IREN Ltd. (NASDAQ:IREN) Reports Q2 Loss, Shares Tumble on Revenue and EPS Miss
Shares of IREN Ltd. fell sharply in after-hours trading, declining nearly 19%, following the release of the company's financial results for the second quarter of fiscal year 2026. The market's negative reaction appears directly tied to the company's performance falling short of Wall Street's expectations on key profitability and revenue metrics, overshadowing significant strategic announcements regarding its expansion in the artificial intelligence cloud sector.
Earnings and Revenue Versus Estimates
The company's reported figures for the quarter ended December 31, 2025, missed analyst consensus estimates on both the top and bottom lines.
- Revenue: IREN reported total revenue of $184.7 million. This represents a significant shortfall compared to the analyst estimate of approximately $232.7 million.
- Earnings Per Share (EPS): The company reported a non-GAAP net loss per share of $0.44. This was substantially wider than the estimated loss of $0.098 per share that analysts had projected.
The quarterly comparison also showed a sequential decline from the prior quarter, with total revenue down from $240.3 million in Q1 FY26. Management attributed the shifting financial profile to the ongoing transition of its business from Bitcoin mining to higher-value AI Cloud services, a capital-intensive process that is currently weighing on near-term results.
Strategic Highlights from the Press Release
Despite the earnings miss, IREN's press release emphasized major progress in building out its AI Cloud infrastructure, which forms the core of its long-term growth strategy. The key announcements included:
- GPU Financing Secured: The company has secured $3.6 billion in financing specifically for the GPU infrastructure related to its previously announced contract with Microsoft. The financing carries an interest rate of less than 6% per annum and, combined with a Microsoft prepayment, covers approximately 95% of the related capital expenditure.
- Expansion on Track: IREN reiterated that its plan to deploy 140,000 GPUs remains on schedule, targeting $3.4 billion in Annual Recurring Revenue (ARR) by the end of calendar year 2026. This figure includes the Microsoft contract and projected revenue from sites in British Columbia.
- New Data Center Capacity: The company announced a new 1.6-gigawatt data center campus in Oklahoma, increasing its total secured grid-connected power portfolio to over 4.5GW. Power at this site is scheduled to ramp starting in 2028.
- Strengthened Balance Sheet: IREN reported a strong liquidity position, with cash and cash equivalents of $2.8 billion as of January 31, 2026. The company noted it has secured over $9.2 billion in funding year-to-date across various sources, including customer prepayments, convertible notes, and equipment financing.
Understanding the Net Loss
The company posted a GAAP net loss of $155.4 million for the quarter, a sharp reversal from the $384.6 million profit in the prior quarter. Management highlighted that this result was heavily impacted by several large, non-cash, and non-recurring items:
- Unrealized losses on financial instrument derivatives related to convertible notes.
- A one-time debt conversion inducement expense.
- Impairment charges on legacy Bitcoin mining hardware as the company reallocates capacity in British Columbia.
- Significant stock-based compensation expense, partly accelerated by the company's rising share price.
The company's preferred profitability metric, Adjusted EBITDA, was $75.3 million for the quarter, down from $91.7 million in Q1.
Market Reaction and Forward Outlook
The steep after-hours sell-off suggests investors are focusing on the substantial earnings and revenue miss in the context of the current quarter, rather than the multi-year strategic milestones. The wider-than-expected loss highlights the significant costs and execution risks associated with the company's rapid pivot and capital expansion.
The press release did not provide specific quantitative financial guidance for the coming quarters beyond its ARR target. Analyst estimates for the next quarter (Q3 FY26) project revenue of approximately $283.7 million and a near-break-even non-GAAP EPS. For the full fiscal year 2026, analysts are currently modeling sales of about $1.19 billion.
For a detailed breakdown of historical earnings, future estimates, and analyst projections, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, an endorsement, or a recommendation to buy, sell, or hold any security. Investing involves risk, including the possible loss of principal.
