The Megaport Ltd (ASX: MP1) share price is slipping down the red slope today.
This afternoon, the elastic network services provider's shares are down 1.16% to $17.86. However, earlier they were down as much as 2.88%.
Let's take a look at the company's latest announcement.
What's moving the Megaport share price today?
Shares in the software-defined networking provider are being sold off following the release of its first-quarter update for FY22.
Surprisingly, the market is reacting negatively to the announcement, despite growth across all operational metrics. To summarise, here are some highlights from the quarter:
- Monthly recurring revenue for September up 14% quarter-on-quarter to $8.6 million;
- Quarterly revenue up 8% quarter-on-quarter to $24.6 million;
- Customers increased 2.1% quarter-on-quarter to 2,332;
- Total ports increased 5.1% quarter-on-quarter to 8,084;
- Total Megaport Virtual Edges (MVEs) sold increased 33.3% quarter-on-quarter to 28; and
- Average revenue per port up 8% quarter-on-quarter to $1,058.
What happened during the quarter?
It was a busy quarter for Megaport in Q1, achieving record underlying monthly recurring revenue (MRR) growth in dollar terms. Likewise, the company's MRR reached a new record of $8.6 million during the quarter. The quarter marks a re-acceleration of growth after a slower period between June 2020 and March 2021.
Additionally, the quarter's total revenue of $24.6 million was helped along with the sale of 1,459 new services. This was in addition to the sale of 7 MVEs ahead of populating Cisco's global price list (GPL).
On that topic, Megaport is now listed on Cisco's GPL as of 29 September 2021. Being featured on this list means Megaport's offerings will be easier to adopt by the $247 billion tech company's customers.
In another positive indicator, long-term commitments reached a record high during the quarter. Megaport states that 52% of net new ports signed for a term of 12 to 36 months. Despite this record achievement, the Megaport share price is floundering on Thursday.
Furthermore, Megaport noted that an additional two software-defined wide area network (SD-WAN) providers will commercially launch on the company's MVE platform. In turn, Megaport's market share of SD-WAN infrastructure will be more than 70%.
The acquisition of InnovoEdge, announced on 10 August 2021, is progressing with integration. The company expects it will provide more orchestration and automation for end-to-end control of network and IT resources.
Words from the CEO
Commenting on the quarterly update, Megaport CEO Vincent English said:
With a record quarter of MRR growth and a continued increase in long-term commitments from our customers, we are seeing more substantial adoption of our platform. Ease-of-use and dependability continue to be driving factors for new service adoption as customers connect to more services and migrate more of their vital applications into public clouds.
Our ecosystem of service providers and support for leading SD-WAN platforms on Megaport Virtual Edge provide our customers with more options to easily and securely connect between the services, locations, and users that are powering their businesses. The deployment of 400 Gbps capacity within our backbone will ensure we are able to satisfy the increasing customer requirements for on-demand cloud connectivity.
In addition, English reiterated Megaport's investment in innovation, positioning it well as SD-WAN adoption increases.
Finally, the Megaport share price is up 22.6% in the last 12 months.
