Megaport Ltd. · ASX:MP1
Megaport — Investor Presentation (August 2023)
46 slides from Megaport's investor presentation, Aug 22, 2023
Slide 1: Investor Presentation Global Update FY23 Full Year Results
Investor Presentation Global Update FY23 Full Year Results
Slide 2: Company Highlights
In 2023 we delivered transformational improvements in EBITDA, Costs, and Net Cash Flow as well as record Annual Recurring Revenue. COMPANY ANNUAL BUSINESS OUTLOOK HIGHLIGHTS RESULTS UPDATE & GUIDANCE FY23 RESULTS INVESTOR PRESENTATION
Slide 3: FY23 Highlights
FY23 HIGHLIGHTS GROSS NORMALISED NET CASH REVENUE PROFIT1 EBITDA2 FLOW3 $153.1M $103.9M $20.2M ($34.5M) $43.4M $35.6M $30.4M $15.4M +40% +52% +31% 1. Gross Profit is revenue less direct network costs (comprising data centre power and space, physical cross connect fees, bandwidth and dark fibre, netw
Slide 4: FY23 Revenue Performance
FY23 REVENUE PERFORMANCE NORTH AMERICA ASIA PACIFIC EMEA GLOBAL $85.4M $43.4M $24.3M $153.1M 56% of global revenue 28% of global revenue 16% of global revenue $27.6M 48% $9.9M 30% $5.9M 32% $43.4M 40% FY22: $57.8M FY22: $33.5M FY22: $18.4M FY22: $109.7M Note: Growth rates are calculated using the ac
Slide 5: Normalised EBITDA: Highest on Record
NORMALISED EBITDA: HIGHEST ON RECORD 1. Normalised Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) represents Reported EBITDA adjusted (reduced) for certain one-off accrual reversals. Reported EBITDA represents operating results excluding equity-settled employee and related costs
Slide 6: Net Cash Flow
NET CASH FLOW 》 Net Cash Flow1 Positive Q4: $2.3M Includes redundancy payouts of $2.6M 》 Net Cash2 Position: $33.3M 1. Net Cash Flow is defined as the movement in Net Cash, which is cash at bank less debt including the vendor financing liability, and excludes proceeds from capital raisings & expendi
Slide 7: Annual Results
The financial results demonstrate Megaport’s pivot during the year towards sustainable, profitable growth and cash generation. COMPANY ANNUAL BUSINESS OUTLOOK HIGHLIGHTS RESULTS UPDATE & GUIDANCE FY23 RESULTS INVESTOR PRESENTATION
Slide 8: Financial Results
FINANCIAL RESULTS Revenue up 40% YoY, driven largely by organic growth and the Cloud VXC price increase. FY23 FY22 Change Change Consolidated Profit & Loss (A$ million) $’M $’M $’M % Direct network costs were up 6% YoY, a drop to 21% of revenue vs Revenue 153.1 109.7 43.4 40% 27% in FY22. This refle
Slide 9: Operating Costs
OPERATING COSTS Employee costs1 decreased by FY23 FY22 Change Change $2.1M YoY with the reduction in (A$ Million) force taking place in 4Q and the $’M $’M $’M % decision to pay $2.3M in FY23 Employee costs1 performance based incentives with 56.7 58.8 (2.1) (4%) stock. Employee costs as a percentage
Slide 10: Cash Flow
CASH FLOW Operating cash flow was an inflow FY23 FY22 Change Change of $10.2M for FY23, as a result of (A$ Million) both the strong revenue growth and $’M $’M $’M % lower operating costs from the cost out program. Cash flow from/(used in) Operating Activities 10.2 (8.0) 18.2 n.m Cash flow used in In
Slide 11: Capital Expenditure
CAPITAL EXPENDITURE Megaport continues to invest in its network and software platforms, with capital expenditure including both Other Deployment internal staff costs and external costs such as property, plant, and equipment. Capitalised labour includes Network Product development and engineering eff
Slide 12: Financial Position
FINANCIAL POSITION (A$ Million) 30 June 2023 30 June 2022 $’M $’M Cash at bank at the end of FY23 was $48.5M, reflecting a strong close to the Cash 48.5 82.5 financial year. Other current assets 30.0 20.4 The amount owing under the vendor Non-current assets 123.8 117.5 financing was $15.2M (up from
Slide 13: Revenue Growth vs Cost to Run the Platform
REVENUE GROWTH VS COST TO RUN THE PLATFORM Revenue FY23: $153.1M $43.4M FY22: $109.7M 40% Direct Network Cost + Opex FY23: $110.2M -$0.1M FY22: $110.3M -0.1% Gross Profit +40% +6% -2% FY23: $103.9M $35.6M FY22: $68.3M 52% 》 Revenue is up strongly while Direct Network Costs and Opex have been flat YoY
Slide 14: Operating Leverage June Month
OPERATING LEVERAGE JUNE MONTH Group Normalised Gross Margins for EBITDA2 Margin1 the month Margin Jun-23 69% 31% Jun-22 65% 5% Jun-21 60% 1% Jun-20 55% (29%) Jun-19 41% (49%) 》 Operating leverage is evident as revenue growth has outstripped cost growth 1. Gross Margin reflects revenue less direct ne
Slide 15: Business Update
Underlying metrics have continued to grow, notwithstanding the issues in our Go-to-Market engine during 2023 COMPANY ANNUAL BUSINESS OUTLOOK HIGHLIGHTS RESULTS UPDATE & GUIDANCE FY23 RESULTS INVESTOR PRESENTATION
Slide 16: Annual Recurring Revenue (ARR)
ANNUAL RECURRING REVENUE (ARR)1 Megaport REVENUE GROWTH YoY ARR1 growth Jun 23 Group 39% NAM NAM 45% APAC 25% APAC EMEA 46% EMEA 1. Annual Recurring Revenue (ARR) in A$ is the recurring revenue expected over a 12 month period, calculated as revenue (excluding one-off and non-recurring 16 revenue) fo
Slide 17: Megaport Customers
MEGAPORT CUSTOMERS Megaport NAM APAC EMEA 17
Slide 18: Customers Without Megaport
CUSTOMERS WITHOUT MEGAPORT OTHER CUSTOMER DATA CENTRES CUSTOMER DATA CENTRE CUSTOMER BRANCH LOCATIONS 18
Slide 19: Customers With Megaport
CUSTOMERS WITH MEGAPORT 800+ MCR DATA CENTRES CUSTOMER DATA CENTRE MVE CROSS CONNECT CUSTOMER BRANCH LOCATIONS 19
Slide 20: Megaport Demo
Megaport Demo Global Update
Slide 21: Customer Survey - One Word to Describe Megaport
CUSTOMER SURVEY - ONE WORD TO DESCRIBE MEGAPORT 21
Slide 22: Cloud Service Provider 100G Port Expansion - 10G Consolidation
CLOUD SERVICE PROVIDER 100G PORT EXPANSION - 10G CONSOLIDATION PHASE 1 PHASE 2 PHASE 3 New Enabled Location Customer Growth CSP Port Consolidation Revenue Ports Revenue Ports Revenue Ports Capacity Costs Capacity Costs Capacity Costs CSP CSP CSP 1 x 100G Port 10 x Capacity 10G 10G 10G 10G 10G 10G 10
Slide 23: Growth in Customer Ports
GROWTH IN CUSTOMER PORTS1 Total Customer Ports1 9,172 8% YoY Total CSP Ports2 791 -26% YoY Aggregate CSP Port Capacity 27 Tbps 32% YoY 1. Customer ports are total ports less cloud service provider (CSP) ports. 23 2. Cloud ports or CSP ports are network interface points or physical connections betwee
Slide 24: Cloud Connectivity
CLOUD CONNECTIVITY AGGREGATE CSP CLOUD ONRAMPS 10G CSP PORTS1 100G CSP PORTS1 PORT CAPACITY FY22 FY22 FY22 FY22 278 960 111 21 Tbps FY23 FY23 FY23 FY23 284 577 215 27 Tbps +6 -383 +104 +6 Tbps +2% -40% +92% +32% 1. Cloud ports or CSP ports are network interface points or physical connections between
Slide 25: Growth in Total Services
GROWTH IN TOTAL SERVICES Total Services Total Services 30,516 Jun 22: 27,383 +11% YoY Services Per Customer 10.7 Jun 22: 10.4 +3% YoY ARR Per Service $5,853 Jun 22: $4,687 +25% YoY 1. Total Services comprises of Ports, Virtual Cross Connects (VXCs), Megaport Cloud Router (MCR), Megaport Virtual Edge
Slide 26: Megaport Cloud Router + Megaport Virtual Edge
MEGAPORT CLOUD ROUTER + MEGAPORT VIRTUAL EDGE Jun-23 Average Services per Customer1 9.6 15.1 20.5 Jun-22: 9.5 Jun-22: 14.9 Jun-22: 17.9 +1% YoY +1% YoY +15% YoY Port only Customer MCR Customer MVE Customer Jun-23 Average ARR per Customer1,2 $54K $96K $172K Jun-22: $43K Jun-22: $77K Jun-22: $144K +28
Slide 27: Key Metrics
KEY METRICS Average Customer Lifetime1 Customer Lifetime Value2 9 years $384K FY22: 10 years FY22: $319K LTV / CAC ratio3 Rule of 404 5.5 53% FY22: 5.6 FY22: 31% 1. Average Customer Lifetime calculated as 1 divided by customer churn (11% in FY23 and 10% in FY22). Customer churn is measured over a 12
Slide 28: ARR Contribution by Cohort
ARR CONTRIBUTION BY COHORT MVE MCR EMEA NAM 》 Each customer cohort contributes to ARR growth year after year 28
Slide 29: Customer Cohort Trends
CUSTOMER COHORT TRENDS Average Services per Customer Average ARR per Customer ($) 》 Growth in services and spend from our existing customers drives Net Revenue Retention 29
Slide 30: Customer Cohort Survival by Cohort Year
CUSTOMER COHORT SURVIVAL BY COHORT YEAR 》 Customer survival highlights that churn typically declines over time within each customer cohort 30
Slide 31: Outlook & Guidance
An ongoing focus on improving operating efficiency and strong operating leverage will see continued improvement in operating and financial performance COMPANY ANNUAL BUSINESS OUTLOOK HIGHLIGHTS RESULTS UPDATE & GUIDANCE FY23 RESULTS INVESTOR PRESENTATION
Slide 32: Focus - Reignite the Sales Machine
FOCUS – REIGNITE THE SALES MACHINE 》 #1 Priority Go-to-Market overhaul 》 Investment: 20+ open sales roles – 1,000+ applications, commenced interviews for 13 roles and 3 offers in market 》 Customer Success: hiring underway – protect and expand beyond product led growth 》 GTM breakdown – functions mat
Slide 33: FY24 Guidance
FY24 GUIDANCE1 FY24 Revenue1 FY24 EBITDA1,2 FY24 Net Cash Flow1,3 $190M - $195M $51M - $57M Positive growth of 24% to 27% growth of 152% to 182% 》 Megaport is now in a strong financial position 》 Investment in go-to-market engine to drive top line revenue growth 》 Returning to a culture of innovation
Slide 34: Revenue Guidance
REVENUE GUIDANCE 1. Refer to ASX announcement dated 22 August 2023 titled “Updated Guidance for FY24”. FY24 Guidance assumes a foreign exchange rate of AUD $1.00 to USD 34 $0.67. Any variation to the exchange rate will impact both revenue and costs.
Slide 35: Updated EBITDA Guidance
UPDATED EBITDA GUIDANCE1,2,3 1. Refer to ASX announcement dated 22 August 2023 titled “Updated Guidance for FY24”. FY24 Guidance assumes a foreign exchange rate of AUD $1.00 to USD $0.67. Any variation to the exchange rate will impact both revenue and costs. 2. Normalised Earnings Before Interest Ta
Slide 36: Questions
Questions ASX: MP1 ON THE WEB: megaport.com/investor megaport.com/media-centre SOCIAL: @megaport @megaportnetwork MEGAPORT LIMITED | ACN 607 301 959 | ASX: MP1
Slide 37: Important Information
IMPORTANT INFORMATION This presentation has been authorised by the Board of Megaport. Megaport Limited ACN 607 301 959 Nothing in this presentation should be construed as either an offer to sell or a All references to “$” are to Australian currency (AUD) unless otherwise noted. solicitation of an of
Slide 38: Appendix
Appendix
Slide 39: North America Metrics
NORTH AMERICA METRICS Total Installed Data Centres Total Number of Customers ARR per Port3 $20,150 +36% 210 209 1,462 1,607 30 JUNE 2022 30 JUNE 2023 30 JUNE 2022 30 JUNE 2023 No. of Ports per Data Centre 23.7 +7% Total Number of Ports Total Number of Services1 Services per Port 4,647 4,961 12,810 1
Slide 40: North America Financial Performance
NORTH AMERICA FINANCIAL PERFORMANCE Exit June result Slower network expansion, now at scale, has allowed operating leverage to deliver strong margin growth. The improved normalised EBITDA margin is reflective of strong revenue growth, reduced headcount in the region, and the cost out program being f
Slide 41: Asia Pacific Metrics
ASIA PACIFIC METRICS Total Installed Data Centres Total Number of Customers ARR per Port3 108 100 1,003 1,051 $13,982 +23% 30 JUNE 2022 30 JUNE 2023 30 JUNE 2022 30 JUNE 2023 No. of Ports per Data Centre 35.4 +10% Total Number of Ports Total Number of Services 1 Services per Port 3,484 3,537 10,713
Slide 42: Asia Pacific Financial Performance
ASIA PACIFIC FINANCIAL PERFORMANCE Exit June result APAC profit after direct network costs margin continued to grow with increased revenue. EBITDA margin continued to improve in line with the cost out program being fully implemented by the end of the financial year, the change in payment of PBI from
Slide 43: EMEA Metrics
EMEA METRICS Total Installed Data Centres Total Number of Customers ARR per Port3 105 91 531 578 $19,927 +41% 30 JUNE 2022 30 JUNE 2023 30 JUNE 2022 30 JUNE 2023 No. of Ports per Data Centre 16.1 +20% Total Number of Ports Total Number of Services 1 Services per Port 1,414 1,465 3,860 4,405 3.0 +10%
Slide 44: EMEA Financial Performance
REGIONAL HIGHLIGHTS EMEA FINANCIAL PERFORMANCE Exit June result Revenue growth and ongoing optimisation of the network has driven profit after direct network costs margin growth in the year. EMEA Normalised EBITDA grew 86% on prior year. Normalised EBITDA margin continued to improve in line with the
Slide 45: Reported EBITDA to Normalised EBITDA Walk
REPORTED EBITDA TO NORMALISED EBITDA WALK Reported EBITDA of $25.2M in FY23 was favourably impacted by several one-off accounting adjustments which, when removed, give a full year Normalised EBITDA of $20.2M. 1. Reported Earnings Before Interest Tax Depreciation and Amortisation represents operating
Slide 46: Port Consolidation FAQs
PORT CONSOLIDATION FAQS Q: What is a Cloud port or CSP port? A: A Cloud port is a network interface point or physical connection between Megaport and a Cloud Service Provider (CSP) on-ramp located inside a data centre. Megaport pays for a cross connect to connect to a CSP on-ramp. Q: How does Megapo