Key Takeaways
- IREN stock declined approximately 6% in early trading following an adjusted EBITDA result of $19.2M that fell short of analyst expectations of $34.9M
- Fourth quarter revenue reached $137.2M, trailing the consensus estimate of $157.14M, while AI cloud revenue surged 110% from the prior quarter to $70.5M
- The firm’s fiscal 2026 annual recurring revenue target of $4 billion has been completely contracted, representing an increase from the $3.4B disclosed in July
- A new multi-year agreement with a frontier AI laboratory was announced, and the company secured $6.5B in GPU financing during the past three months
- Analysts at H.C. Wainwright maintained their Buy recommendation with a $90 price objective, viewing the pullback as an attractive entry point
Shares of IREN tumbled roughly 6% to $38.20 during premarket hours on Friday following the release of fiscal fourth quarter earnings that revealed an adjusted EBITDA shortfall. The stock closed Thursday’s session at $40.53, marking a 47% decline from its 52-week peak of $76.87, while maintaining a 76% gain over the trailing twelve-month period.
Fourth quarter revenue totaled $137.2 million, falling short of the Street’s $157.14M projection. The company’s adjusted EBITDA of $19.2 million came in significantly below analyst forecasts of $34.9 million.
However, the quarter wasn’t entirely disappointing.
Revenue from AI cloud services reached $70.5 million during the period, representing a 110% sequential increase from the previous quarter’s $33.6 million. This type of quarter-over-quarter expansion signals substantial momentum.
IREN concluded the quarter with approximately $500 million in annual recurring revenue, which subsequently doubled to $1 billion following Microsoft’s acceptance of Horizon 1.
Full Contracting of $4B ARR Goal Achieved
Management announced that its $4 billion ARR objective for fiscal year 2026 has been fully secured through contracts, marking an improvement from the $3.4 billion level disclosed during the company’s July communication.
This expansion resulted from a newly signed multi-year partnership with an undisclosed frontier AI laboratory, supplementary customer agreements, and both renewals and expansions from the existing client base.
Important detail: the $4B calculation doesn’t include approximately $700 million in ARR stemming from a NVIDIA agreement anticipated to scale up during 2027.
Company guidance points to exceeding $4 billion in ARR by the December quarter, while Wall Street forecasts 117% revenue expansion for fiscal 2027.
Wall Street Views Selloff as Entry Opportunity
Following the earnings release, H.C. Wainwright reaffirmed its Buy stance and maintained a $90 price objective on IREN shares, characterizing the decline as an opportunity for investors.
The $90 target implies approximately 122% potential upside from Thursday’s closing price.
B. Riley’s Nick Giles characterized the quarterly performance as “a commercial and financing validation” in advance of the upcoming revenue acceleration toward $4 billion ARR and additional capacity contracting for 2027 and 2028.
Citizens JMP Securities maintained its Market Outperform rating alongside an $80 price target, highlighting strength in the AI cloud services segment.
Regarding capital raising, IREN secured $6.5 billion in GPU financing during the last three months. This funding, when combined with advance customer payments, provides coverage exceeding 100% of the GPU-related capital expenditures associated with achieving the $4B ARR milestone.
Management has established capital expenditure guidance for fiscal 2027 in the range of $25 billion to $30 billion.
Three-year contract pricing has escalated approximately 125% since November. Recent agreements are generating more than $20 million in annual revenue per IT megawatt, while ongoing negotiations are trending around $25 million per IT megawatt.
The company delivered 41% revenue growth during the last twelve months.
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