The life of an emerging tech stock is hard sometimes.
Take network as software services (NASS) company Megaport, for instance. On July 27 the shares closed at their most recent high of $9.71. On Monday, they ended at their most recent low – $8.26 – as investors seemed to fear the worst in the company’s about to be released June 30 results.
But they didn’t slide to the extent they did in the ’sell everything tech’ days of June when the shares hit a low of $4.83.
Tuesday saw the release of the company’s June 30 figures (including a well-timed bout of job cuts in the 4th quarter) and what do you know – they were better than feared and up went the shares – jumping 10% to $9.
The details of the June 30 figures were very much de rigeur for an emerging tech stock – solid revenue rises but lots of red ink.
Revenue rose 40% to $109.7 million, while the net loss fell 12% to $48.5 million from $55 million in 2020-21.
Monthly recurring revenue (a key metric measuring how much money keeps being paid by customers in what is a short-term business) was up 43% to $10.7 million and “normalised EBITDA of $10.3 million was lower than the $13.3 million the year before.
Megaport said this recurring revenue “accelerated’ towards the end of the June year
Naturally there is no dividend.
Megaport said the 40% jump in revenue came from a boost in customers and service uptake with highest growth was seen in North America, where revenue jumped 49%.
While the company lost money on an EBITDA basis for the year, in the fourth quarter Megaport delivered claimed an EBITDA profit in the three months to June, though some reports said the cutting of 35 jobs in the quarter helped achieve that milestone. Those 35 job cuts saved it $1.6 million.
The total number of customers grew 16% on the previous financial year to 2,643; the total number of services sold jumped 26% to 27,383, while total ports jumped 24% to 9,545.
Megaport said the job cuts put it in “the best possible position for revenue growth in FY23 when it sees “strong momentum” heading into the new financial year.
CEO Vincent English said in the results announcement that “average services per customer increased 9% in fiscal year 2022. We drive more value by delivering features that allow customers to take greater control of their traffic and ease the job of getting connected.”
“The team is highly aligned to grow our business through geographic expansion to key new markets, ongoing product innovation, and operational efficiencies. This will drive profitability, sustainability, and ultimately value to our shareholders, partners, and customers,” he said.
