The market may be sinking today, but the same cannot be said for the Megaport Ltd (ASX: MP1) share price.
In morning trade, the network-as-a-solutions provider's shares are up 27% to $12.15.
This has been driven by the release of a stronger than expected half year result from Megaport today.
Megaport share price rockets on results day
- Annual recurring revenue (ARR) up 18% to $226.6 million
- Customer logos up 4% to 2,720
- Ports up 8% to 9,294
- Total services up 11% to 31,677
- Gross profit up 12% to $74.7 million
- EBITDA of $27.6 million
What happened during the half?
For the six months ended 31 December, Megaport reported an 18% increase in ARR over the prior corresponding period to $226.6 million. Management advised that this growth was driven by net retention revenue (NRR) of 107% coupled with strong net new logo additions.
Total revenue for the half was $106.8 million, which is up 12% compared to the same period last year.
And with its gross margin remaining stable at 70%, the company's gross profit increased 12% to $74.7 million. Management believes this reflects its continued strong operating efficiency and profitability.
Commenting on the half, Megaport's CEO, Michael Reid, said:
During H1 FY25 we achieved top-line revenue growth across all regions while making ongoing investments to drive sustainable, long-term growth. We made these investments in future growth while generating net cash flow of $15.7M, up $3.2M compared to H1 FY24.
The company also revealed that it has been busy behind the scenes. It continues to execute at pace on its strategy for long term growth and is "laying the foundations for future success."
This saw the deployment of the 400G backbone to enable 100G VXCs from 597 data centres, making Megaport the largest 100G NaaS connectivity platform globally. Its team also deployed 82 additional data centres, four new IX locations, 25 new cloud on-ramps, and added two new countries, Brazil and Italy.
Outlook
Another thing giving the Megaport share price an extra lift today is news that it has updated its guidance for FY 2025.
FY 2025 revenue is now expected to be in the range of $216 million to $222 million (previously $214 million to $222 million). This represents growth of 11% to 14% compared to FY 2024's revenue of $195.3 million.
Management has reaffirmed its EBITDA guidance of $57 million to $65 million. However, this guidance now includes the full year impact of $4 million for the investment in key roles made during the first half. So, it is an earnings upgrade of sorts.
