Megaport Ltd (ASX: MP1) shares could react to the company’s FY21 second quarter which was released today.
Megaport is a company that helps businesses access data centre capacity whenever they need it.
What was reported by Megaport in Q2?
Megaport reported that the revenue for the quarter was $18.7 million, an increase of 8% quarter on quarter (or $1.4 million in dollar terms). However, cash receipts from customers jumped 50% to $25.8 million. Revenue growth is being impacted by the continuing strength of the Australian dollar.
Monthly recurring revenue (MRR) for December 2020 was $6.3 million, which was also an increase of 8% (or $0.5 million).
The company made positive net cash from operations of $0.9 million for the quarter.
Total installed data centres was 386 at the end of the quarter, an increase of one from the last quarter. This was the net result of the addition of four new sites and the decommissioning of three sites.
Total enabled data centres was 716 at the end of the quarter, an increase of 14, or 2%.
Megaport finished with 2,043 customers at the end of the quarter, an increase of 3% quarter on quarter.
Looking at other statistics on a quarter on quarter basis, total ports rose 6%, total VXCs went up 7%, total MCRs grew 11% and total services went up 6%.
In another positive sign, the average revenue per port in December 2020 was $934 million, an increase of 2% quarter on quarter, or $21.
The company finished with a cash position of $144.8 million.
Management comments
Megaport CEO Vincent English said: “The addition of OVHcloud to our ecosystem provides our customers with greater service provider choice and positions us to capture more opportunities for local cloud enablement in France. Additionally, we’re excited for the upcoming release of Megaport Virtual Edge which will allow more businesses to access Megaport’s leading ecosystem of service providers from more locations globally. MVE is a perfect example of the convergence of our innovation roadmap and our channel strategy. Technology partners, like Cisco, will be empowered to offer their customers and resellers a single pane of glass solution to connect branch locations to services and locations in real time.”
Summary thoughts
Megaport is one of those businesses are highly involved in the changing way the world works. The Megaport share price has performed strongly over the last two years. But how much further can it run? I don’t know – but it’s quite likely that there’s more to come because of how useful the service is.
I’d be willing to start with a small position and buy more on price weakness or continuing proof that its market position is improving.
Another data centre business available to Aussies, which is classified as one of the ASX growth shares, is Nextdc Ltd (ASX: NXT). This is an interesting sector to watch.
