IREN Triples AI Cloud Revenue to $200 Million, Delays $4 Billion Milestone

AI Cloud revenue nearly tripled to $200 million in IREN's fiscal first quarter, up 183% from the prior three months, yet the company pushed back its target for bringing more than $4 billion of annualized operating revenue online from year-end to January. Co-Founder and Co-CEO Daniel Roberts said the slip reflects a customer-requested design change and supplier timing, and could extend to the end of February if suppliers run late. He confirmed the capacity behind the target is fully funded.

Total revenue climbed 66% sequentially to $228 million in the September quarter, Chief Financial Officer Anthony Lewis said. Bitcoin mining revenue fell to $28 million as IREN stripped out mining hardware ahead of GPU installations, a transition Lewis expects to substantially complete by the end of the December quarter. The quarter closed with a net loss of $263 million.

What do the margins and cash costs show?

Adjusted EBITDA reached $66 million, with the adjusted margin roughly doubling to 29% from 14% in the prior quarter. AI Cloud gross margin before depreciation and amortization held steady at 86%.

IREN exited September with $1 billion of operating annualized recurring revenue. Lewis said the company expects to recognize one quarter of that amount as revenue in the December quarter, with no material contribution from incremental Horizon and Mackenzie capacity during the period. Cash operating expenses — selling, general and administrative costs plus research and development — are set to rise by roughly $50 million to $60 million sequentially.

Why did the Microsoft deployment shift?

Roberts said IREN handed over Horizon 1 to Microsoft in August. Microsoft then requested a reconfiguration and upgrade of network infrastructure to enable 200 megawatts of capacity serving newer frontier AI models. The incremental capital cost is immaterial relative to the broader cluster, Roberts said, describing new cables, labor and a different implementation method.

The buildout continues elsewhere:

• Horizon 2 is built and undergoing commissioning
• Horizon 3 has its GPUs on site
• Horizon 4 GPUs are due to arrive in the coming weeks

Revenue backlog exceeds $20 billion, Roberts said, with two-thirds tied to investment-grade customers. Lewis named Microsoft and NVIDIA as the counterparties behind that share.

How is the spending plan funded?

IREN spent approximately $5 billion on capital expenditures during the quarter and plans about $15 billion for 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 held roughly $9 billion in cash and undrawn commitments to fund growth, leaving $6 billion of additional planned capital expenditure to be financed. 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 — a figure that 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 stood at $10.2 billion. Total assets of $20.6 billion included $6 billion of unencumbered data center assets.

Roberts tied the spending reduction to the availability and cost of capital, not weak demand. "We are not going to grow at all costs," he said, adding that owning its infrastructure gives IREN flexibility over the pace of development.

What are customers now paying per megawatt?

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 roughly 90% of the related GPU capital expenditure. 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.

Older H100 GPUs were re-contracted at double their original pricing, Roberts said. Chief Commercial Officer Kent Draper said the new pricing is locked in for a multi-year term.

During the quarter, three-year contracts priced at $19 million to $23 million per megawatt, while five-year pricing came in around $17 million, Lewis said. Customer prepayments and equipment financing can reduce the corporate capital needed for deployments, he noted, though returns and payback periods vary by contract.

Looking ahead, IREN targets 0.8 gigawatts of operating capacity by the end of calendar 2027. The company holds more than 5 gigawatts of secured power and over 35 gigawatts in development, though Roberts cautioned that many projects are early-stage and not all will reach grid connection agreements.

The takeaway: demand is pricing up while the money is pacing down, and IREN is spending on its own clock.