Shares of IREN Limited (IREN) dropped 16.95% to $18.03 on Thursday, even as the company announced a major five-year AI Cloud agreement. The stock subsequently rebounded 15.81% to $20.88 in the latest quoted trading update, a gain of $2.85 per share. IREN, which operates AI cloud services alongside its Bitcoin mining business, secured substantial customer prepayments in connection with its expanding AI Cloud contract base. Still, the company's rising debt and declining cash position highlighted growing financing demands.

IREN Secures Five-Year AI Cloud Contract With 90% GPU Prepayments

IREN announced the agreement on November 5, alongside the release of its fiscal first-quarter 2027 financial results. The five-year contract carries approximately $22 million in annualized revenue per megawatt of information technology capacity. Under its terms, the customer will prepay approximately 90% of the capital expenditure associated with the graphics processing units (GPUs) that power the service. The prepayment provides IREN with substantial upfront capital to offset GPU hardware costs.

The agreement strengthens IREN's strategy of funding its AI infrastructure build-out through customer commitments and equipment financing. Alongside the headline deal, the company secured a short-term contract generating approximately $40 million in revenue per megawatt. IREN also expanded an existing agreement with a leading frontier AI laboratory, further extending its commercial relationships.

IREN secured new contracts for its older H100 graphics processors at twice their previous pricing, with contracted pricing increasing 11% for three-year agreements and 12% for five-year agreements. However, the company withheld several details, including customer identities, total contract values, deployment dates, and specific hardware quantities. Those undisclosed specifics are the disclosure points to watch as the contracts progress.

IREN's Cash Reserves Decline as Net Debt Climbs

Despite securing substantial customer commitments, IREN reported significant changes across its balance sheet. Cash declined from approximately $5.90 billion to $3.52 billion, while net debt climbed to approximately $4.43 billion — a sharp increase from the $216 million reported previously.

The movements reflect the company's continued expansion of its AI computing operations, which requires substantial spending on equipment and data center infrastructure. To support that growth, IREN combines customer prepayments, GPU financing, and other funding arrangements; customer deposits reduce upfront cash needs, while financing spreads the cost of GPU acquisitions over time.

Chief Financial Officer Anthony Lewis explained during the company's earnings discussion that IREN targets financing covering approximately 90% of related GPU expenditure, and he outlined the financial benefits that customer prepayments can provide. Under one example he cited, a five-year contract generating $20 million per megawatt included a 50% GPU prepayment — an arrangement that would allow the company to recover its GPU investment within approximately 18 months. Lewis noted that this payback period illustrates how prepayments accelerate the recovery of hardware costs. The roughly 90% prepayment attached to the new five-year contract sits well above the 50% share in that example, placing more of the GPU purchase cost on the customer upfront.

Strong AI Revenue Growth Amid Funding Pressures

The quarterly results showed strong momentum across IREN's AI business. The company reported $228 million in quarterly revenue, a 66% increase from the previous quarter. AI Cloud revenue climbed 182% to $200 million, while Bitcoin mining contributed another $28 million. IREN also reduced its quarterly net loss to $263 million, down from $684 million previously, reflecting improved operating performance.

The company's revenue backlog increased 22% to $20.3 billion, supported by agreements across its AI infrastructure operations. IREN pushed its $4 billion annualized revenue target from December 2026 to January 2027, citing customer design changes and supplier schedules as the cause of the adjustment; management identified February as another possible completion date for reaching the milestone. Whether that milestone lands in January or February 2027 is one of the nearer-term execution markers for readers tracking the company's progress.

Meanwhile, Co-CEO Daniel Roberts explained that customers with weaker credit profiles often provide larger upfront payments. That relationship adds another consideration when assessing substantial prepayments and the role they play in financing new infrastructure. Nevertheless, IREN continues to expand its AI Cloud business through long-term contracts, equipment financing, and additional data center development.