Core Scientific, Inc. (CORZ) Q4 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call revealed mixed signals: a significant partnership expansion with CoreWeave and strong cash position were positive, but declining revenue and increased net losses were concerning. Q&A highlighted management's confidence in overcoming permitting and design challenges, yet some responses lacked clarity, raising uncertainties. Despite positive long-term contracts, immediate financial performance and operational hurdles suggest a neutral impact on stock price.
Key Financial Performance
Total Revenue Q4 2024 $94.9 million, down 33% year-over-year due to operational hurdles and a decline in Bitcoin mining revenue.
Adjusted EBITDA Q4 2024 $13.3 million, no year-over-year change mentioned.
Digital Asset Self-Mining Revenue Q4 2024 $79.9 million, down 29% year-over-year, driven by a decrease in Bitcoin earned (974 Bitcoin vs. 3,042 a year ago), partially offset by a 130% increase in Bitcoin price.
Digital Asset Hosted Mining Revenue Q4 2024 $6.5 million, down from $30 million in Q4 2023, due to the sunset of hosted mining contracts.
HPC Hosting Revenue Q4 2024 $8.5 million, with 16.5 megawatts of critical IT load contracted.
Average Annual Fleet-Wide Power Rate 2024 $0.04 per kilowatt hour, better than the target guidance of $0.042 to $0.044.
Average Fleet-Wide Power Rate Q4 2024 $0.037 per kilowatt hour.
Gross Margins Q4 2024 2% for digital asset self-mining, 36% for digital asset hosting, and 9% for HPC hosting.
Non-GAAP Cash Gross Margin Q4 2024 16% for HPC hosting.
Operating Expenses Q4 2024 $43.6 million, up from $30 million in the prior year.
Net Loss Q4 2024 $265 million, compared to a net loss of $195.7 million in the prior year.
Direct Cash Cost to Self-Mine a Bitcoin Q4 2024 $51,035.
Total Cash-Based Hash Cost Q4 2024 Approximately $0.033 per tera hash.
Total Debt Balance at End of 2023 Approximately $1 billion, reduced by $270 million during 2024.
Equitized Secured Convertible Notes $260 million through mandatory conversion.
Convertible Note Offering August 2024 $460 million at reduced interest rates from over 12% to 3%.
Convertible Note Offering December 2024 $625 million at a 0% interest rate.
Cash Position Entering 2025 Over $830 million.
Pro Forma Fully Diluted Share Count February 20, 2025 Approximately 501 million shares.
Statutory Effective Tax Rate 2025 22%.
Net Operating Loss Carry-Forwards More than $300 million.
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Operating Highlights
HPC Hosting Contract: Signed a 16-megawatt agreement with CoreWeave, with total revenue potential of $8.7 billion over 12 years.
HPC Infrastructure Expansion: Expanded HPC infrastructure capacity to over 1,300 megawatts, including a 100-megawatt expansion at the Denton site.
New Facility in Auburn, Alabama: Signed a lease-to-buy agreement at the Aubix facility, currently with 11 megawatts of critical IT load.
Customer Diversification: In active discussions with new HPC customers, aiming to reduce reliance on CoreWeave to below 50% of critical IT load by 2028.
HPC Capacity Expansion: Expect to deliver approximately 250 megawatts of HPC capacity to CoreWeave by the end of 2025.
Operational Efficiency: Achieved a fleet-wide power rate of $0.04 per kilowatt hour, below target guidance.
Balance Sheet Improvement: Reduced total debt by $270 million and entered 2025 with over $830 million in cash.
Strategic M&A: Pursuing acquisitions of stabilized data center assets to enhance revenue predictability.
Focus on HPC: Shifting focus from Bitcoin mining to HPC hosting, with no further CapEx planned for Bitcoin mining in 2025.
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Risk or Challenges
Competitive Pressures: The company is experiencing heightened scrutiny from potential customers due to increased competition in the HPC market, with new entrants making ambitious capacity promises without tangible power agreements.
Regulatory Issues: The company has to navigate operational hurdles related to regulatory compliance, particularly in relation to power agreements and capacity expansions.
Supply Chain Challenges: There are potential delays in expanding HPC capacity due to the complexity of projects and the need for design enhancements, which may affect delivery timelines.
Economic Factors: The company faces economic uncertainties that could impact demand for its services, particularly in the context of fluctuating Bitcoin prices and the overall market for digital assets.
Debt Management: The company has a significant debt load of approximately $1 billion, which poses risks related to financial stability and operational flexibility.
Customer Diversification: The company aims to diversify its customer base but has not yet signed new large HPC hosting customers, which could limit growth opportunities.
Operational Hurdles: The company faced operational challenges due to the Bitcoin halving and the shutdown of mining sites to accommodate new HPC contracts.
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Guidance & Outlook
HPC Contract with CoreWeave: Signed a 16-megawatt agreement with CoreWeave, with total revenue potential of $8.7 billion over 12 years, approximately $725 million per year once fully online.
Infrastructure Expansion: Expanded HPC infrastructure capacity to over 1,300 megawatts, including a 100-megawatt expansion at the Denton site.
Customer Diversification: Active discussions with new customers to diversify HPC customer base, aiming for CoreWeave to represent less than 50% of critical IT load by 2028.
Strategic M&A: Pursuing M&A opportunities to acquire stabilized data center assets or projects with strategic customer contracts.
2025 Revenue Expectations: Expect to deliver approximately 250 megawatts of HPC capacity to CoreWeave by the end of 2025, with full 590 megawatts online by early 2027.
CapEx for HPC Expansion: Funding $1.5 million in capital expenditures per megawatt for the new agreement with CoreWeave.
Future Capacity Expansion: Aiming to add 300 megawatts of capacity across existing sites by the end of 2027 and approximately 400 megawatts of new capacity over the next three years.
Tax Rate and NOLs: Modeling a statutory effective tax rate of 22% in 2025, with over $300 million in net operating loss carry-forwards to reduce future cash taxes.
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Shareholder Return Plan
Shareholder Return Plan: Core Scientific announced a significant expansion of its relationship with CoreWeave, adding approximately 70 megawatts of critical IT load, which represents approximately $1.2 billion in additional contracted revenue over a 12-year term. The total contracted value with CoreWeave now exceeds $10 billion, covering roughly 590 megawatts of critical IT load once fully online.
Share Repurchase Program: None
Dividend Program: None
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Key Q&A
Q:Can you talk about the permitting process and what's elongating that timeline?
A:The permitting process was related to one of our sites, particularly due to additional permitting processes for the expansion and a major design adjustment for efficiency. We're past that process and confident in our current schedule.
Q:Where are you with Alabama Power? Has a feasibility study been done?
A:We have high confidence in gaining additional megawatts at the Alabama site. Capital will be deployed once we secure customer contracts, but until then, there will be limited CapEx.
Q:Can you talk about the economics of the CoreWeave expansion?
A:The rents on this deal will be the same as before, and after about two years, the contracts will look identical from a rate perspective.
Q:What milestones do you need to hit to bring CoreWeave down to less than 50% of revenue by 2028?
A:We are focused on expanding existing sites and acquiring more capacity to secure more contracts to achieve this goal.
Q:What has been the biggest challenge in finalizing data center designs?
A:Incremental design changes were required due to supply chain constraints and permitting challenges, but we have high confidence in our delivery schedules.
Q:How would you explain the potential impact if CoreWeave's contract revenues go down?
A:I can't comment specifically on CoreWeave and Microsoft, but demand for CoreWeave is significantly stronger than in 2024.
Q:Can you talk about the influence of permitting or equipment on rollout timing?
A:It's a combination of supply chain and permitting issues that resulted in delays.
Q:What is the demand dynamic for enterprise customers versus hyperscalers?
A:Enterprise customers open up more sites, and we are focused on blue-chip assets with both hyperscale and enterprise clients.
Q:What is your confidence in the long-term health of the AI Neocloud business model?
A:We have high confidence in CoreWeave's ability to deliver based on their long-term contracts.
Q:Are you seeing any changes in demand across inference and training workloads?
A:Demand is more focused on locations closer to major metropolitan areas.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the specifics of the feasibility study with Alabama Power, and the details on the potential impact of CoreWeave's contract revenues going down were vague.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Alabama Power
Alabama lease
America expansion
Atlanta market
Aubix facility
Auburn Alabama
Auburn location
Austin day
Brett Knoblauch
Briefly customer
CEO President
CEO Sullivan
Core Scientific
Denton
HPC capacity
HPC contract
HPC customer
HPC megawatt
Sterling
agreement CoreWeave
asset self
cash margin
customer base
evolution
financials
fleet power
hosting HPC
infrastructure capacity
interest rate
megawatt load
mining site
note offering
power rate
rate kilowatt
track
CORZ Transcript
Core Scientific, Inc. (CORZ) Q1 2026 Earnings Call Transcript
Positive5-6
The earnings call reveals strong financial performance with a 20% YoY revenue increase and improved gross margins. Despite the absence of strategic initiatives or operational updates, the positive financial metrics and increased net income suggest a favorable outlook. The Q&A section did not provide additional insights or concerns, maintaining a positive sentiment. The overall positive financial performance outweighs the lack of strategic updates, leading to a 'Positive' sentiment rating.
Core Scientific, Inc. (CORZ) Q4 2025 Earnings Call Transcript
Positive3-3
The earnings report shows strong financial performance with a 20% revenue increase, improved margins, and a shift from net loss to net income. These positive financial metrics outweigh the lack of strategic updates or return plans, suggesting a positive stock reaction.
Core Scientific, Inc. (CORZ) Q1 2025 Earnings Call Transcript
Unknown5-7
The earnings call reveals several negative aspects: a sequential revenue decline, negative EBITDA, and reduced Bitcoin production. Despite a strong liquidity position and potential growth opportunities, concerns about supply chain disruptions, economic factors, and competitive pressures persist. The Q&A highlights unclear responses on critical issues like credit enhancements and CapEx changes. The lack of a share repurchase program and a negative trend in financial performance overshadow the optimistic guidance, leading to a likely negative market reaction.
Core Scientific, Inc. (CORZ) Q4 2024 Earnings Call Transcript
Unknown2-26
The earnings call revealed mixed signals: a significant partnership expansion with CoreWeave and strong cash position were positive, but declining revenue and increased net losses were concerning. Q&A highlighted management's confidence in overcoming permitting and design challenges, yet some responses lacked clarity, raising uncertainties. Despite positive long-term contracts, immediate financial performance and operational hurdles suggest a neutral impact on stock price.
CORZ Slides
CORZ Report
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