Megaport reports strong revenue growth, expands product offering

Global connectivity specialist Megaport (ASX: MP1) is well-placed to expand on a number of new product offerings and sales strategies after reporting strong revenue growth for the December 2023 quarter.

The company’s total revenue for the quarter jumped 5% to $48.6 million, up $2.1m on the previous period.

Despite being negatively impacted by significant foreign exchange hits from a strengthening Australian dollar, Megaport also recorded a 1.0% quarter-on-quarter (QoQ) rise with annual recurring revenue (ARR) of $191.7m.

Excluding the currency impact, ARR grew $7.6 million or 4% in the quarter.

Continued growth across all regions

Chief executive officer Michael Reid said Megaport delivered continued growth during the quarter for recurring revenue, customers and total services across all regions.

Mr Reid also noted that the investment in Megaport’s go-to-market engine to drive future top-line growth is continuing with the hiring of a North American sales team now complete.

The company’s focus on delivering its Global WAN product as a service was also a highlight, gaining traction with customers and leading to an agreement signed with a major US healthcare provider.

Expanded product offering

“We spent Q2 FY24 considerably expanding our product offerings and laying the groundwork for sustainable, profitable growth,” Mr Reid said.

“With a 5% revenue increase QoQ, our investment in innovative new products and go-to-market strategies is proving profitable and will support ongoing success.”

“Project Centurion is 80% complete [and] the substantial upgrade to our 400G backbone has provided us with the capacity to offer these high speed ports, as well as 100G VXCs in key locations to further enhance our customers’ multicloud, hybrid cloud and cross-cloud capabilities.”

“This is a significant advancement, resulting in ten times the speed for our customers, enabling them to ride the current AI wave.”

The chief executive officer also told shareholders that the Global WAN service has been well received by the market, with the company closing the largest deal in its history on an impressive three-year term.

“This is further evidence that our ongoing product innovations are providing tremendous value to customers and growing the potential spend of our existing customers.”

Mr Reid said while Megaport is maintaining go-to-market investment as its top priority, it is also shifting operational focus to simplifying and elevating the sales process, including customer segmentation, lead generation and pipeline opportunities.

“This focus will in turn build GTM momentum, enhance customer satisfaction and enable us to drive strong, sustainable and profitable growth.”