IREN Delays 4 Billion Dollars in AI Revenue Until 2027

IREN has postponed more than $4 billion in projected annual recurring revenue from 2026 until at least January 2027 after Microsoft requested changes to network infrastructure supporting artificial intelligence operations. The Australian neocloud company disclosed the delay in its Thursday earnings report, following a sharp decline in its stock price and growing investor concerns about financing requirements across the AI infrastructure industry.

According to IREN, the delayed revenue could extend into February because of customer requirements and supplier scheduling. The company attributed the postponement to "a customer-requested change and supplier timing."

IREN co-CEO Daniel Roberts identified Microsoft as the customer during the company's earnings call. He explained that the requested modifications involve infrastructure supporting 200 megawatts of computing capacity.

"They made a request to reconfigure and upgrade some of the network infrastructure and the purpose of that was really to enable the 200 megawatts of capacity to service these latest-generation frontier models," Roberts said.

Despite the postponement, IREN reported stronger quarterly financial performance. Revenue increased 66% from the previous quarter to $228 million, exceeding the average analyst estimate of $221 million, according to LSEG.

AI Cloud revenue more than doubled to $200 million. The remaining revenue came from bitcoin mining, which previously represented the company's primary business before its transition toward AI infrastructure. IREN's net loss narrowed to $263 million from $684 million in the preceding quarter.

The company also reported a 22% increase in its revenue backlog to $20.3 billion. IREN said approximately two-thirds of that backlog involved investment-grade counterparties, describing the proportion as "approximately two-thirds with investment-grade counterparties."

Roberts maintained that the postponed revenue remains supported by existing agreements and financing arrangements. He also addressed the widening gap between investor sentiment and customer demand.

"There is a disconnect between what we're seeing in public market and what we're seeing at the customer level," Roberts told CNBC's Seema Mody.

However, financial markets have become increasingly cautious about companies investing heavily in AI infrastructure. Roberts acknowledged the changing funding environment and its implications for large technology contracts.

"Capital markets have become more selective in the last few weeks, and the questions have undoubtedly moved from how big the contract is to whether it can be delivered, financed, and run at a profit," Roberts said.

IREN shares had fallen 55% over the previous month and declined 26% following the midterm elections. Although the stock recovered in extended trading after the earnings announcement, concerns about financing and capital expenditure continued to weigh on the neocloud sector.

IREN said it plans to spend $15 billion in capital expenditures during the remainder of its fiscal year. That amount includes $9 billion in cash and committed financing, alongside another $6 billion in targeted financing that remains subject to market conditions.

The company said it has agreements with Nvidia, Microsoft, and 13 other customers. It also reported expanding an existing contract with a leading frontier AI laboratory and continued increases in prices for its computing services.

Roberts said some upcoming data center construction projects would receive backing from Nvidia and Microsoft. Other projects would involve customers willing to provide substantial advance payments to secure computing capacity.

"We just had a customer agree to fund 90% of the GPU capex," Roberts said, referring to graphics processing units.

IREN also addressed concerns surrounding the environmental and community impact of data center development. The company said it aims to address local opposition through partnerships with regional suppliers, efficient water consumption, and employment opportunities.

Roberts described community expectations as reasonable across the company's international markets, including Texas, Australia, and Spain.

"I think whether it's Texas, whether it's Australia, whether it's Spain, everywhere, all we're seeing is people wanting to ensure that data centers pay their own way and do the right thing, and it it feels completely reasonable," Roberts said.

IREN also disclosed that it had deliberately delayed purchasing all the GPUs required for next year as part of its effort to manage investment risks. Meanwhile, competing neocloud companies CoreWeave and Nebius had lost 60% and 48% of their respective stock values over the preceding month. CoreWeave was scheduled to report earnings on Tuesday, while Nebius was expected to release its results the following Thursday.