Applied Digital (APLD) 16 Jan 242024 Q2 Earnings call transcript

Good morning, and welcome to Applied Digital's Fiscal Second Quarter 2024 Conference Call. My name is Sherry, and I will be your operator today.Before this call, Applied Digital issued a financial results for the fiscal second quarter ended November 30, 2023, in a press release, a copy of which will be furnished in a report on a Form 8-K filed with the SEC, and will be available in the Investor Relations section of the company's website.

Joining us on today's call are: Applied Digital's Chairman and CEO, Wes Cummins; and CFO, David Rench.

Following their remarks, we will open the call for questions.Before we begin, Alex Kovtun from Gateway Group will make a brief introductory statement. Mr. proceed. please Kovtun,

some Good involve Fiscal operator. our and to uncertainties. under everyone welcome remarks, be today Thank forward-looking number considered Quarter morning, of XXXX Digital's statements that remind to Second would laws begins we're Conference Applied making we may and you, securities like everyone, statements a Call.Before formal and management risks

could of cause you forward-looking factors, we results described a caution that our there control, a those beyond result, to which of many statements. events number actual which and from differ are As are materially the in

the and XX-Q. caption and disclosures Factors other as not detailed these GAAP you the disclosures report our refer metrics. tables, and uncertainties the consider to non-GAAP to For release We applicable update disclosures more uncertainties in in you descriptions disclaim except are statements any reflect for reconciliation the any earnings We relating but well Securities or filings assumptions the the of events our measures our release in and circumstances, forward-looking Risk ] the Form earnings the law.We to metrics, made, public with filings discuss obligation you financial variable and or to Exchange carefully and to and after our forward-looking read detailed will risks, as on circumstances our made Commission that under our business, identified see Commission. date including occur as statements, uncertainties undertaking also Exchange forward-looking please Securities by with limited risks our quarterly as and required to, statements [ encourage and

everyone for Applied visiting Digital's this available at will a Digital's Exchange that will Commission SEC free remind for call also the would You call may available made via website.Now to I Relations website Securities over replay like being CEO, Wes? Wes turn is and Applied and to Cummins. of get recorded Investor by Digital's Applied in www.sec.gov. link Chairman the I the and be filings section

you ongoing second Thanks, start computing XXXX mission supporting and their solutions high-performance Thank call. everyone. Alex, and hard conference infrastructure good of joining want providing morning, in our work I the quarter for to service our to our rapidly industry. digital by employees for thanking fiscal growing

Rench, with Before data turning start detailed review David the center I'd our across business.Let's CFO, to over financial developments of for call discuss our some hosting our to like recent results, a our operations.

This capacity as full expected at consistent Our XXX-megawatt uptime with to facility Jamestown full throughout quarter capacity. at and which the fifth continues Jamestown consecutive operated perform operated has facility in quarter. marks the the

XXX-megawatts Garden meet City in with efforts months. milestone is quarter had small the capacity next results remainder this for at digital The to facility growing demand the scalable Applied of come expected significant a megawatts with is XXX-megawatt facilities capacity our in Both multiyear the our Texas. to also in Garden quarter, terms.During North we quarter, contracted facility Dakota are Our facility across consistent hosting operated Ellendale facilities. capacity the full of low-cost, XXX our ongoing several to operating uptime XXX-megawatt a This infrastructure. to approximately during in our City bringing online total initial to energization Dakota North contribution out the Digital's at currently on announced the and customers the

additional realized improvements infrastructure we grid. for on facility, the the there As were needed brought we

made these later improvements expect April. than We to no be

the the we hosting them.With send to Our increase are services. facility, the demand Bitcoin, installing customers of we are continue seeing cost for actively in increase to miners and significantly

we City will not prices, the exposed heading center we in halving this Garden Once is are approximately across contracted facilities. fully fixed megawatts becomes so facility reminder, year. into data have event X fully the XXX hosting our As a our of volatility hosting Garden our energized, capacity to City with crypto-markets facility

contract million flow $XXX as contracts ramp to significantly have X we approximately off in on our hosting up in added can ramp of to to data over GPUs capacity in revenue GPU to private the capacity. capacity pursue computing service that deliver move contract seeing million. we high-performance cloud are of services the amounts compute AI basis. customers, our customers earnings annual our exercise demand for time.While they services, have for an pipeline. and additional and primarily now Operating typical which burn cloud additional our February.Let's cash the provide tailor from sites value last March, million cloud up our up customer, in contracts on our to VC-backed Since total as center majority progress as we money, market also from the We so our in deploy embedded applications. hosting grow enterprise agreements of we to expect options and in further they will our prepayments We large $XXX full $XXX brings power of It an adjusted raise been annualized at continues announcement, opportunities to -- which companies, supporting for service quickly existing strong cloud EBITDA our

important increasing our plans to efforts. of We to from market demand excited outreach have enhance segment the are talent hire to sales see and this

secure We to continue GPUs. access to

supercomputers to explore to been the AI networking current next-generation site demand. ready in of power additional financing put we associated for and on applications. X delays are HXXX other compute the support are structure deliveries on only have of We demanding all requirements is which financing in prudent order the it's have the These X However, when XX,XXX installation, we X,XXX have an clusters components. installations to for clusters to client our attributable is they terms us options next support elite X we weeks. tailored capital customer to we and actively in planning most vendor equipment GPUs To-date, currently for and an deposits.Additionally, as there to raw receive of petaflops, ship continue deliveries believe installed in GPU how or some our class pending configured,

to We minimum HPC end the over purpose-built AI the representing fiscal a update me to for The million let cluster of on commissioned with clusters centers. $XXX us the top-XX the opportunity Jamestown supercomputers fully the reach expected of generate workloads. in of before put XX provide data an revenue.Lastly, expect annualized to our are year

on North applications. will facility offer Construction ground for During designed HPC first the XXX-megawatt liquid-cooled This proceeding as high-efficiency broke quarter, in facility Dakota. infrastructure is we high-performance our compute Ellendale, low-cost, expected.

reduction Ellendale this center the the our workloads.Our advantage specialized and AI abundant a in emerging supply adjoining of offer a is power workloads. design in will there next significant sources the will for and We power of in market running this believe maximizes XX customers unique to power these facilities with density constraint It facility sustainable Our for land and assets center performance market. contracted deliver data near our best-in-class valuable months. strategic proprietary placement significant over architecture be compute. at data high-power that believe together become the for renewable will and offer that infrastructure implementation, We will cost scalable

competitive robust burgeoning demand. expectations. landscape driven a we'll seen to by for our initial exceeded AI centers, has position a demand the believe support already be have our this We strong We data which in

XXX Dakota across customers. Utah. X have have of of a reminder, include does support the development This stand-alone and capacity at service megawatts megawatts in Jamestown not we capacity we to our North As current in facility cloud

HPC to well risk-adjusted of the turn Rench, call our As to to our to XXXX, half to shareholder financials second both positioned center data walk you CFO, provide update David guidance. we maximize across seeing our allocate capital we're are that, service and David? fiscal appropriately we and to I'll the highest now will capitalize cloud and we an over returns business, on the the value.With demand enter on continue our through

Thanks, quarter for Wes, good of everyone. from the City the facility, beginning generation year million fiscal and increased XXXX. $XX.X the the uptime. by second revenue second additional primarily fiscal increase revenue to revenue facility million of Jamestown was due quarter of generation of Garden quarter second Revenues XXXX The XXXX for the and the fiscal the during quarter to from fiscal morning, Ellendale facility full compared $XX.X driven were

during XXXX compares of decrease was diluted revenue were $XX.X or to administrative $X.XX by used XXXX.Cost fiscal million. was compared of to of million was personnel loss as second $X.XX the to attributable Selling, diluted million XXXX based net The the general per revenues costs and and faced significant assessed more during a of of we the net quarter energy share million $X.X of fiscal $XX.X compared of depreciation an measure generate or of company basic approximately $XX.X fiscal of expenses XXXX, fiscal quarter driven higher EBITDA In share of colocation were per count primarily full supporting of second adjusted into second in and first cost was second added of the a amortization $XX.X offset accessed quarter the and was XXXX, weighted a additional not This amortization for of for XXXX $X.XX on during million fiscal count period. Adjusted of the share and quarter the This the $XX.X -- approximately share. a revenues based on equipment count diluted average headwind adjusted loss the revenue. yet computing totaled hosting data of $XXX.X business leases and increase the a was energized. for earnings. of was company, depreciation, quarter loss compensation million by weighted million second not $X.X XXXX increases due based back $XXX.X basic to average average and personnel a partially to In weighted lower of expense the year the adjusted weighted and approximately on growth back stock-based of space addition, quarter in the $X.X adjusted of loss loss, of expense costs.Net by revenues, quarter to are for revenue have quarter adjusted cloud million XXXX. million of quarter not the fiscal amortization and of The during fiscal the revenue The quarter compares quarter $XX.X were to million. comparable prior $X.XX and from loss or the per loss or expenses earnings. facilities was for of $XX.X quarter fiscal average share diluted or in of for that expense and on approximately share not charges a supporting second million second GPUs million the million share was service recognized million. a for but the quarter second net per second not and based the for basic been to added a Amortization share non-GAAP net $X.X count basic contract center fiscal during lease supporting sites during XXXX occupancy and $XX.X the quarter.A

delays with XXXX We equivalents; the EBITDA second decrease to in restricted quarter was cash as impact second future our compared support full $XX.X million fiscal able balance and We ended and are up this million of the measure XXXX adjusted stand loss quarter to expect an to for million.Lastly, on EBITDA, fiscal of debt. equivalents fiscal of million a supply-chain and clusters that cash; revenue. Adjusted $XX.X in non-GAAP in quarters cash the $XX.X $X.X cash, we computing sheet. resolve quarter the second for

low have received incorporate arrangements million back During revenue impact the the of customers contracts, the we first quarters due our $XX.X over in term annualized received to customers clusters, delivery on be helps expect to upfront end to GPU remarks. expect our centers. to our rate cash clusters revenue to an of is million approximately the upfront and EBITDA quarter commercial are EBITDA. now our of I $XXX the million recognition, commissioning networking $XXX the for we deposits in the prepayments. million We build the payments revenue EBITDA a million.Now the is our of The guided In data closing credited at year deliveries net the turning Due have run funding the for This ATM customer prepayments fiscal CapEx for it XXXX, that as components timing our offering. certain now our proceeds of delayed annual an $XX.X the rate contract. exit significant and XXXX fiscal and previously in and structure and no the an for X company we range of revenue has customer to recent a now prepayments guidance. XXXX. component certain weeks, to as ATM turn additional closed, with on but and impact adjusted over the our run Network did of with Wes but in below $XX.X offering flow of Since out the the call from improved we complete.Now major benefit year

you, Thank David.

We questions. capitalize mission take and forward are year. it in well Operator? all to our our is thank momentum are team today, for and on opportunities continued I'd happy our the trust our your now business like Applied members positioned half making to look for to on second across of of to execution.We shareholders their growing the dedication continuing what in and our the

first from B. Riley is Pipes Lucas Instructions] with [Operator question Our Securities.

you And and assumption. the with I've wondered, then margin to very side, in your should first are working we morning, million much, agreement side megawatt the of is expectations I Good the site of the million And that terms value the announced. much on your HPC operator. that's use? of number of question kind revenue total per Thank cost My ones, for XX% hosting segment first, few capital around very for conditional think everyone. a $XXX there, you and year. still per details. you the still if good Thank a been $X on

Yes. Lucas, a announced, can let's -- that give thank versus lot detail I what the about but so you. not there's more we The talk cost.

and this we've design new is Analyst million million the we're about moving working Day $X that we was the Shareholder Day the $X design, for. previous I through to for million think, per $X talked the the as in million cost X-story shareholder versus and the megawatt our in -- $X more worked the so towards design, that

talked So, as we're at.But in million that's $X per the looking previously, which per megawatt as fits revenue and right, about of we've in megawatt. $X that what EBITDA this economics, far is about million economics

for turning guidance a very Got And That's it. helpful. to moment.

delayed, some average the In QX think online the been little been what terms of components on a on bottleneck? GPUs then, I more previously, QX. has exactly bit you And that add you have color and provided color Could fiscal the for that? in

prepared think, but remarks, was notes mentioned I you couldn't to quite I in take your I trying it and keep up.

appreciate an this. So around GPUs, if expectation color the of kind you would of have maybe all QX around QX,

Sure.

this X cluster. issue So networking the specific would the we've talked the last the about networking of X or several are It's the already, bottleneck, components not that GPUs themselves. it's I've related the InfiniBand this components the And for times been piece -- months. to and has for say, of kind delivery, I

component of and the because it We it, to of every get of stand are customers. up commission you sure of for need matter you components It's delivery getting get cluster, a the delivery operating making those. all

So of been transceiver specifically we're delivery on the seeing InfiniBand side the in of the InfiniBand. It's deployments. the improvement

one and had running last we up quarter. So cluster

be have now.As a Lucas, for refer cluster We we per on but know, another as -- my in cluster, X,XXX I another us. X we little a said it how prepared to can it. just to -- cluster expect confusing, reminder, X. GPUs I deployed It's And bit remarks, the it's the is receive

another next weeks our the is So X we'll receive X expectation. in

on has so, these $XX deployed. per annual gone of revenue clusters, about think where for should cluster pricing also And of you us million think

And in million revenue our few generating which we're business the the we right then our cluster, $XXX now, few per goes X running generation because million year go of goes expectation.But of is year. basis, $XX of that original is X $XX a we revenue year. week-by-week our which revenue to for a difficulty weeks about -- weeks, clusters, and think to -- behind per million ramp one have just So cluster you when say is clusters, revenue weeks about we're so a I'd X our the per business on from revenue to

So we're by fiscal deployed right, our XX just look year, when the May months away. assuming which the at our is we're -- about X.X clusters end we guidance, of --

XX And hosting our million clusters gets solutions blockchain so, plus to that that $XXX that rate. us run

of I think, us year. for better than hit I the can very end conservative a by think do that, the that's is number we but number that the to

That's very one, and other that $XX.X breakdown number? helpful. quick HPC a GPUs provide been One have year-to-date. purchased that able million in between assets you and equipment to Are in the property

I'm sorry, was number The purchase year-to-date... that? which Lucas,

the number of that's to-date equipment been property that's purchased Yes, and year-to-date.

So that into of majority HPC. that -- goes the

So how the when up balance our the sheet, GPUs you on showing GPUs sheet, we're are asset. you asset, is so the -- right-to-use look our where the at as of lease the look balance because financing

Okay.

have then, side, -- capital you'll see And lease. on liability we'll the a then and a

would short-term as the entire is call you on about between half half goes of leases, the deploy split long-term things asset and whereas -- long-term out with and liabilities. right-to-use on into GPUs, assets, this the I liability, it's liability lease the One the the we

capital when refer doing we're leases. equipment how right what now always the financing the That's you because to sheet, through we're I finance, So the balance leases as these look are GPUs.

what CapEx, the the center. through the look vast on you'll you'll majority GPUs. where is and you right-to-use the And see see facility, and lease is is HPC then equipment when data the liabilities on of leases CapEx the So the capital

very That helpful. is

Our Sutton Capital with George is from Craig-Hallum next question Group.

you about? if financing loan a Is do this these combination together of market could agreement. see and there sort of It's come the I financing know your construction of that financing? us ultimately project-level sense the and walk we it project how in side And any mind? wondered dynamics the great through of just to conditional should

Yes. before. I've -- Thanks, talked this about so publicly George. The

the customers way about do a agreements, mid-September. this think And people then about potential you site. lot these our do since marketing diligence So so you when been this, of the we've should think marketing due on --

you I'm in a it the experienced typically outside a this talking or You agreement to diligence. now, would then, And first then, you those period get get into of And things and we've answer that site won't all due working. questions, our work right of then about contract, someone expect way you'll ROFR specific to refusal gets contract.And finance. you talking exclusivity, I'm contract, period And visits, that go sell work level number go significant to of anyone. a of post where the that a about just to not you to project you then the

engaged the parties are finance with project-level We side. multiple on

for finance project-level. the XX% to loan We project-level a been agreement go have finance, you'll weren't waiting of project-level but get side, at to on cost We XX% while. an for the to to in neighborhood the

as So the the there's we've go would this what in bitcoin refer done of equity goes we with site-level, a, at look we industry the as this won't work debt. call of at just is mezz then through And component, like people corporate-level, what at I down all sites. to our more always like, our it which

have put broke construction.We can it. ground construction in piece, you money equity amount we've on the finance. of X% -- already. that construction then and have Ellendale, you And X.X% into you range, So our and runs continued piece, type significant of contribution, have we in and in then continued the debt the mezz cost the That have a to the site contribution kind to our

X%, in debt then portion will remainder return where to will in of level and then be the small of capital, come I finance a the ownership, teens a So, And X% get -- project close generally and we mezz itself. need high on site from -- mid- on call where it's kind retains money X% someone think this piece to to will to typically that. the X% equity we're out piece and high it their of first maybe

in that process the so, And that's now. we're

megawatts So effectively megawatts XXX for. now that you're if ultimately I obviously, could the you walk marketing, wondered XXX through spoken

clear us it's the equation Just pretty demand the to very to side significant. be that of is here going

seeing the to of as going Just other curious what with opportunity? market you're you're XXX-megawatts

Yes.

we've which in was the diligence the kind thing X in in have we weeks. robust. has parties year several up So as deep kicked capacity interesting more it for -- X it been more last of that off, We January last couple demand of of year the had had very as we week, seen, show and the panic-looking -- just in feels like parties last almost feels

interest we're the So than a parties that have. capacity involved more we the and easily seeing lot would of are that take

carve worse in the online I is it's that few could We're over over position months. to market how that this, the want of for or for a I right? solution. So, have is a is XXX out it's want -- for biggest the we the about out for is megawatts that because own first good ourselves the a have that's is is capacity But the we issue already And what's think to over over for cloud value assets the we next line. highest carve have question that do for out.And capacity, we're and permitting. there, that we issue close in for get a one massive the really is high-quality face, full nice to XX this these The ourselves reminder, we is the of going X to ourselves, we land best come the finish but a our we power reason months, amount the because which me I to to mark, megawatts and And the that the XXX much our George, some next out think we -- carve months, think XXX get think as megawatts the that next booked have. expectation for going I we month short when some demand really available, demand have

Sai for Obviously, So we chain understand Computing side. the challenge. me supply last the on question

on curious demand just I'm that, past the side. Looking

So there any you challenge is Or that got has a changed X mentioned soon. anything on here there? demand you've supply the clusters Is limitation seeing? you're ship it could side? another chain really that just Or

only into as side, demand the come mentioned the new on my market, group that remarks. on a the has So thing the I we're side demand in is changed prepared seeing

So demand is VC-backed But robust of extremely to startup the remains companies. we're customers. what kind in we're market on the as seeing the enterprise what the referring

just now and very enterprise already so -- These companies a $XX these can large of customers. market I have that GPU define now AI, billion type working So They what on are business. capacity. typically and They a of AI looking significant have plan they companies with of are cap that to it -- to they're their on is in generally like north typically do business. strategy. what have have they And for me, publicly-traded, their been landed amounts feels

-- market. The to they've into contracting have Then side, change, on you those with the a the we've is into working been X of a right? one about drive next But at It's have looked different X increased which segment think market all in weeks. is we that's new here we us.We a been but bit moved a that customers hyperscalers. demand, for our infrastructure. basically the of a the way I've of this one now, that's X from it proof-of-concept, barbell, could customer only of get that call we for what and is test which I So a months element -- call

we're have in the the you piece So of this year, hyperscalers side, have startups and then the was now on nothing last kind middle. and there one on the up. start middle show was then side, you that the in VC And to seeing other

details. you Thank the for Perfect.

Absolutely. Thanks, George.

Our next with question Aftahi is ROTH from Darren MKM.

if Just I X, may.

up I if side. kind correctly, you of GPU think gone pricing has on the heard I

not you monthly think, which on I basis side, long curious, the then Day, ago, year. uncontrollables rate, of Wes, I million $X.X you'd said on guess, by maybe an GPU just confidence some given components, Analyst XX,XXX you kind the are at guess I'm talked with million. XX,XXX, your ] the too I I run know XX,XXX on the be what's what's $XXX changed?And over end was the [ targeting think in annualized about number. that fiscal your there's level of I of

Sure.

So has Darren, yes, some. up gone The pricing you're right.

gave and an seeing was our at our customers, we're before $X.XX were in the contract. $X we're most largest pricing marketplace range we looks for XX% a the signing prepayments and with reserve So of [ of hour one kind what like I What now the we're -- on what's around on GPU number -- that seeing on the capacity is of contracts. it our customers, is in and between reserve ] $X.XX, somewhere contracts and XX% for the X-year contracts

that XX,XXX, then color number. the that's pricing.And XX,XXX. the on So on that's took from on a the down kind update We the of the

that for us for is was the is InfiniBand. hitting. now and slowness comfortable XX,XXX for we original XX,XXX with are co-location the but The on the where XX,XXX with GPUs, the had been has the the also without component players GPUs So of we side really we comfortable both to number of piece feel delivery capacity -- outside just market. really multiple going on financing the by a feel ways, in debt on done We that some in the of larger a

But we GPU say I more can would of there's the on guidance.However, on that. really think we the I that is gave reason that's do So sides side. we about feel both what that comfortable

X,XXX shortly, mid-February it, X,XXX so XX,XXX plus at X,XXX have clusters we're of the we'll call of the that those So we're for. guiding

the between end us of I May. there plenty and of So room that think leaves

City, it just fast in. [ everyone Garden more squeeze I Well, and On obviously if as looks as expected. didn't could one ] ramp like it

of can can what little then, propensity needed, kind just quickly the maybe With procured?And those curious just get your grid bit continue maybe talk you about a is components, to how I'm do place with Texas? in the wanting in business maybe do of in somewhere to next of you Like terms to would grade like site how kind like business that a Texas?

I Texas, in love mean there. I it I live Yes.

So I bad we're about so the Dakota don't doing leave I'll the and right say that. sites now to But in are want North anything future Texas, Utah.

the on. working areas the We we've for those because I -- So, in about in are past. this the talked demand the market. see X more of we think We we're capacity out were looking

We a that's gigawatt. capacity north have additional a pipeline of of

or is other that since bank huge that a either late-November to needs our So butcher the we is the specific -- a would guidance we're April remainder a I to on bank frame get a but site, that as way. Texas December, ways expense to I'm worst-case the at on. I up specifically is one not some to improvements. -- need approved that.And the grid working there. been -- be and that, to scenario, that resiliency, through wind fully to location, there's not There's be we come think to for of the and And put by that think little view and working go the -- bit, capacitor time it's area XXX. the going a getting but which in But installed plus is we in the the what the a we've gave which There's capacitor little substation route. then this the that's on this for X

for waiting XX to there. basically we're So, megawatts the last on come

Great.

question is Markets. Our Lake with Street Brown Capital next from Rob

in? is us vertical guess, in? side, sort VC-backed of could Just the I think you of on of customer customer that give sense enterprise you that a new I is the sort group which or mentioned, following anchor up what customer,

the are take megawatts So what the megawatts that at lot going we that that. or you companies world seeing, looking all people that exist tell can of a do to there's the site, down can't in XXX is that are the XXX not customer I we set or megawatts themselves. But are of XXX

a name that So it's very in They're recognize. the it's all data high-power that are us density And small high-power but would companies of capacity, for the density that you in looking for Dakota recognize North companies the instantly. everyone hosting, mix easily group. would are center all names

Okay.

to commitments you still on I around, do GPUs them activity? buy is follow then, And on have contract Or be wanted Okay. and May? just XX,XXX determined I to the deploy after GPU to that the up guess, discussion still

are orders Yes. XX,XXX. Those up valid, even the to still

on it's we still change And so, Rob, for We orders, orders, These the for us. fluid GHXXX, HXXX. for clarify those right way, to HXXX, right? By those just continue. it's just are XX,XXX whether now can to expect

as able and the to those queue the So ability available. the react components to we market evolves, when we're have all that. of bring in to still those are But

$X took just for mentioned a in remarks, quarter had his during second prepared just were in as that we just that.So, that, clarity we the of were the cluster. under on to quarter, So issue were give we million. the paying the delivery cluster total, in now, David Those expenses

paying cluster to InfiniBand commission that to for components turn without have cluster customer. our because fully didn't that that cluster the and So revenue, generating we over it

them. and basically we GPU to want we paying because offer our GPUs to we generate for So be these for paused revenue the don't customers them while can't deliveries ourselves,

what's about those all be and really those still when have need place guess, orders those. that's just happened So expect to deploy in But to We careful, deployed. I to we more be expect us. for we

Got it. Great.

next Needham with question John is from Our Company. Todaro and

Great. the delays Day, about did it you the I ones possible called think, here. before, December GPUs Analyst maybe call in some be you out end talk of so XX,XXX A was of InfiniBand. 'XX. Remember by One, as last the to supposed couple or on

and miss you did maybe mind you kind Just curious, kind kind of situation your guys get those of analyzed expected? that were Or just delays it? than worse of on

on of it John, networking of majority we equipment need you make work. that it's certain that the delivery So needed. component one to those, but There was getting the we're particular component, specifically of -- vast

have instance you in an one generate commission that where in can't right, of revenue. clusters, we our entire -- we XX setup besides the transceivers and But example. just cluster as an So InfiniBand like fully

squeezing it So transceivers in it's been those specifically is what just is.

point I a pay So, GPUs. to could delivery revenue able lot to be detrimental said, and for have we see but and take generate not I no more and think -- to it's like the I delivery we us taken GPUs, of

held GPUs But that. So December, do off.We no a have again, we number we reason could that that in significant of just to made in decision December. taken

But December speed of see that I to see to us in come to available, significantly, that and kind the XX,XXX up that to up speed started we'll be you say not could up able we've I'm January. as that and in late So, meet those think, ready again and loosen the XX,XXX marketplace XX,XXX that the deployment. and

it. Got

that's And helpful. then Okay.

side, contracts? proof-of-concept this had curious, contracts on start move with anything did you customer, the had, how contract to delivering customer maybe wouldn't this Sai existing come enterprise a Or new that could those delay, with I question previously in and contract before shortly.Just the Another change one? you mentioned Compute so the

don't It's and No, nothing be proof-of-concept -- a with have we customer. those contracts. we'd to just moving has contract the changed in contracting. and to then clarify, But John, with enterprise

want -- group significant -- make established see market product, that's and these money just in last late-November. that. new we've show just of looking our on really develop marketplace the the calling are entire it's of out companies in a clear amount the has of exciting with seen kind just changed to of customers, -- GPU up to a for be started have but nothing it that a that it's So And over an new area But previous kind and compute. that,

to though, of sounds just the it delays, still so the though, are And it. Got knocking Okay. customers up with down clarify like? doors, kind even lining

issue no had that. have we with Yes,

it. Got Okay.

this entrance that conference would I seen we've call. I earlier, I the and the we've enterprise say but would -- said say our demand last of would customer, I say from with increase John, overall, seen

slow increase. We've down. anything it seen haven't We seen

Our with Mike next question Securities. is Grondahl from Northland [Operator Instructions]

just the Applied's to into of have What done guys number? What pitch rough And of have the is construction, much a estimate it financing the do complete so for you anchor far? side a just to project of you tenant? contribution roughly, how that,

Yes.

Mike. So question, good

let's so, end So of million when -- think a high you megawatt, the X say we go that. to it's about

have land then, going million, And on an what XX% to finance. from the to partner. construction industry right, we're anywhere we X to XX% at on So expect -- in XX% we project sorry, and equity level call finance to XX%

that earlier, explained I generally more mezz like looks debt. as However,

is the we've so contribute the the And equity at already somewhere our And portion at of of... of project that we'll that. XX% us, north between in spent X% looking for expectation you're and cash end,

$XX million.

on think too, Ellendale. company, that the currently $XX look cash at And this is us, for flow his I in the million, mentioned then, remarks, David prepared Mike, when on for for that, we cash note X, Bitcoin centers flow hit our that think majority we when at point. that from vast dramatically, improves right? of to prepayments it's March I through data the burned important We've the the

our that cash portion of so, And the improves dramatically. flow business from

helpful. you That's it. the there? And supplying the anchor Got it. assuming will tenant could GPUs. that I'm clarify be But Got

Yes.

business, business. center just the this and an the data the as equipment Think to We're providing side. on the buy Equinix they space. space. we just So of DLR do providing are similar very we're hosting; and They select we then or equipment, style Bitcoin the on what

not this it. What I'm it, plays and but to it. customer? -- hold anchor with would as would you to that revenue you when when recognize revenue going start? roughly roughly, this out, Got Got expect And you begin hey, to to

revenue very half the right expectation year. of be second early part calendar the would this the now, the of is So

like be August July, would So kind of...

Yes.

Okay.

Yes.

just contract any Then business? any kind in kind that business, Bitcoin terms? of last Or locked hosting down or question. The Great. extensions, updated everything renewals of one is

note It's are locked down. our of The customer things largest there.

over on a there maybe only of calls lot of for on is, contract. thing largest a capacity. the years, most hosting our X getting have we're we're the you, this years about customer but little probably and note shouldn't more The surprise -- X seeing We capacity

lot but call because significantly. X price weeks hosting the over offer, capacity more calls went have as we last, it, about the We are weeks, never any bitcoin out marketing to X we has don't are of up a getting

it. Got

Okay.

Absolutely.

next is H.C. Kevin question Dede from Wainwright. Our with

Curious supply you're or service need moment? the power cloud about the facilities you at running of for the number that leasing to your

Sure.

Minnesota Lake in own City. And in So we then, we North and have in Jamestown facilities Jamestown, facility have our Dakota. Salt third-party Denver, in

at if understand X Yes. In I maxed have megawatts, Jamestown, you out correctly.

X,XXX you So Jamestown can So megawatts, I GPUs the can hold prefer. you GPU tell will on if capacity, on do us? however it for I

meet I Whatever securing need you're genesis used just the to -- cloud the on I'm guess, are tight, is given amount customer to you demands build-out, market the question meeting the how cloud power right? that is real side? The in is your a -- really of the fine. service you

Yes.

back last the power of summer this secured in year. we So

the We secured sites. the be the capacity it. power these service in So of year, demand able saw middle the ran and out we grabbed we to and last year to

that at secured we So point. that

XX,XXX that beyond And continue then both the talked that will grow. about. the own our our capacity And go our own we facilities facilities it to and for go into that, we we GPUs expectation as have post so, from as that XX,XXX third-party is we

Right.

So XX,XXX go will now. into that's Ellendale to construction XX,XXX in under facility delta the that

Yes.

Okay.

take develop? a market enterprise that correctly going to wondering marketing if you're And that initiative. that. direction I towards that about was could you be that seeing you're more I think I goes to heard starting you the specific Do mention you think

Yes.

the for market. it's specifically So enterprise

we've hired ago. think And this months at as salesperson we've our single specifically salesperson about capability, few we a our we first more I enterprise talked that to before, never So company, now. see reminder, going go after and add a market to but Kevin, we're a to developing that this had

that's whatsoever sales our a never So no we've that, salesperson. company. We've previous expectation. But to had had the in force

be Understood. at I'm of so And is I just demand if why positioning? little that your would all? necessary how And competitive still market marketing congrats sort and on -- shaky that. strong, a that developing a you in initiative see guess,

company, hire done in the an the before who we'll we maybe so salesperson, really people and one, that's the we've we one are there's hired idea because we've that making sure but never and of another out idea. going know do about history So what

need until that So want hiring but I we it to it XX lot I And salespeople, on here to be don't do discussed don't prudent think think internally a that thinking we don't now, few wait need board, but organization. it's the a that it. is, we've build we idea sales we're to salespeople you develop get should

That makes sense.

Didn't of for looking mean offense, kind Okay. any Well, clarification.

it. call we another side have And things latter is, think We it's to salespeople. before need here, saying, where have internally I we no, yes, why discussing it That's don't there's develop sales lot which Kevin, develop a of in the No, this should people the that sell. but team it, goes, no. though. to idea camp, actually landed we've a anything would before have I it. need But debated good we you group we're that a the And on a

right? congrats results, again the don't makes Well, on I disagree, Wes. Marketing all happen. it

Kevin. Thanks,

comments. this And questions conference Instructions] the like Wes some closing would over for at no hand further to [Operator to there time, back I are

sitting comment Thanks, just, everyone, thank you and in them on climate is my to last continuing for construction Ellendale, And our I for joining. -- the who's team it's we're be to most say here thanks, pleasant the site. January, want to not in

quarter. look I So to we you who makes speaking everyone for it and really forward team us, and next appreciate the happen to

conference. That you. today's Thank will conclude

this and your lines time, You participation. may you thank disconnect at your for