Megaport (ASX:MP1) share price lifts after acquisition update

A series of updates from the company today sees its share price in the spotlight.

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The Megaport Ltd (ASX: MP1) share price has jumped into the green in early trade today. Today's climb comes as Megaport gave a key update to the market, amid other announcements.

Let's cover what the releases entail.

Quick recap on Megaport

Megaport's tech service delivery models are touted as "Network as a Service (NaaS)" solutions, a derivative of the high-growth Software as a Service (SaaS) industry.

The company reported FY21 results today and recognised a 35% year-on-year growth in revenue to $78 million. Baked into that figure is a 32% increase in monthly recurring revenue.

For its efforts, Megaport has a market capitalisation of $2.7 billion at the time of writing.

Megaport to acquire InnovoEdge

Today Megaport confirmed it signed the dotted line to acquire "AI-powered multi-cloud and edge application orchestration company" InnovoEdge, Inc.

Under the deal, the transaction includes a cash payment of US$7.5 million and "up to US$7.5 million worth of ordinary shares in Megaport", as per the company.

Moreover, the equity position will be "issued in three tranches" over the coming three years, subject to performance milestones. Investors can expect the deal to be finalised in mid-August.

For its part, InnovoEdge believes the pair's expertise "aligns perfectly" while Megaport is confident the acquisition will "drive functionality" across its NaaS platform.

Speaking on the deal, Megaport CEO Vincent English said:

The acquisition of InnovoEdge aligns well with that priority and will help us drive greater functionality across our leading Network as a Service platform. By integrating the InnovoStudio service with our portal and software defined network, we will provide customers and partners with greater visibility and control of networking, cloud, and service resources.

In addition, investors have reacted favourably to the news today, pushing Megaport shares into the green from the market open.

To illustrate, Megaport shares are now exchanging hands at $17.64 apiece, a 1.55% jump from the previous close.

Megaport share price snapshot

The Megaport share price has posted a year to date return of 25%, extending the previous 12 months' gain of 31%.

Both of these results have outpaced the S&P/ASX 200 Index (ASX: XJO)'s climb of around 25% over the past year.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. 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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