The Megaport Ltd
(ASX: MP1) share price is currently up 20% after the technology business revealed profit in its FY22 fourth quarter.
Megaport describes itself as the global leading provider of ‘elastic interconnection services‘. Its platform enables customers to rapidly connect their network to other services across the Megaport Network.
FY22 fourth quarter update
Megaport reported that monthly recurring revenue (MRR) for June 2022 was $10.7 million, an increase of 13% quarter on quarter. Revenue for the quarter was $30.6 million, up 10% quarter on quarter.
One of the main things that the market is likely concentrating on is that Megaport achieved an EBITDA (EBITDA explained) profit for the fourth quarter of FY22. This was the All Ordinaries (ASX: XAO) ASX share’s first quarterly EBITDA profit.
During the quarter, two new markets – Canada and Japan – became individually profitable ahead of schedule, which helped the overall EBITDA picture.
Total ports at the end of the quarter were 9,545, an increase of 6% quarter on quarter. The average revenue per port in June 2022 was $1,120, an increase of 6.8% quarter on quarter.
Megaport had 2,643 customers at the end of the quarter, which was an increase of 4% quarter on quarter.
Other updates
After the launch in Mexico on 14 April 2022, Megaport said that strong local interest resulted in sales of core products ahead of plan through its partnership with KIO Networks with support from the Megaport local team.
Mexico is reportedly the second largest IT spending market in Latin America. The launch in Mexico contributed to four of the additional 16 data centres enabled by the Megaport network.
Management comments
The Megaport CEO Vincent English said:
The underlying Megaport network and business model has strong operating leverage to further increase profit and generate cash as revenue grows. Japan and Canada have reached profitability ahead of plan and early indications are that Mexico may outperform plan expectations.
Summary thoughts
The Megaport business continues to make good progress. I think that making a positive EBITDA is a key step for a growing ASX tech share. Even so, the Megaport share price is down around 60% since the start of the 2022. This could prove an opportunistic time to buy shares if investors like the business.
