Hut 8 (HUT) Q2 2024 earnings summary

Executive summary

• Revenue grew 72% year-over-year to $35.2 million for Q2 2024, reflecting the combined company's performance post-merger and growth across digital asset mining, managed services, and high-performance computing.

• Net loss was $71.9 million, primarily due to a $71.8 million loss on digital assets from Bitcoin price decline and new FASB fair value rules.

• Adjusted EBITDA was a loss of $57.5 million, compared to income of $14.8 million in the prior year, mainly due to digital asset losses.

• Closed a $150 million strategic investment from Coatue to accelerate AI infrastructure and energy platform expansion.

• Completed a merger with US Bitcoin Corp, with Q2 2024 results reflecting the combined entity's performance.

Financial highlights

• Digital asset mining revenue declined to $13.9 million from $15.9 million year-over-year due to the Bitcoin halving and increased network difficulty.

• Managed services revenue rose to $9 million, driven by management fees from Ionic Digital and new agreements.

• High-performance computing, colocation, and cloud revenue was $3.4 million, with no prior year comparison.

• Other revenue reached $8.9 million, including equipment sales, hosting, and power revenues.

• Cost of revenue for digital asset mining dropped to $7.5 million, with gross margin improving to 46% from 34% year-over-year.

• Depreciation and amortization increased to $11.5 million, and SG&A rose to $17.9 million, mainly due to merger-related headcount and stock-based compensation.

• Other income was $14.4 million, mainly from a $17.2 million unrealized gain on derivatives.

Outlook and guidance

• AI and high-performance computing revenue expected to begin in Q3 2024 as GPU-as-a-service vertical launches.

• Ongoing discussions for large-scale partnerships and fleet upgrades, with a focus on disciplined capital allocation and maximizing shareholder value.

• Continued expansion of power infrastructure and exahash growth planned, including a new 205 MW site in the Texas Panhandle.

• Management expects continued volatility in Bitcoin prices and network difficulty, impacting mining economics.