Thank you for joining today's session. We have today with us Megaport for their full year results release and investor briefing with CEO Vincent English and CFO Sean Cassidy. Vincent, I'll pass it off to you.
Good morning. Thanks, Devin. Good morning, everybody. Welcome to FY 2021 Megaport Earnings Call and Global Update. I'd like to start with our FY 2021 highlights, most of which have been reported earlier through our quarterly announcements. Just taking you through the key highlights. Monthly recurring revenue at AUD 7.5 million was up 32% on the same time last year. Our annualized run rate revenue now is running at just under AUD 90 million, also up 32%. The growth in our customers went up by 24% to 2,285. We've seen our record growth in quarter four, across a lot of our metrics, including customers, which bodes really well for our FY 2022. In terms of the total number of services, it grew by 30% to 21,712, and also the number of ports live on the network was 7,689, up 33%.
Most encouraging to me, as we talk about this a little bit later on in cloud, with hybrid cloud being so prominent, MCRs grew up to 502, up 64% in the year. I suppose the other major highlight on the financial base, Sean will touch on this in the financial section, is that we reached the group EBITDA breakeven on an exit run rate in the month of June, which was anticipated, and we're expecting next year to be more of the same. We also achieved our ISO 27001 accreditation earlier in the year, which was really important from a security of information perspective, particularly as we go further into managing data with customers. In terms of our continued focus on our strategic cloud partners, extending their reach and maintaining a global number one position with the most on-ramps on our network.
Not only have we done that, with the launch of MVE back in March, we've added four partners onto our ecosystem from the SD-WAN space. They are Cisco, VMware, Versa, and Fortinet. We will continue to grow that ecosystem and SD-WAN providers over the course of the year. In terms of the cloud on-ramps, we added 36 in the year to a total of 233, up 18%. In terms of the cloud regions, we added 12, up to 121, which is an increase of 12%. In terms of the installed data centers, we finished the year at 405 to extending our footprint up 11% in the year. The enabled data centers themselves at 761, grew by 14% in the year.
Looking at the revenue performance for the full year, starting at the right-hand side, total revenue AUD 78.3 million, up AUD 20.2 million or 35% in the year. Looking to APAC, revenue was AUD 25.7 million, up 25%. North America business at AUD 38.7 million in revenue, up 47%. Our European business at AUD 13.8 million, up 24%. It's telling that with over 49% of our revenue now coming from North America, that the growth in our North America business is now nearly at twice the growth of the APAC and European regions. In U.S. dollar terms, North American, not only did it on a reported basis in Australian dollars increase by 47%, in U.S. dollar terms, it grew by 65%. I'm going to hand it over to Sean Cassidy, our CFO, to take you through the annual results.
Thanks, Vinny. Good morning, everybody. Revenue for the year of AUD 78.3 million is up 35% from FY 2020. This is despite the FX headwinds we've experienced all year from the strengthening Australian dollar. Excluding the impact of this, the underlying revenue growth is around 44% for the business. Direct network costs grew AUD 7.7 million, 27% to AUD 36.2 million.
With revenue growth outstripping this, profit after direct network costs, our equivalent to gross profit, grew AUD 12.6 million to AUD 42.1 million as we saw a 3 percentage point increase in margin in the year to 54%. OpEx grew 10% to AUD 55.4 million, largely with increased staff costs as the business continues to expand. A quick summary of this points to the operating leverage coming through to narrow our EBITDA losses. AUD 20.2 million additional revenue yields AUD 12.6 million more gross margin and added AUD 7.7 million to our EBITDA.
EBITDA losses represent 17% of revenue, an improvement of 19 percentage points over the previous year. Below EBITDA, the increase in depreciation and amortization, AUD 6.2 million-AUD 23.5 million, reflects the network expansion that we've done, especially the full-year costs of our expansion in FY 2020, and the investment in intellectual property over the last two years, delivering products such as MVE. Our net losses have widened slightly in the year to AUD 55 million, principally because of increased depreciation and amortization, and also because of unrealized foreign exchange losses on intragroup loans. These graphs represent the geographical split of our revenue as reported in Australian dollar. As can be seen, all regions grew in absolute terms. Growth of AUD 2.7 million in Europe is 25% in reported currency, the market grew 29% in local currency terms.
APAC growth of AUD 5.1 million against 25% is primarily driven through growth in Australia, though AUD 0.6 million of that growth comes from Japan. As Vinny mentioned, the North America region remains our main growth engine with our investment and expansion into 86 metros really delivering for us. NAM accounted for 49% of our group revenues in the year, up from 45% in FY 2020. Our monthly recurring revenue in June of AUD 7.5 million, up 33% year-on-year means our exit run rate of the business is almost AUD 90 million on an annualized basis. Next year, we will see strong growth across all our footprints, with Japan being a growth engine for APAC. NAM will continue to outperform and will constitute a majority of our growth in FY 2022. We can expect North America to exceed 50% of group revenues next year.
This may be further emphasized if the US dollar recovers ground against the Australian dollar. There have been some indicators in that regard in recent weeks. On operating costs, direct network costs include partner commissions, as well as the costs directly associated with running our network. The AUD 7.7 million increase year-on-year comes from both these elements. While we have traditionally shown a metric of average monthly cost per DC for our network, with increasing channel sales and increasing partner commissions are skewing this figure. Average monthly cost for FY 2021 was AUD 7,800, it's up 10%, but that increase is wholly attributable to partner commissions, which grew 99% year-on-year. Excluding these, average network cost per DC actually came down 2% year-on-year. Going forward, we've split out these partner commissions and network costs to allow better tracking of our increasing efficiency and network utilization.
People costs increased 14% to AUD 41.4 million as we continue to grow the business. A majority of this growth were in our commercial and operations areas, along with some hiring in product and engineering development. General and administration costs increased AUD 1.7 million to AUD 5.4 million for the year, with significant increases in insurance costs, particularly D&O, and this is related to the scale and the market cap of the business. Savings across other OPEX areas help keep our costs under control and help deliver the EBITDA result that Vinny alluded to or mentioned earlier. Obviously, we have savings in travel and some marketing, which were COVID related. Non-operating costs. Equity settled employee and related costs have increased AUD 2.9 million or 42% to AUD 9.8 million.
These costs now include some Australian state employer taxes on the exercise of options and included in the chart this year are AUD 1.7 million of costs related to prior periods. Foreign exchange losses of AUD 13.5 million have increased AUD 9.7 million year-on-year because of the strengthening of the Australian dollar. AUD 7 million of this is unrealized and it arises in the retranslation of Australian dollar denominated intragroup loans. AUD 4.6 million of realized losses come from the retranslation of cash deposits held in other currencies, principally US dollar. Interest expense of AUD 1.5 million is imputed interest on the 0% vendor financing we have and also some certain leases capitalized under AASB 16.
The credit of AUD 6.6 million in income tax is from the recognition of deferred tax assets, largely because of timing differences, although AUD 1.7 million is recognized in respect to tax losses carried forward as some of our subsidiaries approach net profitability. This graph I'd like to point out is the month of June in each year. It doesn't represent the full year. I'd like to point out also that since the group turned EBITDA positive as a whole in June, we've been showing this slide for a few years and tracking this momentum, and whether you look at it monthly or whether you look at it annual snapshots like this, we know this result's been coming. Our margin after direct network cost is up 5 percentage points over the year to 60% in June as we appreciate the benefits of scale.
This figure includes increase in commissions as our partners bring a greater % of their revenue. This year we've saved on some travel and marketing costs, and going forward, we'll be investing a little more on our P&L in growth, but that's not going to change the dynamics that we see here. I'd also like to point out a few regional highlights. On to APAC first. APAC has shown solid growth, 25% to close with AUD 2.4 million in monthly recurring revenue. In line with our other two regions, APAC saw very strong record growth in Q4 with significant port additions late in the quarter. This has the effect of temporarily diluting metrics such as our revenue per port, which is flat at AUD 799, and our average services per port, which are down marginally at 3.0.
APAC is a mature market, but it's still growing in absolute terms, with ports growing 21% to 2,977. It's also growing in efficiency with profit after direct network cost margin increasing 1 percentage point to 73%. Services are up 19% to 8,937. I'd just like to point out there always is a slight lag on additional services attaching to ports, particularly in high acquisition months like we just had in June. While port utilization is not a metric we use much internally outside of capacity planning, it can be seen at 43% in such a mature market, there are still ample opportunities for revenue growth without much additional CapEx or incremental OpEx costs to be incurred. Being a mature market, it's easy to see the benefits of the operating leverage at work.
From June 2020 to June 2021, we added AUD 0.4 million in monthly revenue, which brought in AUD 0.3 million in additional EBITDA. I'd also like to point out the operating metrics of 73% gross margin and 47% EBITDA are close to what we've previously guided as our long-term margins. These results include Japan, which is still slightly gross margin and EBITDA negative. This shows that we now have the scale to absorb this type of expansion into new markets without significantly impacting results, even a market as big as Japan, which is the fifth biggest cloud market in the world. The European business next. Pardon me. Revenue per port has fallen 12% year-on-year to AUD 1,144. This is impacted by FX, at local terms, revenue per port has fallen 8% year-on-year.
This is partially because of the dilution effect of strong port additions in late Q4, and partially because of the IX repricing we flagged in Q2. Port numbers have increased 33% in the year to 1,137. This has driven MRR growth of 25% year-on-year to AUD 1.3 million in June. As with APAC, port growth has not quite been matched with growth in additional services, which have grown 23% to 3,044. The apparent drop in installed data centers from 105 to 103 was where we've removed some duplication on our network, e.g., multiple PoPs in a campus. These DCs have simply transitioned from installed to enabled, but they all remain within our network. The slight drop in profit after direct network cost margin to 62% is related to an increase in partner commissions.
We see Europe as a market that greatly benefits from the channel we are currently building, and we see strong pipeline growth, particularly in network solutions to larger companies. The number of customers grew 21% in the year and finished in June 430. We're starting to see huge uptick in large European multinationals using the Megaport platform globally as our direct sales engine become more localized and has started to build momentum. Europe turned EBITDA positive in Q4 of FY 2020 and has been EBITDA positive for the year as a whole in FY 2021. Notwithstanding the reduction in margin after direct costs, good cost control has resulted in increasing profitability from our revenue growth. EBITDA margin of 42% is 19 percentage points up from June 2020.
Our EBITDA margins are fast approaching those of APAC, which is a mature business, although here we feel there's a lot more growth to come, especially through our channels. Last and certainly not least, North America. All metrics for the North American region are showing exceptional growth. Ports are up 44% to 3,575. Customers up 35% to 1,219, and that now represents more than half of our customer base. MRR in Australian dollars has increased 46% to AUD 3.8 million. As Vinny mentioned, in local currency, that has grown 64% year-on-year in line with the total revenues. Our NAM region holds 50% of our assets and accounts for almost 50% of our revenues as reported in Australian dollars.
The region accounts for 63%, 86 out of 136 of the metros we have a presence in. We still see huge potential for growth in this, the biggest cloud market in the world. Our network reach, particularly in the U.S., is a valuable asset. It's becoming more so as we continue to roll out SD-WAN on MVE, bringing the edge closer to the branch. In fact, our expansion into tier two enterprise-rich markets has allowed us to build a very granular edge to address branch connectivity. The North American region's march to profitability has been very swift. From turning EBITDA positive in December 2020, EBITDA margin in June of 22% is a fantastic result, and it's an improvement of 35 percentage points over June of last year. NAM is an example of our operating model writ large.
In the North America region, we invested more capital in a shorter time, and we've accepted deeper EBITDA losses than any other region. The returns have been swifter and greater. From June 2020 to June 2021, in Australian dollar terms, we added AUD 1.3 million in monthly recurring revenue and converted all of that to EBITDA. This is done by achieving scale to cover the cost of the network and are directly attributable to OpEx costs in the region. We've done this with a port utilization of 32%, indicating there's scope for a lot of additional revenue growth with little in the way of additional CapEx or incremental network costs. Proving out the model at this scale, at this speed, gives us great confidence in achieving larger and quicker returns as we continue to invest and grow.
Finally, I'd like to point out a few highlights on our financial position after the 30th of June. Included within current assets are trade receivables of AUD 6.6 million, down 24% from June 2020. This marked improvement in collections is also reflected in the greatly improved quality of our debt aging. Other current assets are included within our cash balances and some prepayments. The increase of AUD 3.5 million in non-current assets is the additional deferred tax assets that I mentioned earlier. Certain groups of subsidiaries improved net profitability. The increase of AUD 9.5 million in current liabilities represents the increasing scale of the business, and the increase is largely coming from trade payables and sales and employer tax liabilities. Our total net cash spend in 12 months, AUD 30.5 million. AUD 8.3 million spent on operations and AUD 22.1 million spent in CapEx.
The significant reduction in cash spent on operations is reflective of the group edging closer to EBITDA breakeven throughout the year. Cash spent on operating activities in Q4 was AUD 0.6 million. That reduction in cash burn affords us the opportunity to utilize some of the cash assets we have on hand to invest in growth, such as the build-out of the indirect channel, Partner Vantage program, and the acquisition of InnovoEdge, which Vinny will talk about later on. With that, I'd like to hand back to Vinny. Thank you.
Thanks, Sean. We'll just go through a business update and a few of our metrics. The chart on your left-hand side, once again, it's showing the significant uplift that we've seen towards the difference between FY 2021 and FY 2020, the preceding year. The number of services continues to grow at a faster rate than the number of ports in the network. Total services, as I said, was at 21,712. On the chart on our right, a very strong correlation to mapping total services and uptake in ports and services actually correlates to the AUD 7.5 million in recurring revenue exiting in June. As we said earlier on, installed data centers were up 11%. Our ports were up 33%. Total services were up 30%. Our customers were up 24%. If you look at the monthly recurring revenue at AUD 1.8 million, up an increase of 32%.
As we said earlier on, North America is growing at a rate of 46% year-on-year, Europe 32%, and APAC at 20%. The revenue per port, while it dipped down slightly by AUD 6, that's really a direct relation to the very strong quarter we had in ports towards the end of Q4, which has had a slight dilutionary effect on the overall revenue per port in June. We expect that to be fully billing and coming into effect in the start of this quarter in the new financial year, FY 2022. Switching to our strategic partners, and this is really around what's happening in the cloud space and some telling statistics on the right-hand side of your chart.
68% of all of Megaport connections terminate to a public cloud provider, and 35% of Megaport customers are using multicloud, and this number has significantly increased over the last year. As you may have recalled, we used to present the spiral graphs, but because of the density of the lines and the connectivity in there, it's no longer feasible. It's just a blob. I think it's telling that it's a significant part of our business having a network that's connecting to over 233 on-ramps, which increased by 18% during the year. Also the number of cloud regions that we're connected to across the 23 countries, up 12%. Switching to the customer cohort trend, which we present this time every year. Looking at the chart on your left, starting with the number of average services per customer.
We had four services per customer in FY 2021, slightly down on the previous year. As each of the other cohorts move from left to right in the dark bubble, they substantially increased over previous years in terms of the number of services uptake, including FY 2014, increasing up to 25.7 services per customer. Some of this is reflective in the type or profile of our customers, which are getting larger and obviously taking on more services. With the advent of MVE coming onto our network, this will allow us to increase that even further as existing customers and new customers start to take on larger footprints and uptake of services. Looking at the chart on your right where the average revenue per customer is around AUD 3,300, increased by 7%. FY 2021, 1,765.
Slightly down on the 2,008 in the previous year, but has been impacted, as Sean said, with 49% of our revenue coming from the U.S. has been impacted by the FX to a degree. In all other cases, as we move from left to right, you can see in the dark bubbles that each of the numbers are increasing year-over-year as customers are actually using more services. Two interesting pieces of information here. The number of customers that we added in FY 2021 is now 5 x what we added in FY 2014 over the year. Even looking at our FY 2014 cohort, since their year one up to year eight now at the moment, 55% of all of those customers initially are now still on the network after eight years.
Again, some really sticky customers in the usage case, which proves out that cloud is no longer just seen as a potential to help business. It's actually becoming a very essential service. Actually, the network underneath that to allow for that connectivity is even more critical and important. The last interesting statistic on our customer cohorts is that we've seen over the last six months. There's a bigger percentage of our customers now signing up to take terms on our contracts. It's no longer month- to- month, but it's a minimum of 12 months per term, which is really important for continuity and as larger organizations want to make sure that they have those contracts in place. That's been a significant shift or change in the dynamic of customers purchasing and buying.
Looking at Megaport Cloud Router, as I said earlier on, we ended up with 502 at the end of June. It was a 64% increase in uplift. Not really surprising when also we've got over 35% of our connections connecting to more than one cloud provider. The average monthly revenue per customer was AUD 5,900, and has remained very consistent, notwithstanding that we're adding more customers over time. We expect this number to tick up over in FY 2022, particularly on the back of a very strong quarter four, as those customers will bill accordingly into FY 2022. Looking at Megaport Virtual Edge, and bear in mind that this has only been live across Megaport for less than 90 days up to the end of June. As of that point in time, we have 21 MVEs sold up to the end of June.
We've built out across 20 metros with MVE covering the major markets. We'll continue to do so in FY 2022. As I said earlier on, we've enabled the top four of the SD-WAN partners onto the platform, with the remaining couple to come on this quarter by the end of September, which will cover over 50% of the SD-WAN market. Looking forward for this first half of FY 2022, we have 129 customer opportunities in our pipeline that we're currently working through. Again, I think the education piece that we had from back in early April around SD-WAN and with the launch of the global price list with Cisco happening at the end of this month, we anticipate that to continue to grow into FY 2022 and beyond.
Just touching on this slide from that last presentation, just illustrating the customer use case here, where the customer was based on the West Coast and was connecting or standing up MVEs on the East Coast so it could connect its locations together. Just looking at the map in this particular case in the U.S., where all the dots which represent where the customer has locations. This spend and this use case started out with a proof of concept, has now turned live, AUD 15,200 for this solution just initially. All of those locations have to be connected at some point in time, and that's going to be built out over the next FY 2022 and beyond.
This is typical of some of the large customers that we're seeing opportunities with, who have large footprints, either regionally or globally, and they're looking to connect their locations as branches back to services such as cloud. We expect this to develop further, particularly with our large customers in the network. Looking at the network footprint itself, we continue to expand. As I said, we were from 405 installed data centers at the end of the year. As Sean said, we're in 86 metros now in North America, up 8%, and in terms of the installed, increased by 14% in North America, which is still, as we said, is our largest market with over half our network and half of our revenue attributed to it. Europe has continued to grow. We added an extra city in, to add 33 cities into Europe.
While installs went slightly down, enables went up by 15% as we leveraged campuses and locations that we were in. In the APAC region, we added again, similarly, we installed new locations there, up 21%, and enables up 19%. Again, I suppose they continue to expand into FY 2022 into new metros and in new countries going forward. Next, I'd like to switch our attention to some recent news or PR that we announced around scaling through the channel. With Rodney Foreman, our Chief Revenue Officer, at the last presentation, we talked a lot about how we pivot from direct selling and the percentage of direct sales that we have today into more indirect sales, which allows us to scale through enabling partners to access to our services so they can sell more of Megaport's services. This is Partner Vantage.
It was launched on the 3rd of August, and it's really about enabling partners to sell. I'd just like to take you through a couple of components of what actually it is. Well, it's a world-class channel program that allows customers to sell our services and enable our Network as a Service to be bundled with other service cloud solutions as part of what the enterprise customers are looking for. It's really three pillars to this. This is really about the ease of doing business. How are the partners able to easy provision, easy to order, easy to manage and get paid, essentially, for doing that? If we make the sales process and the provisioning process very simple for the partner, the partner can sell more to the end customer, and that's really what this is about.
It also is about making sure we provide comprehensive materials, sales, technical, and marketing to allow them to accelerate with that and actually be more self-sufficient in their selling process. Ultimately, this is all about growing revenue and having hundreds and thousands of other partners out there selling Megaport services and having a platform where it enables them to do that. Who are we targeting? Mainly the providers in this particular case are cloud service providers, network service providers, data center operators, managed service providers, global system integrators, value-added resellers, and value-added distributors. Using agents as well, who will help us to aggregate solutions and work with Megaport to do so. Like any program that's out there, we've enabled 2 tiers to compensate the expertise and performance for the partner, which is the prestige and obviously the preferred status.
There's various elements that are part of the PartnerVantage program. There's the PRM, which is the partner relationships. It's effectively a CRM for partners. It allows them to have that one stop for the partner to actually deal and manage the entire Megaport process and business. The single pane of glass, which again, we'll talk about more later on, allowing for the partner to actually go in and provision services for, on behalf of the customer. We also have financial incentives in place, and a program so they can track how their sales are tracking and commissions, et cetera. There's also a learning component where we have a lot of materials, both sales and technical, to help the partners and their staff to actually sell.
Not to mention, there's also the resources that are needed for the sales and sales toolkits, as well as the marketing capability and the presentations and toolkits to allow them to use Megaport. We're very excited about PartnerVantage, and it's a key component in Rodney's strategy and in our overall strategy for FY 2022 and beyond. We're really good. As Sean said, we're going to be investing in that and supporting that as we pivot from 30% indirect sales today into over 70% over the coming two years. Next, I'd like to switch. Very excited to announce the acquisition of InnovoEdge Inc., which we announced this morning. This is a very synergistic acquisition and it's also very strategic to Megaport. It's an AI-powered multi-cloud and edge application orchestration company. It allows us to add more capabilities on a couple of fronts.
One, in terms of people capabilities, it also allows us to step up the stack in terms of the services and what we can offer through a single pane of glass with customers. We're very excited about this. It's very strategic to us. It aligns very easily across what we've already built, as in our network. You've heard me talk about this on a couple of occasions, where the next thing after MVE will be allowing more and more services to be built on a network that already has a lot of leverage in it to scale.
In terms of the market drivers and why this, apart from having a very principled view, which is very much aligned to us about automation in terms of making everything very simple for the customer and how they want to manage their services and being very agile and simple to use. Not all services are all together in one place or converged and convened, so they're all very much isolated or siloed. It allows us to actually build more solutions, our partners solutions, to allow them to manage public and private cloud. It also brings us into the AI and machine learning space and how we manage that consumption of the compute that's used for that, and managing the network, which underlying is Megaport. Again, it allows the enterprises using their partners to focus on the simplicity and agility of managing their IT infrastructure and network.
An example of the orchestration is, as you see on the slide, when you add InnovoEdge to Megaport. What we've effectively done, as you can see on the left-hand side, is the orchestration allows us get to the cloud with Megaport and with the combination of InnovoEdge, allows us to go through the cloud. Effectively what that means is that our enterprise customers can be in a branch, can be in a data center, many different locations on our network today. Not only now do we hand off the customer at the doorway or the gateway of the cloud service provider through the on-ramp, this now gives us the ability for the customer to manage all of its cloud infrastructure and its compute right down to the application level where the data resides.
This brings us deeper and deeper into the customer's actual infrastructure and what they're using their data for. Added to that, the simplicity of a single pane of glass, which again, as you can see from the diagram on your left, customers, as I said earlier, 35% of our customers are using multi-cloud. You could have 1 cloud provider, a second cloud provider. You also have a portal or access through a data center provider, and you may also have an SD-WAN providers that you're using. With Megaport and InnovoEdge, we create a single pane of glass where the enterprise customer is able to manage all of that through one login or one portal. Main cloud instances for containers and applications allows them to manage that and create them. It gives them access to visibility and reporting, deep learning analytics.
The benefits are reduced complexity, rapid service turn-up that gives agility to the customer and allows them to provision real time with their network and compute. Really it bridges the network and the DevOps function, where you've got physical network to code, to manage infrastructure and data. It allows us to do a lot more white label portal benefits for providers that we will be working with, and also facilitate a real end-to-end solution. Again, it's all about simplicity and removing complexity on behalf of the customer. There's several main drivers as to why we linked up with InnovoEdge. We started working with InnovoEdge a couple of months back, and that was really to work together for solutions for customers. It became fairly apparent, between both of us that there was a lot of synergies in terms of being acquired and being one company together.
It's happened very quickly. As you recall, when we were doing the earnings call over a year ago, we talked about capability on so many M&A activity, and the capability was really about technology. It was about people and talent, and taking us to the next stage in terms of our development and the space that we wanted to go into. It was highly complementary or adjacent to what we were already doing. Looking at the main drivers, the partner enablement is really important given the fact that we're over 200 data center operators that we're working with today. It's really about driving revenue and service adoption across our products and allowing us to get further, deeper, and access to more customers.
The innovation was really important, as we've been talking about for the last 18 months, about how we continue to innovate and add more relevance to customer and what they're using their data for in the future. MVE was the first step of that. Then just the agility. Again, this is like we're effectively acquiring a dev team that allows us to rapidly develop going forward. Not just our products, but combined products for customers. That allows us to stay ahead. It gives us competitive advantage. It also brings us into the AI space, which is something that we've said is something that would sit across our MVE platform, and allows us to integrate and work with far more providers. It allows us to expand our channel and addressable market, and effectively future-proofs us going forward.
They're the real rationale as to kind of why we're doing that today. InnovoEdge will continue to operate as a separate entity in our business. We will integrate fully with Megaport and their InnovoStudio, which allows us to provide solutions for our partners. While at the same time, our core business is still what we've presented to you earlier on today in terms of how it's performing up to FY 2021 and beyond. In terms of the innovation roadmap, really looking at our logo in the center of the diagram here. We're effectively the foundation underneath this. What we're really doing is plugging other technologies into our network foundation. Really this is about bridging the gap between network operations and development operations. The capability that it gives us is quite substantial.
The initial six months on our business, we'll be working on the integrations and getting that up and running. Then we'll eventually, coming out the second half year, we'll be productizing a lot of this with our go-to-market strategy to enable that. That's reflected in the milestones in the terms of the acquisition. Which brings us to the consideration, which is in total $15 million. Seven and a half of that is a cash consideration, with the remaining seven and a half in equivalent in Megaport shares. These will be in three tranches over the next three years, subject to achievement of certain product development and revenue milestones. The team are fully committed, to being honest, over that term for the three years as we both work towards really building a future roadmap for Megaport. That's the end of that section.
I'd like to move on. The next phase of our growth and continuing on the same team, it's about scaling up and scaling out. As Sean said, we've spent the last couple of years to this point in time where we've been proving out what the leverage in our network and the capability we have. We can see from our margins, and we can see from the utilization that we have on our network, that we've got plenty of headroom to continue to grow. With Rodney and his team and yourself in the PartnerVantage, continuing to invest in that, in the channel, and unlocking those other providers to really sell more of our existing products is really important. It's a strategic fit. We're continuing to invest in that. Obviously on the product, more MVE integrations will continue.
Like I said, we've just started with SD-WAN, and we've got the first couple of providers on that will continue through FY 2022. As you saw with the investment with InnovoEdge, it allows us to create more platform innovation and orchestration and ease of use and actually add more services to the network. On top of that, we're going to continue to invest in the growth and some resources in hiring on people and talent, both in commercial and operations teams, because as we scale up and scale out, we actually need to be able to manage that and deal with it. Lastly, network growth.
As we double our customers and continue to grow into the future and have way more services and transactions across the network, we also need to make sure that our operations and our capabilities are in lockstep as we manage that. On that note, I'll just wrap it up before we go to Q&A. Really just say that we're really excited with where we're at in terms of the business, and thank the team. We've had an amazing strong year despite everything that's going on in the world, and really looking forward to FY 2022. Okay. I'll hand it over for Q&A.
All right. We are now beginning the Q&A session. If you have a question, please press the raise hand button, which can be found at the bottom of the Zoom interface. When you're selected to ask your question, I will call your name and ask you to unmute yourself. We have the first question from Tim Plumbe at UBS. Go ahead, Tim, whenever you're ready.
Sorry, Vinny, can you hear me?
Hey, Tim. Yeah.
Sorry about that. Look, I'll just ask two questions and then jump back into the queue, in the interest of giving everyone else a go. 650 ports added, which was a pretty solid improvement from the previous quarters. Can you talk a little bit about some of the changes across the platform that helped drive that uplift? How are you thinking about the cadence of incremental ports going into or in FY 2022, as we start to see some of the initiatives from the Partner Vantage program flowing through?
Well starting with the 650 that we had at the end of the quarter, I think a lot of that, as I said earlier, I think with Rodney coming on board at the beginning of February, it gave us an opportunity to realign our resources and our teams and put a fair degree of rigor and discipline around our sales process. That was one of the key elements that was being met. Part of that also was actually, we talked about it before, was the pipeline build. It was growing at a faster rate than we ever had before. There was more conversion on a bigger pipeline, which allowed for the higher ports number. Not just the number of ports with record as well, it's also the number of new customers that we added at the end of quarter four.
There was a lot about that. We put an incentive program. We tightened it up, made it easier. That's contributed a lot towards what we've done. I think the next phase is, as you mentioned, as we bring on more partners, and we're starting to sign contracts with some of these partners, hence the urgency to launch Partner Vantage and have the program not just in place, but actually have it integrated so that we could use it. I think that will bode us well, probably more into quarter two of this financial year and beyond, as we're bedding it all in this quarter. We expect a kind of similar momentum to come through from quarter four into quarter one.
The benefit of adding lots of new customers and lots of ports towards the back end of quarter four means the VXCs and the services tend to follow. We see more of an impact of that coming through into July, whereas a lot of the ports and the actual standing of original services ended in June, hence that dilution we talked about in our revenue per port. We expect that to bounce back in quarter one.
Great. Thanks for that. Just the other question around reinvesting for growth. Just wondering if you're able to give us any more color around how you're thinking about that OpEx uplift, compared to this year. With that incremental spend, how are you thinking about the impact that that has on the cadence of your top line going forward?
Yeah, I think initially, in this first half of the year, we're obviously investing around Partner Vantage, and a lot of it's been investing around sales and getting that set up. We're still sort of in a lockdown by country. Traveling is a little bit prohibitive. We've got a strong team now in each of the regions. That allows us to keep selling going on in the U.S. We have to build a structure around the indirect team. We're also building small teams around each of the SD-WAN providers, the same as we did with the cloud providers, to make sure that we have a contact that works specifically with, for example, a Cisco and a Fortinet. There's a lot of that that's going on at the moment. It'll keep us a little bit lower.
We might flip back into the red during the first half of this year and pop out. It will probably be three or four months during this first half of the year, and we pop out the other side when we have finished with the investment. The other half of the investment is really related to CapEx, which is in building out and supporting the network, the infrastructure, as well as the IP and products that we talked about, having new products ready for FY or calendar year 2022, sorry.
Great. Thanks, guys.
No problem.
Tim, I'll just add to that a little. In terms of kind of the revenue momentum, the indirect sales channel is going to take a little while to ramp up . We incur the expense before we get the benefit of this. You'll really see the revenue momentum coming through in the second half of the year, particularly in Q4, as it builds momentum. In terms of port adds and the momentum we're seeing there, Q4 was a record quarter, and that was done through our existing kind of our existing direct sales and the indirect channel that we have. We see that momentum continuing on. It might not be quite as record breaking as Q4 of last year every quarter, it should be there.
All right. We have the next question from Jonathan Atkin.
Thanks very much. On costs, I was interested in understanding a little bit more. The items where you feel like you can get some operating leverage, whether it's bandwidth, data center rent, data center power, the items that make up cost of goods sold and SG&A, as you look forward, where are there opportunities and where are there perhaps some challenges?
Hey, Jonathan. I'll answer parts of that, and maybe Sean, you want to jump in as well. One of the things that as we built out the cost structure on how we roll out into DCs, the costs, they're based on the number of services or ports per data center that we use based on the rollout of the equipment. It's reasonably, as Sean mentioned in the thing, it's reasonably fixed in terms of what it is. We need 15 ports, effectively, in a data center to break even, roughly between 15 and 18 ports to break even in a data center. The minimum build has 40-odd ports. Again, that goes back to the utilization that we talked about ports in the network, I know it's done by country or region there, but that can be drilled right down into per site.
As you add more ports in each site, you'll actually create that margin or that gross margin that we're seeing on the network. Even if some costs were to increase, it's really addition of an extra port or two per month is really what will cover it off. There is some capacity that we need to look at as we build out 400 GB on the backbone. Again, that'll be a minor part of an uplift that we would have to do as we substitute other parts of connectivity and upgrade them into 400 GB. Sean, did you want to add anything to that?
Absolutely. Like you say, Vinny, the network costs are stepped in relation to the number of DCs. The bigger steps are when you move into a new metro, for example. The densification that we see sometimes gives small incremental cost, but it's not quite as much as you add every time you add a new metro. We're at quite some scale now. We're not doing the kind of land grab that we did in FY 2019 and FY 2020. We're able to go about this in a much more measured and controlled fashion. We spent quite a lot of effort and last year, looking at our direct network costs and combining them and rationalizing them and putting a lot of control there. That's why you see the average cost per DC, excluding partner commissions, come down year-on-year.
That kind of dynamic where we're holding a good cost to grow in our network as a scale will continue going forward.
You talked about locking in some duration with your customers talking about annual rather than month- to- month. On the cost side, I'm curious whether it's data center costs or bandwidth or duration or getting any kind of discount that way, or is there some vulnerability around maybe the month-to-month nature of some of your costs?
No, most of the costs are termed in our COGS. Whether it's co-location, power, cross connects, dark fiber, et cetera, all of those are termed. What we've been able to do is, as we've been expanding and growing our network over time, is that we've been able to get better purchasing power, particularly on network. As we're adding more, the unit cost comes down over time and as we come to renewals. In general, as Sean said, it's reasonably a fixed cost, and when renewals tend to come up, we tend to bundle a lot of things where we have the opportunity to do it, so to renegotiate that better. It doesn't happen with all costs, but for the most part, that's how it works. We tend to have very small, in our COGS, it's very small month-to-month costs as part of the overall COGS. It's mainly termed.
The only other thing that we will be, I suppose, spending, Sean mentioned earlier on, the only thing we will be spending more on is actually the GS and the marketing as well, right? That's really important to support the revenue generation with what we're doing. We will see a pickup on that, whereas last year with COVID and less travel and less conferences, we're expecting that to pick back up and we're going to invest in that going forward.
Lastly from my side, and I'll jump back in the queue. There was a slight miss on gross margin you called out because of indirect commissions, but I think you beat on EBITDA. What's the simple or sort of intuitive way to understand that? Was it head count? Travel? What were the items that led you to kind of exceed on EBITDA despite the miss on gross margins?
There were a lot of movements going either way. Yeah, we did save on travel. We did save on certain marketing expenses as well because we actually a lot of our marketing face-to-face. Whether there's a cause or effect on kind of the slightly flatter revenues we had seen in the middle part of the year, it's a little unclear. We have those types of savings, but there were other costs went against us. As you may or may not be aware, there was an accounting policy change where we accounted for Software as a Service arrangements. That caused us to expense quite a lot of cost that we would normally have capitalized.
That's something a lot of businesses are going to go through this reporting season, where there are going to be significant P&L hits on businesses for stuff that would normally be capitalized. There has been a little bit of give and take, but yeah, we will certainly be adding a lot more to support the channel build-up that we're currently building going forward. There were both gives and takes in the last year.
Thank you.
All right. We have the next question from Nick Harris at Morgans.
Hey, guys. Thanks for the call, and obviously congratulations. Great year. Three for me. The first one, if you look at sort of the segment level OpEx across all three regions, it declined. Is that largely FX? Can you give us an idea of what was happening on a sort of constant currency underlying basis?
There will be FX impacts, particularly in the United States of that. There's been no changes in kind of the operational setup where we have specifically moved expenditure to sample from region. That's not the case at all. There will have been FX impacts. You could probably back calculate it from the quarterly reports and the FX report that we've published quarterly. I could probably calculate it for you.
That's okay. I can back solve it. I just wanted to understand if you've taken sort of headcount out or it was really currency related.
It's mostly currency related. We haven't taken headcount out or reallocated significantly.
The other thing, Nick, just bear in mind that we didn't have the same travel as previous years in each region, right? Because of COVID and marketing as well. There's an element of each of the regional OpEx as you said, that would've been depressed. You can see that in the total numbers in some of the line items for OpEx that are well down on the previous year. The same impact would flow through into the regions.
Got it. Thanks, Vinny. Thanks, Sean. Just next two questions. Megaport, the Virtual Edge, obviously, you had a great fourth quarter. You've given us a pipeline, which looks really good. I'm not trying to hold you to a number. I'm just trying to get a vague idea of conversion rates. Would I be crazy to think it's reasonable that you might convert a third of those or something?
Look, it's only 21 customers so far that we've reported at the end of June. The pipeline going forward has certainly picked up. That's also attributed to the fact that we started out with one service provider, and now we've got four. Naturally, you'd expect it to increase. There is some of that pipeline will convert quicker because there is an immediate solution and immediate need there, and that's part of that proof of concept that we've been working through with some new customers that seems to be working really well. It's probably early days, but it's probably not unrealistic. Our conversion rate on our existing products outside MVE is circa 40%. Yeah, probably somewhere between 30% and 40% would seem reasonable.
Thanks very much. Just my last question, Jonathan mentioned it as well, nearly half of your ports in the fourth quarter were customers on 12 to 36-month terms, which is obviously great for you. Bit of a change in the business model given it's normally sort of consumption as a service. I'm just trying to understand, great for you, what's driving the customer, the end customer, to sign a 12-month or 36-month agreement?
I think the underlying feedback that we're getting is some of the companies that we've seen taking up are larger companies. As obviously, they're more comfortable with signing terms as per their procurement policies or as their buying policies are in place. It's just easier for them to do it that way. The solutions are bigger and the footprints are bigger and the spend is bigger. As a result, they're just locking in terms the same way they buy. That seems to be the underlying theme that we're picking up from customers as opposed to anything else that's happened. Obviously, when we do talk to customers, we do let them know, yes, it is a consumption of service as you said. We also make them aware that there is a slight discount if they take a term as opposed to going month- to- month.
That's the main reason so far.
It doesn't really take away from the flexibility that our service offers because the VXCs are still flexible in terms of capacity and whether they turn up or on. In many ways, you can think of this as kind of as a mobile phone. You don't change your mobile phone every time you add credit necessarily. Your mobile phone's there and you add credit to it. The same way, the port itself, while we did offer the flexibility of month- to- month, if people want to turn up a new port, it's not quite as straightforward as turning up a VXC, for example. Signing the port on terms is not as inconvenient as it might look.
All right. Thanks, guys.
All right. We have the next question coming from Bob Chen at JP Morgan.
Hey, morning, guys. This is the first one for me. Hey. This is the first one for me.
Sorry about that.
Hey, guys. Can you hear me?
Yeah.
Yeah. There we go. Just revisiting that sort of reinvestment into FY 2022. I think you mentioned earlier that obviously FY 2021, some of the cost category is a little bit depressed because of lack of traveling. Now you're sort of talking about a bit more of an investment for 2022. Can you talk a little bit about what that quantum might look like into 2022 and what the impact would be on sort of your margin expansion between first half and second half?
Yeah. We're looking to hire about, I think in this first half of the year. Well, between this quarter and next quarter, between now and sort of October, November time, we're looking at hiring 40-odd people. That would be the biggest uplift in terms of our OpEx. Then obviously followed by marketing spend to support the Partner Vantage and the partners as we get that up and rolled out, plus supporting the SD-WAN capability and MV Edge. That's the shift change. We just launched it, and as things start to open up within each of the regions, like in the United States and in parts of Europe where people can get out and travel within region, with the exception of Australia, of course.
Once you've been allowed to do that, it then means that we can actually now actively go out and pursue more aggressively the revenue. Part of that is obviously the investment back into it. They're the two constituent components from an OpEx point of view that we'll be focusing on over the next three to four months. Once that's done, that's effectively the heavy lifting done that will springboard us on into the rest of the year. It's not too dissimilar from something we did two years ago with our direct sales team, if you recall that, where we did reinvest back into hiring more people and account management, et cetera. Subsequently, a quarter or two quarters later, we actually got the bounce from that once it all got bedded in.
It's the same similar type process as what we're doing here.
Okay, brilliant. Obviously, launching more into that indirect channel with PartnerVantage. You've also got more customers signing term contracts. Can you talk a little bit about what the longer-term impact that will have on your gross margins going forward?
They'll increase. There's two elements to that, right. Partner commissions is a line item that we include as part of our cost COGS, for want of a better word, which then affects your margin, your gross margin, or your margin after network costs. That may flatten out based on where we're at, and particularly as we switch to more 70%, I said two years down the road, as that switches to more of an indirect, it'll have more of an impact on your gross margin. There'll be a negligible impact. Most of the rest will flow through to your EBITDA. If the gross margin flattens out, your EBITDA margin goes up because we're finished with the heavy lifting and hiring.
Your cost base is going to be more around the commissions that you need to pay to support large volumes of sales as opposed to hiring more and more salespeople, if you understand what I'm trying to say, the dynamic between the two margin profiles. In general, the way we see it is the more products we add to the platform, that's the second thing. This has a bigger influence. The more products we add, they are layering up on top as we talked about the foundation or network that we've already built and the capability within the network to support more. As we layer more products on it, those products have much higher margin.
Once you get the sales engine and the sales machinery in place, all you're doing is selling more products that layer over the existing network, which then contribute to a higher gross margin and ultimately EBITDA over time.
Okay, great. Just the final one for me. Obviously, you provide some details on the innovation pathway with InnovoEdge. It's obviously early days, but can you talk a little bit about how we should think about it from a potential revenue opportunity perspective in the future?
Yeah. Well, initially, yes. There's a kind of a business model behind InnovoEdge, which is one of the milestones that we have as part of the three-year, that the guys will be working towards driving a revenue outcome as part of the milestones. More importantly, this is how we see this as an avenue, as I said earlier, to help us build more products that we can sell across the entire company with then having the sales engine in place. It's allowing us to get deeper with the enterprise customer into what they're actually using their network for to connect to and into their infrastructure and managing all of that. It steps into the world of effectively like licensing as a service effective for what they use inside this.
The VXCs and the network and everything you see that connects the customer to that endpoint, and as they pass through that endpoint, then it would be effectively on a licensing model based on usage and consumption.
All right, great. Thanks for that, guys.
We have the next question coming from Roger Samuel at Jefferies.
Hi guys. I've got two questions. First one just on Partner Vantage. Can you tell us what is the commission rate and what sort of incentives have you put in place to ensure that they are driven to sell the Megaport products?
Yeah. There's two elements to this one, Roger. The first one is the commission. The partners that we're bringing on here all fall within the same type of commission structure that we've had before. It's a way of having a platform where it's easier for them to do business, and we can actually have three or four large partners that end up having hundreds of semi-partners underneath them to sell. The structure is very similar to where it ranges from anywhere from 15% up to 21%, is the range based on small volume to large volume. Right? That's no different from what we're seeing today. This just allows us to do it a lot more efficiently and creating a world-class program to put that together to make it easier for all of these partners to actually sell. That's no different.
It's just a mechanism how we do it. The MDF that we referred to is effectively market development funds. Some of that can come from end-user providers like SD-WAN providers. Some of it will come from us. This is where we put incentives in to have a push on a product. Let's say it could be for a quarter or a month or whatever that you normally would do. To help them to have a push on a certain product line, or it could be a certain country or region. That's typically how these programs are built and set up. Think of it as marketing spend.
Okay. My second question is just on MVE. You mentioned that the revenue per customer is about AUD 5,000 a month. Does this include the revenue share with your SD-WAN partners? What's the net revenue to Megaport?
Yeah. There's no revenue share with the MVE partner. Those are all direct customers.
Yeah.
That's the one that.
Okay, all right.
That's not just MVE revenue, that's the revenue that we're currently getting from customers with MVEs. In the same way we talk about the MRR for different customers for MCR. That's the metric.
Yeah. Because they're buying a few VXC as well, I imagine.
Correct.
Yep. Okay. Thank you. Thanks, guys.
We have the next question from Paul Mason.
Hey, guys. Just on InnovoEdge. Firstly, I just wanted to check that I understand sort of where it sits in the stack. If I compared it to, say, VMware Tanzu for container orchestration or alternatively something like vManage for SD-WAN management. It sort of looks like it's touching both sorts of capabilities. Is that how it's placed and if so, is it positioned to actually compete against those things, or is it sort of positioned more as a complement?
More the latter. It's complement. This is where you have a single pane of glass where you can actually have many services, and you want to be able to actually manage it through one source. It allows you to look at your, say, compute with Google and your compute that you have with Azure and some bare metal that you've got with somebody else, plus your own infrastructure. Run applications and monitor not just the network, but everything that goes past the network and where the network connects to. It also has elements of predictability. It's able to tell you when certain services, or servers, or compute are reaching a maximum. It's able to predict that you'll need to upgrade or increase your capacity for compute. The AI component allows for that predictability. There's a lot in it.
The best way I've explained it, the way we look at it is it allows us the capability to be neutral. Using the automation for the end customer to pull everything together in one place. With the foundation being the underlying network that we've already built, which with over 220 cloud on-ramps across 23 countries, is one of the things that's underpinning that usage and the ability to have service providers using white label solutions like that for their business and for their customers. It's more in that vein.
Okay. Just in terms of the sort of revenue model that you guys are looking at. Inferred in the release, it sounds like it doesn't have much revenue at the moment. This is maybe a business plan as opposed to pre- revenue model.
It's pre-revenue, Paul, yeah.
You've described it as a SaaS business, but outside of, say, software subscription revenue streams, would you guys be able to function effectively as a channel partner for AWS or an Azure and Google Cloud through customers ordering that service through the pane? Would you be eligible for partner revenues from that sort of revenue stream with it, or it doesn't work like that?
Really what you're talking about a customer who's already got an AWS account or another cloud provider account. What you're doing is you're actually using one login to link all of those together so you can see everything in one place. Just to answer the first part of it, yes, it is pre-revenue, a lot of this is about these are a very smart bunch of people, as I said, we were very excited when we sat down and started to work through certain solutions that we were looking at for some of our customers. It became fairly evident that this was kind of critical to the way forward. Hence we moved on it quickly and that's where it's at. It's definitely pre-revenue.
They do have a business case, and they do have a model in terms of how it will all work, and it's quite adjacent, as I said, to what we're doing. That's part of the earn-out piece that we have is to prove out certainly the revenue model that's there. For us initially, this is really about the development capability that we have to expedite products across the platform.
Yeah. I was more just interested in sort of the revenue model plans as opposed to.
Yeah.
I've no problems with the pre-revenue part of it.
Yeah. Well, the revenue model is more like a license. As you stand up more and more services, so you connect to more things as you go through the cloud, then there's an instance basis for that and sort of an umbrella license type scenario, and then a usage-based component after that.
Okay, great. Just one last one from me. Just in terms of your network capacity plans, I don't think you guys are completely rolled out on 100 GB and now moving into 400 GB. In terms of thinking about your network capacity evolution, are you expecting to get 100 GB everywhere in the next sort of 12 months or two years as part of moving up into 400 GB in some markets as well? Is it just there's certain key markets, say like Sydney, for example, which is a big cloud market, where you're going to keep growing network capacity, but other markets are going to sort of cap out at 10 GB. What's sort of the plan there?
Yeah. You're right there. We started out with the major markets across the network where we saw higher utilization, where we're using over going 30, 40 GB traffic. Those ones were all automatically on the top list to go to 100 GB. A lot of them are already done in the year just gone. The second part to that is the 400 GB is literally think of it as the backbone that we're upgrading to. Devices are coming available to us in August, actually, the first slot. We'll start with those. Once we put them through test labs and everything, they'll get rolled out and they'll follow that same pattern. The ones that haven't yet been upgraded to 100 GB, they're being monitored based on the number of traffic. As it hits certain thresholds, we upgrade them.
Instead of going from 20 GB to 40 GB, we'll just go from 20 GB to 100 GB.
Okay. Thanks a lot, guys.
We have the next question from Lucy Huang at Bank of America.
Hey, Vinny. Hey, Sean. I just have one question. In terms of the MVE opportunity where I think you said you've landed the year with 129 in the pipeline, I'm just wondering if you can give us some color as to out of that 129, how many are new customers to the Megaport platform and maybe what proportion are existing? Are most of them coming from the Cisco partnership or some of the other SD-WAN partners that you signed on recently? Thanks.
Yeah. The majority are new customers. There's only been, I would say, 20 rule applies here. There's probably 20% coming from existing customers. The rest of it is new. Part of that pipeline is between the top two existing SD-WAN providers that are live, which is Cisco and Fortinet. They've come directly from them. While we're not open live yet in Cisco, they can only get provision through Megaport at the moment. We expect that number to increase as the Cisco machine goes live later this month and onwards. The Fortinet business is all 100% channel. Its channel partners are the ones who are being redirected to us about this product offering.
Wonderful. It is very early days as well, but just wondering, have there been any kind of cross-sell opportunities across some of the 20-ish new customers you signed on with MVE? Have you been able to cross-sell some extra Megaport services or is it just too early because they're still rolling out?
Sorry, what was the first part of that?
I think you're now billing for about 20 MVE customers. Just wondering, has there been any kind of cross-sell opportunities so far with those new customers to the platform? Is it still too early in that phase?
It's a little early, but yes, there is. There's been two or three customers that we've spoken to about MVE and are now asking about direct ports and VXCs in data centers like our core products, effectively connecting to the cloud. Yes, there is. I think some of it's got to do with starting out with an SD-WAN because multiple locations, then realizing that it was that easy to do, then that these are all the other services that we have. They're realizing that this would be a better way for them to build out their network using Megaport or devices they've already got. There's been several conversations around that, which is good because it allows the new customer to come in and take up more services.
Like I said, there's only been 20 up to the end of June, so probably by the end of this half year will I be in a better position to know or certainly at the end of this quarter as well, we'll be able to see how that conversion goes.
Wonderful. Thanks, guys.
We have the next question from Ross Barrows at Wilsons Advisory.
Great. Thanks. Can you guys hear me okay?
Yeah. Hey, Ross.
Wonderful. Just a question. I just wanted to follow up on the customers that were moving from month- to- month to contract terms. I think you made some comments around that before, but I don't think you addressed pricing. Is it fair to say that moving to a 12, 24 or 36-month term would improve pricing, I guess, for those customers doing so? Just any comments you can make just around the materiality of those customers. Sounds like they're bigger customers than smaller, but what proportion, I guess, by value are you kind of seeing of that customer base finding that appealing?
Well, in last quarter, I think it was nearly 50% of new customers coming on were taking terms. To be honest, we saw most of that actually happen in North America and Europe. Probably Europe more so than anywhere else first. There is a different pricing. In the pricing as part of the port, when you log on, most people click on the AUD 500 and it's month- to- month, but you can get up to a 10%-15% discount if you pick either between a one and a three-year term on the port. Then the VXCs are as normal after that. It's been that way all along. It's just that we've seen different types of profiles of customers, like I said, based on their procurement policies or whatever they're doing, they prefer to take terms rather than not. That's kind of how Europe works, too.
They like terms and like to lock things in and it's just a different buying mechanism.
You mentioned that's for new customers. What's the proportion of existing customers looking to do the same or have done the same?
Not much. To be honest, there hasn't been much movement. It's mainly new customers where we're seeing that. All those new ports that we saw coming on the network last quarter and those customers and those ports have all decided to be termed. It's really negligible on the existing.
Just one other question. In the use case slide that you had when you spoke about the customer sitting around $15,000 at the moment, but obviously has the opportunity to expand that over time. I know every case will be different, obviously, but just in terms of that customer, what's the potential upside to a customer like that has that many branches that could expand over time, hypothetically, of course?
Quadruple, easily.
Yeah.
In that particular customer case.
Great. Thank you.
All right. We have the final question in the queue. Back to Tim Plumbe at UBS.
Hi, Vinny. Just one last question from me. Just thinking about expansion into new data centers over FY 2022. How are you thinking about that across your existing geography? Maybe can you touch on any potential new geographies that you're thinking about? Pre-COVID, Brazil was on the cards. Obviously, that got put on the back burner. How are you thinking about new areas going forward?
We're thinking about two countries. I'd rather not say, to be honest with you. I'm tipping my hand to any potential competition or whatever's out there. Yes, one would be Latin America region and one potentially Europe. It's a toss-up between Europe and over this side of the world. In terms of the rollout of sites, Sean, I think we were planning for similar numbers to the year that we just had, the 45 sites across the existing three regions. If we do a new market, that would be additional on top of that.
Fantastic. Thanks, guys.
All right. With that, there are no more questions in the queue. Back to you, Vincent and Sean.
Okay. Thank you very much, everybody, for joining us on the earnings call. I know there's quite a lot of meetings, either group sessions or one-on-one sessions between now and Friday. Looking forward to catching up with everybody. Thanks again. Right. We'll leave it at that. Thank you.
That's all.