The Megaport Ltd (ASX: MP1) share price is down 7% even though the ASX tech share upgraded its FY24 EBITDA guidance.
Megaport is a tech company that enables businesses around the world to connect with cloud infrastructure. It says its global software defined network (SDN) helps businesses rapidly connect their network to services via an easy-to-use portal or its open API (application programming interface).
The company says its agile networking capabilities reduce operating costs and increase speed to market compared to traditional networking solutions. It partners with cloud service operators like AWS, Microsoft Azure, Google Cloud and the largest data centre operators, system integrators and managed service providers in the world.
Upgraded EBITDA guidance
Megaport has announced that thanks to continued improvement in the company’s operating and financial performance, the ASX tech share has upgraded its FY24 EBITDA guidance to be in the range of $56 million to $58 million, an increase on the previous FY24 guidance of between $51 million to $57 million. Usually, increased profit would be a positive for the Megaport share price, but perhaps investors were expecting even more.
If the business achieves that guidance, it would reflect an increase of EBITDA of between 177% to 187% compared to FY23’s normalised EBITDA of $20.2 million.
Megaport confirms it expects FY24 revenue to be in the range of $190 million to $195 million, which would represent an increase of between 24% to 27% compared to FY23’s revenue of $153.1 million.
The company also confirmed FY24 capital expenditure guidance of between $20 million to $22 million.
This guidance is taking into account the planned investment in go-to-market capabilities, product development, marketing, advertising, travel, entertainment, professional fees and planned capital expenditure, and excludes any future strategic initiatives the company may decide to undertake.
Final thoughts on the Megaport share price
The Megaport share price is up almost 50% this year and it’s up more than 140% over the past 12 months.
It’s a bit cheaper today, but it’s priced for success. The business continues to grow revenue at a decent pace, though growth is somewhat slowing. As long as profitability grows at a good pace, it may be able to beat the market over the long-term from here. But, I’m not sure how big the business can become, so I’d rather wait for a better Megaport share price.
