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Why the Superloop share price is surging today

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The Superloop Ltd (ASX: SLC) share price has surged this morning after the company released an announcement to the ASX before market open. Superloop shares closed at 96 cents per share yesterday but opened this morning at $1.01 and have since risen to $1.07 – a 9.2% rise at the time of writing.

What did Superloop say?

The announcement contained both an update to its major network projects and an updated FY20 guidance. Here’s some of what the company had to say:

Today, Superloop announced the completion of two major network projects that have been years in the making. These transform Superloop’s on-net fibre infrastructure across Asia Pacific, with live customer traffic being carried over INDIGO subsea cable from Sydney to Perth to Singapore and across the Australia-wide footprint interconnecting all 121 NBN POIs (points of interconnection).

CEO Drew Kelton also stated that “with master service agreements in place with many global service providers, content providers and global enterprises, and with INDIGO and domestic fibre networks now live and billing, the company expects to see continued connectivity growth in FY20 and beyond.”

Meanwhile, non-core cloud managed services continued to decline during 2H19, with the company stating “the carrying value of ~$60m Services segment, including $43m of goodwill, is being assessed for non-cash impairment as part of the… full year results”.

FY20 Guidance

In updating FY20 guidance, the company stated:

Superloop is providing new guidance on its FY20 financial year EBITDA. The group expects underlying operational EBITDA… to approximately double year-on-year to $14m-$16m. This is underpinned by strong growth in core fibre connectivity business delivering operating leverage into the future, coupled with a return to growth of complimentary offerings and partially offset by planned further declines in the non-core cloud managed services business.

Superloop will release its final FY19 results on 27 August 2019.

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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of SUPERLOOP FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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