Megaport Limited (ASX: MP1) announced on 27th April 2026 that its wholly owned subsidiary, Latitude.sh, has secured a 36-month compute and storage contract valued at approximately USD$25.1 million (AUD$35.4 million).
The deal adds approximately USD$8.4 million (AUD$11.8 million) in Annualised Recurring Revenue (ARR) to Megaport’s books.
What the Latitude.sh Compute Contract Actually Involves
The customer is a US-based, unlisted high-growth technology company working in the developer tooling sector.
It serves enterprise demand for agentic AI and is backed by institutional capital. Megaport has not disclosed the customer’s identity for competitive reasons but confirmed the ASX announcement contains all material information relevant to the contract’s impact on the company’s securities.
The contract is set to commence in H1 FY27.
Supporting the deal, Megaport will spend approximately USD$12.2 million (AUD$17.2 million) on new CPU servers. The payback period on that capital investment is around 24 months.
Hardware delivery is expected before 30 June 2026. Deployment will happen in phases from H1 FY27, in line with customer requirements.
Importantly, when the 36-month term ends, those assets do not sit idle. They remain inside Latitude.sh’s compute pool, available for renewal or on-demand use by other customers. That is a meaningful detail for anyone tracking the long-term asset economics of the Latitude.sh platform.
Compute ARR Already Growing Fast – Before This Deal
The Latitude.sh compute contract is notable not just for its size but for the context around it.
Compute ARR for Latitude.sh’s on-demand product, excluding this new deal, rose 31% to USD$58.7 million (AUD$82.7 million) as of 25th April 2026, up from USD$45.0 million (AUD$68.0 million) on 31st December 2025.
That lift reflects a broader shift in the platform’s mix. A growing proportion of Latitude.sh revenue is now contracted rather than month-to-month, which reduces revenue volatility and improves forward visibility.
On the network side, Megaport Network ARR, including India, reached AUD$272.0 million at 31st March 2026, up 23% on a constant currency basis compared to 31st March 2025. Excluding India, Network ARR grew 20% on the same basis.
Megaport Network ARR performance chart [Megaport]
CEO Michael Reid on the Contract and the Market Opportunity
Megaport CEO Michael Reid commented directly on the deal and the company’s approach to capital deployment.
“Securing a contract of this size reflects both the scale of the opportunities we see in the compute market, and our disciplined approach to deploying capital,” Reid said.
He added that the company would continue to pursue similar opportunities, investing only where committed customer demand supports compelling payback periods.
“The explosion in AI use cases is driving incredible demand for compute and storage, with CPUs remaining a critical component of the infrastructure that powers AI. As businesses increasingly seek flexible, high-performance automated infrastructure, Megaport is perfectly positioned to capture a growing share of this rapidly accelerating opportunity.”
FY26 Guidance Unchanged – With One Caveat on Capex
Megaport has reaffirmed its full year FY26 revenue and EBITDA guidance, as originally provided in the H1 FY26 half year results lodged with the ASX on 20th February 2026.
FY26 Group capex guidance of between AUD$90 million and AUD$100 million remains unchanged, excluding this new contract.
However, if the hardware ordered for this deal arrives before 30th June 2026, FY26 Group capex could increase by up to AUD$17.2 million. Investors should factor that into their modelling.
Why the Latitude.sh Platform Is Central to Megaport’s Strategy
Megaport acquired Latitude.sh in late 2025 in a deal worth up to USD$300 million (AUD$459 million), funded through a AUD$200 million institutional placement. The thesis was straightforward: combine Megaport’s global private network with Latitude.sh’s on-demand CPU and GPU infrastructure to create a single platform where compute and connectivity meet.
As of today’s announcement, the strategy appears to be gaining traction. Contracted revenue is rising as a proportion of the total. Enterprise customers are signing multi-year deals. And the Latitude.sh platform is positioned to serve the one sector with almost unlimited near-term demand, AI.
You can read more on AI infrastructure stocks across the ASX, LSE, and TSXV and how Megaport fits into the broader landscape of top ASX tech stocks in 2025.
Investor Outlook
Over the past 12 months, Megaport shares have declined approximately 17%, underperforming the S&P/ASX 200, which gained around 10% in the same period.
That gap reflects lingering concerns about execution risk following the Latitude.sh acquisition and elevated capex commitments through 2026 and 2027.
Today’s announcement provides concrete evidence that the compute platform is converting interest into signed, multi-year contracts. The Latitude.sh deal also demonstrates that Megaport can attract enterprise AI customers at meaningful contract values.
Whether today’s announcement is enough to shift sentiment on the stock will depend on the next set of quarterly results and whether guidance is met on both revenue and EBITDA.
Also Read: Temple & Webster’s Founding CEO Is Stepping Back – Here’s Who Takes Over
Frequently Asked Questions
Q: What is the Megaport Latitude.sh compute contract?
A: Megaport’s subsidiary Latitude.sh signed a 36-month compute and storage contract worth AUD$35.4 million (USD$25.1 million) with a US-based technology company in the developer tooling sector. The deal adds AUD$11.8 million in Annualised Recurring Revenue and is expected to commence in H1 FY27.
Q: Who is the customer in the Megaport compute deal?
A: The customer is a US-based, unlisted high-growth technology company serving enterprise demand for agentic AI. Megaport has not disclosed the customer’s name for competitive reasons but confirmed the company is backed by institutional capital.
Q: What is Latitude.sh and how does it relate to Megaport?
A: Latitude.sh is a Compute-as-a-Service platform that Megaport acquired in late 2025. It delivers on-demand CPU and GPU infrastructure across 20 markets. Megaport uses Latitude.sh to combine compute and network services on a single platform, targeting AI and cloud workloads.
Q: What is Megaport’s current ARR?
A: As of 31st March 2026, Megaport Network ARR, including India, stood at AUD$272.0 million, up 23% on a constant currency basis year-on-year. Latitude.sh Compute ARR, excluding the new contract, reached USD$58.7 million (AUD$82.7 million).
Q: Has Megaport changed its FY26 guidance?
A: No. Megaport reaffirmed its FY26 revenue and EBITDA guidance following this announcement. Group capex guidance of AUD$90 million to AUD$100 million remains unchanged, though it could rise by up to AUD$17.2 million if hardware for the new contract arrives before 30th June 2026.
Disclaimer: This article is for informational purposes only and does not constitute financial product advice. Colitco accepts no liability for investment decisions made based on this content. Past performance is not a reliable indicator of future performance. Please consult a licensed financial adviser before making any investment decision.
Source: https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-03082542-2A1668275&v=undefined
Last modified: April 27, 2026
