It’s clearly AI capex capital raising season.  This time Megaport’s turn.

Raising US$596m in equity mostly for new compute contracts (previously announced) and on-demand AI inference servers (new news).

The market liked it - stock up +11% from pre-announcement once trading resumed and last close of $18.48 is well above the $14.30 offer price.  Post raise market cap to be north of A$4bn.  

This differs from Latitude’s history of mostly CPU compute and from the recent GPU-skewed contracts.

The build-out is to offer immediate access to GPUs (hourly and monthly pricing), with example use cases of early customer testing to facilitate large contracts and burst options for existing customers.

US$252m capex (across GPUs, CPUs, network and storage) being spent.

Targeting 6-9 months to procure and deploy the pool, 3-6 month ramp from deployment, with 16-22 month payback.

The pitch is they can capitalise on available power and space across the Megaport network given they have over 150 contracted DC operators in 31 countries deployable with the existing Megaport network.

And they’ve just launched a storage offer (launching with block, file and object support).

The other major chunk of proceeds goes to funding the previously announced new customer contracts.

In aggregate they are: TCV of US$330m and ARR of US$143m across 4 major new contracts (mix of new and existing customers, all US based technology providers).

Full ARR run-rate expected by end of CY26.

And this could be interesting for future opportunity: “Includes a highly strategic relationship with a customer that enables broader GPU inference adoption across enterprise”.

Let’s not forget about Megaport’s networking business.

Networking ARR of A$278m as of April, up 25% y/y.  

Importantly NRR is up 4pts y/y to 113% following years of slowing in NRR.  

Latitude looks to be on a different growth trajectory since it was acquired by Megaport last year.

The stock has caught a meaningful bid recently as Latitude catalysts have been coming quickly (the market likes catalysts!).  

In an attempt to narrate the market view, the stock was performing well over most of CY25 as there was growing optimism that networking momentum had been restored in the business.  Then late CY25 and into CY26 there was the double whammy of being caught up in basket selling of Australian tech and growth stocks (the space has been tough) combined with initial market uncertainty on the Latitude acquisition.

One of the main bull cases to be made for Megaport is its capital light model.  A neocloud is the opposite…sure some common thematics with the networking business but from a business structure and capital intensity perspective they are very different. So this shift caught some investors off guard.  

Well, again, a couple positive announcements can change a market narrative in a hurry.  

Have views?  Questions?  Comments?  Get in touch.  

Disclaimer: Informational content only — not investment research, advice, or a recommendation. All estimates, expectations, forecasts, etc are either from management or consensus expectations as indicated.

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