Macquarie Telecom marks 5th year of profitable growth as FY19 revenue nears A$250m

Macquarie Telecom Group has announced its FY19 results, showing five successive years of profitable growth as revenue nears the A$250 million mark.

The company has said it will continue to invest in hybrid IT, cloud (including adding public cloud capability) and cyber security, as it migrates thousands of customers to the NBN under the agreement announced last year.

“Macquarie’s profitable growth has enabled us to invest across our four business units,” said the firm’s Chief Executive David Tudehope. “The success of our private cloud and cyber security services underpins our Hosting revenue and profit growth.”

KEY RESULTS

Full year revenue increased 6% to A$246.6 million for FY2019, up from A$233.6 million for the prior year.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) was A$52.1 million for FY2019, an increase of A$4.3 million on the prior year and in line with guidance.

Net profit after tax decreased 3% to A$16.5 million compared to a profit of A$17.0 million for the previous corresponding period, which the telco attributed to increased depreciation.

Capital expenditure for FY2019 was A$46.1 million (FY18: A$33.8 million) driven by growth Capex of A$14.8 million for: The Fortune 100 Customer Stage 3 and Data Hall 4 fit out, NBN migrations, Government Cloud and IC3 investment.

In addition, customer related Capex was A$21.8 million while Maintenance Capex was A$9.5 million.

KEY GOALS FOR FISCAL YEAR 2020

Macquarie Telecom said its focus in fiscal year 2020 would center around improving customer experience to ensure a leading Net Promoter Score. In addition, its Government team will prioritise its efforts on growing revenue in both cyber security and secure cloud computing.

“Telecom will continue to migrate thousands of customer’s services to the NBN under the company’s six-year wholesale supply agreement with NBN Co,” it added. “Telecom Capex will increase from A$15.8m in FY19 to $A25-A26m in FY20. The increase in capex can be attributed to both growth and customer capex projects in FY20 including the Telecom core network upgrade and a continued investment in new data networking technology (SD WAN).”

LOOKING AHEAD

The company said its EBITDA will continue to grow in FY20, noting however that the 1H FY20 will be flat compared to 2H FY19 due to one-offs received in June 2019 and further investment in sales growth in its Hosting business.

While a delay in planning and approval will mean practical completion of IC3 East (part of the Macquarie Park Data Centre Campus) will be pushed on from 1H to 2H CY20, the company said this would impact its ability to support its customers’ current and future growth plans.

Upon completion, the Macquarie Park Data Centre Campus will provide 43MW in total load, a significant increase on the current 10MW facility.

The Company plans to make a significant investment in growth and customer growth capex (excluding IC3) during FY20.

Total capex, excluding IC3 East, is expected to be between A$51-A$54m consisting of:
Growth Capex – A$12 to A$13 million
Customer Growth Capex – A$24 to A$25 million
Maintenance Capex – $A15 to A$16 million

 

Huawei: commitment to UK delivers billions in economic benefits

Huawei has claimed it boosted the UK economy by £1.7 billion through its economic activity in 2018, up six times since 2012.

According to an independent study by global advisory firm Oxford Economics, the company supports over 26,000 jobs either directly or through its supply chain – with the employment benefits stretching across all regions of England, Scotland, Wales and Northern Ireland.

As an international company, Huawei creates significant value in the UK each year. The company’s £1.7bn contribution in 2018 consisted of:

–          £287 million from Huawei’s own activities (‘direct value-added’)

–          £806 million contribution via UK businesses within Huawei’s supply chain (‘value added’)

–          An additional £598 million generated by the spending of the employees of Huawei and its suppliers’ (‘induced impact’)

Huawei 2019 UK Partner Summit

The independent study was launched at Huawei’s 2019 UK Partner Summit.  The theme for the summit, at One Great George Street Conference Centre in central London, was ‘Let’s Grow Together’.  Huawei took the opportunity to reiterate its commitment to the UK and outline its strategy across its various partnership programmes in the UK.

Speaking at the summit today, Sir Andrew Cahn, Non-Executive Director, Huawei UK, said: “The UK has an outstanding reputation for nurturing business growth and pioneering innovation, and we are extremely proud of our relationships with our partners in the UK.  Huawei has enjoyed great success helping to build the UK’s telecoms networks, and we remain fully committed to the UK.  This is one of our most important markets globally and we fully intend to help it remain a leader in new technologies.”

Huawei’s UK Commitment

Huawei announced in 2012 that it intended to spend £1.3 billion in the UK over five years. In fact, it exceeded this commitment by almost £900 million, spending £2.2 billion on investment and procurement over that period. Last year, Huawei announced a further pledge of £3 billion, to be spent with British suppliers between 2018 and 2022.  In 2018 alone, the company purchased over £900 million of goods and services from UK businesses – 30 percent of its procurement goal – and is therefore on course to significantly exceed its new five year target.

Jerry Wang, Huawei UK CEO, commenting on the Oxford Economics report said: “Today’s findings prove Huawei’s value and contribution to the UK economy.  As part of its Industrial Strategy, the UK Government has said it wants ‘a Britain that lives on the digital frontier, with full-fibre broadband, new 5G networks and smart technologies’.  We are proud of the role we have played in helping to develop the UKs digital infrastructure and we remain committed to being a strong and innovative partner to our customers.”

Since opening its first office in the UK in 2001, Huawei has grown to employ 1,600 people directly.  The number of jobs supported by Huawei’s overall UK activities has risen five-fold in seven years, as Huawei has made specific commitments to procure from British companies.  Oxford Economics’ research also finds that Huawei boasts high productivity levels. With each UK employee contributing to GDP of £183,000 – 3.5 times more productive than the average UK worker, Huawei is building a highly skilled workforce, and invested £1.3 million in training last year.

In 2018, Huawei invested £112 million in research and development, employing more than 300 researchers in the UK.  Huawei also collaborated with 35 universities and research institutes, according to the report. In 2018 it sent 50 STEM undergraduates from leading UK universities to China for a month as part of its Seeds for the Future programme.  Tax revenue of £470 million was estimated to have been generated by Huawei activity last year, which was sufficient to fund the annual salaries of over 17,000 nurses.

Pete Collings, Director of Economic Impact Consulting, Europe & Middle East at Oxford Economics said: “Our research highlights how Huawei has continued to make a substantial contribution to the UK economy. This extends beyond the company’s own operations, to include significant activity throughout the breadth of the UK economy, as Huawei conducts crucial research and development in the UK and draws on UK-based firms to deliver the inputs required for its global business.”

Macquarie Telecom Group notes 4th successive year of solid profit

[the_ad_placement id=”in-content”]Macquarie Telecom Group has announced its results for the full year ended 30 June 2018 in line with updated guidance and declared a final dividend of 25cps, fully franked.

Chairman Peter James said, “Consistent execution of our strategy has delivered four years of consecutive growth. We will continue to invest to benefit from the megatrends of cloud and cyber security.”

KEY POINTS 

  • Full year revenue was up 6% to $233.1 million for FY2018 compared to $219.7 million for the previous corresponding period.
  • Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $47.8 million for FY2018, an increase of $7.5 million or 19.0% on the previous corresponding period and in line with upgraded guidance.
  • Cash flow from Operating Activities of $42.9 million. The company is debt free and has a closing cash balance of $30.3 million as at 30 June 2018.
  • Net profit after tax was up 20% to $17.0 million compared to a profit of $14.2 million for the previous corresponding period.
  • Capital expenditure for FY2018 was $33.8 million (FY17: $38.5 million) driven by growth Capex of $11.5m for: The Fortune 100 Customer; Government Cloud, Data Hall 4 fit out; SD WAN investment and Telecom NOC insourcing project. In addition, customer related Capex was $11.0m and maintenance Capex $11.3m.
  • Final dividend declared of 25 cps, fully franked which brings the Company to a full year dividend of 50 cps.

Chief Executive David Tudehope said “Macquarie’s profitable growth has enabled us to invest across our business units. Our confidence in the continued growth in demand for Cloud underpins our decision to invest $75-80m in the Macquarie Park Data Centre Campus.” 

PRIORITIES IN FISCAL YEAR 2019

  • Focusing on customer experience to ensure a leading Net Promoter Score.
  • Leveraging the 42% of the Australian Government who have contracted with Macquarie Government, the Government team will be focused on growing revenue in both cyber security and Secure Cloud computing. Our Cloud computing offering is certified by the Australian Signals Directorate.
  • Telecom will continue to invest in new data networking technology (SD WAN) and will achieve a full year benefit from the insourcing of the NOC in FY19.
  • Hosting has delivered Stage 2 of the Fortune 100 customer at Intellicentre 2, with full revenue earning capacity in FY19.
  • OUTLOOK

    The Company announced the expansion of its existing Macquarie Park Intellicentre to a 43MW Campus. The Campus is designed to meet the growing needs of global hyperscalers and cloud, enterprise and Government customers.The Company’s EBITDA will continue to grow in FY19, however the 1H FY19 will be flat compared to 2H FY18 due to one-off or abnormal items received in June 2018 and further investment in sales growth.

  • The Company expects that the initial capital expenditure on the Intellicentre 3 East (IC3 East) Data Centre will be approximately $75-80 million, the bulk of which will be incurred across calendar year 2019.  This capex will be partially offset by a fee from Keppel DC REIT to the value of $26-36m for the development of IC3 East core and building shell.
  •  The services offered under this six year agreement will include dedicated, Australian based nbn™ service delivery, assurance and support staff for Macquarie customers.
  • It is expected that the first customers to be connected to the new services will commence billing in Q2 of the 2019 financial year.
  • The existing Fortune 100 customer has contracted for an additional 1.4MW of capacity to be provided over the remainder of the initial contract term. The Company will invest approximately $8.4 million in data centre mechanical, electrical and plant over the next eight months to expand its capacity to meet this demand. The additional capacity is expected to be ready for service in Q4 FY19.The Company announced that it has entered into a wholesale supply agreement with NBN Co. The deal will enable the provision of telecommunications and data services to Australia’s business community.
  • The Company will enter a 20 year lease with Keppel including options to renew. This data centre development will be funded by structured debt financing due to be finalised in Q1 FY19.
  • Continued demand from our Federal Government Agencies for secure Cloud, including from Tier 1 Agencies like ATO, gives great confidence for future growth in the Government Business. Accordingly, there will be further investment in expansion in Canberra and our Cloud platform, with an increase in Opex of around $1.5m.

Nutanix reports Fourth Quarter and fiscal 2018 financial results

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SYDNEY, Australia – Nutanix, Inc. (NASDAQ: NTNX), a leader in enterprise cloud computing, today announced financial results for its fourth quarter and fiscal year ended July 31, 2018.

Fourth Quarter Fiscal 2018 Financial Highlights

  • Revenue: $303.7 million (at 77.7% non-GAAP gross margin), up from $252.5 million (at 62.6% non-GAAP gross margin) in the fourth quarter of fiscal 2017, reflecting the elimination of approximately $95 million in pass-through hardware revenue in the quarter as the company continues to execute its shift toward increasing software revenue1
  • Software and Support Revenue: $267.9 million, growing 49% year-over-year from $179.6 million in the fourth quarter of fiscal 2017
  • Billings: $395.1 million, growing 37% year-over-year from $289.2 million in the fourth quarter of fiscal 2017
  • Software and Support Billings: $359.2 million, growing 66% year-over-year from $216.3 million in the fourth quarter of fiscal 2017
  • Gross Margin: GAAP gross margin of 75.9%, up from 61.4% in the fourth quarter of fiscal 2017; Non-GAAP gross margin of 77.7%, up from 62.6% in the fourth quarter of fiscal 2017
  • Net Loss: GAAP net loss of $87.4 million, compared to a GAAP net loss of $66.1 million in the fourth quarter of fiscal 2017; Non-GAAP net loss of $19.0 million, compared to a non-GAAP net loss of $26.0 million in the fourth quarter of fiscal 2017
  • Net Loss Per Share: GAAP net loss per share of $0.51, compared to a GAAP net loss per share of $0.43 in the fourth quarter of fiscal 2017; Non-GAAP net loss per share of $0.11, compared to a non-GAAP net loss per share of $0.17 in the fourth quarter of fiscal 2017
  • Cash and Short-term Investments: $934.3 million, up 168% from the fourth quarter of fiscal 2017
  • Deferred Revenue: $631.2 million, up 71% from the fourth quarter of fiscal 2017
  • Operating Cash Flow: $22.7 million, compared to $5.9 million in the fourth quarter of fiscal 2017
  • Free Cash Flow: $6.5 million, compared to negative free cash flow of $6.5 million in the fourth quarter of fiscal 2017

Fiscal Year 2018 Financial Highlights

  • Revenue: $1.16 billion (at 68.1% non-GAAP gross margin), up from $845.9 million (at 63.1% non-GAAP gross margin) in fiscal 2017, reflecting the elimination of approximately $169 million in pass-through hardware revenue in fiscal 2018 as the company continues to execute its shift toward increasing software revenue1
  • Software and Support Revenue: $898.1 million, growing 47% year-over-year from $609.6 million in fiscal 2017
  • Billings: $1.42 billion, growing 43% year-over-year from $990.5 million in fiscal 2017
  • Software and Support Billings: $1.16 billion, growing 54% year-over-year from $754.2 million in fiscal 2017
  • Gross Margin: GAAP gross margin of 66.6%, up from 61.3% in fiscal 2017; Non-GAAP gross margin of 68.1%, up from 63.1% in fiscal 2017
  • Net Loss: GAAP net loss of $297.2 million, compared to a GAAP net loss of $379.6 million in fiscal 2017; Non-GAAP net loss of $101.5 million, compared to a non-GAAP net loss of $120.7 million in fiscal 2017
  • Net Loss Per Share: GAAP net loss per share of $1.81, compared to a GAAP net loss per share of $2.96 in fiscal 2017; Non-GAAP net loss per share of $0.62, compared to a pro forma non-GAAP net loss per share of $0.85 in fiscal 2017
  • Operating Cash Flow: $92.6 million, compared to $13.8 million in fiscal 2017
  • Free Cash Flow: $30.2 million, compared to negative free cash flow of $36.4 million in fiscal 2017

Reconciliations between GAAP and non-GAAP financial measures and key performance measures are provided in the tables of this press release.

“We ended the year on a high note with a record quarter on many fronts, positioning us extremely well for the future. We will continue to invest in talent and hybrid cloud technology while incubating strategic multi-cloud investments such as Netsil, Beam, and now Frame,” said Dheeraj Pandey, Chairman, Founder and CEO of Nutanix. “Frame increases our addressable market, brings another service to our growing platform, and adds employees with insurgent mindsets who will help us continue to challenge the status quo.”

“The company’s strong achievement of 78 per cent non-GAAP gross margin, the best in our history, is the direct result of our successful execution toward a software-defined business model,” said Duston Williams, CFO of Nutanix. “We’re also tracking above our target performance we set using the ‘Rule of 40’ framework, demonstrating our ability to balance growth and cash flow.”

Recent Company Highlights

  • Completed the Acquisition of Frame: Acquired Frame, a leader in cloud-based Windows desktop and application delivery, increasing the company’s addressable market. IDC estimates that the desktops-as-a-service (DaaS) software market is forecast to grow to $3 billion in 2021 at a compound annual growth rate of 32%.2 With the addition of Frame, Nutanix customers will be able to deliver desktops-as-a-service from multiple clouds, combining the consumer-grade simplicity and web-scale design of cloud applications with the functionality of traditional virtual desktop applications.
  • Achieved Milestone of $1 Billion+ in Annual Revenue in Less Than a Decade from Inception: Grew fiscal 2018 revenue to $1.16 billion, excluding $169 million in pass-through hardware revenue eliminated, crossing the $1 billion milestone.
  • Expanded Customer Base Hitting Milestone 10,000+ Customers and Signed Largest Deal in History: Nutanix ended the fourth quarter of fiscal 2018 with 10,6103 end-customers, adding 1,000 new end-customers in the quarter. Notably, the company passed an important milestone, adding its 10,000th customer during the quarter. The company also expanded an existing customer engagement by closing a deal greater than $20 million in the quarter, the largest in Nutanix history.
  • Successfully Continued Transition to a Software-Defined Business Model: Grew software and support billings by 66 per cent year-over-year in the fourth quarter. Pass-through hardware billings decreased to 9 per cent of total billings in the quarter, down from 25 per cent in the fourth quarter of fiscal 2017.
  • Launched 12 Culture Principles Representative of Company Values: Codified the company’s corporate values with the articulation and launch of 12 culture principles. These principles serve as the foundation for how Nutanix employees work with each other, with partners, and with customers.
  • Added Two New Executives in Key Functions: Prabha Krishna joined Nutanix as the SVP of People and Places, and is responsible for the HR and facilities teams worldwide. In addition, Ben Ravani joined as the SVP of Xi Reliability Engineering to oversee building and operating Xi Cloud Services as well as serve as the General Manager of the Nutanix Seattle site.
  • Introduced New Velocity Program for Scaling Growth in the Mid-Market: The company launched its Velocity channel program in June, aimed at accelerating the selling processes, incentives, and marketing investments for strategic, mid-market focused channel partners. The program provides a frictionless experience for channel partners, giving them more leverage to grow their business.
  • Expanded its Global Workforce: Nutanix has rapidly increased and evolved its operations in India over the past five years and recently ranked second on “India’s Great Mid-Size Workplaces 2018” list. Additionally, the company continues to increase its headcount in Bangalore, Belgrade and Berlin as it further disrupts traditional enterprise IT incumbents with an increasingly global workforce.
  • Certified as the First Hyperconvergence-Based Solution for SAP HANA®: In August, the company received certification from SAP for its AHV hypervisor and Enterprise Cloud OS platform as the first Hyperconverged Infrastructure (HCI) solution to pass SAP’s stringent criteria for running production SAP HANA® deployments. With this milestone achievement, customers combine the cost and operational benefits of modernised IT infrastructure with the scale and performance required for SAP HANA. For Nutanix, this presents a significant opportunity to broaden penetration in Global 2000 accounts.

Q1 Fiscal 2019 Financial Outlook

For the first quarter of fiscal 2019, Nutanix expects:

  • Revenue between $295 and $310 million, implying software and support revenue growth of approximately 40-45% YoY;
  • Billings between $370 and $390 million, implying software and support billings growth of 50-55% YoY;
  • Bill-to-revenue ratio of approximately 1.26x;
  • Non-GAAP gross margin between 78% and 79%;
  • Non-GAAP operating expenses between $280 and $290 million;
  • Non-GAAP loss per share between $0.26 and $0.28, using approximately 176 million weighted shares outstanding

First quarter guidance reflects a faster removal of pass-through hardware than originally anticipated, accelerating the reduction of zero margin billings and revenue with the benefit of improved gross margins. Additionally, the Q1 expected bill-to-revenue ratio of 1.26x is higher than street consensus of 1.21x, implying an approximate $12 million in deferred revenue that would have otherwise been in revenue and gross profit.