Megaport’s Latitude.sh subsidiary has secured three major AI infrastructure contracts worth USD 183 million, backed by a USD 101 million capital expenditure commitment, reinforcing its role in the global AI compute ecosystem.
- Three fixed-term contracts total USD 182.9M (AUD 254.0M)
- Annual recurring revenue of USD 65.2M (AUD 90.6M) expected
- USD 101M (AUD 140.3M) capex primarily on NVIDIA hardware
- Contracts span 24 to 36 months with strong payback
- Funding via cash reserves and upsized AUD 150M debt facility
Megaport Strengthens AI Compute Footprint with Major Contracts
Megaport Limited (ASX:MP1) has turbocharged its AI infrastructure ambitions by securing three substantial contracts through its wholly owned subsidiary Latitude.sh. These deals, spanning GPU, CPU, network, and storage infrastructure, collectively lock in a total contract value (TCV) of approximately USD 182.9 million (AUD 254.0 million) with two US-based technology companies. The contracts underpin an annual recurring revenue (ARR) of about USD 65.2 million (AUD 90.6 million), marking a significant boost to Megaport’s revenue profile.
The contracts are fixed-term and binding, with two spanning 36 months and one covering 24 months. Importantly, these agreements guarantee committed revenue irrespective of customer usage, delivering predictable cash flow and aligning with Megaport’s disciplined capital deployment strategy. This move cements Megaport’s role as a critical infrastructure partner amid the accelerating AI ecosystem, especially as demand shifts from foundational AI models to inference and edge computing.
Capital Investment Focused on High-Performance NVIDIA Hardware
To fulfil these contracts, Megaport plans to invest approximately USD 101 million (AUD 140.3 million) in incremental capital expenditure, primarily on high-performance NVIDIA GPUs and complementary compute, network, and storage hardware. Orders for this equipment are already placed, with delivery expected in late FY26 or early FY27 and phased deployment commencing in the first half of FY27. The company anticipates an attractive payback period of roughly two years on this capex.
These investments satisfy the USD 86 million capex commitment agreed upon during the Latitude.sh acquisition, with no changes to the timing of associated performance or integration payments. After the contract terms conclude, the hardware will remain within Latitude.sh’s compute pool, available either for contract renewals or as part of Megaport’s on-demand platform, extending asset utilisation and revenue potential.
Funding Strategy and Liquidity Position
Megaport will fund the USD 101 million capex through a combination of existing cash reserves and a newly upsized AUD 150 million debt facility from a leading global financial institution. Pro-forma liquidity as of 31 December 2025, factoring in these contracts and a recent strategic deal, stood at approximately AUD 199.1 million. This robust balance sheet positions Megaport well to capitalise on the surging demand for AI infrastructure without immediate pressure on equity markets.
The contracts complement a previous Latitude.sh win, a $35.4 million compute deal announced in April 2026, which added nearly $12 million in ARR and triggered $17.2 million in incremental capital expenditure. This sequence of wins highlights Latitude.sh’s growing contribution to Megaport’s overall growth and the expanding footprint in AI-driven infrastructure Latitude.sh wins $35.4M contract.
Global Automated Infrastructure Platform Enables Scale
Megaport’s strategy leverages its global automated infrastructure platform, which combines its foundational network automation with Latitude.sh’s compute and storage capabilities. Spanning more than 1,100 data centre locations worldwide, this platform offers ultra-low latency and rapid deployment, critical for hyperscalers and enterprises demanding distributed compute at scale near end users.
CEO Michael Reid emphasised the company’s positioning at an industry inflection point, noting that Megaport is becoming indispensable for powering AI applications with its globally distributed, software-enabled infrastructure. This vision aligns with the company’s broader growth trajectory, which has seen a 49% increase in Annual Recurring Revenue to A$338 million in H1 FY26, driven by organic growth and strategic acquisitions including Latitude.sh Megaport Surges 49% ARR.
Guidance Maintained Amid Potential Capex Upside
Megaport reaffirmed its FY26 revenue and EBITDA guidance, with group capex guidance remaining between AUD 90 million and 100 million, excluding the new contracts and a recent strategic deal. However, if the equipment for these contracts is delivered before 30 June 2026, capex could increase by up to AUD 140.3 million, reflecting the substantial upfront investment required to support these agreements.
The company plans to provide further financial details, including network and compute performance, with its full-year results in August 2026. The undisclosed customers behind these contracts are US-based technology firms with institutional backing, underscoring the strategic nature of these partnerships without revealing competitive details.
Bottom Line?
Megaport’s new contracts significantly deepen its AI infrastructure footprint, but delivering on the ambitious capex plan and converting ARR will be critical to watch over the next 12 months.
Questions in the middle?
- How will Megaport manage execution risks around the large capital expenditure rollout?
- Will these contracts lead to further upsell or renewals beyond the initial terms?
- How might foreign exchange fluctuations impact the reported revenue and costs?