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Megaport announces net loss of AU$21m following expansion and acquisitions

Megaport has reported a net loss of AU$21.35 million on revenue of AU$2.68 million following its focus on expanding its network across APAC, Europe, and North America.
Written by Corinne Reichert, Contributor

Australian interconnection services provider Megaport has reported its first full-year financial results, recording a net loss after tax of AU$21.35 million on revenue of AU$2.68 million.

Cash and cash equivalents stood at AU$11.87 million as of June 30, 2016, with net assets of AU$17.2 million.

A breakdown of Megaport's revenue saw cloud connectivity contribute AU$328,000; internet exchange add AU$363,000; network services contribute AU$45,000; monthly recurring revenue reach AU$736,000; and annualised revenue reach AU$8.9 million.

Direct network costs amounted to AU$4.2 million for the year. Capex was AU$7 million, with AU$2 million of this spent on its European network and platform upgrades, and AU$5 million on its new locations across the globe.

Megaport increased its number of ports by 412, to 736 in total; number of locations by 66, to 102; number of countries in which it is present by 13, to 17; and its number of customers by 135, to 314 in total.

"While we expanded our footprint, we continued to grow our overall business; increasing customers, ports, and revenue. Megaport's monthly recurring revenue is up 80 percent since the beginning of the fiscal year, and we increased our ports by 127 percent," said Megaport CEO Denver Maddux.

"In addition, we forged a number of strategic partnerships, including leading datacentre operators like CyrusOne and EdgeConnex and with the Amsterdam Internet Exchange. These partnerships yield excellent channel opportunities and service reach, with which Megaport can effectively go to market with a broader set of resources selling our services in more locations."

Maddux added that Megaport has seen "tremendous uptake" in the number of ports and services across Australia and New Zealand, indicating "strong adoption of customers" across IaaS, PaaS, IP, transport, voice, and managed services.

It now has 42 locations present in the Asia-Pacific region, across Sydney, Melbourne, Auckland, Hong Kong, Singapore, Brisbane, and Perth; and 33 sites across North America in Los Angeles, New York City, Chicago, Dallas, San Jose, Seattle, Ashburn, Las Vegas, Portland, and Toronto.

Megaport also has 57 sites across Europe, thanks largely to its AU$3.1 million acquisitions of ECIX and OM-NIX last month. It is now present in Frankfurt, Berlin, Munich, Düsseldorf, Nuremberg, and Hamburg, Germany; London, United Kingdom; Vienna, Austria; Stockholm, Sweden; Amsterdam, Netherlands; Dublin, Ireland; Luxembourg; Moscow, Russia; Sofia and Kapitan Andreevo, Bulgaria; Thessaloniki, Greece; Skopje, Macedonia; Bucharest, Romania; and Kiev, Ukraine.

"With the acceleration of our European deployment through the acquisition of OM-NIX and ECIX, we have effectively leapfrogged our original deployment plan. This enables us to hit the market hard and fast with a unique service footprint," Maddux said.

"North America required an aggressive, organic build-out to reach key service markets and provide the right service coverage. Since the region began generating revenue in May, we have seen a marked increase in the number [of] ports ordered, the demand for cloud connectivity services by datacentre operators drove us to expand to Portland and Las Vegas, which are in addition to our original planned footprint."

Megaport last week raised AU$31 million in capital through a share purchase plan (SPP) in order to continue its global expansion.

"Net proceeds of AU$30 million will be used to further fund capital expenditure for the North American and European network and platform upgrades and new global locations, ongoing operating costs of the network, services and staff of existing business units, network capacity investment, and additional acquisition opportunities," Megaport explained in its financial results presentation.

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 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.

In June, Megaport signed Verizon Media Digital Services as a new customer in a "long-term" agreement in the Asia-Pacific region and the United States, along with Fujitsu Australia and New Zealand as a reseller of Megaport services in Australia.

Megaport in February reported a AU$9.9 million loss on revenue of AU$1,001,079 for the six months ending December 2015, with the net loss incurred as a result of continuing to roll out its services worldwide.

Megaport began trading on the Australian Securities Exchange (ASX) in mid December after a successful Initial Public Offering (IPO) that saw it raise AU$25 million to be primarily used to expand services across the US and Europe.

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