Megaport (ASX:MP1) Shares Face Funding Questions As Losses Deepen

Megaport came into this result with the stock up roughly 41% over three months, yet down about 14% in just the past week, which suggests sentiment was stretched and nervous at the same time. The headline today is simple. Revenue was A$312.2m for FY26 and annual recurring revenue was A$395m, but the company still reported a A$39m loss from continuing operations.

The market is now assessing whether the revenue and recurring contract profile justifies that recent rally, or whether the fresh loss and funding needs are more significant. The rest of the numbers highlight that tension.

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FY 2026 Earnings Summary

• Revenue (FY 2026, Trailing 12 Months): A$312.2m vs. A$227.1m in FY 2025 (very large increase, around 37% year on year as cited by Megaport)
• Net Loss from Continuing Operations (FY 2026, Trailing 12 Months): A$39.0m loss vs. A$0.3m loss in FY 2025 (loss widened significantly)
• Basic EPS (FY 2026, Trailing 12 Months): A$0.218 loss per share vs. A$0.002 loss per share in FY 2025 (loss per share increased sharply)
• Annual Recurring Revenue ARR (FY 2026 year end): A$395m vs. not disclosed for FY 2025 (ARR base now clearly quantified for Megaport)

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Megaport bull case hinges on ARR and AI contracts

Optimists argue Megaport is entering an acceleration phase where a richer product mix in AI, storage and security lifts annual recurring revenue and operating leverage. FY26 ARR of A$395m, including network ARR of A$289.6m and compute ARR of A$105m, lines up with that story. Network net revenue retention around 114% supports the idea that existing customers are expanding usage rather than shrinking. The A$1.3b of total contract value signed since late April and management’s estimate of about A$435m additional ARR once fully deployed also match the narrative of a larger addressable market. The Wasabi partnership and the Latitude acquisition show Megaport now sells an integrated network, compute and storage stack that fits AI and data heavy workloads. The missing piece for the bull case is that FY26 still ended with a A$39m loss from continuing operations.

Bear case focuses on losses, capital intensity and timing

The cautious view is that Megaport is overextending on capital heavy AI infrastructure while profitability and cash generation lag. FY26 CapEx of A$98m alongside a A$39m loss and an entitlement offer targeting A$827.3m support those worries that network and compute expansion still require heavy external funding. The new A$825m debt facility and about A$826m of CapEx tied to announced contracts underline how much balance sheet capacity is being committed ahead of full revenue ramp. Management itself flags timing and execution risk across GPU and storage procurement, multi site deployments and customer handovers. That directly links to the bear concern that ARR from large contracts may arrive slower than hoped. The share price falling about 14% over 7 days after a roughly 41% gain over 90 days suggests investors are already questioning how cleanly Megaport can convert signed TCV into durable earnings.

After a A$39m loss, heavy CapEx and fresh shareholder dilution, do these issues hint at deeper structural threats? Review the full risk analysis for Megaport which shows 2 important warning signs.

Stay Ahead Of Your Next Move

If Megaport’s mix of strong ARR and ongoing losses has your attention, register for free with Simply Wall St and add it to a Watchlist to track the share price against fair value and watch for a better entry point. Once you own Megaport or any other stock, use the Portfolio Command Center to cut through market noise and focus on the updates that actually matter to your holdings. For longer term ideas and different angles on Megaport’s risks and potential, turn to the Community and see what other investors are watching. By surfacing hidden catalysts and risks early, Simply Wall St can help you move faster and stay ahead of the market.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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