What IREN (IREN) Said on Its Q1 Earnings Call

Key Points

• AI Cloud revenue surged 183% sequentially to $200 million, lifting total revenue 66% to $228 million. IREN’s adjusted EBITDA margin improved to about 29%, while it reported a net loss of $263 million.
• IREN pushed its target of bringing more than $4 billion in annualized operating revenue online from year-end to January, with a possible delay to late February. The shift follows a Microsoft-requested network redesign for 200 megawatts of capacity and potential supplier delays.
• IREN plans to spend about $15 billion in the rest of fiscal 2027, pacing investment based on capital-market conditions rather than weak demand. New contracts include customer prepayments covering about 90% of related GPU costs, while the company cited roughly $12 billion to $15 billion in potential funding sources.

IREN NASDAQ: IREN reported a nearly threefold increase in AI Cloud revenue for its fiscal first quarter, but pushed back its target for bringing more than $4 billion of annualized operating revenue online, citing a customer-requested design change and supplier timing.

Co-Founder and Co-CEO Daniel Roberts said the company is now targeting January for the milestone, previously expected by year-end. It could slip to the end of February if suppliers are late, he said. The capacity supporting the target is fully funded, according to management.

The company also reduced its planned capital spending for the remainder of fiscal 2027. Roberts said IREN was pacing investment in response to financial market conditions, rather than a lack of customer demand.

AI Cloud Growth Drives Revenue

AI Cloud revenue rose 183% from the prior quarter to $200 million in the September quarter, Chief Financial Officer Anthony Lewis said. Total revenue increased 66% sequentially to $228 million, while Bitcoin mining revenue fell to $28 million as IREN continued removing mining hardware ahead of GPU installations.

Lewis said the company aims to substantially complete that transition by the end of the December quarter. IREN reported a net loss of $263 million for the September quarter.

Adjusted earnings before interest, taxes, depreciation and amortization were $66 million, with the adjusted EBITDA margin rising to about 29% from 14% in the prior quarter. AI Cloud gross margin before depreciation and amortization remained at 86%.

IREN exited September with $1 billion of operating annualized recurring revenue, or ARR. Lewis said the company expects to recognize one quarter of that amount as revenue in the December quarter, but does not expect a material contribution from incremental Horizon and Mackenzie capacity during the period. Cash operating expenses, including selling, general and administrative costs and research and development, are expected to rise by approximately $50 million to $60 million sequentially.

Microsoft Deployment Timeline Shifts

Roberts said IREN handed over Horizon 1 to Microsoft in August. Microsoft subsequently requested a reconfiguration and upgrade of network infrastructure to enable 200 megawatts of capacity to serve newer frontier AI models, he said.

The incremental capital cost of the network upgrade is immaterial relative to the broader cluster, Roberts said, describing the work as involving new cables, labor and a different implementation method. He said Horizon 2 was built and undergoing commissioning, Horizon 3 had its GPUs on site, and GPUs for Horizon 4 were due to arrive in the coming weeks.

IREN’s revenue backlog exceeded $20 billion, Roberts said, with two-thirds tied to investment-grade customers. Lewis identified Microsoft and NVIDIA as the investment-grade counterparties behind that share.

Spending Plan and Funding

IREN spent approximately $5 billion on capital expenditures during the quarter and plans to spend about $15 billion during the remainder of fiscal 2027, Lewis said. The updated plan spreads deployment of Childress air-cooled capacity across calendar 2027 rather than concentrating it earlier in the year.

The company had approximately $9 billion in cash and undrawn commitments available to fund growth, leaving $6 billion of additional planned capital expenditure to be funded, Lewis said. Management outlined an indicative $12 billion to $15 billion of potential funding sources, including data center financing, GPU prepayments and financing, and corporate-level initiatives. That estimate excludes potential convertible and equity financing.

At September 30, IREN reported $5.8 billion in cash, including $2.3 billion of restricted cash primarily set aside for GPU deployments. Total debt was $10.2 billion. Lewis said the company’s $20.6 billion of total assets included $6 billion of unencumbered data center assets.

Roberts said the spending reduction reflected the availability and cost of capital. “We are not going to grow at all costs,” he said, adding that ownership of its infrastructure gives IREN flexibility over the pace of development.

New Contracts and GPU Pricing

Since quarter-end, IREN signed a five-year contract at $22 million of annualized revenue per megawatt of IT load, with a customer prepayment covering approximately 90% of the related GPU capital expenditure, Roberts said. It also signed a shorter-duration contract at more than $40 million per megawatt and expanded an existing agreement with a leading frontier AI lab.

Roberts said the company had re-contracted older H100 GPUs at double their original pricing. Chief Commercial Officer Kent Draper said the new pricing was locked in for a multi-year term.

During the quarter, three-year contracts were priced at $19 million to $23 million per megawatt, while five-year pricing was approximately $17 million, Lewis said. He added that customer prepayments and equipment financing can reduce the corporate capital needed for deployments, although returns and payback periods vary by contract.

Looking ahead, IREN is targeting 0.8 gigawatts of operating capacity by the end of calendar 2027. Roberts said the company has more than 5 gigawatts of secured power and over 35 gigawatts in development, while cautioning that many development projects are early-stage and not all will result in grid connection agreements.

About IREN (NASDAQ:IREN)

IREN Limited, formerly known as Iris Energy Limited, is a data center infrastructure company focused on bitcoin mining and high-performance computing. The company develops and operates data centers designed to support energy-intensive computing applications, including bitcoin mining and artificial intelligence (AI) cloud services.

IREN's operations are supported by company-owned electrical infrastructure, data centers and computing hardware. Its bitcoin mining business uses specialized application-specific integrated circuit (ASIC) machines, while its AI cloud offering is designed to provide access to advanced computing resources for AI development and other high-performance computing workloads.

Founded in 2018 and headquartered in Sydney, Australia, IREN has developed data center operations in North America, including facilities in British Columbia, Canada, and Texas.

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