Megaport Limited

The Megaport Chief Financial Officer, Michael Reed.

I've been promoted to the CFO folks. I'm also sitting as the CEO and I have delegated my CFO responsibility to Tish just to let you all know. And welcome to the FY26 full year results for Megaport. This is our investor presentation. You'll see all of this is lodged from the ASX. I think there's a number of lodgements out there, so we're going to walk through a few of those today. But let's kick it off. First and foremost, we aren't a gaming company, as many of you will probably notice from this, but this does represent our business. We are connecting from the networks to the clouds. We are compute, network, and storage, and we're on fire. Let's get through it. So what you'll see is, as you know, folks, we've acquired a compute... and Storage Company, which is we've launched storage in that period of time. So we're going to break up the business between Megaport Group, which is going to be at the top right of each screen, you'll see this particular logo. That represents that the revenue and anything we're talking about in that slide is the entire group made up of both the computer network business. If you see this at the top right is compute and this is network. So that's just a bit of a slide key to break it down so that we can share how each business is performing. Today we'll be going through company highlights, financial results, strategic update, and then a guidance update. Let's just pause for a second and look back. I think it's over the past 10 months from today. In November, we actually couldn't fit enough on the slide for what we did throughout the year, otherwise it would be too big. So on 26th of November, we announced the acquisition of Latitude.sh. That was our entrance into CPU and now GPU as a service platforms, totally automated. We also announced an acquisition of Xtreme IX, which is our entrance into India with 40 different data centers landing. It's the largest internet exchange in India. And then on the 27th of April, this has happened in a pretty short period of time. So between the 27th of April and today, we've announced $1.3 billion of TCV. The first one was $35 million on the 27th of April, and then we announced a $254 million GPU CPU network and storage contract on the 14th of May. Then on the 3rd of June, we announced $458.9 million of TCV. We also launched our GPU on-demand pool, which is a capital raise via entitlement offer, which is $827 million. The day after we launched storage, so that's been pretty busy, And then today, we announced another $506 million of TCV contracts, which are announced today. That's obviously forward-looking, so that's not reflected in the FY26 numbers. And we've got an announcement in the ASX on that. We've also been incredibly busy, so a huge shout-out to the finance team. I think a lot of the investors, as we've spoken in the past, have asked us about how we're looking at this from a debt perspective, how we're looking at all of our capital management. and we've shared that we've been in a process for a period of time. We're super pleased to announce we've got $825 million in new debt facility which has been announced as of today. So that's fantastic news which sets us up for the future. Again, the highlight here is $1.3 billion of TCV contracts signed since April 27 to today. How does that look looking backwards? So let's talk about the FY26 ARR chart and you can see Quick note at the top right, this is the group business. And so you can see that broken down is the network and then the compute business, ARR, as at June 26. $395 million of ARR landed in that year, which is an astounding achievement. If you break it down from a group revenue perspective, we're at $312 million, which is a 37% year-on-year increase of group revenue for FY26. Networking ARR, is up 27% in constant currency to $289.6 million. An incredible achievement and I'm very, very proud of what the team has achieved here. On network net retention, so we break down the net revenue retention effect for the network business specifically, separating out the compute business. So I think this would be appropriate to say that that little thing doesn't represent that. This represents the network side. We're up five percentage points year on year. That's 114% net revenue retention, probably one of the most important metrics that we've been focused in the business over the last three years. This is an astounding achievement. We're going to walk through some of those pieces coming up. The compute ARR, so since the acquisition, which we announced late November, we're up 72% as at June to $105 million of ARR. Just an incredible achievement for the Latitude business. And a massive shout out, not only to the founders that have joined us, but to the entire team and to all the new folks that are joining the business and helping scale. It's a story of massive execution coming out for the next year and continued growth. So let's look at the annual recurring revenue breakdown for the network. There's the network logo at the top right. So this is representing the network annual recurring revenue throughout the year. You can see the breakdown between Americas, obviously the largest component of that, 290 at the top, 166 in Americas, 77 million in Asia Pac, 47 in EMEA, all regions growing. But I think I want to draw your attention really specifically to the ARR incremental addition. So this is the net increase in ARR on top of the start of the year to the finish of the year. And you can see in history, we've been performing well, but look at FY26. This is 103% increase. It's on the largest ever year-on-year growth that we've ever seen. So the largest year that we've ever seen, we've over-doubled that in net and ARR incremental additions to $62.3 million in FY26. An incredible proof point that the investment that we made actually this time last year back into the business and all those pieces we've been setting up from a product standpoint is paying off in dividends. Really exciting. This is the compute business and just a reflection of how the ARR has grown inside that business. I mean, right now we're hitting sort of a little skate park here as you come up this side. So you can see since the acquisition in November 26, you can see the extreme growth that we've had here just in that very short period of time. This isn't even taking into account all of the TCV contracts that we've got in place. I think there's a very small amount of ARR from them in there. So the future is looking incredibly bright. Again, congratulations to the Latitude team. What a magic partnership between us and that's showing right there. We've shared our DC cohorts ARR contribution over time before. It's a little bit of a night shot, but it certainly reflects how important it is for us to continue to invest in building out new data centres. And I'll just sort of explain what you're looking at here. Each group here represents a cohort of data centres that we've added. So if we go back to this very first one, in FY22, we added 26 different data centres. and it started in that year with this level of revenue. Now, what was really important is that the following year, that's when you start to see the revenue come to fruition when you invest in building out a data centre and you can see its compound interest from there on after. Now, we sort of shared this back here. Look, when we first came in, there was very few data centres added, and we started to say we need to continue to add. What we saw in FY25 was we added 115 data centres. You could see how that landed from a revenue perspective, but have a look at the following year from those data centres. Astronomical. And so the point of this is every time we add these new DCs and get new revenue, it expands our TAM and helps us grow the business, but it's the ongoing growth of that. Now have a look at what we've done in FY26. The team is on fire. They've added 155 data centres, landed the revenue at this component and you can, if you play this forward, you can start to see at the impact of compound interest of building out the TAM. This is a really key part of the strategy as we constantly continue to invest in building and showcasing why we're doing that. So you can see we're up 35% year on year in terms of data centres. and what's really interesting is we're landing new data centers with much higher ARR because we've got so many more products that we're selling to that customer base. So it's a real key example of the strategy coming together. Probably one of my favorite charts. This sort of represents what that compound interest around net retention and how it plays out in the customer cohorts. So just to sort of quickly look at it, whilst it looks very pretty and it is very pretty, each color represents a cohort of customers, i.e., let's pick a particular colour. So in June 22 to June 23, so FY23, this very small piece of revenue is the customers that landed. And then what happens to them the next year? They expand, and then the year after they expand, and the year after they expand. So that's actually showcasing it's incredibly sticky but also expansive, which is your net retention number. But what we've done right at the top here is we keep stacking these on top of each other The FY26 cohort ARR has landed 55% higher than our previous record. It's showing an incredible result from the go-to-market team, and again, back to all those new products that were landing and innovating, we get more revenue, more wallet share, more TAM per customer, and we're proving that out as to how we land. It's always great when we tell you what we were going to do, and we can show you historically that we actually did what we said we were going to do. This slide, there's a lot of data in here. We're putting this in the deck more for when we go through the investor roadshow, so I'm not going to walk through every one of these. But in short, the execution against the strategy throughout the financial year was nothing short of astounding for what was a pretty small team. And so we added 155 data centres. We've added so many different products. If you think about the strategy of the company, there are three pieces. We build, and that is how we expand and add different total addressable marketing to existing products. First, we add... If you look at Megaport infrastructure across 40 sites, we build out storage hardware, we build out all this infrastructure, all these different components. We upgrade speed, 400 gig, you name it, etc. Then on top of that, actually there's probably a few things worth calling out. We had three times the expansion in 100 gig internet locations, which is a 200% increase in market coverage. Just one little example of going big on the products that we're seeing massive success in. So we're constantly testing products and all sorts of things inside the business. When we find success, we double down behind them and continue to expand. 67% increase in 100 gig enabled locations, for example. 58% increase in bare metal service. It's a huge investment. The Innovate component is about us bringing out new products. So this is our engineering team that's actually building cool stuff. We launched cloud storage, DDoS protection, we launched MCP, so this is all the AI components that are sitting inside that, and virtual machines, Kubernetes, agent hub, there's so many things that came through, cloud router, IPsec, packet filtering, ping trace route. The team has delivered that in that period of time. Each one of those steps us further away from anyone that would try and do what we do. and actually adds a TAM to the component. And the last piece is the investment component. We talked through a few of those. We've acquired companies. We've added capital to it. We've invested in all the different folks. We're diversifying our capital base. All those different components will take the investor roadshow if we need to go through that. All right. The financial results. This is the exciting part, folks. I'm going to hand you over to Patricia Dorman, our CFO. Cheers.

Thanks, Michael. So the FY26 performance, we just have a slide here really to touch back on the guidance that we provided and where we've landed compared to that guidance. So reported group revenue is 312 mil. That's made up of the network revenue, which has been seen experienced significant growth over the last year, landing at 268. and then the compute revenue, which we talk extensively about and what we've learned a number of strategic contracts that largely will land into FY27 for the impact onto revenue. However, that compute revenue against there is around 44 mil. EBITDA is above the top end of guidance at 25%, made up of a variety of components, being revenue and a range of costs in there, which we'll talk through on the next slide. and then CapEx around the guidance that we had, 90 to 100 mil, which excluded any strategic contracts or initiatives landing at 98 mil. So here we've got a fair bit of text, which is helpful for post-results for a few of the folks on the call. But the call-outs here, revenue up 37%. Now, that is, we did acquire two companies with revenue in those companies' latitudes. and the India acquisition. That, but also the underlying network business itself with significant NRL growth and new logo acquisition during the year has added to that result. The direct network costs, it does reflect the ongoing investment we've talked about extensively previously, 155 net new DCs, and we continue the 400 gig core backbone upgrades as well throughout the globe. Employee costs are up substantially as planned and as communicated a number of times as the business has been rebuilding, that cost has increased. We also have incorporated the two entities in a much bigger group and we continue to invest in the business, particularly to support the scale of growth and opportunity and revenue. Other operating costs, there are some higher non-recurring expenditure associated with the two acquisitions in particular. We're now located heavily in Brazil, India and the US, so there's a significant amount of travel as we start to merge the three entities together and some heavy marketing activity to support that as well. EBITDA 77.0, which showcases that 25% margin there, is also a call-out there for us. Employee costs. This is some insight into where we've invested for employees and continue to invest and you can see that insight there largely around the LTV to CAC of 5.8. That really just reflects even with the grown-to-market investment which continues to scale. That supports the revenue growth in line with that. We are scaling the customer support and deployment functions to enable the compute build-out. That's a really critical component. and then we continue to invest in the product and engineering as we continue to scale out the onion rings. I think Michael will talk to you a little bit later in this around the continuing expansion of products. Cash flow, that is up pretty materially. We did do an entitlement offer in the months of June and so the cash has landed in the balance sheet. We continue to place deposits. on significant orders of GPUs, and as we start to have those be delivered, we'll continue to utilise that cash in order to start to support the rollout of the strategic contracts as planned. You can see here the operating cash flow for the combined entities. That is driven by the inclusion of the two entities as well. This is a consolidated cash flow as with EBITDA, so some pretty significant changes in the business overall. across the P&L cash flow and balance sheet that you'll see. Michael has talked to this previously around the new debt facility where we have commitment letters signed by a syndicate of leading domestic and international banks. That has been a significant process that we've undertaken over the last few months and so we're really excited to announce that as part of the overall funding strategy that we've undertaken to support growth for the consolidated group. We do continue to explore further funding strategies in line with our capital management plan and this is really designed to highlight that where we see the growth and we will continue to invest our cash in where we want to build and innovate to enable growth for the future of Megaport. And that debt facility will form a core part of that overall funding strategy for that. Back to you, Michael, on your strategic update.