Megaport share price rises as revenue lifts 40%

Investors appeared to react positively to Megaport's results.

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Key points

  • The Megaport share price is in the green today 
  • Net loss of $48.5 million, improved by 12% on FY21  
  • Megaport revenue surged 40% 

The Megaport Ltd (ASX: MP1) share price is jumping today on the back of the company's FY22 results.

The network as a service (NaaS) company's share price is currently trading at $8.95, a 9.54% gain. In contrast, the S&P/ASX 200 Index (ASX: XJO) is up 0.05% today.

Let's take a look at what Megaport reported to the market.

Megaport reports an overall loss despite revenue boost

Highlights of Megaport's FY22 results include:

  • Net loss of $48.5 million, a 12% improvement on the $55 million loss in FY21
  • Revenue of $109.7 million, 40% more than last year.
  • Monthly Recurring Revenue (MRR) leapt 43% on previous year to $10.7 million
  • Normalised EBITDA loss of $10.2 million, a 23% improvement on the $13.3 million loss last year
  • No dividend declared

What else did the company report?

The 40% revenue boost was driven by a boost in customers and service uptake. The highest growth was seen in North America, where revenue jumped 49% in FY22.

Megaport highlighted its MRR growth outperforming revenue growth shows "acceleration towards the end of the year".

While EBITDA was a loss for the year, in the fourth quarter Megaport delivered EBITDA profit for the first time.

The total number of customers grew 16% on the previous financial year to 2,643.

The total number of services sold lifted 26% to 27,383, while total ports jumped 24% to 9,545.

Management has decided to reduce the workforce to lower costs and prepare for rising prices and inflation. A total of 35 positions have been made redundant at a cost of $1.6 million.

Management comment

In a letter to shareholders, chief executive officer Vincent English said:

A key indicator of the value of the Megaport platform for customers is service adoption. Average services per customer increased 9% in fiscal year 2022. We drive more value by delivering features that allow customers to take greater control of their traffic and ease the job of getting connected.

The team is highly aligned to grow our business through geographic expansion to key new markets, ongoing product innovation, and operational efficiencies. This will drive profitability, sustainability, and ultimately value to our shareholders, partners, and customers

What's ahead

Megaport said the decision to reduce the workforce places the company in "the best possible position for revenue growth in FY23.

The company sees "strong momentum" heading into FY23.

Commenting on the future outlook, chairman Bevan Slattery said:

Our company's innovation roadmap will continue to focus on automation and orchestration of network capacity, network function virtualization, and IT services discovery.

Megaport share price snapshot

The Megaport share price has descended 52% in the year to date and 48% in the past year.

But in the past month, Megaport shares have soared 37%.

For perspective, the benchmark ASX 200 index has lost 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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