Modular data center provider DXN has lost a neocloud customer.

The company this week announced Q1 FY27 revenues of AU$3.4 million (US$2.39m), up 340 percent on the same quarter last year (from AU$700,000).

However, the company noted its US-listed neocloud customer informed DXN that following a “strategic shift in its business,” the unnamed client has cancelled its AU$8.8 million (US$6.19m) AI HPC contract.

DXN secured a contract with an unnamed neocloud to supply a modular data center back in June, with the company tapped to deliver a 1.36MW liquid-cooled module offering densities up to 150kW per rack to the US.

DXN noted the customer is “unlikely” to proceed with plans for a larger follow-on campus opportunity.

DXN has recognized AU$100,000 of revenue related to the contract, and expects to be paid AU$4.2 million (US$2.95m) based on works progressed to date, totaling around 48 percent of the overall deal.

Shalini Lagrutta, managing director of DXN, said: “While we are disappointed that our maiden Al HPC customer has changed its strategic direction, our contract terms have protected DXN's position, and the design work and US relationships built through that program have opened further Al opportunities for us in the US market. We have observed a significant step-change in customer inbounds during the quarter, driven by both the shift in industry demand and the supply response. Our focus for the remainder of FY27 is disciplined execution, converting backlog into revenue, while nurturing the growing customer relationships we are attracting."

DXN saw AU$2.9 million ($2m) in revenue from its modular data center business, AU$400,000 ($280,000) from its data center operations unit, and AU$100,000 ($70,000) from its data center-as-a-service division. The company’s current contract backlog totals AU$30.8 million ($21.7m).

The company has secured a temporary lease on a manufacturing facility in the Seven Hills area in New South Wales, adding around 1,000 sqm of factory space to cater for short-term demand.

The company is working on securing a permanent manufacturing site on the Australian east coast. DXN is also establishing manufacturing capacity in Johor, Malaysia, and in Jakarta, Indonesia. These are all due live next year.