Megaport Ltd (ASX: MP1) shares are on watch on Tuesday after the tech company announced almost $1 billion in new AI contracts.
The Megaport share price finished yesterday's session down 3.92% at $18.85, although the stock has still climbed around 60% in 2026.
Megaport has delivered a raft of positive updates this morning, giving investors plenty to think about when trading gets underway.
So, let's take a closer look.
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Megaport lands almost $1 billion in new contracts
The biggest news this morning is the signing of three new AI infrastructure contracts through Megaport's Latitude.sh business.
The deals are worth roughly $978.6 million in total and cover GPU and CPU compute, network, and storage services.
Two are with new customers, while the other expands an existing relationship.
Megaport will also receive around $322.6 million in prepayments, with roughly $281.5 million coming from one new customer before services are delivered.
Once everything is up and running, the company expects its pro forma annual recurring revenue (ARR) to reach around $1.1 billion.
That takes the total value of strategic contracts announced since April to about $2.3 billion.
CEO Michael Reid said:
Since April, we've announced approximately A$2.3 billion in total strategic contract value.
He added that the company is "just getting started".
Business continues to grow
There was also a positive update on how the rest of the business is tracking.
Network ARR reached $302.6 million in August, up 29% year on year on a constant currency basis.
Net revenue retention increased to 116%, compared with 110% a year ago.
But it's the Compute side of the business where the numbers are really starting to grow.
Compute ARR reached $201.4 million as of 22 September, up 90% since the end of June and 227% since Megaport completed the Latitude.sh acquisition.
Megaport is now billing more than $500 million in Group ARR, not including the full impact of the contracts announced today.
FY27 guidance upgraded
With all of this coming through, Megaport has upgraded its FY27 guidance as well.
Revenue is now expected to come in between $720 million and $810 million, compared with the previous range of $620 million to $730 million.
EBITDA margins are also expected to be higher, with guidance increasing to 42% to 44%.
Of course, all this growth comes at a cost.
Megaport now expects FY27 capital expenditure of between $1.78 billion and $1.88 billion, which is around $500 million higher than its previous guidance.
Despite the higher investment, Megaport says it remains fully funded, with pro forma liquidity of approximately $362.2 million.
