Megaport (ASX:MP1) Shares Jump Over 7% Today

Megaport (ASX:MP1) Shares Jump Over 7% Today – What’s Driving the Surge

Sonal Goyal

27 April 2026 09:38 AM AEST

Megaport (ASX:MP1) Shares Jump Over 7% Today – What’s Driving the Surge

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Highlights

Megaport's wholly owned subsidiary Latitude.sh has secured a 36-month contract valued at approximately USD$25.1 million (AUD$35.4 million) with a US-based high-growth technology company operating in the developer tooling sector — representing AUD$11.8 million in Annualised Recurring Revenue and expected to commence in H1 FY27.
Excluding this strategic deal, Latitude.sh's on-demand compute ARR increased 31% to USD$58.7 million from USD$45.0 million as at 31 December 2025, while Megaport Network ARR reached AUD$272.0 million at 31 March 2026, up 23% on a constant currency basis year-on-year — indicating strong momentum across both revenue segments.
Megaport reaffirmed FY26 Group revenue and EBITDA guidance, with Group Capex guidance of AUD$90–100 million unchanged excluding the new deal; the incremental capital expenditure of approximately AUD$17.2 million required to support the new contract carries an attractive 24-month payback period, with hardware delivery expected in FY26 and deployment commencing in H1 FY27.

Megaport Limited (ASX:MP1) is a Brisbane-headquartered, globally active automated infrastructure platform providing software-driven network connectivity and compute services across more than 1,100 enabled locations worldwide. Following its acquisition of Latitude.sh, the company now operates two distinct revenue engines: its established Megaport Network business, which provides elastic interconnection and Software Defined Networking services; and Latitude.sh, its compute and storage platform serving on-demand and contracted enterprise customers.

As of 27 April 2026, MP1 shares were priced at $9.565, reflecting 7.60% share price gain during morning trading hours.

The company's dual-segment structure is increasingly relevant in the context of the global artificial intelligence infrastructure buildout, where demand for both high-performance compute and low-latency network connectivity is accelerating across enterprise and hyperscale customers. Megaport's announcement on 27 April 2026 of a significant new compute contract through Latitude.sh serves to illustrate how the company is positioning its compute capabilities to capture contracted, recurring revenue alongside its traditionally month-to-month network business.

The Latitude.sh Contract: Terms and Commercial Logic

The contract announced on 27 April 2026 involves a US-based, unlisted high-growth technology company operating in the developer tooling sector, described as serving enterprise customers' accelerating demand for agentic AI and supported by institutional capital. The deal is structured as a 36-month agreement with a total contract value of approximately USD$25.1 million (AUD$35.4 million), representing AUD$11.8 million in Annualised Recurring Revenue. Revenue is contractually committed irrespective of usage — a fixed-commitment structure that reduces revenue variability and supports more predictable cash flow forecasting.

The contract will be supported by approximately AUD$17.2 million in incremental capital expenditure on CPU servers — hardware that Megaport has already ordered, with delivery expected prior to 30 June 2026 and phased deployment commencing in H1 FY27. The payback period of approximately 24 months is considered attractive for contracted infrastructure deployments of this nature. Importantly, at the conclusion of the 36-month term, the assets will remain in the Latitude.sh compute pool and continue generating revenue through either a contract renewal or on-demand utilisation, extending the asset's revenue-generating life well beyond the initial contract period.

Compute ARR Growth: The Broader Latitude.sh Trajectory

The strategic contract is best understood within the context of Latitude.sh's broader growth trajectory under Megaport's ownership. Excluding the new contract, on-demand Compute ARR increased 31% to USD$58.7 million (AUD$82.7 million) as of 25 April 2026, from USD$45.0 million at 31 December 2025. This growth rate reflects the accelerating enterprise demand for flexible, high-performance compute infrastructure that Megaport's management has consistently highlighted as a structural tailwind for the Latitude.sh platform.

CEO Michael Reid noted in the announcement that CPUs remain a critical component of AI infrastructure, and that businesses are increasingly seeking flexible, automated infrastructure from trusted providers. The addition of a USD$8.4 million ARR contracted contribution — representing approximately 14% of the current on-demand run rate — meaningfully increases the proportion of Latitude.sh revenue that is contracted rather than month-to-month, a structural improvement in revenue quality that analysts and institutional investors typically regard favourably in infrastructure businesses.

Megaport Network: Sustained ARR Growth

Megaport's core network business continues to perform strongly alongside the compute growth story. Network ARR (including India) reached AUD$272.0 million at 31 March 2026, representing 23% growth on a constant currency basis compared to 31 March 2025. Excluding India, Network ARR grew 20% on a constant currency basis — reflecting continued market penetration and customer expansion across the company's global connectivity platform. This sustained double-digit growth in the Network segment provides the financial foundation upon which Megaport's investment in Latitude.sh compute capacity is built.

Capital Expenditure and FY26 Guidance

The incremental AUD$17.2 million capital expenditure associated with the new contract is expected to be incurred prior to 30 June 2026, which means it could increase FY26 Group Capex from the stated guidance range of AUD$90–100 million by up to AUD$17.2 million, depending on delivery timing. This represents a potential uplift in FY26 capital spending of up to approximately 19% above the top of the existing guidance range — a meaningful consideration for investors focused on free cash flow generation in the near term. Management has maintained FY26 Revenue and EBITDA guidance as reaffirmed at the H1 FY26 results.

Conclusion

Megaport's announcement of a USD$25.1 million (AUD$35.4 million) contracted compute deal through Latitude.sh marks a significant commercial milestone for the company's strategy to build a recurring, contracted revenue base within the AI-driven compute infrastructure market. The 31% growth in on-demand Compute ARR, sustained 23% growth in Network ARR, reaffirmed FY26 guidance, and the attractive 24-month payback on incremental hardware capex collectively reinforce the operational momentum at MP1. At a share price of $8.890, the company enters the second half of FY26 with a clear dual-segment growth narrative that has delivered measurable commercial outcomes.

FAQs

1. What is Latitude.sh and how does it relate to Megaport's core business?

Latitude.sh is a compute and cloud infrastructure platform wholly owned by Megaport, acquired as part of the company's strategy to complement its network connectivity business with compute and storage capabilities. It provides CPU, GPU, and storage services to enterprise and technology customers on both on-demand and contracted terms. Under Megaport's ownership, Latitude.sh has delivered rapid ARR growth, and the combination of network and compute is central to Megaport's vision of a unified, automated infrastructure platform.

2. Who is the customer behind the $35.4 million contract?

Megaport has not disclosed the customer's identity for competitive reasons, describing the party as a US-based, unlisted high-growth technology company in the developer tooling sector that serves enterprise demand for agentic AI and is supported by institutional capital. Megaport has confirmed that the customer's identity is not considered information that would materially affect the price or value of Megaport securities, and that all material information relevant to assessing the contract's impact has been disclosed.

3. What does the 24-month payback period mean for investors?

The 24-month payback period refers to the number of months required for the cumulative EBITDA generated by the contract to exceed the AUD$17.2 million initial capital expenditure on CPU servers. A 24-month payback is considered attractive in the contracted infrastructure sector, as it implies that the hardware investment becomes economically recovered within the contract term, after which the assets continue generating revenue during their remaining useful life.

4. How does the new contract affect FY26 Capex guidance?

Megaport's existing FY26 Group Capex guidance of AUD$90–100 million excludes the new strategic deal. To the extent that equipment ordered for the contract is delivered prior to 30 June 2026, FY26 Capex could increase by up to AUD$17.2 million above the top of the guidance range. FY26 Revenue and EBITDA guidance have been reaffirmed unchanged.

5. What is the significance of contracted versus on-demand compute revenue?

Contracted revenue — where customers commit to paying a fixed amount irrespective of usage — provides more predictable and stable cash flows compared to on-demand pricing, where revenue fluctuates with customer consumption patterns. As Latitude.sh adds more contracted revenue relative to its on-demand base, the proportion of high-quality, predictable recurring revenue increases, which is generally viewed positively by analysts and institutional investors in evaluating infrastructure platform businesses.

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