Iris Energy Limited

(NASDAQ Global Select)
Back to all articles
Bullish +75

IREN Stock Rallies After Earnings as AI Cloud Revenue Nearly Triples Despite Data Center Delays

AI infrastructure Earnings report New contract AI-generated analysis

πŸ“ˆ IREN shares jumped 10.7% in after-hours trading after reporting quarterly revenue of $228 million, which beat analyst expectations of $221 million.

☁️ AI Cloud revenue surged 182% sequentially to $200 million, contributing significantly to the company's strong financial performance.

πŸ’° The company achieved an 86% gross margin on its core business operations during the reported quarter.

πŸ“‰ Net loss narrowed to $263 million compared to a $684 million loss in the previous quarter, showing improved profitability trajectory.

πŸ—οΈ IREN plans to spend $15 billion on expansion this fiscal year, with $9 billion secured through cash and financing.

⚠️ The company pushed back its $4 billion ARR target from January 2027 to potentially February 2027 due to project delays.

πŸ”§ Delays at the Texas data center stem from customer-requested networking equipment changes and supply chain constraints.

🀝 IREN holds contracts with major clients including Nvidia, Microsoft, and 13 other customers for its AI infrastructure.

πŸ“œ Revenue backlog grew 22% to $20.3 billion, with two-thirds backed by investment-grade counterparties.

πŸ’Ή Analyst consensus on TipRanks is a Strong Buy with an average price target of $72.78 implying significant upside.

Bullish Signals
  • IREN reported quarterly revenue of $228 million, beating analyst expectations of $221 million and driving a 10.7% after-hours stock rally.
  • AI Cloud revenue exploded 182% sequentially to $200 million, demonstrating rapid scaling in its high-growth segment.
  • The company achieved an impressive 86% gross margin, indicating strong pricing power and operational efficiency.
  • Net loss narrowed significantly to $263 million from a prior quarter's $684 million loss, signaling improving financial health.
  • IREN secured a $9.7 billion deal with Microsoft for AI infrastructure expansion, validating its technology capabilities.
  • The company expanded an existing contract with a major AI client while noting that service prices are rising.
  • Revenue backlog grew 22% to $20.3 billion, providing a strong foundation for future revenue recognition.
  • Approximately two-thirds of the revenue backlog is backed by investment-grade counterparties, reducing credit risk.
Risk Factors
  • IREN pushed back its $4 billion ARR target from January 2027 to potentially February 2027 due to project delays.
  • The Texas data center project faced schedule delays caused by customer-requested networking equipment changes and supply chain issues.
  • Despite strong revenue, the company still reported a net loss of $263 million, indicating it has not yet achieved profitability.
  • Expansion plans require an additional $6 billion in funding that depends on market conditions and the ability to raise more capital.
Full Analysis
IREN Ltd. shares surged 10.7% in after-hours trading following a fiscal Q1 2027 earnings report that significantly outperformed analyst expectations. The company reported quarterly revenue of $228 million, representing a 66% sequential increase and beating estimates of $221 million. This growth was primarily driven by its AI Cloud business, which saw revenue jump 182% sequentially to $200 million, achieving an impressive 86% gross margin. Despite the strong top-line performance, IREN reported a net loss of $263 million, which was narrower than the expected loss of $684 million in the prior quarter. The company plans to invest $15 billion in expansion this fiscal year, aiming to fund $9 billion through existing cash and secured financing, with an additional $6 billion contingent on market conditions. However, IREN adjusted its timeline for reaching a $4 billion annual recurring revenue (ARR) target from January 2027 to potentially February 2027 due to delays at its Texas data center. Co-CEO Daniel Roberts attributed these delays to customer-requested changes in networking equipment and supply chain issues affecting equipment deliveries for the Microsoft project. IREN maintains a robust order book with a revenue backlog of $20.3 billion, up 22% from the previous quarter, with about two-thirds coming from investment-grade counterparties. The company holds contracts with major tech giants including Nvidia and Microsoft, and noted that prices for its computing services are rising as it expands capacity.