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1. IREN AI Cloud revenue reshapes the quarter
IREN, the Nasdaq-listed infrastructure company that began as a Bitcoin (BTC) miner, reported on November 5 that its AI Cloud revenue reached $200 million in the quarter ended September 30, 2026, a 182% increase from $71 million in the prior quarter. Total revenue was $228 million, up 66% from $137 million, while Bitcoin mining brought in only $28 million.
The figures cover the first quarter of IREN's 2027 fiscal year and show how far the business has moved from its origins. A little over a quarter earlier, mining and cloud were closer to equal contributors. Now one segment supplies nearly 88% of sales, and the other has become a minor line item.
The shift matters beyond a single company. IREN is one of several miners that built large power-connected data center sites for Bitcoin and are now renting that same capacity to artificial intelligence developers. The latest quarter gives a clear look at what that conversion looks like when it starts to reach the income statement.
2. How the revenue split changed
The $200 million AI Cloud total is made up of two parts. AI Cloud Services, in which IREN supplies GPU computing capacity to customers, contributed $135 million. AI Cloud Lease revenue, which comes from leasing infrastructure, added $65 million. Together they posted a gross margin of 86%, the same level as the quarter before.
Gross margin measures the share of revenue left after the direct costs of delivering a service. An 86% figure means that, before overhead, depreciation and financing costs, most of every dollar earned from cloud customers is retained. That is considerably richer than what miners typically keep from block rewards once electricity and hardware costs are counted, and it explains why management has been steering capital toward the cloud business.
The distinction between the two cloud lines is worth keeping in mind. Under a services arrangement, the operator runs the GPUs and sells computing time, which makes it responsible for the hardware, the software environment and uptime. Under a lease, the customer takes on more of that responsibility and the operator mainly provides the facility, power and cooling. Each model carries a different risk profile, and IREN is currently earning from both.
Bitcoin mining revenue, by contrast, dropped from $67 million to $28 million over the same period. The decline reflects the company's decision to give its capacity over to AI workloads rather than a single market event. The result is that mining, once the foundation of the company's identity, now accounts for roughly one-eighth of quarterly sales.
3. What do the loss and EBITDA figures show?
IREN's net loss narrowed to $263 million from $684 million in the previous quarter, while adjusted EBITDA rose to $66 million, a 29% margin, from $19 million, or 14%. The two measures tell different stories because they treat the costs of building the business differently.
Adjusted EBITDA strips out depreciation, interest and certain other items, so it reflects the operating performance of the cloud and mining units. Net loss includes the full cost of the equipment and financing behind the buildout. For a company deploying large quantities of GPUs and data center space, the gap between the two can be wide, and it is expected to remain visible while capital spending is heavy.
The balance sheet reflects that spending. Net debt stood at $4.4 billion, compared with $216 million a quarter earlier. In the period, IREN made roughly $2.7 billion of payments for computer hardware. The company says about $15 billion of capital expenditure remains for the fiscal year. Around $9 billion of that is covered by cash and committed financing and customer prepayments, and about $6 billion is targeted from financing and other sources that depend on market conditions.
That last point is a notable qualifier. Roughly $6 billion of the planned outlay is not yet locked in, so the pace of expansion is partly tied to how credit and capital markets behave in the coming months.
4. How large is IREN's backlog and annualized revenue?
IREN's revenue backlog, the value of contracted business still to be recognized, rose 22% from the previous quarter to $20.3 billion, and about two-thirds of it is with investment-grade counterparties. Operating annualized recurring revenue, or ARR, doubled to about $1 billion.
ARR takes the current run of recurring contract revenue and expresses it as a yearly rate. It is a forward-looking indicator rather than recognized revenue, so it is most useful for judging momentum. Doubling to $1 billion in a quarter indicates that newly commissioned capacity is being switched on and billed quickly.
The share of backlog tied to investment-grade customers is important for a different reason. Long-term compute contracts are only as dependable as the party paying for them, and a concentration of highly rated customers lowers the risk that the revenue will not be collected. IREN's customer base includes Nvidia and Microsoft, along with 13 other customers, according to the company.
Horizon 1, one of the company's data center phases, entered service for Microsoft in the period and earned Nvidia Exemplar Cloud status for GB300 NVL72 systems, a designation signaling that the deployment meets the chipmaker's reference performance standards. Horizons 2 through 4 are in late-stage construction.
5. Why did the $4 billion ARR target move?
IREN said its target of more than $4 billion in ARR is fully contracted and fully funded, but the date for reaching it has slipped. It was previously expected by the end of 2026. The company now points to January 2027, with the possibility that it extends into February.
The company attributed the change to a customer-requested design change and to supplier timing. In practical terms, a customer asked for adjustments to how the capacity is built, and the equipment schedule shifted accordingly. Nothing in the company's statement suggests that the contracts themselves have been altered or that demand has weakened, only that revenue will begin a little later than planned.
Delays of this kind are common in data center construction, where power, networking and GPU deliveries have to line up before a site can be switched on and billed. They still carry consequences, because every month of postponement defers revenue that the company has already financed against. Investors are likely to follow the January and February milestones closely.
IREN has described the structure as one in which it owns the land, the power and the data centers underneath its contracts. Daniel Roberts, an IREN executive, has said that ownership gives the company greater flexibility in how it funds growth and how quickly it moves.
6. What did the new contracts add after the quarter closed?
After the quarter ended, IREN expanded an existing contract with a leading frontier AI lab and signed further agreements at higher prices. One short-term contract was priced at roughly $40 million per megawatt of IT capacity. A five-year contract was priced at about $22 million per megawatt, with the customer prepaying 90% of the associated GPU capital expenditure.
The two prices reflect different trade-offs. Short-term deals command a higher rate because the customer is paying for flexibility, while the five-year deal gives IREN a steadier income stream and shifts most of the hardware financing burden onto the buyer through prepayment. A prepayment of that size reduces the amount IREN needs to raise elsewhere.
The company also said it contracted H100 GPUs at double the earlier H100 pricing, and that contracted pricing rose 11% on three-year agreements and 12% on five-year agreements. The H100 is an older Nvidia data center chip, so a doubling of its price points to demand for computing capacity that is strong enough to lift the value of previous-generation hardware.
A price quoted per megawatt of IT capacity is a way of measuring how much a customer pays for a given block of computing power, regardless of which chips fill it. Because power availability is the scarcest input for new AI sites, operators that already hold grid connections and finished buildings can ask for more than those still waiting on permits and construction.
Rising contract prices are a useful signal for the whole sector. If customers keep paying more for capacity, operators with available power and space hold a stronger negotiating position than they did a year ago.
7. What is next for IREN and Bitcoin miners moving into AI?
The next checkpoints are the delivery of the $4 billion ARR target in January or February 2027 and the closing of the remaining roughly $6 billion of funding for the current fiscal year's buildout. Both will show whether the company can convert its backlog into recognized revenue on schedule.
There are risks that readers should weigh alongside the growth. A larger share of revenue now depends on a small group of very large customers, and the company's own statements note that part of its funding plan is conditional on markets. Construction schedules can slip, as this quarter's revised ARR date shows, and falling demand for computing capacity would affect the company far more than a weaker Bitcoin price now would.
For the wider mining industry, the quarter underlines a split that has been growing for some time. Bitcoin mining remains a business with thin margins that depend on the coin's price, network difficulty and energy costs. Leasing capacity to AI customers offers contracted income with far higher margins, but it demands much more capital, brings customer concentration and exposes operators to construction timelines.
IREN's results sit at the far end of that transition. With $28 million from mining against $200 million from AI Cloud, the company now looks and reports more like a cloud infrastructure provider than a miner. Whether the higher margins justify the $4.4 billion of net debt and the further capital still to be arranged is the central question as the fiscal year continues.