"Born in the cloud" Megaport pre-ordered supplies in early stages of coronavirus

Cloud technology company Megaport (ASX: MP1) pre-ordered around six months worth of critical supplies when Covid-19 was in its early stages in China this January, while Megaport founder and chairman Bevan Slattery says the company is in "great shape" with more than $100 million in cash.

In a letter to shareholders today, Slattery said the group pre-ordered items such as optics and transceivers, as well as equipment for planned rollouts for the financial year.

"Almost all of those orders have now been received and dispatched to the country of planned installation," Slattery said.

"As such we expect to see little impact from any potential supply-chain issues that may arise in the near term. We are keeping a watching brief with all our suppliers on inventory levels."

He explained most of Megaport's revenues were monthly recurring, and to date there has not been any "material change" to either existing business or the company's sales pipeline for the quarter.

"While travel restrictions may have some impact, most of our sales and deal closure activities are driven remotely and our sales force has experience working away from an office," he said.

"So far this quarter the number of VXC services are up 11 per cent QoQ and ports are up 7 per cent, with a solid pipeline that we would expect to close before quarter end.

"Additionally, we are already beginning to see companies which had a more "traditional" IT posture looking to embrace a more "cloud-enabled" environment, removing risks associated with on-premises management while leveraging platforms that are hosted in the cloud."

Last week Megaport activated a company-wide work from home trial day to test its business continuity capabilities in the event all staff were required to work remotely.

"As expected, the team and systems performed well. Megaport was "born in the cloud" and many of our staff in the US, Europe and Asia have always worked from home. It is expected that all staff will be working from home starting from this week," Slattery said.

Updated at 2:35pm AEDT on 16 March 2020.


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