Financial Trends -- 5/10
IREN financial trends score 5/10. Revenue trajectory is exceptional -- 355% YoY growth to $240M in
Q1 FY26 -- but declined to $184.7M in Q2 FY26 as Bitcoin mining revenue fell during the AI transition.
The $9.7B Microsoft contract provides long-term revenue visibility, but earnings are extremely noisy
with large noncash items (unrealized derivative gains/losses, impairments, tax benefits). FCF is deeply
negative during this massive investment cycle (~$11.8B in planned capex). Share count dilution has been
substantial through ATMs and $3.7B+ in convertible notes. The business model is in radical transition
from BTC mining to AI cloud. Penalty: -1 for dilution (well over 10% annualized).
Weight: 25%
Q1 FY26 Revenue
$240M
+355% YoY | record quarter
Q2 FY26 Revenue
$184.7M
-23% QoQ | BTC mining decline
TTM EPS
$0.87
Noisy -- noncash gains/losses
Cash Position
$2.8B
Jan 2026 | earmarked for buildout
Quarterly Revenue Trajectory (FYE June 30)
Five consecutive quarters of record revenue through Q1 FY26, then a -23% QoQ decline in Q2 FY26.
Revenue grew from ~$57M (Q1 FY25) to a record $240M (Q1 FY26) -- a 4.2x increase in just four
quarters, driven by surging Bitcoin mining economics. Q2 FY26 revenue declined to $184.7M as BTC
mining revenue fell during the AI transition. AI Cloud revenue contribution is growing but remains
early-stage: $3.2M in Q1 FY25 to $7M in Q4 FY25.
| Metric | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | Q1 FY26 | Q2 FY26 |
|---|---|---|---|---|---|---|
| Revenue ($M) | $57M | $117M | $148M | $187M | $240M | $184.7M |
| QoQ Growth | — | 105% | 26% | 26% | 28% | -23% |
| AI Cloud Revenue ($M) | $3.2M | $3.5M | $3.8M | $7.0M | — | — |
Revenue from IREN earnings transcripts Q1 FY25 through Q2 FY26. AI Cloud revenue disclosed Q1-Q4 FY25 only. FYE June 30.
AI Cloud Revenue Ramp and ARR Targets
AI Cloud revenue is accelerating -- $3.2M to $7M over FY25 -- but remains tiny vs total revenue.
The $9.7B Microsoft deal at 85% projected EBITDA margin is the centerpiece of the AI pivot.
ARR target of $3.4B by end CY2026 is extremely ambitious -- currently ~$2.3B contracted
(~$1.9B Microsoft, ~$0.4B Prince George), leaving ~$1.1B to secure. Hardware-level AI cloud
margins exceed 95% (revenue less electricity), but full margins including depreciation and
SBC are materially lower.
AI Cloud revenue from IREN transcripts. ARR targets per management guidance. Microsoft deal is $9.7B with 85% projected EBITDA margin.
Profitability: Improving but Extremely Noisy
Adj EBITDA surged from $2.6M (Q1 FY25) to $92M (Q1 FY26), but NPAT is heavily distorted by noncash items.
Q4 FY25 NPAT of $177M included large unrealized gains on financial instruments. Q2 FY26 was hit
by $219.4M in noncash losses (unrealized derivative losses, debt conversion inducement) plus $31.8M
in mining hardware impairment, partially offset by a $192.5M tax benefit. Trailing P/E of 39.84x
on TTM EPS of $0.87 is misleading -- true operating earnings power is difficult to gauge during
this massive transition.
| Metric | Value |
|---|---|
| TTM EPS | $0.87 |
| Trailing P/E | 39.84x |
| Forward P/E | 46.63x |
| Q1 FY26 Adj EBITDA | $92M |
| Q2 FY26 Noncash Losses | $219.4M |
| Q2 FY26 Mining Impairment | $31.8M |
| Q2 FY26 Tax Benefit | $192.5M |
NPAT and EBITDA from IREN transcripts and filings. Q4 FY25 NPAT inflated by unrealized gains. Q2 FY26 distorted by noncash charges and tax benefit.
BTC Mining Economics: High Margins at Current Prices
BTC mining hardware margins exceed 75% -- all-in cost of $36K-$41K vs realized price of $93K-$99K.
At current BTC prices the mining operation generates substantial cash flow. However, this is
highly cyclical and BTC price-dependent -- the company is deliberately pivoting away from mining
toward AI/HPC, which will reduce BTC mining capacity over time. The Microsoft contract at 85%
projected EBITDA margin on $9.7B offers more predictable and scalable economics than BTC mining.
| BTC Mining | Low End | High End |
|---|---|---|
| All-in Cash Cost per BTC | $36K | $41K |
| Realized BTC Price | $93K | $99K |
| Implied Margin per BTC | ~$57K (61%) | ~$58K (59%) |
| Hardware Profit Margin | 75%+ | |
BTC mining costs and realized prices from IREN transcripts. Hardware margins 75%+ at scale. Highly BTC price-dependent.
Capital Structure: Massive Fundraise, Deeply Negative FCF
$9.2B raised in FY26 YTD -- massive capital deployment cycle with FCF deeply negative.
Total capital raised includes $3.74B in convertible notes ($440M Dec 2024, $1B Oct 2025, $2.3B Dec 2025),
$3.6B in GPU financing, and $1.9B in customer prepayments (Microsoft). Cash of $2.8B at end of Jan 2026
is earmarked for massive deployment: ~$5.8B for Microsoft GPU procurement, ~$3B for Horizon data centers,
~$3B for broader GPU and expansion. FCF is deeply negative on a net basis given the ~$11.8B investment pipeline.
| Capital Item | Amount |
|---|---|
| Convertible: $440M (Dec 2024) | $440M |
| Convertible: $1B (Oct 2025) | $1,000M |
| Convertible: $2.3B (Dec 2025) | $2,300M |
| GPU Financing | $3,600M |
| Customer Prepayments (Microsoft) | $1,900M |
| Total Capital Raised FY26 YTD | $9,200M |
| Cash at End Jan 2026 | $2,800M |
Capital raises from IREN transcripts and filings. Convertible notes at 0% and 3.25% coupon. Cash earmarked for massive data center buildout.
Capex Pipeline: ~$11.8B Planned Investment
~$11.8B in planned capex -- enormous execution risk but backed by contracted revenue.
The Microsoft GPU procurement ($5.8B) is the largest single line item, supported by the $9.7B
contract with 85% projected EBITDA margin. Horizon data centers (~$3B) and broader GPU expansion
(~$3B) round out the pipeline. Operating cash flow from BTC mining is positive at current prices
but insufficient to self-fund this buildout -- hence the massive capital raises.
Capex breakdown from IREN management guidance. Microsoft GPU procurement tied to $9.7B deal. Pipeline figures are management estimates.
Dilution: Significant (-1 Penalty)
Shares outstanding grew from ~210M to ~330M+ -- well over 10% annualized dilution, triggering a -1 penalty.
Multiple ATM raises (10M shares in Q2 FY25, 17.4M post-Q3 FY25, 25.3M in Q2 FY25) plus $3.74B
in convertible notes at 0% and 3.25% coupon that will convert into equity at various strike prices.
Significant share-based compensation is also causing payroll tax issues. The convertible notes create
further dilution overhang beyond the ~330M currently outstanding.
| Dilution Metric | Value |
|---|---|
| Earlier Share Count | ~210M |
| Current Estimated Shares | ~330M+ |
| Approximate Dilution | ~57% |
| ATM Raises (FY25-FY26) | ~52.7M shares issued |
| Convert: $440M (Dec 2024) | 0% coupon |
| Convert: $1B (Oct 2025) | 3.25% coupon |
| Convert: $2.3B (Dec 2025) | 0% coupon |
Dilution data from IREN transcripts and filings. Convertible notes will convert at various strike prices. ATM raise details from quarterly reports.
Forward Estimates and Valuation Context
Trailing P/E
39.8x
TTM EPS $0.87 (noisy)
Forward P/E
46.6x
~$0.75 consensus FWD EPS
ARR Target (CY2026)
$3.4B
$2.3B contracted | extremely ambitious
MSFT Deal EBITDA Margin
85%
Projected on $9.7B contract
Forward P/E of 46.6x implies analysts see earnings pressure before the massive ARR ramp.
Consensus forward EPS of ~$0.75 is below TTM of $0.87, suggesting the market expects continued
earnings noise during the transition. The $3.4B ARR target by end CY2026 would be transformative
if achieved ($2.3B already contracted), but true operating earnings power is difficult to gauge
during this radical business model transition from BTC mining to AI cloud.
P/E ratios and forward estimates based on consensus as of March 2026. ARR targets per management guidance. MSFT deal margin is projected, not realized.
Key Financial Signals
Positive Signals
1. Revenue +355% YoY to $240M in Q1 FY26 -- exceptional growth trajectory
2. $9.7B Microsoft contract at 85% projected EBITDA margin -- strong revenue visibility
3. BTC mining margins 75%+ at current prices -- generating substantial operating cash flow
4. AI Cloud revenue accelerating -- $3.2M to $7M over FY25, with massive ramp ahead
5. $2.8B cash position -- well-capitalized for buildout phase
6. $2.3B ARR already contracted toward $3.4B target
2. $9.7B Microsoft contract at 85% projected EBITDA margin -- strong revenue visibility
3. BTC mining margins 75%+ at current prices -- generating substantial operating cash flow
4. AI Cloud revenue accelerating -- $3.2M to $7M over FY25, with massive ramp ahead
5. $2.8B cash position -- well-capitalized for buildout phase
6. $2.3B ARR already contracted toward $3.4B target
Negative / Concerning Signals
1. Q2 FY26 revenue -23% QoQ -- BTC mining decline during AI transition
2. Earnings extremely noisy -- $219.4M noncash losses, $192.5M tax benefits in single quarter
3. FCF deeply negative during ~$11.8B investment cycle
4. Dilution ~57% share count growth (~210M to ~330M+) plus convert overhang
5. $3.74B in convertible debt at 0-3.25% will convert into additional equity
6. BTC price dependency -- mining cash flow highly cyclical
7. Execution risk on AI pivot -- $3.4B ARR target extremely ambitious
8. SBC volatility -- share-based comp causing payroll tax issues
2. Earnings extremely noisy -- $219.4M noncash losses, $192.5M tax benefits in single quarter
3. FCF deeply negative during ~$11.8B investment cycle
4. Dilution ~57% share count growth (~210M to ~330M+) plus convert overhang
5. $3.74B in convertible debt at 0-3.25% will convert into additional equity
6. BTC price dependency -- mining cash flow highly cyclical
7. Execution risk on AI pivot -- $3.4B ARR target extremely ambitious
8. SBC volatility -- share-based comp causing payroll tax issues