Megaport’s AI Contract Pipeline Reaches A$2.3 Billion

Three Contracts Add Almost A$1 Billion in Value

Megaport Limited (ASX:MP1) has added almost A$1 billion in contracted AI infrastructure revenue, securing three agreements through its Latitude.sh subsidiary with a combined total contract value of approximately A$978.6 million. The contracts cover GPU and CPU compute, networking and storage for AI applications and inference workloads, and take the total value of strategic contracts announced since April to about A$2.3 billion.

The agreements are expected to contribute approximately A$232.4 million in annual recurring revenue once fully deployed. Megaport says the hardware should begin contributing through the third quarter of FY27, with the contracts reaching their full run-rate by the fourth quarter. Their weighted average term is just over four years, and committed revenue is payable over the fixed terms irrespective of customer usage.

Customer Prepayments Reduce the Immediate Funding Burden

Customer prepayments total approximately A$322.6 million, including a prepayment of about A$281.5 million from one new customer before service delivery. Megaport says that payment covers most of the cash capital expenditure required to fulfil that contract and has already allocated power and space for the new deployments.

The customers remain unnamed. Megaport said two agreements are with US-based technology providers, one of which is an existing customer, while the third is with a publicly listed enterprise using the infrastructure for its own AI workloads. The company said the arrangements broaden its customer base, but the disclosure leaves the credit quality and concentration of individual counterparties difficult for outside investors to assess.

Compute Growth Drives Higher FY27 Targets

Compute ARR reached A$201.4 million as at 22 September, up 90% from 30 June and 227% from the level at Latitude.sh’s acquisition, according to Megaport. Strategic-contract ARR rose to A$96.3 million from A$14.9 million over the same period as infrastructure arrived and entered service earlier than expected. Network ARR was A$302.6 million at the end of August, up 29% year on year on a constant-currency basis, while Network net revenue retention rose to 116%.

Megaport has raised FY27 Group revenue guidance to A$720 million to A$810 million, from A$620 million to A$730 million, and lifted its EBITDA margin range to 42% to 44%, from 38% to 40%. Compute revenue guidance now stands at A$395 million to A$475 million, while Network revenue guidance rises to A$325 million to A$335 million. The company attributes the changes to the new contracts, earlier deployment of previously announced infrastructure and the latest trading performance.

GPU Pool Replenishment Takes Capex Above A$1.7 Billion

The expansion comes with a sharply higher investment bill. FY27 capex guidance has increased by A$500 million to A$1.78 billion to A$1.88 billion, broadly matching the A$500.3 million required for the three new contracts. Megaport is also allocating GPUs previously ordered for its on-demand pool to the contracted deployments and plans to spend a further A$360 million replenishing that pool, with revenue from the replacement equipment expected to ramp in the first half of FY28.

Megaport says it is fully funded for the updated programme, reporting pro forma liquidity of approximately A$362.2 million. Its recently documented debt facility has been increased to A$845 million, although access to the full facility remains subject to revenue milestones, covenants and other agreed conditions. The company retains a 16-to-22-month EBITDA payback target for the GPU pool, but that estimate depends on utilisation, contract duration, equipment mix and operating costs.