Megaport secures $506.2M in new AI infrastructure contracts
Megaport (ASX: MP1) has secured a new portfolio of three major infrastructure contracts through its wholly owned subsidiary, Latitude.sh. The agreements cover GPU and CPU compute, network, and storage capacity for multiple customers, expanding the company’s role in supporting AI applications and inference workloads.
Each contract provides committed revenue over its fixed term, independent of customer usage. The portfolio represents a combined total contract value (TCV) of approximately USD$359.4M (AUD$506.2M), equating to around USD$91.7M (AUD$129.2M) in Annualised Recurring Revenue (ARR).
The customers are described as US-based technology providers supported by institutional shareholders. Their identity has not been disclosed for competitive reasons.
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Breaking down the three contracts
The new contracts continue Megaport’s disciplined approach to deploying capital into AI infrastructure. All three meet the company’s internal return hurdles, including counterparty credit quality, contract terms and tenor, and payback, with returns on investment described as consistent with previously announced strategic deals.
The earlier Latitude.sh contract portfolio, announced in May 2026, established the same structural template: fixed-term committed revenue, incremental capex funded through existing cash and a debt facility, and hardware assets rolling into the on-demand compute pool at contract expiry.
The USD$91.7M (AUD$129.2M) in ARR will be recognised incrementally as hardware is deployed and becomes operational. Megaport anticipates the full ARR contribution will be added on a run-rate basis by the end of Q3 FY27.
Delivering the contracts requires approximately USD$207.2M (AUD$291.8M) in incremental capital expenditure, primarily for high-performance NVIDIA GPU, compute, network and storage hardware. This has already been incorporated into the company’s FY27 guidance.
| Metric | USD | AUD | Notes |
|---|---|---|---|
| Total Contract Value | $359.4M | $506.2M | Irrespective of customer usage |
| Annualised Recurring Revenue | $91.7M | $129.2M | Full run-rate by end Q3 FY27 |
| Incremental Capex | $207.2M | $291.8M | NVIDIA GPU, compute, network, storage — in FY27 guidance |
Why committed AI infrastructure revenue matters
For investors less familiar with the technology, some context helps. AI inference workloads refer to the computing power required to run trained artificial intelligence models when they generate outputs, such as answering queries or making predictions. This work relies heavily on GPU compute (graphics processing units optimised for parallel calculations) and CPU compute (general-purpose processors), supported by network and storage capacity.
The distinguishing feature of these contracts is that revenue is committed over a fixed term, regardless of how much the customer actually uses the infrastructure.
There is also an asset lifecycle dimension worth noting. At the end of each contract term, the underlying hardware does not become idle. Megaport has outlined how these assets are redeployed to continue generating revenue:
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Assets are moved into the Latitude.sh compute pool once a contract term concludes.
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They remain available to generate revenue for their remaining asset life.
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Revenue can come either through a contract renewal by the existing customer, or via Megaport’s on-demand platform.
The combined effect is a layered model: committed contracts deliver near-term revenue certainty, while reusable assets extend the earning potential of each hardware investment beyond the initial term.
Fully funded: cash plus new AUD$825M debt facility
Megaport will fund the USD$207.2M (AUD$291.8M) in incremental capital expenditure from available liquidity. As at 30 June 2026, the company reported cash at bank of AUD$435.4M.
Alongside the contract announcement, Megaport disclosed a newly established AUD$825.0M debt facility from a syndicate of leading domestic and international banks. This adds a further source of committed funding to support the company’s infrastructure expansion.
On a pro forma basis, Megaport stated it is fully funded for all committed capital expenditure resulting from strategic contracts announced since 27 April 2026, in addition to the potential acquisition disclosed in its results announcement. The company noted it will continue to execute a funding strategy that diversifies its sources and optimises against the underlying assets.
Investors exploring the capital structure behind this expansion will find our full explainer on the June entitlement offer and GPU Pool covers the AUD$827.3M raise, the AUD$350M on-demand GPU Pool strategy, and how group pro forma ARR reached AUD$662.9M following all strategic contracts announced to that point.
Hardware orders for the compute equipment have already been placed. Delivery is expected in Q2 FY27, with deployment occurring on a phased basis as equipment arrives.
Update on June strategic contracts
Megaport also provided an update on two strategic customer contracts announced on 3 June 2026. Due to supply constraints, the company was unable to secure equipment meeting the required technical specifications for certain components of those contracts.
Rather than proceeding on the original terms, Megaport agreed alternative arrangements with the existing customers and entered into two new contracts to provide higher-grade GPUs. The company described these arrangements as delivering an improved commercial outcome.
The net effect is an aggregate increase of approximately USD$87.1M (AUD$122.7M) in TCV compared with the amounts previously announced, with no material change in aggregate ARR or capital expenditure requirements.
Combined with today’s new contracts, this brings the TCV for all strategic contracts announced since 27 April 2026 to approximately USD$0.9B (AUD$1.3B).
The bigger picture for investors
The latest portfolio reinforces Megaport’s positioning in AI infrastructure, built on disciplined capital deployment tested against internal return hurdles, committed revenue streams, and a funding base that the company describes as fully funded on a pro forma basis. The cumulative strategic TCV of roughly AUD$1.3B since April 2026 provides a clear marker of the pace at which the business is scaling.
From the announcement
“On a pro forma basis, Megaport is fully funded for all committed capital expenditure resulting from all strategic contracts announced since 27 April 2026, in addition to the potential acquisition disclosed in today’s results announcement.”
Two near-term milestones stand out for investors tracking progress. Hardware delivery is expected in Q2 FY27, followed by the full ARR run-rate contribution anticipated by the end of Q3 FY27.
The combination of committed, usage-independent revenue and reusable assets that continue to earn beyond their initial contract terms points to a model designed for layered, durable revenue as the company expands its AI infrastructure footprint.
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