Megaport Limited: A bit of SaaS and a well flagged and loved upgrade

About the author:

Nick Harris
Author name:
By Nick Harris
Job title:
Senior Analyst
Date posted:
23 August 2023, 8:30 AM
Sectors Covered:
Telecommunications, Technology

  • Megaport Limited's (ASX:MP1) FY23 result was largely known due to substantial pre-release. Key new information was: 1) FY24 Underlying EBITDA guidance being upgraded by ~24%; & 2) the introduction of a number of SaaS metrics including LTV and LTV/CAC.
  • These numbers were broadly in-line with our expectations. For every $1 MP1 spends on Customer Acquisition Cost (CAC) this returns 5.5x that in gross profits (Life Time Value). MP1’s value proposition and sales and marketing machine is spending more well. They will balance growth and profits over the years ahead.
  • Following a significant share price increase (+114% in the last three months) we move MP1 to a HOLD with a 12-month target price of (login to view).

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