The Megaport Ltd (ASX: MP1) share price is trading lower on Wednesday following the release of its half year update.
At the time of writing the shares of the leading provider of elastic interconnection services are down 3.5% to $10.67.
Despite this decline, though, they are still up a remarkable 168% over the last 12 months.
What happened in the first half?
For the six months ended December 31, Megaport reported revenue of $25.9 million. This was an increase of 70% on the prior corresponding period.
At the end of the period the company’s total Monthly Recurring Revenue (MRR) was $4.6 million, which was an increase of $1.9 million or 68% from a year earlier.
Megaport generated a profit after direct network costs of $13.2 million for the half year, which was an increase of $8.3 million or 173% from the same period last year. Its net loss for the period was $19 million.
Despite this loss and thanks partly to a $62 million capital raising during the half, Megaport finished the period with a hefty cash balance of $119.9 million.
Key drivers of its growth in the first half were its increasing footprint and customer numbers. By the end of December Megaport had reached 1,679 customers across 552 Enabled Data Centres in 102 cities. Of these data centres, 93 were located in Asia Pacific, 313 in North America, and 146 were in Europe.
Megaport’s chief executive officer, Vincent English, appeared to be pleased with the company’s performance during the first half.
He said: “Megaport had a solid revenue performance during the first half of Fiscal Year 2020. During the reporting period, Megaport’s gross profit margin in each of the three main operating regions increased while we continued to expand our footprint to new locations.”
“In November, Megaport launched services in Japan, a leading market for public cloud services. Additionally Megaport added 24 new cloud onramps during the period representing access to 12 new cloud regions. This expanded footprint and more robust ecosystem of service provider options drives greater utilisation of the Megaport network and provides more customer access and value.”
Mr English revealed that the company is focused on expanding its footprint to reach its stated 380 installed data centre target.
He said: “Coming into the second half of the year, we will continue to focus on ecosystem development, adding new service providers to our marketplace and integrating with more cloud onramps as cloud providers expand their platforms to new markets.”
“As we evolve our platform, our development teams will drive more system automation and features that enable rapid provisioning of services while further integrating with service providers. This formula translates to improved user experience and drives the uptake of services across the entire cloud ecosystem,” he concluded.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. 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.