IREN Limited Q2 FY2026 earnings call

Key Points

• Dan Roberts: Secured $3.6 billion GPU financing at <6% interest, covering 95% of GPU-related CapEx for the Microsoft contract. Strong customer demand with ongoing negotiations for new and prior generation GPUs. Progress on data center construction across Horizon 1-4, and expansion of AI cloud footprint in British Columbia with ~$0.5 billion ARR under contract for Prince George. Secured a new 1.6 gigawatt site in Oklahoma, taking total secured power to over 4.5 gigawatts.
• Kent Draper: Vertical integration is a key competitive advantage with end-to-end control of data centers. Steady progress in site portfolio with construction milestones on schedule. Prince George data center fit-outs for GPUs complete; Mackenzie and Canal Flats sites prepared for expansion. Sweetwater procurement and civil works underway. Strong power portfolio with Oklahoma site adding to differentiated power assets.
• Anthony Lewis: Q2 financials reflect transition to AI cloud with lower Bitcoin mining revenue but accelerating AI cloud revenue. Adjusted EBITDA declined, but partially offset by lower payroll tax accruals and power costs. Capital strategy includes diverse funding sources, with $3.6 billion GPU financing secured to support Microsoft contract and broader growth.

Total revenue for Q2 was $184.7 million, down 23% from the prior quarter primarily due to lower Bitcoin mining revenue. This was offset by growth in AI cloud revenue as GPUs were commissioned at the Prince George site. AI cloud revenue is accelerating with deployments, and the company is on track to reach a $3.4 billion ARR by the end of 2026, with revenue contribution from various segments including the Microsoft contract and Prince George site.

Forward-Looking Statements

• Secured $3.6 billion GPU financing covering 95% of GPU-related CapEx for the Microsoft contract, providing clarity for broader customer discussions.
• Target to reach $3.4 billion ARR by the end of 2026, with demand not being the limiting factor. Subsequent quarters expected to show growing AI cloud contribution consistent with ARR targets.
• Focus on converting advanced customer negotiations into contracted revenue, leveraging secured power and execution capability.

Risks Discussed

• Forward-looking statements subject to risk factors causing actual results to differ from expectations. ERCOT batch processing potential impact on Sweetwater, but Kent Draper noted Sweetwater 1 is on track for Q2 energization and construction is well advanced.

Q: Darren Aftahi inquired about Oklahoma and ERCOT's impact on Sweetwater.

A: Kent Draper responded that Sweetwater is likely included in batch 0, meaning full 2 gigawatts of power is secured, and other projects in the portfolio may also be in batch 0.

Q: Paul Golding asked about Oklahoma site characteristics and cloud vs colo.

A: Kent Draper said Oklahoma site has favorable characteristics like low latency, Southwest Power Pool location with renewables and low cost power. Daniel Roberts added AI cloud offers better value per megawatt than colocation due to higher value chain position and capital intensity benefits from GPU financing.

Q: Michael Ng asked about Sweetwater 1 and 2 energization dates and contract progress.

A: Kent Draper stated Sweetwater 1 is on track for Q2 energization, construction advanced, and the batch process is expected to help customer discussions by uncovering real megawatts.

Q: Brett Knoblauch asked about ERCOT batch and Sweetwater.

A: Kent Draper said Sweetwater 1 is on track, and ERCOT will make public disclosures soon, but the 2,000 megawatts at Sweetwater is secure regardless.

Q: Nick Giles asked about human capital constraints.

A: Kent Draper noted long history of construction has built relationships with EPC partners and labor, allowing steady work and good supply chain management. Daniel Roberts added long runway in accumulating human capital over 7 years.

Q: Joseph Vafi asked about ARR ramps and Sweetwater.

A: Kent Draper said Prince George is ramping, Mackenzie and Canal Flats are progressing, and Anthony Lewis mentioned diverse capital sources for financing growth. Daniel Roberts discussed importance of right deals for Sweetwater to maximize shareholder value.

Q: Michael Donovan asked about Sweetwater ramp and Oklahoma assets.

A: Kent Draper said Sweetwater will be phased, and Oklahoma site has 200 acres of secured land adjacent to a major utility substation with 1.6 gigawatts secured power available from 2028.

Q: John Todaro asked about NVIDIA credit backstop.

A: Kent Draper said power and data center capacity are constraints, not credit backstops. Daniel Roberts added IREN is in similar conversations with counterparties regarding various structures.

Q: Mike Colonnese asked about CapEx projections.

A: Anthony Lewis stated the $3.6 billion GPU financing covers Microsoft-related CapEx, and focus is on financing residual CapEx for ARR growth targets.

Q: Benjamin Sommers asked about older generation chips.

A: Kent Draper said older generation chips shift to inference use, which is growing, and there's strong demand for older generations as supply lags demand, with chips still earning good returns even after years.