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Core Scientific(CORZ) - 2024 Q3 - Earnings Call Transcript
CORZCore Scientific(CORZ)2024-11-07 01:34
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Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was 95million,withagrosslossof95 million, with a gross loss of 0.2 million and an operating loss of 41million,reflectinglowerpost−halvinghashpricesandhigheroperatingexpenses[17][18]−ThenetlossforQ32024was41 million, reflecting lower post-halving hash prices and higher operating expenses [17][18] - The net loss for Q3 2024 was 455 million, significantly higher than the 41millionnetlossinthesameperiodlastyear,primarilyduetoa41 million net loss in the same period last year, primarily due to a 408.5 million non-cash mark-to-market adjustment [31][32] - Adjusted EBITDA for Q3 2024 was 10million,ayear−over−yeardecreaseof10 million, a year-over-year decrease of 18 million [32] Business Line Data and Key Metrics Changes - Digital asset self-mining revenue decreased by 18% year-over-year to 68.1million,drivenbya6268.1 million, driven by a 62% decrease in the number of Bitcoin earned due to the April halving [21][22] - HPC hosting revenue was 10.3 million, exceeding costs of revenue by 1.3million,resultinginaGAAPgrossmarginof131.3 million, resulting in a GAAP gross margin of 13% [24] - Digital asset self-mining segment gross margin was negative 9%, while HPC hosting had a non-GAAP gross margin of 27% when excluding direct pass-through power costs [29][26] Market Data and Key Metrics Changes - The company operated approximately 175,000 miners in its self-mining fleet, with a self-mining to hosted mining mix of 89% to 11% [33] - Power costs decreased to 0.038 per kilowatt hour from 0.045perkilowatthouryear−over−year[30]CompanyStrategyandDevelopmentDirection−ThecompanyisfocusingonexpandingitsHPChostingbusiness,withplanstosecureadditionalpowerfromlocalgridpartnersandacquirenewsites[48][49]−ThecompanyaimstoconvertexistingsitestoHPChosting,targetingatotalHPChostingcapacityofover1gigawattbytheendof2027[52]−ThecompanyhassecuredacontractwithCoreWeavevaluedatupto0.045 per kilowatt hour year-over-year [30] Company Strategy and Development Direction - The company is focusing on expanding its HPC hosting business, with plans to secure additional power from local grid partners and acquire new sites [48][49] - The company aims to convert existing sites to HPC hosting, targeting a total HPC hosting capacity of over 1 gigawatt by the end of 2027 [52] - The company has secured a contract with CoreWeave valued at up to 8.7 billion over 12 years, indicating strong demand for high-powered data center infrastructure [59] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about favorable market fundamentals driving strong demand for data center infrastructure [9] - The company anticipates improvements in margins over time as it increases critical IT load without incurring additional operating costs [28] - Management highlighted the potential for significant value creation in HPC hosting and the Bitcoin mining business as market conditions improve [60] Other Important Information - The company completed a $460 million convertible note offering, which significantly improved its capital structure and eliminated previous debt restrictions [14][35] - The company expects to begin delivery of powered infrastructure for HPC hosting by the end of the first half of 2025 [54] Q&A Session Summary Question: Are there conversations with potential customers for the 100 megawatts allocated to HPC? - Management confirmed that conversations began earlier in the year and are ongoing, indicating a competitive process for the capacity [63] Question: What drove the higher-than-expected HPC revenue? - The CFO explained that a one-time adjustment for early delivery contributed to the higher revenue [66] Question: What is the plan for construction and leasing for the 100-megawatt transition? - Management stated that they aim to secure a client and contract before incurring capital expenditures [68] Question: Any updates on expanding power capacity at existing HPC sites? - Management indicated potential for an additional 300 megawatts across existing sites, with ongoing discussions [73] Question: Thoughts on the implications of the Presidential Election for the Bitcoin mining industry? - Management noted that strong support for Bitcoin and energy production from political figures could serve as tailwinds for the industry [75] Question: What are the potential deal structures for new sites? - Management indicated a focus on single-tenant buildings and build-to-suit arrangements for new clients [78] Question: How has the market changed regarding rental rates since the CoreWeave deal? - Management noted that lease rates have increased due to strong demand and clients covering some capital expenditures [82] Question: What is the competitive landscape for new sites? - Management highlighted strong demand and ongoing discussions with multiple clients, indicating a competitive process [88] Question: Will the new block chips require significant retrofitting of existing facilities? - Management stated that the new block chips will primarily focus on refreshing the existing fleet without significant infrastructure changes [100] Question: What is the status of supply chain issues? - Management expressed confidence in overcoming supply chain challenges and securing necessary components [108]