IREN Limited (NASDAQ: IREN) saw its stock tumble 12.5% on Friday, closing at $35.45, despite the company reporting a substantial $4 billion in contracted annual recurring revenue (ARR) from its artificial intelligence (AI) cloud services. The decline, which wiped out approximately $1.8 billion in market value, came as investors focused on a steep 68% drop in adjusted EBITDA for the fiscal fourth quarter.
The quarter marked a pivotal shift for the company, as AI Cloud Services revenue surged 110% sequentially to $70.5 million, surpassing Bitcoin mining as the primary revenue source for the first time. Bitcoin mining revenue fell 40% to $66.7 million as the company repurposed facilities for GPU-based AI workloads. Total revenue for the quarter came in at $137.2 million, down 5% from the prior quarter.
However, adjusted EBITDA plummeted to $19.2 million from $59.5 million in the March quarter, with margins contracting to 14.0% from 41.1%. The company attributed the decline to increased employee expenses and platform investments made ahead of related cloud revenue recognition, a timing mismatch that rattled investors. Net loss widened to $684.0 million from $247.8 million in the prior quarter.
Management emphasized the long-term opportunity, disclosing that $4 billion of 2026 capacity ARR is now under contract, with only $1 billion operational as of August 26. CEO Daniel Roberts stated, “Our 2026 capacity is largely sold out.” The contracted ARR figure, however, is not GAAP revenue and assumes commissioned GPUs operate at full capacity, a caveat the company acknowledges could lead to significantly lower recognized revenue.
For the full fiscal year, AI cloud revenue rose nearly eightfold to $128.8 million, but adjusted EBITDA declined 9% to $245.7 million. The annual net loss of $702.6 million included $638.8 million in non-cash impairment charges, primarily related to Bitcoin mining equipment replaced by GPU installations.
Financing appears to ease immediate liquidity concerns. IREN reported that its current cash, secured GPU financing, and customer prepayments total $14 billion, with customer prepayments covering 45% to 55% of GPU capital expenditures. The company also noted that Microsoft has received Horizon 1, a 50-megawatt liquid-cooled facility at Childress, with three more Horizon sites slated for delivery in the fourth quarter of 2026.
Analysts remain divided on timing but not on demand. B. Riley highlighted the quarter as supporting both commercial strategy and financing trajectory, while H.C. Wainwright maintained a Buy rating with a $90 price target. Peers also slipped, with CoreWeave (NASDAQ: CRWV) down 2.9% and Nebius Group (NASDAQ: NBIS) off 4.3%, but IREN’s decline was more than double either.
Investors now watch for operational ARR to progress toward the $4 billion contracted mark without another margin collapse. Risks include commissioning delays, GPU availability constraints, customer concentration, and falling rental prices, which could strain cash flow and delay revenue recognition.
