Megaport’s Growth Hinges on Acquisition Integration and Currency Risks

Strong Growth Momentum

Megaport Limited has delivered a compelling first half for FY26, reporting a 49% year-on-year increase in Annual Recurring Revenue (ARR) to A$338 million. This growth reflects a combination of organic expansion within its core network services and the strategic acquisitions of Latitude.sh, a compute-as-a-service provider, and Extreme IX, a leading Indian internet exchange operator.

The company’s core Megaport Network ARR climbed to A$263.4 million, up 16% year-on-year, supported by a 57% increase in net revenue retention by customer logo and a growing customer lifetime now averaging 13 years. These metrics underscore Megaport’s success in deepening relationships with existing customers while attracting new logos at a record pace.

Financial Performance and Guidance

EBITDA rose 28% to A$35.3 million, maintaining a 26% margin despite increased investments in go-to-market capabilities, product innovation, and network expansion. Gross margins improved slightly to 72%, reflecting operational leverage and disciplined cost management.

Reflecting the strong H1 performance, Megaport raised the lower end of its FY26 revenue guidance for the Megaport Network to A$264–270 million and provided combined group guidance of A$302–317 million. Capital expenditure is expected to be 21–24% of revenue, including significant investments in new data centre deployments and the Indian market expansion.

Strategic Acquisitions and Market Expansion

The acquisitions of Latitude.sh and Extreme IX have broadened Megaport’s service offering and geographic reach. Latitude.sh contributes A$68 million ARR with a global footprint across 22 locations, delivering high-performance CPU and GPU compute services. Extreme IX adds A$7 million ARR and access to 40 data centres in India’s rapidly growing cloud market.

Megaport’s expansion into India, supported by a ~A$43 million investment, positions the company to capitalise on the country’s accelerating cloud adoption and digital infrastructure demand. The company is retrofitting acquired sites with Megaport-grade infrastructure to offer its full suite of services.

Innovation and AI as Growth Drivers

Product innovation remains a key growth pillar, with over 30% of ARR growth in H1 FY26 driven by new offerings such as enterprise-grade security features, expanded cloud on-ramps, and enhanced network capacity including 400G ports. Megaport emphasises its role as a physical infrastructure provider underpinning AI workloads, highlighting the increasing data movement and compute demand driven by AI as a strong tailwind for its business.

With a global network spanning 30 countries, over 1,000 data centres, and extensive physical compute resources, Megaport is well positioned to serve the evolving needs of cloud, enterprise, and AI-driven customers.

Outlook

Megaport’s strategic focus on building, innovating, and investing continues to underpin its growth trajectory. The company’s strong cash position, bolstered by a recent A$218 million capital raise, supports ongoing expansion and integration efforts. While foreign exchange fluctuations pose some risk to guidance, Megaport’s diversified global footprint and expanding product suite provide a solid foundation for sustained growth and profitability.