Reporting Season

Megaport posts wider-than-expected loss; shares surge off session lows

Tue 09 Aug 22, 11:40am (AEDT)
A data centre with server stacks in the background
Source: Unsplash

Key Points

  • Megaport losses narrowed from -$55m in FY21 to -$48.5m in FY22
  • Bloomberg estimates expected a loss of -$39.5m
  • Megaport lays off 35 staff in an effort to reduce costs and step closer towards breakeven

The price action for Megaport (ASX: MP1) on Tuesday was wild after the telco infrastructure company posted a narrower loss of -$48.5m in FY22.

Megaport shares dipped -7.2% as the market opened but rallied back to breakeven around 10:10 am AEST. By 11:00 am, the stock was up almost 10%.

Megaport intraday chart
Megaport intraday chart (Source: TradingView)

The FY22 results should be well-known after the company posted its fourth quarter results on 20 July, which caused an abrupt 23% single day jump in share price.

FY22 earnings at a glance

Full year

2022

2021

Change %

Revenue ($m)

109.7

78.3

40

Annualised revenue ($m)

128.3

89.8

43

Normalised EBITDA ($m)

-10.2

-13.3

23

Net loss ($m)

-48.5

-55.0

12

Source: Megaport | Table: Market Index

Rallying against all odds

Megaport has managed to reverse a steep intraday selloff even as it posts another year of negative profits and cashflow after an already 80% rally from June lows.

The net loss of -$48.5m was a sizeable miss compared to Bloomberg estimates of -$39.5m.

Still, the price action would suggest investors are optimistic about Megaport's outlook and trajectory towards breakeven. The company said it was EBITDA positive for the fourth quarter.

"With the continued rapid growth in the cloud connectivity space, we have the scale and capital position necessary to drive our business to profitability. This will be a key focus in fiscal year 2023 as we leverage our channel programmes and operational efficiency," commented CEO Vincent English.

Inching towards profitability

"Long-term value creation for Megaport will come from scaling sales globally through channel partners," said Morgans, in the lead up to the earnings result.

"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," noted English.

Encouragingly, Megaport managed to weather the inflationary environment, with average network costs per data centre per month of $5,800, down from $5,900 in FY21.

"In an effort to reduce our costs and prepare for rising prices and inflation across our key markets, we took the additional step of reducing our workforce," said Megaport.

Megaport did not provide any guidance but Morgans expects it to be EBITDA positive in FY23.

Megaport price chart
Megaport 12-month share price chart

 

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Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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