The Megaport Ltd (ASX: MP1) share price has jumped 33% after announcing some new contract wins.
Megaport says it’s bringing together network compute together seamlessly and deploy secure, scalable infrastructure closer to users, data and clouds. It partners with service providers, data centres and system integrators to provide programmable, software-driven connectivity across at least 1,100 enabled locations.
Contract wins
Megaport reported that its subsidiary Latitude.sh has secured three major GPU, CPU, network and storage contracts across two customers. The company said this reinforces its position as a critical infrastructure partner in the accelerating AI ecosystem.
Megaport revealed that these contracts generate long-term revenue, regardless of usage, delivering strong returns.
The contracts represent a combined total contract value (TCV) of approximately US$182.9 million (A$254 million), representing approximately US$65.2 million (A$90.6 million) in annualised recurring revenue (ARR).
Two of the contracts, representing approximately 90% of the TCV, have 36-month initial terms, while the third contract has a 24-month contract term.
Megaport noted that the contracts require approximately US$101 million (A$140.3 million) in additional capital expenditure, primarily for NVIDIA GPU, compute, network and storage hardware, with a payback of approximately two years.
The ASX tech share has placed orders for the compute hardware, with delivery expected in late FY26 or early FY26, with deployment occurring on a phased basis starting in the first half of FY27.
At the end of each contract term, the assets will be deployed within the Latitude.sh compute pool and will be available to generate revenue for their remaining asset life, either as a contract renewal by the existing customers or as part of the on-demand platform.
Outlook for the Megaport share price
The company said that the combination of Megaport’s foundational network infrastructure automation with Latitude.sh’s compute and storage capabilities has created a global automated infrastructure platform, enabling it to pursue and secure new value-accretive opportunities. It seems to be working so far.
For FY26, the business is expecting to generate annual revenue of between A$302 million to A$317 million and an EBITDA (EBITDA explained) margin of between 21% to 24%.
The company is clearly seeing a lot of momentum, but I’m not sure what a good price to pay is because its level of profitability is uncertain to me in the future.
It’s doing well to tap into the strong demand, but there are other ASX growth shares I’d rather buy which have clearer paths to profit growth.
