IREN Pushes $4B in Revenue to at Least January

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IREN has told investors that more than $4 billion in annual recurring revenue expected in 2026 will now arrive no earlier than January. The news came with its quarterly results, after a 26% post-election drop in the stock.

A sector under pressure

IREN is a neocloud, a company that rents out AI computing capacity. The group is being hit on worries about whether capital will keep flowing for expansion. Investors are watching closely, because the AI trade has begun to look shaky after the Democratic sweep in Tuesday's midterms.

The concern is that heavily indebted companies burning cash may not keep up with payments if borrowing costs climb and lenders pull back. CoreWeave, due to report Tuesday, is down 60% in a month. Nebius, reporting next Thursday, is down 48%.

IREN co-CEO Daniel Roberts described a split between markets and customers: "There is a disconnect between what we're seeing in public market and what we're seeing at the customer level."

Roberts said capital markets had become more selective in recent weeks. Investors now ask less about contract size and more about delivery, financing and profit.

Money for the build-out

IREN plans $15 billion in capital spending for the rest of this fiscal year. About $9 billion is cash and committed financing. The other $6 billion is target financing, subject to market conditions.

Roberts said some data center construction next year would be backed by Nvidia and Microsoft. Roughly a third would go to companies willing to make large prepayments. One customer just agreed to fund 90% of the GPU capital spending, he said. IREN has also not yet bought all the GPUs it needs for next year, a choice it made to reduce risk.

The quarter in numbers

Revenue climbed 66% from the prior quarter to $228 million. Analysts had expected $221 million on average, according to LSEG. AI cloud revenue more than doubled to $200 million. The rest comes from bitcoin mining, the business IREN ran before it moved into AI.

The net loss narrowed to $263 million from $684 million in the previous period. Year-ago figures were not in the release.

Revenue backlog rose 22% to $20.3 billion, with about two-thirds held by investment-grade counterparties. IREN says the $4 billion target is fully contracted and funded.

IREN said prices for its compute keep rising and that one of its existing contracts with a leading frontier AI lab has grown. It has contracts with Nvidia, Microsoft and 13 other customers.

What slipped and why

The company blames "a customer-requested change and supplier timing." On the earnings call, Roberts named Microsoft as the customer. Microsoft asked to reconfigure and upgrade parts of the network infrastructure, he said, to enable 200 megawatts of capacity to serve the latest-generation frontier models.

The delay could push payment into February. Shares rose in extended trading, though they are down 55% over the past month.

Source: CNBC