Iren (NASDAQ: IREN) delivered a difficult fiscal fourth quarter, but investors who focus only on recent results may be missing the bigger picture entirely.
Revenue for Q4 of fiscal year 2026 came in at $137.2 million, representing a 26.7% year-over-year decline that rattled markets and triggered a notable sell-off.
A $684 million net loss compounded the negative sentiment, alongside a projected $25 billion to $30 billion in capital expenditures planned for fiscal 2027.
Despite the surface-level disappointment, the quarter’s weakness was widely anticipated, and the underlying long-term thesis for Iren remains firmly intact.
The company is targeting 300 megawatts of delivered power in 2026, with ambitions to scale that figure to 800 megawatts by the end of 2027, out of a 5.8 gigawatt portfolio.
A key development came on August 13, when Iren announced the delivery of Horizon 1, covering 50 megawatts of the 200 megawatts included in its landmark Microsoft deal.
CEO Dan Roberts confirmed the company is actively working to deliver Horizons 2 through 4 “later this year,” which would unlock the full $1.94 billion in annual recurring revenue from that agreement.
Because Horizon 1 was delivered in August, it did not appear in the financial results for the quarter ended June 30, 2026, which explains why AI cloud revenue came in at just $70.5 million.
Horizon 1 alone unlocks $485 million in annual recurring revenue, and the sequential growth expected over the next two fiscal quarters is expected to be substantial as further deliveries occur.
Iren’s decision to be patient with deal-making has also proven strategically valuable, with the company now commanding $20 million per megawatt annually from new customers, more than double the rate of its Microsoft deal.
The five-year, $9.7 billion Microsoft contract covered 200 megawatts, placing it at roughly $9.7 million per megawatt annually, well below current market rates Iren is securing.
The company is even in discussions with tech customers willing to pay $25 million per megawatt annually, suggesting Iren’s compute assets are appreciating rapidly in value.
CFO Anthony Lewis addressed investor concerns about the hefty capital expenditure outlook, noting that Iren already holds $14 billion on its balance sheet.
Lewis said the company plans to close the remaining funding gap through approximately $8 billion in GPU financing and prepayments, with data center financing also under consideration.
Prepayments have been representing 45% to 55% of GPU capital expenditures, reducing the need for shareholder dilution that previously concerned many investors.
As of August 26, Iren reported $1 billion in operating annual recurring revenue including Horizon 1, with expectations to reach $4 billion in operating annual recurring revenue by year-end.
That $4 billion target would represent roughly $1 billion per quarter in AI cloud revenue, a stark contrast to the $70.5 million recorded in Q4 FY26.
The recent sell-off appears to reflect impatience rather than a deterioration of fundamentals, as the structural drivers powering Iren’s growth story remain squarely on track for 2027 and beyond.
