IREN's AI Cloud Revenue Nearly Triples to $200 Million as Microsoft Delays Push Its $4 Billion ARR Goal Into 2027

IREN, the former bitcoin miner turned AI cloud operator, posted fiscal first-quarter results that show both the ferocity of AI compute demand and its fragility. Revenue for the quarter ended September 30 rose 66% from the prior quarter to $228 million, ahead of the roughly $221 million analysts expected, while AI cloud revenue nearly tripled quarter over quarter to $200 million at an 86% gross margin. Net loss narrowed sharply to $263 million from $684 million, and adjusted EBITDA reached $66 million, a margin of about 29%.

The quarter's headline complication is a delay. Microsoft, IREN's flagship customer, asked for a network redesign across 200 megawatts of capacity so the deployment can serve the latest generation of frontier models. That pushed the company's target of more than $4 billion in annualized recurring revenue — a milestone that is fully contracted and funded — from the end of 2026 to January 2027, and potentially as late as the end of February. Co-CEO Daniel Roberts told investors the incremental capex was "completely immaterial" and that no contractual penalties apply, characterizing demand as "unprecedented."

Contracted revenue backlog grew 22% quarter over quarter to $20.3 billion, roughly two-thirds of it from investment-grade counterparties including Microsoft and Nvidia. Post-quarter, pricing kept climbing: three-year contracts are being signed about 11% higher and five-year deals about 12% higher, one five-year agreement was struck at roughly $22 million per megawatt of IT load with customer prepayments covering 90% of the associated GPU capex, and a short-duration deal exceeded $40 million per megawatt. IREN even recontracted older H100 GPUs at double their previous price.

The report landed on a bruised tape. Bloomberg reported that Microsoft is tightening its review of data center projects involving neocloud suppliers IREN, Nebius and Nscale, reassessing some high-risk projects, and IREN shares closed down about 17% at $18.03 on November 5 before rebounding roughly 13% in extended trading on the results. Bitcoin mining revenue fell to $28 million from $67 million as the company decommissions that business, with the transition expected to be substantially complete by the end of the December quarter.

IREN's pitch to investors is vertical integration: it owns more than 30,000 acres of land, over 5 gigawatts of secured grid connections and a 35-gigawatt development pipeline across North America, Europe and Asia-Pacific. "Most companies do one of those three. We do all three," Roberts said. The company plans roughly $15 billion of capital expenditure for the remainder of fiscal 2027, of which about $9 billion is backed by cash and committed financing and the remaining $6 billion depends on market conditions. Chief commercial officer Kent Draper said customer prepayments, which in recent contracts have covered 45% to 55% of GPU capex, reduce the need for traditional debt.

All figures are company-reported and unaudited, and the street is watching the peer group for confirmation: CoreWeave reports November 10 and Nebius November 12. The larger question IREN's quarter crystallizes is whether neocloud economics — heavy borrowing, long-lived data centers, short-priced compute contracts — hold up as lenders get choosier. Roberts said the questions from capital markets have shifted "from how big the contract is to whether it can be delivered, financed and run at a profit." On this quarter's evidence, IREN can at least answer the first two.