BRISBANE, May 15, 2026, 08:04 AEST
Megaport Ltd shares closed 27.72% higher at A$12.58 on Thursday after the Australian network infrastructure company said its Latitude.sh unit had secured three fixed-term compute, network and storage contracts worth A$254 million with two U.S. technology providers.
The contracts matter because they give Megaport’s newer compute business a firm revenue base after its push beyond cloud connectivity into AI infrastructure. Megaport said the deals would add about A$90.6 million in annualised recurring revenue, or ARR, a measure of recurring revenue expected over 12 months, once hardware is deployed and operational by the end of the first half of fiscal 2027.
That is not small beside the company’s recent numbers. Megaport reported A$134.9 million in revenue for the first half of FY26, while group ARR rose 49% year on year to A$338 million after acquisitions, a February filing showed.
The customers were not named. Megaport described both as U.S.-based technology providers running AI applications and inference workloads, meaning the use of trained AI models to generate answers or outputs. One is already a Megaport customer, and about 90% of the total contract value is tied to 36-month initial terms, with the remaining contract set for 24 months, the filing showed.
Chief Executive Michael Reid said Megaport was becoming an “essential platform for powering the applications of tomorrow” as AI workloads move toward inference and edge computing, where processing happens closer to users. He also called Megaport a “one-stop platform for the AI ecosystem.” ASX Announcements
The win comes with a large hardware bill. Megaport said the contracts require about A$140.3 million in incremental capital expenditure, mainly for high-performance Nvidia GPU, compute, network and storage equipment. GPUs, or graphics-processing units, are chips widely used to run AI workloads.
Megaport said it would fund that spend with existing cash and capacity under a newly upsized A$150 million debt facility. It put pro-forma liquidity, including these contracts and a separate April compute deal, at about A$199.1 million as of Dec. 31.
But execution risk has grown. The revenue is expected to come in phases as hardware is delivered and switched on, and Megaport is taking more customer concentration and equipment risk than in its older network-only business. If delivery slips, if demand from the two customers changes, or if the hardware cannot be redeployed at good returns after the contracts end, the payback could look less clean.
Megaport reaffirmed its FY26 revenue and EBITDA guidance for the combined group. EBITDA means earnings before interest, tax, depreciation and amortisation. In February, it guided to revenue of A$302 million to A$317 million, EBITDA of 21% to 24% of revenue, and capex of A$90 million to A$100 million, before the extra spend tied to the new contracts and the April deal.
UBS analyst Tim Plume, cited by Capital Brief, kept a buy rating and A$14.65 target price, calling the announcement a “significant win for the business.” He said the contracts would “require upgrades” to consensus expectations for group EBITDA, with preliminary analysis pointing to upside for FY27 forecasts. Capital Brief
The deal also helps justify Megaport’s November move to buy Latitude.sh, a compute-as-a-service business, for US$150 million upfront and up to US$150 million in contingent consideration. Megaport pitched that acquisition as a way to combine network automation with high-performance compute for cloud, AI and data-centre workloads.
Competition is not standing still. Equinix markets Fabric as an on-demand private connectivity platform for cloud and AI infrastructure, while PacketFabric offers cloud connectivity through a software-defined network-as-a-service platform. Megaport’s newer pitch is to bind that network layer with Latitude.sh compute capacity, rather than sell connectivity alone.
Even after Thursday’s rally, the stock remains below its 52-week high of A$17.87, MarketScreener data showed. That gap leaves room for a rerating, but it also shows investors have not fully erased earlier doubts over growth, capital intensity and the timing of earnings from the compute strategy.
Megaport said it would give more detail on both network and compute performance when it reports full-year results in August.
