Up 119% in a year, Megaport share price slipping today despite record earnings

Megaport reported strong financial metrics across the board, but its guidance may have disappointed.

| More on:
Modern accountant woman in a light business suit in modern green office with documents and laptop.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Megaport Ltd (ASX: MP1) share price is losing ground today.

Shares in the S&P/ASX 200 Index (ASX: XJO) tech stock closed yesterday trading for $13.80. In morning trade on Tuesday, shares are changing hands for $13.31 apiece. That's down 3.6% following the release of the company's half-year results (1H FY 2024).

For some context, the ASX 200 is down 0.1% at this same time.

Longer-term shareholders won't be overly concerned with the retrace though. Shares in the network as a Service (NaaS) solutions provider are still up an impressive 119% over 12 months.

Here's what ASX 200 investors are considering today.

Megaport share price slides despite profit surge

  • Half-year revenue of $95 million, up 35% from 1H FY 2023
  • Record annual recurring revenue (ARR) of $192 million up 29% from the prior year
  • Gross profit of $67 million up 43% from 1H FY 2023
  • Record earnings before interest, taxes, depreciation and amortisation (EBITDA) of $30 million, up 785% from 1H FY 2023

What else happened during the half for Megaport?

With some lofty market expectations, the Megaport share price is in the red today despite strong financial metrics across the board.

The company credited the huge boost in half-year EBITDA to its 35% top-line revenue growth and management's tight focus on cost control.

The boost in operating and financial performance drove EBITDA margins up to 32% over the six-month period, up from 5% in 1H FY 2023.

Net profit came in at just over $4 million, up from a sizeable loss in the prior corresponding half-year.

As at 31 December, Megaport had net cash of $46 million, up from $40 million a year earlier.

What did management say?

Commenting on the half-year operations which have seen the Megaport share price among the top performers on the ASX 200, CEO Michael Reid said the company's earnings surge was "an amazing result and indicative of the outstanding financial turnaround.".

Reid added:

$12.5 million in net cash flow represents a massive $40.8 million improvement from the $28.3 million net cash outflow we reported for the half year at this time last year. A phenomenal result that has enabled us to make investments in the go-to-market engine while maintaining our robust financial position.

What's next for the ASX 200 tech share?

Looking at what could impact the Megaport share price in the months ahead, Reid said, "A strong financial foundation has been laid, and I look forward to doubling down on our efforts in the second half as we continue to deliver profitable, efficient growth."

Megaport's guidance was unchanged despite the company's very strong first-half results, which could be pressuring the share price today.

According to Reid:

With our finances in great shape and a go-to-market engine poised to fire, we're happy to report that FY24 revenue and EBITDA guidance is being restated at $190 to $195 million and $51 to $57 million, respectively.

And our net cash flow remains strong after already lowering our capex guidance to $20 to $22 million in January 2024.

Megaport share price snapshot

Even with today's intraday retrace factored in, 2024 has started out with a bang for the ASX 200 tech share.

Since the opening bell on 2 January, the Megaport share price is up more than 44%.

Motley Fool contributor Bernd Struben 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. The Motley Fool Australia has recommended Megaport. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

Photo of two women shopping.
Earnings Results

Premier Investments share price jumps 9% on results and demerger plans

The Smiggle and Peter Alexander owner has released its results. How did it perform?

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Earnings Results

Soul Patts share price struggles on falling profits

ASX 200 investment house Soul Patts reported its half year results this morning.

Read more »

a biomedical researcher sits at his desk with his hand on his chin, thinking and giving a small smile with a microscope next to him and an array of test tubes and beackers behind him on shelves in a well-lit bright office.
Earnings Results

Chemist Warehouse merger target Sigma reports 149% FY24 profit jump

This could be the last set of results from Sigma as we know it if its merger is approved.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Earnings Results

Brickworks share price tumbles on disappointing half-year loss

This loss didn't stop the company from increasing its dividend again.

Read more »

A man sits on a bench atop a mountain with a laptop, making investments with a green ESG mind.
Earnings Results

ASX All Ords stock KMD tumbles as interim dividend cancelled

Investors are hitting the sell button on ASX All Ords stock KMD today.

Read more »

Coal miner holding a giant coal rock in his hand making a circle with his hand, symbolising a rising share price.
Energy Shares

New Hope share price charges higher despite profit crunch and huge dividend cut

Weaker coal prices have hit this miner's profits and dividend hard.

Read more »

A Chinese investor sits in front of his laptop looking pensive and concerned about pandemic lockdowns which may impact ASX 200 iron ore share prices
Earnings Results

Liontown share price tumbles 7% on half-year results

This lithium developer's results have been released this afternoon.

Read more »

A man in a hard hat and high visibility vest holds his thumb up in a gesture of confidence with heavy moving equipment in the background as on a mine site as the Chalice Mining share price rises today.
Earnings Results

Sayona Mining share price jumps despite $32m half-year loss

The Sayona Mining Ltd (ASX: SYA) share price is pushing higher on Thursday. At the time of writing, the lithium…

Read more »