MEGAPORT LIMITED — Annual Report 2017

Aug 23, 2017

FY17 Full Year Results and Global U date p

24 August 2017

==> picture [85 x 22] intentionally omitted <==

Megaport Limited Megaport Limited ACN 607 301 959 ACN 607 301 959

Note / Strictly Private & Confidential

Highlights FY2017

==> picture [52 x 14] intentionally omitted <==

2

Fiscal Year 2017 KPIs

==> picture [533 x 288] intentionally omitted <==

----- Start of picture text -----

Total number of data centres Total number of ports Total number of services
102 165 736 1829 1500 3764
JUNE 2016 JUNE 2017 JUNE 2016 JUNE 2017 JUNE 2016 JUNE 2017
Total number of customers Monthly Recurring Revenue Annualised Revenue
314 738 * $308k $1.2M $3.7M $14.6M
JUNE 2016 JUNE 2017 JUNE 2016 JUNE 2017 JUNE 2016 JUNE 2017
----- End of picture text -----*

==> picture [53 x 13] intentionally omitted <==

*Monthly Recurring Revenue is closing monthly revenue for the month of June.

3

FY17 Company Highlights

==> picture [533 x 288] intentionally omitted <==

----- Start of picture text -----

Profit after direct $27.8M 240+
network costs Strategic capital Service providers
raising completed in Megaport’s self-service Marketplace
Key Milestone Achieved
+$253K
in 2nd Half 2017
24 new
24% Top 5 cloud regions enabled
June 2017 run rate cloud service providers 13 new
now integrated into Megaport
cloud on-ramps enabled
----- End of picture text -----

==> picture [78 x 24] intentionally omitted <==

4

Fiscal Year 2017 Revenue Performance

==> picture [678 x 254] intentionally omitted <==

----- Start of picture text -----

Asia Pacific North America Europe GLOBAL
JUNE 2017 JUNE 2017 JUNE 2017 JUNE 2017
$5.1M $1.3M $4.3M $10.7M
Increase: $2.4M Increase: $1.3M Increase: $4.3M Increase: $8.0M 298%
June 2016: $2.6M June 2016: $0.002M June 2016: $0M June 2016: $2.7M
----- End of picture text -----

==> picture [53 x 13] intentionally omitted <==

5

==> picture [79 x 70] intentionally omitted <==

Annual Results

==> picture [52 x 14] intentionally omitted <==

6

FY17 Financial Results

Consolidated Profit & Loss	1 July 2016 - 30 June 2017 $	27 July 2015 - 30 June 2016 $
Revenue	10,668,613	2,679,410
Direct network costs1	11,246,275	4,219,175
Profit/(loss) after direct network costs1	(577,662)	(1,539,765)
Employee costs	(16,537,386)	(10,742,463)
Professional fees	(3,031,097)	(3,060,888)
Depreciation and amortisation expense	(4,155,954)	(1,295,761)
Other costs2	(5,632,808)	(4,706,333)
Net profit/(loss)	(29,934,907)	(21,345,210)

Financial Results

For year ended 30 June 2017

Revenue $10.7M up 298% Loss after direct network costs for the Group of $578K

Global business in H2FY17 is generating a profit after direct network costs

1. Revenue less direct network costs, which comprise of data centre power and space, physical cross connect fees, bandwidth and dark fibre, network operation and maintenance, and channel commissions which are directly related to generating the service revenue of Megaport Group.

2. Total Other costs includes travel and marketing expenses, finance expenses, and other income and costs to the business.

==> picture [53 x 13] intentionally omitted <==

7

FY17 Revenue

==> picture [410 x 191] intentionally omitted <==

----- Start of picture text -----

FY17 FY16
$16K
$1.3M
$5.1M
$4.3M
$2.7M
Asia Pacific North America Europe
----- End of picture text -----

from REVENUE: $10.7M UP 298% FY16 from MRR:[*] $1.2M UP 294% FY16

Financial Results

For year ending 30 June 2017

Revenue of $10.7M, up 298%, driven by acquisitions in Europe and organic growth in Asia Pacific and North America

47% from Asia Pacific 41% from Europe 12% from North America

Monthly recurring revenue was $1.2M for June 2017, up 294%, driven by increased utilisation of Megaport Services globally

==> picture [53 x 13] intentionally omitted <==

*Monthly Recurring Revenue is closing monthly revenue for the month of June.

8

FY17 Operating Costs

Financial Results

		FY16 $	H1FY17 $	H2FY17 $	FY17 $
	Direct network costs	4,219,175	5,289,857	5,956,418	11,246,275
	Profit/(loss) after direct network costs	(1,539,765)	(831,153)	253,491	(577,662)
	Total operating expense	19,805,445	12,908,255	16,494,427	29,402,682
	Employee costs	10,742,463	7,813,796	8,723,590	16,537,386
	Professional fees	3,060,888	1,666,517	1,364,580	3,031,097
	Depreciation and amortisation expense	1,295,761	1,835,632	2,320,322	4,155,954

For year ended 30 June 2017

Global business in H2FY17 is generating a profit after direct network costs

OPEX for H2FY17 is now consistent run rate for the business

OPEX per dollar of Revenue generated has decreased from $7.40 to $2.75 YoY

9

FY17 Financial Results

Consolidated Financial Position	1 July 2016 - 30 June 2017 $	27 July 2015 - 30 June 2016 $	27 July 2015 - 30 June 2016 $
Current Assets	23,958,983	13,495,691
Non-current Assets	16,885,215	7,954,202
Total Assets	40,844,198	21,449,893
Current Liabilities	(9,344,376)	(4,231,035)
Non-current Liabilities	(1,276,622)	(48,880)
Total Liabilities	(10,620,998)	(4,279,915)
Equity	30,223,200	17,169,978
Cash Position	1 July 2016 - 30 June 2017 $		27 July 2015 - 30 June 2016 $
Cash at end of period	*** 21,027,324**		11,869,997

Financial Results

For year ended 30 June 2017

Successful Capital Raise $27.8M

*Closing cash position $21M as at 30 June 2017, closing cash on full settlement of Capital Raise 3 July 2017 was $37.4M

Investment in assets to facilitate network expansion (incl. IRU), and business acquisitions to grow revenue

==> picture [53 x 13] intentionally omitted <==

10

About Megaport

==> picture [52 x 14] intentionally omitted <==

11

==> picture [720 x 54] intentionally omitted <==

----- Start of picture text -----

Connecting everyone to everything
----- End of picture text -----

The Megaport Software Defined Network (SDN) brings greater cloud connectivity to the enterprise.

==> picture [677 x 230] intentionally omitted <==

Approximately 80 Cloud Service Provider owned on-ramp locations

There are over 4000 commercial enterprise data centres

165 Megaport-enabled data centres

==> picture [53 x 13] intentionally omitted <==

12

Who is Megaport?

Pay for what you use Ease of use Fast, instant, and secure Leading service providers Who we connect Enterprises Cloud service providers Data centre operators Network service providers

==> picture [61 x 61] intentionally omitted <==

==> picture [111 x 66] intentionally omitted <==

==> picture [119 x 70] intentionally omitted <==

==> picture [119 x 70] intentionally omitted <==

==> picture [53 x 13] intentionally omitted <==

13

==> picture [102 x 89] intentionally omitted <==

Business Update

==> picture [52 x 14] intentionally omitted <==

14

Building the Network Effect

==> picture [671 x 321] intentionally omitted <==

----- Start of picture text -----

Megaport
Service
Connections
Ports
Services
Dec 2015 June 2016 Dec 2016 June 2017
Service
Connection
Types
Direct Public Cloud
Internet Exchange
Private Connection
----- End of picture text -----

==> picture [53 x 13] intentionally omitted <==

15

All graphs exclude acquisitions

Fiscal Year 2017 Growth

==> picture [677 x 296] intentionally omitted <==

----- Start of picture text -----

3764 What’s driving
revenue growth?
Average Revenue per Port
June 2016 June 2017
1829 $418 $667
1500
$1.2M
+59%
GROWTH
736
The increase in services
$308K
102 165 per port directly increases
Port value
DATA CENTRES MRR PORTS TOTAL SERVICES
+62% +294% +149% +151%
----- End of picture text -----*

==> picture [130 x 20] intentionally omitted <==

==> picture [53 x 13] intentionally omitted <==

Total revenue divided by number of Ports at reporting period end date. *Monthly Recurring Revenue is closing monthly revenue for the month of June. Total services comprise of Ports, Virtual Cross Connections (VXCs), and Internet Exchange (IX).

16

Growth Trends

• **

17

==> picture [53 x 13] intentionally omitted <==

Monthly Recurring Revenue is closing monthly revenue for the month of June. *Includes acquisitions.

Industry Growth Trends

Enterprise Cloud Service Spend ($B)

==> picture [299 x 185] intentionally omitted <==

Total of: BPaaS, PaaS, SaaS, Cloud Management & Security Services, Cloud Advertising Source: Gartner, 2017

==> picture [252 x 200] intentionally omitted <==

----- Start of picture text -----

95% of Respondents are Using Cloud
22% 67% 5%
Public Hybrid Private
Cloud Cloud
Only Only
Public 89% Private 72%
----- End of picture text -----

==> picture [161 x 8] intentionally omitted <==

----- Start of picture text -----

Source: RightScale 2017 State of the Cloud Report
----- End of picture text -----

==> picture [108 x 64] intentionally omitted <==

79% of companies surveyed use two or more cloud or hosting providers.

==> picture [53 x 13] intentionally omitted <==

Source: 451 Research 2016

2017 Milestones : Cloud Service Providers

==> picture [671 x 296] intentionally omitted <==

----- Start of picture text -----

New Partners FY17
Cloud Service Providers
Existing Partners
----- End of picture text -----

==> picture [53 x 13] intentionally omitted <==

19

STOCKHOLM

2017 Milestones : New Cloud Regions

AMSTERDAM

==> picture [684 x 320] intentionally omitted <==

----- Start of picture text -----

24
New Cloud Regions
Amazon Web Services
Microsoft Azure
Oracle Cloud
Google Cloud
Alibaba Cloud
AWS GovCloud US DoD East US-Phoenix 1 Europe West 2 (London) US West 1 (Silicon Valley)
EU Frankfurt US Gov Texas US-Ashburn 1 Europe West 3 (Frankfurt) US East 1 (Virginia)
US Ohio US Gov Iowa Asia Pacific SE1 (Singapore)
EU London West US 2 Asia Pacific SE2 (Sydney)
EU Ireland UK South CN-Hong Kong
West Europe EU Central 1 (Frankfurt)
Germany Central
Canada East
Canada Central
----- End of picture text -----

20

2017 Milestones : New Cities

==> picture [166 x 266] intentionally omitted <==

----- Start of picture text -----

New Cities [22 ]
Atlanta Miami
Austin Montreal
Berlin Munich
Cincinnati Norwalk
Culpeper Nuremberg
Dublin Phoenix
Dusseldorf Portland
Frankfurt Quebec City
Hamburg San Antonio
Houston San Francisco
Las Vegas Stockholm
----- End of picture text -----

==> picture [486 x 264] intentionally omitted <==

==> picture [53 x 13] intentionally omitted <==

21

2017 Milestones : New Data Centre Operators

==> picture [115 x 62] intentionally omitted <==

==> picture [194 x 58] intentionally omitted <==

==> picture [166 x 129] intentionally omitted <==

----- Start of picture text -----

30 New Data Centre
Operators
----- End of picture text -----

==> picture [115 x 68] intentionally omitted <==

==> picture [119 x 58] intentionally omitted <==

==> picture [210 x 39] intentionally omitted <==

==> picture [121 x 55] intentionally omitted <==

==> picture [140 x 39] intentionally omitted <==

==> picture [165 x 41] intentionally omitted <==

==> picture [120 x 38] intentionally omitted <==

==> picture [79 x 30] intentionally omitted <==

==> picture [67 x 27] intentionally omitted <==

==> picture [51 x 22] intentionally omitted <==

==> picture [72 x 23] intentionally omitted <==

==> picture [94 x 44] intentionally omitted <==

==> picture [79 x 38] intentionally omitted <==

==> picture [134 x 42] intentionally omitted <==

==> picture [120 x 39] intentionally omitted <==

==> picture [53 x 13] intentionally omitted <==

==> picture [167 x 38] intentionally omitted <==

==> picture [120 x 58] intentionally omitted <==

==> picture [140 x 53] intentionally omitted <==

==> picture [131 x 27] intentionally omitted <==

==> picture [149 x 18] intentionally omitted <==

==> picture [111 x 56] intentionally omitted <==

Addressable Channels to Market

Master Agencies Vast agency sales resources Aligned to solution-sell via solution architects Promotional and educational opportunities

Data Centre Operators Cloud and Managed Service Provider Resellers of Megaport services Aligned with Product and Sales organizations White labelled Megaport service integration Solution-selling and sell-with oriented Targeted go to market engagements Demand signal for new locations

Cloud and Managed Service Provider

==> picture [124 x 51] intentionally omitted <==

==> picture [98 x 32] intentionally omitted <==

==> picture [166 x 38] intentionally omitted <==

==> picture [80 x 58] intentionally omitted <==

==> picture [133 x 33] intentionally omitted <==

==> picture [107 x 66] intentionally omitted <==

==> picture [194 x 57] intentionally omitted <==

==> picture [196 x 36] intentionally omitted <==

==> picture [108 x 25] intentionally omitted <==

==> picture [89 x 40] intentionally omitted <==

==> picture [103 x 33] intentionally omitted <==

==> picture [89 x 40] intentionally omitted <==

==> picture [108 x 38] intentionally omitted <==

==> picture [102 x 22] intentionally omitted <==

Megaport Benefits:

Enables larger, distributed sales force for Megaport services. Rapid speed to market. Minimise go to market complexities and costs

==> picture [90 x 25] intentionally omitted <==

23

==> picture [111 x 98] intentionally omitted <==

Asia Pacific

==> picture [52 x 14] intentionally omitted <==

24

APAC Highlights

Total number of data centres Total number of Ports Total number of Services 47 905 2352 JUNE 2017 JUNE 2017 JUNE 2017 Total number of customers Monthly Recurring Revenue Profit after direct network costs 414 540K 52% JUNE 2017 JUNE 2017 JUNE 2017

FY17 Highlights

FY18 Focus

• Delivered over 1,100 services

• ● New international routes opening up new connectivity options for global customers

• DC coverage growth via Strategic Partners

• ● Onboarding new CSP’s to drive VXC growth ● Digital campaigns to reduce Cost of Acquisition

• Delivered over 350 cloud connections

==> picture [53 x 13] intentionally omitted <==

25

==> picture [154 x 63] intentionally omitted <==

North America

==> picture [52 x 14] intentionally omitted <==

226

North America Highlights

==> picture [468 x 202] intentionally omitted <==

----- Start of picture text -----

Total number of data centres Total number of Ports Total number of Services
61 356 823
JUNE 2017 JUNE 2017 JUNE 2017
Total number of customers Monthly Recurring Revenue Profit after direct
network costs
140 276K -56%
JUNE 2017 JUNE 2017 JUNE 2017
----- End of picture text -----

FY17 Highlights

FY18 Focus

• Delivered over 600 services

• ● Expanded key DCO agreements and locations:

• EdgeConnex

• ○ Digital Realty ○ QTS

• ● Onboarded 18 Resellers

• Enabling partners & resellers to sell Megaport services

• Add 35 new sites via new and existing DCO relationships

• ● Expand addressable market through new and existing partnerships

• Focus on Tier2 and Tier3 new markets

==> picture [53 x 13] intentionally omitted <==

27

==> picture [106 x 59] intentionally omitted <==

Europe

==> picture [52 x 14] intentionally omitted <==

28

Europe Highlights

==> picture [467 x 202] intentionally omitted <==

----- Start of picture text -----

Total number of data centres Total number of Ports Total number of Services
57 568 589
JUNE 2017 JUNE 2017 JUNE 2017
Total number of customers Monthly Recurring Revenue Profit after direct
network costs
222 404K 49%
JUNE 2017 JUNE 2017 JUNE 2017
----- End of picture text -----

FY17 Highlights

• Availability of Megaport services on combined assets from acquisitions

• Delivery of Megaport services to existing ECIX customers

• Now the largest IX operator in 4 key German markets

FY18 Focus

• Increase geographic reach via strategic NSP partnerships

• Develop new DC operator partnerships in existing markets

• Continue building relationships with regional NSP’s to enhance access to platform

==> picture [53 x 13] intentionally omitted <==

Includes acquisitions.

29

==> picture [79 x 69] intentionally omitted <==

FY18 Focus

==> picture [52 x 14] intentionally omitted <==

30

FY18 Focus

Connect to new locations, partners, and enterprises Accelerate partner enablement to maximise sales opportunity Strengthen our position as the leading innovator in global Network as a Service (NaaS) Deliver revenue growth with prudent cost management and meaningful reduction in cash burn

==> picture [53 x 13] intentionally omitted <==

31

Important Information

Megaport Limited ACN 607 301 959

Nothing in this presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell Megaport securities in any jurisdiction. No representation or warranty, expressed or implied, is made as to the accuracy, completeness or thoroughness of the information, whether as to the past or future. Recipients of the document must make their own independent investigations, consideration and evaluation. The information contained in this presentation is subject to change without notification.

Direct network costs: Revenue less direct network costs, which comprise of data centre power and space, physical cross connect fees, bandwidth and dark fibre, network operation and maintenance, and channel commissions which are directly related to generating the service revenue of Megaport Group.

This presentation includes certain forward looking statements that are based on information and assumptions known to date and are subject to various risks and uncertainties. Actual results, performance or achievements could be significantly different from those expressed in, or implied by, these forward looking statements. Such forward looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Megaport. These factors may cause actual results to differ materially from those expressed in the statements contained in this presentation. For specific risks and disclaimers, please refer to the Megaport 2017 Strategic Placement presentation lodged with the ASX on 28 June 2017.

All references to “$” are to Australian currency (AUD) unless otherwise noted.

==> picture [90 x 25] intentionally omitted <==

32

Thank you

==> picture [151 x 40] intentionally omitted <==

Social

==> picture [14 x 13] intentionally omitted <==

==> picture [14 x 13] intentionally omitted <==

==> picture [14 x 13] intentionally omitted <==

/megaportnetworks @megaport

@megaportnetwork

On the Web:

Megaport.com/investor Megaport.com/newsroom

ASX : MP1

==> picture [52 x 14] intentionally omitted <==