Macquarie Telecom (ASX:MAQ) share price lower on seventh year of EBITDA growth

After a bumper performance in the past few weeks, the Macquarie Telecom share price is edging lower post-FY21 results.

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The Macquarie Telecom Group Ltd (ASX: MAQ) share price has opened lower on Wednesday after the company released its FY21 full-year results.

Macquarie Telecom share price lower despite continued track record of growth

Macquarie Telecom was pleased to announce its seventh consecutive year of EBITDA growth and in line with guidance. Key highlights for FY21 include:

  • Revenue increased 7.1% to $266.2 million
  • Earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 13% to $73.8 million
  • Net profit after tax (NPAT) decrease 7.4% to $12.5 million
  • Capital expenditure of $139.1 million (FY20: $64.1 million)

What happened to Macquarie Telecom in FY21?

The Macquarie Telecom share price has surged 40% since mid-July. This major rerate came about on 14 July, when the company announced plans to build a new data centre at Macquarie Park Data Centre Campus.

The company said that the new data centre will be called "IC3 Super West" and will be the largest data centre on the campus.

IC3 Super West will add 32MW of IT load to bring the total campus IT Load to 50MW over time. It is designed to seamlessly interconnect with its IC3 East asset.

According to today's results, the company's state significant development application is expected to shorten the planning cycle, likely to run until early 2022.

Macquarie Telecom said that construction and funding remain subject to final board approvals.

In terms of financial performance, Macquarie Telecom delivered a 7.1% increase in revenue, underpinned by strong growth in cloud services & government and data centre divisions.

The company's 7.4% decline in NPAT reflects the increase in depreciation and amortisation as a result of increased levels of capital expenditure in FY20 and FY21.

Management commentary

Macquarie Telecom chief executive David Tudehope commented on the company's strong track record of growth, saying:

The 2021 full year results delivered the seventh consecutive year of EBITDA growth underpinned by our strategy of investing in Data Centres, Cloud & Cyber Security, including the recent announcement of our new IC3 Super West development, which will provide significant customer growth opportunities in the future.

In addition, Tudehope said that the company will increase investments in cyber security to meet rising demand.

We have decided to increase our investments in Cyber Security, people and technology, to benefit from the increasing demand for business and government to uplift their security defences.

What's next for Macquarie Telecom?

Looking ahead, Macquarie Telecom expects EBITDA to continue to grow in FY22, underpinned by investments made in data centres as well as cloud services and government.

The company said it will continue to develop public cloud capability to enhance its current hybrid cloud offering.

This is in addition to "making significant investments in FY22" to realise the strong demand for cyber security in its government and cloud services business.

Macquarie Telecom share price snapshot

At the time of writing, the Macquarie Telecom share price is down 1.53%, trading at $74.85 a share. However, it's enjoyed a good run so far in 2021, increasing 43% year to date and up almost 63% over the last 12 months.

The company has a market capitalisation of $1.6 billion.

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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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