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Macquarie Telecom (ASX:MAQ) share price on watch with more growth in HY21

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The Macquarie Telecom Group Ltd. (ASX: MAQ) share price will be on watch tomorrow after the telecommunications business released its FY21 half-year result.

This is a diversified technology business. It generates earnings from data centres, cloud, cybersecurity and telecommunications. The clients are mid to large business and government customers.

How did Macquarie Telecom do in the FY21 half-year result?

Looking at the top line, revenue increased by 9% to $143.6 million.

All business units grew revenue. Macquarie Telecom said that it achieved particularly strong growth in cloud services and government. It also revealed that the data centres business has sold 10MW of IT load to a leading corporation. The company boasted that hosting revenue has grown revenue at a compound annual growth rate of 22.3% over the last three years.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 15% to $36.4 million. Cloud services and government EBITDA grew the most, rising by 33.3% to $18 million, whilst the telecommunications EBITDA fell 3.2% to $9.1 million. Data centres EBITDA grew almost 7% to $9.3 million.

Macquarie Telecom highlighted that the EBITDA margin for the overall business has improved from 19.6% in the first half of FY18 to 25.3% in the first half of FY21.

Net profit after tax (NPAT) went up 5% to $7 million. The company generated total operating cash flows of $13.6 million during the half-year.

The telecom business continues to migrate services to the NBN in line with its plan and expects to complete this by late 2021.

Investing for growth

The company said that its data centre in Canberra (Intellicentre 5 – IC5) was completed on time and on budget. The Intellicentre 3 East (IC3 East) is on budget and will achieve practical completion in March 2021.

Capital expenditure for the first half of FY21 was $32.9 million, excluding IC3. Customer growth capex was $13.9 million, up 20%, reflective of its continued data centre sales success and product mix, according to the company.

The company said it has drawn down $93.5 million of debt to support its data centre developments in IC3 East and Intellicentre 5 South Bunker in Canberra.

Commentary from the CEO

Macquarie Telecom CEO David Tudehope said:

Macquarie’s 20-year strategy of investing in world-class data centres is based on strong demand for data centre capacity as customers migrate to cloud and co-location services. The win, of the 10MW of IT load sold to a leading corporation, recognises the world class investment we have made in the Macquarie Park Data Centres Campus in Sydney’s North Zone.

Macquarie Telecom share price recent performance

Over the last year the Macquarie Telecom share price has risen by 77% over the last year. However, since the start of 2021, the Macquarie Telecom share price has been largely flat so far. 

Macquarie Telecom Outlook

The company said that FY21 EBITDA is expected to be approximately $72 million to $75 million.

It also revealed that the telecom division continues to win customers from legacy data and IP carriers with its NBN and SD WAN solution.

Total capex is expected to be between $57 million to $66 million, excluding IC3. The IC3 expenditure is expected to be between $123 million to $126 million.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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