IREN Ltd (IREN) shares closed at $18.03 on Nov. 5, down 16.95%, after the AI data center operator reported a 58% quarterly drop in Bitcoin mining revenue and pushed a key Microsoft-related revenue milestone into early 2027.
The Australian company, which is building 200 megawatts of data center capacity for Microsoft in Texas, said its more than $4 billion annualized run-rate revenue target would now be reached in January rather than by year-end, with the timing possibly slipping to the end of February. Management attributed the shift to a customer-requested redesign of network infrastructure and to supplier delivery schedules.
"The more than $4 billion of contracted ARR is funded and now targeted for January," co-founder and co-CEO Daniel Roberts said on the earnings call.
For the quarter ended Sept. 30, IREN reported revenue of $228 million, up 66% from the prior quarter and ahead of the $221 million average analyst estimate tracked by LSEG. AI cloud revenue nearly tripled to $200 million from $71 million, while Bitcoin mining revenue fell to $28 million from $67 million in the June quarter and $233 million a year earlier.
The net loss narrowed to $263 million, or 66 cents per share, from $684 million in the prior period. Adjusted EBITDA rose to $66 million, a margin of about 29%, from $19 million three months earlier.
Note: Figures reflect the quarter ended Sept. 30, 2026. Prior-quarter backlog is derived from the reported 22% sequential increase.
The mining wind-down is accelerating. IREN produced 402 BTC in the quarter, down from 2,039 BTC a year earlier, as average operating hashrate fell to 8.8 exahashes per second from 45.3 EH/s. Installed mining capacity stood at roughly 7.9 EH/s at quarter-end. The company said it aims to substantially complete the exit from Bitcoin mining by Dec. 31, 2026, with immaterial operations continuing through calendar 2027, and held no BTC on its balance sheet at the end of September.
AI cloud now accounts for nearly 88% of quarterly revenue, up from about 52% in the prior quarter. Operating IT capacity rose 127% to 93 megawatts, driven by the handover of the first Horizon data center to Microsoft in August. AI cloud segment gross margin before depreciation held at 86%, and total company gross margin rose to 80% from 76%.
Roberts said Microsoft asked for the network reconfiguration after taking delivery of Horizon 1, so that the full 200 megawatts could serve the newest generation of frontier models. He described the incremental capital spending as "entirely immaterial" relative to the broader cluster and said the changes carry no penalty provisions. Horizon 2 is built and in commissioning by Dell, Horizon 3 has all GPUs on site, and Horizon 4 GPUs are due in coming weeks, he added.
The delay landed as investors were already souring on debt-funded AI infrastructure. IREN's stock has fallen 55% over the past month, and the selloff deepened after Democrats swept the midterm elections, stoking fears of tighter regulation. Rival neoclouds have been hit harder still: CoreWeave has lost about 60% in a month and Nebius 48%, according to CNBC. Bloomberg News reported that Microsoft is tightening oversight of projects run by neocloud providers including IREN, Nebius and Nscale.
"There is a disconnect between what we're seeing in public market and what we're seeing at the customer level," Roberts told CNBC.
IREN said it plans roughly $15 billion of capital expenditure over the remainder of fiscal 2027, down from earlier guidance. About $9 billion is covered by cash, committed financing and customer prepayments, leaving a $6 billion gap that management expects to fill from data center and GPU financing, against an indicative $12 billion to $15 billion of potential sources before any convertible or equity issuance.
The balance sheet showed $20.6 billion in total assets at Sept. 30, including $12.3 billion of property, plant and equipment and $6 billion of unencumbered data center assets. Cash and restricted cash totaled $5.8 billion, including $2.3 billion restricted mainly for GPU deployments. Total debt was $10.2 billion, largely low-coupon convertibles maturing in 2032 and beyond, leaving net debt of $4.43 billion.
Backlog reached $20.3 billion, up 22%, with Microsoft accounting for $9.6 billion, or 47%, and Nvidia for $3.4 billion, or 17%. About two-thirds, or $13 billion, is tied to investment-grade counterparties. IREN said it has contracts with Nvidia, Microsoft and 13 other customers.
Pricing continues to climb. Three-year contracts signed in the quarter carried $19 million to $23 million of annualized revenue per megawatt of IT load, and five-year deals about $17 million. Since quarter-end, IREN has signed a five-year contract at roughly $22 million per megawatt, with the customer prepaying about 90% of associated GPU capital costs, and a shorter deal above $40 million per megawatt. Older H100 GPUs were recontracted at double their original pricing.
Chief Financial Officer Anthony Lewis said memory and storage components remain constrained and that GPU prices are expected to keep rising, with increases passed through immediately into hourly contract pricing. Payback periods have actually shortened over the past six months, he said.
Roberts pushed back on comparisons with lease-heavy neocloud peers, noting the company owns its land, power and data centers and has not signed long-term colocation liabilities or $100 billion total contract value deals with AI labs. "We're not going to grow at all costs," he said, citing capital market conditions as the reason for trimming spending plans.
IREN has secured more than 30,000 acres of land and over 5 gigawatts of grid-connected power, with a further 35 gigawatts in development across North America, Europe and Asia Pacific. It expects to have $25 billion of data center and GPU assets by June 2027.
For the December quarter, management guided cash operating expenses up $50 million to $60 million sequentially and said about a quarter of the $1 billion in operating ARR at Sept. 30 would be recognized as revenue. The shares rebounded in extended trading after the release.
