IREN Q2 Earnings Call Highlights

Key Points

• $3.6 billion of GPU financing (expected sub-6% interest) plus $1.9 billion of Microsoft prepayments cover roughly 95% of GPU CapEx for IREN’s $9.7 billion Microsoft AI contract, with management saying the package implies an average interest cost of about 3%.
• IREN plans to deliver 140,000 GPUs by end-2026 to target $3.4 billion in annualized revenue, while expanding secured power to >4.5 GW (including a new 1.6 GW Oklahoma site) and highlighting 810 MW of operational air-cooled capacity for faster deployments.
• Fiscal Q2 revenue was $184.7 million (down 23% QoQ) as Bitcoin-mining income fell during the shift to AI cloud, though AI revenue is ramping; results were affected by non-cash/non-recurring items (~$219.4 million) and a $31.8 million mining-hardware impairment.

IREN NASDAQ: IREN used its fiscal second-quarter 2026 earnings call to emphasize progress in its shift from Bitcoin mining to what management described as a vertically integrated AI cloud platform, highlighting new GPU financing commitments, additional secured power capacity, and continued customer engagement for both current and prior-generation GPUs.

Financing package tied to Microsoft contract

Co-founder and Co-CEO Daniel Roberts said the company secured underwriting commitments for $3.6 billion of GPU financing at an interest rate expected to be less than 6%. Management said that, when combined with $1.9 billion in customer prepayments from Microsoft, the package covers approximately 95% of the GPU-related capital expenditures supporting IREN’s $9.7 billion AI contract with Microsoft.

CFO Anthony Lewis described the facility as a delayed-draw term loan from Goldman Sachs and J.P. Morgan structured to align with IREN’s CapEx profile. Lewis said it amortizes in full over a five-year term, and is secured against both the GPUs and the contracted cash flows from Microsoft, which management said supports the facility’s credit profile and pricing.

Roberts argued that the financing reduces a key concern around AI cloud—GPU capital intensity—and said that when factoring in the Microsoft prepayment, the company views its average interest cost as “around 3%.” He added that the financing outcome provides clarity to advance broader customer discussions.

Capacity build-out and expanding power portfolio

Roberts and Chief Commercial Officer Kent Draper framed IREN’s scale-up strategy around “capacity, customers, and capital,” saying the three elements are moving in parallel. Draper said IREN designs, builds, and operates its own data centers, supported by internal engineering, procurement, construction, technology, and operations teams, which management positioned as an advantage amid industry constraints such as long-lead equipment and skilled labor availability.

On the build-out, Draper said construction milestones across the portfolio are being delivered on schedule:

• Prince George (British Columbia): Data center fit-outs for air-cooled NVIDIA B200 and B300 GPUs are complete, awaiting delivery of remaining GPUs on order.
• Mackenzie and Canal Flats: Teams are preparing sites for AI cloud expansion, with ASICs being removed and GPUs being installed.
• Childress (Texas): Construction across Horizons One through Four is progressing to schedule to meet Microsoft’s GPU deployment timelines.
• Sweetwater (Texas): Procurement activities and civil works are underway for the first phase of data centers.

Management said the company expects to deliver 140,000 GPUs by the end of 2026, which it said would position IREN to deliver $3.4 billion in annualized run-rate revenue.

IREN also announced a new 1.6 gigawatt site in Oklahoma, which Draper said brings total secured power to over 4.5 gigawatts. He described the Oklahoma campus as a 2,000-acre site with low-latency connectivity to major network exchanges, located in the Southwest Power Pool, and said the ramp schedule commences in 2028. Draper also cited jurisdictional diversity versus ERCOT, a large penetration of renewables, and low-cost power as attractive site attributes.

Demand, contract structure, and the role of air-cooled deployments

Management repeatedly said demand is strong and “not the constraint,” describing multiple advanced negotiations for larger-scale deployments. Draper said customers are increasingly focused on “time to data center,” and noted an increased focus by hyperscalers and enterprises on air-cooled GPU deployments because they can be deployed faster. IREN emphasized its 810 megawatts of operational air-cooled data centers as a fit for that demand.

Draper said IREN has approximately $2.3 billion of annualized revenue run rate under contract, including about $0.4 billion at Prince George, which he said the company expects to increase “over the coming weeks” as it finalizes negotiations for remaining capacity at that site. He added that the company’s $3.4 billion ARR target for the end of 2026 would use only around 10% of IREN’s secured grid-connected power capacity, leaving what management called a substantial runway for growth beyond 2026.

During Q&A, executives said cloud contract negotiations are reflecting strong market conditions through factors including longer tenors and continued customer willingness to provide prepayments. Roberts also said IREN remains open-minded about colocation versus AI cloud, but currently sees AI cloud as a higher-value use of scarce megawatts. He contrasted colocation returns with what he described as the larger revenue potential from cloud contracts for incremental data center capacity.

Quarterly financial results reflect transition away from Bitcoin mining

Lewis said fiscal Q2 results reflected continued progress in the transition from Bitcoin mining to AI cloud, with AI cloud revenues accelerating as deployments ramp. Total revenue was $184.7 million, down 23% from the prior quarter, which Lewis attributed primarily to lower Bitcoin mining revenue due to reduced Bitcoin mined. He said the reduction stemmed from the AI transition lowering operating hash rate amid increasing global hash rate, along with lower average Bitcoin prices. Lewis said growth in AI cloud revenue partially offset the decline, driven by commissioning of new GPUs at Prince George.

Lewis said SG&A decreased by $37.6 million, primarily due to higher accelerated stock-based amortization and related payroll tax accruals recognized in the prior period. He added that adjusted EBITDA declined primarily because of lower Bitcoin mining revenue, partially offset by lower payroll tax accruals and lower power costs.

Lewis also cited several non-cash and non-recurring items that affected EBITDA and net income, including unrealized losses on prepaid forwards and capped calls associated with convertible notes, and a one-time debt conversion inducement expense tied to the equitization of a portion of the company’s 2029 and 2030 convertible notes. He said those items totaled $219.4 million. IREN also recorded $31.8 million of mining hardware impairment related to the transition to AI cloud, compared to $16 million in the prior period. Lewis said these impacts were partially offset by an $182.5 million income tax benefit, primarily reflecting the release of deferred tax liabilities related to unrealized gains on financial instruments.

ERCOT batching process and Sweetwater timelines

Analysts asked about ERCOT’s batch study processing and potential implications for IREN’s Sweetwater development. Management said Sweetwater is likely to be included in the batching process and that it believes Sweetwater One and Two would be included in “Batch Zero,” which would mean the full 2 gigawatts of power is secured. Executives also stressed that Sweetwater’s 2GW is secured regardless of the batching process, citing a signed interconnection agreement from 2023.

Draper said the company remains on track to energize Sweetwater One in Q2 and described it as a full bulk substation capable of 1.4GW at that site. He added that, if anything, the batching process could help customer discussions by clarifying which megawatts in the market are “real” and deliverable.

On revenue timing, Draper said a portion of Prince George’s contracted revenue is already operational. For the Microsoft contract, he said revenues will come online progressively over the course of the year, with initial revenues expected to commence in Q2.

About IREN NASDAQ: IREN

IREN Limited, formerly known as Iris Energy Limited, owns and operates bitcoin mining data centers. The company was incorporated in 2018 and is headquartered in Sydney, Australia.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.