IREN Slumps Over 7% Pre-Market as Asset Impairment Drags Quarterly Loss to $684 Million; AI Cloud Revenue Surpasses Mining for First Time

TradingKey - On August 28, Eastern Time, AI cloud infrastructure provider IREN (IREN) fell over 7% in pre-market trading at one point. As of press time, IREN was down 5.97% pre-market at $38.11. The company's fourth-quarter fiscal results reported after the bell on the previous trading day missed expectations, triggering a market sell-off.

[Source: TradingView]

The company recorded $137.2 million in revenue for the fourth fiscal quarter. Among this, AI cloud service revenue rose from $33.6 million in the previous quarter to $70.5 million, accounting for about 51.4% of total quarterly revenue and surpassing the Bitcoin mining business ($66.7 million) for the first time.

While AI cloud revenue grew, asset impairments posed a significant drag on current-period earnings. On a GAAP basis, IREN's fourth-quarter net loss widened to $684 million from $247.8 million in the prior quarter, far exceeding the analyst estimate of $204.3 million.

The loss was mainly driven by two non-cash items: an impairment on mining equipment assets of approximately $450.4 million and a decrease in the fair value of mining equipment held for sale of about $102.1 million, totaling $552.5 million and accounting for roughly 81% of the quarterly net loss.

These asset adjustments are directly related to the company's scaling back of its Bitcoin mining operations and advancing its transition toward AI cloud services.

During the same period, adjusted EBITDA dropped to $19.2 million from $59.5 million in the previous quarter, falling below the market consensus of $57.1 million. The pressure on short-term operating profit from AI infrastructure expansion and business realignments is already reflected in the EBITDA metric.

On a full-year basis, IREN's AI cloud service revenue reached $128.8 million, with roughly 55% generated in the fourth quarter, indicating an accelerating quarterly growth trend for the business.

According to the company's plan, the AI cloud capacity target is approximately 480 MW (megawatts) in 2026, and will expand further to 1.2 GW (gigawatts) in 2027.

In terms of contracts, the five-year framework agreement signed between IREN and Microsoft (MSFT) has a total potential value of up to $9.7 billion (including extension options), covering multiple 50MW-class AI infrastructure deployments. The first 50MW project, Horizon 1, has been delivered and accepted by Microsoft, with the remaining deployments scheduled to proceed through 2026.

The company also stated that the NVIDIA GB300 NVL72 system used in Horizon 1 has passed relevant testing by Nvidia (NVDA) and received Exemplar Cloud certification.

Upon full delivery of all signed AI cloud service contracts, the corresponding annualized revenue run-rate (ARR) will be approximately $4 billion. As of the end of this fiscal quarter, the portion fully deployed and operational accounts for an ARR of about $500 million. The disparity between the two is mainly due to the majority of computing capacity remaining under construction or delivery and not yet generating revenue.

Going forward, market attention will focus on two key areas: first, whether the AI infrastructure can be deployed according to schedule and put into operation on time; second, the extent to which signed cloud service contracts can be converted into actual revenue and operating cash flow.