Megaport Limited (MP1) Earnings Call Transcript & Summary

Hello, everyone, and thank you for joining the Megaport Limited 2022 Half Year Results Release and Investor Briefing. We will begin with the presentation by the Megaport management team, followed by a Q&A session. [Operator Instructions] Now over to the Megaport team. Thank you.

Thank you very much. Good morning, good evening to the Megaport First Half Year Results for Financial Year FY '22 today on the 9th of February. I'd like to take you through slides in our presentation. I'm joined on this call by my colleague, Sean Cassidy, our Chief Financial Officer, who will be sharing the presentation with me today. Starting with the company highlights for the first half of the year 2022. The -- a lot of these results have already been reported in our quarterly, but I think it's important that we go through them in terms of where our business is at. Our monthly recurring revenue grew by 23% in the 6 months between the end of June from $7.5 million to $9.2 million, up by 23% in the period. And that's a significant number, even though some of our underlying services haven't grown at the same rate, but it talks to and it speaks to a lot of the revenue that our customers are spending and the stickiness of our customers that we have in our base. Annualized, multiplying that by 12, it's $110.4 million, up from the -- just under $90 million, again, same percentage, 23%. Our customers have jumped up to just slightly under 2,500 customers, up 7% for the period in the 6 months. But more importantly, which contributes to the revenue, our total number of services are just short of 25,000, up 12% in the 6 months, as is the number of ports that our customers have acquired at just over 8,500, up 11%. And I think one of the most significant components, while still yet to come to full fruition and part of our product portfolio, the total number of MCRs in our business has grown to 603, up 20% in the 6 months. And this is really related to more and more businesses moving away from not just a single cloud provider but a multi-cloud or a hybrid cloud solution. And as you would have known from my conversations at the full year and in between that the margins on some of our MCR and our MVE products are a lot higher because of the significance that -- of the complexity that we're moving from the solution to help customers consume services. And this is contributing a lot towards our higher monthly recurring revenue and higher margins as we've gone through the last 6 months in the business. Other highlights. We again continue to focus on cloud onramps. We are still the largest global company today with over 240 cloud onramps connected to our network across all of the large cloud providers. Notwithstanding that, in the last 6 months or 7 months if you take from the end of May until the end of December, we've added the top 5 SD-WAN providers onto our network and integrated domain, which accounts for over 70% of the total SD-WAN market across the 24 countries that we operate in. So again, Megaport is continuing to invest strategically, investing in the cloud onramps and the partners that we have as well as the ecosystem and value-added distributors in our network so that we can increase our addressable market with our customers to give them the greatest reach. Typically, as we have done in every first half of the year for the last 3 years, we moderately increase our installed data centers. We've added 6 new ones to a total of 411. We typically do most of our investments in our data centers in the second half of the year as we've done for the last 2 years. And again, as we've said with cloud onramps, we've continued to increase the cloud regions up to 124, again, the largest provider that has the most cloud regions globally today. Total number of enabled data centers is 768, up -- an increase of 7, again, in line with the installed data centers as we continued to focus on the second half of the year for our build our own network and more. But the first half of the year is about making sure we monetize, embed our partners and make sure that we make sure that we're helping customers to get on boarded during the first half of the year. In terms of our revenue performance for the first half of '22, total revenue was $51.2 million, an increase of 42% or $15.2 million for the 6 months. Nearly -- just over half of that or $26.6 million of that has come from our largest market now, which accounts -- is in North America, which is an increase of $9.4 million, up 55%, which now accounts for 52% of our total revenue in the business and continues to increase. Asia Pac was up 28% at $15.8 million or an increase of $3.5 million in the 6 months. But what we're really happy with, I suppose, most of all is in Europe. Our European business has grown 35%, up $8.8 million for the first 6 months, really encouraging signs about where that's going for us in terms of our business over the next 12 months. I'm going to hand you over to Sean now, who's going to take you through the first half year results financial.

Thanks, Vinny. Good morning, everyone. Revenue for the 6 months ended 31 December '21 was $51.2 million, an increase of $15.2 million or 42% over the same period previous year. Profit after direct costs of $30.9 million increased 69% over the comparable period as our operating leverage continues to come through. Profit after direct cost margin at 60% is 9 percentage points up on the same period previous year. Average direct network costs per data center have reduced year-on-year, though a 7% increase in the number of installed data centers has meant that the direct network costs have increased 5% from 1H '21. Partner commissions have increased in line or slightly ahead of revenue as we continued to grow the proportion of our business that comes through the indirect sales channel. With our investment in Scale Up, Scale Out, operating costs have increased $11.3 million to $38.2 million, though this has been kept in line with top line growth. EBITDA losses of $7.3 million are 16% lower than prior year, and the EBITDA loss margin is showing an improvement of 10 percentage points. Depreciation and amortization has increased $2.7 million to $13.6 million, primarily because of the investment in our network and IP over the last year, notably with bringing the MVE platform to market. Nonoperating items and tax are net positives with unrealized FX gains in the period compared with losses in the comparable 6 months. This has contributed to net losses being trimmed by 47% -- net losses for the period of $20.2 million in period. Revenue -- as I mentioned, revenue for the period is $51.2 million. It's up 42%. But our monthly recurring revenue, or MRR, for December is 46% compared to December '20. This indicates an acceleration at the end of the period and is brought about by a combination of increasing customer numbers and growth in the average number of services per customer. All regions showed strong growth in revenue over the comparable period last year, APAC growing 28%, EMEA growing 35% and NAM performing -- actually, I think growing 55% to $26.6 million. As Vinny mentioned, NAM accounts now for more than 50% of our business. And our annualized revenues based on the December MRR now exceed $110 million. As we previously announced, we have invested in scaling our business, and this has manifested in an increase in our operating costs, notably in employee costs. Operating costs have increased $11.3 million or 42%, in line with our revenue, with employee costs accounting for $8.1 million of this increase. We have built out the indirect sales channel team, and we've hired additional support staff as our scale increases employee costs as a percentage of revenue, however, continued to fall via the increase in head count to 300, a number that includes the staff acquired in the InnovoEdge acquisition. Our professional fees have just increased in line with business. Our marketing and travel combined at $1.6 million are normalizing now after been much reduced throughout financial year '21. IT costs have increased $0.8 million to $1.6 million, largely because of the change in the accounting rules surrounding Software as a Service arrangements, thus putting a little bit of EBITDA pressure on the business that didn't exist last year. General and administrative costs, which include office rentals, insurances and other sundry items, have increased generally in line with the business. Nonoperating items have moved from a cost of $18.8 million of 1H '21 to income of $0.7 million in the current period, principally because of unrealized foreign exchange or foreign currency losses from the strengthening of the Australian dollar last year becoming unrealized foreign exchange gains this year as the U.S. dollar recovers; interest and other finance costs or imputed charges on our 0% vendor finance arrangements; and the finance cost elements of operating leases, which we have capitalized under AASB 16. Other operating expenses include one-off professional fees relating to the acquisition of InnovoEdge, deferred tax charges arising in recognition of some deferred tax liabilities on the acquisition plus some employee share expense. This slide shows revenue and operating margins for the December month historically. Notwithstanding the additional investment in the P&L, as noted earlier, as part of the Scale Up, Scale Out, our EBITDA loss margins in December '21 continued to narrow. This is the operating leverage coming through with increasing strong profit after direct cost margin -- increasingly strong profit after direct cost margin, effectively our gross margin, which is up 7 percentage points year-on-year. Current assets have decreased as cash reserves has reduced. Net cash burn in the period of $31.7 million includes $10 million for the InnovoEdge acquisition. Our trade debtors have increased by $1.7 million, largely in line with revenue, though our days sales outstanding has been reduced further by a day to 23. Noncurrent assets have increased following the acquisition and the preliminary valuation of InnovoEdge, $21 million. CapEx of $15 million and additional IP of $6 million account for the balance net of the depreciation and amortization charges. Total liabilities have increased in line with our business growth with the increase in noncurrent liabilities largely due to increased utilization of our 0% vendor finance facility. Cash balances of $104.6 million mean the group is in a very strong financial position at the end of the period. And with that, I'll hand it back to Vinny for the business update.

Thanks, Sean. The chart on your left, which, again, we've reported quarterly, the dark blue line shows or indicates the number of ports that we've added on to the network, which is still a key leading indicator for our business. But what's more significant and which is -- what's driven the 23% growth in our monthly recurring revenue is nearly a tripling effect from the 8,500 ports to nearly over 24,000 services that we have on our network, which is continuing to drive the monthly recurring revenue, which is what you see the very mirroring effect of that on the chart on your right-hand side, which shows the growth from $7.5 million at the end of June to the $9.2 million monthly recurring revenue at the end of December. We don't expect this to continue. In terms of the first half year growth, like what I said in terms of the ports, up 11% and total services, up 12%, if you look at, on your right-hand side, the monthly recurring revenue, as I said, has increased by $1.7 million or 23% to $9.2 million in the 6-month period. But not only has the monthly recurring revenue come from existing -- or sorry, new customers, also existing customer spends continue to increase where the average revenue port has gone from $974 up to $1,074, up $100 in the comparable 6-month period. In terms of Megaport Cloud Router, I think there's a -- the next couple of slides are significant in terms of where we're going with the company and what we're trying to do, and this is more of a strategic nature. But on the left-hand side, if you look at the average number of services per customer who is not using an MCR, which is 9.2 versus a customer who is using an MCR which at 14.4, but if you look at the comparable average revenue per customer, it's nearly double at $6,200 versus $3,300. And this is significant because as we talk about a rollout of our new products and overlaying them across our network, we get to extract more complexity away from a customer solution so that it's easier for them to use these multi-cloud and hybrid cloud solutions. And we get to charge -- or actually, the customers have to actually look at a much higher premium for this highly valuable service. And so the number of services that we increase, and you can see from the chart in front of you, up from 543 to 603 in the 6-month period, which represents a 20% growth rate, is effectively the future product set where we're going with this in terms of the next 2 to 3 years. So it's important from the point of view of not -- what are we looking at, what's the customer doing, but not what the customer is doing, but how do we help them to solve that problem with a solution and at the same time, we get to effectively have a higher premium product that's being used or utilized on our network.

Yes. Approximately 13% of our customer base have at least 1 MCR. This is up 2.5 percentage points from a year ago, notwithstanding our customer base has grown 20% in that time. With 36% of our customer base increasing using more than one cloud provider, there's still additional scope to expand this further throughout the customer base. And we see MCR as a very sticky product. Customers who use an MCR are putting more traffic across our network, and we know from experience that this means that they are less likely to churn. So with an uptick in monthly spend and a lower likelihood to churn, a customer's lifetime value greatly increases when they take on an MCR. I know it's still early days for MVE. Our numbers are still yet small. We are confident that this behavior that we observed with MCR will also be seen with MVE. The customer numbers, [ only more so ]. We're already seeing average monthly spend for an MVE customer greatly outstripping the traditional SDN-only customer and even that of an MCR customer. The number of services increased significantly, too. I don't know, Vinny, if you want to talk more about that.

And again, I'd just draw your attention to the average service per customer for a non-MVE customer is 9.2. And as Sean said, it's early days yet as we're bringing on more and more of these customers. And as Rodney and his colleagues are rolling out a channel program and an ability to where we can sell to most of these customers, which are more of an indirect fashion, it's gone from 9.2 up to 15.7. But again, I would draw your attention to the average monthly revenue per customer who is not using an MVE of $3,300 has jumped, has nearly quadrupled to nearly $11,100 in terms of the revenue per customer and the stickiness of that. And again, it's a little bit of a longer sales cycle, but it's one of those things that you're actually building logistically a solution for a -- longevity solution for a customer in terms of how they want to manage their business going forward from a connectivity point of view. Also, I want to point out that we've seen the first sales come through from our Cisco Global Price List in the early part of January. So we're really encouraged by that. And again, a lot of the customers that we have -- even though we've only sold 40 at the end of December, the key thing is that's what we've sold and built. We have a lot of other customers that are in proof-of-concept and working through that solution about what they need and how they want to build out their capability. In other news, we have announced early in -- during January, we announced that we're in a partnership with KIO Networks, the expansion into Mexico, which we will launch in March 2022. We're going to 4 data centers in Mexico City and Queretaro. Both -- the partnership with ourselves and KIO has been driven by relationships with Microsoft and Google in terms of as they've expanded into Latin America. And it's an important market strategically. Mexico accounts for 33% of the overall cloud spend in Latin America. So it is one of the largest markets in South America. And again, along with our strategic relationships with our cloud partners, we've collaborated with KIO to make sure that we're able to bring customers the services and the network services that we have and a full suite of our products day 1 in March 2022. In terms of channel update, you -- again, you would have heard me talk and Rodney talk about this quite extensively back in August when we released our full year results. We've successfully managed to do something that most companies cannot do or not do in a short period of time. We launched this back in May -- early June 2021, and we've now completed a full world-class channel program for Megaport to help our indirect partners. And the -- most companies and most businesses take 18 to 20 months to complete that. We've done it in 6 to 7 months. Why do we do it? It's about ease of doing business. It's about enabling 4,000 to 5,000 resellers sell our products and drive customer success, but it's -- most importantly, it's about building a foundation, about growing our revenue. And these are the key foundation points as to why we've pivoted from a direct selling model to an indirect selling model. It doesn't mean we're going to stop doing the direct selling model. It just means that we're actually enabling our business to grow faster and quicker through a different avenue. In terms of the channel segmentation, we were very focused before on providers in our marketplace, which is with our cloud providers. Now we've managed to enable 3 additional channels effectively to help us to grow our business: with agents and through our indirect channel; also through alliances with our -- not just our SD-WAN providers but also other managed service providers; and also then through our distributors, which is a new -- complete new avenue for our business, which allows us to help us to sell solutions to more and more customers through the top 2 tiered, value-added distributors in Arrow and TD SYNNEX, which we announced one in December and the other in January. And again, the why is because this gives us a target addressable market. It's much wider than what we have been in before, and we're bedding in not just the investment in people, the channel and how we're going to enable these markets, which is what we've done in the first half of this year so that in the next 12 to 18 months, that we're able to benefit from this going forward. In terms of key partner wins, again, I would reiterate at the point that we've done some things here that are so fast compared to what other businesses do. But we've had a lot of key logos in a lot of key markets and regions, which we've enabled as part of the channel strategy to help us to sell -- to set us up for calendar year '22. And these are the partners who are now selling Megaport as a network as a service, which they've never had as a product before to help them to gain -- not only for them to gain more revenue on their customers to get more business but also to enable Megaport to do the same. In terms of Megaport ONE, which we again announced in January. Megaport ONE effectively is the full integration of InnovoEdge, which we've again achieved. We announced the acquisition back in August 2021. And in all my 25 years working in business, it's one of -- been the most successful acquisitions that I've ever been part of, not just in terms of the people involved, the smart and the software developers, but the speed of execution of what we've done. It's going to enable Megaport to be -- it's taken us to the next level over 2022 and beyond. It's about connecting anything and controlling everything through one single pane of glass. It's about making sure that the customer, wherever they log on and how they manage their services, they're going to use Megaport ONE as the single platform to allow them to do that. Orchestrating all of their future capabilities, it's a network underlying, again, another product that overlays across a network as a service, which we've built over the last 5 years and we've invested in. And it enables people to future transform their IT capability using one platform, which is Megaport ONE. The key features of this, which we talked about when we announced the acquisition, it was about the discovery of where to find the cloud, where is the edge, where are the GPUs and the resources, where are the cloud. It's about provisioning services, one click, seamless provisioning and the deployment of that -- all of those virtual functions. It also has the ability, as I said before, the artificial intelligence and the programmability, about understanding what's the future predictability of how my services are operating, my capacity and what do I need to build so I can manage and drive my business. And it allows the customer not only to consume public cloud but also their own private infrastructure, whether it's inside in a data center or it's off-premises. So I think this is -- it's a really key feature for us in terms of what we see and where that's gone from 2022 and beyond. Who is this -- who benefits from Megaport ONE? Well, there's data center operators. It's a quite -- again, it's a white label capability, allows them to offer more services and features to their customer. It's managed service providers who have lots of small clients that they need to able to manage in the thing. And they can actually use this platform to actually deliver these services. And it's also for network service providers, which effectively are aligned to our virtual network so that they can deliver these services as well. In terms of -- there's probably a couple of things on this slide. Megaport is the edge. We have virtualized the edge, and we will continue to do so over the course of the next couple of years, whether it's through 5G, security as a service, our expansion into SD-WAN. And as I mentioned with Megaport ONE, we're enabling the capability of our platform so that we are the future, and we are the glue that brings connectivity together. And that's important from a product capability point of view, our network growth in terms of making sure that we've got not just more countries, but we've got the scale and the backbone and the smarts behind our systems and our capacity so that we can support customers. We're going to continue to invest in growth, but most important -- and also in our channel and our partnerships. But I think the most key piece to take away from this is that we've been very clear about our plan. We've been very straightforward about what we wanted to do, not just in our first half of the year, and I think we've demonstrated that we've gone above and beyond in what our capability is to deliver in the first half of this year. But we are very focused on delivering our financial results for the second half of the year. And that's what we've said and that's what we're planning to do. But I think -- and as you will see, there are some other slides that are in the appendix, which you can read at your leisure. It talks to the regional focus that we have and the gross margin or the profit after direct network cost plus the EBITDA margin in each of our markets. And I will call out this one particular case, which is in our APAC business, which is running at a 74% gross margin and now a 52% EBITDA margin. So we know that this business has got scale. We understand the model that we're working to. We're just focused on the execution part right now, and that happens here on in from the second half of the year. I think that's the last slide of the presentation. So I'll hand it back to the moderator for Q&A.

[Operator Instructions] And we have the first question from Jonathan Atkin at RBC.

So I was interested in just any incremental color that may not have been in the presentation or the release around kind of the financial outlook around revenues, EBITDA. Any kind of qualitative color that you could kind of point out as we sort of update our models? And then the second question was around the MVE pipeline. And you quantified it at, I think, 202 MVEs. What can you share around the prospects for growing that pipeline further? Is it going to be a similar rate of growth? Or what sort of momentum are you expecting from that? And then the conversion of the existing pipeline, any kind of puts and takes to think about. If these opportunities don't convert, what would be some of the factors behind that? And what's the kind of the early read there?

Thanks, Jonathan. I'll probably answer the latter part of those questions on MVE, and then I'll let Sean kind of jump in on the financials. But we have 2 to 3x more MVE opportunities than what we are seeing as a conversion rate on the -- in the actual sales early. And that's -- a lot of it's got to do with proof of concepts. It's also, we're just embedding in -- with our indirect channel but also with -- we've announced a lot of those SD-WAN partnerships literally in the last 2 months of the quarter, right? So we're really just embedding them in. And again, that's something where we've hired people to be in, like someone's working with each one of those partners and in terms of how we build it out. But a lot of customers right now are thinking about their SD-WAN solution. And they're buying their SD-WAN services and their licenses. And so we're in the beginning of the conversation with them. What we've done now is we've focused with our SD-WAN partners and particularly with MVE on the customers that they've already bought the services and how do we help them expand their network. So it's about accelerating that. And I think that's where we're focused on for the next 6 months as well as some -- there's a longer sales cycle with some of the brand-new customers who are rolling this out. But I think that's probably where we're at, where we know that it's a little bit of a longer sales cycle. It's a more complex solution, but it's also a more sticky solution. And it's also a more valuable solution. And I think that's where we've been focused. In terms of the financials, Sean, do you want to take that part of it, please?

Absolutely. Jonathan, we grew our revenues 42% in the first 6 months of the year. And as indicated, there seems to be a little bit of an acceleration towards the end of the period, particularly as the indirect sales channel starts to have effect. So you can extrapolate it from there, but we don't normally give specific guidance. I will say that while we have been running quite fast to sign up partners in the indirect sales program and quite a few logos represented on a slide earlier, there is still a little bit of a lead time associated with them in terms of onboarding them and training them about our products and how to sell our products and getting activation going. So that build in momentum is not immediate, but it will be there in the second half of the year. In terms of EBITDA, we did highlight that we would be investing in the P&L, and most of that investment will be done in the first half of the year. That is done. We have scaled up our business. We don't expect to be incurring -- that expenditure is done now. We won't be increasing that expenditure very much more, except perhaps supporting that -- the indirect sales channel growth with a few marketing dollars. We have kind of guided that we expect to be breakeven EBITDA for the year as a whole. And while there are a few EBITDA pressures coming on that we didn't expect or we didn't initially plan on following the acquisition of InnovoEdge and the change in accounting rules around SaaS arrangements, we're still guiding we'll get very close to that figure, which would be a significant improvement over FY '21.

We have the next question from Siraj Ahmed at Citi.

I'll just ask 3 questions. The first thing and last one -- the first thing we need, just on the pipeline number, can I just clarify the 202 that you mentioned? What's the mix between direct and indirect and the partners in there? And on that, just confirming that, given the first half, the conversion rates were slow. You were saying this is 202 for the second half. So are you assuming a decent conversion rate from this?

To the latter part of the question, yes, because there is a longer lead time. So having these conversations now and having proof-of-concepts in place now means that you get a higher conversion rate over -- a little bit -- like we've been only at this for 3 or 4 months, right, in bringing all these providers. So the second half of the year is where we always said this is where -- this was going to be an important factor for us. A lot of these companies are not small. They're large multinational global companies, right? So the solutions that we're putting together with them are not simple, right? And they have to work through the logistics of putting that together, and we're helping them with that. And hence, the proof-of-concept model of how we see the MVEs out there is really important. And I think that's what we're seeing. Now I will say this. Of the 200-and-odd MVE instances that we have, the majority of those up to this point in time have come from Megaport, right, Megaport customers or Megaport-led sales initiatives. The partners that we have, that's where we're expecting and that's where we're onboarding with them through the PartnerVantage program plus the -- those resellers. So most of those SD-WAN providers, 80% or 90% of their business is done indirect, and we're using the same partners that they're using. So we're having those conversations and our pipelines with them, which are going to contribute significantly to 2022 and beyond. But the initial bulk of the customers that we've got have been initiated more from our direct side and our Megaport side of the business.

One more for you, Vinny, and then one for Sean. And so excluding MVE, just keen to get some color on how the third quarter is tracking, Vinny. The first half was a bit up and down. How are you looking in terms of ports and things like that?

Yes. We're going really well. We -- just with -- okay, so where are we at? We're at the 8th of February, whatever. So within 1 month and 1 week of this quarter, we're already over 50% of what we did in quarter 2, right? So we've -- and typically, our quarter 3 and quarter 4 have been quite strong in terms of businesses picking up. And coming into the new financial year, and as I've kind of outlined on numerous occasions, new businesses, new plans, new budgets, people are coming into it, trying to get these projects up and running. And I think that's what we're seeing right now. So we're just over 50% in 1 week and 1 month of what we were in quarter 2. So I think we're in good shape.

Got it. And is that MRR or ports, Vinny, just clarifying, when you say more than 50%?

Total services MRR, yes.

All right. Awesome. Just one last one for Sean. Sean, can you just clarify your comment on full year EBITDA breakeven? I mean, so your OpEx was around -- was $38 million in the first half. So if you annualize that, that's $76 million. Just struggling to see how you get to EBITDA breakeven. Were there some one-offs in that first half OpEx?

There were some one-offs in the first half OpEx. Vinny has mentioned the OpEx associated with kind of setting up some of the indirect sales channel, and there were a few other things. But the $38 million is close to our run rate. But I expect some uptick in sales momentum. And as you see, our profit after direct cost is improving all the time as well. So the contribution from our revenue should start to cover the OpEx costs.

We have the next question from Tim Plumbe at UBS.

Sorry, guys. Apologies. Can you hear me?

Yes. We can hear you, Tim.

Sorry about that. A couple of my questions have been asked, so I'll just keep it to 1 or 2. But Vinny, you mentioned the pipeline of port opportunities. Can you talk at all or give a little bit more color in terms of the initial signs that you're seeing through that indirect sales channel? Obviously, early days in terms of the new platform that's being implemented. But how do we think about that gaining traction? And are we seeing any benefits of that in this quarter? Or is it kind of too early to see that?

It's -- Tim, it's starting, right? So it's like everything else. When a global provider -- or the 2 or 3 top global providers that we've brought on, there's a certain amount of onboarding that needs to be done, education around how to sell, what Megaport does as part of the solution, et cetera. So we've been focused on that quite a lot in the last month or 2. I think we'll see early traction on that in this quarter 3, but it's definitely going to be towards quarter 4 and the rest of 2022 where we will really see this thing kick off in terms of the indirect selling motion and enabling those partners. A lot of this has been about education, making sure that they understand what they're selling. We know what we sell because we've been doing it for 5 or 6 years, right? But it's making sure that other partners of ours understand the value proposition, the solution and the key dynamics around what they're selling. And that's part of the Vantage program and the tools that we set up as part of that, which was around the education, the pricing, the solution selling, what's the customer use case that we're pitching to and making sure we had all of that lined up. And I think we've got that there. It's just a scaling matter right now where we're just trying to make sure that our 2 or 3 people that are working with some of these partners have to deal with 3,000 and 4,000 resellers, right? That's the scale of what we're talking about, and it's got to be done in a very efficient manner. So one of the things I didn't mention on the call, which I'll say now, is that post earnings at the end of February, we're going to do a product and innovation road map for the next 2 to 3 years and certainly starting out about where we believe and where things should be about the edge and our products and where we're stepping with our foot forward, but also a lot of demonstrations not just from our cloud providers but some of our SD-WAN providers in about how our solution works and what is the solution that we're selling for. And we'll be announcing something about that in due course over the next week or 2, where post earnings is probably somewhere around early to mid-March. We will do that and take everybody across it, and I think that will give everybody an understanding or a better appreciation of where this is going and how big this is.

Got it. And then just the second question around the MVE. Obviously, still early days and learning that business model, et cetera. But when you look at the sales cycle as it stands today, and obviously, that varies depending on how complex the customer is, how do you think about the time between those initial discussions to proof-of-concept to actually doing the hard sale?

Look, I mean, that same question could be asked about ports and VXCs, right? And I used to always say, it's kind of like a 90-day sales cycle, depending on people. But I think that got kind of blown out of the water a bit because we've had big customers just come in and just turn up services with very little touch or very little involvement. And we've also had some reasonably medium-sized or smaller customers, and they've taken 120 days to more to get cross rates. So it's a mixed bag depending on what they're trying to do or what they're trying to solve for. I think what's accelerated a lot of this has been -- I'm not going to say it's COVID, but I'm going to say, I think a lot of things have -- with IT transformation, a lot of things have accelerated, the board and business owners, their view about their IT transformation and the need to speed that process up so that they're not going to -- no one gets caught with a business disruption. And I think that's what we've seen, and that's what we're hearing from our customers. So I think there is this inherent acceleration. So I'm not really sure, Tim, if I can say it's 90 days or 120 days or whatever the number is. But I do notice there is an acceleration in anticipation to try and provide solutions that wasn't there before and trying to do it as quickly and as efficiently as possible. But I would say it's -- outside of a normal port and VXC sale, I'd say it's definitely a quarter out, right? That's what you're looking at, right? You're dealing with that 90 to 120 days. The first thing you have to do is buy hardware. The second thing you have to do is to buy licenses, and then the third thing you need to do is get an MVE. So if you haven't got the license and the hardware, we don't -- it doesn't happen. So there's -- so customers who've already got license and hardware are easier targets to address initially, which is what we're doing. But as you're looking at customers who are in the middle of a decision process about building a global -- or building their own SD-WAN network, they have to buy the equipment and they have to buy the software and then they have to get the MVE, right? And so that's a little bit of a longer slog than, say, someone who's already got that in place and they want to expand their network because they've already got the licenses and they've already got the hardware, if that makes sense.

We have the next question from Nick Harris at Morgans.

I guess like everyone here, I'm just keen to understand a little bit more about growth in the channel partners. So obviously, you achieved a huge amount in the last 6 months, some seriously impressive partners there. I think you mentioned Cisco is selling, but I think that you said somewhere 22 partners. So I was just keen to get a feel. So question one, how many of those partners are actually selling something now? Question 2 was just around Megaport ONE. That looks like a really smart way to simplify what is a complex solution. Did you sort of design that? Were you sort of pulled into that design by the distributors or value-added resellers because it would make their life easier? And therefore, should it be a reasonably short sales cycle? Or is that a medium-term product that you talk about in your road map in a couple of months? And then just the last one was with the channel. Can you just remind us what your definition of success would be if we look forward sort of 6 months or -- and medium term?

Thanks, Nick. Lots of hard questions there. Okay. The middle one, right, I'll start with the one in the middle, which is about the InnovoEdge and the proposition there, right? So again, that's -- it's very targeted towards either network service providers, maybe some high-end enterprise customers, definitely data center operators and managed service providers, right? That's where the target audience is for that to make that happen. When we were in discussions with the guys and we decided to buy the business, we were looking for them to help us to accelerate or enable some of our white labeling capability because we were trying to grow so much. And it became very apparent when we were both talking to each other that there was a high synergy between our 2 businesses. And hence, we just jumped on it and we invested in InnovoEdge. Right now, they've already -- part of the earn-out clauses and everything that we've agreed is part of the contract. They are already 6 -- 4 to 6 months ahead of themselves, right? That's how fast they're operating. And what that does for us is that Megaport ONE, that acceleration and rebranding of that has helped us to have some serious conversations with some key customers about how we can enable them to sell more and be more productive. And I think that's something that I probably would have thought was a year down the road, but it's actually been 6 or 7 months, right? So that's how fast it's happened. We're incredibly excited about the capability of where that's going and what it can do for us with the team. If you recall from the full year results, I said they were a wicked smart bunch of people, and I'm not mistaken by that. And it's been proven out from what we are doing and where we're seeing with that. And I think adding -- this is a real case when you add 2 and 2 and you get 16 in terms of our software development and our network capability and our functionality and what we can offer to customers as part of our product offering. That's what it means to us. Now where is it? It's just starting, right? I mean, these guys, like I said, they're 4 or 5 months ahead of themselves and are working very closely with everybody in the company. And we're all fully integrated. It's going to take just a little bit more before we see the revenue, but we were at the Pacific Telecoms Conference in -- PTC in Hawaii in January, which is the single biggest conference in our circle. And we haven't been there for 2 years. And it was hugely, hugely very -- everybody was very receptive and going, "I need to see more about Megaport ONE," and went, "How do we get this? And what's -- what it can do for me?" So I think we're just starting out, Nick, on that one. I can't give you a prediction right now. I think we're starting out on that. We're in the middle of a lot of conversations with some key people about what it can do for them and how we can enable them to sell more and do more. So probably more of a question for end of our financial year in August. What was the other part? Sean, did you want to jump in on [indiscernible]?

Yes. The next one was just the 22 partners. Are a big chunk selling or a small chunk?

Yes. Yes. Look, I mean, again, same thing, right? So I'm not trying to dodge anything here. I'm just being very clear with everybody. Rodney and the team and everybody here has done a tremendous job to try and get -- what we've done in 6 or 7 months has been phenomenal, right? And 22 partners in that same period and a channel program and a channel team and the capability of how we can support them to do that has been done in 6 months, right? I think we've always said this that the 2022 was always about, okay, let's get it all done before Christmas so that we've got the capability to go and sell this in 2022, right? And I haven't changed my view on that. I haven't changed my commentary on it. It's been fairly clear. I think this is something that it's going to kick off in 2022, but we had to put all the fundamentals and the building blocks in place during the second half of 2021 so that it would put us in a position so that we can move forward. And that's what we've done.

Yes. I'd just like to say, we are seeing a few -- a lot of those resellers start to take -- we've seen a faster uptake in Europe than we have elsewhere. And we always said that Europe is a natural home for this type of selling where customers will go to kind of managed service providers for their solutions. And that's certainly been -- for early adoption, it seems to be in the case. And you have seen in the Q2 results, Nick, where we kind of split out our MRR between direct and indirect. And for the first quarter in 3 or 4 looking back, you've started to see that tick up a little bit. For me, that's an indication that the snowball is just starting to roll down the side of the mountain. And now we will see -- I did say there is a little bit of a lead time to educate these guys to sell our products, and we're taking a lot in one go. And there's a bit of effort to start all these [indiscernible] leads running. But we will start to see that momentum build through Q3.

We have the next question from Kane Hannan at Goldman Sachs.

Just a couple from me as well, please. Firstly, just with respect to edge, that $11,000 per customer you were talking to. I think that doubled on the $5,000 that you reported in August, and I know it's obviously a small sample. But -- so I was just keen to understand what's driven that growth, whether that's mix, incremental services from the existing customers and where you see that selling over time as you get more and more people on to the edge product?

Look, again, I'll let Sean jump in here. But at the end of the last time we did the full year results, we talked about that doubling impact. We had only just been selling that product for a month, right? So we didn't have a full period of time where you saw that revenue. I think you're looking at the number now with not just with the number of customers that we have in MVE. And I think we've also got a lot of proof of concepts, which we don't charge for. So they're all in the mix, and we don't count them in the numbers that we're doing. And that's our future pipeline to grow this. But I think the previous period and the number we talked about going from 5-point -- was it $7,000 or $8,000 up to $11,400, the difference here is that was like 1.5 months selling in a quarter versus -- or a period versus what we're looking at in 6 months. So I think you're looking to -- you're starting to naturalize or see what the true numbers come through in this half year. But notwithstanding that, we haven't added enough customers in yet. So you haven't really seen the true impact of that. And I think this is in its infancy, to be honest. Maybe, Sean, did you want to add a bit of color to that?

I completely agree. So when we showed the slide at the full year, like Vinny says, it's only been operating for less than a full quarter. And there were discounts given, proof-of-concept, reduced pricing that were happening there because many companies didn't have time to turn up all the services that they were ever going to turn up on their MVEs, model those proof of concepts that might turn into commercial relationships. They're becoming a much more viable proposition for us. When we showed the slide, it was only intended to kind of help people get their head around how we're going to be highlighting this so -- to help people with modeling and to see how the product fits in with the portfolio. And we always expect that number to go up. Whether it stays at around $11,000, at the minute, we have -- a lot of our customers are existing SD-WAN customers who are motivated purchasers. There are a lot of very large companies as well. So as this becomes a little bit more ubiquitous and smaller enterprises start to take on, you might see a little bit of a dilution in that number going forward. But we certainly expect it to be much closer to the $11,000 than $5,000 we presented in August.

And more volume. And more volume.

Yes. a lot more volume.

Yes.

Yes. And then just a couple, I suppose, on the geo revenue trends. Obviously, some pretty healthy APAC numbers in the half. Was there much of a step-up from Japan in there? I suppose what drove that improving trend? And then Europe, you continue to be pretty positive on the opportunity over there, but those growth rates are bouncing around quite a bit quarter-on-quarter. So I was just interested in what's driving volatility. Is that just the scale of the revenue number over there that means that incremental contracts has a much bigger impact?

Look, Japan is improving, right? I'll -- 2 markets that are really -- there's probably 3 markets that are kind of key to us that we've -- the old saying that rising tide lifts all boats in Japan, Canada and France, which we went into. So France and Canada are extremely -- they weren't across the land fully EBITDA positive in December, but they are in January. Japan has a little bit to go. We've got another month or 2. It's in complete lockdown since -- as everybody knows. So that market is something that both Sean and I and Rodney have been really focused on trying to get there and visit them. It's a relationship-type business, particularly around the channel. And we want to be involved around that. But the market is kind of locked down. So it is a little bit behind where we want, but it's not driving the overall APAC number. Everybody is contributing. The Australian business, New Zealand business, Singapore and Hong Kong business have been thriving. And what it does is it proves out we haven't added that many sites in those markets or added that much extra investment into those markets outside of Japan in the last -- in the short -- last short while. But now all of a sudden, we're seeing that they're now at 51% EBITDA or 52%, whatever the number is, right? So when Japan does turn profitable over the course of the next 6 months, which it will, then that number is going to increase because it's dragging it back now a little bit just because of the investment and the time and the effort to go there. So as revenue increases, it will rectify itself. In terms of Europe, like I said, with some of the key markets there, one of the things that we identified and rightly or wrongly with our model, the way we were trying to focus on being a direct or a data center operator kind of focused solution selling. The channel works, right? And Rodney has hired some really key people in both Germany and France and the U.K. and Scandinavia to help us grow our business. And we're already seeing the fruits of that. So I'm really excited about the European business. It needed a refresh. It needed something different, and it is in the indirect model and the channel model. That's where most of the business is done in Europe. And we've just rightly run -- we've maybe gone through it a bit later. Again, we should have, but we've gone through it now. And we're starting to see those things come through into fruition. And I think that's where you're seeing the growth in Europe, and I think that's going to continue, notwithstanding any FX translation on revenue and on the business. But I -- when you think about the map, when you think about North America and the geographic print in North America and it's massive and then if you look at Europe as a whole, it's the same footprint, right? So it's a question of -- but it's very much different countries and it's very different relationships and very different ways of doing business. So we've had to break it down a lot more to get to that point where we're able to figure it out. And I think -- I truly believe we're kind of on the right track in terms of making that happen. I'm not sure if I fully answered your question, [ Devin ], but...

One more thing, Kane, as well. I think of all our regions, Europe was probably the most impacted by COVID than any others, where our sales teams couldn't cross international borders. In addition to that, as we're coming out and our guys are able to start traveling again, in addition to the -- where we know this market is right for the indirect sales channel, we've done a lot of work in localizing our marketing materials and localizing our portal so as to help sell them to the individual markets. It's not like the United States where everything can just be done [indiscernible]. So that's also helped with the sales momentum within Europe as well.

We have the next question from Bob Chen at JPMorgan.

Just a few quick ones for me. Obviously, a lot of investment in getting this -- the channel online. Can you talk a little bit about how much visibility you have into that sort of pipeline that comes through that indirect sales channel?

A little bit. The -- Bob, the key question here is that we're -- the 22 partners that we brought on as part of the channel program are the ones who are going to enable us and help us to sell the fastest and the quickest as opposed to going direct to a Microsoft or a Google or a Cisco or a VMware, right, because they've got lots of partners. So we've been focused on working on the downstream side of things where they sell the most so that we can be the most active about how we sell that. And Rodney has been very smart about that, and he's been very articulate about how we do that. And I think that's important. It's like how do we help them to sell more and -- as opposed to what the pipeline looks directly from the big guys, right? And that can be very sensitive, right, because they've got lots of partners, lots of different people they work with. And they don't -- they will share certain things over time. But right now, this is -- it's been -- and that's why we went towards the channel program. That's why we went with the partners. That's why we integrate with all that so that we could make it easier for them to sell, and that's where the conversation ends. And so basically, leads are being handed off to partners. We are working with those partners to help to deliver that lead. So yes, we do have a downstream but not upstream, and there's a big difference. And that's -- it's competitive in nature, and it's also very sensitive, right? And I think everybody would appreciate what I'm trying to get to.

Okay. Perfect. And then just in terms of the sort of rollout of the Megaport network. You sort of alluded to a bigger ramp-up in that sort of the second half. I mean, what can we sort of expect in that second half? I see that...

I think we're going to -- again, Sean, can you correct here? But we're aiming for what we planned to, which is about 40 additional sites, 42 maybe kind of additional sites over the fiscal year. And then I know we've only done like a handful in the first half, which we typically do. But there's a bit of a strong pipeline for the second half of the year in terms of what we need to do there. You also have to remember, we rolled out MVE, a PartnerVantage program, hired up a whole bunch of indirect people in channel, right? So there's only so many things you can do really well. You can't just keep throwing more sites on top of it and then not be able to sell into the sites because that would be -- well, it wouldn't be a good investment opportunity in terms of time, money and effort, right? So that's why we've always focused on anything new we were doing, we were doing it quick and fast in the first half of our financial year. And traditionally, everything else that we did do, we would focus on in the second half year. But like I think, Sean, it's about that 40-odd number for...

44 includes Mexico, yes, so about 35 or so excluding Mexico. And yes, you're right. And there are other things going on. We're increasing capacity. We're increasing our MVE capacity. We're building a 400 gig backbone as well. So it's not just about extending our reach, and I believe we're already at scale. And what we're doing alongst the DC network now is kind of infilling some of the European markets. And then we're kind of granularizing the edge of our network in America, which will kind of help MVE sales so people will have shorter humps across public Internet. But we're well beyond -- because we've reached scale now, we're well beyond the stage where new DCs are leading indicators for revenue growth. [indiscernible] outside the DC.

We have the next question from Lucy Huang at Bank of America.

I just have 2 quick ones as well. So just hoping to get some color on the first Cisco MVE sales through the Global Price List. Maybe you can give us some color around the size of the deal. Is the end customer an existing Megaport customer and how long it took Cisco to land that sale? And then secondly, just interested -- I know it's still early days for MVE customers. But with the ones that are currently being billed, are we seeing any cross-sell or upsell capability into the rest of the Megaport business through this customer?

Thanks, Lucy. I'll probably start with the second half of that question. I think I touched on this earlier on. Most of the MVE opportunities at this point in time have come through Megaport sales-led initiatives either through existing customers or conversations we have had with customers about MVE and the capability of SD-WAN through one of our partners, SD-WAN partners. That's probably been the lion's share of what we've seen so far, right? So we've been focused on how do we enable those other partners and our channel program to sell more of those new customers, right, for the want of a better word. The customer that we've seen come through Cisco has been a joint lead customer. So it's been a Cisco customer for a long time. It's a Fortune 500 company. And it's -- the proof-of-concept was very successful. It's -- and basically, what's happened is that they've now expanded out that proof-of-concept. And it's only starting out as part of that proof-of-concept in a certain area, and it will continue to grow and expand over time. So it's not -- it was an existing customer. It was someone that was in our opportunity or our funnel, our pipeline. And then they were also a customer -- already an existing customer of Cisco. So that was a real question of 2 and 2 equals 4, 5 or 6, whatever number you want to pick. But that's how that all came out and where we did. And it was a very successful proof-of-concept. And we're building it out. And it is on the higher end. In case anybody asked me, it is on the higher end of the $15,000, $16,000, $17,000 MRR, not $11,000, right? So it's a large company. And as they continue to grow their footprint and expand, which is all built on the success of the product and what it can do and how it can do it, that, that will continue to grow over time.

We have the next question from Wei Sim at Macquarie.

Just a couple. The first one is just in regards to the cash flow for -- on payments for PP&E. It kind of doubled versus last year. Just wondering what drove this and any guidance for CapEx going forward. The other question is just in regards to Megaport ONE, if you could just give us a bit more color on perhaps our aspirations behind this. Where do we see the revenue contribution coming through versus our base product maybe over the medium term? And also, just to better understand how we think about the sales motion for this product. Is this something which is more ancillary to our existing products or we are looking at really selling it as a separate product?

Sean, do you want to take the first part on the cash?

Yes. There was a little bit of acceleration in the first half of PP&E purchases as we're getting ahead of kind of supply chain issues with silicon and stuff. We've been buying boxes and have been stocking [ comp ] to some extent as part of the expansion number. We make sure we have inventory available to build capacity and are continuing to build capacity in our network. So yes, it might look accelerated first half versus first half. The full year will be higher than last year but only marginally. So we have been guiding -- I think we were guiding $30 million to $35 million is going to be the higher end of that plus the acquisition on top of them.

Yes. And in terms of the other part of your question with MVE and -- look, it's -- one of the things that we've been very focused on is just making sure that we get everything in place and get everything right so that we can look at 2022 and move forward at pace and an acceleration. And I think that's kind of where we've been very much focused in the first half of this year, about how we're setting ourselves up, getting the right people in place, the right processes, the right capabilities so that we can scale this business properly.

Sorry, Vinny. Sorry, I was actually asking in regards to Megaport ONE, InnovoEdge, not MVE.

Right. But I was kind of -- yes, sorry. I just want to -- I was just leading into that, right? So these are all connected. That's why I'm trying to lead into it, right? So Megaport ONE is when you think about what we've done with MCRs, now we've gone with MVE and as we're building over our core products, which is our platform, our network as a service, which is 24 countries to 240 cloud onramps, now we're connecting more buildings and more locations with branches through SD-WAN. And now all of a sudden, we're adding a future capability, which is a platform that will sit across everything that will allow your IT specialists in your business to manage all of these assets and all this infrastructure in a seamless way, right, and provision services and actually plan and program things as they want. So all we've been doing when we started out this business is layering it. Now who do we pitch this product to? It's in the slide deck. Yes, there's some data center operators who may want a white label product. There's some network service providers. It could be fiber service providers. It could be whatever. They are looking to actually add cloud capability, have a single platform, white label that and add it to something that they want to use. It's also for managed service providers that actually want to be able to sell it downstream to their customers, and it looks and feels like it's their product. But in -- underlying, it's Megaport. So we've kind of -- 2 things that we've done with our strategy is we've moved outwards geographically in terms of our footprint, in terms of countries and data centers. We've actually -- our -- we'll even move further by adding SD-WAN capabilities to where actually our geographic footprint has gone along. MCR, and we started out with ports and VXCs. We moved up with MCRs, Layer 2, and now we've added on the MVE capability. So we're moving -- we're removing more complexity as we go along. And now we're putting a platform on top of it all that allows customers to orchestrate everything, right? And that's where the smarts are. This is where the capability is in the company. It's not -- it's about the software and our network combined that allows us to drive that. And so there are not going to be as many enterprise customers driving Megaport ONE, but there will be large multinational network service providers or data center operators who will be using it. And they will then be contacting or connecting to enterprise customers. I hope that answers your question.

We have the next question from Roger Samuel at Jefferies.

Can you hear me?

We can. Yes, Roger.

I've got 2 questions. First one, just within direct sales channel, it looks like that is taking quite a long time to ramp up. And I'm just wondering if you can share with us any pushback or hurdle from your channel partners? And the second question that I've got is just on MVE and SD-WAN. Most of the telcos that we look at are starting to offer SD-WAN services in partnership with your SD-WAN partners as well. And I'm just wondering if that trend is positive or negative for your company.

Well, okay, the first part of that question, Roger, is like I said here, there is a slightly different sales cycle to this one than our typical products, right, because you have to buy hardware and you have to buy the software and then you buy the MVE, right, to roll out your global solution, right? So there is a little bit more to that. And I think also, with the channel partners that we have, we've had to make sure that we've educated them rightly. Like you've got to sell smart and sell efficiently and making sure that we're giving them the right tool kit. We're building out the PartnerVantage program. We're making sure that we enable them to be successful with selling, and that's what we've focused on. The first half of this year was getting that done and making sure that, that was something that we could succeed on in 2022 and beyond, right? And so it probably has been a little bit -- maybe a little bit slower than you thought. But I mean, if I was to hire 4,000 people tomorrow morning, it would take me the same amount of time to educate them selling our product as it would be to hire and educate the channel to sell -- to get 4,000 people to sell our product. They still have to go through the same process. And so I think that's where we're -- we've been focused on, making sure we get it right and get it right the first time with our sales tool kit, our education, our training and putting our partnerships together so that they're successful with selling. That's what we're -- we've been focused on. In terms of MVE, that's been -- the issue -- there hasn't been really an issue around MVE. It's just been more around how do you -- again, same thing, how do you enable the customers to sell or -- sorry, partners to sell to customers. I think that's been the core part of what we've been trying to focus on and get right. We get that right at the beginning, and it helps itself go forward. What was the first part of your question?

Just regarding the telcos, they're selling just SD-WAN services as well. And I'm just wondering what's the impact on Megaport. Yes.

None. None. Right. Let me just set this straight for everybody. Everybody is a partner of AWS, Microsoft, Google and the cloud guys. Everybody is a partner of Cisco, VMware and all the rest of it. The only difference that we've done is we've actually integrated with them. Everybody else is just a partner. That means you have to go through a paper exercise. You go through a manual exercise. You still have to write orders, and you have to go through all that stuff. We're a software and a network company. We integrate with people. We don't just do manual. So that's the difference, right? We've made this easier. We're making it seamless, and we're making it easier for the customer to actually consume the services and helping the SD-WAN providers faster and quicker to make more sales. That's all they're interested in, and that's what we've done. And that's why we're a preferred partner. And that's the difference.

The next question comes from Paul Mason at Evans & Partners.

Just a couple for me. So the first one, just a clarifying question. In terms of the 202 opportunities, is that -- that's the number of customers? Or is that number of MVE devices that are in your pipeline?

No. No, that's customers.

Great. And the second one is sort of a longer-term question maybe for Sean, maybe for Vinny, about cost planning and investment planning. Because you guys have been pretty clear on planning to have an EBITDA breakeven point. In terms of once you hit these sort of milestones like EBITDA breakeven or cash flow breakeven after that, like are you planning to like use those as points where your margins just keep growing? Or are you going to sort of think about after getting to that point where you're not as reliant on capital markets or something like that, that you'll go hard on reinvestment instead of letting the margin run? What's the sort of the general vision of how that plays out?

I'll let Sean jump in, in a minute. Right now, Paul, we're just focused on our objectives of prove out the model, make the margins, get the revenue, prove out the EBITDA, and then that's kind of like next year's question, to be honest. That's where I'm looking at. Do I look at down 3 or 4 years? I don't think -- I think everybody is looking at us to try and make sure that we get them the outcome and prove out the model that we've done, and I think that's been the focus. There is no reason why this thing would slow down or go any other way except continue. The question is, we're a technology company. We have to keep reinvesting in the business. When you're profitable and you're breakeven and your cash flow is sustainable, then you can do that faster and quicker, right? It's just about what you want to do. I think we kind of set ourselves a 2- or 3-year program, and we're coming into the back end of that cycle right now where we want to make sure that we actually turn out FY '22 and calendar '22, where we're cash flow positive and EBITDA and we're turning out the revenues and we've spun out the new products. And that's why we keep reinvesting it. It's probably a bit early. Like there's $104 million in the bank. Apart from CapEx, we're pretty much net cash flow breakeven, give or take $1 million or so. So it's not -- we're not far off this. I think the question is it really depends how fast and quicker we want to grow and invest in the business. So that we don't have then to go back into the red. Maybe, Sean, do you want to take that point?

Yes. I just completely concur. Every time we have invested in ourselves, we've delivered, and we're doing it again. We saw an opportunity with accelerating the top line growth through the indirect sales channel, and that's why we have invested in ourselves this time. We are very focused on bringing it up to fruition and reproving the operating model again and getting back to that EBITDA positive and cash flow positive result, but we have certainly no intention of milking the margins and going out to pasture. So yes, when we see another opportunity, we will reinvest in growth. And whether that is kind of expansion or technological innovation, we will definitely be doing something.

Okay. Great. And just the last one quickly for me is just around your direct sales team. So one of the things that sort of occurred to me because the last quarter, there was -- it looked like a lot more of the incremental MRR came from channel. And there's obviously lots of different timing things, and you're a high-growth company. And so they can -- just a lot of noise. But in terms of how you're incentivizing the sales team on MVE, which has probably a more complex sales cycle versus the historical products, like is there any difference in how they're incentivized to sell that would be steering them to like focus a lot more on MVE in the short term or anything like that?

No. Not really, right? It's mainly focused on monthly recurring revenue. Now obviously, that will shift very quickly as we bring more and more partners on, and it's less reliant on, say, the Megaport sales machine for delivering indirect sales, right? It's going to be about those partners bringing those sales, which are effectively commission-based sales, right, or sales-led incentives. Whereas your own direct sales team -- or our direct sales team is going to be very much focused on the customers that we have, plus growing our own customer base through a direct selling method, which they will continue. It's just in this initial phase, we've managed to get sales coming through from customers, inbound inquiries about MVE and about how we're selling and what we're doing. So there is no -- we've spent a lot of time making sure there was no -- what's the word I'm looking for? There was no conflict between the direct and the indirect channels. It's about where the revenue is coming from, and we spent a lot of time talking about that because that's usually where things go wrong. But I think as we pivot more towards our partners selling more and more on the indirect and then through the channel, there is a clear path for how that works. And there's no conflict between that and the pricing that we do versus what we may unearth as a customer through Megaport.

So everyone, there are no more questions currently in the queue.

Okay. Well, sorry, everybody. I'm in Ireland. It's 2:00 in the morning. And if there's no other questions, we will leave it at that. And obviously, we've quite a lot of meet and sell over the next 2 to 3 days. Both Sean and I are available to take questions and go through more detail over the coming days. But thank you very much for everybody joining the call and for your questions and feedback. Thank you.

Thank you.