Updated version 1 - Update 2 - IREN's quarterly revenue exceeds expectations, delays part of Microsoft AI infrastructure delivery

Added executives' comments from the earnings call

Reuters, November 5 - Artificial intelligence data center company IREN (IREN.O) reported quarterly revenue that exceeded market expectations thanks to strong growth in its AI cloud business; meanwhile, after adjusting its network design at the request of Microsoft, the software giant, the company postponed some delivery dates for Microsoft’s infrastructure.

In after-hours trading on Thursday, the company’s shares rose 4%. Amid concerns over tighter tech industry regulation sparked by a sweeping Democratic victory in the US midterm elections, stocks related to AI infrastructure and data centers generally faced sell-offs, with IREN closing down about 17%.

The company said that delivery delays for Microsoft MSFT.O (link) infrastructure would not result in financial penalties.

However, IREN has pushed back its timeline for achieving over $4 billion in annualized revenue from the end of the year to January. The company said this timeframe may extend to late February.

According to a Bloomberg report earlier that day, amid project delays and rising costs, the Windows maker has stepped up oversight of data center projects operated by so-called “new cloud” companies including IREN, Nebius NBIS.O, and Nscale.

Reportedly, Microsoft is gradually exiting projects it considers higher risk and weighing whether to sign new contracts with these service providers, while focusing more efforts on expanding its own data centers.

Companies like IREN are building high-energy-consuming data centers, which can ultimately be leased to firms developing and running AI models.

IREN’s AI cloud revenue for the first quarter rose from $71 million in the previous three months to $200 million.

The company said its assets and income benefited from contracts with NVIDIA, Microsoft, and 13 other companies, with about two-thirds of its unrecognized revenue linked to investment-grade counterparties.

IREN executives stated during the earnings call that as of the end of September, the company’s annualized run-rate revenue had reached $1 billion, with approximately one-quarter of that expected to be recognized in the December quarter.

As the company accelerates its investments in data centers and GPUs, capital expenditures for the remainder of the fiscal year are expected to reach about $15 billion.

According to data compiled by the London Stock Exchange Group (LSEG), total revenue for the quarter ending September 30 rose to $228 million, higher than analysts’ average estimate of $221.28 million.

https://www.reuters.com/graphics/IREN-STOCKS/zgpodgxnovd/chart.png

(To facilitate non-native English speakers, Reuters has automatically translated its reports into several other languages. As automated translations may contain errors or lack the context required, Reuters does not guarantee the accuracy of the automated translation, which is provided for convenience only. Reuters accepts no liability for any damage or loss arising from the use of automated translation features.)