The Megaport Ltd (ASX: MP1) share price is down by 16% after the company reported its FY24 result.
Megaport helps businesses connect to internet infrastructure.
FY24 result
Here are some of the highlights from the 12 months to 30 June 2024:
- Revenue increased 28% to $195.3 million
- Gross profit improved 32% to $136.8 million
- EBITDA rose by 127% to $57.1 million
- Net profit after tax (NPAT) improved $19.4 million to $9.6 million
Megaport reported a number of pleasing operational growth numbers, including the number of total services increasing by 11% to 29,816 and the number of ports grew by 6% to 8,777.
Annual recurring revenue (ARR) increased by 14% to $203.9 million, implying that revenue could increase by at least another 4.4% to $203.9 million.
The company said the improvement in EBITDA reflected the pivot to profitable, efficient growth in FY24.
Management commentary
The Megaport CEO Michael Reid said:
FY24 saw us execute a massive financial turnaround whilst growing revenue by 28%. An astounding transformation resulting in our first ever net cash flow positive year generating $28.0M, up $62.5M YoY. This fiscal turn around set the stage for us to profitably invest in GTM, product, engineering, and our ecosystem, building the platform for profitable growth over the next three years and beyond.
Outlook for the Megaport share price
The business is expecting FY25 revenue to be in the range of $214 million to $222 million, with FY25 EBITDA guided to be between $57 million to $65 million. This implies revenue growth of at least 9.6% and that EBITDA will be between flat to 13.8% growth.
Megaport said it’s still committed to profitable, efficient growth as it disrupts “large and expanding markets.”
CEO Reid said:
In fiscal 2025, Megaport will continue to leverage and grow our high speed global backbone and 100G connectivity, expand into new markets and geographic locations, and prepare for additional capacity augmentations to meet the rising demand from AI.
With updated speed and pricing to improve our competitiveness on a global scale, we plan on continuing the rapid pace at which we innovate and expand our product sets, with a focus on low-touch, incremental, high revenue products.
The FY25 growth is expected to smaller than I would have thought, considering the tailwinds the business is exposed to.
The sell-off could be a time to invest in a beaten-up opportunity, though I’d hope that FY26 could see stronger profit growth.
