Target Hospitality Corp. announced a 400‑bed expansion of its data‑center community, raising total capacity from 250 to 650 beds—a 160% increase that will support up to 650 individuals, with the possibility of scaling to 1,500. The move adds $40 million in committed minimum revenue over a two‑year term through March 2028, lifting the total contract value to $83 million, a 90% jump from the original $43 million agreement.
The expansion will require $10‑$15 million in capital expenditures and will begin construction in the fourth quarter of 2025, with completion slated for the first quarter of 2026. The contract includes four one‑year extension options through March 2032, giving the company long‑term revenue visibility.
Target Hospitality is using the expansion to accelerate its shift from a government‑centric portfolio to high‑margin commercial opportunities in the data‑center and AI infrastructure market. The new community builds on an August 2025 contract that initially covered 250 individuals and generated $43 million in committed revenue through September 2027. The company has launched the “Target Hyper/Scale” brand to highlight its capabilities in this sector, and the expansion demonstrates the scalability of its existing asset portfolio.
The expansion comes after a strong Q3 2025 earnings report in which the company generated $99.36 million in revenue—up 16% from the prior quarter and beating estimates of $85.30 million—and posted an EPS of –$0.01 versus an estimate of –$0.04. The company’s liquidity remains robust, with zero net debt and roughly $205 million in available cash. Management noted that the construction shift will modestly compress margins in 2026 because construction has a lower contribution profile, but the predictable two‑year cash‑flow stream offsets this short‑term pressure.
CEO Brad Archer said the expansion “supports the rapid growth in our customers’ demand and provides vital solutions that contribute to the success of this data‑center project.” He added that the community’s 160% growth in three months exceeded expectations, underscoring the company’s ability to scale quickly in high‑growth markets. The expansion is a key driver of Target Hospitality’s broader strategy to diversify beyond government contracts and capture higher‑margin commercial revenue streams.
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