The Megaport Ltd (ASX: MP1) share price is pushing higher on Wednesday after the release of its FY 2020 results.
At the time of writing the network as a service provider's shares are up 1.5% to $14.82.
How did Megaport perform in FY 2020?
For the 12 months ended 30 June 2020, Megaport's strong growth continued with a 66% increase in revenue to $58 million.
On a recurring basis, at the end of the period the company's monthly recurring revenue (MRR) had reached $5.7 million. This was an increase of 57% year on year and equates to $68.4 million on an annualised basis.
Given that Megaport is investing heavily in its future growth, it continues to operate at a loss. It recorded a net loss of $47.7 million for FY 2020. Despite this, it has a very strong balance sheet with a cash position of $166.9 million.
What were the drivers of Megaport's growth?
Megaport drove consistent increases in all metrics across all regions in FY 2020.
This includes its footprint in data centres globally, which grew 22% to 366 installed locations and 27% to 669 enabled locations.
Strong demand thanks to the shift to the cloud and its expanding footprint led to Megaport's customer base increasing by 352 or 24% to 1,842. Management advised that customers grew across many verticals, but Financial Services, Manufacturing, Healthcare, and Digital Media continue to perform exceptionally well. This is a result of increased demand for cloud connectivity and data requirements within vertical-specific digital supply chains.
Also growing strongly were its Ports and Megaport Cloud Routers (MCRs), which were up 42% and 75%, respectively. This led to Total Services increasing by 5,151 or 45% to 16,712. This includes a 53% increase in Virtual Cross Connections to 9,248.
Management commentary.
Megaport's Chief Executive Officer, Vincent English, said, "The Company has reached $5.7 million in monthly recurring revenue, a 57% increase from last year. This growth is underpinned by our North American business contributing $26.3 million this fiscal year, an increase of 94% from FY19."
"Our continued global expansion to key locations in Europe, Asia Pacific, and North America has enabled Megaport to reach 23 countries, and 669 enabled locations including 366 installed data centres in 128 cities globally. Our expansion into Japan with the enablement of Tokyo and Osaka has unlocked new opportunities as Megaport is the first global neutral interconnection fabric in the market," he added.
Outlook.
Mr English believes that its performance in FY 2020 has put the company on a path to become EBITDA breakeven in the near future.
He commented: "Megaport's performance in Fiscal Year 2020 has positioned the company on a path to profitability. We are driving our business to achieve EBITDA breakeven on an exit run rate basis in Fiscal Year 2021. With the investments we've made in our people, technology, and network footprint, Megaport is well positioned to achieve our revenue and profitability objectives."
A key driver of this looks like to be in recently announced Megaport Virtual Edge offering.
"The development of Megaport Virtual Edge and our collaboration with Cisco to enable SD-WAN capabilities will unlock a new level of value for our customers and enable more businesses to take advantage of Megaport's industry-first elastic interconnection platform," he explained.
