Iren Ltd.
Iren Ltd.
08/27/2026 | Press release | Distributed by Public on 08/27/2026 14:22
Annual Report for Fiscal Year Ending June 30, 2026 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read together with our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that reflect plans, estimates and beliefs and involve numerous risks, uncertainties, and other important factors, including but not limited to those described in "Item 1A. Risk Factors" and "Special Note Regarding Forward-Looking Statements." Therefore, actual results may differ materially from those contained in any forward-looking statements.
The following discussion and analysis generally discusses fiscal year 2026 and fiscal year 2025 items and year-to-year comparisons between such fiscal years. Discussions of year-to year comparisons between fiscal year 2025 and fiscal year 2024 are not included, and can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Group's Annual Report for the fiscal year ended June 30, 2025, filed with the SEC on August 28, 2025.
Our fiscal year ends on June 30. Accordingly, references herein to "fiscal year 2026", "fiscal year 2025," and "fiscal year 2024" relate to the years ended June 30, 2026, June 30, 2025 and June 30, 2024, respectively.
Overview
IREN is a vertically integrated AI Cloud Services platform, delivering data centers, compute and software for AI training and inference.
We own and operate all three layers of the AI Cloud Services stack. The data center layer includes the land, power, substations, buildings and cooling that form the physical foundation of our AI Cloud Services platform. The compute layer includes the GPUs, CPUs, storage, servers and networking deployed within that data center infrastructure. The software layer includes the managed services and enterprise support that enables customers to deploy, operate and manage AI workloads.
We generate AI Cloud Services revenue by delivering both bare metal compute and managed cloud services to customers supporting AI training and inference workloads. Our customer base includes hyperscalers, frontier labs, AI developers and enterprises. As of June 30, 2026, our operating AI Cloud Services capacity represented approximately 40MW.
We continue to operate Bitcoin miners at certain of our data centers while we transition this data center capacity toward AI Cloud Services. We aim to substantially complete this transition by December 31, 2026. We generate Bitcoin mining revenue by contributing computing power, or hashrate, to the Bitcoin network and receiving a share of block rewards and transaction fees, and exchanging these Bitcoin for fiat currencies such as USD or CAD. We typically liquidate all the Bitcoin we mine daily and therefore did not have any Bitcoin held on our balance sheet as of June 30, 2026. As of June 30, 2026, our installed Bitcoin mining capacity was approximately 23.2 EH/s, representing approximately 380MW of data center capacity.
Our total revenue was $707.0 million for the year ended June 30, 2026, compared to total revenue of $501.0 million for the year ended June 30, 2025. We generated net income (loss) of $(702.6) million for the year ended June 30, 2026 compared to net income (loss) of $86.9 million for the year ended June 30, 2025. We generated Adjusted EBITDA of $245.7 million and $269.7 million for the years ended June 30, 2026 and 2025, respectively. Our cash and cash equivalents were $5,895.6 million and restricted cash was $1,723.9 million as of June 30, 2026. Adjusted EBITDA is a financial measure not defined by GAAP. For a definition of Adjusted EBITDA, an explanation of our management's use of this measure and a reconciliation of Adjusted EBITDA to net income (loss), see "Special Note Regarding Non-GAAP Measures."
For the fiscal year ended June 30, 2026, 72% and 24% of the Company's non-current assets were located in the United States of America and Canada, respectively.
Recent Developments
NVIDIA Strategic Partnership
In May 2026, we entered into a strategic partnership with NVIDIA intended to support the deployment over time of up to 5GW of NVIDIA DSX-aligned AI infrastructure across our global data center pipeline. Pursuant to a securities purchase agreement, we granted NVIDIA the right to invest up to $2.1 billion in Ordinary shares, subject to delivery of up to 600,000 GPUs and certain regulatory conditions.
Strategic Acquisitions
In June 2026, we completed the acquisition of Nostrum Group, a developer of grid-connected AI data centers based in Spain. In connection with the acquisition, we issued 837,424 Ordinary shares on June 12, 2026 to certain of the sellers thereunder plus approximately EUR 82 million of cash. The acquisition marked our entry into the European market and added several data center sites including an approximately 300MW site in Badajoz, together with an additional development pipeline, and local development, engineering, construction and operations capabilities.
In August 2026, we completed the acquisition of Mirantis, Inc. ("Mirantis"), a provider of cloud infrastructure software, Kubernetes-based orchestration and enterprise support services. Aggregate consideration was approximately $544 million, payable through the issuance of 12.6 million Ordinary shares plus cash and restricted stock units of approximately $40 million. Mirantis became our direct wholly owned subsidiary and expands our software and operational capabilities for deploying, managing, monitoring and supporting customer workloads.
AI Cloud Services Contracts
On November 2, 2025, we entered into the Microsoft Agreement, pursuant to which we will provide Microsoft Corporation with dedicated GPU services at "Horizon" data center facilities located in Childress, Texas over a five-year average term. The GPU services will be made available to Microsoft Corporation in four tranches ("Horizon 1," "Horizon 2," "Horizon 3" and "Horizon 4" data center facilities) targeted for deployment during 2026 (subject to extension in certain circumstances). Horizon 1 was delivered to, and accepted by, Microsoft in August 2026. Horizon 2-4 is targeted for delivery in phases in calendar Q4 2026, with grace periods under the Microsoft Agreement for delivery extending from mid-Q4 of calendar 2026 to the beginning of Q2 of calendar 2027.
The total contract value is approximately $9.7 billion through 2031, with 20% of the contract value for each tranche to be paid prior to the applicable delivery date and credited against the service fees due and payable after the 24th calendar month of the applicable GPU service term on a pro rata basis. The GPU quantity and the estimated monthly payments are expected to be approximately equal across all four tranches.
In May 2026, we entered into a five-year cloud services contract with NVIDIA to support its internal AI and research workloads representing approximately $3.4 billion of total contract value.
In July 2026, we entered into multi-year cloud services contracts with leading AI developers including Prometheus, Perplexity and Together AI, representing approximately $2.8 billion in aggregate total contract value.
In August 2026, we entered into a multi-year cloud services contract with a leading frontier AI lab.
Key Factors Affecting Our Performance
We believe our financial condition, results of operations and cash flows are affected by the factors described below. These factors should be considered together with the matters described under "Risk Factors" in Part I, Item 1A of this Annual Report.
Customer demand, contracting and customer concentration
Growth in AI training and inference workloads has contributed to increased demand for our AI Cloud Services. We expect AI infrastructure requirements to expand as organizations develop and deploy AI across a broader range of use cases. The pace and breadth of AI adoption, together with customers' infrastructure strategies and investment priorities, will affect demand for our platform and the timing and scale of our investments.
Our AI Cloud Services revenue depends on our ability to contract capacity with creditworthy customers on acceptable commercial terms, and on the continued growth of demand for AI infrastructure. We primarily contract capacity under multi-year reserved capacity arrangements that specify the amount and type of capacity, service levels, pricing, term, customer prepayments, deployment schedules and acceptance conditions. Revenue (excluding prepayments) generally commences only after applicable compute has been delivered, commissioned, placed in service and accepted (where applicable) by the relevant customer.
Our customer contracts are concentrated, and the loss of, default by, or reduction in capacity taken by any of our largest customers could materially affect our revenue and our ability to service any indebtedness incurred to finance the related infrastructure. See "Item 1A. Risk Factors." We seek to mitigate this exposure through customer credit assessment, customer prepayments and by broadening our customer base across hyperscalers, enterprises AI developers, frontier labs, and channel partners. Diversification may reduce concentration over time but may also result in shorter contract terms, smaller individual commitments and greater variability in utilization and pricing.
Delivery, commissioning, testing and customer acceptance of AI Cloud Services capacity
Our ability to convert contracted capacity into revenue depends on delivery of capacity in accordance with contractual schedules. Each deployment requires the completion of data center construction and energization, delivery and installation of GPUs, servers, storage and networking equipment, integration and configuration of the resulting clusters, performance testing against contractual specifications, and acceptance by the customer. Revenue generally begins only upon customer acceptance, and in certain arrangements is subject to service-level credits based on uptime and other performance requirements thereafter. Delays at any stage may postpone revenue commencement and result in "delay credits", while certain operating, financing and other costs continue to be incurred, affecting expected project returns. Failure to satisfy delivery schedules or ongoing service-level requirements may also result in significant payments under relevant customer contracts being reduced or delayed, expose us to service credits, damages or other liability, or give rise to termination rights under our customer contracts, any of which could have a material adverse impact on our business, operating results, financial condition and future prospects.
Power availability and data center construction
Our growth depends on our ability to secure large-scale grid-connected power, and to construct and energize data centers capable of supporting AI compute. As of June 30, 2026, we had executed grid connection agreements, letters of agreement or equivalents representing approximately 5GW of total power capacity in the United States, Canada, Spain and Asia Pacific and data center projects in varying stages of development.
Development timelines are affected by grid connection studies and approvals, transmission and substation construction, utility and transmission service provider processes, permitting, equipment lead times and construction execution. Permitting requirements, evolving regulation and community considerations may affect not only development schedules and costs but also the continued validity of the permits and grid connection rights required to operate the facility.
Once a data center is operating, our electricity costs are influenced by regional utility tariffs or wholesale market prices and, where applicable, hedging and longer-term procurement arrangements. Further, the availability of electricity and our cost of electricity may be affected by regulatory requirements and conditions that are applicable to us or data centers generally. These factors, together with data center efficiency and utilization, affect the operating costs and margins of our AI Cloud Services.
GPU procurement, deployment, and technology obsolescence
Our AI Cloud Services business requires access to successive generations of GPUs and related infrastructure. Our ability to obtain allocation of leading-edge compute on acceptable terms and timelines depends on our relationships with chipmakers and OEMs. We work closely with a diverse range of suppliers to secure access to GPUs and related infrastructure to ensure we can support our planned expansion. Tariffs, trade restrictions and supply chain disruptions may affect the availability, cost and delivery timing of GPUs, servers, networking and storage equipment and specialized electrical and cooling components.
Compute hardware is subject to rapid technological change, and the introduction of new architectures may reduce the market rate for earlier generations. We estimate the useful lives of GPUs and related equipment based on expected utilization and technological developments. We manage our exposure by maintaining a multi-generation fleet, and by matching hardware generations to different customer workload and cost requirements, and by seeking contract terms and durations that support recovery of the associated capital cost over the contracted period.
Contract pricing, utilization and financing economics
The returns we generate on AI Cloud Services depend on the price at which capacity is contracted, the proportion of installed capacity that is contracted, the capital cost of the associated infrastructure, the useful life of the associated infrastructure and the cost and structure of the financing used to fund it.
Pricing for AI compute capacity is influenced by the hardware generation and configuration, contract term, prepayments, creditworthiness of the customer and prevailing supply of comparable capacity. We fund our AI Cloud deployments through a combination of asset-level and corporate-level initiatives. As we scale, we expect our diversified sources of funding will enable us to optimize the cost of capital. Our ability to raise the substantial capital needed for our AI Cloud deployments will depend on financial, economic and market conditions and other factors, over which we may have no or limited control, and such capital may not be available on acceptable terms, if at all, when we require it.
Software development and platform integration
The software layer of our platform enables customers to provision, deploy, manage and monitor AI workloads. We believe these capabilities affect the range of customers and workloads our platform can serve. Our performance will depend on our ability to continue integrating these capabilities, execute our product roadmap and translate software functionality into customer adoption, increased utilization and additional revenue. Our investment in the software layer includes the acquisition of Mirantis, a provider of cloud software and services, completed on August 3, 2026. We are integrating its k0rdent AI platform into our software layer. Because the acquisition completed after June 30, 2026, it did not affect our results of operations and is not reflected in our financial statements for fiscal year 2026.
Macroeconomic conditions, tariffs and supply chain
Global economic and geopolitical conditions have been increasingly volatile due to factors such as trade restrictions, inflation, rising interest rates and supply chain disruptions. The impacts of inflation have resulted in increased operating expenses as we grow and develop our managerial, operational and financial capabilities and systems, consistent with the impacts of inflation on the general economy. If our costs, in particular labor, information system, technology, hardware and utility costs, were to become subject to significant inflationary pressures, we might not be able to effectively mitigate such higher costs. In addition, inflation may impact our ability to obtain financing for future capital expenditures at a price that is acceptable, or at all. Our inability or failure to do so could adversely affect our business, financial condition, and results of operations.
The AI Cloud Services industry is characterized by volatility and significant demand for equipment, including GPUs, servers, networking and storage equipment and specialized electrical and cooling components. Tariffs and trade restrictions also affect our procurement of such equipment, which we source from a limited number of suppliers and, in certain cases, from a limited number of manufacturing locations. Supply chain delays, manufacturing constraints and logistics disruption
may affect our ability to meet our delivery obligations to customers and may result in significant payments under relevant customer contracts being reduced or delayed, expose us to service credits, damages or other liability, or give rise to termination rights under our customer contracts, any of which could have a material adverse impact on our business, operating results, financial condition and future prospects. Increases in the cost of this equipment, or restriction on its availability, could increase the capital cost of our deployments, delay delivery and acceptance of contracted capacity, or both. Suppliers may from time-to-time increase the price of equipment, including orders we have already placed. Our contracts with suppliers in some cases permit the pass-through of such cost increases, meaning that, notwithstanding that an order has already been made, the increased prices may nonetheless apply to us. We are not always able to pass through these increased costs to our customers, which could adversely affect our business, financial condition, and results of operations.
Competitive environment
The markets for AI Cloud Services and the infrastructure supporting them are highly competitive and capital-intensive. We compete with cloud service providers, data center developers and operators, hyperscalers, infrastructure investors and other market participants for customers, development sites, grid-connected power, equipment, construction resources, skilled personnel and capital. Certain competitors have greater financial, technical or commercial resources, established customer relationships or access to lower-cost capital, which may provide them with advantages in securing capacity, accelerating development or pricing their services.
Growing demand for AI infrastructure, together with grid interconnection constraints and lengthy development and permitting processes, has intensified competition for suitable sites and timely access to power. Competitive conditions may affect our development costs and timelines, customer contract terms, pricing, margins and returns on invested capital.
Bitcoin mining
We continued during fiscal year 2026 to operate Bitcoin miners at our data centers. We expect Bitcoin mining to represent a declining proportion of our data center capacity and our revenue as we redeploy capacity towards AI Cloud Services, and aim to substantially complete this transition by December 31, 2026.
Bitcoin mining revenue is affected principally by the market price of Bitcoin, the global network hashrate, and the block reward. Because mining rewards are denominated in Bitcoin, our Bitcoin mining revenue varies directly with the Bitcoin price; we liquidate rewards for fiat currency on a daily basis and held no Bitcoin as of June 30, 2026. Increases in the global network hashrate reduce our proportionate share of network rewards for a given amount of operating hashrate. The block reward is subject to halving at predetermined intervals; the most recent halving occurred on April 2024, reducing the reward to 3.125 Bitcoin per block, and the next is expected in 2028. Our mining revenue is also affected by the cost and availability of electricity at the relevant sites, and by the efficiency of our mining fleet. We do not expect to make further material investments in mining hardware.
Key Indicators of Performance and Financial Condition
Key operating and financial metrics that we use, in addition to our GAAP consolidated financial statements, to assess the performance of our business are set forth below:
Adjusted EBITDA
Adjusted EBITDA and Adjusted EBITDA Margin are not presented in accordance with GAAP.
Adjusted EBITDA is defined as net income (loss), excluding income tax (expense) benefit, finance expense, interest income, depreciation and amortization, stock-based compensation expense, foreign exchange gain (loss), impairment of assets, certain other non-recurring income, gain (loss) on disposal of property, plant and equipment, unrealized fair value gain (loss) on financial instruments, debt conversion inducement expense, gain (loss) on partial extinguishment of financial liabilities, increase (decrease) in fair value of assets held for sale and certain other expense items. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue.
Beginning in the fiscal year ended June 30, 2026, the Company has changed its definition of Adjusted EBITDA to exclude debt conversion inducement expense. This is a change from the presentation of Adjusted EBITDA in prior periods, and these adjustments did not have any impact on Adjusted EBITDA or its calculation in prior periods. We believe Adjusted EBITDA is a useful metric because it allows us to monitor the profitability of our business on a current basis and
removes expenses which do not impact our ongoing profitability and which can vary significantly in comparison to other companies. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these items.
We believe Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools. These measures should not be considered as alternatives to Net income (loss) and Net income (loss) margin, as applicable, determined in accordance with GAAP. They are supplemental measures of our operating performance only, and as a result you should not consider these measures in isolation from, or as a substitute analysis for, our net income (loss) as determined in accordance with GAAP, which we consider to be the most comparable GAAP financial measure. For example, we expect depreciation of our fixed assets will be a large recurring expense over the course of the useful life of our assets, and that stock-based compensation is an important part of compensating certain employees, officers and directors. Adjusted EBITDA and Adjusted EBITDA Margin do not have any standardized meaning prescribed by GAAP and therefore are not necessarily comparable to similarly titled measures used by other companies, limiting their usefulness as a comparative tool.
The following table shows a reconciliation of net income (loss) to Adjusted EBITDA and Adjusted EBITDA Margin:
| Year Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| ($ thousands) | ($ thousands) | ||||||||||
| Net income (loss) | (702,621) | 86,941 | |||||||||
| Income tax expense (benefit) | (6,062) | 6,560 | |||||||||
| Finance expense | 59,251 | 11,045 | |||||||||
| Interest income | (80,631) | (7,504) | |||||||||
| Depreciation and amortization | 417,729 | 181,136 | |||||||||
| Unrealized (gain) loss on financial instruments | (558,541) | (77,518) | |||||||||
| Debt conversion inducement expense (1) | 111,799 | - | |||||||||
| (Increase) decrease in fair value of assets held for sale (2) | 110,622 | 2,160 | |||||||||
| Gain on partial extinguishment of financial liabilities | - | (9,093) | |||||||||
| Stock-based compensation expense | 205,023 | 42,642 | |||||||||
| Impairment of assets (3) | 638,805 | 7,223 | |||||||||
| Foreign exchange (gain) loss | 10,273 | 1,339 | |||||||||
| Other one-off income (4) | - | (1,699) | |||||||||
| (Gain) loss on disposal of property, plant and equipment | 24,908 | (4,002) | |||||||||
| Other expenses (5) | 15,118 | 30,443 | |||||||||
| Adjusted EBITDA | 245,672 | 269,672 | |||||||||
| Revenue | 707,007 | 501,023 | |||||||||
| Net income (loss) margin (6) | (99 | %) | 17 | % | |||||||
| Adjusted EBITDA margin (7) | 35 | % | 54 | % | |||||||
____________________
(1)Debt conversion inducement expense of $111.8 million for the year ended June 30, 2026. See "Results of Operations-Comparison of the years ended June 30, 2026 and 2025 -Debt conversion inducement expense" for further information on Debt conversion inducement expense.
(2)(Increase) decrease in fair value of assets held for sale for the years ended June 30, 2026 and 2025 was $110.6 million and $2.2 million, respectively. See "Results of Operations-Comparison of the years ended June 30, 2026, and 2025 -Increase (decrease) in fair value of assets held for sale " for further information.
(3)Impairment of assets for the years ended June 30, 2026 and 2025 was $638.8 million and $7.2 million, respectively. See "-Results of Operations-Comparison of the years ended June 30, 2026 and 2025-Impairment of assets" for further information.
(4)Other one-off income includes insurance proceeds relating to the theft of mining hardware in transit during the year ended June 30, 2025.
(5)Other expenses for the year ended June 30, 2026 include transaction costs incurred on entering the capped call transactions in conjunction with the issuance of the convertible notes and professional fees incurred in relation to business acquisitions. Other expenses for the year ended June 30, 2025 include a one-time liquidation payment incurred in August 2024 resulting from the then transition to spot pricing at the Group's site at Childress, the reversal of the unrealized loss recorded on fixed price contracted amounts outstanding at June 30, 2024, a litigation-related settlement provision, loss on mining hardware in transit, professional fees incurred in relation to litigation matters and transaction costs incurred on entering the capped call transactions in conjunction with the issuance of the convertible notes.
(6)Net income (loss) margin is calculated as Net income (loss) divided by Revenue.
(7)Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Revenue.
Results of Operations
The following table summarizes our results of operations, disclosed in the Consolidated Statements of Operations and Comprehensive Income (Loss).
| June 30, 2026 | June 30, 2025 | |||||||||||||
| ($ thousands) | ($ thousands) | |||||||||||||
| Revenue: | ||||||||||||||
| AI Cloud Services Revenue | $ | 128,795 | $ | 16,394 | ||||||||||
| Bitcoin Mining Revenue | 578,212 | 484,629 | ||||||||||||
| Total revenue | 707,007 | 501,023 | ||||||||||||
| Cost of revenue (exclusive of depreciation and amortization shown below): | ||||||||||||||
| AI Cloud | (16,932) | (1,319) | ||||||||||||
| Bitcoin Mining | (202,774) | (157,673) | ||||||||||||
| Total cost of revenue | (219,706) | (158,992) | ||||||||||||
| Operating (expenses) income: | ||||||||||||||
| Selling, general and administrative expenses | (449,115) | (136,458) | ||||||||||||
| Depreciation and amortization | (417,729) | (181,136) | ||||||||||||
| Impairment of assets | (638,805) | (7,223) | ||||||||||||
| Gain (loss) on disposal of property, plant and equipment | (24,908) | 4,002 | ||||||||||||
| Other operating expenses | (15,157) | (13,302) | ||||||||||||
| Other operating income | 11,699 | 9,413 | ||||||||||||
|
Total operating (expenses) income
|
(1,534,014) | (324,704) | ||||||||||||
| Operating (loss) income | (1,046,714) | 17,327 | ||||||||||||
| Other (expense) income: | ||||||||||||||
| Finance expense | (59,251) | (11,045) | ||||||||||||
| Interest income | 80,631 | 7,504 | ||||||||||||
| Increase (decrease) in fair value of assets held for sale | (110,622) | (2,160) | ||||||||||||
| Realized gain (loss) on financial instruments | (9,269) | (4,215) | ||||||||||||
| Unrealized gain (loss) on financial instruments | 558,541 | 77,518 | ||||||||||||
| Gain on partial extinguishment of financial liabilities | - | 9,093 | ||||||||||||
| Debt conversion inducement expense | (111,799) | - | ||||||||||||
| Foreign exchange gain (loss) | (10,273) | (1,339) | ||||||||||||
| Other non-operating income | 72 | 817 | ||||||||||||
| Total other (expense) income | 338,029 | 76,173 | ||||||||||||
| Income (loss) before taxes | (708,683) | 93,501 | ||||||||||||
| Income tax (expense) benefit | 6,062 | (6,560) | ||||||||||||
| Net income (loss) | $ | (702,621) | $ | 86,941 | ||||||||||
Comparison of the years ended June 30, 2026 and 2025
AI Cloud Services revenue
Our AI Cloud Services revenue for the years ended June 30, 2026 and 2025 was $128.8 million and $16.4 million, respectively, an increase of $112.4 million. The increase was primarily due to an increase in AI Cloud Services customers and contracts, as a result of continued capacity expansion.
Bitcoin mining revenue
Our Bitcoin mining revenue for the years ended June 30, 2026 and 2025, was $578.2 million and $484.6 million, respectively, an increase of $93.6 million. This revenue was generated from the mining and sale of 6,075 and 5,499 Bitcoin during the years ended June 30, 2026 and 2025, respectively. The increase in revenue is primarily driven by higher average Bitcoin price, which increased revenue by $35.9 million, and an increase in total Bitcoin mined, which increased revenue by $57.7 million during the year ended June 30, 2026. The increase in Bitcoin mined reflected the growth in our average operating hashrate, which was partially offset by the increase in the implied global hashrate. Our average operating hashrate increased to 36.5 EH/s for the year ended June 30, 2026 as compared to 25.7 EH/s for the year ended June 30, 2025.
Cost of revenue - AI Cloud Services (exclusive of depreciation and amortization)
Cost of revenue - AI Cloud Services consists of electricity charges, employee benefits, and other direct expenses incurred in generating AI Cloud Services. Cost of revenue - AI Cloud Services for the years ended June 30, 2026 and 2025 was $16.9 million and $1.3 million, respectively, an increase of $15.6 million. The increase was primarily due to an increase in employee benefits as a result of increased headcount, as well as continued capacity expansion.
Cost of revenue - Bitcoin Mining (exclusive of depreciation and amortization)
Cost of revenue - Bitcoin Mining consist of electricity charges, employee benefits, and other direct expenses incurred in generating Bitcoin mining revenue. Cost of revenue - Bitcoin Mining for the years ended June 30, 2026 and 2025 was $202.8 million and $157.7 million, respectively, an increase of $45.1 million. The increase was primarily due to a $38.8 million increase in electricity charges reflecting an increase in average operating hashrate to 36.5 EH/s for the year ended June 30, 2026 from 25.7 EH/s for the year ended June 30, 2025 and an increase in employee benefits as a result of increased site headcount.
Selling, general and administrative expenses
Selling, general and administrative expenses consist of employee benefits expense, RECs, site expenses including property taxes, repairs and maintenance, stock-based compensation and professional fees, among other expenses. Selling, general and administrative expenses for the years ended June 30, 2026 and 2025 were $449.1 million and $136.5 million, respectively, an increase of $312.7 million. The increase includes a $52.8 million increase in accrued payroll taxes relating to stock-based compensation awards, a $23.0 million increase in employee benefits expense related to the increase in the employee headcount as a result of expansion of business operations, a $2.9 million increase in the consumption of RECs as a result of continued expansion of the Childress site and a $162.4 million increase in stock-based compensation expense. The increase in stock-based compensation expense was primarily related to the September 2025, October 2025 and May 2026 vesting of certain market-based RSUs and stock options and the resulting accelerated recognition of the remaining unrecognized compensation cost, the amortization of certain stock-based payment awards modified and awarded in the fourth quarter of the fiscal year 2025, and the amortization of RSUs issued to employees and directors during the year ended June 30, 2026. The increase in selling, general and administrative expenses also included a $16.1 million increase in professional fees, a $17.4 million increase in sponsorships and marketing, a $2.9 million increase in insurance costs, a $10.5 million increase in non-refundable provincial sales tax, and a $6.2 million increase in property taxes as a result of the expansion of our business operations and ongoing expenses as a publicly listed company.
Depreciation and amortization
Depreciation and amortization consist primarily of the depreciation of HPC hardware and data centers, and Bitcoin mining hardware. Depreciation expense for the years ended June 30, 2026 and 2025 was $417.7 million and $181.1 million, respectively, an increase of $236.6 million. The increase was primarily due to higher operating capacity at Childress and additional GPUs placed into service during the year ended June 30, 2026.
Impairment of assets
Impairment of assets for the year ended June 30, 2026 and 2025 was $638.8 million and $7.2 million, respectively, an increase of $631.6 million. In the year ended June 30, 2026, the Group recorded impairment charges primarily relating to Bitcoin mining hardware as well as certain IT and electrical equipment and data center infrastructure impaired as a part of the Group's plan to retrofit its air-cooled data centers in Childress and British Columbia as well development of additional direct-to-chip liquid and air cooling data centers at the Childress campus (Horizons 5 and 6) for AI Cloud Services. This primarily reflects assets displaced from the Group's data centers as part of the Group's strategic focus on expanding its AI Cloud Services business. In the year ended June 30, 2025, the Group recorded impairment charges of $7.2 million related to the initial classification of the S19j Pro miners as held for sale in September 2024. See Note 14. Property, plant and equipment, net of the consolidated financial statements included in this Annual Report for further information.
Gain (loss) on disposal of property, plant and equipment
The net gain (loss) on disposal of property and equipment for the years ended June 30, 2026 and 2025 was $(24.9) million and $4.0 million, respectively. The net loss for the year ended June 30, 2026 relates primarily to write-offs of certain damaged equipment. The net gain for the year ended June 30, 2025 relates to the exchange of Bitmain T21 mining hardware for miners of the same model and specification under the Bitmain S21XP exchange agreement. See Note 14. Property, plant and equipment, net of the consolidated financial statements included in this Annual Report for further information.
Other operating expenses
Other operating expenses for the years ended June 30, 2026 and 2025 were $15.2 million and $13.3 million, respectively, an increase of $1.9 million. During the year ended June 30, 2026, other operating expenses primarily comprised $10.9 million of transaction costs associated with capped call transactions entered into in connection with the issuance of convertible notes and $4.2 million of professional fees related to business acquisitions.
During the year ended June 30, 2025, other operating expenses primarily comprised $5.8 million of net loss contingency expense, which included a $20.0 million provision related to the NYDIG settlement, partially offset by the reversal of a $13.4 million loss contingency related to the Goods and Services Tax appeal with the CRA. Other operating expenses also included $4.2 million of transaction costs associated with capped call transactions entered into in connection with the issuance of convertible notes and a $1.7 million loss arising from the theft of mining hardware while in transit.
Other operating income
Other operating income for the years ended June 30, 2026 and 2025 was $11.7 million and $9.4 million, respectively, an increase of $2.3 million. The increase is primarily due to a $2.7 million increase in demand response program income at the Group's site at Childress.
Finance expense
Finance expense for the years ended June 30, 2026 and 2025 was $59.3 million and $11.0 million, respectively, an increase of $48.2 million. The increase was primarily related to a larger principal amount of outstanding convertible notes and interest expense on lease liabilities and the GPU Financing entered into during the year ended June 30, 2026.
Interest income
Interest income for the years ended June 30, 2026 and 2025 was $80.6 million and $7.5 million, respectively, an increase of $73.1 million. The increase in interest income was primarily related to an increase in average cash and cash equivalents balance for the year ended June 30, 2026.
Increase (decrease) in fair value of assets held for sale
Increase (decrease) in fair value of assets held for sale for the years ended June 30, 2026 and 2025 was $(110.6) million and $(2.2) million, respectively. This decrease was related to a larger decrease in fair value of Bitcoin miners held for sale during the year ended June 30, 2026.
Realized gain (loss) on financial instruments
Realized gain (loss) on financial instruments for the years ended June 30, 2026 and 2025 was $(9.3) million and $(4.2) million, respectively. Realized gain (loss) on financial instruments primarily represents the loss on expired Bitcoin purchase options during the year ended June 30, 2026 and the loss on the electricity purchased and subsequently resold under a power supply agreement at the Group's Childress site during the year ended June 30, 2025.
Unrealized gain (loss) on financial instruments
Unrealized gain (loss) on financial instruments for the years ended June 30, 2026 and 2025 was $558.5 million and $77.5 million, respectively. The increase in unrealized gain (loss) relates to the changes in fair value of the Capped Call Transactions, including new capped call transactions entered into in connection with convertible notes issued during the year, and Prepaid Forward Transactions during the year ended June 30, 2026. See Note 13. Financial assets and Note 17. Derivatives of the consolidated financial statements included in this Annual Report for further information on the unrealized gain (loss) during the year ended June 30, 2026.
Gain on partial extinguishment of financial liabilities
Gain on partial extinguishment of financial liabilities for the years ended June 30, 2026 and 2025 was nil and $9.1 million, respectively. The gain during the year ended June 30, 2025 was primarily related to a supplemental agreement with Bitmain, which decreased the amount due under the existing purchase arrangements for mining hardware.
Debt conversion inducement expense
Debt conversion inducement expense for the year ended June 30, 2026 and 2025 was $111.8 million and nil, respectively. The increase was related to the induced conversion of a portion of the 2030 Convertible Notes and the 2029 Convertible Notes. Refer to Note 23. Debt of the consolidated financial statements included in this Annual Report for further information.
Foreign exchange gain (loss)
Foreign exchange gain (loss) for the years ended June 30, 2026 and 2025 was $(10.3) million and $(1.3) million, respectively. The increase in the loss was primarily related to foreign exchange movements in the translation of monetary assets and liabilities held in currencies other than the functional currency of the company holding the monetary asset or liability.
Income tax (expense) benefit
Income tax (expense) benefit for the years ended June 30, 2026 and 2025 was a benefit of $6.1 million and an expense of $(6.6) million, respectively. The year-over-year change was primarily driven by the loss before income taxes for the year ended June 30, 2026, changes in valuation allowances recorded against certain deferred tax assets, and permanent book-to-tax differences, including non-deductible share-based compensation expense, partially offset by non-taxable items.
Net income (loss)
Net income (loss) for the years ended June 30, 2026 and 2025 was $(702.6) million and $86.9 million respectively. The increase in loss for the year is primarily attributable to the increase in Impairment of assets, Depreciation and amortization, Selling, general and administrative expenses, Debt conversion inducement expense, and Finance expense, partially offset by the increase in Unrealized gain (loss) on financial instruments, Bitcoin mining revenue and AI Cloud Services revenue during the year ended June 30, 2026.
Liquidity and Capital Resources
As of June 30, 2026, we had cash and cash equivalents of $5,895.6 million and restricted cash of $1,723.9 million, and for the year ended June 30, 2026, we had net income (loss) of $(702.6) million and net operating cash inflow of $2,100.4 million. Based on our current operating plans and business conditions, we believe that our existing cash and cash equivalents, expected cash flows from operations and proceeds from financing activities will be sufficient to satisfy our anticipated liquidity requirements for the next 12 months and for the reasonably foreseeable future.
Our primary cash requirements have been for capital needs to support capital expenditure for the development and construction of our data center platform, and the purchase of GPUs, as well as investments in growth and development initiatives. We are a capital-intensive business that requires significant funding. Our liquidity outlook could be adversely affected by events that materially reduce our access to the capital markets or impair our production capabilities, including, but not limited to, our ability to maintain our existing operations, failure to effectively execute our growth strategies, falling GPU rental rates, counterparty risks for AI Cloud Services contracts, broader deteriorating macroeconomic conditions, the regulatory and sociopolitical environment related to data center development, the impact of Bitcoin halving events, and significant increases in costs. Furthermore, we have generated significant negative cash flows from investing activities as we continue to support the growth of our AI Cloud Services segment. As part of this strategy, we are transitioning our British Columbia and Childress sites to support AI Cloud Services, while continuing to advance development and expansion initiatives across our broader data center portfolio. We anticipate making significant investments for the foreseeable future, including capital requirements associated with our agreement with Microsoft announced in November 2025 (the "Microsoft Agreement"), as well as GPU acquisitions and the development of additional data center capacity. We also expect to continue progressing development activities at other sites to support this transition and broader growth plan. We expect these and other planned investments to require substantial additional capital to support the continued expansion in this segment.
Our primary sources of liquidity and capital during the year ended June 30, 2026 included available cash and cash equivalents, proceeds from sales under our at-the-market facility and registered direct offering, proceeds from issuances of debt including convertible notes, GPU Financing, and cash inflows from operations, including AI Cloud Services contract prepayments reflected in deferred revenue. Given constrained GPU supply and long lead times, we may commit to purchases of GPU and related hardware and commence the related site development in advance of arranging the related financing, and in certain cases in advance of executing customer contracts for the related capacity. We intend to fund our planned investments through a range of funding sources and financing initiatives, which may include customer prepayments, cash on hand, asset-backed GPU and data center financing facilities, equipment financing arrangements, convertible note issuances and equity. We continue to monitor funding markets for opportunities to raise additional unsecured and secured debt, equity or equity-linked capital, at both the corporate and project levels, to support our capital and liquidity needs and growth plans. Any such financings are subject to market conditions and there can be no assurance as to the structure, timing, amount or other terms of any such financing, but any could be material.
At-the market facility
We are party to an At Market Sales Agreement (the "Sales Agreement") with B. Riley Securities, Inc., Cantor Fitzgerald & Co., Compass Point Research & Trading, LLC, Canaccord Genuity LLC, Citigroup Global Markets, Roth Capital Partners, LLC and Macquarie Capital (USA) Inc, to which Citizens JMP Securities, LLC, Goldman Sachs & Co. LLC and Jefferies LLC were joined on March 4, 2026. Pursuant to the Sales Agreement, we may offer and sell our Ordinary shares from time to time in an amount not to exceed the lesser of the amount registered on an effective registration statement and for which we have filed a prospectus, and the amount authorized from time to time to be issued and sold under the Sales Agreement by the Board. As a result, we may increase the amount of our Ordinary shares that may be sold from time to time pursuant to the Sales Agreement in accordance with the terms of the Sales Agreement.
On March 4, 2026, the Company filed a new prospectus supplement superseding and replacing the previously filed prospectus supplement relating to the offer and sale of up to $6.0 billion of its Ordinary shares under the Sales Agreement. As of August 14, 2026, the Company has issued 47,165,838 Ordinary shares under the new prospectus supplement at varying prices generating an aggregate of approximately $2.5 billion in gross proceeds. The total number of Ordinary shares outstanding as of August 14, 2026, was 394,058,648.
Convertible notes
On October 14, 2025, we issued $1 billion aggregate principal amount of the 2031 Convertible Notes. The 2031 Convertible Notes will mature on July 1, 2031, unless earlier converted or redeemed or repurchased by us, and are convertible at the option of the holder into Ordinary shares at any time and from time to time on or after April 1, 2031. As of June 30, 2026, there was $1 billion aggregate principal amount of 2031 Convertible Notes outstanding.
On December 8, 2025, we issued $1.15 billion aggregate principal amount of the 2032 Convertible Notes and $1.15 billion aggregate principal amount of the 2033 (Jun) Convertible Notes. The 2032 Convertible Notes will mature on June 1, 2032, unless earlier converted or redeemed or repurchased by us, and are convertible into Ordinary shares at the option of the holder at any time and from time to time on or after March 1, 2032, and the 2033 (Jun) Convertible Notes will mature on June 1, 2033, unless earlier converted or redeemed or repurchased by us, and are convertible into Ordinary shares at the
option of the holder at any time and from time to time on or after March 1, 2033. As of June 30, 2026, there was $1.15 billion aggregate principal amount of 2032 Convertible Notes outstanding and $1.15 billion aggregate principal amount of the 2033 (Jun) Convertible Notes outstanding.
On May 14, 2026, we issued $3 billion aggregate principal amount of the 2033 (Dec) Convertible Notes. The 2033 (Dec) Convertible Notes will mature on December 1, 2033, unless earlier converted or redeemed or repurchased by us, and are convertible into Ordinary shares at the option of the holder at any time and from time to time on or after September 1, 2033. As of June 30, 2026, there was $3 billion aggregate principal amount of 2033 (Dec) Convertible Notes outstanding.
In connection with the issuance of each of the 2031 Convertible Notes offering, the 2032 Convertible Notes offering, the 2033 (Jun) Convertible Notes and the 2033 (Dec) Convertible Notes offering (together, the "Convertible Notes"), we entered into Capped Call Transactions. The Capped Call Transactions are expected generally to reduce potential dilution to our Ordinary shares upon any conversion of each series of the Convertible Notes and/or offset any payments we are required to make in excess of the principal amount of converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap. The Capped Call Transactions will expire upon the maturity of the relevant series of Convertible Notes.
Concurrently with the issuance of the 2032 Convertible Notes and the 2033 (Jun) Convertible Notes, the Group issued 39,699,102 Ordinary shares to fund the repurchase of approximately $544.3 million aggregate principal amount of outstanding 2030 Convertible Notes and 2029 Convertible Notes, for an aggregate purchase price of approximately $1,632.4 million, which includes accrued and unpaid interest of $8.9 million, and recognized a debt conversion inducement expense of $111.8 million, in separate, privately negotiated transactions with a limited number of holders of the 2030 Convertible Notes and 2029 Convertible Notes. See Note 23. Debt to our audited financial statements for the year ended June 30, 2026, included in this Annual Report for further information
As of June 30, 2026, we had outstanding $6,745.7 million aggregate principal amount of convertible notes.
See Note 23. Debt and Note 17. Derivatives to the audited consolidated financial statements included in this Annual Report for further information on the terms of the Convertible Notes and Capped Call Transactions.
GPU Financing
In May 2026, the Company, through its indirect wholly-owned, financing subsidiary IE US Hardware 3, LLC (the "Financing SPV"), entered into an approximately $3.6 billion senior secured financing program (the "GPU Financing") comprising two separate instruments: an approximately $1.5 billion senior secured delayed draw term loan (the "DDTL Facility") provided by a syndicate of commercial bank lenders under a credit agreement (the "Credit Agreement"), and $2.1 billion of senior secured notes (the "USPP Senior Notes") issued to institutional investors under a note purchase agreement (the "Note Purchase Agreement"). The two instruments share a common security package in favor of CSC Delaware Trust Company as collateral agent ("Collateral Agent") and covenant framework established under a common terms agreement (the "Common Terms Agreement"), but are separate debt instruments held by different classes of creditors and bearing different interest rates. The proceeds of the GPU Financing are used to finance a portion of the acquisition cost of GPUs and related infrastructure deployed by the Financing SPV in support of the Microsoft Agreement.
Borrowings under the DDTL Facility bear interest at a floating rate equal to 1-month SOFR plus 2.25% per annum, payable monthly in arrears. Principal is repayable monthly in accordance with the amortization schedule set out in the Credit Agreement. The DDTL Facility is drawn in four tranches aligned to the delivery milestones under the Microsoft Agreement, subject to satisfaction of specified conditions precedent.
As at June 30, 2026, $413 million of the DDTL had been funded and $1,132 million of unfunded commitment remained available subject to the conditions precedent.
The USPP Senior Notes bear interest at a fixed rate of 5.96% per annum, payable monthly in arrears. Principal is repayable monthly in accordance with the amortization schedule set out in the Note Purchase Agreement. The USPP Senior Notes are issued in up to four tranches. Note proceeds are funded into a restricted escrow account on each tranche closing date and are released to the Financing SPV upon satisfaction of the release conditions.
As at June 30, 2026, $525 million of USPP Senior Notes had been issued and $1,575 million of unfunded commitment remained available subject to the conditions precedent.
The GPU Financing is non-recourse to the general credit of the Group, except for limited guarantees provided by IREN Limited. No liability is recognized for these guarantees, which are guarantees by the IREN Limited of the obligations of consolidated subsidiaries.
Further, IREN Limited has guaranteed the Financing SPV's payment obligations under its pre-closing interests rate and power hedge transactions to the hedge counterparties, which occurs on a tranche-by-tranche basis as the related debt and notes are drawn. A counterparty may call the guarantee only after demanding payment from the Financing SPV and expiry of the applicable cure period. The guarantee steps down as each tranche transfers into the secured structure, with Tranche 1 having been transferred (and the balance is expected to transfer by the end of calendar 2026) and falls away for any tranche terminated and settled beforehand.
If Microsoft validly terminates a funded tranche of the Microsoft Agreement and a replacement qualified customer is not secured during the ensuing remarketing period, the Parent has guaranteed that (i) the debt and notes allocated to that tranche, net of any disposition proceeds realized from the sale of the GPUs associated with such terminated tranche and applied to prepayment, payable within five business days of demand, and (ii) any upfront amount owed to Microsoft on termination, payable when due (subject to a carve-out where the Collateral Agent enforces against the collateral during the remarketing period). The guarantee is released as each tranche is accepted by Microsoft and terminates on the earliest of discharge of the secured obligations, acceptance and funding of the final tranche, or the occurrence of all tranche release dates.
IREN Limited has also guaranteed the full and timely performance by the data center provider, an indirect subsidiary of the Company, of its service obligations to the Financing SPV under the managed services agreement. This is a performance guarantee and not a guarantee of the Financing SPV's borrowings. It terminates on the earliest of discharge of the secured obligations, the data center provider ceasing to be a Group affiliate, its replacement at the Collateral Agent's direction, or termination of the agreement, and accordingly may remain outstanding for the term of the Microsoft Agreement.
See Note 23. Debt to the audited consolidated financial statements included in this Annual Report for further information.
Equipment Leasing and Financing Agreements
During the year ended June 30, 2026, the Group entered into equipment leasing arrangements to finance GPU purchases.
In August 2025, the Group secured approximately $102 million under a 36-month lease with monthly payments, and a purchase option at the lower of fair market value and 18% of the initial purchase price. The Group also secured approximately $96 million under a 24-month lease with fixed monthly payments, and a $1 purchase option at maturity.
In November 2025, the Group further secured approximately $200 million to finance a portion of the Group's GPU orders under a 24-month lease with fixed monthly payments, and a $1 purchase option at maturity. See Note 22. Finance leases to the audited consolidated financial statements included in this Annual Report for further information.
IREN Limited provided parent guarantees for the payment obligations under these arrangements.
Off-Balance Sheet Arrangements
During the years ended June 30, 2026, 2025 and 2024, we did not have any material off-balance sheet arrangements.
Historical Cash Flows
Comparison of cash flows for the years ended June 30, 2026 and 2025
The following table sets forth a summary of our historical cash flows for the years ended June 30, 2026 and 2025 presented.
| Year Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| ($ thousands) | ($ thousands) | ||||||||||
|
Net cash from (used in) operating activities
|
2,100,418 | 245,886 | |||||||||
|
Net cash from (used in) investing activities
|
(4,722,984) | (1,380,487) | |||||||||
|
Net cash from (used in) financing activities
|
9,680,050 | 1,294,735 | |||||||||
| Net cash and cash equivalents increase/(decrease) | 7,057,484 | 160,134 | |||||||||
| Cash and cash equivalents at the beginning of the period | 564,526 | 404,601 | |||||||||
| Effects of exchange rate changes on cash and cash equivalents and restricted cash | (2,483) | (209) | |||||||||
| Net cash and cash equivalents at the end of the period | $ | 7,619,527 | $ | 564,526 | |||||||
Operating activities
Our net cash from operating activities was $2,100.4 million for the year ended June 30, 2026, compared to net cash from operating activities of $245.9 million for the year ended June 30, 2025, an increase of $1,854.5 million.
In addition, for the year ended June 30, 2026, our net income (loss) was $(702.6) million, compared to $86.9 million for the year ended June 30, 2025. The increase in net income (loss) to net cash from (used in) operating activities primarily reflects noncash adjustments of $978.3 million, which is driven by unrealized (gain) loss on financial instruments of $(558.5) million, debt conversion inducement expense of $111.8 million, depreciation and amortization of $417.7 million, stock-based compensation expense of $205.0 million, impairment of assets of $638.8 million and change in fair value of assets held for sale of $110.6 million. Other noncash items, including realized gain (loss) on financial instruments, foreign exchange (gain) loss, amortization of debt issuance costs and (gain) loss on disposal of property, plant and equipment, collectively contributed $52.9 million. Refer to "-Results of Operations" for further detail of associated costs.
Unrealized (gain) loss on financial instruments reflects the changes in fair value of the Capped Call Transactions and Prepaid Forward Transactions, which were entered into during the second and fourth quarter of the fiscal year 2025, and Capped Call Transactions which were entered into during the second and fourth quarter of the fiscal year 2026. Depreciation and amortization reflects ongoing investment in property, plant, and equipment, and stock-based compensation reflects the amortization expense associated with the issuance of equity incentives.
Changes in operating assets and liabilities resulted in a net cash increase of $1,824.7 million, primarily due to an increase in deferred revenue of $1,841.7 million from AI Cloud Services contract prepayments, an increase in accounts payable and accrued liabilities of $38.0 million and an increase in other liabilities of $49.5 million reflecting an increase in accrued payroll taxes on stock-based compensation. This was partly offset by an increase in prepayments and deposits of $67.7 million reflecting an increase in computer hardware prepayments and deposits for land options and other deposits, increases in accounts receivable and other receivables of $29.4 million primarily related to AI Cloud Services contracts and an increase of $9.1 million in tax-related liabilities.
Investing activities
Our net cash used in investing activities was $4,723.0 million for the year ended June 30, 2026, compared to net cash used in investing activities of $1,380.5 million for the year ended June 30, 2025, an increase of $3,342.5 million. For the year ended June 30, 2026, the increase in cash outflows of $3,342.5 million was primarily attributable to an increase in payments for computer hardware, payments for property, plant and equipment, net of computer hardware, payments for intangible assets for connection rights and land purchase options and payments for the acquisition of subsidiaries during the year ended June 30, 2026.
The payments for computer hardware of $1,335.1 million primarily relates to AI hardware. The payment for property, plant and equipment net of computer hardware of $2,998.0 million primarily relates to the continuing expansion of our data center capacity at Childress, including Horizons 1-4, and at the Sweetwater 1 and Sweetwater 2 sites as well as the transition of the British Columbia data centers to AI Cloud.
Financing activities
Net cash from financing activities was $9,680.1 million for the year ended June 30, 2026, compared to net cash from financing activities of $1,294.7 million for the year ended June 30, 2025, an increase of $8,385.3 million. For the year ended June 30, 2026, our cash inflows comprised primarily of $7,237.6 million in proceeds from the issuance of convertible senior notes and debt financing facilities, $4,742.8 million from the issuance of Ordinary shares of which $1,631.5 million related to a registered direct offering, $38.8 million in proceeds from the unwind of certain capped call transactions and $6.6 million in proceeds from the exercise of options. These cash inflows were partially offset by offerings costs related to the at-the-market program of $50.4 million, payments made for entering into the Capped Call Transactions of $448.9 million, the aggregate induced conversion of the convertible notes of $1,623.5 million, payments for borrowing transaction costs of $165.5 million and repayment of finance lease liabilities and debt of $58.1 million.
Contractual Obligations
As of June 30, 2026, the Group had commitments of $13,810.0 million, as compared to $368.8 million as of June 30, 2025. These commitments include committed capital expenditure on AI hardware and infrastructure related to site development.
The increase in total commitments was primarily due to an increase in commitments related to our expansion into AI Cloud Services and includes committed capital expenditure on computer hardware and infrastructure related to site development of Horizons 1-4 at the Childress site, the Sweetwater 1 and Sweetwater 2 sites and the transition of the Childress and British Columbia data centers to AI Cloud. The commitments set forth above do not reflect commitments related to any hardware purchase agreements and other contracts entered into after June 30, 2026.
Assuming the remaining outstanding 2030 Convertible Notes, 2029 Convertible Notes, 2031 Convertible Notes, 2032 Convertible Notes, 2033 (Jun) Convertible Notes and 2033 (Dec) Convertible Notes are not converted into Ordinary shares, repurchased or redeemed prior to maturity:
•annual interest payments of approximately $6.9 million in each calendar year from 2026 through 2030 in connection with the 2030 Convertible Notes:
•annual interest payments of approximately $8.2 million in each calendar year from 2026 through 2029 in connection with the 2029 Convertible Notes:
•annual interest payments of approximately nil in each calendar year from 2026 through 2031 in connection with the 2031 Convertible Notes:
•annual interest payments of approximately $2.9 million in each calendar year from 2026 through 2032 in connection with the 2032 Convertible Notes:
•annual interest payments of approximately $11.5 million in each calendar year from 2026 through 2033 in connection with the 2033 (Jun) Convertible Notes:
•annual interest payments of approximately $30.0 million in each calendar year from 2026 through 2033 in connection with the 2033 (Dec) Convertible Notes; and
•principal for each of the Convertible Notes upon maturity, for a total of $6,745.7 million, will be payable under the terms of the Convertible Notes.
Refer to Note 23. Debt to the audited consolidated financial statements included in this Annual Report for further information.
As of June 30, 2026, the Group had finance lease obligations primarily related to GPU hardware. We expect to make remaining payments under these finance leases of approximately $270.4 million over the remaining lease terms. Refer to
Note 22. Finance leases to the audited consolidated financial statements included in this Annual Report for further information.
In May 2026, the Group entered into a DDTL Facility providing for up to $1,545 million of commitments, and issued $2,100 million of USPP Senior Notes. The DDTL Facility and the USPP Senior Notes are non-recourse to the general credit of the Group, except for limited guarantees provided by the Company. Refer to Note 23. Debt to the audited consolidated financial statements included in this Annual Report for further information.
As of June 30, 2026, $413 million was drawn under the DDTL Facility and $525 million of the USPP Senior Notes had been funded. Assuming the drawn and funded amounts remain outstanding and are not prepaid prior to maturity, we expect to make (i) principal repayments of $413 million under the DDTL Facility and $525 million under the USPP Senior Notes, both amortizing through 2031; and (ii) interest payments on drawn and funded amounts. The DDTL bears interest at a floating rate of SOFR + 2.25%; based on amounts drawn and rates in effect at June 30, 2026, DDTL interest is estimated at approximately $24.4 million per annum. The USPP Senior Notes bear interest at a fixed rate of 5.96% per annum, representing approximately $31.3 million per annum on funded amounts. Interest on both facilities will increase as further amounts are drawn or funded, and decrease as the amounts amortize to maturity.
Amounts undrawn under the DDTL Facility and unfunded under the USPP Senior Notes do not represent principal repayment obligations. As of June 30, 2026, approximately $1,132 million remained available and undrawn under the DDTL and $1,575 million of USPP Senior Notes remained committed to be funded on scheduled draw dates.
To manage interest rate variability on the floating-rate DDTL Facility, the Group has entered into pay-fixed, receive-floating interest rate swaps with an aggregate notional amount of approximately $1,500 million and maturities through October 2031, designated as cash flow hedges, under which it pays a weighted-average fixed rate of approximately 3.80% and receives Term SOFR. Refer to Note 17. Derivatives and Note 23. Debt to the audited consolidated financial statements included in this Annual Report for further information.
Research and Development, Patents and Licenses, etc.
We are building proprietary data centers that continue to be refined through research and development efforts to further optimize the operational environment and efficiencies, including targeting stable performance during high and low temperature periods, as well as the life of our hardware.
Design, research and development have not been significant components of our business: however, such activities may become more significant in the future.
Critical Accounting Estimates
Stock-based compensation expense
We measure the cost of stock-based compensation awards granted in accordance with ASC 718, Compensation-Stock Compensation. The grant-date fair value of equity-classified awards is determined using valuation models such as the Black-Scholes-Merton option-pricing model and Monte Carlo simulations, which reflect the specific terms of the award. In applying these models, management uses judgment in estimating key assumptions, including expected volatility, grant-date stock price, expected term of the award, and the risk-free interest rate. See Note 25 to our consolidated financial statements included in this Annual Report for the key assumptions.
Estimation of useful lives of assets
We determine the estimated useful lives, residual values, and related depreciation expense for property, plant, and equipment based on historical experience and expected future usage. Determining useful lives requires judgment and is subject to uncertainty, particularly in industries where assets may become obsolete due to technological innovation or changes in business strategy. If actual useful lives are shorter than those originally estimated, depreciation expense will increase. In addition, assets that are determined to be obsolete, non-strategic, abandoned, or sold are written down or written off, which could result in material charges to earnings.
Income taxes
The determination of income tax expense and the recognition of deferred tax assets require significant judgment due to uncertainties in the interpretation of complex tax laws, changes in tax legislation, and the amount and timing of future taxable income. These uncertainties could require management to revise its expectations, which may materially impact the recognition and measurement of deferred tax assets and liabilities, as well as the provision for income taxes recorded in the consolidated statement of operations.
Deferred tax assets are recognized for deductible temporary differences and net operating loss carryforwards when it is more likely than not that such assets will be realized. Management establishes a valuation allowance to reduce deferred tax assets to the amount expected to be realized. In evaluating realizability, management considers projections of future taxable income within the relevant tax jurisdictions and other available sources of taxable income. Changes in these estimates or assumptions could result in adjustments to the carrying amounts of deferred tax assets and liabilities, which could have a material impact on our results of operations.
Impairment of long-lived assets
We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. This process includes (i) identifying whether an indicator of impairment exists, (ii) assessing recoverability by comparing the carrying amount of the asset group to the sum of the undiscounted cash flows expected to result from its use and eventual disposition, and (iii) if the asset group is not recoverable, measuring the impairment loss as the excess of the carrying amount over fair value. Actual future outcomes could result in different conclusions that could materially affect the consolidated financial statements.
Loss contingencies
In the ordinary course of business, we may be involved in legal proceedings, claims and governmental and/or regulatory reviews. Management periodically reviews estimates of potential costs to be incurred by us in connection with the adjudication or settlement, if any, of these matters. These estimates are developed, as applicable in consultation with outside counsel, and are based on an analysis of potential outcomes. In accordance with ASC 450, Contingencies, loss contingencies are accrued if, in the opinion of management, an adverse outcome is probable and such financial outcome can be reasonably estimated. The accruals may change in the future due to new developments in each matter or changes in our litigation strategy. It is possible that future results for any particular quarter or annual period may be materially affected by changes in our estimates or outcomes relating to these matters.
Given the uncertain nature of litigation generally, we are not able in all cases to estimate the amount or range of loss that could result from an unfavorable outcome of the litigation to which we are a party. In view of these uncertainties, we could incur charges in excess of any currently established accruals. In the opinion of management, any such future charges, individually or in the aggregate, could have a material adverse effect on our consolidated results of operations, financial condition and/or consolidated cash flows.
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