The Megaport (ASX:MP1) share price is up almost 40% in 6 months

Strong financials and a strategic acquisition appear to be driving forces behind the company’s recent share price surge.

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Rocket shooting out of investors outstretched hands to signify fast growth of ASX tech share

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Shares in emerging ASX tech company Megaport Ltd (ASX: MP1) have skyrocketed over the past 6 months.

The Megaport share price has rallied almost 40%, from a low of $12.15 six months ago to $17.09 at the time of writing. The company even set a new 52-week high price of $18.55 on 30 June.

It has been a busy few months for Megaport, with the release of the company’s FY21 full-year financial results, as well as the announcement that it had completed a key strategic business acquisition.

Let’s take a closer look at how these two events have boosted the Megaport share price.

About Megaport

First, a quick reminder of what Megaport actually does.

Megaport describes itself as a network as a service (NaaS) company. It leverages cloud technology to supply “on demand” network services to corporate clients. It helps clients expand their network connectivity, and also allows them to manage their bandwidth usage.

Customers have the ability to scale up their bandwidth requirements when demands are high, and then reduce consumption during off-peak times. This flexibility means Megaport’s customers can tailor the network to suit their individual needs, and better manage their overall costs.

Recent news

Let’s start with the financials.

Megaport released its full-year FY21 results to the market on 10 August. The company recorded revenues of $78.28 million for FY21, a year-on-year uplift of 35%. This was underpinned by strong growth in customer numbers, with Megaport ending the year with 2,285 active users (an increase of 24% over the prior year).

Megaport CEO Vincent English commented on the result, saying that the company’s “investment in innovation and products supported big growth in Fiscal Year 2021”. He said that Megaport’s mission for FY22 was to accelerate growth and increase its “lead in the NaaS space”.

One way to drive growth is through acquisitions.

On the same day as it released its annual results, Megaport also reported that it had acquired tech company InnovoEdge for up to US$15 million, half in cash and half in ordinary shares of Megaport.

InnovoEdge develops software to help customers manage and analyse the performance of cloud-based applications. In its release to the market, Megaport stated that the acquisition would provide “increased functionality” on its NaaS platform.

Megaport share price snapshot

Megaport’s strong financial performance and growth strategy appear to be the catalysts for sending its shares soaring higher recently.

The Megaport share price is up almost 5% over the past month.

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Motley Fool contributor Rhys Brock owns shares of MEGAPORT FPO. 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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