Highlights

  • Megaport has secured four new AI infrastructure contracts with combined TCV of A$458.9M, requiring A$369.5M in Capital Expenditure, primarily for NVIDIA GPUs.
  • The company is establishing an on-Demand GPU Pool backed by A$350M in Investment, targeting consumption-based pricing across enterprise and sovereign AI markets.
  • A fully underwritten 1-for-3.08 entitlement offer at A$14.30 per share will raise A$827.3M, representing a 13.9% discount to the last closing price.

 

Megaport Limited (ASX:MP1), a globally automated infrastructure platform operating across more than 1,100 data centres in 31 countries, last traded on 1 June 2026. The company has execute one of the most ambitious capital raises in its listed history on 3 June. The stock was last quoted at A$16.61 on 1 June 2026, before the company announced plans to issue new shares at A$14.30 each — a level reflecting a 10.9% discount to the Theoretical Ex-Rights Price (TERP).

The announcement marks a decisive acceleration of the company's pivot from pure-play network connectivity toward vertically integrated AI infrastructure. Within a matter of weeks, Megaport has shifted from a focused networking Business into a company that now claims pro forma group annualised Recurring Revenue (ARR) of A$662.9M — a figure that would have been unrecognisable to shareholders just twelve months prior.

The Contracts: Scale, Terms, and Revenue Visibility

The four newly executed contracts carry a combined Total Contract Value (TCV) of approximately US$330.4M (A$458.9M at the prevailing Exchange Rate of $0.72 AUD:USD). All customers are US-based technology providers running AI applications and inference workloads. The company has not disclosed customer identities for competitive reasons, though it has confirmed that institutional shareholders back all four parties.

The contracts are expected to commence in the first half of FY27, with the full annualised run-rate ARR contribution of US$143.3M (A$199.0M) to be added progressively as hardware is deployed and becomes operational. Approximately 55% of ARR and 70% of TCV are generated by contracts with 36-month terms, providing a meaningful degree of medium-term revenue certainty. The capital expenditure required to service the contracts — approximately US$266.0M (A$369.5M) — carries an estimated payback of around 27 months based on cumulative EBITDA exceeding the initial GPU server investment.

The GPU Pool: Architecture of On-Demand AI Infrastructure

Central to Megaport's AI strategy is the creation of an on-demand GPU Pool, backed by US$252.0M (A$350.0M) of investment. The pool is designed to serve three core functions: attract new customers seeking immediate access to AI infrastructure, provide existing customers with flexible burst capacity, and create a conversion pathway from short-term usage toward longer-term contracted deployments.

The operational metrics disclosed by the company are instructive. After the initial 6-9 month procurement and deployment period, a further 3-6 months is anticipated before the pool reaches optimal utilisation. Once there, the company targets a 16-22 month payback period to recover the Capital Investment through cumulative EBITDA. These projections are contingent on utilisation rates, SKU mix, term duration, and operating costs — variables that will only become clearer once the pool is live.

The strategic logic is that Megaport's pre-existing network of over 1,100 connected data centres — combined with the platform capabilities inherited through its Acquisition of Latitude.sh — positions it to deliver ultra-low latency AI inference proximal to end users in a way that centralised cloud providers structurally cannot.

Network Division: Organic Growth Remains Consistent

Amid the noise of the capital raise and AI contracts, the underlying network business continues to execute. For the April 2026 period, Network ARR reached A$277.7M, representing 25% year-on-year growth on a constant currency basis. Excluding the contribution from the December 2025 acquisition of Extreme IX in India, organic growth came in at 22% year-on-year — still a high-teens organic rate for a business of this size.

Network Net Revenue Retention (by logo) increased to 113%, up four percentage points on the prior comparable period, indicating that existing customers are spending more within the platform over time. This metric is a key indicator of product stickiness and upsell efficiency. Both numbers reinforce that the core connectivity business is not being sacrificed as the company scales its compute ambitions.

Compute Division: A 6.4x ARR Transformation Since Latitude.sh

The acquisition of Latitude.sh in late 2025 has proven to be the platform upon which Megaport's compute ambitions rest. Since that acquisition, Compute ARR — excluding the contribution of the Strategic Contracts announced since 27 April 2026 — has grown 40% to A$83.9M. Including the Strategic Contracts, the Compute division now carries pro forma ARR of A$385.2M, representing a 6.4x increase since the initial acquisition.

The Strategic Contracts in aggregate — spanning the 27 April, 14 May, and 3 June 2026 announcements — will contribute A$747.8M of TCV and A$301.3M of ARR. The velocity of contract execution over a six-week period represents a significant step-change in the scale of the compute division and reflects the broader acceleration of enterprise AI inference demand.

The Entitlement Offer: Structure, Pricing, and Use of Proceeds

The fully underwritten entitlement offer is structured as a 1-for-3.08 pro rata accelerated non-renounceable rights issue at A$14.30 per share. The offer is underwritten by the joint lead managers. Eligible retail shareholders will have the opportunity to participate from 11 June 2026, with the Retail Entitlement Offer closing on 29 June 2026. Eligible retail shareholders who take up their full pro rata entitlement may also apply for Additional New Shares of up to 50% of their entitlement, subject to shortfall availability.

The A$827.3M in gross proceeds will be deployed as follows: A$369.5M to fund hardware for the new contracts; A$350.0M for the GPU Pool; A$19.3M in Transaction Costs; and A$88.5M for Balance Sheet capacity and near-term growth opportunities. Pro forma Liquidity, calculated as at 31 December 2025 and adjusting for the offer proceeds and capital commitments, stands at approximately A$287.6M.

FY26 Guidance Update

FY26 revenue guidance has been tightened to a range of A$307M to A$315M, reflecting ongoing network momentum. EBITDA Margin guidance of 21-24% and group capex of A$90M-A$100M are unchanged. Importantly, guidance does not yet incorporate the contribution of any Strategic Contracts, meaning the FY27 revenue picture will look substantially different once those contracts are operational.

Conclusion

Megaport's 3 June announcement represents the most consequential strategic inflection in the company's listed history. The combination of A$458.9M in contracted AI infrastructure revenue, a US$252M GPU Pool, a 13.9% discounted entitlement offer, and pro forma group ARR of A$662.9M is a package that fundamentally repositions the company within the ASX technology landscape. The near-term execution challenge will be hardware procurement, deployment timing, and achieving the utilisation rates underpinning the GPU Pool payback targets. The speed of contract accumulation over the past six weeks suggests customer demand is real; the next test is operational delivery at scale.