Megaport’s Latitude.sh has secured a $35.4 million three-year compute and storage deal, adding nearly $12 million in annual recurring revenue and underpinning the company’s growth in AI-driven infrastructure.
- Latitude.sh wins $35.4M 3-year compute and storage contract
- Annual Recurring Revenue for compute rises 31% to USD 58.7M
- Megaport Network ARR grows 23% year-on-year on constant currency basis
- Contract triggers $17.2M incremental capital expenditure on CPU servers
- FY26 revenue and EBITDA guidance reaffirmed with potential capex increase
Latitude.sh Secures Major AI-Driven Compute Deal
Megaport Limited’s subsidiary Latitude.sh has clinched a significant new customer contract worth approximately USD 25.1 million (AUD 35.4 million) over three years. This deal, signed with a US-based high-growth technology firm operating in developer tooling and supported by institutional capital, adds around USD 8.4 million (AUD 11.8 million) in annual recurring revenue (ARR) to Latitude.sh’s on-demand compute and storage platform.
The contract marks a strategic win in a fiercely competitive market, reflecting the surging demand for compute resources driven by AI applications. Megaport CEO Michael Reid highlighted the opportunity, noting that CPUs remain a critical component powering AI infrastructure and that the company’s automated platform is well positioned to capture this accelerating demand.
Strong Growth Momentum in Compute and Network ARR
Latitude.sh’s compute ARR, excluding the new contract, surged 31% to USD 58.7 million (AUD 82.7 million) as of late April 2026, compared to USD 45.0 million (AUD 68.0 million) at the end of 2025. This growth reflects a shift toward more contracted revenue versus month-to-month business, indicating stronger revenue predictability for the platform.
Meanwhile, Megaport’s core Network ARR, including its Indian operations, grew 23% on a constant currency basis to AUD 272.0 million by March 31, 2026. Excluding India, Network ARR rose 20%, underscoring robust organic growth across its global footprint. This follows the company’s earlier accelerated expansion through acquisitions, including Latitude.sh, which contributed to a 49% ARR jump reported in February 2026 Megaport Surges 49% ARR.
Capital Investment and Deployment Plans
To support the new compute contract, Megaport plans to invest approximately USD 12.2 million (AUD 17.2 million) in additional CPU server hardware, with a targeted payback period of about 24 months. The capital expenditure will be phased, with hardware deliveries expected in FY26 and deployment commencing in the first half of FY27 aligned with customer requirements.
Notably, these investments form part of the USD 86.0 million capital expenditure commitment Megaport made during the Latitude.sh acquisition for calendar years 2026 and 2027. Any equipment delivered before June 30, 2026, could increase Megaport’s FY26 Group Capex guidance by up to AUD 17.2 million, which currently stands between AUD 90 million and AUD 100 million.
Guidance Reaffirmed Amid Strategic Growth
Megaport has reaffirmed its FY26 revenue and EBITDA guidance for the combined group, maintaining a steady outlook despite the sizeable new contract and associated capital deployment. The company’s disciplined capital allocation approach emphasizes investing alongside committed customer demand, ensuring sustainable growth without compromising financial discipline.
While the identity of the new customer remains confidential for competitive reasons, the deal underscores Megaport’s strategic positioning at the intersection of cloud, network, and compute infrastructure, particularly as AI workloads continue to drive demand for flexible, high-performance platforms.
Bottom Line?
Megaport’s compute contract win and solid ARR growth highlight its foothold in AI-driven infrastructure, but execution of capital deployment and contract delivery will be key to sustaining momentum.
Questions in the middle?
- How will Megaport balance capital expenditure with maintaining EBITDA margins amid rapid growth?
- Will Latitude.sh secure further large-scale contracts to sustain its ARR growth trajectory?
- How might exchange rate fluctuations impact Megaport’s financial results given USD-denominated contracts?