Key points
- Sustained 70% Gross Margin
- First signs of stabilisation in Net Revenue Retention
- ARR up 18% (14% in Constant Currency)
Full summary
Megaport Ltd reported its H1 FY25 results, highlighting sustained 70% gross margin, first signs of stabilisation in Net Revenue Retention, and 18% growth in Annual Recurring Revenue (14% in Constant Currency). The company continued to execute on its strategy, with investments in new compute platform, 400G backbone, and expansion into new markets and cloud on-ramps. The Americas region contributed 58% of total ARR. New logo growth and port growth demonstrated the impact of investments in go-to-market and product innovation. Megaport Virtual Edge (MVE) saw 90% year-on-year growth, with MVE customers generating almost 3x the ARR of port-only customers. Revenue increased 12%, driven by improvement in ARR per existing customer and addition of new logos. Direct network costs and partner commissions increased, but the company maintained a stable 70% gross margin. Employee costs and other operating expenses increased to support growth in go-to-market activities, resulting in an 8% decline in EBITDA. The company generated strong operating cash flow and improved its net cash position by $31.1 million compared to H1 FY24.
Guidance
FY25 Revenue guidance tightened to $214 million - $222 million, while FY25 EBITDA guidance remains unchanged at $27.6 million - $29.6 million, including $4 million in opportunistic investment in key go-to-market roles.
Outlook
The company continues to see strong demand for its services, and the investments in go-to-market and product innovation are delivering results. The company remains focused on executing its strategy and driving sustainable growth.