IREN Shares Slip 12% on Q1 Earnings Miss, Revenues Rise Q/Q

Core Insights - IREN Limited (IREN) shares fell 12.4% after reporting weaker-than-expected earnings for Q1 fiscal 2026, with earnings of 1 cent per share missing the Zacks Consensus Estimate of 14 cents [1] - The company achieved net earnings of $384.6 million, a significant recovery from a loss of $176.9 million in the previous quarter [1] - Total revenues increased by 28.3% sequentially to $240.3 million, surpassing the consensus estimate by 8.83% [1] Financial Performance - Bitcoin revenues reached $232.9 million, up 29.1% sequentially, while AI Cloud Services revenues slightly increased to $7.3 million from $7.0 million [3] - Adjusted EBITDA was $91.7 million, down from $121.9 million in the previous quarter, with the adjusted EBITDA margin contracting to 38% from 65% [4] - Operating expenses rose to $236 million due to higher SG&A expenses and depreciation costs related to the expanded data center platform [4] Balance Sheet Strength - As of September 30, 2025, IREN had $1.03 billion in cash and cash equivalents, up from $564.5 million at the end of the previous quarter [5] - The company secured $400 million in total GPU financing and issued $1 billion in zero-coupon convertible notes in October 2025 to enhance liquidity and support growth initiatives [5] Future Outlook - IREN is targeting an annualized AI Cloud revenue run-rate of $3.4 billion by the end of 2026, with approximately $1.9 billion expected from its Microsoft contract and $1.5 billion from GPU deployments in British Columbia [6][7] - The company is transitioning its operations in British Columbia from bitcoin mining to AI, including the deployment of liquid-cooled data centers [6]