IREN Earnings Show AI Pivot Despite Large Loss
IREN earnings show a pivot to AI cloud with $4.0 billion contracted ARR and a $703 million impairment loss, forcing traders to reprice capital risk.
KEY TAKEAWAYS
- FY26 net loss of $703 million driven by $639 million non-cash impairments.
- Contracted ARR of $4.0 billion with $1.0 billion operating ARR after Microsoft Horizon 1 acceptance.
- Guided FY27 capex of $25.0-30.0 billion described as fully funded by $14.0 billion of cash and financing.
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IREN Limited (NASDAQ: IREN) reported on 2026-08-27 that it is accelerating a shift from Bitcoin mining to AI cloud services after Microsoft accepted its Horizon 1 deployment. The company posted fiscal 2026 results showing a large loss driven by impairment charges that reshape its capital plan.
Results and Impairments
The Form 8-K filed on 2026-08-27 disclosed fiscal 2026 consolidated results for the year ended 2026-06-30. Total revenue rose to $707 million, but the company recorded a net loss of $703 million, largely due to $639 million of non-cash impairments related to decommissioning Bitcoin-mining hardware as sites convert to AI cloud capacity.
AI Cloud Services revenue increased nearly eightfold to $129 million from $16 million in the prior year, while Bitcoin-mining revenue totaled about $578 million. Adjusted EBITDA, a proxy for operating profit, fell to $246 million, a 35.0% margin, down from $270 million and a 54.0% margin a year earlier. Operating cash flow for the year totaled about $2.1 billion.
For the June quarter, total revenue was $137 million, with AI cloud revenue reaching $70 million, or 51.4% of the quarter’s sales. The quarter produced a net loss of $684 million, including $450 million of non-cash impairments and a $102 million fair-value decline on mining hardware held for sale. Adjusted EBITDA dropped to $19 million from about $60 million in the year-earlier quarter. Cost of revenue declined by roughly $7 million as electricity use fell while mining operations wound down.
ARR Contracts, Deployments, and Funding
Management highlighted a rapid shift to recurring, contracted AI work, reporting annualized recurring revenue (ARR) of about $500 million at the end of the quarter. The company stated, “Annualized run-rate revenue (ARR) – Current: $4 billion contracted ARR for 2026 capacity; $1 billion ARR operating today.” It also announced a new multi-year contract with a leading frontier AI lab.
Horizon 1, the first of four 50-megawatt liquid-cooled deployments at Childress, Texas, delivered to Microsoft in the June quarter, achieved NVIDIA Exemplar Cloud status on GB200 NVL72 systems. This deployment underpins the $1 billion operating ARR.
To support an aggressive build, management guided fiscal 2027 capital expenditures of $25.0–30.0 billion for AI capacity, describing the program as “fully funded” by $14.0 billion of existing cash, committed GPU financing, and customer prepayments. The company disclosed $2.8 billion of GPU financings covering about 90% of associated GPU capital expenditures and reported cash and cash equivalents of $7.6 billion at fiscal year-end.
Management expects to exceed the contracted ARR level by the end of the December quarter 2026. Because much of the December-quarter capacity is scheduled to come online late in the period, the revenue impact will be reflected mainly in the March quarter 2027.
This combination of large contracted ARR and marquee deployments supports a growth thesis centered on GPU cloud compute. However, the rapid reallocation of capacity has produced significant non-cash write-downs and compressed near-term margins.
