Telecommunications infrastructure company Megaport (ASX MP1), has announced their full-year results today along with updating the market on their struggles with inflation.
To deal with these macroeconomic issues, Megaport management recently made the decision to lay off a total 35 positions across its business. To remove liability, the Company paid out a total of $1.6 million to the employees made redundant.
In regards to their results, Company revenue rose by 40% to $109 million year-over-year (YoY), while booking a loss after tax of $48.5 million, dropping by 12% YoY, a slight improvement from $55 million during FY21. Monthly recurring revenue however did rise by 43%, along with the total number of customers climbing 16%.
Overall, the growth in results can be viewed as somewhat positive for the Company as they continue to reach a point where they’re achieving profitability, which they have stated is their ‘key focus of 2023.’
During the 2022 financial year, there was a strong demand from enterprises for interconnection and cloud services, as a result, the total number of services connected to Megaport rose 26% YoY, reaching 27,383.
“With the continued rapid growth in the cloud connectivity space, we have the scale and capital position necessary to drive our business profitability. This will be our key focus in fiscal year 2023 as we leverage our channel programmes and operation efficiency,” said Megaport CEO, Vincent English.
If you’re struggling to understand what this business does, then you’re not alone. The services that Megaport provides perhaps don’t sound incredibly vital to enterprises until you take a deeper look at their operations.
Basically, Megaport has data centres blotted across the globe where they provide high-speed ‘ports’ that businesses can use for point-to-point connections. Rather than utilising the standard fibre optic cables that span the earth run by global telco companies, Megaport provides connections that are completely cloud-based via satellites where the network is just as efficient and fast but can be provided under a much cheaper subscription basis.
This service experienced high demand during the peak of the COVID-19 pandemic, where swaths of businesses had to adapt to employees switching to Work From Home.
Since the beginning of 2022, the widespread tech sell-off ended MP1’s nearly 3 years of straight growth sending the stock into a downturn that shaved off nearly 80% of its value from $22 to $4.70. As the tech-sector fights this downturn, it may have created a bottom as of recently, Megaport shares have doubled in value in the last two months from its lows of $4.70 to sit on $8.86 at the time of writing.
Trading Desk Assistant at Emerald Financial
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