportunity is.
So ourselves and others continue to take land banking opportunities. And clearly, as we're moving towards M3 and M4 as new developments, they will be of significant scale and customer demand is very strong.
Your next question comes from Mitchell Sonnegan from Macquarie.
Just number one, on S2, that's ramping up very quickly. Can you maybe provide some broad guidance on the profile we should be expecting and when full billing might be achieved on existing contracted capacity? Number two, over in Perth, are you hearing anything more from the hyperscalers over there? Can you provide a bit of an update on the conversations you're having with your major customers and expectations over in Perth over the next few years? And finally, just on the cash conversion, that was really strong in the first half.
Should we expect that to normalize over the full year? Thanks, Mitchell. Everyone's got three questions today, so well done. On F2, yes, obviously, very strong. And as it relates to cash conversion across the business, yes, yes, to normalizing.
So P2, tipping off our competitors and everybody else, obviously, the cable routes that are coming into Perth, particularly out of Singapore, you've got two new routes, AST and Indigo, then you've got the Perth to Demand cable. Very strong, obviously, supporting all of those. You will have seen announcements from those companies saying that they'll be distributing their services at P2. So we remain very excited about what that means for the Perth market. We made announcements previously on hosting the Microsoft connectivity nodes and Amazon connectivity nodes there in partnership with those key players in that market, strong demand, both in the program and in hyperscale.
They certainly have the potential to be capable of deploying regions. And as we're seeing across the whole region, those companies continue to deploy and get closer to the customer. And I think the theme of getting closer to the customer is what we will expect to see that will drive demand in those markets that will drive network to growing to compute capacity. And we're very, very well prepared and ready to support that growth and working closely with customers to plan for that support. So without preempting too much what's going to happen there, I do expect that Perth is going to offer us some fantastic opportunities in the not too distant future.
Thank you, Mitch.
Your next question comes from Paul Mason from E and P.
I'll do the three questions as well. So the first one, just on your guidance structure, I mean, I've been thinking about your FY 'twenty one trajectory as a bit more second half weighted because of the M2 contracts, which sort of referenced starting billing in the second half. And so I'm just wondering if you could maybe comment on like is that actually more like a very, very light start and it's more like first half 'twenty two that we should think about that? The second question is about a follow on from John's one. Just you guys had obviously done some front of house refurbishments at M1 and I think S1 as well.
Just where that's up to? And then the third is in relation to S2. I was wondering if you could make a comment about what your sort of runway that's left to sell enterprise deals at S2 looks like, given we're still about one point years away from S 3 opening. Like, do you think you've got enough space in there to actually, you know, consistently sell in? Is there
a risk that
you might run out of inventory again? But that those
are the three for me. Thanks.
Thank you, Paul. I think you might have almost got four in there. Second half weighted, yeah, look, I mean, we continue to be pretty disciplined and conservative in relation to how we manage the forecast. Clearly, strong numbers in the first half. You know, the team got a good handle on what billing activation and ramp looks like.
And we we continue to be pretty flexible with customers. So I just got to continue to to be disciplined and and be conservative in terms of how we forecast the the ramps. And, you know, we always benefit from, you know, positive delivery in that regard. Just one thing to keep in mind, we don't know where power will go, so we've had some positive benefits from power prices in the first half and don't know what that necessarily will mean in the second half. So we just continue to be a little conservative as it relates to our estimations for power costs and obviously that its impact on the revenue mix.
Second question in relation to the front of house research. So yes, we absolutely have gone through the front of house research, seeing in one, S1, continuing to update and keep those facilities fresh. Whilst the front of house is important from a customer experience perspective, so too is continuing to optimize those facilities for margin expansion, the density of the networks and obviously the important role that they play delivering highly diversified cross connect revenue. So you've seen all of that come through, those upgrades are reflected in the maintenance costs of the R and M line, residential investments that we've made as we've upgraded in line and just on front of house. So, yeah, that's pretty much reflected in the numbers today.
My question in relation to the F2 runway on enterprise. So we've got a literal inventory, but obviously not very much. It is our goal not to go dark. I'd like to think that we will have enough inventory to try and, you know, make it through to the opening of s three. You know, it'll be a positive.
As opposed to double of sword, you know, we we we run out of inventory and we've got to wait a little while. So, you know, I think we've got enough the FY '22 open date March still being the target. You know, we're gonna go as fast as we can to to hit those dates. So, you know, it'll be twelve months before we can can really get into to selling s three with those confirmed delivery dates. But, you know, I'm hoping that we just have enough to get us there, Paul.
But again, it will be positive if we run it out in that context because we will sell it to enterprise. So I think it's a positive either way. Thanks, Paul. Thanks.
Thank you. Your next question comes from Suraj Ahmed from Citi. Please go ahead.
Thanks. I just have two. First one, Craig, you spoke to a pickup in enterprise pipeline, second half has been very strong. I think previously you've mentioned that typically the one megawatt hour half in enterprise deals. I mean, where do you think that can go to in the steady time that given the increased demand?
And secondly, just to give the margin guidance for the second half, implies step down. Just trying to understand if there's any additional cost that we should be thinking about or is it just conservative? Thanks.
Thanks, Suraj. There's only two questions you don't want to fill. I'm just joking, mate. I'm good. That's all good.
Thank you, Suraj. So enterprise, the the one megawatt run rate is exactly what we expect. When you think about that one megawatt, when you break that down into enterprise customers, you've got to remember that a one megawatt deal, you know, when we part of the challenge, maybe on the deposit scale, when when you're selling in megawatts and customers are deploying tens of thousands servers, that that they are the largest in the world, but there are very few of them. When you're looking at the enterprise, you know, like ten ten kilowatts for an enterprise customer or 20 kilowatts for an enterprise customer can be a very high margin, critically important ecosystem enhancing opportunity. Those enterprise customers are the ones that the hyperscale wanna connect to.
Believe that we have and continue to focus very, very deeply on the enterprise business is that it's created beautiful ecosystem. You know, that connectivity 75% of data not leaving the building. It's running around inside the four walls of the facility. It drives both physical and and a lot of the cross connect decks. So, I guess, in in an enterprise context, one and a half is what we hope for.
That also includes churn and and customers consolidating and migrating to cloud and then upgrading infrastructure into smaller or more efficient footprints. So I I think that, you know, it's exactly what we wanna continue to see. And as a result of, you know, public and private cloud adoption and then enterprise becoming more efficient as well, We're actually selling more and more and more, and that's sort of being maintained with that one megawatt run rate number. So it's a good performance, I expect that we want to continue to maintain that. Just on the margin guidance, really at the end of the day, power pass through tends to distort what's going on in the margin side.
So as the larger hyperscale customers consume more power, obviously, power is not take or pay. That power is power pass through. So it tends to be a larger percentage overall. But just to be clear, the EBITDA margin improved based on guidance, and there is an overall improvement in the margin position. Thanks, Suraj.
Thank
you. Your next question comes from Tim Plum from UBS. Please go ahead.
Most of my questions have been asked already, so I'm going to mix it up. I'll keep it to two questions, if that's all right. Craig, you touched on it a little bit when you mentioned S-four earlier, but just wondering how you think about weighing up offshore versus local opportunities. And maybe if you can talk about the appetite to expand offshore? And then secondly, in terms of the corporate costs, quite an uplift half on half sorry, year on year.
Historically, you guys have had a half on half uplift in the second half as you take on some more projects, etcetera. Should we be expecting more of the same? And how do we think about that medium term trajectory on the corporate cost line?
Thanks, Tim. So yes, look, S4 and M3, S4 and more to come. There's another a number of other initiatives. We will be unveiling, obviously, the expansion of the edge strategy for us. Locally will be an important piece that we'll reveal more about shortly.
So as edge becomes a a greater feature, many people are talking about it for a long time. We've been carefully evaluating the opportunity and what it looks like. So, you know, outside of the the big, what you call, metro data centers, there will be other opportunities. We'll take advantage of those. We'll be investing in those areas to continue to grow, not just the depth of the business in the context of metros, but the breadth of the business.
So that is important. As it relates to offshore, we have and continue to evaluate opportunities, particularly in Singapore and Japan. It's a bit of a difficult environment. It's tough to travel for everybody given the last twelve months worth of COVID, but it has not it's not discouraged us from wanting to take advantage of those opportunities. We've got a site in Singapore despite the moratorium working with the government to see if we're capable of obviously building our first facility there and moving forward.
Know, it's not just patience. It's not necessarily, you know, easy for me even though I wanna be making progress on every single front. We do have a site. We've got a design. We've selected our builders and engineers.
They're looking at the need to get started. They would just need the government support to move forward on that. And, you know, ourselves and a number of others are waiting patiently to to get cracking in that market, In Japan, it's a little more complicated because this focus, again, we're not just looking at hyperscale opportunities. We're looking at building a very similar business, obviously, to what we've built successfully here. It's deep.
It's enterprise focused. It's got a strong connectivity base. And you've gotta do that in the major metros and finding sites in the major metros and places like Tokyo is a little tricky than it is going out to say, you know, the larger regional areas where you can get land that's that's available. So look, we'll continue to focus on international as an opportunity. And I just have to look at that and say, you know, if it takes us ten years to build a successful business internationally, taking us ten years to build a wonderful successful business domestically, we'll just have to be patient and and look for the opportunity.
Customers wanna work for us. Customers want to work with us. Customers want to grow. We've asked them that context. They love the quality of the product, the service delivery, ethos, our brand products, and the things that we do to build ecosystem enhancing enterprise businesses.
And and that's why it's a little differentiated. It's easy to chase, you know, very large scale, you know, hyper opportunities with a handful of those and everybody wants a piece of them. But it takes time and it takes discipline to build an enterprise business and that's where a huge amount of value is created. So, you know, we're not gonna lose sight of creating the most valuable part, getting big for the sake of it's not, you know, the number one most important priority. The most important priority is building a quality business.
Sometimes it comes in big orders. Sometimes it comes in small orders, but most of time, it takes time to build anything of quality and we'll continue to be patient, we'll continue to be disciplined. My last question, Tim, just in relation to corporate costs. I think the very simple answer is that there's one significant item that that really puts pressure on us and everybody else, and that is insurance premiums. Year on year, was a pretty significant impact you're talking about, you know, being there being our insurance and other things just being, you know, millions more than what most people would have wanted them to be rather than expected them to be.
I don't think that would be a surprise to anyone. So largely outside of our control, and we'll control the things that we can control, which is all the costs and investments that we make on our side. The outside costs, you know, we benchmarked insurance costs on a on a global scale. We went to market. We've tested every opportunity we can, but we just don't have a lot of flexibility in that regard.
So some things you can't control, those ones will accept that they are what they are, and we'll focus on the ones that we can include. Thanks, Tim.
Thanks, Craig.
Thank you. Your next question comes from Fraser McLeish from MSG Marquee. Please go ahead.
Hi, Craig. Thanks very much. Just a quick one from me. Just on the revenue per megawatt number, I think, came down about 3% in the half. Would you be able to just give a little bit of granularity on the key drivers of that, I guess, are being what makes power prices and probably contracted price increases?
And just how you're seeing that trending going forward would be very helpful. Yes.
Thanks, Fraser. That one's actually relatively straightforward insofar as the revenue per megawatt number is really a direct reflection of what's happening in the mix of power. So as we get a larger percentage type of hyperscale, every time we deliver a large chunk of hyperscale, that will have a direct impact on the revenue per megawatt number. So as we're activating as you saw in the first half, were activating a fairly significant amount of billing, and it comes as a power pass through rather than take or pay. But the other element being and this is the return metric that is important that we continue to focus on, and that's the dollar generated per square meter.
So the balance of those two, as you've seen over time, the per megawatt pricing goes up and down depending on the size of the customer and billing at any given time. But the revenue per square meter continues to rise, and that's the one that is obviously important for us to continue to improve margins over time. Fraser.
Great. Thank you.
You.
I think we're pretty much exactly on the hour. So are there any further questions?
There are no further questions at this time. So I'll now hand back for closing remarks.
Thanks very much, Charlene. Ladies and gentlemen, thanks for joining the first half results call. We appreciate the continued support. Thank you to everyone for the questions. It's been an exciting period for us despite challenging circumstances for most domestically and globally.
COVID-nineteen has unquestionably caused many businesses to think differently about how they operate. A lot of those changes in the environment have been very positive catalysts for us. We are hugely excited about what's happening in the overall continued development of the business. There are many, many new opportunities, obviously, emerging as we go from M2 into M3 and obviously, S3 into new developments, we'll be sharing more about like S4. But the growth environment coming into a very strong second half for us, it's wonderful to be able to share and upgrade the guidance in the year.
So thanks to everyone for joining the call today. Thank you for your support, and I'm sure we'll talk again soon. Bye for now.
That does conclude our conference for today. Thank you for participating. You may now disconnect.