Megaport has landed four major AI infrastructure contracts worth A$459 million, fueling its plan to build a globally-distributed AI inference cloud supported by a new A$350 million GPU Pool. The company is raising A$827 million through a fully underwritten entitlement offer to fund these initiatives and future growth.
- Four AI contracts with A$459M total contract value
- A$350M investment to create on-demand GPU Pool
- Compute division pro forma ARR jumps to A$385M
- Network ARR up 25% year-on-year to A$278M
- A$827M entitlement offer launched at 10.9% discount
Megaport's AI Infrastructure Push Backed by Major Contracts
Megaport Limited (ASX:MP1) is doubling down on the AI infrastructure race with four new contracts valued at approximately A$459 million, primarily for high-performance NVIDIA GPUs and complementary network and storage gear. These deals underpin its ambitious strategy to build a Globally-Distributed AI Inference Cloud leveraging its extensive footprint of over 1,100 data centres across 31 countries.
The contracts, secured with US-based technology providers, are expected to commence in the first half of FY27 and require about A$370 million in capital expenditure. This capex will fund the deployment of GPUs and supporting infrastructure to meet rising demand for latency-sensitive AI inference workloads, which are outstripping supply globally.
Creating an On-Demand GPU Pool to Meet Burgeoning Demand
Central to Megaport’s AI infrastructure vision is the establishment of a new GPU Pool, backed by a A$350 million investment. This on-demand resource pool aims to provide enterprise customers with flexible access to GPUs, CPUs, storage, and networking, enabling rapid provisioning and billing automation without the traditional lead times.
The GPU Pool will serve multiple roles: attracting new customers needing immediate access, offering existing clients burst capacity, and converting short-term usage into longer-term contracts. This decentralised approach addresses critical constraints like data centre space, power, and global low-latency connectivity, positioning Megaport to capture a growing share of the AI inference market.
Financial Growth Accelerates with Compute and Network Divisions
Megaport’s Compute division has undergone a rapid transformation since acquiring Latitude.sh, with pro forma Annual Recurring Revenue (ARR) soaring to A$385.2 million; a 6.4-fold increase. The newly announced Strategic Contracts contribute A$748 million in total contract value and A$301 million in ARR. Combined with the Network division’s ARR of A$277.7 million, which grew 25% year-on-year on a constant currency basis, Megaport’s group pro forma ARR now stands at A$662.9 million.
The Network division’s net revenue retention improved to 113%, indicating strong customer loyalty and upsell potential. Meanwhile, the Compute division’s ARR, excluding the Strategic Contracts, grew 40% since the Latitude.sh acquisition, reflecting robust organic growth.
Entitlement Offer to Raise A$827 Million at a Discount
To finance the capital expenditure for these contracts and the GPU Pool, Megaport has launched a fully underwritten entitlement offer targeting A$827.3 million. The offer price of A$14.30 per share represents a 10.9% discount to the theoretical ex-rights price and a 13.9% discount to the last close price.
Proceeds will be allocated primarily to hardware investment (A$369.5 million), the GPU Pool (A$350 million), transaction costs (A$19.3 million), and balance sheet capacity for near-term growth (A$88.5 million). The company’s liquidity position remains solid, with pro forma cash of approximately A$288 million as of 31 December 2025.
Guidance Update and Market Positioning
Megaport has tightened its FY26 revenue guidance to between A$307 million and A$315 million, reflecting strong momentum in its Network business. EBITDA margin and capital expenditure guidance remain unchanged. The company expects ongoing investment in storage, network, and CPUs to support its expanding distributed footprint and the capacity build-out associated with recent contract wins.
The company will provide a detailed financial update for both Network and Compute divisions in its full-year results in August 2026, offering investors a clearer view of contract execution and GPU Pool deployment progress.
Bottom Line?
Megaport’s bold capital raise and contract wins position it as a key player in the AI inference infrastructure market, but execution risks around GPU Pool deployment and contract ramp-up remain critical to watch.
Questions in the middle?
- How quickly can Megaport scale GPU Pool utilisation to meet payback targets?
- What impact will the entitlement offer have on Megaport’s share price and capital structure?
- How will Megaport balance contracted revenue with consumption-based GPU Pool demand?