Megaport (ASX:MP1) sinks over 12%. Here’s why.

Image Source: © Elizaliv | Megapixl.com

Highlights

  • MP1 share price has fallen to its 3-month low today.
  • Megaport’s MRR growth has slowed down despite overall financial growth in Q2-FY22.
  • Megaport predicts it will showcase additional capacity and automation in next quarter.

Technology sector company, Megaport Limited (ASX:MP1) shares have headed south today. The shares have crashed by over 11% since trade began today. MP1 is trading at AU$16.060 each as of 11:30 AM AEDT. The tech company’s shares have crashed despite a positive Q2-FY22 update, released today on ASX.

How has Q2-FY22 been for Megaport?

  • In Q2-FY22, Megaport has delivered strong Monthly Recurring Revenue (MRR), though the MRR growth rate softened on a QtoQ basis.
  • The Underlying MRR grew only by 6% as compared to a previous quarter’s growth of 11%.
  • Further, the total revenue for Q2-FY22 was up 8% compared to Q1-FY22.
  • The annualised recurring revenue stood at AU$110M.
  • Megaport’s new services business was up 5% QtoQ and the Megaport Virtual Edges (MVE) sales grew by 42.9%.
  • Megaport’s MVE or direct sales supports the indirect channel growth. It has added two additional connectivity partners in Q2-FY22– VMware and Aruba.
  • In Q2-FY22, Megaport has also partnered with its second major Value-Added Distributor (VAD), TD SYNNEX and on-boarded 22 indirect channel partners.

Talking about the Megaport’s way ahead, the company’s management said-

Bottom line

Despite growth in sales and channel additions Megaport shares have not managed to gain investor confidence on ASX. The technology sector sell-off seems to have overpowered Megaport’s strong quarterly performance.

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