Why Did DXN’s Revenue Plunge 69% Despite a $12M Backlog?
DXN Limited reports a sharp revenue decline in Q1 FY26 due to client-driven project deferrals but highlights a robust $11.9 million backlog and the imminent launch of its first Data Centre as a Service site.
- Q1 FY26 revenue down 68.8% to $0.94 million due to project deferrals
- Strong total backlog of $11.9 million supports future growth
- First DCaaS site construction completed; service fees to start November 2026
- Cash balance of $2.4 million maintained despite negative operating cash flow
- Asia-Pacific expansion bolstered by new sales and engineering hires
Quarterly Performance and Revenue Challenges
DXN Limited, a specialist in prefabricated modular data centres, has reported a significant 68.8% drop in revenue for the September 2025 quarter, falling to $0.94 million. This decline is attributed primarily to the deferral of projects by three major clients, an unprecedented event in the company’s history. Despite this temporary setback, DXN stresses that the revenue shortfall is a timing issue rather than a reflection of operational weakness.
The company closed the quarter with a cash balance of $2.4 million, managing to maintain financial discipline amid slower project execution and delayed milestone payments. Operating cash flow was negative $428,000, reflecting the timing of supplier payments and deferred customer receipts, but DXN remains confident in its cash management and cost controls.
Backlog Strength and Pipeline Momentum
DXN’s total backlog stood at a healthy $11.9 million as of 30 September 2025, supported by a growing pipeline of 75 identified projects across various stages from qualification to final negotiations. This backlog provides a solid foundation for anticipated revenue acceleration in the coming quarters, with the company expecting growth to be weighted towards the second half of FY26.
Key projects such as Globalstar, Ventia, and DP World experienced delays but remain active, with revenue recognition expected to resume as project momentum picks up. The company’s modular data centre division, while impacted this quarter, continues to evolve its Strutcore product line to meet the needs of hyperscale customers, potentially unlocking new market opportunities.
Data Centre as a Service (DCaaS) Milestone
A major highlight for DXN is the completion of its inaugural DCaaS site construction, with utilities including power and internet expected to be operational by the end of October. This milestone paves the way for the commencement of recurring service fees from November 2026, marking a significant new revenue stream. The DCaaS agreement with a US-based global satellite provider has already received strong client validation, positioning DXN as a leader in this emerging segment.
Strategic Expansion in Asia-Pacific
DXN is actively strengthening its presence in the Asia-Pacific region, onboarding dedicated sales and engineering talent to accelerate growth and capture new customer opportunities in markets such as Singapore, Malaysia, and Indonesia. This geographic expansion complements the company’s core modular and DCaaS offerings and aligns with its long-term growth strategy.
Managing Director Shalini Lagrutta emphasised that despite the challenging start to FY26, the company’s fundamentals remain strong, with structural enhancements and product innovation setting the stage for sustained success.
Bottom Line?
DXN’s Q1 challenges underscore the volatility of project timing, but its robust backlog and DCaaS launch signal promising growth ahead.
Questions in the middle?
- How quickly will deferred projects translate into revenue in upcoming quarters?
- What impact will the DCaaS recurring revenue stream have on DXN’s financial stability?
- How effectively can DXN’s Asia-Pacific expansion convert pipeline opportunities into contracts?
