After a slow start to the day, the Megaport Ltd (ASX: MP1) share price is surging higher this afternoon.
At the time of writing, the shares of the global leading provider of elastic interconnection services are up 7% to $14.20.
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Why is the Megaport share price surging higher?
Investors have been fighting to get hold of Megaport shares today following the release of its half year update.
According to the release, for the six months ended 31 December, Megaport reported revenue of $36 million. This was an increase of $10.1 million or 39% from the prior corresponding period.
Furthermore, at the end of the period, the company's Monthly Recurring Revenue (MRR) stood at $6.3 million. This was up $1.7 million or 37% year on year and annualises to revenue of $75.6 million.
This top line growth would have been even stronger had the Australian dollar not strengthened so materially during the period.
Management notes that while North American MRR in US dollars increased by 26% from June to December, the reported growth in Australian dollars was just 15%.
In respect to earnings, Megaport delivered a profit after direct network costs of $18.2 million for the half. This was up $5.1 million or 38% over the prior corresponding period.
Finally, on the very bottom line, the company recorded a net loss of $38.4 million. This left it with a cash balance of $144.8 million.
What were the drivers of this growth?
A combination of customer and ports growth and an expanding footprint helped drive Megaport's first half growth.
At the end of December, the company had 2,043 customers (up 11%) across 716 Enabled Data Centres (up 7%) in 130 cities. Of these data centres, 390 were located in North America, 202 in EMEA, and 124 in Asia Pacific.
Management commentary
Megaport's Chief Executive Officer, Vincent English, was pleased with the half and remains very positive on its outlook. This is particularly the case in the massive North American market.
He said: "As we continued to expand our footprint to new locations, adding 23 new cloud onramps representing access to 11 new cloud regions, Megaport has continued our strong revenue performance during the first half of Fiscal Year 2021. Our path to profitability remains firmly in focus, with all three regions now EBITDA positive."
"As a high-growth region, North America has always represented a significant market opportunity for Megaport and our investments there continue to pay off. North America was EBITDA positive on a regional basis in 2QFY21, notwithstanding some unfavourable FX movements. With all regions now EBITDA positive, we are on track to achieve EBITDA breakeven for the Group on a run rate basis this Fiscal Year as we continue to optimise our footprint to maximise margins and move to profitability," he added.
Outlook
As mentioned above, Mr English expects Megaport to achieve its goal of being EBITDA break even on a run rate basis within FY 2021.
Supporting this will be the impending launch of its Megaport Virtual Edge (MVE) product on 31 March.
He explained: "On March 31, we will launch Megaport Virtual Edge, having currently deployed MVE infrastructure to eleven metros globally. An additional ten metros will be enabled by the end of this fiscal year."
"Our industry-first integration between Cisco and MVE to support Viptela SD-WAN services is well on track and customer field trials are underway. Additionally, our Technology Partner pipeline for MVE integration covers about 50% of SD-WAN market share globally. This positions us to greatly expand our addressable market and drive more uptake of Megaport services through channel programmes with leading technology companies while providing more choices to our customers in how they engineer their IT solutions," Mr English concluded.
Following today's gain, the Megaport share price is now up 27% over the last 12 months.
