Megaport secures ~$1B in new AI infrastructure contracts
Megaport Limited (ASX: MP1) has announced three new AI infrastructure contracts through its wholly owned subsidiary, Latitude.sh, with a combined Total Contract Value (TCV) of approximately US$685.0M (A$978.6M, translated at A$0.70:USD as at 28 September 2026). The contracts cover GPU and CPU compute, network, and storage for AI applications and inference workloads, with a weighted average contract term of just over four years.
The customer composition across the three agreements is as follows:
- Two agreements with US-based technology providers supported by institutional shareholders, one of which is an existing Megaport customer and one a new customer
- One agreement with a new customer that is a publicly-listed enterprise and the end-user of its own AI workloads
- Customer identities have not been disclosed for commercial reasons
Each contract provides committed revenue over its fixed term, irrespective of customer usage. The anticipated returns from these agreements are consistent with or better than previously announced strategic deals, with regard to counterparty credit quality, contract terms, and payback.
Combined with earlier announcements, these three contracts bring the total strategic contract TCV announced since April 2026 to approximately A$2.3 billion.
The contracted revenue model has been consistent across every Latitude.sh agreement since the platform strategy was formalised, with the AUD$254M in committed AI infrastructure deals announced in May 2026 establishing the same fixed-term, usage-independent structure that now underpins the A$2.3B cumulative TCV.
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What is Annual Recurring Revenue and why does it matter for Megaport investors?
Annual Recurring Revenue (ARR) is the annualised value of contracted recurring revenue, calculated as Monthly Recurring Revenue multiplied by 12, and excludes any non-recurring or one-off items. For infrastructure-as-a-service businesses, ARR is a preferred performance metric because it signals revenue visibility, contract quality, and growth trajectory in a way that single-period revenue figures cannot.
Megaport reports ARR across two distinct streams. Network ARR represents the recurring revenue base of its software-defined networking business. Compute ARR reflects the AI infrastructure business operated through Latitude.sh, which Megaport acquired.
Today’s announcement pushes Group pro forma ARR to approximately A$1.1B, with more than 85% of that ARR sourced from North America. This pro forma figure is inclusive of Network ARR as at 31 August 2026, Compute ARR as at 22 September 2026, and unbilled committed ARR for the strategic contracts.
ARR, prepayments, and the path to $650M+ annualised EBITDA
The three new contracts are expected to contribute approximately US$162.7M (A$232.4M) in ARR, ramping through Q3 FY27 and reaching full run-rate by Q4 FY27. Key contract metrics are summarised below:
Key Contract Metrics
- Combined TCV: ~A$978.6M
- Contracted ARR contribution: ~A$232.4M
- Customer prepayments (today’s contracts): ~A$322.6M
- Capital expenditure required: ~US$350.2M (A$500.3M), primarily high-performance NVIDIA GPU, compute, network, and storage hardware
- Group pro forma ARR (post-announcement): ~A$1.1B
- Annualised EBITDA run rate (once all strategic contracts billing): over A$650.0M (excludes any contribution from the GPU pool)
GPUs already ordered for Megaport’s on-demand GPU pool are being allocated to the new contracts. Replenishment capex is approximately US$252.0M (A$360.0M), which is expected to be procured and deployed by Q4 FY27, with GPU pool revenue anticipated to ramp in H1 FY28. The EBITDA payback target for the GPU pool remains at 16–22 months.
Funding confirmed — A$362M pro forma liquidity
Megaport has recently executed documentation for its previously announced debt facility and has upsized total capacity to A$845M, provided by a syndicate of leading domestic and international banks. The company is fully funded for all capital expenditure in the updated FY27 Group guidance, including both the strategic contracts and the GPU pool replenishment, with approximately A$362.2M in pro forma liquidity.
Pro forma liquidity is inclusive of cash at bank as at 30 June, proceeds of the retail entitlement offer, the senior secured debt facility, and customer prepayments for strategic contracts, less FY27 Group capex net of prepayments from FY26. Total available liquidity remains subject to agreed terms and conditions of debt drawdown under existing facilities, including achievement of revenue milestones and maintenance of covenant limits.
FY27 guidance upgraded across revenue, margin, and capex
Megaport has upgraded its FY27 Group guidance as a result of the three new compute contracts, earlier-than-expected delivery and deployment of infrastructure for previously announced strategic contracts, and strong network trading performance. The table below summarises the changes:
| Metric | Previous Guidance | Updated Guidance | |
|---|---|---|---|
| Network Revenue | A$315M – A$325M | A$325M – A$335M | |
| Compute Revenue | A$305M – A$405M | A$395M – A$475M | |
| Group Revenue | A$620M – A$730M | A$720M – A$810M | |
| Group EBITDA Margin | 38% – 40% | 42% – 44% | |
| Group Capex | A$1.28B – A$1.38B | A$1.78B – A$1.88B | +A$500.0M reflecting new contract equipment costs of A$500.3M |
The increase in the bottom end of Compute Revenue guidance reflects both the trading update and the contribution from the new compute contracts. The increase in the top end of Compute Revenue guidance reflects only the contribution from the new compute contracts.
Trading update confirms strong momentum
The trading update accompanying today’s announcement reported the following metrics:
- Group ARR currently billing over A$500M
- Network ARR (August 2026): A$302.6M, up 29% on a constant currency basis vs the prior corresponding period (26% excluding India)
- Network NRR (August 2026): 116%, up 6 percentage points vs the prior corresponding period
- Compute ARR (22 September 2026): A$201.4M (US$141.0M), up 90% since 30 June 2026 and up 227% since acquisition (from US$43.1M / A$61.6M at acquisition)
- Strategic contract ARR within Compute: increased to US$67.4M (A$96.3M) from US$10.4M (A$14.9M) at 30 June 2026
Growth in Compute ARR has been driven by earlier-than-expected arrival and deployment of compute infrastructure for previously announced strategic contracts.
Compute ARR growth since 30 June 2026 has been heavily front-loaded by earlier deployments, with the AUD$506.2M AI infrastructure contracts announced in August 2026 contributing the bulk of the US$67.4M in strategic contract ARR now billing within Compute.
CEO commentary — “We’re just getting started”
Michael Reid, CEO, Megaport
“Since April, we’ve announced approximately A$2.3 billion in total strategic contract value… Together with our existing business, these contracts support approximately A$1.1 billion in Group ARR once deployed.
Earlier deployments, new contracts, and Network growth underpin our upgraded FY27 revenue and EBITDA margin guidance. Customers have committed approximately A$323 million in prepayments on today’s contracts, supporting the infrastructure investment behind future growth.
We’re broadening our customer base, replenishing our GPU pool, and expanding our AI inference platform. Our progress has been extraordinary, and we remain focused on delivery and disciplined investment. We’re just getting started.”
The customer composition across today’s contracts also reflects the dual-market positioning of Latitude.sh, which now serves both inference providers and enterprise customers with in-house compute requirements. The addition of a publicly-listed enterprise end-user alongside the two US-based technology providers continues Megaport’s stated strategy of diversifying its customer base and reducing overall customer concentration risk.
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