Megaport shares (ASX: MP1) fell back below A$20 into the final trading session of the week, having dropped 5.06% to close at A$19.31 on Thursday. Heading into the final trading session of the week, markets are working through FY26 results, as a sharp swing to statutory loss put a dampener on the 37% revenue growth and surging annual recurring revenue.
The MP1 share price will head into this morning’s open at A$19.31, down 10.1% for the week, despite Megaport delivering what many would characterise as transformational top-line growth. Markets appear to be focused on near-term profitability rather than longer-term strategic positioning, after what has already been a bullish year for holders, up 62.27% YTD.
Strong Growth Not Enough For MP1
Megaport reported revenue of A$312.2 million for FY26, representing 37% year-on-year growth from A$227.1 million in FY25. EBITDA rose 24% to A$77.1 million, up from A$62.3 million in the prior year, demonstrating the company’s ability to generate operating profit even as it invests heavily in growth initiatives and integrates recent acquisitions. But this was not seen as enough to outweigh an increase in FY losses.
The headline challenge came at the statutory net profit line, where Megaport recorded a loss of A$39.0 million compared to a negligible A$0.3 million loss in FY25. This sharp deterioration appears to stem from increased depreciation and amortisation related to acquisitions, integration costs, and the capital-intensive build-out of GPU infrastructure.
The standout metric was group annual recurring revenue, which jumped 62% to A$395.2 million, providing better visibility into future revenue streams. This ARR figure reflects the full-year impact of Megaport’s strategic pivot into compute and GPU-as-a-Service, following its acquisitions of Latitude.sh and Extreme IX during the financial year.
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Megaport ended FY26 with cash and cash equivalents of A$435.4 million, bolstered by a substantial equity raising completed during the year. The company declared no dividend for FY26, consistent with its growth and reinvestment strategy.
Transformation Boosts Top Line
The FY26 result highlights the company’s aggressive expansion into compute infrastructure and artificial intelligence workloads. The company completed two key acquisitions during the year: Latitude.sh, a global compute and GPU-as-a-Service platform, and Extreme IX, an India-based internet exchange business that accelerates Megaport’s entry into the Indian market.
These acquisitions were complemented by a series of major strategic contracts announced between April and May 2026. Megaport secured deals with combined total contract value of A$747.8 million, contributing A$301.3 million of ARR to its compute division. On a pro-forma basis as of late May 2026, Megaport’s total ARR reached approximately A$662.9 million, split between network ARR of A$277.7 million and compute ARR of A$385.2 million.
The company’s pro-forma ARR of more than A$660 million positions it as a serious global AI infrastructure platform, a dramatic evolution from its origins as a mid-sized network-as-a-service provider. However, the transition from a capital-light connectivity business to a capital-intensive compute and GPU infrastructure provider fundamentally changes the investment thesis and introduces new risks that markets are still digesting.
What Lay Ahead?
If momentum is to continue into FY27, markets will likely be focused on whether EBITDA margins stabilise or expand as major contracts ramp, the successful launch and utilisation of the on-demand GPU pool, capex discipline relative to guidance, and a clearer quality-of-earnings picture that reconciles strong ARR growth with bottom-line performance.
The price action in Megaport shares suggest that after a strong rally through 2026 on AI optimism, markets wanted to see more from the print. With A$435 million of cash on the balance sheet and nearly A$400 million of ARR providing revenue visibility, Megaport has the resources and runway to execute its vision, but the next period is likely to prove critical for direction. The intraday low of A$18.60 on Thursday is getting closer to an earlier support zone between $18.20-$18.50. If the price breaks down further, there could be tests of these levels whilst markets reassess.
