IREN Delays $4 Billion ARR Target to January After Microsoft Requests Design Change

Co-chief executive Daniel Roberts identified the customer as Microsoft on the company's earnings call, CNBC reported. "They made a request to reconfigure and upgrade some of the network infrastructure and the purpose of that was really to enable the 200 megawatts of capacity to service these latest generation frontier models," Roberts said, according to CNBC.

The delay lands at a sensitive moment for neoclouds, the specialist providers that borrow heavily to build GPU capacity for AI developers and hyperscalers. IREN's stock fell 26% after Tuesday's US midterm elections and is down about 55% over the past month, CNBC reported, as investors question whether debt-funded data centre projects can be financed and delivered on time. In its results release the company said the more than $4 billion of annual recurring revenue (ARR) is fully contracted and funded, and that only its timing has moved.

Roberts acknowledged the change in mood. "Capital markets have become more selective in the last few weeks, and the questions have undoubtedly moved from how big the contract is to whether it can be delivered, financed, and run at a profit," he said on the call, according to CNBC. He told the broadcaster there was "a disconnect between what we're seeing in public market and what we're seeing at the customer level." The shares rose in extended trading.

Quarterly Revenue Beats Forecasts

For the quarter ended September 30, the first of IREN's 2027 fiscal year, revenue rose 66% from the previous quarter to $228 million, the company said. That was ahead of the $221 million average analyst estimate compiled by LSEG, according to CNBC. AI cloud revenue rose 182% to $200 million, made up of $135 million from cloud services and $65 million from leasing, while bitcoin mining revenue fell to $28 million from $67 million.

The net loss narrowed to $263 million from $684 million in the prior quarter, and adjusted EBITDA rose to $66 million from $19 million. Operating ARR doubled to about $1 billion after the company's Horizon 1 facility went into service for Microsoft. IREN said Horizon 1 has been given Nvidia's Exemplar Cloud status for GB300 NVL72 systems.

Cash and Capital Spending

The build-out is draining cash. IREN ended the quarter with $3.5 billion in cash and equivalents, down from $5.9 billion three months earlier, while net debt rose to $4.43 billion from $216 million. It plans to spend another $15 billion in capital expenditure in the rest of the fiscal year. About $9 billion of that is covered by cash, committed GPU financing and customer prepayments, the company said, and the remaining $6 billion is a financing target that is subject to market conditions.

IREN said demand and pricing are still moving in its favour. Revenue backlog rose 22% from the previous quarter to $20.3 billion, about two-thirds of it with investment-grade counterparties. Contracted prices rose 11% on three-year deals and 12% on five-year deals, and the company said it had contracted older Nvidia H100 GPUs at double their previous price. After the quarter closed it expanded an existing contract with what it called a leading frontier AI lab, and signed a five-year contract at about $22 million per IT megawatt in which the customer prepays 90% of the GPU capital cost. Nvidia and Microsoft are its main customers, alongside 13 others.

Investors will get further readings on the sector shortly. CoreWeave, whose shares have fallen 60% over the past month, reports on Tuesday, and Nebius, down 48% over the same period, reports next Thursday, according to CNBC. For IREN, the test is whether the Microsoft capacity starts billing in January as now promised.