Superloop traffic up 30 per cent in the space of weeks

Superloop (ASX: SLC) shares were given a fibre-optic jolt this morning as the cloud services connector reaffirmed profit guidance for FY20.

The Brisbane-based company said it was tracking towards the mid-point of a $12-15 million EBITDA guidance, supported by strong core fibre connectivity sales performance in the third quarter.

This includes multiple high capacity services (10G and 100G) which were contracted on both the Indigo cable system and other routes across Superloop's recently completed international network.

"Our cyber security services have also experienced an uptick, as education providers transition to a distributed education environment as a result of COVID-19," the company said.

Connectivity sales reached $5.6 million in terms of annualised revenue sold, with contract lengths varying from one to five years in duration. This figure is higher than the entirety of sales in H2FY19.

"Furthermore, the Company continues to see improvements in our book-to-bill cycle as a result of a greater focus on "on-net" services which allows the business to deliver and invoice services to our customers quicker.

"Over the last few months, the increased demand on our Internet / IP network has been significant, largely driven by the changing traffic profile and volume due to work from home patterns and an increase in video conferencing / streaming services."

Within a matter of weeks the company has experienced more than a 30 per cent increase in traffic.

"This increase in customer demand has almost entirely been delivered on our existing domestic and international assets.

"The company still enjoys significant spare capacity on most international routes, meaning there is further opportunity to continue to grow this business segment, without significant increase to operating or capital costs."

In April Superloop noted uncertainty around Guest WiFi and student accommodation clients due to potential impacts on international travel from the pandemic, however today it noted the segment was performing within its expectations.

"We are pleased to report that revenues from student accommodation WiFi has been broadly consistent with our updated guidance note issued on 18 February 2020 and continue to see consistent device activations in line with our COVID-19 revised expectations," the company said.

"We will continue to monitor the situation closely and expect revenues to improve as students return to university campuses during FY21, although the timing is uncertain at this stage."

SLC shares were up 18.97 per cent at $1.16 per share at 11:47am AEST, and have risen 167 per cent since hitting a 12-month low of $0.435 in late March.

Business News Australia