Megaport Limited has secured a significant three-year compute contract for its subsidiary Latitude.sh, valued at AUD$35.4 million with annualized recurring revenue of AUD$11.8 million. The customer, a US-based unlisted technology company focused on developer tooling, will commence the contract in the first half of FY27. The deal showcases robust demand for compute capacity in an AI-driven infrastructure market and represents a major win for a platform that has rapidly grown since Megaport’s acquisition of Latitude.sh.
The contract’s impact extends beyond immediate revenue. Latitude.sh’s compute platform has experienced remarkable momentum, with underlying annualized recurring revenue excluding this deal growing 31 percent to USD$58.7 million in recent months compared to USD$45.0 million at year-end 2025. This growth trajectory reflects a structural shift in the business, with contracted revenue now representing a significantly larger portion of the total compared to historical month-to-month arrangements. The diversification towards longer-term contracts de-risks the revenue base and improves cash flow visibility for the company.
Megaport’s broader network business continues to perform well, with Network ARR reaching AUD$272.0 million as of March 2026, representing 23 percent growth year-on-year on a constant currency basis. Excluding India operations, network ARR still grew 20 percent, indicating solid underlying demand for Megaport’s core connectivity services. The dual growth engines of network and compute demonstrate that Megaport is benefiting from multiple tailwinds in infrastructure, ranging from traditional interconnection demand to emerging AI workload requirements.
The capital deployment associated with this contract illustrates disciplined financial management. Megaport will invest approximately AUD$17.2 million in CPU server hardware with an attractive payback period of approximately 24 months. This capital expenditure forms part of the previously committed USD$86.0 million capex program for Latitude.sh through 2027. The hardware will be phased into production during H1 FY27, with ordering already underway and delivery expected during FY26. After the 36-month contract concludes, these assets remain within the Latitude.sh pool and can generate revenue through contract renewals or the on-demand platform, extending their productive life.
The contract win highlights unprecedented demand for compute infrastructure driven by artificial intelligence adoption, particularly among enterprise customers accelerating their investment in agentic AI systems. Investors should monitor whether Latitude.sh can convert this demand into additional major contracts and sustain momentum in underlying compute ARR growth. Watch also for updates on the hardware deployment timeline and any additional customer wins that would further validate the market opportunity Megaport believes exists for specialized compute capacity in the AI era. This announcement is price sensitive and has been flagged as material by the ASX.
View the full ASX announcement (PDF)
About Megaport Limited (ASX: MP1)
Megaport Limited is a software-defined network service provider that offers Network as a Service (NaaS) solutions enabling enterprises to connect to cloud providers, data centers, and internet exchanges on a flexible, pay-as-you-go basis. The company operates a global interconnection platform connecting approximately 3,000 enterprise customers across over 1,000 data centers worldwide. Megaport’s Marketplace enables businesses to access multiple cloud and IT service providers without relying on the public internet.
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