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**Key Takeaways**:
- **$9.7B Microsoft Deal**: Delivers $1.9B ARR with 85% margin, 20% upfront prepayment, and 25-30% levered IRR. Represents a strategic partnership for hyperscale AI compute.
- **140,000 GPU Expansion**: Targeting $3.4B ARR by end-2026, leveraging 16% of 3 GW power. Sweetwater (2 GW) and Canadian sites drive growth.
- **Financial Strength**: $1.8B cash, $2.5B secured financing, and 35%+ equity IRR on cloud deals. Dell's GPU financing reduces capital intensity.
- **Strategic Differentiation**: Vertically integrated platform, future-proofed data centers, and hyperscale credit risk mitigation.
- **Customer Demand**: Strong precontracting of GPUs, with hyperscalers favoring bare metal service over software stack.

**【CEO Summary Section】**
- **Revenue Growth**: Q1 FY '26 revenue reached $240 million, up 355% year-over-year, driven by AI cloud expansion and the Microsoft contract.
- **Microsoft AI Cloud Contract**: Signed a $9.7 billion 5-year deal with Microsoft, generating $1.9 billion annual recurring revenue (ARR) and 85% EBITDA margin. Includes 20% upfront prepayment ($1.94 billion) and deployment of 40,000 NVIDIA GB300 GPUs at Childress campus.
- **AI Cloud Expansion**: Scaling GPU fleet from 23,000 to 140,000 by end-2026, targeting $3.4 billion ARR. Expansion leverages 16% of 3 GW secured power, with 460 MW allocated for Microsoft.
- **Strategic Differentiation**: Vertically integrated platform (substation to GPU) enables faster deployment, cost efficiency, and superior customer service. Microsoft views IREN as a strategic partner for AI compute.
- **Future Growth**: 140,000 GPU fleet supports hyperscale AI workloads, with optionality for future expansion. Sweetwater campus (2 GW capacity) remains a key growth driver.

**【CFO Financial Commentary】**
- **Financial Performance**: Adjusted EBITDA of $92 million, reflecting 85% margin on Microsoft contract. Operating expenses increased due to share-based payments and payroll taxes.
- **Funding Strategy**: $1.8 billion cash at end-October, with $2.5 billion secured financing against GPUs. Prepayments and operating cash flows cover 1/3 of $5.8 billion CapEx for Microsoft deal.
- **Return Profile**: Unlevered IRR of low double digits, levered IRR 25-30% (assuming $2.5 billion debt). Potential upside with 20% residual value (RV) assumption, pushing levered IRR to 35-50%.
- **Capital Efficiency**: Dell's in-built financing for GPU purchases (no upfront payment) and 20% prepayment reduce capital intensity.

**【Q&A Highlights】**
- **IRR and Risk-Return**: Levered IRR of 25-30% for Microsoft deal, with upside from RV. Cloud returns (35%+ equity IRR) preferred over colocation due to higher risk-adjusted returns.
- **GPU Deployment**: 40,000 GPUs for Microsoft, with air-cooled B200/B300 variants. 12,000 of 23,000 initial GPUs precontracted, with strong demand for inference and AI-native workloads.
- **Future-Proofing**: Data centers designed for 200 MW super clusters, flexible rack densities (130-200 kW), and Tier 3 concurrent maintainability. Liquid cooling infrastructure planned for future GPU generations.
- **Customer Demand**: Strong interest in Sweetwater (2 GW) and Canadian sites. Bare metal service preferred by hyperscalers, with no immediate need for software stack.
- **Execution Track Record**: No missed construction deadlines; 140,000 GPU deployment on track for end-2026.

IREN Limited (IREN) Q1 2026 Earnings Call Transcript

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