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Megaport reports negative net cash flow of AU$4.7m for December quarter

After just over a year of operating as an individual company, Megaport has reported a negative net operating cash flow of AU$4.7 million for the quarter ending December 2015.
Written by Corinne Reichert, Contributor

Australian elastic interconnection services provider Megaport has published a quarterly cash flow update, reporting a negative net operating loss of AU$6.28 million for the five months to the end of December, with cash at hand standing at AU$25.44 million.

For the quarter ended December 31, 2015, Megaport announced [PDF] a negative net operating cash flow of AU$4.7 million, total negative operating and investing cash flows of AU$6.61 million, while net financing cash flows came in at AU$23.75 million. Receipts from customers stood at AU$538,000, while staff costs were reported as AU$2.3 million for the quarter.

Net financing cash flows for the first five months to December were AU$10 million more, at AU$33.75 million. The five-month period also showed a total negative operating and investing cash flows of AU$8.3 million.

Megaport has been slowly ramping up its business activities; earlier this month, it announced completion of the installation of 15 services across the United States, with its services now live in Silicon Valley, Los Angeles, New York City, Chicago, Dallas, Northern Virginia, and Seattle metropolitan areas.

As part of what it called its "first-phase core footprint" for the US, new and existing customers in these regions have immediate connectivity to Megaport's multiple cloud and network service partners, including Amazon Web Services (AWS), Google Cloud Platform, and Microsoft Azure.

Megaport's US subsidiary has also signed a deal that will see the company's US footprint expand almost immediately, with Megaport partnering up with enterprise datacentre provider CyrusOne to provide software-defined networking (SDN)-enabled elastic interconnection and cloud services to customers using CyrusOne's existing US datacentres.

CyrusOne has datacentres across 30 locations in the world, with its US facilities present in Chicago, Austin, Dallas, Cincinnati, Houston, Phoenix, Sterling, Florence, South Bend, Stamford, Norwalk, Wappingers Falls, Totowa, and San Antonio.

The deal will see Megaport enable CyrusOne's more than 925 customers with more capacity and scalability, as well as provide them with access to several service providers and clouds through Megaport's API, mobile apps, and "Megaportal".

It will see Megaport gain access to 13 US locations.

"CyrusOne's US datacentre portfolio complements our neutral interconnection fabric extremely well, and rapidly expands our footprint in the United States," said Megaport CEO Denver Maddux.

The news of Megaport's continuing expansion across the US follows Megaport earlier in January announcing that it had signed a deal with non-profit company Amsterdam Internet Exchange (AMS-IX) to exclusively provide services to AMS-IX customers worldwide.

The deal, also secured by Megaport's US subsidiary, will see it provide elastic multi-cloud connectivity to AMS-IX customers in Hong Kong, the San Francisco Bay Area, and Chicago.

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

Founded in 2013 by Australian technology entrepreneur Bevan Slattery, Megaport initially operated in the dark fibre business. It then spun off its dark 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.

"Rather than enterprises needing to purchase long-term, fixed bandwidth circuits between datacentres and their cloud providers, Megaport has developed a platform that uses software-defined networking to enable our customers to provision secure, dedicated, and highly scalable circuits otherwise known as 'elastic interconnects' between their network and other networks connected to the Megaport fabric," Slattery said at the time.

"With Megaport, customers can provision elastic interconnects for as long as a year and as short as one day, as slow as 1 megabit per second or as fast as 100 gigabits per second."

Slattery told ZDNet last year that it was important to divide Superloop and Megaport as the latter looks at growing beyond the APAC region.

"We looked at Megaport and where its rollout expansion was, and it was beyond those markets. I wanted to be very clear about what Megaport does and what it doesn't do. Megaport is a layer 2 elastic connectivity platform. It's about making it easier for the network and cloud guys to interconnect," he said.

"I didn't want people to also think it was a dark fibre provider."

Superloop itself released its first annual results report in August last year, recording a net loss of AU$1.19 million due to the costs of developing the new business and expanding its fibre-optic network across Australia, Singapore, and Hong Kong, as well as a lack of customers.

The company also reported underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) at a loss of AU$3.55 million. Given the continued rollout of its networks, customer revenue was not recorded; however, the company made revenue from interest income on deposits held, which amounted to AU$7,217.

Maddux had first flagged in October 2015 that Megaport would be looking at opportunities in the US and Europe.

"There's a lot of interest in Europe for the Megaport model, as well as the major cities in the US, where we may have some competition on features but not in terms of the overall capabilities of the platform," Maddux said.

Megaport, which trades on the Australian Securities Exchange (ASX) under the ticker symbol MP1, aims to expand its business into 45 datacentres across Europe and North America in 2016.

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