IREN FY2026 Q4 Earnings: AI Cloud Full-Year Revenue +687%, $1B Microsoft Contract Recognized, FY2027 Capex Guidance Up to $25–30B
IREN Ltd reported strong AI Cloud growth in its June 2026 quarter, though net losses from mining transition costs overshadowed the operational progress. Total revenue reached $137.2 million, with AI Cloud revenue comprising $70.5 million—marking the first quarter in which cloud services exceeded 50% of total revenue. The net loss of $684 million was driven primarily by noncash impairments of $450.4 million related to mining hardware decommissioning and a $102.1 million fair-value decline in mining equipment held for sale. Cost of revenue fell $6.6 million due to reduced electricity consumption from winding down mining operations, which are expected to be fully decommissioned by December 2026.
Contracted Annual Recurring Revenue surged to $4 billion through calendar 2026, with $1 billion already operational and expected to exceed $4 billion by the end of the December quarter. The company exited Q4 with ARR of approximately $0.5 billion. Pricing power proved robust, with three-year contract pricing up roughly 125% since November and five-year pricing up about 70%, with recent deals pricing in excess of $20 million per megawatt of IT load.
IREN secured approximately $19 billion in funding over the past twelve months, comprising $16 billion from customer prepayments, GPU financing, and convertible notes alongside roughly $3 billion in equity. Over the past three months alone, the company raised $6.5 billion in GPU financing. For its Microsoft contract, IREN raised $3.6 billion at a weighted average rate of about 6%, while $2.8 billion was raised for non-investment-grade deployments, including $2.4 billion at 9% fixed rates. Customer prepayments are funding 45% to 55% of GPU CapEx on recent deals, and prepayments equivalent to 50% of GPU CapEx approximate 100% of data center costs. The company maintains a robust cash position of $7.6 billion on its balance sheet at 30 June, though $1.7 billion is restricted.
The company delivered Horizon 1 to Microsoft, achieving NVIDIA exemplar cloud status on the GB300 NVL72, and achieved full integration and operation of the AI infrastructure stack. Its customer base expanded to include new contracts with Cohere, Prometheus, Perplexity, Figure AI, and a leading frontier AI lab, alongside renewals from Together AI and Bioworks AI, indicating broad market acceptance. IREN has a secured pipeline exceeding 5 gigawatts of grid connections, with 2027 capacity targeting 1.2 gigawatts gross for long-term growth positioning.
The acquisition of Mirantis, now an NVIDIA-certified hypervisor, strengthens the software layer and enables higher-margin managed services and on-demand compute offerings. The company is optimizing existing sites with spare power capacity to allow additional GPU deployments without requiring new grid connections, improving capital efficiency. IREN's entire data center portfolio, including Horizons 1-4, remains 100% unencumbered, providing future financing flexibility.
For fiscal 2027, IREN guided CapEx of $25 billion to $30 billion to support 2026 deployments contributing to the $4 billion ARR target, balance air-cooled deployments for calendar 2027, and significant liquid-cooled facility CapEx in the second half of 2027, though GPU compute for new facilities is excluded from guidance. The company has secured $14 billion and is targeting roughly an additional $8 billion from GPU financing and prepayments, with the balance covered through data center financing, operating cash flows, and corporate sources. Management highlighted the strong fundraising environment, particularly following NVIDIA's recent announcements to major capital allocators.
Executive commentary underscored that contracts are not the driver in this industry; getting compute online is the priority. Contracts announced reflect GPU orders placed some time ago and reflect natural price increases beyond CapEx inflation. Daniel Roberts, Co-CEO, noted that the funding flywheel—whereby prepayments roughly equivalent to 100% of data center costs and 90% gearing on GPU financing require little equity over time—will support continued expansion despite growing ambitions. The company currently pursues a strategy of building a diversified customer base with longer-term contracts and accretive financing, eventually providing optionality to move into shorter-term contracts and leverage Mirantis software for higher revenue profiles. Pricing commentary confirmed consistency across live customer conversations, with strong competitive tension for near-term megawatts and upward pressure over time. Deals range from three to five years—not spot or two-year capacity—with substantial opportunity to sell on-demand capacity to optimize near-term P&L reserved for later execution. Globally, economics proved very consistent; compute is largely a global market with many customers accessing North American compute from overseas, though sovereign AI considerations may introduce additional scarcity factors in other locations.
Management flagged near-term headwinds: first-quarter cash SG&A is expected to rise $40–50 million sequentially due to the mining-to-cloud transition, pressuring near-term profitability. Execution risks exist in delivering Horizons 2-4 by December 2026, with a significant portion of capacity expected to come online late in the quarter, potentially impacting revenue recognition. CapEx requirements are expected to increase 15–20% for ongoing and new deployments, though revenue increases are projected to outpace cost growth. The company's reliance on customer prepayments and financing markets introduces dependency on favorable market conditions, which could prove volatile. Headcount nearly tripled in FY26 as the company built ahead of revenue, resulting in higher costs before revenue generation and potential cash-flow pressure. The competitive landscape for AI infrastructure remains intense, and rapid market evolution could lead to pricing pressure or technology obsolescence. Additionally, the identity of the leading frontier AI lab customer remains undisclosed, creating uncertainty about concentration and stability of this key contract.