Highlights

  • Megaport (ASX:MP1) increased FY26 net profit before tax by 24 per cent to $77.1 million.
  • Group Revenue increased to between $307 million and $315 million, compared with $227.1 million in FY25.
  • The company is expanding its AI infrastructure exposure through Latitude.sh and an on-demand GPU pool.
  • FY27 guidance targets revenue growth supported by connectivity, compute services and AI infrastructure contracts.

Megaport (ASX:MP1) has expanded its AI infrastructure strategy following its FY26 result, with the company reporting higher profit and outlining FY27 growth expectations. The Network-as-a-Service provider is combining its existing connectivity platform with compute capabilities through Latitude.sh and an on-demand GPU pool.

The company’s strategy represents a shift towards a more infrastructure-focused model, with management targeting increased scale through AI-related contracts, compute capacity and Recurring Revenue opportunities.

Why this result matters

Megaport has built its Business around enterprise connectivity to major cloud platforms and is now expanding into AI infrastructure services. The FY26 result showed continued growth in its connectivity operations while the company added new compute-related capabilities.

For investors, the focus is moving beyond FY26 performance towards execution of the company’s FY27 strategy, including the deployment of GPU infrastructure and delivery of AI-related contracts.

The FY26 scorecard

Megaport reported net profit before tax of $77.1 million in FY26, representing a 24 per cent increase compared with the prior year. Group revenue was within the company’s previous guidance range of $307 million to $315 million, compared with $227.1 million in FY25.

The increase reflected the contribution from Latitude.sh following its Acquisition in November 2025, alongside growth from Megaport’s core connectivity business.

In FY25, Megaport reported EBITDA of $62.3 million, with revenue growth of 16 per cent and annual recurring revenue growth of 20 per cent, reaching $243.8 million.

The operational drivers: NaaS, Latitude.sh and the GPU pool

Megaport’s growth strategy is centred on three operational areas. The first is its Network-as-a-Service platform, which enables enterprises to establish private software-defined connections to cloud providers without building physical network infrastructure.

The second growth area is Latitude.sh, acquired in November 2025 for up to US$300 million (approximately A$459 million). The platform provides bare-metal and compute-as-a-service solutions, with on-demand Annual Recurring Revenue reaching US$58.7 million by late April 2026, up approximately 31 per cent over four months.

The third area is the company’s on-demand GPU pool. Megaport raised $827.3 million through an entitlement offer at $14.30 per share, allocating approximately $350 million towards Nvidia GPU purchases and development of distributed inference capacity.

The company also disclosed four AI infrastructure contracts with a combined value of approximately $458.9 million, expected to contribute around $199 million in annual recurring revenue as infrastructure becomes operational.

Management's strategy and the FY27 outlook

Megaport has positioned FY27 as a key execution period, supported by continued Network-as-a-Service growth, strategic customer contracts and deployment of the on-demand GPU pool.

The company’s FY27 guidance includes group revenue of $620 million to $730 million, with Earnings before tax representing 38 to 40 per cent of revenue.

The company expects AI infrastructure contracts to commence in the first half of FY27, with revenue contribution increasing as GPU capacity is deployed. Management has indicated a deployment period of six to nine months, followed by a three-to-six-month ramp-up period.

The AI infrastructure opportunity

Megaport is increasing exposure to AI-related infrastructure Demand through its combination of connectivity and compute services.

The company’s existing enterprise network provides a foundation for connecting customers with cloud and compute resources, while Latitude.sh and the GPU pool expand its service offering into additional infrastructure requirements.

Catalysts to watch

Key developments include contract execution, GPU deployment progress and utilisation levels across the company’s compute infrastructure.

Customer adoption of Latitude.sh services and performance of the GPU pool will be important indicators of whether the FY27 guidance can be achieved.

Quarterly Annual Recurring Revenue updates will remain an important measure of progress as the company expands its AI infrastructure operations.

The execution risks

Megaport’s transition towards capital-intensive infrastructure introduces additional execution considerations. The company is deploying significant Capital towards GPU hardware and must manage installation, utilisation and customer demand.

FY27 guidance depends on timely commencement of AI contracts and deployment schedules. Delays could affect revenue recognition and project returns.

Competition in compute infrastructure remains a consideration, with pricing pressure and alternative infrastructure providers potentially affecting utilisation levels. The recent capital raising also increased the company’s share count, requiring future earnings growth to support per-share outcomes.

The balance of it

Megaport’s FY26 result reflects both continued growth in its connectivity business and a broader strategic transition towards AI infrastructure.

The company’s FY27 outlook depends on successful deployment of GPU capacity, execution of customer contracts and expansion of recurring revenue streams. The next stage will determine whether the AI infrastructure strategy can translate Investment into operating performance.