Q4 2026 Megaport Ltd Earnings Call

August 20, 2026

Speaker #1: 31, and thank you for joining the Megaport FY26 full-year results investor webcast. We will begin with the presentation by Michael Reed, Chief Executive Officer, and Leticia Dorman, Chief Financial Officer, followed by a short Q&A session.

Operator: Hello everyone, and thank you for joining the Megaport FY2026 full year results investor webcast. We will begin with the presentation by Michael Reid, Chief Executive Officer, and Leticia Dorman, Chief Financial Officer, followed by a short Q&A session. If you would like to ask a question during the webcast, please use the raise hand feature to be placed in a virtual queue. Now, I will hand over to the Megaport Chief Executive Officer, Michael Reid.

Operator: Hello everyone, and thank you for joining the Megaport FY 2026 full year results investor webcast. We will begin with the presentation by Michael Reid, Chief Executive Officer, and Leticia Dorman, Chief Financial Officer, followed by a short Q&A session. If you would like to ask a question during the webcast, please use the raise hand feature to be placed in a virtual queue. Now, I will hand over to the Megaport Chief Executive Officer, Michael Reid.

Speaker #1: If you would like to ask a question during the webcast, please use the raised-hand feature to be placed in a virtual queue. Now, I will hand over to the Megaport Chief Executive Officer, Michael Reed.

Speaker #2: Welcome to the FY26 full-year results for Megaport. This is our investor presentation. You'll see all of this is lodged on the ASX. I think there's a number of lodgments out there, so we're going to walk through a few of those today.

Michael Reid: Welcome to the FY2026 full year results for Megaport. This is our investor presentation. You will see all of this is lodged on the ASX. I think there is a number of lodgements out there, so we are going to walk through a few of those today. Let us kick it off. First and foremost, we are not a gaming company, as many of you will probably notice from this, but this does represent our business. We are connecting from the networks to the clouds. We are compute, network, and storage. We are on fire. Let us get through it. What you will see is, as you know, folks, we have acquired a compute and storage company, which is we have launched storage in that period of time. We are going to break up the business between Megaport Group, which is going to be at the top right of each screen. You will see this particular logo.

Speaker #2: But let's kick it off. First and foremost, we aren't a gaming company, as many of you will probably notice from this, but this does represent our business.

Speaker #2: We are connecting from the networks to the clouds. We are compute network and storage. And we're on fire. Let's get through it. So what you'll see is, as you know, folks, we've acquired a compute and storage company which we've launched storage in that period of time.

Speaker #2: So we're going to break up the business between Megaport Group, which is going to be at the top right of each screen, you'll see this particular logo.

Speaker #2: That represents that the revenue and anything we're talking about in that slide is the entire group, made up of both the compute and network business.

Michael Reid: That represents that the revenue and anything we are talking about in that slide is the entire group made up of both the compute and network business. If you see this at the top right is compute, and this is network. That is just a bit of a slide key to break it down so that we can share how each business is performing. Today, we will be going through company highlights, financial results, strategic update, and then a guidance update. Let us just pause for a second and look back. I think it is over the past 10 months from today. In November, we actually could not fit enough on the slide for what we did throughout the year, otherwise it would be too big. On 26 November, we announced the acquisition of Latitude.sh. That was our entrance into CPU and now GPU-as-a-service platforms, totally automated.

Speaker #2: If you see this at the top right, it's compute, and this is network. So that's just a bit of a slide key to break it down so that we can share how each business is performing.

Speaker #2: Today we'll be going through company highlights, financial results, strategic update, and then a guidance update. Let's just pause for a second and look back to get over the past 10 months from today.

Speaker #2: In November, we actually couldn't fit enough on the slide for what we did throughout the year. Otherwise, it'd be too big. So on 26 November, we announced the acquisition of Latitude.sh.

Speaker #2: That was our entrance into CPU and now GPU as a service platforms, totally automated. We also announced an acquisition of Extreme, IX, which is our entrance into India with 40 different data centers landing.

Michael Reid: We also announced an acquisition of Extreme IX, which is our entrance into India with 40 different data centers landing. It is the largest internet exchange in India. On 27 April, this has happened in a pretty short period of time. Between 27 April and today, we have announced AUD 1.3 billion of TCV. The first one was AUD 35 million on 27 April. Then we announced an AUD 254 million GPU, CPU, network, and storage contract on 14 May. Then on 3 June, we announced AUD 458.9 million of TCV. We also launched our GPU on-demand pool. We did a capital raise via entitlement offer, which was AUD 827 million. The day after, we launched storage, so it has been pretty busy. Then today, we announced another AUD 506 million of TCV contracts, which are announced today.

Speaker #2: It's the largest internet exchange in India. And then on the 27 April, this has happened in a pretty short period of time. So between the 27 April and today, we've announced 1.3 billion dollars of TCV.

Speaker #2: The first one was 35 million dollars on the 27 April. And then we announced a 254 million dollar GPU/CPU network and storage contract on the 14 May.

Speaker #2: Then on the 3 June, we announced 458.9 million dollars of TCV. We also launched our GPU on-demand pool. We did a capital raise via entitlement offer.

Speaker #2: Which was 827 million. The day after, we launched storage. So that's been pretty busy. And then today, we announce another 506 million dollars of TCV contracts, which were announced today.

Speaker #2: That's obviously forward-looking, so that's not reflected in the FY26 numbers. And we've got an announcement in the ASX on that. We've also been incredibly busy, so a huge shout-out to the finance team.

Michael Reid: That is obviously forward-looking, so that is not reflected in the FY26 numbers. We have got an announcement in the ASX on that. We have also been incredibly busy, so a huge shout-out to the finance team. I think a lot of the investors, as we have spoken in the past, have asked us about how we are looking at this from a debt perspective, how we are looking at all of our capital management. We have shared that we have been in a process for a period of time. We are super pleased to announce we have got AUD 825 million of new debt facility, which has been announced as of today. So that is fantastic news, which sets us up for the future. Again, the highlight here is AUD 1.3 billion of TCV contracts signed since 27 April to today. How does that look looking backwards? Let us talk about the FY26 ARR chart.

Speaker #2: I think a lot of the investors, as we've spoken in the past, have asked us about how we're looking at this from a debt perspective, how we're looking at all of our capital management.

Speaker #2: And we've shared that we've been in a process for a period of time. We're super pleased to announce we've got 825 million dollars of new debt facility, which has been announced as of today.

Speaker #2: So that's fantastic news, which sets us up for the future. Again, the highlight here is 1.3 billion dollars of TCV contracts signed since April 27 to today.

Speaker #2: How does that look, looking backwards? So let's talk about the FY26 ARR chart. And you can see a quick note at the top right.

Michael Reid: You can see, quick note at the top right, this is the group business. You can see that broken down is the network and then the compute business ARR as at June 2026. AUD 395 million of ARR landed in that year, which is an astounding achievement. If you break it down from a group revenue perspective, we are at AUD 312 million, which is a 37% year-on-year increase of group revenue for FY26. Networking ARR is up 27% in constant currency to AUD 289.6 million. An incredible achievement and very proud of what the team has achieved here. On network net retention, so we break down the net revenue retention effect for the network business specifically, separating out the compute business. I think this would be appropriate to say that that little thing does not represent that. This represents the network side. We are up 5 percentage points year on year.

Speaker #2: This is the group business. And so you can see broken down is the network, and then the compute business, ARR, as at June 26.

Speaker #2: 395 million dollars of ARR landed in that year, which is an astounding achievement. If you break it down from a group revenue perspective, we're at 312 million dollars, which is a 37% year-on-year increase of group revenue for FY26.

Speaker #2: Networking ARR is up 27% in constant currency to 289.6 million dollars. An incredible achievement, and very, very proud of what the team has achieved here.

Speaker #2: On network net retention, so we break down the net revenue retention effect for the network business specifically, separating out the compute business. So I think this would be appropriate to say that that little thing doesn't represent that.

Speaker #2: This represents the network side. We're up 5 percentage points year on year. That's 114% net revenue retention, probably one of the most important metrics that we've been focused in the business over the last 3 years.

Michael Reid: That is 114% net revenue retention. Probably one of the most important metrics that we have been focused on in the business over the last three years. This is an astounding achievement, and we are going to walk through some of those pieces coming up. The compute ARR. Since the acquisition, which we announced late November, we are up 72% as at June to AUD 105 million of ARR. Just an incredible achievement for the Latitude business and a massive shout-out not only to the founders that have joined us, but to the entire team and to all the new folks that are joining the business and helping scale. It is a story of massive execution coming out for the next year and continued growth. Let us look at the annual recurring revenue breakdown for the network. There is the network logo up the top right.

Speaker #2: This is an astounding achievement. We're going to walk through some of those pieces coming up. The compute ARR, so since the acquisition, which we announced late November, we're up 72% as at June to 105 million dollars of ARR.

Speaker #2: Just an incredible achievement for the Latitude business and a massive shout-out not only to the founders that have joined us, but to the entire team, and to all the new folks that are joining the business and helping scale.

Speaker #2: It's a story of massive execution, coming out for the next year, and continued growth. So let's look at the annual recurring revenue breakdown for the network.

Speaker #2: There's the network logo up the top right. So this is representing the network annual recurring revenue throughout the year. You can see the breakdown between Americas, obviously the largest component of that, 2.9 at the top, 166 in Americas, 77 million in Asia PAC, 47 in EMEA.

Michael Reid: This is representing the network annual recurring revenue throughout the year. You can see the breakdown between Americas, obviously the largest component of that, 290 at the top, 166 in Americas, AUD 77 million in Asia-Pac, AUD 47 in EMEA. All regions growing. But I think I want to draw your attention really specifically to the ARR incremental addition. This is the net increase in ARR on top of the start of the year to the finish of the year. You can see in history, we have been performing well, but look at FY26. This is 103% increase. It is on the largest ever year-on-year growth that we have ever seen. So the largest year that we had ever seen, we have over doubled that in net and ARR incremental additions to AUD 62.3 million in FY26.

Speaker #2: All regions growing. But I think I want to draw your attention, really specifically, to the ARR incremental addition. So this is the net increase in ARR on top of the start of the year to the finish of the year.

Speaker #2: And you can see in history, we've been performing well, but look at FY26. This is 103% increase on the largest ever year-on-year growth that we've ever seen.

Speaker #2: So the largest year that we've ever seen with over doubled that in net and ARR incremental additions to 62.3 million dollars in FY26. An incredible proof point that the investment that we made actually this time last year, back into the business, and all those pieces we've been setting up from a product standpoint, is paying off in dividends.

Michael Reid: An incredible proof point that the investment that we made actually this time last year back into the business and all those pieces we have been setting up from a product standpoint is paying off in dividends. Really exciting. This is the compute business and just a reflection of how the ARR has grown inside that business. Right now we are hitting sort of a little skatepark here as you come up this side. So you can see since the acquisition in November 2026, you can see the extreme growth that we have had here just in that very short period of time. This is not even taking into account all of the TCV contracts that we have got in place. I think there is a very small amount of ARR from them in there. So the future is looking incredibly bright. Again, congratulations to the Latitude team.

Speaker #2: Really exciting. This is the compute business. And just a reflection of how the ARR has grown inside that business. I mean, right now, we're hitting sort of a little skate park here.

Speaker #2: So as you come up this side, so you can see since the acquisition in November 26, you can see the extreme growth that we've had here, just in that very short period of time.

Speaker #2: This isn't even taken into account all of the TCV contracts that we've got in place. I think there's a very small amount of ARR from them in there.

Speaker #2: So the future is looking incredibly bright. Again, congratulations to the Latitude team. What a magic partnership between us. And that's showing right there. We've shared our DC cohorts ARR contribution over time, before.

Michael Reid: What a magic partnership between us, and that is showing right there. We have shared our DC cohorts' ARR contribution over time before. It is a little bit of an eye chart, but it certainly reflects how important it is for us to continue to invest in building out new data centers. I will just sort of explain what you are looking at here. Each group here represents a cohort of data centers that we have added. So if we go back to this very first one, in FY2022, we added 26 different data centers, and it started in that year with this level of revenue. What was really important is that the following year, that is when you start to see the revenue come to fruition, when you invest in building out a data center. You can see it is compound interest from there on after. We sort of shared this back here.

Speaker #2: It's a little bit of an eye chart, but it certainly reflects how important it is for us to continue to invest in building out new data centers.

Speaker #2: And I'll just sort of explain what you're looking at here. These each group here represents a cohort of data centers that we've added. So if we go back to this very first one, in FY22, we added 26 different data centers.

Speaker #2: And it started in that year with this level of revenue. Now, what was really important is that the following year, that's when you start to see the revenue come to fruition when you invest in building out a data center.

Speaker #2: And you can see it's compound interest there on from there on after. Now, we sort of shared this back here. When we first came in, there was very few data centers added.

Michael Reid: Look, when we first came in, there were very few data centers added. We started to say we need to continue to add. What we saw in FY2025 was we added 115 data centers. You could see how that landed from a revenue perspective. But have a look at the following year from those data centers. Astronomical. The point of this is every time we add these new DCs and get new revenue, it expands our TAM and helps us grow the business, but it is the ongoing growth of that. Now have a look at what we have done in FY2026. The team is on fire. They have added 155 data centers, landed the revenue at this component, and if you play this forward, you can start to see the impact of compound interest of building out the TAM.

Speaker #2: We started to say we need to continue to add. What we saw in FY25 was we added 115 data centers. You could see how that landed from a revenue perspective.

Speaker #2: But have a look at the following year from those data centers. Astronomical. And so what the point of this is, every time we add these new DCs and get new revenue, it expands our TAM and helps us grow the business, but it's the ongoing growth of that.

Speaker #2: Now, have a look at what we've done in FY26. The team is on fire. They've added 155 data centers. Landed the revenue at this component.

Speaker #2: And you can, if you play this forward, you can start to see at the impact of compound interest of building out the TAM. This is a really key part of the strategy as we constantly continue to invest in building and showcasing why we're doing that.

Michael Reid: This is a really key part of the strategy as we constantly continue to invest in building and showcasing why we are doing that. So you can see we are up 35% year on year in terms of data centers. What is really interesting is we are landing new data centers with much higher ARR because we have got so many more products that we are selling into that customer base. So it is a real key example of the strategy coming together. Probably one of my favorite charts. This sort of represents what that compound interest around net retention and how it plays out in the customer cohorts. Just to sort of quickly look at it. Whilst it looks very pretty, and it is very pretty, each color represents a cohort of customers, i.e., let us pick a particular color.

Speaker #2: So you can see we're up 35% year on year in terms of data centers. And what's really interesting is we're landing new data centers with much higher ARR because we've got so many more products that we're selling into that customer base.

Speaker #2: So it's real key example of the strategy coming together. Probably one of my favorite charts this sort of represents what that compound interest around net retention and how it plays out in the customer cohorts.

Speaker #2: So just to sort of quickly look at it, whilst it looks very pretty and it is very pretty, each color represents a cohort of customers, i.e., let's pick a particular color.

Speaker #2: So in June 22, so to June 23, so FY23, this very small piece of revenue is the customers that landed. And then what happens to them the next year?

Michael Reid: So in June 2022 to June 2023, so FY23, this very small piece of revenue is customers that landed. Then what happens to them the next year? They expand, and then the year after, they expand, and the year after, they expand. So that's actually showcasing it's incredibly sticky but also expansive, which is your net retention number. But what we've done right up the top here is we keep stacking these on top of each other. The FY26 cohort ARR has landed 55% higher than our previous record. It's showing an incredible result from the go-to-market team. Again, back to all those new products that we're landing and innovating. We get more revenue, more wallet share, more TAM per customer, and we're proving that out as to how we land.

Speaker #2: They expand, and then the year after they expand, and the year after they expand. So that's actually showcasing it's incredibly sticky, but also expansive, which is your net retention number.

Speaker #2: But what we've done right up the top here, is we keep stacking these on top of each other. The FY26 cohort ARR has landed 55% higher than our previous record.

Speaker #2: It's showing an incredible result from the go-to-market team. And again, back to all those new products that we're landing and innovating, we get more revenue, more wallet share, more TAM per customer, and we're proving that out as to how we land.

Speaker #2: So it's always great when we tell you what we were going to do, and we can show you historically that we actually did what we said we were going to do.

Michael Reid: So it's always great when we tell you what we were going to do, and we can show you historically that we actually did what we said we were going to do. This slide, there's a lot of data in here. We're putting this in the deck more for when we go through the investor roadshow, so I'm not going to walk through every one of these. But in short, the execution against the strategy throughout the financial year was nothing short of astounding for what was a pretty small team. So we added 155 data centers. We've added so many different products. If you think about the strategy of the company, there are three pieces. We build, and that is how we expand and add different total addressable market into existing products. So as we add, if you look at it, Megaport infrastructure across 40 sites.

Speaker #2: This slide, there's a lot of data in here. We're putting this in the deck more for when we go through the investor roadshow. So I'm not going to walk through every one of these.

Speaker #2: But in short, the execution against the strategy throughout the financial year was nothing short of astounding for what was a pretty small team. And so we added 155 data centers.

Speaker #2: We've added so many different products. If you think about the strategy of the company, there are three pieces. We build, and that is how we expand and add different total addressable market into existing products.

Speaker #2: So that's we add if you look at it, megaport infrastructure across 40 sites. We build out storage hardware. We build out all this infrastructure.

Michael Reid: We build out storage hardware. We build out all this infrastructure, all these different components. We upgrade speed, 400G, you name it, et cetera. Then on top of that, actually, there's probably a few things worth calling out. We had 3 times the expansion in 100G internet locations, which is a 200% increase in market coverage. Just one little example of going big on the products that we're seeing massive success in. So we're constantly testing products and all sorts of things inside the business. When we find success, we double down behind them and continue to expand. 67% increase in 100G-enabled locations, for example. 58% increase in bare metal service. Huge investment. The innovate component is about us bringing out new products. So this is our engineering teams actually building cool stuff. We launched Cloud Storage, DDoS protection. We launched MCP.

Speaker #2: All these different components. We upgrade speed, 400 gig, you name it, et cetera. Then on top of that, we actually, there's probably a few things worth calling out.

Speaker #2: We had three times the expansion in 100 gig internet locations, which is a 200% increase in market coverage. Just one little example of going big on the products that we're seeing massive success in.

Speaker #2: So we're constantly testing products and all sorts of things inside the business. When we find success, we double down behind them and continue to expand.

Speaker #2: 67% increase in 100 gig enabled locations, for example. 58% increase in bare metal service. Huge investment. The Innovate component is about us bringing out new products.

Speaker #2: So this is our engineering teams actually building cool stuff. We launched cloud storage, DDoS protection. We launched MCP. So this is all the AI components that are sitting inside that.

Michael Reid: This is all the AI components that are sitting inside that. Virtual machines, Kubernetes, Agent Hub. There's so many things that came through. Cloud Router, IPsec, Packet Filtering, and Ping and Traceroute. The team has delivered that in that period of time. Each one of those steps us further away from anyone that would try and do what we do and actually adds a TAM to the component. The last piece is the investment component. We talked through a few of those. We've acquired companies. We've added capital to it. We've invested in all the different folks. We're diversifying our capital base. All those different components will take the investor roadshow if we need to go through that. All right. The financial results. This is the exciting part, folks. I'm going to hand you over to Leticia Dorman, our CFO. Cheers.

Speaker #2: And virtual machines, Kubernetes, Agent Hub, just so many things that came through. Cloud router, IPsec, packet filtering, ping traceroute. The team has delivered that in that period of time.

Speaker #2: Each one of those steps us further away from anyone that would try and do what we do and actually adds a TAM to the component.

Speaker #2: And the last piece is the investment component. We talked through a few of those. We've acquired companies. We've added capital to it. We've invested in all the different folks.

Speaker #2: We're diversifying our capital base, all those different components will take the investor roadshow if we need to go through that. All right. The financial results.

Speaker #2: This is the exciting part, folks. I'm going to hand you over to Latisha Dorman, our CFO. Cheers.

Speaker #1: Thanks, Michael. So the FY26 performance, we just have a slide here really to touch back on the guidance that we provided and where we've landed compared to that guidance.

Leticia Dorman: Thanks, Michael. The 2026 performance, we just have a slide here really to touch back on the guidance that we provided, and where we have landed compared to that guidance. Reported group revenue is AUD 312 million. That is made up of the network revenue, which has been since experienced significant growth over the last year, landing at AUD 268 million. Then the compute revenue, which we talk extensively about, and what we have landed a number of strategic contracts that largely will land into 2027 for the impact onto revenue. However, that compute revenue, against there is around AUD 44 million. EBITDA is above the top end of guidance, at 25%, made up of a variety of components, being revenue and a range of costs in there, which we will talk through on the next slide.

Speaker #1: So reported group revenue is 312 mill. That's made up of the network revenue, which has been seen experienced significant growth over the last year, landing at 268.

Speaker #1: And then the compute revenue, which we talk extensively about and what we've landed a number of strategic contracts that largely will land into FY27 for the impact onto revenue.

Speaker #1: However, that compute revenue against. There is 44, around 44 mill. EBITDA is at the top above the top end of guidance at 25%. Made up of a variety of components, being revenue and a range of costs in there, which we'll talk through on the next slide.

Speaker #1: And then capex around the guidance that we had, 90 to 100 mill, which excluded any strategic contracts or initiatives landing at 98 mill. So here we've got a fair bit of text.

Leticia Dorman: CapEx around the guidance that we had AUD 90 million to AUD 100 million, which excluded any strategic contracts or initiatives, landing at AUD 98 million. Here we have got a fair bit of text, which is helpful for post results for a few of the folks on the call. The call-outs here, revenue up 37%. That is, we did acquire two companies, with revenue in those companies, Latitude, and the India acquisition. That, but also the underlying network business itself with significant NRR growth and new logo acquisition during the year has added to that result. The direct network costs, it does reflect the ongoing investment that we have talked about extensively previously, 155 net new DCs, and we continue the 400G core backbone upgrades as well throughout the globe. Our employee costs are up substantially as planned and as communicated a number of times.

Speaker #1: Which is helpful for post results for a few of the folks on the call. But the callouts here, revenue up 37%. Now, that is, we did acquire two companies.

Speaker #1: With revenue in those companies, Latitude. And the India acquisition. That, but also the underlying network business itself with significant NRR growth and new logo acquisition during the year has added to that result.

Speaker #1: The direct network costs, it does reflect the ongoing investment we've talked about extensively. Previously, 155 net new DCs. And we continue the 400 gig core backbone upgrades as well throughout the globe.

Speaker #1: Employee costs are up substantially as planned and as communicated a number of times as a business has been rebuilding that cost has increased. We are also have incorporated the two entities.

Leticia Dorman: As the business has been rebuilding, that cost has increased. We also have incorporated the two entities, in much bigger group, and we continue to invest in the business, particularly to support the scale of growth and opportunity and revenue. Other operating costs, there are some higher non-recurring expenditure associated with the two acquisitions in particular. We are now located heavily in Brazil, India and the US, so there is a significant amount of travel, as we start to merge the three entities together, and some heavy marketing activity to support that as well. EBITDA at AUD 77 million, which showcases that 25% margin there is also a call-out there for us. Employee costs. This is some insight into where we have invested for employees and continue to invest, and you can see that insight there largely around even the LTV to CAC of 5.8.

Speaker #1: And in much bigger group. And we continue to invest in the business, particularly to support the scale of growth and opportunity and revenue. Other operating costs, there are some higher non-recurring expenditure associated with the two acquisitions in particular.

Speaker #1: Located in, we're now located heavily in Brazil, India, and the US. So there's a significant amount of travel as we start to merge the three entities together.

Speaker #1: And some heavy marketing activity to support that as well. EBITDA at 77 mill. Which shows showcases that 25% margin there is also a callout there for us.

Speaker #1: Employee costs. This is some insight into where we've invested for employees and continue to invest. And you can see that insight there largely around even the LTV to CAC of 5.8.

Speaker #1: That really just reflects even with the go-to-market investment, which continues to scale. That supports the revenue growth in line with that. We are scaling the customer support and deployment functions.

Leticia Dorman: That really just reflects even with the go-to-market investment, which continues to scale, that supports the revenue growth in line with that. We are scaling the customer support and deployment functions, to enable the compute build-out. That is a really critical component. Then we continue to invest in the product and engineering, as we continue to scale out the onion rings. I think Michael will talk to you a little bit later in this, around the continuing expansion of products. Cash flow, that is up pretty materially. We did do an entitlement offer, in the month of June, and so the cash had landed in the balance sheet. We continue to place deposits on significant orders of GPUs, and as we start to have those be delivered, we will continue to utilize that cash, in order to start to support the rollout of the strategic contracts as planned.

Speaker #1: To enable the compute build-out, that's a really critical component. And then we continue to invest in the product and engineering as we continue to scale out the onion rings.

Speaker #1: So I think, Michael, we'll talk to a little bit later in this around the continuing expansion of products. Cash flow. That is up pretty materially.

Speaker #1: We did do an entitlement offer in the months of June. And so the cash had landed in the balance sheet. We continue to place deposits on significant orders of GPUs.

Speaker #1: And as we start to have those be delivered, you'll continue to utilize that cash in order to start to support the rollout of the strategic contracts as planned.

Speaker #1: You can see here the operating cash flows are the combined entities. That is driven by the inclusion of the two entities as well. This is a consolidated cash flow as with EBITDA.

Leticia Dorman: You can see here the operating cash flows of the combined entities. That is driven by the inclusion of the two entities. This is a consolidated cash flow, as with EBITDA, so some pretty significant changes in the business overall, across the P&L cash flow and balance sheet that you will see. Michael has talked to this previously around the new debt facility where we have commitment letters signed by a syndicate of leading domestic and international banks. That has been a significant process that we have undertaken over the last few months, so we are really excited to announce that as part of the overall funding strategy that we have undertaken to support growth for the consolidated group. We do continue to explore further funding strategies in line with our capital management plan.

Speaker #1: So it's some pretty significant changes in the business overall. Across the P&L cash flow and balance sheet that you'll see. The Michael has talked to this previously around the new debt facility.

Speaker #1: Where we have commitment letters signed by a syndicate of leading domestic and international banks. That has been a significant process that we've undertaken over the last few months.

Speaker #1: And so we're really excited to announce that as part of the overall funding strategy. That we've undertaken to support growth for the consolidated group.

Speaker #1: We do continue to explore further funding strategies in line with our capital management plan. And this is really designed to highlight that where we see the growth and we will continue to invest our cash in where we want to build and innovate.

Leticia Dorman: This is really designed to highlight that where we see the growth and we will continue to invest our cash in where we want to build and innovate to enable growth for the future of Megaport. That debt facility will form a core part of the overall funding strategy for that. Back to you, Michael, on your strategic update.

Speaker #1: To enable growth for the future of Megaport. And that debt facility will form a core part of the overall funding strategy for that. Back to you, Michael.

Speaker #1: On your strategic update.

Speaker #2: Fantastic. And congratulations for a huge amount of work from the team. Team just acknowledging the finance and HR and the legal team that have made two acquisitions come to fruition.

Michael Reid: Fantastic, and congratulations for a huge amount of work from the team. Just acknowledging the finance and HR and the legal team that have made two acquisitions come to fruition. The finance team has done all the multiple announcements since April, plus the end of the financial year results, and on top of that, a debt facility process, which has been outstanding. So Tish, you are allowed to have a little break, maybe a couple of days after this. Strategic update. For those of you who have not been following, we are now what is a globally distributed automated infrastructure company. People are like, "Well, what is Megaport and what do we do?" We do three things. We deploy compute, network, and storage, which are physical infrastructure assets. We deploy them in data centers all around the world. We own that infrastructure. We use our capital to procure that.

Speaker #2: The finance team has done all the multiple announcements since April. Plus the end of the financial year results and on top of that a debt facility process, which has been astounding so tissue related to have a little break, maybe a couple of days after this.

Speaker #2: Strategic update. So for those who haven't been following, we are now what is a globally distributed automated infrastructure company. So people are like, well, what is Megaport and what do we do?

Speaker #2: We do three things. We deploy compute, network, and storage, which are physical infrastructure assets. We deploy them in data centers all around the world.

Speaker #2: We own that infrastructure. We use our capital to procure that. We physically install it in the data center that we lease. We then stitch it all together with fiber.

Michael Reid: We physically install it in the data center that we lease. We then stitch it all together with fiber, and then we run that. We run a software automation layer that we have built and manage in-house. That is the sort of crown jewels of the business that automates the deployment in seconds for all compute and GPU, for all network globally, and then for all the storage elements. The three pieces make up the trifecta to what is all IT infrastructure service in any application that you have ever used in your life. You can see how we are distributed and broken down around the globe. We are in 31 different countries. We have 330,000 pieces of physical fiber that we lease and stitch together 3,000 network devices, 13,000 plus GPUs and CPUs, and scaling at a rate of knots across 1,100 data centers.

Speaker #2: And then we run that. Now we run a software automation layer that we have built and manage in-house that is the sort of crown jewels of the business.

Speaker #2: That automates the deployment in seconds for all compute and GPU, for all network globally, and then for all the storage elements as well. The three pieces make up the trifecta to what is all IT infrastructure service in any application that you have ever used in your life.

Speaker #2: You can see how we're distributed and broken down around the globe. We are in 31 different countries. We have 330,000 pieces of physical fiber that we lease and stitch together 3,000 network devices, 13,000 plus GPUs and CPUs in scaling at a rate of knots.

Speaker #2: Across 1,100 data centers. This is an incredible business with an impenetrable moat that is just scaling at a rate of knots. Like a look at this thing.

Michael Reid: This is an incredible business with an impenetrable moat that is just scaling at a rate of knots. Take a look at this thing. It is incredible. We are super proud of what has been built there. But as I say, a picture is worth a thousand words and a demo is a thousand PowerPoints. Instead of putting 1,000 PowerPoints in here, I am just going to do a very quick demo to show you what that actually means. Assuming I can switch over here. Just checking everyone can see my screen. Is that coming through? Yay. All right. What you can see here is planet Earth. We obviously have two options. We have the flat Earth version, which Leticia is fond of, and we have also got the spherical version. I am a spherical guy. Let us zoom in.

Speaker #2: It's incredible. So we're super proud of what's been built there. But as I say, a picture is worth a thousand words. And a demo is a thousand PowerPoints.

Speaker #2: So instead of putting a thousand PowerPoints in here, I'm just going to do a very quick demo to show you what that actually means.

Speaker #2: Assuming I can switch over here. Just checking everyone can see my screen. Is that coming through? Yay. All right. So what you can see here is planet Earth.

Speaker #2: We obviously we have two options. We have the planet Earth version, which Letitia is fond of. And we've also got the spherical version. I'm a spherical guy.

Speaker #2: So let's zoom in. What you've got here is every single data center that Megaport has rolled out across the globe from a network standpoint.

Michael Reid: What you have got here is every single data center that Megaport has rolled out across the globe from a network standpoint. This is specifically looking at the network part of the business. We are compute network and storage, and this is the network element. If we just take a look at the United States, this is me logging into the portal as a customer. I can see all the different connectivity and different products that we have deployed. We will pick a clean location, and we will just zoom in on that. We will take 13 data centers clustered over in this particular location. We will keep zooming in. There is 12. You can see all these different data centers sitting in this particular location. We have got NTT Global, we have got QTS Portland, Flexential, EdgeConneX, and we keep scaling. We go right down here to two. There is another. There is Digital Realty Portland.

Speaker #2: So this is specifically looking at the network part of the business. We are compute network and storage. And this is the network element. So if we just take a look at the United States, this is me logging into the portal as a customer.

Speaker #2: I can see all the different connectivity and different products that we've deployed. We'll pick a clean location and we'll just zoom in on that.

Speaker #2: So we'll take 13 data centers clustered over in this particular location. We'll keep zooming in. There's 12. You can see all these different data centers sitting in this particular location.

Speaker #2: So we've got NTT Global. We've got QTS Portland. Flex Central. Edge Connects. And we keep scaling. We go right down here to two. And there's another there's digital reality Portland.

Speaker #2: So what you've got in this very small location in Portland is a whole range of data center operators that we're currently live and active in.

Michael Reid: What you have got in this very small location in Portland is a whole range of data center operators that we are currently live and active in. This is when we talk about deploying data center locations. This is what we do. What happens is a customer has their own compute hardware sitting in this particular data center, and they need to go and connect. Let us pick EdgeConneX here. We click on there, and we can choose what product we want to create. We want to create a port. We want to get access from our server that we have got in that data center. We want to access connectivity to the outside world. We have picked the data center. We click next. We scroll down, and we choose what size of port. This is the Megaport. The 100G location. We will give it a name.

Speaker #2: And this is when we talk about deploying data center locations. This is what we do. So what happens is a customer has their own compute hardware.

Speaker #2: Sitting in this particular data center and they need to go and connect. So let's pitch Edge Connects here. We click on there and we can choose what product we want to create.

Speaker #2: We want to create a port. We want to get access from our server that we've got in that data center. We want to access connectivity to the outside world.

Speaker #2: We've picked the data center. We click next. We scroll down and we choose what side. It's a port. So this is the Megaport, the 100 gig location.

Speaker #2: We'll give it a name. We'll choose whether you want to add a cross connect, which is automated for you. We can actually deploy that.

Michael Reid: We will choose whether you want to add a cross-connect, which is automated for you. We can actually deploy that. Month-to-month terms, you name it. You can add all sort of technical details. We will just click next and click add the port. What we have done, as you will see, it has gone blue. We now have deployed physically a physical 100G port in that particular location that I am going to connect my data center infrastructure to. I could be a bank, and I am running a server in there with all my applications, and I need to connect somewhere. We take the port, and we go and add a connection, and we say, "I want to connect to a cloud, to a private data center, to Megaport Internet, to an internet exchange, to a marketplace, to a service key, to Megaport Storage," and we keep adding more products.

Speaker #2: Month to month terms, you name it. You can add all sort of technical details. We'll just click next and click add the port. And what we've done is you'll see it's gone blue.

Speaker #2: We now have deployed physically a physical 100 gig port in that particular location that I'm going to connect my data center infrastructure to. So I'm a I could be a bank and I'm running the server in there with all my applications.

Speaker #2: I need to connect somewhere. So we take the port and we go and add a connection. And we say I want to connect to a cloud, to a private data center, to Megaport internet, to an internet exchange, to a marketplace, to a service key, to Megaport storage.

Speaker #2: And we keep adding more products. But let's say we want to connect to cloud. And And we'll scroll down. These are all the different cloud locations.

Michael Reid: But let's say we want to connect to cloud, and we'll scroll down. These are all the different cloud locations. We'll choose Amazon Web Services, a hosted connection. Every one of these locations is physical infrastructure that we've built out around the world, over 300 different cloud on-ramps. You can see these are all the different connections. A blue and a red connection adds diversity. It's that simple. Let's choose a location. We'll choose up to Seattle. You can see how many milliseconds delay. We'll choose a blue. We click next, and then we give it a name. We give it a speed. Let's say 25 gig, and we just click next. All you need to know is your AWS account ID.

Speaker #2: We'll close choose Amazon Web Services, a hosted connection. And every one of these locations is physical infrastructure that we've built out around the world.

Speaker #2: Over 300 different cloud on-ramps. And so you can see these are all the different connections. A blue and a red connection adds diversity. It's that simple.

Speaker #2: Let's choose a location. We'll choose up to Seattle. You can see how many milliseconds delay. We'll choose a blue. We click next. And then we give it a name.

Speaker #2: We give it a speed. Let's say 25 gig. And we just click next. We all you need to know is your AWS account ID, the platform automatically stitches into the AWS portal, gives you a piece of fiber in effect that is yours, that you can access through that at 25 gig from your data center.

Michael Reid: The platform automatically stitches into the AWS portal, gives you a piece of fiber, in effect, that is yours that you can access through that at 25 gig from your data center. We click add, and then we're done. You'll see that connectivity is now live. So it's that simple. We go back to that particular location. Every time we go and add products, we grab that same product, and we say we would like to connect that to, say, a Global WAN platform, and we want to go and, say, connect into Brisbane, Australia. There's NextDC. Let's go in. It's 148 milliseconds all the way from the US to that particular location. We'll click next. We'll give it a name. We'll give it a speed. Scroll down. Click. You've got all this cool technical stuff you can add in. Click next, and we've deployed.

Speaker #2: We click add and then we're done. And you'll see that connectivity is now live. So that's it's that simple. We go back to that particular location.

Speaker #2: Every time we go and add products, we grab that same product and we say we would like to connect that to say a global WAN platform.

Speaker #2: And we want to go and say connect into Brisbane, Australia. There's next DC. Let's go and it's 148 milliseconds all the way from the US to that particular location.

Speaker #2: We'll click next. We'll give it a name. We'll give it a speed. Scroll down. Click. You've got all this cool technical stuff you can add in.

Speaker #2: Click next. And we've deployed. And what we've done is we've traversed in across many, many different subsea cable that's already built. You're now stitched in and connecting across to the to Australia.

Michael Reid: What we've done is we're traversing across many, many different subsea cable that's already built. You're now stitched in and connecting across to Australia. So that becomes the network component of this piece, and the network stitches it together. Then we go into the compute side of the business. The exact same thing. We look at live demo to shareholders, and we go in here, and we have this beautiful thing that says create a server. So when we click create a server, first of all, we've created compute network. Now we're going to create compute. You have options. You have bare metal, bare metal GPU, virtual machines, and there's a whole range of other cool stuff that the team keep building. These are the locations that we've physically deployed infrastructure in.

Speaker #2: So that becomes the network component of this piece. And the network stitches it together. And then we go into the compute side of the business.

Speaker #2: And so the exact same thing. We look at live demo to shareholders. And we go in here and we have this beautiful thing that says create a server.

Speaker #2: So when we click create a server, first of all, we've created network. Now we're going to create compute. You have options. You have bare metal.

Speaker #2: Bare metal GPU, virtual machines. And there's a whole range of other cool stuff that the team keep building. These are the locations that we're physically deployed infrastructure.

Speaker #2: And so imagine walking into a data center and seeing racks and racks and racks of servers, all spinning lights on and you name it.

Michael Reid: So imagine walking into a data center and seeing racks and racks, and racks of servers all spinning, lights on, and you name it. Let's say 70% of those servers are customers and 30% are waiting to be deployed. So let's take North America. Here's Ashburn. That's where the home of the cloud is. We'll scroll down. You've got all these different types of servers that you can deploy on demand at the click of a button. Core optimized, memory optimized storage. Let's just choose this one, RS4 metal. You can see how much it costs per hour. You can scroll down. We can even pre-deploy an operating system. So the platform is searching through all the servers and deploying operating systems that make sense that we expect the customer to utilize. Why is this important?

Speaker #2: Let's say 70% of those servers are customers and 30% are waiting to be deployed. So let's say take North America. Here's Ashburn. That's where the home of the clouds.

Speaker #2: We'll scroll down. You've got all these different types of servers that you can deploy on demand at the click of a button. Core optimized, memory optimized storage.

Speaker #2: Let's just choose this one. RS4 metal. You can see how much it costs per hour. You can scroll down. We can even pre-deploy an operating system.

Speaker #2: So the platform is searching through all the servers and deploying operating systems that make sense that we expect a customer to utilize. Why is this important?

Speaker #2: Imagine pulling an iPhone out of the box and it didn't have an operating system on it. It would now take you 20, 30, maybe two hours to download.

Michael Reid: Imagine pulling an iPhone out of the box. It didn't have an operating system on it. It would now take you 20, 30, maybe 2 hours to download and then get it up and running. We can actually pre-deploy the operating system on you, which means it deploys in 5 seconds. We can scroll down, choose hourly. This is live, so I click deploy hourly, and in effect, what it's doing is taking a server in that particular location. It's deploying it, and in less than 5 seconds, it's on. It's on with an operating system live in Ashburn. We can click into that. I can't tell you how complicated the software is to allow you to physically do that. Mind-boggling. Massive shout-out to Edu and his team that actually made that happen. If you have a look down here, you can see all the different options.

Speaker #2: And then get it up and running. We can actually pre-deploy the operating system on you, which means it deploys in five seconds. So we can scroll down, choose hourly.

Speaker #2: This is live. And so I click deploy hourly. And in effect, what it's doing is taking a server in that particular location. It's deploying it.

Speaker #2: And in less than five seconds, it's on. It's on with an operating system live in Ashburn. We can click into that. I can't tell you how complicated the software is to allow you to physically do that.

Speaker #2: Mind boggling. Massive shout out to Edge U and his team that actually made that happen. If you have a look down here, you can see all the different options.

Speaker #2: This is a live server. It's available. You can ping it. You can put your own software and do whatever you want to do. Then you can manage it.

Michael Reid: This is a live server. It's available. You can ping it, you can put your own software on, do whatever you want to do. Then you can manage it. You can say down here, look, I want out-of-band remote access, move it, install it, delete it, you name it. You can scroll down and add a database, add Kubernetes, add a network, or add storage. This is the next pillar. What we've talked about is network, we've talked about compute that we've now deployed, and I would like to add a storage bucket onto the side of it. If you think of it, in your laptop that's sitting in front of you've got a compute, little bit of Intel chip or something sitting in there.

Speaker #2: You can you can say down here, look, I want to out of band remote access, move it, install it, delete it, you name it.

Speaker #2: You can scroll down and add a database, add Kubernetes, add a network. Or add storage. And so this is the next pillar. What we've talked about is network.

Speaker #2: We've talked about compute that we've now deployed. And I would like to add a storage bucket onto the side of it. So if you think of it, in your laptop that's sitting in front of you, you've got to you've got to compute a little bit of Intel chip or something sitting in there.

Speaker #2: You've got some memory. You've got a storage, which is a little bit of a hard drive. And then you've got a Wi-Fi device. That's your compute network and storage in terms of a laptop.

Michael Reid: You've got some memory, you've got a storage, which is a little bit of a hard drive, and then you've got a Wi-Fi device. That's your compute network and storage in terms of a laptop. It's what we do, too. It's really that simple. We click storage, we click object, block. We've got different options. Let's take object storage, and you can start to create a bucket. It's really simple. I'm going to create a bucket, and I get to choose super high-performance storage delivered in seconds on our VAST platform. Then we look at our standard, cost-optimized storage that crosses between VAST, Wasabi, and a few other components inside there. Now you can start to see where we've deployed that. So let's look at a very low-cost storage platform that you can deploy from anywhere.

Speaker #2: That's what we do too. It's really that simple. So we click storage. We click object, block. We've got different options. Let's take object storage.

Speaker #2: And you can start to create a bucket. It's really simple. I'm going to create a bucket. And I get to choose. Super high performance storage delivered in seconds.

Speaker #2: On our vast platform. And then we look at our standard cost optimized storage across between vast was having a few other components inside there.

Speaker #2: And now you can start to see where we've deployed that. So let's look at a very low cost storage platform that you can deploy from anywhere.

Speaker #2: Let's just say you wanted to create a backup out of your cloud to make sure that if there's a problem with the cloud, you had a full backup that's actually protected.

Michael Reid: Let's just say you wanted to create a backup out of your cloud to make sure that if there was a problem with the cloud, you had a full backup that's actually protected. If, say, you were attacked from a cyber perspective, you've got complete control. There's North America, all the different locations, Europe, Asia Pacific. This is a truly global platform. Let's say Ashburn again. All you need to do, imagine that you are trying to protect your data. If you've heard of these sort of crypto lockers and so forth, where they break into your laptop and then they encrypt all your data and ask you for Bitcoin. 70% of the time that that occurs, it actually has already encrypted your backups. So your IT team says, "Don't worry, I've got a backup." They start downloading it, only to realize that's also encrypted.

Speaker #2: And if say you were attacked from a cyber perspective, you've got complete control. There's North America, all the different locations, Europe, Asia, Pacific. This is a truly global platform.

Speaker #2: Let's say Ashburn again. And all you need to do, imagine that you were trying to protect your data. If you've heard of these sort of crypto lockers and so forth, where they break into your laptop and then they encrypt all your data and ask you for Bitcoin.

Speaker #2: 70% of the time that that occurs, it actually has already encrypted your backups. So your IT team says, don't worry. I've got a backup.

Speaker #2: They start downloading it and you realize that's also encrypted. How do you protect that? One button from Megaport. You click this. You go right.

Michael Reid: How do you protect that? One button from Megaport. You click this, you go right, and you've object locked it. You've clicked retention, how long you want to keep it for. So for governance, you click 30 days. You've got an immutable backup for 30 days. You click create the bucket. So that is compute, network, and storage all delivered via software, all on demand. The only thing I'm going to go back to is I'm going to delete this server because what it shows you is the fact that it's on demand, and I actually want to sell this server to someone, so it's live. Let's just delete this. I'll have to copy and paste this piece so I don't fat-finger it, and I've deleted it. Now what's happened is that server has been deleted. It gets wiped three times, made available back in the portal. Okay.

Speaker #2: And you've object locked it. You click retention. How long you want to keep it for. So for governance, you click 30 days. You've got an immutable backup for 30 days.

Speaker #2: You click create the bucket. So that is compute, network, and storage, all delivered via software, all on demand. The only thing I'm going to go back to is I'm going to delete this server because what it shows you is the fact that it's on demand.

Speaker #2: And I actually want to sell this server to someone. So it's live. So let's just delete this. I have to copy and paste this piece so I don't fat finger it.

Speaker #2: And I've deleted it. And now what's happened is that server has been deleted. It gets wiped three times, made available back in the portal.

Speaker #2: Okay. So hopefully that gives you a perspective of what compute network and storage really is without 700 slides. So we go back to this I think this is probably the I would say like almost strategy on a page.

Michael Reid: Hopefully that gives you a perspective of what compute, network, and storage really is without 700 slides. We go back to this. I think this is probably the, I would say, almost strategy on a page. These are the investments in strategic pillars that unlock TAM, total addressable market. If we look here, I'll just get my laser pointer. Each one of these rings, Tish called them the onion rings. Each one of these onion rings or rings, in effect, represents a product that opens up total addressable market.

Speaker #2: These are the investments in strategic pillars that unlock TAM, total addressable market. So if we look here, just get my laser pointer. Each one of these rings, Tish called them the onion rings, each one of these onion rings or rings in effect represents a product that opens up total addressable market.

Speaker #2: So one of the key pieces to continued net retention, one of the most important factors, if you're investing in a tech business, is to ensure the technology is awesome, customers love it, pricing and all those components are covered off, but the company is continuing to invest in new products and making things that customers that solve customer problems and that they love.

Michael Reid: One of the key pieces to continued net retention, one of the most important factors if you're investing in a tech business, is to ensure the technology is awesome, customers love it, pricing all those components are covered off, but the company is continuing to invest in new products and making things that solve customer problems and that they love. If you don't do that, you don't earn the right to get your net retention. Your growth starts to slow. This is this sort of continued investment. You can see in the past three years, we've gone from what was a cloud connectivity company in Virtual Edge, adding Global WAN, data center to connect DC internet, NAT Gateway, and a whole range of security that we've just launched in the last however long, including DDoS and IPsec, and you name it.

Speaker #2: And if you don't do that, you don't earn the right to get your net retention. Your growth starts to slow. So this is this sort of continued investment.

Speaker #2: You can see in the past three years, we've gone from what was a cloud connectivity company in virtual edge, adding global WAN, data center interconnect, DC internet, NAT gateway, and a whole range of security that we've just launched in the last hour of a long, including DDoS and IPSEC and you name it.

Speaker #2: That represents the network part of the business. The compute component, which is CPU and GPU elements, came with the latitude acquisition. And that team innovated incredibly fast and added storage to that pillar.

Michael Reid: That represents the network part of the business. The compute component, which is CPU and GPU elements, came with the Latitude acquisition, and that team innovated incredibly fast and added storage to that pillar. You can do two things. You can continue to add rings, and you can also expand the ring. The expansion of the ring is building. That's when we added new data centers that I talked about before, new markets, new countries, taking the same product set and landing in new locations or even just expanding capacity, going from 10 gig to 100 gig, from 100 gig to 400 gig. That will actually expand the ring. That's the build-out. The innovator, all the developers and engineering teams sitting there building awesome compute products, network products, storage products, AI products, and security that you'll see continually invested in that space.

Speaker #2: And so you can do two things. You can continue to add rings. And you can also expand the ring. And so the expansion of the ring is building.

Speaker #2: That's when we added new data centers that I talked about before, new markets, new countries taking the same product set and landing in new locations or even just expanding capacity going from 10 gig to 100 gig, from 100 gig to 400 gig.

Speaker #2: That will actually expand the ring. That's the build out. The innovator, all the developers and engineering team sitting in there building awesome compute products, network products, storage products, AI products, and security that you'll see continually invested in that space.

Speaker #2: And you should expect from us constant updates around what we're bringing to market to solve customer problems. The last one is where we invest.

Michael Reid: And you should expect from us constant updates around what we are bringing to market to solve customer problems. The last one is where we invest. We expand product and engineering to constantly invest in that space around innovation. We expand the go-to-market because the last piece that you have is when you build beautiful core products, you need to go and tell the world about them and take them to your customers. The last piece is you can build that either internally with your innovation team, or you can look to acquire strategic acquisitions. Latitude and Extreme are great examples of that. Actually, they represent two things. Latitude adds a new ring, whereas Extreme expands the existing ring. So you are actually seeing acquisitions that hit both expanding a ring and adding a new ring.

Speaker #2: And so we expand product and engineering to invest in constantly invest in that space. Around innovation, we expand the go-to-market because the last piece that you have is when you build beautiful cool products, you need to go and tell the world about them.

Speaker #2: And take them to your customers. And the last piece is you can build that either internally with your innovation team or you can look to acquire strategic acquisitions latitude and extreme are great examples of that.

Speaker #2: And actually, they represent two things. Latitude adds a new ring. Whereas extreme expands the existing ring. So you're actually seeing acquisitions that hit both expanding a ring and adding a new ring.

Speaker #2: So if you had to ask what our strategy is, we're adding ring and expanding them. And then you'd say, well, what constitutes a focus from a product standpoint?

Michael Reid: So if you had to ask what our strategy is, we are adding rings and expanding them. Then you would say, well, what constitutes a focus from a product standpoint? So these are the guiding principles specifically for product or an acquisition that we are looking at. We are very disciplined around what we look to acquire. If you look at Latitude, we acquired a company the same as Megaport. Total automation, super important. That gives you the ability to be instantaneous. You saw us deliver that server in less than 5 seconds. If you can automate the infrastructure, you can deliver it at global scale. If you can make it incredibly resilient, I can do something that you cannot do as a customer. I can do it much more resilient than you could do yourself.

Speaker #2: So these are the guiding principles specifically for product or an acquisition that we are looking at. And so we're very disciplined around what we look to acquire.

Speaker #2: If you look at latitude, we acquire a company the same as Megaport, total autonomy, automation, super important. That gives you the ability to be instantaneous.

Speaker #2: You saw us deliver that server in less than five seconds. If you can automate the infrastructure, you can deliver to global scale. If you can make it incredibly resilient, I can do something that you can't do as a customer.

Speaker #2: I can do it much more resilient than you could do yourself. If I make it flexible so you can turn it on, turn it off, add it, change it month to month, per hour, whatever it is, you can make it super flexible.

Michael Reid: I make it flexible so you can turn it on, turn it off, add it, change it month to month, per hour, whatever it is. You can make it super flexible. If you can make it self-service, you can add this magical thing called product-led growth, where people jump on the platform and start to add products, and you reduce the amount of team that you need to service it. If you make it super easy, just that alone is what you have actual entire companies existing just because they are easier than something else. Add the best support, make sure the pricing is super disruptive, and make sure that the whole thing is profitable, and you have the ingredients for an incredible company. That is Megaport. That is Latitude that we have brought into the business, and everything else will scale from there, and every single product lives and breathes off that.

Speaker #2: If you can make it self-service, you can add this magical thing called product-led growth where people jump on the platform and start to add products and you reduce the amount of team that you need to service it.

Speaker #2: If you make it super easy, just that alone is what you have actual entire companies existing just because they're easier than something else. Add the best support.

Speaker #2: Make sure the pricing is super disruptive. And make sure that the whole thing is profitable and you have the ingredients for an incredible company.

Speaker #2: That's Megaport. That's latitude that we've brought into the business. And everything else will scale from there. And every single product lives and breathes off of that.

Speaker #2: We've done some very, very large strategic deals. Whatever it was, one point something billion dollars that we've gone and announced. And a lot of folks are looking to say, well, how does that play out?

Michael Reid: We have done some very, very large strategic deals. Whatever it was, 1 point something billion dollars that we have gone and announced. A lot of folks are looking to say, "Well, how does that play out? What is the timeline? What does it look like? It is different to what you have ever done." So what we have sort of broken down is just so that you can have a sort of an understanding of the process that we go through. There is sort of sales, finance, and legal, procurement, and then operations. It is pretty obvious. You could sort of play this through, but I think we get a lot of questions about how it sort of works. First of all, we would have a customer that we would talk to.

Speaker #2: What is the timeline? What does it look like? Because different to what you've ever done. So what we've sort of broken down is just so that you can have a sort of an understanding of the process that we go through.

Speaker #2: There's sort of sales finance and legal, procurement, and then operations. And it's pretty obvious. You could sort of play this through, but I think we get a lot of questions about how it sort of works.

Speaker #2: So first of all, we'd have a customer that we would talk to. They either come to us, they're introduced to us, they're existing customer, and they'd say, we want to do a whole range of CPU, a whole range of GPU, whatever it may be.

Michael Reid: They either come to us, they are introduced to us, they are an existing customer, and they would say, "We want to do a whole range of CPU, a whole range of GPU," or whatever it may be. We do not have it in the portal or platform, so these are custom strategic deals. We would work on pricing, which is pretty tricky because pricing is only available for a very short period of time because of what is happening from a market perspective around supply-demand, particularly memory, if you cross it. So at 2 weeks and pricing changes. You have got to be very, very fast here. Contract negotiation can happen in parallel or very quick. This is a very quick process. That can happen incredibly quickly, too, or for traditional enterprise, a bit longer.

Speaker #2: Now, we don't have it in the portal or the platform. So these are custom strategic deals. We would work on pricing, which is pretty tricky because pricing is only available for a very short period of time.

Speaker #2: Because of what's happening from a market perspective around supply demand, particularly memory, if you're across it, so two weeks and pricing changes. So you've got to be very, very fast here.

Speaker #2: Contract negotiation can happen in parallel or very quickly. This is a very quick process. That can happen incredibly quickly too. Or for sort of traditional enterprise a bit longer.

Speaker #2: But you need to operate very quickly in this environment because by the time you've gone through your sort of contract negotiation, your pricing could have gone up.

Michael Reid: You need to operate very quickly in this environment because by the time you have gone through your contract negotiation, your pricing could have gone up. Everyone moves fast. We need to ensure we are funded, so we cannot announce or land a deal that is not fully funded, which is what we have gone from a debt perspective. Before that was the capital raise, before that was the debt, et cetera. We then land signature, and we announce that obviously, if it is material to the market, which is why you have seen those announcements. Separate to that, we look at DC contracts. We have to procure the hardware, and then we also, at the same moment, need to make sure it has got a home to live in with power. That is a very fast process to land, actually, the data centers that we are going to land in.

Speaker #2: So everyone moves fast. We need to ensure we're funded. So we can't announce or do a landed deal that's not fully funded, which is what we've gone and put from a debt perspective before.

Speaker #2: That was the capital raise before. That was the debt, etc. We then land signature. And we announce that, obviously, if it's material to the market, which is why you've seen those announcements.

Speaker #2: Separate to that, we look at DC contracts. So we have to procure the hardware and then we also at the same moment need to make sure it's got a home to live in with power.

Speaker #2: So that is a very fast process to land actually the data centers that we're going to land in. In many cases, we're pre-talking to hundreds and hundreds of data centers anyway because we live there.

Michael Reid: In many cases, we are pre-talking to hundreds and hundreds of data centers anyway because we live there, but that is a very fast process to land that contract. We would say there is an equipment delivery period of time. This is where I think the market, it is just worthwhile being aware. This can take time, and I think we have called it out in the next slide, 6 to 9 months for delivery and all these different components can play out. To be clear, you do not deploy the CapEx until it is sent, but you do have deposits that you pay prior, and we still have to announce the full thing fully funded is how we have played that. We have got GPU, CPU gets ordered, network gets ordered, and storage.

Speaker #2: But that's a very fast process to land that contract. And then we would say there's an equipment delivery period of time. And this is where I think the market sort of it's just worthwhile being aware.

Speaker #2: This can take time. And I think we've called it out on the next sort of slide, six to nine months for delivery and all these different components can play out.

Speaker #2: So to be clear, you don't deploy the capex until it's sent. But you do have deposits that you pay prior. And we still have to announce the full thing fully funded is how we've played that.

Speaker #2: So we've got GPU, CPU gets ordered, network gets ordered, and storage. These are the pieces of the puzzle that make up the AI data centers that we're building out, mainly for inference and also some you can look at that for training and so forth for smaller pieces.

Michael Reid: These are the pieces of the puzzle that make up the AI data centers that we are building out, mainly for inference and also some, you can look at that for training and so forth for smaller pieces. This becomes the inference cloud in effect that our customers procure. The team then builds out the data center. The data center actually has to get delivered on their site from a data center perspective, which is the build-out, the ready-for-service components, putting on the power, making sure it is available, getting the racks actually physically installed. The team then rack and stack. It is a very fast process because we are only talking about small numbers of servers. It is a fast process. They call it a week to rack and stack and then a month to get the whole thing set. It depends upon the size, the scale, the complexity.

Speaker #2: But yeah, this becomes the inference cloud in effect that our customers procure. The team then builds out the data center. So the data center actually has to get delivered on their side from a data center perspective, which is the build-out, the ready for service components, putting all the power, making sure it's available, getting the racks actually physically installed.

Speaker #2: The team then rack and stack. It's a very fast process because we're only talking about small numbers of servers. It's a fast process. They call it a week to rack and stack and then a month to get the whole thing sort of set.

Speaker #2: Depends upon the size, the scale, the complexity. So that would take time. We test. Make sure it's up and running. We hand over and give delivery to a customer.

Michael Reid: So that would take time. We test, make sure it is up and running. We hand over and give delivery to a customer. From that moment, it instantaneously starts billing. That is why you will see sort of step change jumps in our ARR throughout the year as we turn on the take or pay, which is the entire cluster, then it just starts billing. Then we have a live customer we continue to manage from an operations perspective. I spent a bit of time on it because I think it is important. These are pretty sizable deals that we are doing, and we are rolling them out in many different locations and executing many different contracts to many different customers. The team is on fire. So quick update on the strategic contracts and the GPU pool.

Speaker #2: And from that moment, it instantaneously starts billing. And it becomes sort of that's why you'll see sort of step change jumps in our ARR throughout the year as we turn on the take or pay, which is the entire cluster then.

Speaker #2: It just starts billing. And then we have a live customer and we continue to manage from operations perspective. I spent a bit of time on it because I think it's important.

Speaker #2: These are pretty sizable deals that we're doing. And we're rolling them out in many different locations and executing many different contracts to many different customers.

Speaker #2: But the team is on fire. So quick update on the strategic contracts and the GPU pool. So strategic contracts, what we have as we pointed out, very specifically, you need three things.

Michael Reid: Strategic contracts, what we have, as we pointed out very specifically, you need three things. You need the power, you need the network, you need the compute element. You also need storage. You need to sort of procure all the infrastructure to get that power. Lots of questions around whether we have access to that, et cetera. Just clearing the market here. We have equipment, space, and power has been procured for all contracts prior to today's announcements. Delivery and deployment is progressing through FY27. The addition of these new long-term contracts brings AUD 1.3 billion of TCV and a total ARR of these long-term contracts. Once deployed, remember, as we deploy them, and it will take time, we will add AUD 435 million of annual recurring revenue, and then we have supported that with AUD 826 million of capital expenditure. So that sort of breaks down the strategic contracts.

Speaker #2: You need the power, you need the network, you need the compute element. You also need storage. You need to sort of procure all the infrastructure to get that power.

Speaker #2: Lots of questions around whether we have access to that, etc. Just clearing the market here. We have equipment, space, and power has been procured for all contracts prior to today's announcements.

Speaker #2: Delivery and deployment is progressing through FY27. The addition of these new long-term contracts brings one point three billion dollars of TCV and a total ARR of these long-term contracts once deployed.

Speaker #2: Remember, as we deploy them, it will take time. We'll add 435 million dollars of annual recurring revenue. And then we've supported that with 826 million dollars of capital expenditure.

Speaker #2: So that sort of breaks down the strategic contracts. On the right side, we're building out a GPU pool, which we spent a lot of time, sort of taking the market through.

Michael Reid: On the right side, we are building out a GPU pool, which we spent a lot of time sort of taking the market through. It is basically exactly the same infrastructure in clusters that we build out. It takes six to nine months to sort of procure, get that deployed, and then you have got to ramp. So once we have physically deployed it, we ramp that to the market. That could be three to six months from deployment. Then you look at your average paybacks sort of distributed through that for the on-demand platform. We are one of the very few companies in the world that I think will deliver true on-demand B300s as an example to the market. All right. We have shared this slide in the past, and this is sort of like, yeah, okay, well, geez, Megaport is changing and what is happening and where have you come from, where have you been?

Speaker #2: It's basically exactly the same infrastructure in clusters that we build out. It takes six to nine months to sort of procure, get that deployed, and you've got to ramp.

Speaker #2: So once we've physically deployed it, we've ramped that to the market. That could be three to six months from deployment. And then you look at your average paybacks sort of distributed through that for the on-demand platform.

Speaker #2: We're one of the very few companies in the world that I think will deliver true on-demand B300s as an example to the market. All right.

Speaker #2: We've shared this slide in the past. And this is sort of like, yeah, okay, well, geez, Megaport's changing and what's happening and where have you come from, where have you been?

Speaker #2: It's funny because when we look back, we've had so much transformation in this year. But if we were to bring ourselves back to this moment last year, I asked or in effect, we told the market that we were going to actually invest more in building out the go-to-market teams and start to grow.

Michael Reid: It is funny because when we look back, we have had so much transformation in this year. But if we bring ourselves back to this moment last year, I asked, or in effect, we told the market that we were going to actually invest more in building out the go-to-market teams and start to grow. So we went through this period. We were building the company. There was that period where the world caved in and we said, "Look, let us prioritize profitability." We saw a decline in net retention, the entire world sort of tightened post-COVID. We then did this massive transformation where we said, "All right, we are going to start to invest in the company because we are seeing all the net retention stabilize. We are seeing an opportunity for growth." We invested in the last year to continue to scale that and to see that revenue to start to scale.

Speaker #2: So we went through this period. We were building the company. There was that period where the world caved in and we said, look, let's prioritize profitability.

Speaker #2: We saw a decline in that retention the entire world sort of tightened post-COVID. We then did this massive transformation where we said, all right, we're going to start to invest in the company because we're seeing all the net retention stabilize.

Speaker #2: We're seeing opportunity for growth. We invested. In the last year, it continued to scale that and to see that revenue to start to scale.

Speaker #2: Now, we said that that's what we would expect. We're a transform reset. I mean, FY27 to 29, we'll see an acceleration in revenue. What you can see that we're ahead of it.

Michael Reid: Now, we said that that is what we would expect. With a transform and reset, and in FY27 to 2029, we will see acceleration in revenue. Well, you can see that we are ahead of it. We are already seeing incredible growth from those investments that you allowed us to do as our shareholders, and we are returning that to you. Next year is continue to accelerate revenue, capitalize on all those prior investments, continue to expand the TAM, execute all these contracts, aggressively grow that market share, and we are going to continue the investment with revenue growing faster than costs, as we promised. We have accelerated the revenue through the reinvestment as well. What you have seen is actually our revenue has been accelerating, and I showcased that by the incremental ARR, the net retention, the growth rates. Everything is to plan. Okay, cool. What is in the future? What is beyond that?

Speaker #2: We're already seeing incredible growth from those investments that you allowed us to do as our shareholders. And we're returning that to you. Next year is continued accelerate revenue.

Speaker #2: Capitalize on all those prior investments. Continue to expand the TAM. Execute is execute all these contracts aggressively grow that market share. And we're going to continue the investment with revenue growing faster than costs as we promised.

Speaker #2: We've accelerated the revenue through the reinvestment as well. So what you've seen is actually our revenue has been accelerating and I showcased that by the incremental ARR, the net retention, the growth rates everything's to plan.

Speaker #2: So okay, cool. So then what's in the future? What's beyond that? So FY30 and beyond, if we continue at the rate of scale that we're at, which you can see how we're performing just in the last sort of since April, you'll see us to continue to build out this business.

Michael Reid: FY30 and beyond, if we continue at the rate of scale that we are at, which you can see how we are performing just in the last sort of since April, you will see us to continue to build out this business. We are going to be significant scale, at significant scale in FY30 and beyond. At that point, your growth off that base is so large. We will be a global leader in automated infrastructure as a service, and your sort of sustainable 20%+ growth. When you grow at that rate with infrastructure, you become highly profitable, and you convert a huge amount of that scale into free cash flow. We are in sort of still an investment phase to get ahead of it, but as we get up to that point, it starts to spit out cash, which is that sort of the future on that side.

Speaker #2: We're going to be significant scale at significant scale in FY30 and beyond. And at that point, your growth off that base is so large.

Speaker #2: We'll be a global leader in automated infrastructure as a service. And you'll sort of sustainable 20 plus percent growth. When you grow at that rate with infrastructure, you become highly profitable and you convert a huge amount of that scale into free cash flow.

Speaker #2: So we're in sort of still an investment phase to get ahead of it. But as we get up to that point, it starts to spit out cash, which is that's sort of the future on that side.

Speaker #2: So here's the guidance update. I know you're all waiting for this. We get to sort of talk through the success of what we've built and get really proud about that.

Michael Reid: Here is the guidance update. I know you are all waiting for this. We get to sort of talk through the success of what we have built and get really proud about that. You have probably all just flicked to the last page. I am still excited about the previous. Now let us give you the full guidance. This is pretty astounding, actually. We are going to call group revenue for FY27 between AUD 620 million to AUD 730 million. That is 100% to 130% year-on-year growth from a revenue standpoint and guidance. You can see the breakdown between the two businesses. The network business is AUD 315 million to AUD 325 million, and the compute business is AUD 305 million to AUD 405 million, is the contribution of those two businesses in there. Our EBITDA is moving to 38% to 40% of the revenue that lands.

Speaker #2: You've probably all just flicked to the last page. I'm still excited about the previous. Now let's give you the full guidance. So this is pretty astounding, actually.

Speaker #2: We're going to call Group Revenue for FY27 between 620 million to 730 million dollars. That is 100% to 130% year-on-year growth from a revenue standpoint in guidance.

Speaker #2: You can see the breakdown between the two businesses. The network business is 315 to 325 million. And the compute business is 305 to 405 million is the contribution of those two businesses in there.

Speaker #2: Our EBITDA is moving to 38 to 40% of the revenue that lands. And then you can see the capex and that will be deploying inside that year to service a lot of those existing contracts that we've just announced.

Michael Reid: Then you can see the CapEx and that we will be deploying inside that year to service a lot of those existing contracts that we have just announced. That is where we are at to date. That is a pretty exciting, I think, finish. Then we will hand over to questions. Tish is going to join us, and I look forward to taking some questions from the audience or our analysts.

Speaker #2: And that's where we're at today. So that's a pretty exciting I think finish. And then we'll hand over to questions. So Tisha's going to join us.

Speaker #2: And I look forward to taking some questions from the audience. For our analysts.

Speaker #1: We will now begin the Q&A session. As a reminder, if you would like to ask a question, please use the raised hand feature to be placed in the virtual queue.

Operator: We will now begin the Q&A session. As a reminder, if you would like to ask a question, please use the raise hand feature to be placed in the virtual queue. Attendees are limited to one question before you can rejoin the queue to ask a follow-up question. We ask that you keep your questions short and sharp. Given the time constraints today, unanswered questions will be responded to post-event. Our first question comes from Siraj Ahmed with Citi. Please unmute your line and ask your question.

Speaker #1: Attendees are limited to one question before you can rejoin the queue to ask a follow-up question. We ask that you keep your questions short and sharp.

Speaker #1: Given the time constraints today, unanswered questions will be responded to post-event. Our first question comes from Suraj Ahmed with City. Please unmute your line and ask your question.

Speaker #2: Morning, Michael. And Tisha, can you hear me okay?

Siraj Ahmed: Morning, Michael and Tish. Can you hear me okay?

Speaker #3: Yes.

Speaker #4: Yes.

Michael Reid: Yes.

Speaker #2: Great. Just two-part question. That you were not able to procure Kit for two contracts. Can you just expand on that? And looking at the FY27 capex guide, I mean, it does seem like it's a one-off issue because correct me if I'm wrong, but that 1.3 billion would mean all the you're essentially procuring all the kit for all contracts and the GPU cool.

Siraj Ahmed: Great. Just a two-part question. You were not able to procure kit for two contracts. Can you just expand on that? Looking at the FY27 CapEx guide, it does seem like it's a one-off issue because, correct me if I'm wrong, but that AUD 1.3 billion would mean you are essentially procuring all the kit for all contracts and the GPU pool. Right? Can you just confirm it? Thanks.

Speaker #2: Right? Can you just confirm that? Thanks.

Speaker #3: Yes, you are correct on the capex. That's the plan for the capex piece. You'll see that we didn't actually most of the we didn't have so the only time it triggers capex is actually when the equipment is delivered.

Leticia Dorman: Yes, you are correct on the CapEx. That's the plan for the CapEx piece. You'll see that we didn't actually. Most of the. We didn't have. The only time it triggers CapEx is actually when the equipment is delivered. That's when you have to pay a deposit up front, and then once it's procured, it then converts into CapEx, and you pay the remainder. Say, for example, you might pay 20% up front deposit, and then once you deliver the kit, then your CapEx actually triggers at that point. I'll just answer the second part. In terms of the equipment, the contract announcement we made on the previous ones, I'll probably leave that to Michael to describe, because I think there's a little bit nuance to that. But yeah, it's largely around technical specs.

Speaker #3: That's when you have to pay a deposit up front. And then once it's procured, it then converts into capex and you pay the remainder.

Speaker #3: So say, for example, you might pay 20% upfront deposit. And then once you deliver the kit, then your capex actually triggers at that point.

Speaker #3: That's all just to answer the second part. In terms of the equipment, the contract announcement we made on the previous ones, I'll probably leave that to Michael to describe because I think there's a little bit nuance to that.

Speaker #3: But yeah, it's largely around technical specs. So.

Speaker #4: Yeah. So we're rolling out lots of different technology for our customers. There was a number we've got lots and lots of different contracts that we've been rolling out.

Michael Reid: Yeah. We are rolling out lots of different technology for our customers. There was a number. We have lots and lots of different contracts that we have been rolling out. One particular contract was associated for a particular hardware that we were not comfortable with the spread of the different hardware for the automation system. We changed that with multiple customers, in effect, to a larger TCV and a much better contract for a specific infrastructure that we would deploy for the automation system globally. That was done very quickly. We have announced that in effect inside these pieces. We continue to deliver more ARR, more TCV, and then we have more contracts on top of that as we continue to deploy.

Speaker #4: One particular contract was associated for a particular hardware that we weren't comfortable with the spread of the different hardware for the automation system. So we changed that with multiple customers in effect to a larger TCV and a much better contract for a specific infrastructure that we were deployed for the automation system globally.

Speaker #4: And that was done very quickly. And so we've announced that in effect inside these pieces. And so we continue to deliver more ARR, more TCV.

Speaker #4: And then we've got more contracts on top of that as we continue to deploy. It just shows the robustness of the market at the moment.

Michael Reid: It just shows the robustness of the market at the moment, and the fact that actually we have this unbelievable amount of demand in the industry at the moment for across not only just CPU, GPU, and storage, but also the network elements that stitch it all together. It is an incredible time to be in the industry.

Speaker #4: And that the fact that actually we have sort of this. Believable amount of demand in the industry at the moment. For across not only just CPU, GPU, and storage, but also the network elements that sort of stitch it all together.

Speaker #4: So it's an incredible time to be in the industry.

Speaker #2: Got it. Can I just clarify? Tisha just followed up on this. So if you're spending all the capex, that would mean that FY28, when you enter FY28, you essentially run rating the whole ARR from the contracts, which is 540 or compute ARR of 540 and the GPU pool, right?

Siraj Ahmed: Got it. Can I just clarify, Tish, just follow up on this. If you are spending all the CapEx, that would mean that FY28, when you enter FY28, you are essentially run rating the whole ARR from the contracts, which is AUD 540 or compute ARR AUD 540 and the GPU pool, right? Is that fair or is that too aggressive?

Speaker #2: Is that fair or is that too aggressive?

Speaker #4: The GPU pool you deploy the capex for that and there is a period of ramp. And I think that's why I think this is important that we share this slide.

Michael Reid: The GPU pool, if you deploy the CapEx for that and there is a period of ramp, and that is why I think this is important that we share this slide. We will just sort of go back to this because I think there are a lot of questions that come out.

Speaker #4: And we'll just sort of go back to this because I think there's a lot of questions that come out. If.

Speaker #3: Too is helpful.

Leticia Dorman: Two is helpful.

Speaker #4: Yes. But I think the point is if it's a GPU pool once you've got deployment so let's say we hand over here this is the GPU handover.

Michael Reid: Yes. But I think the point is if it's a GPU pool, once you've got deployment, let's say we hand over here, this is the GPU handover. But the handover is to the pool, and from that moment forward, you would have a ramp period as all the GPUs start to get taken up, which is different to a strategic deal. The strategic deal is instantaneous, which is what I was saying. The strategic deal is take or pay the entire piece. As soon as it's delivered, it instantaneously starts revenuing. So there's just a nuance between the two pieces of that. Everything in these strategic contracts, as soon as they're handed over, the ARR will hit at that moment in time. And just reminding folks, ARR is different to revenue. Let's say ARR hits at December mark. We'll only get six months of that booked in revenue.

Speaker #4: But the handover is to the pool. And from that moment forward, you would have a ramp period as all the GPUs start to get taken up, which is different to a strategic deal.

Speaker #4: The strategic deal is instantaneous, which is what I was saying. So the strategic deal is take or pay the entire piece as soon as it's delivered.

Speaker #4: It instantaneously starts revenuing. So there's just a nuance between the two pieces of that. Everything in these strategic contracts, as soon as they're handed over, will the ARR will hit at that moment in time.

Speaker #4: And just reminding folks, ARR is different to revenue. I ARR, let's say ARR hits at December mark, will only get six months of that booked in revenue.

Speaker #4: So timing is a huge piece to this puzzle. And there's lots and lots of pieces that sort of make up that timing, which is why we're sharing this component.

Michael Reid: So timing is a huge piece to this puzzle, and there's lots and lots of pieces that sort of make up that timing, which is why we're sharing this component. By the way, to get to this handover, every single one of these components must have occurred to hand it over. So if one of these delays out, then you can see how that changes and moves, which is why it's tricky to land on the exact moment of time that everything starts revenuing, which is also why we've got a range from a guidance perspective.

Speaker #4: By the way, to get to this handover, every single one of these components must have occurred to hand it over. So if one of these delays out, then you can see how that changes and moves, which is why it's tricky to land on the exact moment of time that everything starts revenuing, which is also why we've got a range from a guidance perspective.

Speaker #2: Perfect. Thank you.

Siraj Ahmed: Perfect.

Michael Reid: Yeah.

Siraj Ahmed: Super. Thank you.

Speaker #4: Thanks, Raj.

Michael Reid: Thanks, Raj.

Speaker #1: Your next question comes from the line of Eric Choi with Baron Joey. Please unmute your line and ask your question.

Operator: Your next question comes from the line of Eric Choi with Barrenjoey. Please unmute your line and ask your question.

Speaker #5: Hey, Michael. Hey, Tish. I'm so sorry, Michael. Couldn't have to ask on guidance. If that's all right. Could I just confirm the bottom end essentially assumes minimal GPU pool and the very, very dirty math is you're guiding to network revenues of 320.

Eric Choi: Hey, Michael. Hey, Tish. I am so sorry, Michael. Going to have to ask on guidance, if that is all right.

Michael Reid: Oh, yeah.

Eric Choi: Could I just confirm the bottom end essentially assumes minimal GPU pool? The very, very dirty math is you are guiding to network revenues of AUD 320. Your base compute ARR is AUD 91. If we assume your new contract is only coming in the H2, that is still another AUD 190. So 320 plus 90 plus 190 is pretty close to that bottom end revenue guidance. I have essentially assumed no GPU pool.

Speaker #5: Your base compute ARR is 91. If we assume your new contracts only come in in the second half, that's still another 190. So like 320 plus 90 plus 190 is pretty close to that bottom end revenue guidance.

Speaker #5: And I've essentially assumed no GPU pool.

Speaker #4: We need an AI bot to respond to you as you're throwing all these numbers at us. Come on. I think we'll let's not specifically answer to your numbers because I don't want any Tisha to sort of do that math.

Michael Reid: We need an AI bot to respond to you as you are throwing all these numbers at us. Let us not specifically answer to your numbers because I do not want Tish to sort of do that math. Let us just sort of announce the general piece of your question. Maybe we will announce that piece.

Speaker #4: But let's just sort of announce to the general piece of your question. Maybe we'll announce that piece.

Speaker #3: I think it's Eric. Timing is key in this. And so I would just build out a broad range of assumptions on that. Like the timing elements and this is not just a mega port.

Leticia Dorman: I think, Eric Choi, timing is key in this, and so I would just build out a broad range of assumptions on that. The timing elements, and this is not just a Megaport, it is industry-wide, is everything has to align perfectly to then deploy to happen perfectly from a GPU pool standpoint. It is really just around timing when it is deployed and when it is taken up and the cost of that and the price that customers are paying at that point.

Speaker #3: It's the industry-wide is everything has to align perfectly to then deploy to happen perfectly from a GPU pool standpoint. It's really just around timing when it's deployed and when it's taken up and the cost of the and the price that customers are paying at that point.

Speaker #4: So it's tricky for us to give you guidance within the really specifically because let's say one month delay makes a material difference. And also the thing that we also can't control is exactly the ramp of a pool.

Michael Reid: It is tricky for us to give you guidance within the year really specifically, because let us say 1 month delay makes a material difference.

Leticia Dorman: Makes material.

Michael Reid: The thing that we also cannot control is exactly the ramp of a pool, which is why we give sort of this guidance here or sort of insight here to say it takes 6 to 9 months to procure and deploy. Then once we have deployed it, there is a 3 to 6-month ramp. As you can see, if you rolled that through, we announced those in this financial year. Did we? Just at the end of last financial year. If you play that forward, yeah, you are going. I do not know what your exact maths were, but in short, we are not expecting a whole range of that pool to be revenue in this financial year.

Speaker #4: Which is why we give sort of this guidance here or sort of insight here to say it takes six to nine months to procure.

Speaker #4: And then to deploy, then once we've deployed it, there is a three to six month ramp, which as you can see, if you rolled that through, we announced those in this financial year, did we?

Speaker #4: Just at the start of the end of last financial year. So if you play that forward, yeah, you're going, I don't know what your exact maths were, but in short, we're not expecting a whole range of that pool to be revenue in this financial year.

Speaker #3: I think just look at the range. Within the guidance, we've built in some timing elements to that. And that's the real driver of that range.

Leticia Dorman: I think just look at the range within the guidance. We have built in some timing elements to that, and that is the real driver of that range.

Speaker #5: Super helpful. Can I go really, really quick follow-on, which is if you look at the difference between the bottom and top end of your guidance range, it's about 50 million bucks of EBITDA.

Eric Choi: Super helpful. Can I do a really, really quick follow on, which is if you look at the difference between the bottom and top end of your guidance range, it is about AUD 50 million of EBITDA. If the GPU pool might be the bulk of the difference, it sort of suggests the bottom end, your top end has got 3 months of different GPU pool utilization, if you like. Sorry, one other follow-up is FY27 was a bit of a weird year because you have got partial contributions from your new contracts and you got partial contracts from the GPU. Can I just check if we hypothetically assumed 12 months for all of your new contracts and all of your GPU pool, I reckon you are run rating above AUD 600 million of EBITDA now on a run rate basis. Could you help with that, please, Tish?

Speaker #5: So if the GPU pool might be the bulk of the difference, it sort of suggests the bottom and your top end has got three months of different GPU pool utilization, if you like.

Speaker #5: And sorry, one other follow-up is FY27 is a bit of a weird year because you've got partial contributions from your new contracts and you've got partial contracts from the GPU.

Speaker #5: But can I just check if we hypothetically assumed 12 months for all of your new contracts and all of your GPU pool, I reckon your run rating above 600 million bucks of EBITDA now on a run rate basis?

Speaker #5: Could you help with that, please, Tisha?

Speaker #3: Eric, I would just focus on what guidance we've provided here. And what we've provided is really the timing on the range for revenue is driven by timing of strategic contract delivery.

Leticia Dorman: Eric, I would just focus on what guidance we have provided here. What we have provided is really the timing on the range for revenue is driven by timing of strategic contract delivery, and the EBITDA is a fall through of that. Do not forget, we are also building the business, so we have to keep reinvesting in the new group business. So you do not just drop every single dollar to the bottom line. But that EBITDA we feel pretty comfortable with, in terms of a range, and it is dependent on revenue.

Speaker #3: And then the EBITDA is a fall through of that. Don't forget we're also building the business. So we have to keep reinvesting in the new group business.

Speaker #3: So you don't just drop every single dollar to the bottom line. But that EBITDA we feel pretty comfortable with in terms of a range.

Speaker #3: And it is dependent on revenue.

Speaker #4: And yeah, I mean, you can see this breakdown. The network revenue is tight. And there's a broader range for compute revenue because of the sheer difference between how it ramps.

Michael Reid: You can see this breakdown. The network revenue is tight, and there is a broader range for compute revenue because of the sheer difference between how it ramps. The network business is like obviously the recurring revenue, very, very tight thing that you can sort of predict. It really changed between that and retention component. Whereas the compute is really a mixture of when we deploy. Deploy and hand over or in the pool when we deploy and then adoption. So I think we have given some pretty good insight to the business here in covering those ranges so that we are conservative in how we approach both ends of that. We do not want to set the market up for something that is not achievable, and that is where I think is where we see it at the moment.

Speaker #4: Like the network business is like all this recurring revenue, very, very tight thing that you can sort of predict. It really changed between that net retention component.

Speaker #4: Whereas the compute is really a mixture of when we deploy, that's deploy and hand over or in the pool when we deploy and then adoption.

Speaker #4: So I think we've been I think we've given some pretty good insight to the business here and covering those ranges so that we're conservative in how we approach both ends of that.

Speaker #4: We don't want to set the market up for something that's not achievable. And that's what I think is where we see it at the moment.

Speaker #4: And remember, there's risk associated to all those components because there's as we remind you all, each one of these components needs to be delivered in order to turn on the paying component.

Michael Reid: Remember, there is risk associated to all those components because as we remind you all, each one of these components needs to be delivered in order to turn on the paying component. If any of that delays, which as you know, is a massively supply chain challenged world at the moment across all these elements, it can move it. But that is why we go back to, we feel comfortable at this guidance and all these components that break it down. So I think we just keep pointing back to that.

Speaker #4: And if any of that delays, which as you know, there's a massively supply chain challenge world at the moment, across all these elements, it can move it.

Speaker #4: But that's why we go back to, we feel comfortable at this guidance and all these components that break it down. So I think we just keep pointing back to that.

Speaker #5: Makes sense. Thanks, guys.

Eric Choi: Makes sense. Thanks, guys.

Speaker #1: Next up is Tim Plum with UBS. Please unmute your line and ask your question.

Leticia Dorman: Pleasure.

Operator: Next up is Tim Plumbe with UBS. Please unmute your line and ask your question.

Speaker #6: Hi guys. Sorry. For me, it's another question around the new contracts that are there. Just apologies if I've missed it, but can you talk about payback period or the GP margin that you're expecting out of that?

Tim Plumbe: Hi, guys. Sorry. For me, it's another question around the new contracts that are there. Just apologies if I've missed it, but can you talk about payback period or the GP margin that you're expecting out of that? If I think about that AUD 435 million of long-term contracts and you sit there and you say average GP or average incremental margin at 80% gives you AUD 350 million. Then if you assume reinvestment, every 10% is kind of AUD 35 million. I appreciate your comments around reinvestment back into the business, but you're starting to talk about some pretty large numbers. How do we think about what is a reasonable expectation for reinvestment of incremental contracts back into the business, please?

Speaker #6: And if I think about that 435 million of long-term contracts and you sit there and you say average GP or average incremental margin at 80% gives you like 350 million dollars and then if you assume reinvestment, every 10% is kind of 35 million dollars.

Speaker #6: So I appreciate your comments around reinvestment back into the business, but you're starting to talk about some pretty large numbers. So how do we think about what is a reasonable expectation for reinvestment of incremental contracts back into the business, please?

Speaker #4: Just reminding you that this is FY27 guidance. And so yes, you're saying 435 million of ARR, which we've said here, but that depends on when you deploy that.

Michael Reid: Just reminding you that this is FY27 guidance, and so yes, you're saying AUD 435 million of ARR, which we've said here, but that depends on when you deploy that. If we're talking specifically about the guidance for FY27, it goes back to the same statement with-

Speaker #4: So if we're talking specifically about the guidance for FY27, it goes back to the same statement.

Speaker #6: Not the guidance for FY27. Just in general, like how should we be thinking about reinvestment?

Tim Plumbe: Not the guidance for FY27, just in general. How should we be thinking about reinvestment?

Speaker #4: Into the future, beyond FY27 or like what?

Michael Reid: You mean into the future beyond FY27 or like what?

Speaker #6: Well, just reinvestment of the 430. Reinvestment within the 435 million dollars of ARR that's been generated to date through the strategic contracts.

Tim Plumbe: Well, just reinvestment within the AUD 435 million of ARR that has been generated to date through the strategic contracts.

Speaker #4: Yeah. I think Tisha can just quickly hit on that and I think we've shared this component.

Michael Reid: Yeah. I think Tish can just quickly hit on that.

Leticia Dorman: Yeah.

Michael Reid: I do not think we have shared this component.

Speaker #3: So in terms of margins, there, Tim, I wouldn't necessarily want in terms of the future for those, the business is changing and evolving. Yes, you get to a quantum where it doesn't make sense to kind of you would start to see a high margin.

Leticia Dorman: So in terms of margins there, Tim, I wouldn't necessarily want. In terms of the future for those, the business is changing and evolving. Yes, you get to a quantum where it doesn't make sense to kind of, you would start to see a high margin, but I wouldn't necessarily be baking that in at this stage. The guidance for 2027, Megaport will continue to reinvest where we see opportunity to build innovate, and continue to build out the product set, go to market, and also making sure that the customer support is there as well across the board for these new product sets. I wouldn't necessarily just start baking in huge dropping down to the bottom line, but we will. We will continue to be profitable. With a higher CapEx in business, you would expect to see higher margins over time, but give us time to grow.

Speaker #3: But I wouldn't necessarily be baking that in at this stage. The guidance for '27, Megaport will continue to reinvest where we see opportunity to build, innovate.

Speaker #3: And continue to build out the product set, go to market. And also like making sure that the customer support is there as well for the across the board for these new product sets.

Speaker #3: So I wouldn't necessarily just start baking in huge dropping down to the bottom line, but we will. We will continue to be profitable. Like this is a with a higher capex in business, you would expect to see higher margins.

Speaker #3: Over time, but give us time to grow.

Speaker #4: And we've shared that again. It consistently for the past, I think, year, around we accelerate revenue through reinvestment, yes, but we will continue investment with revenue growing faster than costs.

Michael Reid: And we've shared that again consistently for the past, I think, year around we accelerate revenue through reinvestment, yes. But we will continue investment with revenue growing faster than costs. Then we also say, well, what is the long-term future, FY30 and beyond? There is sustainable 20% growth after we've had sort of these injections of incredible growth. We're going to do 100% plus in revenue next year. Then you get to a point where, okay, well, when that winds down, you're very highly profitable, and then you convert all of that or a huge amount, not all, but are converting a huge scale into free cash flow at that point. So we're not going to give forward-looking guidance on those numbers, but you can look through the business and do some math and definitely catch up with the team to talk through modeling after.

Speaker #4: And then we also say, well, what is the long-term future? FY30 and beyond. Very sustainable 20% growth after we've had sort of these injections of incredible growth.

Speaker #4: We're going to do 100% plus in revenue next year. And then you get to a point where, okay, well, when that winds down, you're very highly profitable and then you convert all of that or a huge amount, not all, but converting a huge scale into free cash flow at that point.

Speaker #4: So that is the we're not going to give forward-looking guidance on those numbers, but that is you can look through the business and do some math and definitely catch up with the team to talk through your modeling after.

Speaker #4: Very hard for us to do modeling with all the numbers just on a call. We do not want to give the wrong impression around it.

Michael Reid: Very hard for us to do modeling with all the numbers just on a call. We do not want to give the wrong impression around it. So I think definitely spend some time with the detail with the team after.

Speaker #4: So I think definitely spend some time with the detail with the team after.

Speaker #6: Oh, that's useful, guys. Thank you. And sorry, just one last like back to the point in terms of payback period for the new contracts.

Tim Plumbe: That's useful, guys. Thank you. And sorry, just one last back to the point in terms of payback period for the new contracts. Is there a way for us to think about that?

Speaker #6: Is there a way for us to think about that?

Speaker #3: They're consistent with what we've previously announced and they meet our internal thresholds.

Leticia Dorman: They are consistent with what we have previously announced, and they meet our internal thresholds.

Speaker #4: I think we've stated that in the announcement.

Michael Reid: I think we have stated that in the

Leticia Dorman: Yeah

Michael Reid: in the announcement.

Speaker #6: Okay, great. Thank you very much.

Tim Plumbe: Okay, great. Thank you very much.

Speaker #3: Thanks, Tim.

Leticia Dorman: Thanks, Tim.

Speaker #1: Your next question comes from the line of Roger Samuel with Jefferies. Please unmute and ask your question.

Operator: Your next question comes from the line of Roger Samuel with Jefferies. Please unmute and ask your question.

Speaker #7: Oh, hi. Good morning. I've got a question about your funding requirements. So obviously you've been using a mix of debt and equity to fund future growth, but if I look at your upsized debt facility, half the cash on the balance sheet plus the operating cash flow that you generate in FY27, looks like you just have enough to cover the capex requirement in FY27 of 1.3 billion dollars.

Roger Samuel: Oh, hi. Good morning. I have a question about your funding requirements. Obviously you have been using a mix of debt and equity to fund future growth. If I look at your upsized debt facility plus the cash on the balance sheet plus the operating cash flow that you generate in FY27, it looks like you just have enough to cover the CapEx requirement in FY27 of AUD 1.3 billion. I am just wondering what other options you have to fund future contracts in compute and whether you are prepared to increase your gearing ratio even more.

Speaker #7: So I'm just wondering what other options you have to fund future contracts in compute and whether you're prepared to increase your gearing ratio.

Speaker #3: Roger, Roger. We had we did the capital raise, right, in June, which is slightly inconvenient timing. So yes, you've got that as at 30 June, but then we have the following retail entitlement offer that landed on the 2nd of July.

Leticia Dorman: Roger.

Roger Samuel: Yep.

Leticia Dorman: Roger.

Michael Reid: Yeah, this is important.

Leticia Dorman: We did the capital raise right in June.

Roger Samuel: Yep

Leticia Dorman: It is slightly inconvenient timing. You have that as at 30 June, but then we have the following retail entitlement offer that landed on 2 July. You will see that in the actual annual accounts as well.

Speaker #3: So you'll see that in the actual annual accounts as well. I know it's kind of reporting, but yeah.

Roger Samuel: Yeah

Leticia Dorman: I know it is reporting, but yeah.

Speaker #4: So it's lifting a big portion of that capital raise.

Michael Reid: It is missing a big portion.

Leticia Dorman: Yeah

Michael Reid: of that capital raise.

Speaker #3: We're comfortable with our funding that we're covered. For what we've announced. And we're not necessarily going to go, this is funded exact thing by debt for this contract, that's not how it is.

Leticia Dorman: We are comfortable with our funding that we are covered for what we have announced. We are not necessarily going to go, this is funded exact thing by debt for this contract. That is not how it is. We have got a general corporate facility for those purposes.

Speaker #3: We've got a general corporate facility for those purposes.

Speaker #6: Yeah, I suppose my question is that are you prepared to increase your gearing ratio going forward? Maybe to something like two times.

Roger Samuel: Yeah. I suppose my question is that, are you prepared to increase your gearing ratio going forward? Maybe to something like 2 times.

Speaker #4: Do you mean from a debt facility? No, we've said.

Michael Reid: You mean from a debt facility? Is that what you are saying?

Roger Samuel: The debt, yeah.

Speaker #6: You're using more debt as opposed to raising equity.

Michael Reid: No, we've

Roger Samuel: Oh, yeah. Using more debt as opposed to raising equity.

Speaker #3: We're well funded, so we'll continue to manage within thresholds. We've only just got the commitment letters at this stage. So that is what we've announced today.

Leticia Dorman: We're well-funded, so we'll continue to manage within thresholds. We've only just got the commitment letters at this stage. So that's what we've announced today.

Speaker #4: We'll adhere to the strict governance associated with that, and then we'll assess strategic deals as we go forward. And we have our very flexible mix of capital.

Michael Reid: We'll adhere to the strict governance associated with that. Then we'll assess strategic deals as we go forward. We have now a very flexible mix of capital that we can access, which is something I think the market was asking us a lot of, was getting this debt facility. We obviously did a capital raise most recently, and we'll continue to assess strategic opportunities based upon what we can service.

Speaker #4: That we can access, which is something I think the market was asking us a lot of, was getting this debt facility. We obviously did a capital raise most recently, and we'll continue to assess strategic opportunities based upon what we can service.

Speaker #3: Roger, I think I think the question that I probably hear from that is we're going to grow into the debt, rather than just from day one.

Leticia Dorman: Roger, I think the question that I probably hear from that is, we're going to grow into the debt rather than just from day one.

Speaker #3: So yeah, but I suppose at the end of FY27, you'll yeah, you have more debt on your balance sheet. You will currently.

Roger Samuel: Oh, yeah. But at the end. Yep.

Leticia Dorman: as we continue to expand.

Roger Samuel: Yeah. But I suppose at the end of FY27, you will, yeah. You have more debt on your balance sheet.

Speaker #4: If you were to win more contracts, yeah, if you were to win more major contracts, then you probably need to fund it. Yeah. Depending upon new contracts that we haven't yet shared here, obviously, yeah, we would need to constantly look into that.

Leticia Dorman: We will currently with that debt.

Roger Samuel: If you were to win more contracts, yeah. If you were to win more major contracts, then you would probably need to-

Michael Reid: That's-

Roger Samuel: Fund, yeah.

Michael Reid: Yeah. Depending upon new contracts that we haven't yet shared here, obviously, yeah, we would need to constantly look into that.

Speaker #3: And we are this is just step one in or step feels like 100, but step one in our capital management framework plan. That's what we've been building over the last few months.

Leticia Dorman: We are this is just step 1 in, well, step feels like 100, but step 1 in our capital management framework plan. That's what we've been building over the last few months. I think we've shared that a few times since we've come to market in the last few months.

Speaker #3: I think we shared that a few times since we've come to market in the last few months.

Speaker #4: But that debt facility is sizable as well. So it's we've got runway here. Yeah, I'm not sure what your math was saying that we're out.

Michael Reid: That debt facility is sizable as well.

Michael Reid: We've got runway here. Yeah. I'm not sure what your maths was saying that we're out. I think maybe catch up with the team after and just go through it, and it might be misleading around the AUD 435 that landed in 30 June, but there's a remainder that came from the retail offering that landed after that we can't report on. So maybe it's worth just sort of ducking through those components.

Speaker #4: So I think maybe catch up with the team after and just go through it. And it might be misleading around the 435 that landed in June 30, but there's a remainder that came from the retail offering that landed after that that we can't report on.

Speaker #4: So maybe it's worth just sort of ducking through those components.

Speaker #6: Okay, thanks.

Roger Samuel: Okay. Thanks.

Speaker #1: Your next question comes online of where coup with Bank of America. Please unmute and ask your question.

Operator: Your next question comes from the line of Wei Kuo with Bank of America. Please unmute and ask your question.

Speaker #6: Hey, morning team. Just on the compute side, just wondering who you mostly coming up against in tenders today and the reason why I ask is I think we've seen a number of sort of CDN players edge infrastructure providers or.

Wei Kuo: Hey. Morning, team. Just on the compute side, just wondering who are you mostly coming up against in tenders today? The reason why I ask is, I think we've seen a number of CDN players, edge infrastructure providers, all pivot into the AI compute space. So in tenders, are you seeing this bucket increasingly come up or is it still other new cloud providers? Just wondering, how do you see yourselves positioned versus some of the CDN players that also have a very distributed network globally?

Ware Kuo: Hey. Morning, team. Just on the compute side, just wondering who are you mostly coming up against in tenders today? The reason why I ask is, I think we've seen a number of CDN players, edge infrastructure providers, all pivot into the AI compute space. So in tenders, are you seeing this bucket increasingly come up or is it still other new cloud providers? Just wondering, how do you see yourselves positioned versus some of the CDN players that also have a very distributed network globally?

Speaker #6: Pivot into the AI compute space. So in tenders, are you seeing this bucket increasingly come up or is it still other newer cloud providers and just wondering how do you see yourselves positioned versus some of the CDN players that also have a very distributed network globally?

Speaker #4: I haven't come across any of the CDN players that I'm aware of. I think the space is just an unbelievable demand scenario. Deals are constructed incredibly fast because of the pressure around pricing.

Michael Reid: I haven't come across any of the CDN players that I'm aware of. I think the space is just an unbelievable demand scenario. Deals just constructed incredibly fast because of the pressure around pricing. So there is, I think if you think through like a traditional IT enterprise procuring IT, where they run a 6-month process, they run an RFP, and they get pricing, and they spend their time going through it, getting board approval, whatever, and they finally go and deliver upon it. Every 2 weeks, the pricing changes. So the whole world has had to change and materially. You could have, and you can probably, if you map just memory pricing between November last year and today, every few weeks, the pricing changes. Vendors have gone away from long pricing. They'll give you about a 2-week window, and it still doesn't even guarantee it, so it can move.

Speaker #4: So there is I think if you think through like a traditional IT enterprise procuring IT, where they run a six-month process, they run an RFP and they get pricing and they spend their time going through it, getting board approved, whatever, and they finally go and deliver upon it.

Speaker #4: Every two weeks, the pricing changes. So the whole world has had to change. And materially, you could have and you can probably if you map just memory pricing between November last year and today, every few weeks, the pricing changes.

Speaker #4: Vendors have gone away from long pricing. They'll give you about a two-week window and it still doesn't even guarantee it. So it can move.

Speaker #4: So customers have had to change because imagine you're running a process, you get some budget, you say, let's say it's a million dollars, by the time you go through the process, it's now 1.2 million dollars, your budget's not approved, you go back to get the approval, you go and run the process again only to find that it's now 1.4 million and then it just continues in this cycle.

Michael Reid: Customers have had to change because imagine you are running a process, you get some budget, you say, "Let's say it's AUD 1 million." By the time you go through the process, it's now AUD 1.2 million. Your budget is not approved. You go back to get the approval. You go and run the process again, only to find that it's now AUD 1.4 million, and then it just continues in this cycle. What happens is, it's significantly faster because of the environment. There are no tenders, so to speak. You are dealing with customers very quickly to land what they need when they need it. It's a timing game, and then it's how quickly you can get access to the capital, to the data center space, and the delivery of the chips and get them running operationally. Then that depends on the location that they are looking for.

Speaker #4: So what happens is it's significantly faster because of the environment, A, so there's no tenders, so to speak, you're dealing with customers very quickly to land what they need when they need it.

Speaker #4: So it's a timing game and then it's how quickly you can get access to the capital to the data center space and the delivery of the chips and get them running operationally.

Speaker #4: And then that depends on the location that they're looking for. So I'd say there's multiple factors and I'd say the pie is expanding so rapidly and so large that there's plenty of pie for anyone and everyone in this space at this point in time and for the foreseeable future.

Michael Reid: I would say there are multiple factors, and I would say the pie is expanding so rapidly and so large that there is plenty of pie for anyone and everyone in this space at this point in time and for the foreseeable future. It's less around competition, it's more about what you can actually execute against as a company, and the same for everyone. Which is why the debt facilities and these components help us project forward opportunities to continue. That's why it's like all these pieces of that puzzle is really, really important.

Speaker #4: So it's less around competition. It's more about what you can actually execute against as a company. And the same for everyone. Which is why the debt facilities and these components help us project forward opportunities to continue.

Speaker #4: So that's why it's like all these pieces of that puzzle is really, really important.

Speaker #1: Next up is Frazier McLeish with MST. Please unmute your line and ask your question.

Operator: Next up is Fraser McLeish with MST. Please unmute your line and ask your question.

Speaker #7: Hi, great. Just good year for you. Just want to say congrats on all the progress you've made. My question is really just on the acquisition that you've kind of looking at that you've called out today.

Fraser McLeish: Hi. Great. Just a huge year for you. I just want to say congrats on all the progress you have made. My question is really just on the acquisition that you have kind of looking at, that you have called out. Today, just wondering why, when you say it's early stage, why you have sort of chosen to call it at the moment, and whether it's in the network or the compute space. Also just, you also announced a partnership, I think, on storage recently. Whether that gives you everything you need in storage or whether that would still be an area you would potentially be looking for acquisitions if something comes up. Thanks.

Speaker #7: Just wondering why when you say it's early stage, why you've sort of chosen to call it at the moment and whether it's in the network or the compute space.

Speaker #7: And also just you also announced some partnership, I think, on storage recently. Whether that gives you everything you need in storage or whether that would still be an area you'd potentially be looking for acquisitions of something comes up.

Speaker #7: Thanks.

Speaker #4: Yeah, I think I'll draw you back to this slide. We're constantly and forever looking to innovate to add rings and expand rings. And we can do that via acquisition or via internal build.

Michael Reid: Yeah. I think, and I'll draw you back to this slide. We're constantly and forever looking to innovate, to add rings and expand rings, and we can do that via acquisition or via internal build. We're constantly exploring a huge range of options that would look for that internally. We make decisions on whether we can build this style of product set and how quickly we could deploy that. From a storage element, I would say we are comfortable with what we have today for everything, but uncomfortable in that we need to constantly add more and more innovation to it. We will be always looking to add more rings or even differentiate the rings that we have in there. It's just this constant process that you'll see from us.

Speaker #4: And we're constantly exploring a huge range of options that would look for that internally. We make decisions on whether we can build this style of product set and how quickly we could deploy that.

Speaker #4: And so in effect, from a storage element, we I would say we are comfortable with what we have today for everything, but uncomfortable in that we need to constantly add more and more innovation to it.

Speaker #4: So we will be always looking to add more rings or even differentiate the rings that we have in there. And it's just this constant process that you'll see from us.

Speaker #4: So that's why I think we're sharing the component around these three pieces. And we're constantly exploring options in that space. And we will forever be exploring options in that space.

Michael Reid: That's why I think we're sharing the component around these three pieces, and we're constantly exploring options in that space, and we will forever be exploring options in that space. We'll announce more detail if and when any of those come to fruition. By the way-

Speaker #4: And we'll announce more detail if and when any of those come to fruition. And by the way, it'll be across each group. So this is the network element.

Fraser McLeish: Just on the-

Michael Reid: It'll be across each group. This is the network element, this is the compute, and this is the storage, and we'll be constantly exploring each one of those elements.

Speaker #4: This is the compute and this is the storage. And we'll be constantly exploring each one of those elements.

Speaker #7: And the acquisition you've highlighted in the release today.

Fraser McLeish: And the acquisition you have highlighted in the release today?

Speaker #8: Which area?

Leticia Dorman: Which area?

Speaker #4: Oh, we're currently looking I think it would be the network and security space.

Michael Reid: Oh, we are currently looking, I think it would be the network and security space.

Speaker #7: Great, thanks.

Fraser McLeish: Great. Thanks.

Speaker #4: We're continuing to build each part. So it's not just to focus on GPUs, for example. So it's important to note that this isn't just a compute business here.

Michael Reid: We're continuing to build each part, so it's not just a focus on GPUs, for example. It's important to note that this isn't just a compute business here. This is a giant network business that we'll continue to invest in, a giant CPU business and a GPU business, and then there'll be the storage elements that come with it as well.

Speaker #4: This is a giant network business that will continue to invest in a giant CPU business and a GPU business. And then they're with the storage elements that come with it as well.

Speaker #7: Great, thank you.

Fraser McLeish: Great. Thank you.

Speaker #1: Your next question, comes from Paul Mason with E&P. Please unmute your line and ask your question.

Operator: Your next question comes from Paul Mason with E&P. Please unmute your line and ask your question.

Speaker #6: Hey, team. Just one for me on just technology for calling and stuff. So next year, it sort of looks like it's going to be harder to deploy a GPU into a air-cooled environment because I think Vera Rubin is going to require liquid cooling.

Paul Mason: Hey, team. Just one from me on just technology for cooling and stuff. Next year it looks like it's going to be harder to deploy a GPU into an air-cooled environment, because I think Vera Rubin's going to require liquid cooling. Just like maybe how you're thinking about the plans for trying to grow Latitude from there. Are you going to have to maybe start procuring data center space on spec a little bit in order to support growth and get liquid cooling built in time? Or are you thinking about a longer lead time? Or are you thinking about just sticking with B300 for the foreseeable future, which can do air conditioning?

Speaker #6: So just like how are you thinking about like the plans for trying to grow latitude from there? Like are you going to have to maybe start procuring data center space on spec a little bit in order to support growth and get liquid cooling built in time or are you thinking about like a longer lead time or you're thinking about just sticking with like B300s for the foreseeable future, which can do air conditioning?

Speaker #4: It would be a mix. I think as we've sort of progressed into this space, we've started progressing appropriately for the opportunities that we've had.

Michael Reid: It will be a mix. I think as we've sort of progressed into this space, we've started progressing appropriately for the opportunities that we've had. All of those, at the moment, if you look at the market, there's very little liquid cooled data centers that have been physically built, as you're sort of alluding to. There's a number of reasons for that. They actually need to change the CDUs in there, the chillers, and all these components. So the actual data centers themselves, I know whatever it is, 99.1% of data centers are not built for liquid cooling. There's this sort of transformation happening in the industry. NVIDIA's pushing that by releasing more and more liquid cooled components. Yes, if you want to deliver Vera Rubin, you'll need liquid cooled elements just because of the sheer heat that they create in that space.

Speaker #4: Now, all of those, at the moment, if you look at the market, there's very little liquid cooled data centers that have been physically built, as you sort of alluding to.

Speaker #4: There's a number of reasons for that. They actually need to change the CDUs in there, the chillers and all these components. So the actual data centers themselves, I don't know whatever it is, 999.1% of data centers are not built for liquid cooling.

Speaker #4: And so there's this sort of transformation happening in the industry. NVIDIA is pushing that by releasing more and more liquid cooled components. So yes, if you want to deliver Vera Rubin, you'll need liquid cooled elements just because of the sheer heat that they create in that space.

Speaker #4: But what we're starting to see is that data centers are catching up. So we're seeing that more and more are coming with liquid cooled capabilities.

Michael Reid: What we're starting to see is that data centers are catching up. So we're seeing that more and more are coming with liquid cooled capabilities. We will constantly procure and deploy upon what our customers are requesting of us, what the market's demanding, and so we'll cross all of those different areas. So there'll be elements of liquid cooled, there'll be elements of air cooled, distributed all around the globe, depending upon where the requests are. So the answer is yes, to deploying liquid cooled. It's sort of the obvious path. You can also deploy B300 as liquid cooled. So you can take a data center that's liquid cooled, deploy all the stack in there, but yes, Vera Rubin specifically requires more, they're quite dense in terms of what they deliver. But you can look at Rubin, and so, you can also look at that component as well.

Speaker #4: We will constantly procure and deploy upon what our customers are requesting of us, what the market's demanding. And so we'll cross all of those different areas.

Speaker #4: So there'll be elements of liquid cooled. There'll be elements of air cooled distributed all around the globe depending upon where the requests are. So the answer is yes.

Speaker #4: To deploying liquid cooled. It's sort of the obvious path. You can also deploy B300s liquid cooled. So you can take a data center that's liquid cooled, deploy all the stack in there.

Speaker #4: But yes, Vera, Rubin specifically requires more it's quite dense in terms of what they deliver, but you can look at Rubin's and so you can also look at that component as well.

Speaker #4: If you look at it today, GB300s don't sit in an air-cooled facilities, but B300s sit in there. So they're still B300s. One has the grays, black, well on 72 and one rack.

Michael Reid: If you look at it today, GB300 don't sit in an air-cooled facilities, but B300 sit in there. So they're still B300. One has the Grace Blackwell on 72 in one rack. The other, you can put eight in a server and you can distribute from an air. So we build depending upon what makes sense.

Speaker #4: The other you can put eight in a server and you can distribute from an air. So we build, depending upon what makes sense.

Speaker #6: And just quick follow-up one. Just it hasn't been mentioned for a while, but could you make some comments on just like the rollout of the new compute platform?

Paul Mason: Just a quick follow-up one. It hasn't been mentioned for a while, but could you make some comments on just the rollout of the new compute platform? I think that was meant to be like a multi-year program of upgrading data centers in order to have the new software in your historical install base. How's that sort of gone?

Speaker #6: I think that was meant to be like a multi-year program of upgrading data centers in order to have the new software in your historical install base.

Speaker #6: Like how's that sort of gone?

Speaker #4: So which the latitude side or are you saying?

Michael Reid: Sorry, which? The Latitude side? Or are you saying?

Speaker #6: No, no, no, no. So if we.

Paul Mason: No. If you-

Speaker #4: Oh, Megaport, you're saying that you're saying on.

Michael Reid: On Megaport? You are saying that the-

Speaker #6: On the compute platform.

Paul Mason: The Megaport compute platform

Speaker #4: The MVE platform? Yes, I think that's two years ago. So yeah, no, we rolled all of that out. I think we have 100 something plus sites or locations that deploy virtual edge.

Michael Reid: the MVE platform? I think that is two years ago. So, we rolled all of that out. I think we have 100 and something plus sites or locations that deploy Virtual Edge. If anything, that equipment is probably getting old. In the future, we will look to replace that as we scale that through. So in effect, that is the compute platform to support all the network edge. That has been performing incredibly well. You can see actually insight where I do not know if the metrics are in there, but basically that business is continuing to scale. That supports our MVE and our MCR platforms and all the different countries and locations at the edge. Yes. I think we told the market we are investing in delivering that, and that has been done. That gives us-

Speaker #4: If anything, that equipment is probably getting old in the future. We'll look to replace that as we scale that through. So in effect, we are that is the compute platform to support all the network edge.

Speaker #4: And that's been performing incredibly well. And you can see actually inside well, I don't know if the metrics are in there, but basically those that business is continuing to scale.

Speaker #4: That supports our MVE and our MCR platforms and all the different countries and locations at the edge. So yes, that I think we told the market we're investing and delivering that.

Speaker #4: And that's been done. And that gives us that 400 gig connectivity up and then 100 gig opportunity to run. So it was like a, I don't know, a significant increase in what we can deliver at the edge.

Paul Mason: Great. Thank you.

Michael Reid: that 400G connectivity up and then 100G opportunity to run. So it was like a, I do not know, a significant increase in what we can deliver at the edge. Super important.

Speaker #4: Super important.

Speaker #6: Thanks, thanks.

Paul Mason: Oh, thanks.

Speaker #1: Your final question comes from the line of Andrew Gillies with Macquarie. Please unmute and ask your question.

Operator: Your final question comes from the line of Andrew Gillies with Macquarie. Please unmute and ask your question.

Speaker #7: Good job, good IT-ish. Can you hear me?

Andrew Gillies: G'day, Chubb. G'day, Tish. Can you hear me?

Speaker #4: Yeah, gotcha.

Speaker #7: Thanks very much. Just kind of one final one, if I may, around the customers, sort of customers for new contracts, just feedback from clients around concerns that potentially the larger side of enterprise is the sort of long-term riskier space for customers.

Michael Reid: Yeah. Gotcha.

Andrew Gillies: Thanks very much. Just one final one of mine around the customers for new contracts. Just feedback from clients around concerns that potentially the larger side of enterprise is the long-term riskier space for customers. Can you maybe share some of the points that give you confidence that the customers you are signing up in Latitude on these compute projects are quality counterparties? And then, also underneath that, how you're seeing that take-up of initial testing on pooled capacity, how the rollout's going on the initial compute contracts as well. Are the customers happy? Have they got any feedback?

Speaker #7: Can you maybe share some of the points that give you confidence that the customers you are signing up in latitude on these compute projects are quality counterparties?

Speaker #7: And then also underneath that, sort of how you're seeing sort of that take up of initial testing on pooled capacity, how the rollout's going on the initial compute contracts as well.

Speaker #7: Are the customers happy? Have they got any feedback?

Speaker #4: Yeah. So customers are very happy because they keep asking us for more. We've been disciplined around how we accept more because in effect, you'll be very careful.

Michael Reid: Yes. Customers are very happy because they keep asking us for more. We are being disciplined around how we accept more, because in effect, you have got to be very careful. You could just sell everything to one customer and you end up with this concentration risk. We also want to make sure we are growing and servicing our customers here, so having these two components play out. We are already, as you can see, in some of the slight amounts of ARR before 30 June, but you can start to see that we are deploying a whole range of GPUs across, and CPUs and storage for these contracts as we press out. We are hitting the time frames that we are telling our customers. I think that the industry is full of folks that are telling people things that they cannot execute against.

Speaker #4: You could just sell everything to one customer and you end up with this concentration risk. But we also want to make sure we're growing and servicing our customers.

Speaker #4: So you're sort of having these two components play out. So we're already, as you can see, in some of the slight amounts of ARR before June 30, but you can start to see that we're deploying a whole range of GPUs across and CPUs and storage for these contracts as we press out.

Speaker #4: We're hitting the timeframes that we're telling our customers. And I think that the industry is full of folks that are telling people things that they can't execute against.

Speaker #4: And so one of the important things to remember is that latitude and Megaport combined, we run 26 data centers plus that we keep adding for compute infrastructure as well as 100 and something 1100 physical data centers all around the globe with automated platforms.

Michael Reid: One of the important things to remember is that Latitude and Megaport combined, we run 26 data centers plus that we keep adding for compute infrastructure, as well as 1,100 physical data centers all around the globe with automated platforms. That is what we do for a living. When we add all these components in there, I think other folks out there in the market have not been able to deploy as quickly as they have promised, or they have had challenges around how to operate and run that. Remember, we have a huge automation software platform that delivers that.

Speaker #4: And so that's what we do for a living. And so when we add all these components in there, I think other folks out there in the market haven't been able to deploy as quickly as they've promised or they've had challenges around how to operate and run that.

Speaker #4: And remember, we have a huge automation software platform that delivers that. So it's not just as easy as installing a thing and handing in the keys over and just saying, good luck to you, which I think a lot of the a lot of entrants in this space have done, which is created a really bad taste in the mouth of many, many customers.

Michael Reid: It is not just as easy as installing a thing and handing the keys over and just saying, "Good luck to you," which I think a lot of entrants in this space have done, which has created a really bad taste in the mouth of many, many customers. When they see how we deliver and we deploy, it is the good old fashioned. You tell someone, you commit to doing something and you deliver against it. In this world right now, it is so important, and that is what we are seeing. I think you asked the next question around counterparty risks and so forth. We have a vast range of customers. I think the important part about adding the pool is to constantly diversify our customer base and then continue to scale with those customers.

Speaker #4: So when they see how we deliver and we deploy, it's the good old-fashioned. You tell someone, you commit to doing something and you deliver against it.

Speaker #4: And in this world right now, it's so important. And that's what we're seeing. So then I think you asked the next question around counterparty risks and so forth.

Speaker #4: So we have a vast range of customers. And I think the important part about adding the pool is to constantly diversify our customer base and then continue to scale with those customers.

Speaker #4: And then we also spend time great time looking into the customers and the details that we've got. Now, there's a mix. Tish actually looked through financials.

Michael Reid: We also spend time, great time looking into the customers and the details that we have got. There is a mix. Tish actually looks through financials. We look through, I do not know, do all the checks. I think you could probably articulate that component.

Speaker #4: We look through, I don't know, do all the checks. I think you probably articulate that component.

Speaker #2: We do a mix of credit checks obviously speak to the customer understand the financials. And then we also just make sure along in terms of the contract, it'll be a mix of terms, but a mix of upfront payment and then payment in advance.

Leticia Dorman: We do a mix of credit checks. Obviously, look, speak to the customer, understand the financials. We also just make sure in terms of the contract that it will be a mix of terms, but a mix of upfront payment and then payment in advance.

Speaker #4: And how they're funded and all those components. And then you do multiple things. You diversify the customer base. And then you actually diversify the risk associated as well.

Michael Reid: How they are funded and all those components. Then you do multiple things. You diversify the customer base, then you actually diversify the risk associated as well. Remember, everything that we deploy is deployed fully automated, which is what is so important. When you deploy the automation platform, you can instantaneously make it available to the market or to a pool in seconds, rather than having to send humans back to go and do an installation or a handover. We have a giant market that services that. If you think of a lot of folks that are entering this space that are really doing a finance model to go and deploy some GPUs without the tech side, they do not have that ability to deliver that.

Speaker #4: And remember, everything that we deploy is deployed fully automated, which is what's so important. And when you deploy the automation platform, you can instantaneously make it available to the market or to a pool in seconds rather than sort of having to send humans back to go and do an installation or a handover.

Speaker #4: And we have a giant market that services that. So if you think of a lot of folks that are entering this space that are really doing a finance model to go and deploy some GPUs without the tech side, they don't have that ability to deliver that.

Speaker #4: So I think there's multiple elements there, which is why I think showing you that demo that I showed before, hopefully gives you the perspective of the diversification of how the business operates and the strength and the power of having an automated software platform across the top.

Michael Reid: I think there are multiple elements there, which is why I think showing you that demo that I showed before hopefully gives you the perspective of the diversification of how the business operates and the strength and the power of having an automated software platform across the top. So hard to physically automate, to automate via software, physical infrastructure. It is very difficult.

Speaker #4: So, so hard to physically automate to automate software via software physical infrastructures. Very difficult.

Speaker #1: Thanks, guys. That brings our Q&A session to a close. I will now hand back to Michael for closing remarks.

Leticia Dorman: Thanks, Gus.

Operator: That brings our Q&A session to a close. I will now hand back to Michael for closing remarks.

Speaker #4: Martine, what an outstanding result. I just want to take the moment to thank our shareholders for continuing with us on this incredible ride. The company has transformed significantly.

Michael Reid: Well, team, what an outstanding result. I just want to take the moment to thank our shareholders for continuing with us on this incredible ride. The company has transformed significantly. I will draw you back to the very first slide. I mean, how often do you get Well, firstly, there is the first slide. How often do you get to see a front page like that? Let us just, I think let us focus here. In the last 10 months, the execution of this company has been unparalleled. Look at where we have come from to where we are. It is a monumental change in the business, and we are incredibly excited about taking advantage of what is the hottest market I have ever seen in my history. From an AI perspective, it is out of control, the growth.

Speaker #4: I'll draw you back to the very first slide. I mean, how often do you get well, firstly, there's the first slide. How often do you get to see a front page like that?

Speaker #4: But let's just I think let's focus here. In the last 10 months, the execution of this company has been unparalleled. Look at where we've come from to where we are.

Speaker #4: It is a monumental change in the business. And we're incredibly excited about taking advantage of what is the hottest market I've ever seen in my history.

Speaker #4: From an AI perspective, it's out of control, the growth. The opportunity is long-term because what you have is natural rate limitings on physical infrastructure, physical data centers.

Michael Reid: The opportunity is long-term because what you have is natural rate limitings on physical infrastructure, physical data centers, so that actually this will continue for the foreseeable future, and you can look through all the different fabs. At the end of that growth piece, you end up with consistent percentage growth on top, no different to how the cloud market built out. We are in a really unique position because of the platform that we have built globally and the skill set that we have, along with the software infrastructure. You can already see that. We just announced another AUD 0.5 billion of TCV today. In that period of time, AUD 1.3 billion from where we were in April, where we had not looked at any of those components, and it was just the on-demand pieces. So important to keep the on-demand continuing and these contracts.

Speaker #4: So that actually this will continue for the foreseeable future. And you can look through all the different fabs. And at the end of that growth piece, you end up with consistent percentage growth on top.

Speaker #4: No different to how the cloud market built out. We're in a really unique position because of the platform that we've built. Globally, and the skill set that we have along with the software infrastructure.

Speaker #4: And you can already see that. We just announced another half a billion dollars of TCV today. And in that period of time, 1.3 billion from where we were in April, where we hadn't looked at any of those components and it was just the on-demand pieces.

Speaker #4: So important to keep the on-demand continuing and these contracts you blend them together and you have this incredible business for the future. Super excited.

Michael Reid: You blend them together, and you have this incredible business for the future. Super excited. I want to spend one second to shout out to the team. The amount of effort and energy from the team that has gone in over those past nine months has been unbelievable. I mean, we were firing fast before, but just to look at what this team has achieved is phenomenal. I want to thank each and every individual. When you run fast, you work long hours. It is tough, all those components. Everyone here leans in, and that is what is so exciting to be in this business. So, thank you for all the support, and we are hiring. So if you know people, send them our way. It is an exciting place to be. Thanks, team. We will see you on the roadshow.

Speaker #4: Want to spend one second to shout out to the team. The amount of effort and energy from the team that's gone in over those past nine months has been unbelievable.

Speaker #4: I mean, we were firing fast before, but just to look at what you've what this team has achieved is phenomenal. I want to thank each and every individual.

Speaker #4: When you run fast, you work long hours, it's tough, all those components, but everyone here leans in. And that's what's so exciting to be in this business.

Speaker #4: So thank you for all the support. And we're hiring. So if you know people, send them our way. It's an exciting place to be.

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