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Shares in Brisbane-based network-as-a-service provider Megaport (ASX: MP1) surged 37 per cent this morning after the company announced three major contracts worth US$182.9 million ($254 million) through its US subsidiary Latitude.sh, describing the deals as a defining moment for the company's push into AI infrastructure.
The contracts span GPU, CPU, network and storage services across two undisclosed US-based technology customers running artificial intelligence and inference workloads.
The contracts are expected to generate $90.6 million (US$65.2 million) in annualised recurring revenue (ARR).
Two of the three contracts carry 36-month terms and account for 90 per cent of the combined total contract value (TCV), while the third runs for 24 months. Customer identities have been withheld for competitive reasons.
The announcement comes less than three weeks after Megaport revealed a separate $35.4 million (US$25.1 million) three-year compute contract with a different US-based customer operating in the developer tooling and agentic AI space, bringing total strategic deal TCV announced since late April to $289 million.
To fulfil the three new contracts, Megaport will deploy incremental capital expenditure of approximately $140.3 million (US$101 million), primarily for NVIDIA GPU and compute hardware, with the company flagging a payback period of roughly two years. The full ARR run-rate is expected to be achieved by the end of the first half of FY27.
Megaport says it will fund the investment through existing cash reserves and a newly upsized $150 million debt facility, giving the group pro-forma liquidity of $199.1 million as at 31 December 2025 when factoring in both these contracts and the April deal.
CEO Michael Reid says the contracts represent a "defining moment" for Megaport and Latitude.sh.
"AI is rapidly shifting toward inference and the edge, driving enormous demand for GPU, CPU, network, and storage infrastructure globally," he says.
“We are at the forefront of an accelerating inflection point across the industry.
"As use cases shift from AI foundation models to inference and the edge, Megaport is becoming an essential platform for powering the applications of tomorrow with globally distributed, automated infrastructure.
"This is exactly why we brought Megaport and Latitude.sh together.
"By combining global compute, network, and storage into one automated platform, we are building critical infrastructure for the next generation of AI applications."
Megaport expanded its global operations through last year's acquisition of Latitude.sh, an automated compute infrastructure group, in a deal worth up to US$300 million ($459 million).
The contracts also satisfy a committed US$86 million capital expenditure undertaking Megaport made when it acquired Latitude.sh in November.
“Whether supporting AI, edge compute, or anyone requiring instant global reach and performance, Megaport is a one-stop platform for the AI ecosystem, providing on-demand, software-enabled performance of dedicated hardware with the flexibility of a global network,” says Reid.
Since the acquisition, Latitude.sh's on-demand ARR - excluding strategic deals - has grown 31 per cent to US$58.7 million as of 25 April 2026, up from US$45 million at 31 December 2025.
The broader Megaport group reported ARR of $338 million at the half-year mark in February, up 49 per cent year-on-year, with revenue of $134.9 million and EBITDA of $35.3 million.
Network ARR, including India, reached $272 million at 31 March 2026, up 23 per cent year-on-year in constant currency terms.
Megaport has reaffirmed its FY26 revenue and EBITDA guidance, while group capital expenditure guidance of $90 million to $100 million remains unchanged excluding the new contracts and the April deal.
Shares in Megaport hit a high of $13.51 this morning, an increase of 37 per cent on yesterday's close.
However, the shares eased back to $13.16 by 12.51pm (AEST) - up 33.6 per cent.
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