Megaport (ASX:MP1) outlined a strong first-half FY2026 performance and a broadened strategic direction during its half-year results call, marked by two acquisitions and an uplift to the company’s standalone revenue outlook. Management emphasized accelerating momentum in the core network business, early progress at newly acquired Latitude.sh, and the strategic rationale behind entering India through the purchase of Extreme IX.
Group snapshot: ARR jumps to $338 million after acquisitions
Management said the Megaport Group ended the half with AUD 338 million in annual recurring revenue (ARR), up 49% year-on-year (AUD 112 million). The company broke out ARR by business:
- Megaport Network: AUD 263 million ARR
- Latitude.sh: AUD 68 million ARR
- Extreme IX (India): roughly AUD 7 million ARR
Megaport Network: constant-currency growth, higher retention, longer customer life
On a standalone basis (excluding acquisitions), management reported Megaport Network ARR of AUD 263.4 million, up 19% in constant currency year-on-year (AUD 36.8 million). Executives cited an FX headwind in reported growth, which they said reflected moves in the Australian dollar against the U.S. dollar.
Key operating metrics cited on the call included:
- Net revenue retention (by logo): 111%, up three percentage points year-on-year
- Customer lifetime: increased by roughly three years to 13 years (management described it as “one divided by churn”)
- ARR per customer: up 6% year-on-year (across roughly 3,000 Megaport customers, excluding acquisitions)
- Total lifetime value: up 57% to about AUD 2.5 billion
Management highlighted the Americas—particularly the U.S.—as a key growth engine, saying the region was “on fire” and growing at 24%. Executives also said new logo growth increased 100% versus the prior comparable period, framing the result as evidence that the company’s growth was not limited to a single seasonal period.
The CEO attributed the higher retention to a mix shift toward higher-value services beyond basic cloud connectivity. As an example, management contrasted smaller cloud connection deals with larger long-haul and “subsea” connectivity opportunities, suggesting the newer mix supports higher expansion within existing customers.
Execution update: expansion, product releases, and higher-capacity infrastructure
During the half, Megaport said it continued to execute against a “build, innovate, and invest” framework. Operational highlights cited included:
- Data center footprint: 51 data centers added, reaching 1,034 globally
- Cloud on-ramps: 11 new on-ramps added to reach 344
- Internet markets: two new markets launched (Italy and Sweden)
- Internet capacity: internet lifted to 100Gb in 16 metros
- Network capacity: backbone upgraded to 400Gb in eight countries; 400Gb ports launched with what management described as immediate adoption
The company also described new enterprise-focused security features added during the period, including IPsec (encrypted tunnels on MCR) and packet filtering. Management said it expects continued security investment in the second half.
Executives also discussed AI as both a demand tailwind and an internal productivity driver. Management said AI is driving significant data movement and increased compute needs, benefiting both Megaport’s network business and its newer CPU/GPU offerings through Latitude.sh. Internally, management said AI tools are improving development efficiency.
Latitude.sh and Extreme IX: strategic rationale and early integration points
Megaport described Latitude.sh as a compute-as-a-service platform providing high-performance CPU and GPU capacity in key markets, with predictable billing and an API-driven model. At acquisition, Latitude operated in 10 countries and 20 locations (management said 22 locations as of the call), with regional mix of about 50% U.S., 20% Europe, 17% Asia Pacific, and 13% Latin America.
On the call, management demonstrated how the Megaport portal now includes both “network” and “compute” options and showcased Latitude capabilities, including bare metal deployments, CPU virtual machines, and an “AI inference” feature positioned as model-as-a-service running on the company’s own infrastructure. The CEO said the acquisition represents the next step in building a broader infrastructure platform that ultimately includes network, compute, and (in the future) storage.
In Q&A, management said Latitude’s near-term growth was constrained by access to compute inventory and deployment timing, noting that ordering, installation, software enablement, and customer utilization ramp all affect the revenue profile. Megaport also addressed supply chain and input cost volatility—particularly around memory—saying it has flexibility across vendors and SKUs and has actively managed procurement timing and vendor engagement.
On synergies, the CEO said the Latitude acquisition was not modeled with “miraculous synergies,” describing synergies as “cream on top” rather than part of the purchase underwriting. Still, management said there are meaningful integration advantages, including leveraging Megaport’s backbone, data center relationships, and go-to-market reach. Executives also noted they hired several compute-focused sales hires, describing them as an overlay function that can leverage Megaport’s existing customer access.
Financial results and FY2026 guidance updates
CFO Tish (identified on the call as CFO) said the half-year EBITDA margin was 26% and included one month of Latitude results, as Latitude closed on Nov. 26. She also highlighted an exit margin for the Megaport Network business of 21%, which she said aligned with guidance and reflected the timing of planned investment.
Cash flow commentary included higher operating inflows from higher customer revenues and one month of Latitude contribution, while investing outflows reflected acquisition payments and CapEx. Financing inflows were driven largely by the capital raise conducted in connection with the acquisitions. The CFO added that, excluding capital raising and acquisition activities, net cash outflow was under AUD 10 million, which she attributed to expansion plans, go-to-market hiring, and CapEx timing.
For guidance, management provided a “standalone” update for Megaport Network (excluding acquisitions and presented in constant currency), saying original revenue guidance of AUD 260 million to AUD 270 million was revised by raising the lower end by AUD 4 million. EBITDA margin and CapEx guidance for the standalone network business were held unchanged, with management citing strong ARR performance, higher NRR, and sustained logo growth.
For the combined group, Megaport guided to:
- Revenue: AUD 302 million to AUD 317 million
- EBITDA margin: 21% to 24% of revenue
- CapEx: AUD 90 million to AUD 100 million
Management said Latitude’s revenue guidance provided in November was reaffirmed, and that group guidance includes an additional AUD 3 million to AUD 4 million contribution from the India internet exchange acquisition, along with related rollout CapEx. The company also discussed FX sensitivity, stating that a AUD 0.05 move in the exchange rate equates to about a AUD 9 million change in revenue.
About Megaport (ASX:MP1)
Megaport Limited provides elastic interconnection services to the enterprises and service providers in Australia, New Zealand, Hong Kong, Singapore, Japan, North America, and Europe. It operates a platform that enables customers to connect their network to other services, as well as creates agile network that connects in multiple regions. The company also offers Megaport Virtual Edge, an on-demand and vendor-neutral Network Function Virtualization service that provides virtual infrastructure for network services at the edge of Megaport's global software-defined network; internet exchange services; and Megaport Marketplace, an online hub the interconnects service providers and enterprise customers.
