Megaport acquires InnovoEdge as losses increase to $55M

Megaport acquires InnovoEdge as losses increase to $55M

Profit after direct network costs was up to $42M.

Vincent English (Megaport)

Vincent English (Megaport)

Credit: Megaport

Network-as-a-service (NaaS) provider Megaport has told shareholders its post-tax losses in FY2021 increased by 13 per cent, to $55 million in the red, as it also reveals its acquisition of US-based multicloud and edge automation platform InnovoEdge for US$15 million.

During the 12 months to 30 June, the provider saw its losses increase from the prior financial year's loss of $48.7 million, while its revenue from ordinary activities was up by 35 per cent, to $78.3 million. 

However, profit after direct network costs — consisting of data centre power and space costs, physical cross connect fees, bandwidth and dark fibre, network operation and maintenance fees, and channel commissions — was up by 43 per cent, to $42 million in the black. 

At the same time as announcing its financial results for FY21, the provider also announced the acquisition of InnovoEdge through its US subsidiary, a move that is expected to add capability to its platform. 

InnovoEdge claims its platform offers software and services to automate the deployment, management, monitoring and price optimisation of multicloud, hybrid cloud and hyper-edge environments.

The acquisition price consists of US$7.5 million in cash and up to US$7.5 million in Megaport shares, and is expected to wrap up by mid-August. 

According to Megaport CEO Vincent English, the acquired company aligns with the provider’s goals of offering increased agility to customers and partners. 

“The acquisition of InnovoEdge aligns well with that priority and will help us drive greater functionality across our leading network-as-a-service platform,” he said. “By integrating the InnovoStudio service with our portal and software defined network, we will provide customers and partners with greater visibility and control of networking, cloud, and service resources.” 

Nick Balletta, InnovoEdge CEO, added that the two companies “share a philosophy of neutral enablement”. 

“Megaport’s commitment to driving innovation and unlocking powerful connectivity use cases through integration and automation aligns perfectly with our development and orchestration expertise,” he said. “We look forward to providing more features that expand on Megaport’s platform to enable even greater agile networking capabilities.” 

All three of Megaport's regions saw their revenue increase during FY21, with its North America region increasing the most, rising by 47.1 per cent, to $38.7 million. Meanwhile, Asia Pacific revenue was up 24.8 per cent, to $25.7 million, and Europe revenue rose by 24.3 per cent to $13.8 million.

The provider claimed the COVID-19 pandemic has not had a significant impact on the business, with a lengthening in the time to sign up new customers briefly shortening in the first quarter, coinciding with the easing of restrictions and customers looking to reinforcing their networks should restrictions come back. 

Megaport also didn’t see any supply chain delays for key components but did see minor delays when commissioning new third party connectivity for new data centres. 

Sales saw an uptick in the third quarter, particularly as larger customers with digital transformation projects started back up. This resulted in what the provider claimed as a record-breaking final quarter, with its highest number of new customers onboarded during the period, as well as the highest number of new ports and services being activated. 

According to English, Megaport is set on seeing its revenue increase further past FY21 with increased contributions fuelling growth for the provider. 

“We will invest in revenue growth by making investments in further market expansion, product and service innovation, and most critically, the people responsible for making Megaport the transformational technology company that is changing the way IT services are built today and tomorrow,” he said. 

InnovoEdge and Megaport’s financial announcements come days after the provider launched its new PartnerVantage program, which was introduced to focus on easing the path to market for resellers, data centre operators, systems integrators and managed services providers (MSPs). 

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