21-Feb-2023: MAQ released their results after the market closed (as they have done for a couple of years now). It's funny. If they were disappointing results, I'd probably be annoyed that they released them after the market had closed, but they're not, and I'm not, and they have form for doing this; their last full year results (for FY2022) and their last two half year results were all released after the market had closed.

Here's the first page of today's half year results announcement:

You can read the full announcement here: Half-Yearly-Report-and-Accounts.PDF (there is a second page, but I've also included that below if you keep reading.)

No dividend declared yet again, but as Buffet says, (and I'm definitely paraphrasing here) better for companies that need cash for growth capex to reinvest their profits at decent rates of return than to give it to their shareholders as dividends and then borrow money and pay interest on it. MAQ do both, reinvest their profits and borrow money for growth, but they've said today that in FY23 their debt will reduce. They give a fair bit of capex guidance on the second page and it looks like their spending is slowing down at last. Not that I've minded - they've spent well! Seventeen consecutive halves of profitable growth isn't something that most companies that not many people have heard of can claim. And, let's face it, Macquarie Telecom is not exactly a household name. Known mostly for data centres, cloud computing, cybersecurity and as a reliable business telco, they have a lot of government clients, including the ATO, and they tend to sail under the radar of most investors, even investors who are generally interested in those very areas.

MAQ has been trading at or just above $50/share of late, which is around their 12-month lows, so it will be interesting to see how the market reacts to this report in the morning.

MAQ-Half-Yearly-Report-and-Accounts-Presentation.PDF

Those returns shown on the right are capital gains (or a capital loss in TNT's case) over 5 years, and those numbers don't include dividends. If you add in Telstra's dividends it ain't going to get you up to MAQ's +255% return from TLS's +21% return. That's not annualised. That's your return at the end of 5 years if you placed the same amount of capital into those 4 companies. You'd get Telco exposure with TLS, you'd get cybersecurity with TNT, you'd get cloud storage (data centres) exposure with NXT, but you'd get all of that exposure with MAQ and heaps more capital growth as well.

MAQ has been damn impressive over the past 5 years that I've held them, and even since I added them here to my Strawman portfolio more recently (in 2019 and 2020, as shown below). I obviously hold more in real life than I do here on SM (the limitations of a $100K portfolio here mean my dollar weightings tend to look pretty small; a lot smaller than my real life positions). IRL my average buy price for MAQ was $17.38/share. Here it's $21.33/share. They've been as high as $80/share (in August 2021) and they're back down to $54 now. I think they go higher tomorrow on the back of this evening's report, all other things being equal.

Like I said, I can forgive them for not paying dividends for this sort of capital growth.

That 37.15% for my MAQ here actually IS annualised, so that's the money weighted annual return - +37.15% p.a. for the past three years.

I've done straws on the company before, so I won't go on, but they're a nice little growth story. Although their current market cap is $1.14 billion, so perhaps not so little any more.

Here's the second page of today's MAQ FY23 first half results announcement this evening:

Noice!

14-July-2021:  IC3 Super West and Confirmation of Guidance

Plus:  IC3 Super West Investor Presentation

Macquarie Data Centres: IC3 Super West - 50MW Campus

Macquarie Telecom Group Limited (ASX: MAQ) provides the following update to the market:

IC3 Super West

Macquarie Data Centres has today lodged a State Significant Development Application to build a new data centre at the Macquarie Park Data Centre Campus, within the Sydney North Zone. The new data centre will be called “IC3 Super West” and will be the largest data centre on the campus, adding 32MW of IT Load to bring the total campus IT Load to 50MW over time. IC3 Super West is designed to seamlessly interconnect with IC3 East.

Macquarie Data Centres is aiming to complete construction of Phase 1 of IC3 Super West in the second half of calendar year 2023. IC3 Super West has been designed to meet the needs of the corporate, government and wholesale markets and will enhance the state’s cybersecurity infrastructure and capabilities.

David Tudehope, the Chief Executive of Macquarie Telecom Group said: “IC3 Super West will expand our Macquarie Park Data Centre Campus to 50 MW of IT Load. This global scale data centre campus will attract new investment into Australia from multinationals looking to expand in the Asia Pacific region. The Macquarie Park Data Centre Campus will also be the home to our new Sovereign Cyber Security Centre of Excellence which is being launched today with the support of Investment NSW.”

Macquarie Data Centres is currently obtaining the necessary planning consents, which are expected to be received in early 2022. Construction and funding of IC3 Super West will then follow and remains subject to final Board approvals.

Sovereign Cyber Security Centre of Excellence

The Sovereign Cyber Security Centre of Excellence is an integrated mix of leading edge physical and virtual infrastructure designed to monitor and manage cybersecurity events. It will be monitored 24/7 by trained engineers equipped with the latest tools. The infrastructure and personnel will be housed in IC3 Super West offering a truly Australian sovereign solution to the growing cyber security threats.

David Tudehope, the Chief Executive of Macquarie Telecom Group said:

“NSW’s digital economy is rapidly growing, and this project will create world class infrastructure and valuable long-term jobs in the digital and cyber security sector.”

Confirmation of Guidance

The Company today confirmed that its FY21 EBITDA will be within the previously announced guidance of $72 to $75 million.

--- ends ---

[Disclosure:  I hold MAQ shares.]

24-Feb-2021:  1H FY21 Results Announcement   plus   1H FY21 Results Presentation   and   Half Yearly Report and Accounts

Macquarie Telecom delivers thirteen consecutive halves of revenue and EBITDA growth

Macquarie Telecom Group Ltd (ASX: MAQ) today announced its strong performance for the half-year ended 31 December 2020, in line with guidance.

Chairman Peter James said, “Our strategy of investing in Data Centres, Cloud and Cyber Security continues to drive further shareholder value and ongoing returns and has resulted in thirteen halves of profitable growth”.

“Macquarie’s focus on customer experience was recognised by the “Best customer experience in the World” award by 60 international judges. Macquarie is the first Australian company to win this award in 22 years of the World Communications Awards in London”.

KEY POINTS

• Revenue of $143.6 million, an increase of 9% on 1H FY20 ($131.9 million).
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $36.4 million, an increase of 15% on 1H FY20 ($31.6 million).
• Conversion of EBITDA to operating cash flows generated total operating cash flows of $13.6 million during the half-year.
• Net profit after tax of $7.0 million, an increase of 5% on 1H FY20 ($6.7 million).
• Capital expenditure for 1H FY21 was $32.9 million (1H FY20: $23.1 million) excluding Intellicentre 3 East.
• Customer Growth Capex was $13.9 million, 20% more than 1H FY20 $11.6 million, reflective of our continued data centre sales success and product mix.
• The company has drawn down $93.5 million to support data centre developments in Intellicentre 3 East and Intellicentre 5 South Bunker.

Chief Executive David Tudehope commented, “Macquarie’s 20-year strategy of investing in world-class data centres is based on strong demand for data centre capacity as customers migrate to cloud and colocation services. The win, of the 10MW of IT Load sold to a Leading Corporation, recognises the world class investment we have made in the Macquarie Park Data Centres Campus in Sydney’s North Zone.”

OUTLOOK

• FY21 EBITDA is expected to be approximately $72 to $75 million.
• Telecom continues to win customers from legacy data and IP carriers with our nbn and SD WAN solution.
• FY21 Total Capex is expected to be between $57 - 66m, excluding IC3, consisting of:
  • Customer Growth - $25 to $28 million.
  • Growth Capex - $17 to $20 million.
  • Maintenance Capex - $15 to $18 million.
• IC3 Expenditure - $123 to $126 million.
• FY21 Depreciation is expected to be between $50 and $53 million.

--ends--

--- click on the links at the top for more ---     

[I hold MAQ shares.  They don't shoot the lights out, although their share price has over the past couple of years.  Their results however are just steady growth, and they are still building the company, particularly the data centres and the hosting (cloud services).  Great company with strong tailwinds.]

30-Nov-2020:  8:12pm:  Investor Day Presentation

[I hold MAQ shares.  If they had a link to this presentation on their Macquarie Telecom Website - I would use that link, but, alas, they do not, so we're stuck with the horrific ASX version...]

11-Nov-2020:  3:37pm:  Investor Update re Macquarie Park Campus

Also, this morning (@ 11:41am):  Material Customer Contract Win

Also, a couple of weeks ago:  29-Oct-2020:  MAQ Announcement - Success Recognised Globally

Further Information:  https://macquarietelecomgroup.com/investors/

[I hold MAQ shares.]

18-Sep-20:  Buy Hold Sell: 5 quality small caps winning market share

In this Livewiremarkets.com BuyHoldSell segment, recorded on 9-Sep-20, Gary Rollo of Montgomery and Chris Stott of 1851 Capital discuss high-calibre companies with a proven track record of profitability and shrewd management teams making the most of opportunities presented by COVID-19.

They include: 1) ARB Corporation - A 4WD accessories manufacturer and distributor whose share price is being driven higher by a record order book; 2) Ingenia Communities - Poised to benefit as domestic tourism opens up; and 3) Macquarie Telecom - A cloud boom winner investing heavily to cope with higher demand.

Gary rates MAQ as a strong Buy, and his comments can be found in the video from around the 2:20 mark.  Stotty rates MAQ as a Hold because of their capex this year.

Chris Stott also reveals the "best micro cap opportunity in the market" right now (GDG) while Gary brings a stock whose savvy management team is capitalising on a beaten-down market (AQZ).

Here's what the boys had to say about MAQ:

Macquarie Telecom (ASX:MAQ)

Matthew Kidman: Now, Macquarie Telecom used to be really boring, just sell your voice products. Now, they build data centres. Buy, hold, or sell?

Gary Rollo (Buy): Macquarie Telecom's a buy. This one has got everything for us. The top line over the course of the next four or five years is going to be driven by the data centre earnings power, and that's a great theme. You know, cloud is driving that market. The business can self-fund the data centre development, so there's no need for extra capital. The stock's on 12 times EBITDA. You've got a management team that's delivered since it's been listed for about 12 or 13 years. It's a buy.

Matthew Kidman: Okay. You sound like you're falling in love, not picking a stock. Chris, Macquarie Telecom. It's really changed itself over time. It might've been boring, but it's really got investor interest. Buy, hold, or sell?

Chris Stott (Hold): Hold, Matthew. So, FY21 for Macquarie Telecom's an investment year, so they're deploying over $140 million of CapEx into a couple of new data centres at Macquarie Park and down in Canberra. So, again, David Tudehope, major shareholder, has done a terrific job with this business well over a decade and continues to do so. But for now, it's an investment year, which will suppress their earnings in the second half of this financial year, so we'd look to review it around that stage, but for now, it's a hold.

--- ends ---

[I hold MAQ and ARB shares.]

27-Aug-2020:  Results Announcement   and   Full Year Results Presentation

plus  Full Year Accounts   and   Preliminary Final Report (Appendix 4E)

Macquarie Telecom Group delivers six successive years of profitable growth.

Macquarie Telecom Group Ltd (ASX: MAQ) today announced its results for the full year ended 30 June 2020, which is in line with guidance.

Chairman Peter James said, “The 2020 full year results have delivered six consecutive years of strong performance and EBITDA growth. These results are evidence of our track record of delivery and investment which will provide a long runway of significant growth opportunities.”

Key Points.

• Full year revenue increased 8% to $266.2 million compared to $246.6 million for FY2019.
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $65.2 million post AASB16, an increase of 25% from prior year.
• Conversion of EBITDA to operating cash flows generated total operating cash flows of $45.9 million during the year, including payment of income tax.
• The Company has commenced work on the Intellicentre 3 East data centre development (“IC3”), drawing down $48.0 million of the debt facility. At 30 June 2020, there is a closing cash balance of $37.9 million and undrawn debt facilities of $92.0 million.
• Net profit after tax (NPAT) of $13.5 million post AASB16, a decrease of 17.5% on FY19 ($16.5 million).
• Resilient during COVID-19 pandemic
• Capital expenditure for FY20 was $65.9 million (FY19: $45.8 million) driven by:
  • Growth Capex of $14.8 million for:
    • The Fortune 100 Customer Stage 3 and Data Hall 4 fit out,
    • NBN migrations and investment in IC3 Macquarie Park and
    • IC5 Bunker in Canberra.
  • Customer related Capex was $38.8 million reflective of our continued Hosting sales success and product mix.
  • Maintenance Capex was $12.3 million.
• The impact of AASB16 was to:
  • Increase EBITDA by $8.0 million from $57.2 million to $65.2 million
  • Decrease net profit after tax by $1.8 million from $15.3 million to $13.5 million

Chief Executive David Tudehope said, “The development of IC3 and IC5 Bunker will expand our Macquarie Data Centre’s projected capacity from 14MW to 50MW enabling it to strongly compete for wholesale customers. The IC3 development further supports our commitment to our wholesale partners. The IC5 Bunker development will provide our Government customers with additional cyber security and cloud capacity. We anticipate strong growth given our experience in delivering to the Government sector leveraging our strict security certifications and the breadth of our Sovereign service offering.”

“Our outstanding customer experience as measured by a Net Promotor Score of +72 has been even more important to our customers as they rely to a greater extent on telecom and cloud services as their staff are predominantly working from home as a result of Covid-19”, said David Tudehope.

OUTLOOK

• Maintain industry leading Net Promoter Score (NPS) greater than +70 across all business segments.
• The Company’s EBITDA will continue to grow in FY21. However, 2HFY21 will be relatively flat compared to 1HFY21 driven by investment in sales and operational resources to support continued growth.
• There are ongoing opportunities in the Telecom business as customers look to strengthen online footprints and their customer facing options through demand for new technologies, including SDWAN and business nbn.
• We will continue to develop public cloud capability to enhance the current hybrid cloud offering.
• Continued demand from Federal Government Agencies gives great confidence for future growth in the Government Business. The further investments to expand capacity in IC5 Bunker in Canberra will provide capability and scope to meet this demand.
• Depreciation and amortisation (post AASB16) for FY21 is expected to be $45 to $48 million. Telecom depreciation will increase from $15.3 million in FY20 to $17 to $18 million in FY21 and Hosting from $26.0 million in FY20 to $28 to $30 million in FY21.
• The Company plans to make a significant investment in growth and customer growth capex during FY21. Total capex is expected to be between $140-$148 million consisting of:
  • Growth Capex - $100 to $104 million (including $83 to $85 million for IC3),
  • Customer Growth - $22 to $24 million, and
  • Maintenance Capex - $18 to $20 million.
• Telecom Capex will decrease from $22.8 million FY20 to $15 to $16 million in FY21 as the core network rollout is completed (growth capex).
• The Macquarie Park Data Centre Campus will provide 43MW in total load on completion. Development of Macquarie Intellicentre 3 (IC3) East expands the Group’s data centre capacity from a total load of 10MW to 28MW and is progressing to plan. The campus is designed to meet the growing needs of global hyperscalers and cloud, enterprise and government customers.
• As announced in June, to improve investor visibility of the value being created, Macquarie Data Centres will be reported as a separate segment from 1 July 2020. 

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Click on links above for more. 

[I hold MAQ shares.  They've been one of my best performing companies this past year.]

Recorded on July 14, 2020:  Roger Montgomery interviews David Tudehope about MAQ's Data Centres

That's a video of Montgomery Investment Management's founder and CIO (Chief Investment Officer), Roger Montgomery interviewing Macquarie Telecom's co-founder, CEO & MD, David Tudehope about Data Centres (DCs), MAQ's business model, their customers, the drivers behind their growth, and the advantages of their DCs.  David's brother Aidan Tudehope is their other co-founder, and Aidan is the MD of Macquarie Hosting which includes their Macquarie Government division.  The Tudehope brothers continue to run the company together and own 54.8% of the shares on issue, so they've got PLENTY of skin in the game.

[I hold MAQ shares]

17-June-2020:  Investor Briefing Presentation by MAQ

Aidan Tudehope from MAQ was interviewed on Ausbiz on Wednesday in their Barangaroo Studios.  See here.

16-June-2020:  Canberra Data Centre (IC5 Bunker) Announcement

Macquarie Telecom Group announces new Canberra government data centre 
 
Macquarie Telecom Group Limited (ASX: MAQ) today announced the build of a new data centre, Intellicentre 5 Bunker (IC5 Bunker), at its Canberra campus in response to increased demand for Macquarie Government’s cloud and cyber security services.

With construction due to commence in July, the initial investment of AU$17 million will be used to build stage one – 1.5 megawatts (MW) – by December 2020. Once completed, the full Canberra campus comprising IC4 Bunker and IC5 Bunker will be 4MW, with additional expansion capacity.

The new facility will leverage the latest physical and virtual security and compliance credentials to manage Government cloud workloads at the protected, secret and above levels. These will include a design to achieve Tier IV data centre standards, being SCEC Zone 5 ready, and retaining 120 plus NV1 government-cleared engineers. It will also have an industry leading PUE* to maximise efficiency.

ANZ has approved an increase in Macquarie’s syndicated banking facility from $100m to $140 million to fund investment in IC5 Bunker construction, cyber security services as well as the build of IC3 East. 

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About Macquarie Telecom Group:  "We’re Australia’s data centre, cloud, cyber security and telecom company for mid to large business and government customers.  The way we do this is completely different from our competitors… we provide the best customer service in Australia."

Disclosure:  I hold MAQ shares.  They use a lot of ancronyms and industry jargon, all of which can be googled.  For instance:

*PUE means Power usage effectiveness.  PUE is an important industry metric for measuring the energy efficiency of a data center's infrastructure under normal operating conditions.  It's calculated using the following formula: 

[Total energy entering the data center]

divided by

[Energy used by IT equipment inside the data center].

Energy use beyond what's consumed by IT equipment powers essential data center services such as cooling, lighting, power distribution and power conversion.

PUE helps track power usage trends in an individual facility over time and measures the effects of different design and operational decisions.

Some of the other acronyms used, such as "SCEC Zone 5" and "NV1 government-cleared engineers" refers to Australian government facilities security standards which can be researched further here:  https://www.protectivesecurity.gov.au/physical/entity-facilities/Pages/default.aspx

MAQ have a lot of government clients and they are a trusted and valued supplier of data and telecommunications services to both government departments, organisations and private companies.  

MAQ was definitely a company that I topped up on in March - and have a look at their chart.  They were at around $28 before the crash, got down to $19.80, and now they're up over $30 and look to be going to around $34 today.  Very high quality company, with VERY incentivised management - LOTS of skin in the game - 55% of the company is owned by the founders, David Tudehope (MAQ's CEO) and Aidan Tudehope (MAQ's Managing Director- Hosting Group). 

The shares often have liquidity issues - almost trading by appointment only at times, but well worth it for the patient who have capital they won't need to liquidate in a mad rush.

26-Feb-2020:  MAQ 1H20 Results Announcement: "Macquarie Telecom delivers eleven consecutive halves of revenue and EBITDA growth"

1H20 Presentation to Analysts

Half Yearly Report and Accounts

28-Aug-2019:

MAQ Preliminary Final Report

Full Year Statutory Accounts

Director's Commentary

Management Briefing to Analysts

Disclosure:  I hold MAQ shares.  They can be very illiquid due to a reduced free float.  This can result in sharp movements in both directions at times.  Good if you are unlikely to become a forced seller.  The Tudehope brothers, who founded the company, own just over 55% of the shares.  David Tudehope is their CEO and an executive director.  Aidan Tudehope is their Managing Director (Hosting Group) and an Executive Director.  They have a lot of government clients including the ATO, and are investing in - and riding - the megatrends of Hybrid IT, Cloud and Cyber Security.  They are focussed on superior customer service and consistently achieve a market leading NPS (net promoter score).  Macquarie’s NPS was +70 for Q4 FY19, NPS being a measure of customer loyalty that is assessed on a scale of -100 to +100, where a score of greater than +50 is excellent.  NPS is calculated on the single question "how likely is it that you would recommend our company to a friend or colleague?"  The larger Telcos (such as Telstra) typically score around -2 to +11.  MAQ scored +70.

23-Dec-2019:  ATO signs with Macquarie Telecom Group for Cyber Security

Macquarie Telecom Group Limited (ASX: MAQ) announces that it has entered into an agreement with the Australian Taxation Office (ATO) to provide Secure Internet Gateway (SIG) and cyber security services estimated to be worth approximately $20 million over the initial 3-year term. The Secure Internet Gateway is a critical service to securely manage the connection between the ATO's IT environments and the internet, protecting the ATO’s IT environments from security threats. 

The deal will leverage Macquarie’s Australian 24x7 Security Operations Centre (SOC), its sovereign data centres and its ASD-Certified cloud computing platforms. Services will commence in 2020. 

Aligned with its ongoing investment in its Government business, Macquarie will invest in upgrading its whole-of-government Secure Internet Gateway to support this deal and introduce the latest cyber security technology for all its Government customers.