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After Iris Energy reported its November results, we updated our fair value and cut our quality score to 3.6. We lowered our rating for the company's protection from competitors and the profit it makes on its investments. We have added the shift toward customers paying for their own equipment to our thesis, along with the rising prices the company charges per megawatt of power. We reset our expectations for revenue from bitcoin mining and increased our projections for the share of sales coming from AI services.
The company reported $228 million in total revenue for the quarter, matching what analysts expected. The standout was the AI cloud business, which brought in $200 million as new data center sites began serving major customers like Microsoft. This shift from Bitcoin mining to AI infrastructure is working, with the company earning a high 86 percent gross margin on its cloud services.
However, management pushed the target date for reaching $4 billion in annual recurring revenue, a measure of the yearly value of its active contracts, from December to January. The company said this one-month delay was due to a customer request rather than a technical failure. While the stock fell sharply on the news, the underlying business remains on track with a $20 billion backlog of future work and enough cash already secured to fund its current expansion plans.
See the full quarter, and how our tracked metrics did
Source: Company earnings report
The company reports its quarterly results today. Analysts expect a loss of about 72 cents per share on revenue of roughly 230 million dollars.
For a company building massive data centers, the most important thing to watch is how quickly it is turning its $3.1 billion in signed contracts into actual cash coming in. We will also be looking for updates on the construction of its Childress and Sweetwater sites, as finishing these projects on time is what allows the company to stay ahead of rivals.
The latest election results suggest a shift in how Washington handles the crypto industry. A Democratic-led Congress is expected to focus more on strict oversight rather than passing industry-friendly laws like the Clarity Act, which aimed to make digital asset rules more predictable.
While IREN is moving quickly into AI cloud services, it still has deep roots in Bitcoin mining. Tougher rules or more scrutiny on the crypto sector could make it harder or more expensive for the company to run that side of its business.
Source: CNBC
IREN closed a $363 million financing deal to support its growing AI cloud business. The agreement refinances specialized hardware, including the powerful chips and networking systems used to run AI workloads, that the company recently bought and put to work.
This is a helpful step for IREN because it allows the company to pull cash back out of equipment it already owns. By using the equipment itself as collateral for a loan, IREN can fund its next round of growth without having to issue more stock and dilute current owners. It shows that lenders are willing to put up significant capital against the company's data center assets.
Source: Business Wire
Management has struggled to set a reliable bar, missing analyst targets for four straight quarters as the massive costs of building data centers outpace their early revenue gains.
| Expectation | |
|---|---|
| EPS | $-0.73 |
| Revenue | $391M |
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