ActivePort aims for ‘exponential revenue trajectory’. Here’s why its CEO thinks it’s possible
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ActivePort’s unique SD-WAN technology has attracted a lot of interest from international clients due to its software’s flexibility and competitive pricing, and the company believes it’s on an exponential growth trajectory.
ASX investors could soon own a stake in ActivePort, an Australian software company that helps companies manage their cloud connectivity and networking all in one place.
The company provides a unique SD-WAN technology to operate a global edge-to-cloud network, which enables customers to manage all of their connectivity from one screen, end to end.
Stockhead caught up with ActivePort CEO, Karim Nejaim, a veteran in the telecommunications sector who started his career at Optus, and was formerly an executive director of product engineering at Telstra managing the technical delivery of Telstra’s products across all segments.
Explaining the ActivePort business, Nejaim said the company’s mission is to connect the world and make it simple.
“Our open SD-WAN is a way to put control of networks back in the hands of the customer,” Nejaim told Stockhead.
“That’s why we created an orchestration capability within our next-generation SD-WAN. ActivePort is the only provider to offer whole network orchestration, open SD-WAN, real-time provisioning and firewall from a single screen.”
Nejaim explains that this unique capability enables its customers to manage their own network and edge devices, as well as being able to include their cloud integration into the company’s SD-WAN.
In effect, it allows the customers to control and orchestrate all the bits of their network from one place. The result is simplicity, agility, speed and reduced costs.
Nejaim emphasises that ActivePort is purely a software company, which means that it’s a capital-light business and, unlike its competitors, can do away with buying lots of expensive racks and hardware.
The company has effectively removed the need to have a specific vendor lock-in hardware, and this enables customers to use its software with any hardware platform.
This in turn has allowed ActivePort to disrupt the market with a superior technology at a lower price point than its competitors.
“This is because we operate in software, and we give customers the flexibility on the hardware they choose.”
This flexibility, Nejaim said, allows the software to connect and talk directly with networks like Megaport, Equinix and PCCW, anywhere in the world. This means customers can easily orchestrate their entire SD-WAN ecosystem in one place.
“We’re basically driving that simplicity and the removal of complexity for customers,” Nejaim explained.
ActivePort offers its services to countries all over the globe, including the regions of South America, Southeast Asia, and recently, an increasing amount of interest from Central Asia.
Nejaim explains that ActivePort has made significant inroads into these emerging regions as they are the exact type of customers that would need to use the technology that it provides.
“In developing countries, data infrastructure is not always reliable. There is a need to get a product into the market from the telcos in those price-sensitive countries,” he said.
“Our SD-WAN technology can help with that problem, allowing them to use the internet to send traffic across traditional carriage like MPLS as well as wireless technologies like 4G and 5G.”
ActivePort is also able to offer a “white label” service where the customers can brand it as their own, allowing them to create their own product and boost revenue.
This one-stop offering, which includes SD-WAN technology, orchestration, and non-hardware lock-in, has attracted a lot of interest from the telco companies in its target regions
Nejaim explained that the business runs margins in excess of 75 per cent.
This is possible as it deals purely in software, a capital-light business that is able to be deployed anywhere in the world.
The software itself is a product of a development phase that was started by the company’s CTO, Mark Middleton, four years ago.
“We’re not paying huge amounts of cost in big data centre installations or large amounts of international traffic, so we end up with a very low-cost base for a software that allows us to offer a price-competitive product with significant margins,” Nejaim told Stockhead.
In terms of revenue forecast, he said most of its revenue is recurring, and he expects to hit a revenue trajectory similar to that of ASX-listed Megaport (ASX:MP1). They started off with around $200,000 per month recurring revenue, and looking at their numbers now, it’s about $7 million per month.
“We expect to hit a similar trajectory within three to five years,” Nejaim said.
Nejaim points to the fact that ActivePort currently has 52 points of presence globally in 16 countries, and theoretically if one point hits $3 million per year, revenue could potentially be as high as $150 million per year.
And there is data to support this growth projection.
Consulting company Gartner estimated that the SD-WAN market will grow by 76 per cent year-on-year to 2025.
Against this backdrop, Nejaim believes that ActivePort presents a good value proposition for investors right now, as it owns a innovative product in a telecommunications segment that is growing rapidly.
The company is currently raising $15 million at 20c in the IPO round led by Bridge Street Capital, which will give it a market cap of around $55 million upon listing.
Nejaim said the funds would be used to expand its virtual edge of presence globally, and to integrate its offering with more telco companies to expand the business.
ActivePort, he says, would be looking to grow its software licensing revenue in line with its peers.
The company’s revenues hit $12.3 million in FY21, and is led by a capable and experienced management team that has skin in the game.
“We’ve got a strong execution, great people, brilliant technology and an accomplished leadership team,” he said.
“And those things are coming together at precisely the right time.”
This article was developed in collaboration with ActivePort, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.