Megaport net cash flow drops to negative AU$5.521m

After more than a year of operating as an individual company, Megaport has reported a negative net operating cash flow of AU$5.5 million, though its customer receipts are on the rise.

Australian elastic interconnection services provider Megaport has reported its financial results for the March 2016 quarter, recording a net operating cash flow of negative AU$5.521 million -- losing 18.1 percent more on last quarter's negative AU$4.674 million.

Customer receipts [PDF] grew, however, up 17 percent quarter on quarter from AU$538,000 to AU$631,000.

Staff costs for the quarter were AU$2.28 million -- down 2.6 percent from the AU$2.34 million reported last quarter, in spite of continuing global expansions. Other working capital costs increased substantially, however, from AU$1.92 million last quarter to AU$3.43 million this quarter off the back of the company's completed North American network expansion.

This expansion also led to direct network costs increasing by AU$455,000, with business in this region expected to contribute revenue as of next quarter.

The company recorded its total cash as of March 31 as being AU$18.7 million.

Founded in 2013 by Australian technology entrepreneur Bevan Slattery, Megaport initially operated as a dark fibre business. It then spun off its fibre assets to found a separate company called Superloop, so that it could focus solely on expanding its layer 2 elastic connectivity platform outside of Asia and Australia.

Megaport's US subsidiary signed a deal in January to expand its US footprint, partnering up with enterprise datacentre provider CyrusOne to provide software-defined networking (SDN)-enabled elastic interconnection and cloud services to customers using CyrusOne's US datacentres.

Under the deal, Megaport enables CyrusOne's more than 925 customers with additional capacity, as well as providing them with access to several service providers and clouds through its API, mobile apps, and "Megaportal". It saw Megaport gain access to 13 US locations.

Megaport also announced signing a deal with non-profit company Amsterdam Internet Exchange (AMS-IX) to exclusively provide elastic multi-cloud connectivity to AMS-IX customers in Hong Kong, the San Francisco Bay Area, and Chicago.

"We are delighted with our team's execution on the rollout of our core service footprint in North America and their business development efforts to build our ecosystem of service providers," said Megaport CEO Denver Maddux in February.

"Megaport has the largest elastic interconnection network in Asia Pacific, with the greatest reach into the most key datacentres. By demonstrating demand for direct, elastic interconnectivity to cloud service providers within Asia Pacific, we have strengthened our relationship with key cloud and network service providers. This is also fuelling demand for Megaport to enable our cloud partners' direct connectivity services into our expansion markets."

As of February, Megaport had services live in seven Sydney locations, nine Melbourne locations, eight Brisbane locations, four Hong Kong locations, four Singapore locations, and two Auckland locations. It was also constructing two more Brisbane locations, one Perth location, and one Auckland location, with a further location in Perth and two more in Auckland in the planning stage.

In the US, it had rolled out a number of services to Seattle, the San Francisco Bay Area, Los Angeles, Chicago, New York, Ashburn, and Texas, with several being constructed in Toronto.

Seven of the 13 locations planned for the European region had commenced construction. While it did not mention when it expects to begin turning a profit, the company said it is planning to expand to more than 100 sites globally by the end of December 2016.

The company is also intending to bring services to 31 North American and 13 European locations, including London, Stockholm, Dublin, and Amsterdam, by the end of April.