Hut 8 Corp.: Form 10-Q for the period ended Mar 31, 2024
Filed with the SEC on May 15, 2024 and accepted by EDGAR at May 15, 2024, 06:45 ET.
Management's discussion and analysis
As filed, 56,027 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and the related notes and the other financial information included elsewhere in this Quarterly Report and with our audited consolidated financial statements included in our Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual business, financial condition, and results of operations could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report and in our Annual Report, particularly under “Item 1A. Risk Factors.” See also “Cautionary Statement Regarding Forward-Looking Statements.” Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Business Overview
Hut 8 is a leading, vertically integrated operator of large-scale energy infrastructure built to extract maximum value from every electron we facilitate. We acquire, design, build, manage, and operate data centers that power compute-intensive workloads such as Bitcoin mining, high performance computing, and AI.
We see incredible opportunities at the intersection of energy and infrastructure. As demand for energy increases over the coming years, we believe that building a scaled portfolio of energy infrastructure assets will create a sustainable competitive advantage for our business. Our vertically integrated model, including our ability to rapidly build new capacity and redeploy existing assets to new use cases, positions us to capture future demand as advancements in technology and the increasing demand for compute capacity necessitate significant growth in underlying energy infrastructure. We also leverage our operating scale, purpose-built technology, and sophisticated approach to energy management to drive efficiency across our business lines.
As of March 31, 2024, our energy capacity under management in our mining business totaled 884 MW across six sites in North America. Additionally, we had more than 36,000 square feet across five cloud and colocation data centers in Canada and four natural gas power generation facilities in Ontario, Canada totaling 310 MW.
Merger of USBTC and Hut 8
On February 6, 2023, USBTC, Legacy Hut, and Hut 8 entered into a business combination agreement pursuant to which, among other things, Legacy Hut and its direct wholly-owned subsidiary amalgamated to continue as Hut Amalco and both Hut Amalco and USBTC became wholly-owned subsidiaries of Hut 8 Corp.
On November 30, 2023, the Business Combination was completed and Hut 8 Corp. began trading on the Nasdaq on December 4, 2023.
Given that the Business Combination closed after the end of the quarterly period ended March 31, 2023, the information included in this Quarterly Report principally describes Hut 8’s business and operations following the closing of the Business Combination, but includes the historical financial statements of USBTC, the accounting acquirer, and related management’s discussion and analysis, which describes the business, financial condition, results of operations, liquidity and capital resources of USBTC prior to the Business Combination.
Business Segments
We have four reportable business segments: Digital Assets Mining, Managed Services, High Performance Computing — Colocation and Cloud, and Other.
Digital Assets Mining
Currently, the majority of our revenue is derived from Digital Assets Mining (also referred to as self-mining), which principally consists of mining Bitcoin. Our self-mining business spanned five sites during the three months ended March 31, 2024:
- two sites that we own: (i) Niagara Falls, New York (Alpha) and (ii) Medicine Hat, Alberta (Medicine Hat);
- two sites owned by third party hosting providers: (iii) Kearney, Nebraska (Charlie) and (iv) Granbury, Texas (Delta); and
- (v) one site in McCamey, Texas (King Mountain) that we own through a 50% joint venture (the “King Mountain JV”).
As of April 30, 2024, we are no longer self-mining at the Charlie and Delta sites. We receive digital asset mining rewards via third party mining pool operators, Foundry and Luxor. Mining pools allow us to combine our computing power with other miners, increasing the chances of solving a block and getting paid by the network. The pools distribute our pro-rata share of Bitcoin rewards based on the computing power we contribute. During the three months ended March 31, 2024 and 2023, the Bitcoin reward for solving a block was 6.25 Bitcoin. On April 19, 2024, the Bitcoin reward for solving a block was halved to 3.125 Bitcoin.
As the adoption of Bitcoin continues to grow and the market valuation of Bitcoin rises, we anticipate a surge in demand for Bitcoin, prompting the entry of new miners into the market. This influx of participants results in the increase of the Bitcoin network’s hash rate. Consequently, existing miners must scale their own hash rate to maintain a competitive edge in solving blocks and acquiring rewards. While we anticipate this trend to persist, we aim to grow our hashrate as we continue to scale our portfolio of underlying energy infrastructure.
As of March 31, 2024, including our net share of the King Mountain JV, we owned approximately 54,500 miners totaling approximately 5.5 EH/s with an average fleet efficiency of 32.4 J/TH.
Managed Services
Our Managed Services business provides to institutional partners such as digital asset mining site owners, governments, and data center developers an end-to-end partnership model for energy infrastructure development, including:
- Project inception: Site design, procurement, and construction management;
- Project operationalization: Software automation, process design, personnel hiring, and team training;
- Revenue management: Utilities contracts, hosting operations, and customer management;
- Project optimization: Energy portfolio optimization and strategic initiatives, and
- Compliance and reporting: Finance, accounting, and safety.
Under this model, partners can enter into infrastructure projects with confidence: renewable energy companies can utilize our modular data centers as a flexible load, investors can deploy capital into energy infrastructure without the need for specialized expertise in site design, construction, and operations, and site owners can monetize their assets with minimal operational requirements on their end. Meanwhile, the scalable and capital-light nature of this business allows us to generate cash flow without significant upfront capital investment while driving attractive project-level economics for our partners. Cash flows are generated through a fee structure that is typically fixed based on power capacity under management, with reimbursement of passthrough costs. In addition to the fixed fee, further cash flows may be driven from incentive bonuses and certain energy management services.
As of March 31, 2024, we managed 767 MW of infrastructure under this program across four sites in the United States, which included 400 MW owned by Marathon Digital, 280 MW owned by the King Mountain JV, and 87 MW owned by Ionic.
High Performance Computing - Colocation and Cloud
Our HPC business spans five locations in Canada (Mississauga, Ontario; Vaughan, Ontario; Kelowna, British Columbia; and two locations in Vancouver, British Columbia) with more than 36,000 square feet of geo-diverse data center space powered by predominantly emission-free energy sources. The fee structure for our HPC business is based on two models: allocation and consumption. Under the allocation model, customers pay a fixed recurring monthly fee based on a set amount of resources assigned. The consumption model for both colocation and cloud businesses is generally a function of additional consumption of compute, storage, network, or power usage above and beyond the contractual commitment. The high-density colocation services available in some of our locations position us well to support the increasing demand for power densities driven by AI and GPU requirements, along with traditional CPU performance increases. In addition to colocation services, our cloud services are a core product offering: we support public and private cloud, managed backup, business continuity and disaster as a recovery service, and high performance high-capacity storage solutions. Our infrastructure is designed to support a variety of compute, storage, and network workloads across traditional enterprise, B2B, machine learning, visual effects, and AI. The data centers are geo-diverse and carrier neutral with network diversity and redundancy from multiple telecommunications providers.
Other
Hosting
We also enter into hosting contracts to operate mining equipment on behalf of third parties within our facilities. Hosting services include the provision of mining equipment and energized space and the monitoring, troubleshooting, and repair and maintenance of customer mining equipment. Hosting services revenue is generated through fees that may be fixed or based on a profit-sharing arrangement, typically with reimbursement for passthrough costs.
As of March 31, 2024, we hosted approximately 8,500 miners (about 0.8 EH/s) at our wholly owned Alpha site, which has a total capacity of 50 MW.
Equipment sales and repairs
We may enter into equipment sale contracts when we believe there is an opportunity to generate profit from selling machines and other mining equipment. For example, reports have been released which indicate that players in the mining equipment business adjust the prices of miners according to Bitcoin mining revenues, which means there may be times where we believe miners are overvalued in relation to their projected cash flows. We may also repair miners for third parties in exchange for a fee, as we have a fully equipped, MicroBT-certified repair center space at our Medicine Hat site.
Power
We provide capacity and energy to the grid through the natural gas power plants in Ontario, Canada through the majority-owned Far North entities. The power generation facilities that are connected to the Independent Electricity System Operator, which operates Ontario’s power grid, primarily generate revenue from capacity sales. Revenue generated from electricity sales is variable and depends on several factors including but not limited to the supply and demand for electricity, generation capacity in the market, and the prevailing price of natural gas.
Joint Ventures
King Mountain JV
The King Mountain JV is a 50/50 joint venture with one of the world’s largest renewable energy producers. The King Mountain JV has 280 MW of self-mining and hosting operations colocated behind-the-meter at a wind farm in McCamey, Texas. Hut 8 acquired its 50% membership interest in December 2022 through a competitive auction process in connection with the Chapter 11 bankruptcy filing of Compute North. As part of the acquisition, Hut 8 also assumed the TZRC Secured Promissory Note.
As of March 31, 2024, the King Mountain JV owned approximately 18,000 miners for self-mining (about 1.8 EH/s) and hosted approximately 68,200 miners (about 7.8 EH/s) for Marathon Digital at its wholly owned King Mountain site, which has a total capacity of 280 MW.
We account for the King Mountain JV using the equity method of accounting, resulting in reporting the King Mountain JV as an unconsolidated joint venture. Additionally, our 50% portion of monthly distributions from the King Mountain JV are swept to pay down the TZRC Secured Promissory Note. See Note 8 and Note 9 to the consolidated financial statements found elsewhere in this Quarterly Report for additional information on the King Mountain JV and TZRC Secured Promissory Note.
Below is the condensed consolidated income statement for the King Mountain JV for the three months ended March 31, 2024 and 2023.
Condensed Consolidated Income Statement
| (in USD thousands) | | Three Months Ended March 31, 2024 | | March 31, 2023 |
|---|---|---|---|---|
| Revenues, net | | $41,194 | | $31,195 |
| Gross profit | | 21,595 | | 18,369 |
| Net income | | 5,558 | | 2,547 |
| Net income attributable to investee | | 2,779 | | 1,274 |
Our board of directors and management team also evaluate Adjusted EBITDA for the King Mountain JV, which is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before interest income, income tax, depreciation and amortization. We use Adjusted EBITDA to assess the King Mountain JV’s financial performance because it allows us to compare the operating performance on a consistent basis across periods by removing the effects of the King Mountain JV’s capital structure.
Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA. This non-GAAP financial measure should not be considered as an alternative to the most directly comparable GAAP financial measure. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in such presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in the future, and any such modification may be material. Adjusted EBITDA has important limitations as an analytical tool and you should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, our definition of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
| (in USD thousands) | | Three Months Ended March 31, 2024 | | March 31, 2023 |
|---|---|---|---|---|
| Net income | | $5,558 | | $2,547 |
| Depreciation and amortization | | 15,433 | 15,236 | |
| Interest income | | (475) | | — |
| Adjusted EBITDA | | $20,516 | | $17,783 |
Far North JV
The Far North JV is an approximately 80/20 joint venture in partnership with Macquarie. We acquired an approximately 80% membership interest in February 2024 through a stalking horse bid transaction in connection with the sale of certain assets of Validus Power Corp. and certain of its subsidiaries. The Far North JV holds certain mining and electrical equipment formerly owned by Hut 8, in addition to four natural gas power plants totaling 310 MW in Ontario, Canada, including:
- one 110 MW facility in Kingston;
- one 120 MW facility in Iroquois Falls;
- one 40 MW facility in Kapuskasing; and
- one 40 MW facility and Bitcoin mine in North Bay.
We account for the Far North JV using the acquisition method of accounting, resulting in consolidation of the Far North entities with a non-controlling interest. As of March 31, 2024, the consolidated balance sheet included the following balances from Far North:
| (in USD thousands) Assets: | | March 31, 2024 |
|---|---|---|
| Cash and cash equivalents | | $1,118 |
| Accounts receivable, net | | 3,018 |
| Deposits and prepaid expenses | | 745 |
| Property and equipment, net | | 48,486 |
| Total assets | | $53,367 |
| | | |
| Liabilities: | | |
| Accounts payable and accrued expenses | | 1,787 |
| Finance lease liability | | 25,443 |
| Total liabilities | | $27,230 |
| | | |
| Non-controlling interests | | $8,609 |
Recent Developments
Derivatives Trades
The Company entered into an ISDA Agreement with NYDIG and executed four covered call options trades for 2,125 Bitcoin during April 2024. The Bitcoin were transacted from the existing Bitcoin holdings and are being pledged as collateral with NYDIG Custody.
Key Factors Affecting Our Performance
Price of Bitcoin
We primarily mine Bitcoin, which has historically experienced significant price volatility. We record revenue upon receipt of Bitcoin at its spot price at the beginning of the day (midnight UTC time), and we have also elected to adopt ASU 2023-08, effective July 1, 2023, under which Bitcoin is revalued every reporting period at fair value with changes in fair value recognized in net income, so any fluctuations in the price of Bitcoin may impact our results of operations.
During the three months ended March 31, 2024, the price of Bitcoin ranged from $39,600 to $73,100. During the three months ended March 31, 2023, the price of Bitcoin ranged from $16,600 to $28,500.
Bitcoin network difficulty and hashrate
Bitcoin network difficulty, which varies directly with Bitcoin network hashrate, directly affects the results of our operations. We define Bitcoin network difficulty, multiplied by two to the thirty-second power (difficulty * 2˄32), as the measure of how many SHA-256d hashes, on average, are required to record a new block on the Bitcoin blockchain. The Bitcoin protocol is designed such that one block is generated, on average, every 10 minutes, no matter how much hashrate is on the network. To keep the time interval between blocks fixed at 10 minutes, the Bitcoin network adjusts its “network difficulty” every 2,016 blocks (or roughly every two weeks) such that the average number of SHA-256d hashes needed to find a new block is normalized at 10 minutes based on the time interval between blocks for the last 2,016 blocks.
For example, as Bitcoin network hashrate increases, the time interval between new blocks decreases. The Bitcoin network will then adjust its difficulty upward to require more hashes, on average, to record a new block. Network difficulty is an integer.
Average network difficulty and average network hashrate were 77.4T and 553.9 EH/s, respectively, for the three months ended March 31, 2024, compared to 40.1T and 287.0 EH/s, respectively, for the three months ended March 31, 2023.
Block reward and halving
During the three months ended March 31, 2024 and 2023, the Bitcoin reward for solving a block was 6.25 Bitcoin. Since April 2024, the Bitcoin reward for solving a block has decreased to 3.125 Bitcoin. The Bitcoin network is programmed such that the Bitcoin block reward is halved every 210,000 blocks mined, or approximately every four years (the “Halving”). This reduction in reward spreads out the release of Bitcoin over a long period of time as an ever smaller number of coins are mined with each Halving. The maximum supply of Bitcoin is 21,000,000 Bitcoin, which is projected to be fully mined around the year 2140.
Bitcoin Halving events impact the amount of Bitcoin we mine which, in turn, may have a potential impact on our results of operations. The last Halving occurred in April 2024 and the next Halving is expected to occur in March 2028.
Key Performance Indicators
In addition to our financial results and non-GAAP financial measures, we use certain key performance indicators to evaluate our business, identify trends, and make strategic decisions.
The following table presents our key performance indicators for the three months ended March 31, 2024 and 2023.
| | | Three Months Ended March 31, 2024 | | 2023 |
|---|---|---|---|---|
| Cost to mine a Bitcoin (excluding hosted facilities)(1) | | $20,419 | | $9,072 |
| Cost to mine a Bitcoin(2) | | $24,594 | | $12,348 |
| Weighted average revenue per Bitcoin mined(3) | | $51,769 | | $23,106 |
| Bitcoin mined(4) | | 716 | | 524 |
| Energy cost per MWh | | $40.06 | | $34.76 |
| Hosting cost per MWh | | $68.72 | | $64.23 |
| Energy capacity under management | | 884 MW | | 772 MW |
(1) Cost to mine a Bitcoin (excluding hosted facilities) is equivalent to the all-in electricity cost to mine a Bitcoin at owned facilities and includes our net share of the King Mountain JV.
(2) Cost to mine a Bitcoin (or weighted average cost to mine a Bitcoin) is calculated as the sum of total all-in electricity expense and hosting expense divided by Bitcoin mined during the respective periods and includes our net share of the King Mountain JV.
(3) Weighted average revenue per Bitcoin mined is calculated as the sum of total self-mining revenue divided by Bitcoin mined during the respective periods and includes our net share of the King Mountain JV; it excludes our discontinued operations at Drumheller, Alberta.
(4) Bitcoin mined includes our net share of the King Mountain JV and excludes our discontinued operations at Drumheller, Alberta. Bitcoin mined excluding our net share of the King Mountain JV was 592 and 326 for the three months ended March 31, 2024 and 2023, respectively.
Cost to mine a Bitcoin
Our profitability in self-mining is heavily dependent upon our cost to mine a Bitcoin, calculated as all-in electricity and hosting costs divided by Bitcoin mined during the respective periods and includes our net share of the King Mountain JV. Our management reviews the cost to mine a Bitcoin excluding hosted facilities and inclusive of hosted facilities.
Our cost to mine a Bitcoin (excluding hosted facilities) for the three months ended March 31, 2024 was $20,419 compared to $9,072 for the three months ended March 31, 2023. The increase was primarily driven by an increase in average network difficulty during the period (77.4T versus 40.1T for the three months ended March 31, 2024 and 2023, respectively) and also due to an increase in our energy cost per MWh (see below for further discussion on energy cost per MWh).
Inclusive of hosted facilities, our cost to mine a Bitcoin for the three months ended March 31, 2024 was $24,594 compared to $12,348 for the three months ended March 31, 2023. In addition to the drivers mentioned above, our hosting cost per MWh increased due to a higher variable hosting rate that is tied to hashprice.
Energy and hosting cost per MWh
In addition to the cost to mine a Bitcoin, our management reviews the energy cost per MWh at facilities we own and hosting cost per MWh at hosted facilities. Energy cost per MWh is calculated by dividing our total energy expense by the total MWh utilized at owned facilities during the respective periods and includes our net share of the King Mountain JV. Hosting cost per MWh is calculated by dividing our total hosting expense by the total MWh utilized at hosted facilities during the respective periods.
Energy cost per MWh for the three months ended March 31, 2024 was $40.06 compared to $34.76 for the three months ended March 31, 2023. The current quarter reflects three months of combined company self-mining activity at our Alpha, Medicine Hat, and King Mountain sites while the prior quarter reflects three months of USBTC’s self-mining activity at our Alpha and King Mountain sites. The weighted average increase was driven by slightly higher energy costs at our Medicine Hat site, acquired as part of the Business Combination, compared to our King Mountain site, which made up the majority of our self-mining activity in the prior quarter.
Hosting cost per MWh for the three months ended March 31, 2024 was $68.72 compared to $64.23 for the three months ended March 31, 2023. The increase was due to a higher variable hosting rate (tied to hashprice) at the Charlie and Delta sites during the current quarter compared to the prior quarter. As of April 30, 2024, we are no longer self-mining at the Charlie and Delta sites.
Bitcoin mined
Bitcoin mined represents the number of Bitcoin we mined during the respective periods and includes our net share of the King Mountain JV. Our management looks at this metric as it directly impacts our Digital Assets Mining segment and King Mountain JV for the respective periods.
Bitcoin mined for the three months ended March 31, 2024 and 2023 was 716 (excluding Bitcoin mined at the Drumheller site) and 326, respectively. The increase in Bitcoin mined was primarily due to the addition of Legacy Hut miners from the Business Combination, partially offset by an increase in average network difficulty during the period (77.4T versus 40.1T for the three months ended March 31, 2024 and 2023, respectively).
Energy capacity under management
Energy capacity under management includes the energy capacity of our self-mining and hosting infrastructure, as well as the energy capacity of the sites that we manage for our clients under the Managed Services line of business.
Energy capacity under management for the three months ended March 31, 2024 was 884 MW compared to 772 MW for the three months ended March 31, 2023. The increase was due to the addition of Medicine Hat, a 67 MW self-mining facility that we own, as a result of the Business Combination, and the addition of an 87 MW digital assets mining facility owned by Ionic, due to the signing of a four-year agreement with our Managed Services business, partially offset by the transition of a previously managed site totaling 42 MW in Pecos, Texas.
Further details on our cost of mining and our energy and hosting costs are shown in the table below.
| Cost of mining - analysis of costs to mine a Bitcoin Cost of mining - owned facilities and net share of the King Mountain JV | | Three Months Ended March 31, 2024 | 2023 |
|---|---|---|---|
| All-in electricity cost per Bitcoin mined | | $20,419 | 9,072 |
| | | | |
| Cost of mining - hosted facilities | | | |
| Hosting cost per Bitcoin mined | | $28,786 | $16,314 |
| | | | |
| Weighted average cost to mine a Bitcoin | | $24,594 | $12,348 |
| Weighted average revenue per Bitcoin mined | | $51,769 | $23,106 |
| Gross margin per Bitcoin mined(1) | | 52.5% | 46.6% |
| | | | |
| Statistics | | | |
| Self-Mining | | | |
| Owned facilities and net share of the King Mountain JV | | | |
| Total Bitcoin mined | | 359 | 287 |
| Bitcoin mining revenue - (in thousands) | | $19,103 | $6,386 |
| Total MWhs utilized | | 182,903 | 74,833 |
| Total all-in electricity expense - (in thousands) | | $7,327 | $2,601 |
| Energy cost per MWh | | $40.06 | $34.76 |
| Average revenue per Bitcoin mined | | $53,236 | $22,271 |
| Gross margin(2) | | 61.6% | 59.3% |
| | | | |
| Hosted Facilities | | | |
| Total Bitcoin mined | | 357 | 237 |
| Bitcoin mining revenue - (in thousands) | | $17,973 | $5,713 |
| Total MWhs utilized | | 149,688 | 60,171 |
| Total hosting expense - (in thousands) | | $10,286 | $3,865 |
| Hosting cost per MWh | | $68.72 | $64.23 |
| Average revenue per Bitcoin mined | | $50,295 | $24,117 |
| Gross margin(2) | | 42.8% | 32.4% |
(1) Gross margin per Bitcoin mined is calculated as weighted average revenue per Bitcoin mined less weighted average cost to mine a Bitcoin, divided by weighted average revenue per Bitcoin mined.
(2) Gross margin is calculated as Bitcoin mining revenue less total all-in electricity expense or total hosting expense, divided by Bitcoin mining revenue.
Key Components of our Results of Operations
We have organized our operations into four reportable segments: Digital Assets Mining, Managed Services, HPC, and Other. These segments reflect the way we evaluate our business performance and manage our operations.
Revenue
We derive revenue from our four business segments: Digital Assets Mining, Managed Services, HPC, and Other. For additional information on how we recognize revenue in each of these segments, please see “—Critical Accounting Policies and Estimates”.
Digital Assets Mining
We principally mine Bitcoin, so the majority of our Digital Assets Mining revenue is derived from the service of providing hashrate to mining pools in exchange for our share of the block reward and transaction fees, less any mining pool fees charged by the mining pool operator. We record revenue upon receipt of Bitcoin at its spot price at the beginning of the day (midnight UTC time), as determined by our principal market, which is Coinbase Prime. Bitcoin’s spot price may fluctuate on a daily basis, which impacts the amount of revenue recorded.
Managed Services
Managed Services revenue is derived from fixed monthly management fees based on power capacity of the customer’s data center, plus the reimbursement of certain operating costs, which vary each month. We may also be entitled to a share of additional hosting services revenue we help generate for the customer, and further cash flows may be driven from other incentive bonuses and certain energy management services.
High Performance Computing – Colocation and Cloud
Our HPC business earns revenue by providing colocation, cloud, and connectivity services to clients in exchange for a fee. The fee structure is based on two models: allocation and consumption. Under the allocation model, customers pay a fixed recurring monthly fee based on a set amount of resources assigned. The consumption model is generally a function of additional consumption of compute, storage, network or power usage above and beyond the contractual commitment.
Other
Other revenue may include: (i) hosting service fees that may be fixed or based on a profit-sharing arrangement, typically with reimbursement of passthrough costs, (ii) equipment sales, (iii) equipment repair revenue from repairing machines owned by third parties, and (iv) power revenues.
Cost of revenue
Digital Assets Mining
Included in cost of revenue for Digital Assets Mining are power costs inclusive of curtailment credits, hosting expense, facility labor costs, occupancy costs, and all repair and maintenance expenses including facility infrastructure and miners.
Managed Services
Cost of revenue for Managed Services primarily consists of passthrough costs for expenses paid by us that are reimbursed by our customers on top of our managed services fee. These typically include facility labor costs, allocated corporate labor costs, and all repair and maintenance expenses including facility infrastructure and miners.
High Performance Computing – Colocation and Cloud
Included in cost of revenue for HPC are energy costs, network management costs, third party license fees, labor costs, repair and maintenance of HPC equipment, and facility costs.
Other
Other cost of revenue may include passthrough costs for hosted customers, cost of equipment sold, cost of equipment repair for third parties, and cost of power revenues.
Depreciation and amortization
Our depreciation expense consists mainly of depreciation for mining equipment and assets related to our HPC operations. As miners are received and put into service, amounts reflected as deposits are transferred to property and equipment and depreciation commences. Depreciation expense also includes an immaterial amount of depreciation for other property and equipment not directly associated with our mining or HPC activities. We capitalize the cost of our miners and record depreciation expense on a straight-line basis over the estimated useful life of the machines, which is generally four years. See Note 2. Basis of presentation, summary of significant accounting policies and recent accounting pronouncements – Property and equipment in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on estimated useful lives.
General and administrative expenses
General and administrative expenses include, but are not limited to, payroll, stock-based compensation, legal fees, professional fees, non-refundable sales taxes, contracted services, security services, investor relations and shareholder costs, and insurance premiums.
Gains on digital asset and realized gain on sale of digital assets
We adopted ASU No. 2023-08, *Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“*ASU 2023-08”), effective July 1, 2023, under which Bitcoin is revalued every reporting period at fair value with changes in fair value recognized in net income. We regularly exchange our newly mined Bitcoin for fiat currency to fund operating expenses.
Other income (expense)
Other income (expense) includes foreign exchange gain (loss), interest expense, and equity in earnings of unconsolidated joint venture. Equity in earnings of unconsolidated joint venture is primarily attributed to our 50% share of the King Mountain JV’s net income or loss. See “—Joint Ventures—King Mountain JV” for additional information on the King Mountain JV.
Income tax benefit (provision)
Our provision for income taxes consists of U.S. deferred federal taxes. A valuation allowance is recorded against substantially all of our net deferred tax assets, which are composed primarily of federal and state net operating loss carryforwards, stock-based compensation, non-goodwill intangibles, investments in joint ventures, and lease liabilities; in addition, we have deferred tax liabilities resulting from our derivative and right-to-use assets. Our ability to offset our deferred tax liabilities with our deferred tax assets is limited due to restrictions on the ability to offset taxable income by more than eighty percent with federal net operating losses. As a result, we have recorded a deferred tax liability for the expected amount of future taxable income that is not covered by net operating losses. We evaluate our ability to recognize our deferred tax assets annually by considering all positive and negative evidence available as prescribed by the FASB under its general principles of ASC 740, Income Taxes.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we rely on Adjusted EBITDA to evaluate our business, measure our performance, and make strategic decisions. Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation and amortization, further adjusted by the removal of non-recurring transactions, depreciation and amortization embedded in the equity in earnings (losses) from an unconsolidated joint venture, foreign exchange gains or losses, the impairment of long-lived assets, net income (loss) attributable to noncontrolling interest, and stock-based compensation expense in the period presented. You are encouraged to evaluate each of these adjustments and the reasons our Board and management team consider them appropriate for supplemental analysis.
Our Board and management team use Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense and income), asset base (such as depreciation and amortization), and other items (such as non-recurring transactions mentioned above) that impact the comparability of financial results from period to period.
Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in such presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in the future, and any such modification may be material. Adjusted EBITDA has important limitations as an analytical tool and you should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, our definition of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
For a reconciliation to Hut 8’s most directly comparable financial measure calculated and presented in accordance with GAAP, please see “—Results of Operations” below.
Results of Operations
Three Months Ended March 31, 2024 and 2023
| (in USD thousands) Revenue: | | Three Months Ended March 31, 2024 | | 2023 | | Increase (Decrease) |
|---|---|---|---|---|---|---|
| Digital Assets Mining | | $30,357 | $7,646 | | $22,711 | |
| Managed Services | | 9,235 | | 5,527 | | 3,708 |
| High Performance Computing – Colocation and Cloud | | 3,326 | | — | | 3,326 |
| Other | | 8,823 | | 2,474 | | 6,349 |
| Total revenue | | 51,741 | 15,647 | | 36,094 | |
| | | | | | | |
| Cost of revenue (exclusive of depreciation and amortization shown below): | | | | | | |
| Cost of revenue - Digital Assets Mining | | 16,622 | | 6,079 | | 10,543 |
| Cost of revenue - Managed Services | | 2,761 | | 2,383 | | 378 |
| Cost of revenue - High Performance Computing – Colocation and Cloud | | 2,589 | | — | | 2,589 |
| Cost of revenue - Other | | 6,175 | | 45 | | 6,130 |
| Total cost of revenue | | 28,147 | | 8,507 | | 19,640 |
| | | | | | | |
| Operating expenses: | | | | | | |
| Depreciation and amortization | | 11,472 | | 2,904 | | 8,568 |
| General and administrative expenses | | 19,999 | | 6,375 | | 13,624 |
| Gains on digital assets | | (274,574) | — | | (274,574) | |
| (Gain) loss on sale of property and equipment | | (190) | | 445 | | (635) |
| Realized gain on sale of digital assets | | — | | (1,372) | | 1,372 |
| Impairment of digital assets | | — | | 563 | | (563) |
| Total operating (income) expenses | | (243,293) | | 8,915 | | (252,208) |
| Operating income (loss) | | 266,887 | | (1,775) | | 268,662 |
| | | | | | | |
| Other (expense) income: | | | | | | |
| Foreign exchange loss | | (2,399) | | — | | (2,399) |
| Interest expense | | (6,281) | | (7,575) | | 1,294 |
| Gain on debt extinguishment | | — | | 23,683 | | (23,683) |
| Equity in earnings of unconsolidated joint venture | | 4,522 | 3,284 | | 1,238 | |
| Total other (expense) income | | (4,158) | 19,392 | | (23,550) | |
| | | | | | | |
| Income from continuing operations before taxes | | 262,729 | | 17,617 | | 245,112 |
| | | | | | | |
| Income tax provision | | (4,396) | | (289) | | (4,107) |
| | | | | | | |
| Net income from continuing operations | | $258,333 | | $17,328 | | $241,005 |
| | | | | | | |
| Loss from discontinued operations | | (7,626) | | — | | (7,626) |
| | | | | | | |
| Net income | | 250,707 | | 17,328 | | 233,379 |
| Less: Net loss attributable to non-controlling interests | | 169 | | — | | 169 |
| Net income attributable to Hut 8 Corp. | | $250,876 | | $17,328 | | $233,548 |
| | | | | | | |
| Net income | | $250,707 | | $17,328 | | $233,379 |
| Other comprehensive loss: | | | | | | |
| Foreign currency translation adjustments | | (11,074) | | — | | (11,074) |
| Total comprehensive income (loss) | | 239,633 | | 17,328 | | 222,305 |
| Less: Comprehensive loss attributable to non-controlling interest | | 134 | | — | | 134 |
| Comprehensive income attributable to Hut 8 Corp. | | $239,767 | | $17,328 | | $222,439 |
Adjusted EBITDA reconciliation:
| (in USD thousands) | | Three Months Ended March 31, 2024 | | 2023 | | Increase (Decrease) |
|---|---|---|---|---|---|---|
| Net income | | $250,707 | | $17,328 | | $233,379 |
| Interest expense | | 6,281 | | 7,575 | | (1,294) |
| Income tax provision | | 4,396 | | 289 | | 4,107 |
| Depreciation and amortization | | 11,472 | | 2,904 | | 8,568 |
| Gain on debt extinguishment | | — | | (23,683) | | 23,683 |
| Share of unconsolidated joint venture depreciation and amortization (1) | | 5,349 | | 5,252 | | 97 |
| Foreign exchange loss | | 2,399 | | — | | 2,399 |
| (Gain) loss on sale of property and equipment | | (190) | | 445 | | (635) |
| Non-recurring transactions (2) | | 4,300 | | — | | 4,300 |
| Loss from discontinued operations | | 7,626 | | — | | 7,626 |
| Net loss attributable to non-controlling interests | | 169 | | — | | 169 |
| Stock-based compensation expense | | 4,474 | | 1,034 | | 3,440 |
| Adjusted EBITDA | | $296,983 | | $11,144 | | $285,839 |
(1) Net of the accretion of fair value differences of depreciable and amortizable assets included in equity in earnings of unconsolidated joint venture in the Consolidated Statements of Operations and Comprehensive Income (Loss) in accordance with ASC 323. See Note 8. Investment in unconsolidated joint venture of our Unaudited Condensed Consolidated Financial Statements for further detail.
(2) Non-recurring transactions for the three months ended March 31, 2024 represent approximately $1.4 million of transaction costs related to the Far North acquisition and $2.9 million related to restructuring cost.
Revenue
Total revenue for the three months ended March 31, 2024 and 2023 was $51.7 million and $15.6 million, respectively, and consisted of Digital Assets Mining, Managed Services, HPC, and Other.
Digital Assets Mining
Digital Assets Mining revenue was $30.4 million and $7.6 million for the three months ended March 31, 2024 and 2023, respectively. This was driven by an increase in the average price of Bitcoin in the current quarter versus the prior year quarter and the inclusion of the Medicine Hat site from the Business Combination. The average price per Bitcoin mined was about $51,300 during the three months ended March 31, 2024 compared to about $23,400 during the three months ended March 31, 2023. Bitcoin mined for the three months ended March 31, 2024 and March 31, 2023 was 592 (excluding the Bitcoin mined at Drumheller) and 326, respectively.
Managed Services
Managed Services revenue was $9.2 million for the three months ended March 31, 2024, consisting of $6.9 million in management fees, $1.4 million in cost reimbursements, and $0.9 million in the form of customer equity. Managed Services revenue was $5.5 million for the three months ended March 31, 2023, consisting $2.9 million in fees and $2.6 million in cost reimbursements. The increase was primarily driven by management fees related to the four-year agreement signed at the end of January 2024 with Ionic.
High Performance Computing – Colocation and Cloud
HPC revenue was $3.3 million and nil for the three months ended March 31, 2024 and 2023, respectively. The revenue for the three months ended March 31, 2024 represents three months of combined company activity in connection with the Business Combination and consists of recurring revenue from small and medium enterprises predominantly domiciled in Canada.
Other
Other revenue was $8.8 million and $2.5 million for the three months ended March 31, 2024 and 2023, respectively. Other revenue for the three months ended March 31, 2024 consisted of $3.7 million in equipment sales, $2.6 million in hosting cost reimbursements, $1.8 million in hosting services revenue, and $0.7 million in power revenues from our natural gas power plants that were acquired as part of Far North JV. Other revenue for the three months ended March 31, 2023 consisted primarily of hosting services revenue. During the three months ended March 31, 2023, we recognized deferred revenue on a hosting contract that was terminated at a previously owned site in Pecos, Texas.
Cost of revenue
Digital Assets Mining
Cost of revenue for Digital Assets Mining for the three months ended March 31, 2024 and 2023 was $16.6 million and $6.1 million, respectively, driven primarily by an increase in electricity costs and hosting costs from additional miners online. The three months ended March 31, 2024 includes three months of costs at the Medicine Hat site, which was acquired as a result of the Business Combination, and nearly three months of costs at the Charlie and Delta sites, versus less than one month of costs at those sites for the prior year period.
Managed Services
Cost of revenue for Managed Services for the three months ended March 31, 2024 and 2023 was $2.8 million and $2.4 million, respectively. The $0.3 million increase was primarily driven by a $0.8 million increase in reimbursable payroll costs offset by a $0.5 million decrease in other site operating costs.
High Performance Computing – Colocation and Cloud
Cost of revenue for HPC for the three months ended March 31, 2024 and 2023 was $2.6 million and nil, respectively. The cost of revenue reflects three months of activity in connection with the newly acquired HPC business from the Business Combination.
Other
Cost of revenue for Other for the three months ended March 31, 2024 was $6.2 million and consisted primarily of $3.3 million in cost of hosting services revenue, of which $3.2 million is electricity costs, $2.0 million in cost of equipment sold, and $0.9 million in cost of power revenues. Cost of revenues for Other for the three months ended March 31, 2023 was less than $0.1 million and consisted primarily of cost of hosting services revenue.
Depreciation and amortization
Depreciation and amortization expense was $11.5 million and $2.9 million for the three months ended March 31, 2024 and 2023, respectively. The increase was primarily driven by property and equipment acquired as part of the Business Combination and an increase in the number of miners at the US sites. Additionally, during the quarter ended March 31, 2024, management performed an operational efficiency review of its mining equipment following the Bitcoin network halving. The outcome was a change in the expected useful life of the Company’s MicroBT M31S and M31S+ and Canaan Avalon servers. The mining equipment was originally estimated to have a useful life of four years from the date the mining equipment was put into service. After the operational efficiency review, the mining equipment was estimated to have a useful life of five months as of January 1, 2024. The result is a change in estimate and applied prospectively, which increased depreciation expense by $2.7 million for the three months ended March 31, 2024.
General and administrative expenses
General and administrative (“G&A”) expenses were $20.0 million and $6.4 million for the three months ended March 31, 2024 and 2023, respectively. The increase in G&A expenses was driven by: (i) a $3.4 million increase in stock-based compensation, (ii) $2.9 million in restructuring costs, (iii) a $2.7 million increase in salary and benefit costs due to added headcount as part of the Business Combination and to support our growth, (iv) a $2.1 million increase in other G&A expenses related to additional headcount and cost centers acquired as part of the Business Combination, (v) $1.4 million in expenses related to the Far North transaction, and (vi) a $1.1 million increase in insurance expenses.
Gains on digital asset
Gains on digital asset was $274.6 million and nil for the three months ended March 31, 2024 and 2023, respectively. The increase, which primarily consists of increases in the market value of our Bitcoin, was due to our decision to adopt ASU 2023-08, effective July 1, 2023, which requires us to recognize our digital assets at fair value with changes recognized in net income during the reporting period. The price of Bitcoin on December 31, 2023 was $42,288 compared to the price of Bitcoin on March 31, 2024 of $71,289, such that the increase in Bitcoin price during the quarter resulted in the significant gain of $274.6 million.
Other (expense) income
Other expense totaled $4.2 million for the three months ended March 31, 2024 compared to other income of $19.4 million for the three months ended March 31, 2023. The decrease of $23.6 million was primarily due to gain on debt extinguishment of nil compared to $23.7 million during the three months ended March 31, 2024 and 2023, respectively. We restructured our NYDIG debt in February 2023. This was partially offset by increase in equity in earnings of an unconsolidated joint venture of $1.2 million during the quarter ended March 31, 2024 compared to the quarter ended March 31, 2023.
Income tax
Our income tax provision was $4.4 million for the three months ended March 31, 2024 compared to $0.3 million for the three months ended March 31, 2023. The decrease in income tax provision was primarily due to higher taxable income for the three months ended March 31, 2024 compared to prior period.
Loss from discontinued operations
Loss from discontinued operations was $7.6 million and nil for the three months ended March 31, 2024 and 2023, respectively. On March 6, 2024, we announced the closure of our Drumheller site in Alberta, Canada in connection with restructuring and optimization initiatives designed to strengthen financial performance. Of the $7.6 million loss, the impairment of the long term assets contributed $6.1 million and the remaining $1.5 million loss was from other operational activities.
Adjusted EBITDA
Adjusted EBITDA was $297.0 million and $11.1 million for the three months ended March 31, 2024 and 2023, respectively. The increase was primarily driven by the $274.6 million fair value gain on digital assets, higher average price per Bitcoin mined, and additional profitable revenue from Managed Services.
Liquidity and Capital Resources
Our earnings and ability to meet any debt obligations will depend on the cash flows resulting from our operations. Our cash needs historically were primarily for growth through acquisitions and working capital to support equipment financing and the purchase of additional miners. Cash needs for operations have historically been financed with cash generated from operations, sales of our mined Bitcoin or financings. Our strategy is primarily to sell new Bitcoin mined and we intend to leverage our current inventory of Bitcoin to take advantage of upside potential if Bitcoin’s value increases over time.
We believe that the cash flows generated from operating activities will meet our anticipated cash requirements in the short-term. On a long-term basis, we would rely on either our access to the capital markets or our open term revolving credit facility for any long-term funding not provided by operating cash flows and cash on hand.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
| (in USD thousands) | | Three Months Ended March 31, 2024 | | March 31, 2023 |
|---|---|---|---|---|
| Cash flows (used in) provided by operating activities | | $(26,343) | | $1,463 |
| Cash flows provided by investing activities | | 23,325 | | 6,233 |
| Cash flows (used in) financing activities | | (14,647) | | (5,733) |
Operating Activities
Net cash (used in) provided by operating activities was ($26.3) million and $1.5 million for the three months ended March 31, 2024 and 2023, respectively.
Net cash used in operating activities for the three months ended March 31, 2024 resulted from net income and related adjustments of $13.4 million in addition to unfavorable changes in working capital of $12.9 million. Net cash provided by operating activities for the three months ended March 31, 2023 resulted from a net loss and related adjustments of $2.4 million offset by favorable changes in working capital of $5.5 million.
Investing Activities
Net cash provided by investing activities was $23.3 million and $6.2 million for the three months ended March 31, 2024 and 2023, respectively. Cash increases for the three months ended March 31, 2024 were primarily due to $37.9 million in proceeds from the sale of Bitcoin, $4.2 million in proceeds from the sale of property and equipment, and $1.1 million in cash acquired from the Far North acquisition, offset by $13.5 million in purchases of property and equipment related to a new site buildout and $6.4 million from our investment in Ionic. Cash increases for the three months ended March 31, 2023 were primarily due to $8.1 million in proceeds from the sale of Bitcoin, offset by $1.0 million in deposits on miners and $0.9 million in purchases of property and equipment.
Financing Activities
Net cash used in financing activities was $14.6 million and $5.7 million for the three months ended March 31, 2024 and 2023, respectively. Cash used in financing activities for the three months ended March 31, 2024 was primarily due to $29.4 million in repayment of notes payable, partially offset by $14.8 million in proceeds from the Coinbase loan. Cash used for the three months ended March 31, 2023 was primarily due to $4.5 million in repayment of notes payable and $1.2 million in debt issuance costs paid.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, each as of the date of the consolidated financial statements, and revenues and expenses during the periods presented. On an ongoing basis, our management evaluates these estimates and assumptions, and the effects of any such revisions are reflected in the consolidated financial statements in the period in which they are determined to be necessary. Actual outcomes could differ materially from those estimates in a manner that could have a material effect on our consolidated financial statements.
Set forth below are the policies and estimates that we have identified as critical to our business operations and understanding our results of operations, based on the high degree of judgment utilized or complexity in their application.
- Use of estimates
- Digital assets
- Revenue from contracts with customers
- Impairment of long-lived assets
- Investment in equity investees
- Finite-lived intangible assets
- Stock based compensation expense
See Note 2. Basis of presentation, summary of significant accounting policies and recent accounting pronouncements to our unaudited condensed consolidated financial statements found elsewhere in this Quarterly Report for more detail on these accounting policies and estimates.
Market risk
As filed, 2,489 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Market Price Risk of Bitcoin
We hold a significant amount of Bitcoin; therefore, we are exposed to the impact of market price changes in Bitcoin on our Bitcoin holdings.
As of March 31, 2024, we held 9,102 Bitcoin and the fair value of a single Bitcoin was approximately $71,300. Therefore, the fair value of our Bitcoin holdings as of March 31, 2024 was approximately $648.9 million. Declines in the fair market value of Bitcoin will impact the cash value that would be realized if we were to sell our Bitcoin for cash, therefore having a negative impact on our liquidity.
Interest Rate Risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Our exposure to interest rate risk relates to our ability to earn interest income on cash balances denominated in foreign currency at variable rates. Changes in short term interest rates will not have a significant effect on the fair value of our cash account.
In addition, we have two loans that maintain a variable interest rate. The first is the TZRC Secured Promissory Note, which includes a maximum interest rate of 15.25%. The second is the Coinbase credit facility, which bears interest at a rate of 5.0% plus the greater of (i) the US Federal Funds Target Rate – Upper Bound and (ii) 3.25%. As a result, changes in the market interest rate could have an effect on our operations over certain periods. As of March 31, 2024, the interest rate on the TZRC Secured Promissory Note was 15.25%, the maximum interest rate. As of March 31, 2024, the interest rate on the Coinbase credit facility was 10.50%. Based on the outstanding balance of the Coinbase credit facility as of March 31, 2024, for every 100 basis point increase in the US Federal Funds Target Rate - Upper Bound, we would incur approximately $0.7 million of additional annual interest expense. We currently do not hedge interest rate exposure. We may in the future hedge our interest rate exposure and may use swaps, caps, collars, structured collars or other common derivative financial instruments to reduce interest rate risk. It is difficult to predict the effect that future hedging activities would have on our operating results.
For more information regarding the TZRC Secured Promissory Note and Coinbase credit facility, see Note 9. Loans payable to the unaudited condensed consolidated financial statements found elsewhere in this Quarterly Report.
Controls and procedures
As filed, 1,629 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of Hut 8’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act and regulations promulgated thereunder) as of March 31, 2024. Based on this evaluation, our management concluded that our disclosure controls and procedures were effective as of March 31, 2024. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls, and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow for timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the three months ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Risk factors
As filed, 1,309 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
As of the date of this Quarterly Report, there have been no material changes from the risk factors set forth in Part I, Item IA of our Annual Report. We are subject to various risks and uncertainties that could materially adversely affect our business, financial condition, operating results and the trading price of our common stock. You should carefully read and consider the risks and uncertainties included in the Annual Report, together with all of the other information in the Annual Report and this Quarterly Report, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, and other documents that we file with the U.S. Securities and Exchange Commission (the “SEC”). The risks and uncertainties described in these reports may not be the only ones we face. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. The factors discussed in these reports, among others, could cause our actual results to differ materially from historical results and those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors, and oral statements.
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2024-03-31. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Revenue | 3 months2024-01-01 to 2024-03-31 | $51.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months2024-01-01 to 2024-03-31 | $28.1m | us-gaap:CostOfRevenue |
| Operating income | 3 months2024-01-01 to 2024-03-31 | $266.9m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months2024-01-01 to 2024-03-31 | $6.3m | us-gaap:InterestExpense |
| Income tax | 3 months2024-01-01 to 2024-03-31 | $4.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months2024-01-01 to 2024-03-31 | $250.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months2024-01-01 to 2024-03-31 | $2.76 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months2024-01-01 to 2024-03-31 | $2.90 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months2024-01-01 to 2024-03-31 | 93,696,683 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months2024-01-01 to 2024-03-31 | −$26.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | At period end2024-03-31 | $11.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | At period end2024-03-31 | $33.5m | us-gaap:AssetsCurrent |
| Total assets | At period end2024-03-31 | $999.0m | us-gaap:Assets |
| Current liabilities | At period end2024-03-31 | $108.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | At period end2024-03-31 | $258.4m | us-gaap:Liabilities |
| Long-term debt | At period end2024-03-31 | $110.6m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | At period end2024-03-31 | $67.0m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | At period end2024-03-31 | $732.0m | us-gaap:StockholdersEquity |
Source: SEC EDGAR, the filing index for accession 0001558370-24-008203. Last ingested by Listed: Nov 4, 2026, 07:17 ET. Listed shows no prices and gives no investment advice.