Macquarie Telecom’s $106M revenue affirms its “strategic and operational plan”

Results for the first half of 2017 at the “upper end of guidance”
Macquarie Telecom CEO, David Tudehope

Macquarie Telecom CEO, David Tudehope

Macquarie Telecom (ASX:MAQ) has reported revenue of $106.8 million for the first half of 2017, alongside an an EBITDA of $19 million as the company continues to deliver on its growth plans.

In a statement released via the ASX, the company said the results were at the upper end of guidance, with revenue up seven per cent from the $100.1 million.

Meanwhile, net profit after tax was $6.2 million, an increase of 214 per cent from the $2 million it reported in the first half of 2016.

“We are pleased by this result which affirms our strategic and operational plan and our growth activities to build on continued customer demand,” Macquarie Telecom Chairman, Peter James, said.

Breaking down financials for its various business units, the company recorded revenue of $71.2 million, an increase of two per cent from the first half of 2016 and EBITDA of $9.3 million for its telecom unit.

Its hosting business contributed to the company revenue of $37.8 million and an EBITDA of $9.7 million, an increase of 16 per cent and 55 per cent respectively, from 1H 2016.

“Our confidence that hosting revenue will continue to grow strongly has been realised during the half and the continued improvement in data centre asset utilisation has driven further growth in profitability,” Macquarie Telecom CEO, David Tudehope, added.

Its growth CAPEX was $11 million, which will be used to expand the capacity at its Intellicentres 2 and 4 ($7.3 million) and data networking technology and network operations centre insourcing ($3.7 million).

Macquarie Telecom also reported a “healthy balance sheet” with cash and cash equivalents of $24.7 million, no debt and cash flows from operating activities of $13.9 million. It also said its CAPEX increased to $12.5 million from $7.5 million in 1H FY16, driven by customer demand.

In addition, underpinned by “strong sales growth”, it expects an EBITDA of about $37 to $39 million for the full financial year of 2017.

It also specified that its hosting revenue will continue in the second half of 2017 but that profitability will be affected by additional staff costs in the sales team and increased electricity proves.

“Telecom’s investment in new data networking technology and network operations centre insourcing will result in additional staff costs being incurred in 2H FY17. These investments will materially reduce costs and further improve service delivery in FY18,” it said.

In May 2016, the company added a new customer to provision data centre services. The deal with the unnamed ‘Fortune 100’ customer, involves a six year contract to provide up to 2.5MW of capacity.

As a result, the company said then that it planned to invest about $15 million at its Intellicentre 2 (IC2) data centre in mechanical, plant and equipment in stages in the next 20 months to expand its capacity to help meet demand.

This customer is expected to commence initial billing in the third quarter of the 2017 financial year. The company also recently signed a MoU with Dubber in February last year.

At the time of publication, Macquarie Telecom’s shares were trading at $12.00.