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Megaport upgrades earnings guidance for FY23

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By Imelda Cotton - 
Megaport ASX MP1 EBITDA revenue upgrade earnings guidance FY23 FY24
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Cloud connectivity provider Megaport (ASX: MP1) has announced an upgrade to its earnings data for the 2023 financial year as a result of continued operational improvements.

The company has forecast a normalised earnings before interest, taxation, depreciation and amortisation (EBITDA) calculation of up to $21 million, compared to the previous guidance of up to $18m.

Reported EBITDA is now expected to be in the range of $24 million to $26 million.

The normalised figures represent reported data which has been reduced as a result of one-off accrual reversals.

Reported EBITDA represents operating results excluding equity-settled employee and related costs; foreign exchange gains and losses; gains and losses on disposal of property, plant and equipment; and certain non-recurring non-operational expenses including one-time redundancy charges of approximately $4.9 million the financial year.

Cash positive position

Megaport has also confirmed a net cash positive position for the fourth quarter inclusive of $2.6 million in redundancy payments.

The company expects to maintain the position through the 2024 financial year after taking into account an incremental growth in sales headcount and planned capital expenditure.

Furthermore, the EBITDA guidance for the new year is projected to surpass the previous estimate of approximately $46 million.

Debt facility termination

Megaport’s board of directors has confirmed it will terminate a $25 million debt facility with HSBC due to a lack of requirement and to reduce costs.

If bank debt is required in the future, the board said it was confident the company would be able to obtain a significantly larger facility on terms which reflect the business’ improved financial performance.

Chief executive appointment

Megaport’s improved financial outlook follows a leadership shuffle and organisational review earlier this year which will see the workforce headcount reduced by 50 roles and result in about $10 million in annualised savings.

In March, the company appointed former Cisco executive Michael Reid to the role of chief executive officer.

Mr Reid has more than 19 years’ industry experience, most recently as chief revenue officer with Cisco software-as-a-service business ThousandEyes which he helped grow into the world’s largest cloud and internet visibility platform.

Prior to ThousandEyes, Mr Reid’s experience with Cisco included serving as head of global sales for multiple corporate acquisitions; leading sales for the northern region of Australia; and leading sales for the country’s largest financial services customers.