Why the Megaport (ASX:MP1) share price is on the rise

A man excitedly watches the rise in ASX stock prices on a computer screen against the backdrop of streamers

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The Megaport Ltd. (ASX: MP1) the share price rises on a day of general decline. This is after the company announced that it has complete the purchase of InnovoEdge for $ 15 million.

At the time of writing, the software vendor’s stock is trading at $ 17.02 – up 0.71%. The S&P / ASX 200 index (ASX: XJO) meanwhile is 0.43% lower.

Let’s take a closer look at today’s news.

Megaport’s share price rises on the last purchase

Last week, Megaport has confirmed that it will buy InnovoEdge. The company, which she describes as providing a “multi-cloud and edge AI management program.” The deal compromised $ 7.5 million in cash and $ 7.5 million in shares in Megaport. The script will be issued in 3 tranches over 3 years, provided that “the achievement of a certain 1 development product and revenue stages”.

At the time, Megaport CEO Vincent English said

The acquisition of InnovoEdge coincides well with this priority and will help us develop greater functionality in our leading network as a service platform. By integrating the InnovoStudio service with our portal and software-defined network, we will provide customers and partners with greater visibility and control of network, cloud and service resources.

Megaport’s share price rose after the news of the acquisition and rose again after its completion.

Results from Megaport FY21

Along with the announced purchase of InnovoEdge, Megaport also published its results for FY 21.

For the previous fiscal year, revenue increased 35% to about $ 78 million. Also, monthly recurring revenues (MRRs) jumped 32% to $ 7.5 million, and average port revenues were slightly reduced to $ 978 per port. Overall, the company made a net loss of $ 55 million, but had approximately $ 136 million in cash.

Photo of the share price of Megaport

In the last 12 months, the price of Megaport shares has increased by 29%. The ASX 200 increased at a slightly lower rate of 25%. For a year now, Megaport shares have exceeded the benchmark index from 19.7% to 13.6%.

Given its current assessment, Megaport has a market capitalization of about $ 2.7 billion.