The Megaport Ltd (ASX: MP1) share price is in focus after the company secured a three-year, $35.4 million compute and storage contract, and saw its compute annual recurring revenue jump 31% year on year.
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What did Megaport report?
- Latitude.sh secured a 36-month contract worth USD$25.1 million (AUD$35.4 million), expected to start in H1 FY27
- Contract adds approximately USD$8.4 million (AUD$11.8 million) in annual recurring revenue (ARR)
- Compute ARR for the on-demand product (excluding the new deal) rose 31% to USD$58.7 million (AUD$82.7 million)
- Megaport Network ARR (including India) climbed 23% to AUD$272.0 million as of 31 March 2026
- Investment includes roughly USD$12.2 million (AUD$17.2 million) in new server hardware
What else do investors need to know?
The new multi-year contract was signed with a US-based, high-growth technology company operating in the developer tools sector. The customer's name remains confidential but is backed by institutional capital and serves enterprise AI demand.
Supporting this deal, Megaport will invest in new compute hardware, which will be added to its compute pool after the contract ends, offering further revenue opportunities. This strategic contract contributes to Megaport's committed capex plan for 2026 and 2027, in line with its recent acquisition of Latitude.sh.
What did Megaport management say?
Megaport CEO Michael Reid said:
Securing a contract of this size reflects both the scale of the opportunities we see in the compute market, and our disciplined approach to deploying capital…We will continue to evaluate similar opportunities, investing alongside committed customer demand at compelling paybacks, ensuring capital is deployed after rigorous analysis while supporting the long-term growth of these markets.
The explosion in AI use cases is driving incredible demand for compute and storage, with CPUs remaining a critical component of the infrastructure that powers AI. As businesses increasingly seek flexible, high-performance automated infrastructure, Megaport is perfectly positioned to capture a growing share of this rapidly accelerating opportunity.
What's next for Megaport?
Megaport has reaffirmed its FY26 revenue and EBITDA guidance for the combined group as detailed in their February 2026 results, with total group capex to remain between AUD$90 million and $100 million, excluding this strategic contract. Depending on hardware delivery schedules, capex could increase by up to AUD$17.2 million in FY26.
Looking ahead, Megaport says its platform is well positioned to tap into strong AI-driven demand for compute, GPU and storage, and intends to keep pursuing disciplined, customer-led growth opportunities.
Megaport share price snapshot
Over the past 12 months, Megaport shares have declined 17%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 10% over the same period.
