Megaport share price explodes 38% on June quarter profit

What was so impressive about the ASX tech company's results today?

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Key points

  • Megaport shares are surging today after the company's quarterly results 
  • The technology company reported an EBITDA profit for the first time 
  • Monthly recurring revenue soared 13% to $10.7 million 

The Megaport Ltd (ASX: MP1) share price is soaring today after the company delivered EBITDA profit for the first time.

The technology company's share price is currently swapping hands at $8.00, a 23.65% gain. That's after hitting a high of $8.96 in early trade, up 38% on yesterday's close. For perspective, the  S&P/ASX 200 Index (ASX: XJO) is 1.26% higher at the time of writing.

Let's take a look at what Megaport reported today.

Megaport delivers profit

Highlights of the Megaport's unaudited financial results presented in the quarterly report include:

  • Monthly Recurring Revenue (MRR) grew 13% on the previous quarter to $10.7 million
  • Underlying MRR jumped 10% to $10.7 million
  • Total revenue jumped 10% on the previous quarter to $30.6 million
  • Annualised recurring revenue of $128 million
  • Normalised EBITDA of $1 million, up 126% on the previous quarter
  • Profit after direct costs and partner commissions of $19.9 million, up 14% on the third quarter
  • Cash position of $82.5 million

What else did the company report?

Megaport delivered EBITDA profit in the fourth quarter, a first for the company. This compared to a loss of $3.8 million on the third quarter of FY22. Canada and Japan becoming profitable earlier than scheduled contributed to this result.

Underpinning the strong monthly recurring revenue growth was strong port sales and a 7% boost in the average revenue per port to $1,120 per month. Net new port sales jumped by 6% to 9,545.

Customers also increased 4% during the quarter to 2,643. Megaport sold 1,447 new services during the quarter, up 6% on the prior quarter.

Multi-cloud connections on the Megaport platform also increased, with 9% more Megaport Cloud Routers (MCR) sold in the June quarter. In total, 14% of the company's customers have now taken up the MCR offering.

During the quarter, Megaport also launched in Mexico, a market the company describes as the "second largest IT spending market in Latin America".

Megaport enabled 16 new data centres during the quarter, and four of these were in Mexico.

Overall, monthly recurring revenue leapt 15% in North America, 12% in the Asia Pacific, and 9% in Europe in the fourth quarter of FY22.

Management comment

Commenting on the results, chief executive officer Vincent English said:

During the fourth quarter of fiscal year 2022 Megaport drove steady underlying revenue growth. Uptake of core products, as well as monthly recurring revenue growth, were strong in the quarter.

This is driven by customers continuing to increase the number of service providers they securely connect through our platform as they undertake global digital transformation initiatives.

The underlying Megaport network and business model has strong operating leverage to further increase profit and generate cash as revenue grows.

What's ahead?

Megaport has a "high degree of confidence" in FY23 and highlighted its solid cash position of more than $80 million.

The company has aligned the business to reduce "cash burn", enabling it to achieve profit. English added:

Closing fiscal year 2022 with a solid fourth quarter performance across all operating metrics provides excellent momentum going into fiscal year 2023.

Megaport share price snapshot

The Megaport share price has lost 47% in the past year, while it has fallen 55% in the year to date.

However, in the past month, Megaport shares have rocketed more than 62%.

For perspective, the benchmark ASX 200 index has lost more than 7% in the past year.

Motley Fool contributor Monica O'Shea has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in 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 Scott Phillips.

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