Own Megaport (ASX: MP1) shares? Here's what to watch when the company reports tomorrow

All eyes will be on Megaport tomorrow. Here's what to look for.

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Key points
  • Megaport shares will be in focus tomorrow when the company releases its earnings for the first half of the financial year
  • While the company hasn't posted guidance, it did outline its growth strategy for this financial year
  • Numerous brokers have previously been disappointed by the company's investment spend

Many eyes will be on the Megaport Ltd (ASX: MP1) share price tomorrow as the company releases its earnings for the first half of financial year 2022.

It will be the first chance the market has had to see, in detail, how the company's 'Scale Up, Scale Out' growth strategy is advancing.

At the time of writing, the Megaport share price is $13.27, 30% lower than it was at the start of 2022. That makes it the worst performing S&P/ASX 200 Index (ASX: XJO) tech share of the year so far.

So, what might the market expect to hear from the company tomorrow? Let's take a look.

A group of people gather around a computer screen in rapt attention, one man holds his hands to cover his mouth as if in nervous anticipation of what news may come.

Image source: Getty Images

Here's what to look out for when Megaport reports

Owners of Megaport shares are likely anticipating the company's earnings for the first half of this financial year, set to drop tomorrow.

They'll follow from its financial year 2021 results. The last financial year saw Megaport deliver major boosts to its performance.

Its revenue increased 35% to $78 million, it recorded a 33% increase to its ports, and its monthly reoccurring revenue (MRR) grew 32% to $7.5 million.

However, the company recorded a net loss of $55 million for financial year 2021.

At the time, CEO Vincent English looked to the future, saying:

The Megaport mission for the coming year is to 'Scale Up, Scale Out'. This is a commitment by everyone at Megaport to accelerate our growth and our innovation cycle to increase our lead in the network-as-a-service (NaaS) space … We will invest in revenue growth by making investments in further market expansion, product, and service innovation, and most critically, the people responsible for making Megaport the transformational technology company that is changing the way IT services are built today and tomorrow.

Unfortunately, that's the closest thing to guidance for financial year 2022 the market got from Megaport.

Still, the strategy might be one point Megaport shareholders look for in the company's half-year earnings tomorrow.

Since the end of financial year 2021, 2 quarterly updates have been released by the company, each showing notable growth.

It recorded 8% revenue growth for both the September and December quarters – reaching $24.6 million and $26.6 million respectively.

Its MRR also grew 14% over the September quarter and 7% over the December quarter.

However, the latter quarter's performance disappointed some brokers.

As The Motley Fool Australia's James Mickleboro reported, numerous brokers expected the company to post a higher investment spend and dropped their price targets for the stock when such expectations didn't eventuate.

Such investment spend could be another metric worth seeking out in tomorrow's announcement.

Megaport share price snapshot

Unfortunately, the Megaport share price has a long way to climb to reach its previous level.

It's now officially lost all its 2021 gains and is trading 1.2% lower than it was this time last year.

Though, long term investors are still well and truly in the green. The Megaport share price is currently 488% higher than it was 5 years ago.

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