Megaport FY24 Earnings Call Highlights

Megaport (ASX: MP1) shares have sunk to a fresh eight month low after its FY25 guidance missed analyst expectations and for a perfectly priced stock – That's simply not acceptable.

FY24 Earnings Summary

• Revenue up 28% to $195.3m

• EBITDA up 182% to $57.1m

• First ever net profit of $9.6m

• FY25 revenue guidance between $214-222m

• FY25 EBITDA guidance between $57-65m

The FY24 net profit figure was in-line with analyst expectations but FY25 missed by a wide margin. The market was looking for FY25 revenues of $232 million and EBITDA of $71 million, meaning the guidance (at midpoint) was a 6% and 14% miss respectively.

Earnings Call Highlights

The below topics have all been answered by Chief Executive Michael Reid and CFO Leticia Dorman.

FY24 EBITDA performance: "EBITDA AUD 57.1 million, up 182% year-on-year... This is our first ever year of net cash flow positive in the company's history... AUD 28 million of net cash flow for the year."

Closing cash position: "Cash at bank is AUD 72.4 million, almost doubled during FY 2024."

Revenue trends: "Growth across all regions... North America is our largest business... AUD 110.8 million of revenue, 57% of total revenue globally."

Pricing adjustments: "The revenue increase was driven by organic growth and the full year impact of pricing changes implemented in FY 2023."

Promotional activities: "Overall increase in travel, marketing, and general engagement activity throughout the industry for our customers and our partners."

Global trends: "Megaport continues to see more and more cloud providers, more and more multi-cloud connectivity and growth across all of those areas."

New investments: "We will continue to innovate product forever and we added strategic investments for the long-term, investments that take us for the next three years and beyond."

New products: "Two products that we add to the mix... Megaport's cloud router... accelerating growth here. MVE is a far more sophisticated and complex sale."

Analyst Q&A Highlights

On net revenue retention: "Inside Megaport, we have seen a decline in net retention, which is why you see that from a revenue standpoint ... One element is that net new adds of customers slowed some period of time ago, newer customers expand faster than older customers."

On FY25 guidance: "The reason that we have provided guidance is to ensure that you understand that you can't grow a company if you don't reinvest back into the company."

On customer churn: "Churn for us remains flat, as I mentioned before, the real story of Megaport that you're trying to unpack is purely net retention."

On AI exchange and go-to-market strategy: "The AI exchange was us publicly sharing that to all the AI GPU as a service style companies."

This article was generated with the support of AI and reviewed by an editor.