Joseph Vafi

Joseph Vafi from Canaccord Genuity inquired about IREN's line of sight on achieving its annualized revenue run rate (ARR) target for the year, the potential for prepayments from other customer ramps to fund GPU buys, and the thought process behind pulling the trigger on some of the Sweetwater capacity given its upcoming energization.

Answer

Kent Draper, CCO, detailed the ramp for Prince George, Mackenzie, Canal Flats, and Microsoft contracts, confirming expectations for prepayments on additional GPU deployments. Anthony Lewis, CFO, highlighted IREN's proven access to diverse capital sources for GPU financing. Daniel Roberts, Co-founder and Co-CEO, explained that IREN's patience and conviction in waiting for the right deal for Sweetwater has been rewarded, emphasizing the opportunity cost of signing a 'bad' deal relative to maximizing shareholder value through the 'three Cs' framework (capacity, customers, capital).

Joseph Vafi asked about IREN's line of sight on customer ramps for the $3.4 billion ARR target, including the potential for prepayments from other customers for GPU buys. He also inquired about the thought process behind not yet announcing a tenant for Sweetwater's capacity, considering its energization is approaching.

Answer

Kent Draper, Chief Commercial Officer, detailed ramp expectations for Prince George, Mackenzie/Canal Flats, and Microsoft, confirming continued customer willingness for significant prepayments, with Anthony Lewis, CFO, adding that diverse capital pools are available. Daniel Roberts, Co-founder and Co-CEO, explained that IREN has ongoing dialogues for Sweetwater and is exercising patience to secure the 'right deal' that maximizes shareholder opportunity, aligning with the 'three Cs' framework and recent GPU financing success.

Joseph Vafi sought details on the Blackwell GPU financing, particularly the end-of-lease options and the decision factors involved. He also asked about the depth of the financing market for GPUs versus traditional project financing for colocation.

Answer

Chief Capital Officer Anthony Lewis explained that lease structures provide flexibility, with options to return equipment for tech rotation or acquire it at a capped fair market value. He noted that financing for cloud and colocation have different profiles, with terms dependent on customer credit and contract duration. Co-CEO Daniel Roberts added that the financing types are not mutually exclusive, as IREN can finance the data center infrastructure separately from the GPU leases, and that the company is exploring the entire capital stack to optimize its cost of capital.

Joseph Vafi inquired about the capital expenditure for the Horizon 1 project, learnings from its high rack density design, and the scale of demand from hyperscalers for the proposed 2-gigawatt Sweetwater data center hub.

Answer

Chief Commercial Officer Kent Draper explained that IREN is leveraging existing data center architecture to deliver liquid-cooled capacity cost-effectively and has already ordered long-lead items. Co-Founder and Co-CEO Daniel Roberts added that a 2-gigawatt hub is 'entirely realistic' given the current market, noting intense interest from nearly all hyperscalers for 1-gigawatt-plus campuses.

Joseph Vafi asked at what Bitcoin price and hashrate the mining business could become self-funding for growth and inquired about the specifics of the Sweetwater site, including procurement plans for its full capacity and fiber connectivity.

Answer

Co-CEO Daniel Roberts distinguished between operating cash flow for potential distributions and capital for reinvestment, highlighting the ability to generate Bitcoin at a low cost. Chief Commercial Officer Kent Draper added that for Sweetwater, IREN is procuring long-lead items for the full 1.4 GW high-voltage substation capacity, and confirmed the site has excellent fiber connectivity with multiple Tier 1 carriers suitable for AI applications.

Joseph Vafi from Canaccord Genuity Group Inc. asked about the factors influencing the decision to exercise the 10 exahash option and the potential timing for monetizing the 3-gigawatt land and power portfolio.

Answer

Co-Founder and Co-CEO Daniel Roberts stated he expects to exercise the option, citing healthy gross margins and significant shareholder value creation, as IREN can build capacity for $30 million per exahash versus a market valuation of $135 million. Regarding the land portfolio, he described it as a "bird in the hand" situation, where they will explore compelling offers but feel no pressure to act, given their extensive, undisclosed development pipeline.

Joseph Vafi inquired about customer sentiment regarding crypto, digital asset, and tokenization strategies amidst the current macro environment and declining asset prices.

Answer

Tom Farley, Chairman and CEO, stated that despite the recent drop in Bitcoin prices, Bullish has not detected a change in tone from institutional customers regarding tokenization, as its value proposition (simpler lending/borrowing, immutable ledger, fewer intermediaries) is independent of asset prices. He acknowledged potential slowdowns in some crypto-native investments but emphasized the robust tokenization pipeline. David Bonanno, CFO, added that Bullish's institutional focus and emphasis on high-quality, liquid assets provide insulation from broader crypto price reactions, with internal metrics showing strong, continued growth.

Joseph Vafi inquired about customer sentiment and strategies regarding crypto, digital assets, and tokenization amidst the current macro environment and asset price declines, particularly how clients are thinking about these areas.

Answer

Chairman and CEO Tom Farley stated that there has been no change in tone from institutional clients regarding their digital asset and tokenization strategies, despite the recent crypto price declines. He acknowledged a potential recalibration from crypto-native types but emphasized that tokenization's value proposition (24/7 operation, simpler lending/borrowing, immutable ledger, reduced intermediaries, composable blockchains) is independent of Bitcoin's price. CFO David Bonanno added that Bullish's institutional focus on high-quality, liquid assets insulates it from broader crypto price reactions, with strong momentum in onboarding and bookings continuing across the pipeline.

Joseph Vafi with Canaccord Genuity asked for more detail on spot spreads, including the incremental pricing power observed in Q2 and the efforts and observations regarding the spot market in Q3 and early Q4.

Answer

CFO Dave Bonanno explained that Q2 experienced anomalously low spreads due to pricing structure iteration and low volatility, but spreads have since rebounded. He emphasized that Bullish optimizes for total adjusted transaction revenue per unit of volatility, noting that higher spreads are not always the target if lower spreads can drive more volume, and stated that current spreads represent a reasonably good baseline.

Joseph Vafi asked for more detail on spot spreads, specifically regarding incremental pricing power observed in Q2 and the current trends in the spot market during Q3 and early Q4.

Answer

CFO Dave Bonanno explained that Q2's anomalously low spreads were due to pricing structure iterations and a low volatility environment, which have since rebounded. He emphasized optimizing for total adjusted transaction revenue per unit of volatility, noting that higher spreads are not always the target if lower spreads lead to more volume.

Joseph Vafi asked for an update on the progress of Bullish's options platform, including details on the anticipated Q4 full rollout and any early indications of its potential contribution to trading volume.

Answer

Tom Farley, CEO and Chairman, noted that the options platform is already 'live live' in a risk-limited beta phase with major options traders, and it's working well. He emphasized that while it's a startup and should be viewed conservatively, the underlying crypto options market is growing, with volumes nearly doubling as a percentage of spot volume in August. Farley expressed excitement, stating the launch has 'all the hallmarks of something that could work out nicely.'

Joseph Vafi asked for an update on the progress of Bullish's options platform, including the anticipated Q4 full rollout, and whether it's too early to estimate its potential contribution to trading volume.

Answer

Tom Farley, CEO and Chairman, emphasized viewing the options platform conservatively as a startup, but expressed excitement that it is already "live live" with real trading by major options traders in a regulated environment. He noted that crypto options have historically been a tiny market but are growing, with August volumes nearly doubling as a percentage of spot volume. Farley believes the platform has the hallmarks of a successful launch due to institutional focus, low cost, and features like portfolio margining.

Joseph Vafi asked for an update on the progress of Bullish's options platform, its anticipated Q4 full rollout, and whether it's too early to estimate its potential contribution to trading volume.

Answer

CEO Tom Farley stated that the options platform is already live in a risk-limited beta phase with real trading by major options traders. He acknowledged that building derivatives volume is challenging and advised a conservative view, but expressed excitement about the underlying crypto options market growth, which nearly doubled in August as a percentage of spot volume. Farley highlighted Bullish's institutional focus, low-cost offerings, and features like portfolio margining as key differentiators, noting that the launch has all the hallmarks of a successful initiative.

Joseph Vafi inquired about Circle's exploration of a native token for the Arc Network, asking for details on the rationale, potential benefits (utility, incentives, governance), and implications. He also asked about the anticipated intersection and synergy between the Circle Payments Network (CPN) and Arc in the near future.

Answer

CEO Jeremy Allaire explained that a native token for Arc aims to provide utility, align economic incentives for growth, and enable stakeholder governance for the network's evolution, especially given its global, distributed nature. He noted that Arc will serve as a critical, enterprise-grade infrastructure for CPN, offering low costs, settlement finality, and enhanced FX capabilities through support for various non-dollar stablecoins.

Joseph Vafi asked for more details on Circle's exploration of a native token for the ARK network, including the reasons for and against such a move and its implications. He also inquired about the future intersection of CPN and ARK.

Answer

Jeremy Allaire, Co-Founder, CEO, and Chairman, explained that ARK is designed for a distributed network with global operators, stakeholder incentives, and governance. A native token could provide utility for users, align incentives for network growth, and offer a concrete way for stakeholders to participate in governance. Regarding CPN and ARK, Mr. Allaire stated that ARK is being activated across all Circle products in testnet and can serve as a best-in-class infrastructure for CPN, offering low costs, settlement finality, and robust FX capabilities, especially with non-dollar currency issuers on the ARK testnet.

Joseph Vafi of Canaccord Genuity asked about the revenue model for the new ARC blockchain, specifically if its gas fees would be a primary transaction revenue source, and for more details on the expanded USYC partnership with Binance.

Answer

Chairman, CEO & Co-Founder Jeremy Allaire confirmed that ARC's USDC-denominated gas fees will be a new revenue source, adding to a growing number of transaction fee streams from products like CPN and Circle Mint. Regarding USYC, he explained the Binance partnership is a key step in establishing yield-bearing collateral on major exchanges, a model Circle aims to deploy across more digital asset and traditional clearinghouses.

Joseph Vafi asked about the role of Hut 8's Bitcoin holdings as a differentiator and how the company views the rising GPU-as-a-service demand in relation to its power pipeline, considering the potential for shorter-term realization compared to longer-term power infrastructure.

Answer

CEO Asher Genoot explained that the GPU business (HiRise) was explored before the Hut 8 merger, but its launch was delayed. He clarified that Hut 8 is built as the energy infrastructure platform for longer-depreciating assets, while American Bitcoin invests in ASICs and HiRise (incubated separately) invests in GPUs. Genoot noted that HiRise benefits from Hut 8's power infrastructure discussions, but capital allocation for GPUs is sensitive to dilution and equity versus debt.

Joseph Vafi asked about the role of Hut 8's Bitcoin holdings as a differentiator and how the rising GPU as a service demand fits into the power pipeline and development priorities.

Answer

CEO Asher Genoot explained that the GPU business (Hirise) was an early focus, now incubated as a separate entity. He noted similar risk profiles for GPU and ASIC investments. Hut 8 is structured as an energy infrastructure platform for longer-depreciating assets, while American Bitcoin invests in ASICs and Hirise in GPUs, with Hirise often leveraging Hut 8's power infrastructure deals.

Joseph Vafi from Canaccord Genuity - Global Capital Markets questioned the exahash plan and growth targets for the American Bitcoin subsidiary.

Answer

CEO Asher Genoot detailed that American Bitcoin starts with 10.2 EH/s from Hut 8, with optionality to scale beyond 25 EH/s and eventually to 50 EH/s. He stressed that growth will be pursued with a focus on favorable economics, aiming for a near-term fleet efficiency of around 14 joules per terahash.

Joseph Vafi of Canaccord Genuity asked about the exahash growth plan and strategic size goals for the American Bitcoin subsidiary.

Answer

CEO Asher Genoot detailed that American Bitcoin starts with 10.2 EH/s from Hut 8, with optionality to scale beyond 25 EH/s towards a 50 EH/s target. He stressed that growth will be pursued with a focus on favorable economics and partnerships, aiming for a fleet efficiency of around 14 joules per terahash, rather than growth at any cost.

Joseph Vafi of Cantor Fitzgerald inquired about the potential efficiency gains from Hut 8's proprietary energy curtailment software and whether the company is ordering more GPUs for its expanding AI business.

Answer

CEO Asher Genoot explained that the curtailment software optimizes operations based on grid dynamics and machine efficiency, citing a past example in West Texas where it reduced average power costs by 56% with less than 9% curtailment. Regarding the AI business, Genoot stated that while the company is excited for its first GPU cluster to begin generating revenue, it has not yet announced any additional orders.

Joseph Vafi of Cantor Fitzgerald inquired about the potential efficiency gains from Hut 8's proprietary energy curtailment software and whether the company is ordering more GPUs to expand its AI business.

Answer

CEO Asher Genoot explained that their curtailment software can significantly reduce energy costs, citing a historical example where a 56% cost reduction was achieved with under 9% curtailment. He stated this capability is a key competitive advantage. Regarding the AI business, Genoot confirmed they are excited for the first GPU cluster to begin generating revenue but have not yet announced additional orders, emphasizing a focus on scaling business verticals where they can effectively compete.

Inquired about alternative strategic uses for the company's large Bitcoin (HODL) balance and whether the mixed-efficiency mining fleet would see a reduction in overall hash rate post-halving.

Answer

The company views its Bitcoin holdings as a key source of capital, enabling strategies like project-level financing, direct sales for growth projects, and options strategies (like selling covered calls) to generate non-dilutive capital. Regarding the fleet, they use proprietary software to curtail unprofitable miners based on real-time energy prices and are optimizing the placement of miners to maximize efficiency. The focus is on the highest and best use of rack space, not just raw hash rate, to ensure profitability post-halving.

Joseph Vafi inquired about initiatives beyond the treasury strategy to broaden the ETH ecosystem's value and asked how ETH's yield generation capability differentiates SharpLink's strategy from Bitcoin-focused treasury models.

Answer

Chairman Joseph Lubin noted the exploration of synergies with Consensus, while Co-CEO Joseph Chalom stated the primary focus remains the treasury strategy, though synergistic operating businesses are being considered. Chalom emphasized that unlike Bitcoin treasuries, SharpLink's ETH strategy benefits from both capital appreciation and compounding yield, which can be reinvested to create a 'righteous cycle' and drive additional value.

Joseph Vafi from Canaccord Genuity asked for more details on eToro's U.S. strategy, particularly regarding future marketing spend and the potential for M&A activity.

Answer

CEO Yoni Assia outlined a plan to aggressively expand the product suite in the U.S. over the next 12-18 months, which will be followed by scaled marketing spend. He also confirmed that eToro is opportunistically evaluating M&A in the U.S., focusing on subscale fintech companies with strong products and teams.

Joseph Vafi from Canaccord Genuity asked for an update on the U.S. strategy, particularly regarding future marketing spend and whether M&A remains a viable option for material short-term growth in the region.

Answer

CEO Yoni Assia confirmed a renewed focus on the U.S., aiming to roll out the full global product suite there over the next 12-18 months. He stated that marketing spend will scale with product expansion and revenue potential. Assia also affirmed that eToro is opportunistic about U.S. M&A, seeing potential in acquiring subscale fintech companies with strong products and teams.

Joseph Vafi asked for more details on the third-party issue that impacted delinquencies and inquired about the capabilities of the new CashAI V5.5 underwriting engine, particularly its effect on advance sizes and credit performance.

Answer

CFO & COO Kyle Beelman clarified that the third-party issue was a reporting problem that delayed settlements on a small set of receivables, resulting in a ~$3M adverse impact on the provision for credit losses; he noted corrective measures are now in place. Regarding the new AI model, Beelman stated that simulations for CashAI V5.5 suggest it will achieve better risk splitting, leading to both higher average origination sizes and lower delinquency rates, ultimately increasing net monetization.

Joseph Vafi inquired about any observed correlation between the new ExtraCash pricing structure and credit performance. He also asked if the updated full-year guidance assumes further ARPU increases or simply maintains the current run rate, and what the outlook is for MTM growth.

Answer

Executive Kyle Beilman stated there has been no negative correlation between the new pricing and credit performance, calling the impact 'all positive' with improved conversion and no adverse selection. On guidance, Beilman confirmed expectations for continued MTM growth and noted that ARPU will naturally expand due to the full-quarter benefit of the new pricing, supplemented by other levers like increasing offer amounts for good-risk customers.

Joseph Vafi asked for more detail on the learnings from the new ExtraCash pricing model and its impact on monetization, and also questioned if there are sufficient market opportunities to continue increasing marketing spend without oversaturation.

Answer

CEO Jason Wilk explained that the new fixed-fee model improves monetization for tenured customers, creating a powerful flywheel of better ARPU and retention that allows for higher credit limits. CFO Kyle Beilman added that the resulting increase in member lifetime value provides confidence to sustain attractive returns even with potentially higher customer acquisition costs (CACs) in the future.

Joseph Vafi from Canaccord Genuity asked for color on the market mechanics of the $9 billion notional Bitcoin trade, noting the market's strong ability to absorb such a large transaction.

Answer

Founder, CEO & Director Michael Novogratz explained that the execution coincided with a period of tremendous buying, largely from balance sheet companies in both Bitcoin and Ethereum. He noted this strong demand is supported by a favorable macro story for crypto, including expectations of Fed rate cuts and concerns about government debt, which reinforces the narrative for Bitcoin as a store of value.

Joseph Vafi inquired about the tangible business benefits of the NASDAQ listing beyond increased investor access and asked about the growth potential and risk management of the company's lending business.

Answer

Founder and CEO Michael Novogratz explained that the NASDAQ listing provides crucial access to the deep U.S. capital markets, which is essential for a growth company. He stated that a larger balance sheet enhances counterparty confidence. Regarding lending, Novogratz emphasized Galaxy's strong credit-focused DNA and noted that cheaper access to capital would enable significant growth for the loan business, which he believes is 'theirs to win'.

Joseph Vafi asked about Galaxy's M&A appetite in the current market and for details on the financing for the Helios CapEx, including the potential cost of capital and the status of the arrangements.

Answer

CEO Michael Novogratz stated that while there are many potential sellers, Galaxy's stock is currently too undervalued to use for significant M&A, though they are actively looking. Executive Christopher Ferraro detailed the Helios financing, expecting an 80-20 debt-to-equity structure with project financing yields around 10-11%, which they plan to refinance at a lower cost post-construction.

Joseph Vafi sought further details on the hyperscaler contract structure and its potential start date. He also asked whether the derivatives business has reached a level of maturity or if there is still significant room for market share and volume growth.

Answer

Founder and CEO Michael Novogratz reiterated that the hyperscaler project is a large-scale build-out with a corresponding multi-month timeline, but declined to share specific contract details. Executive Christopher Ferraro addressed the derivatives question, stating emphatically that the business is 'just getting started.' He highlighted the company's swap dealer license as a key competitive advantage and noted that continuous client onboarding from all regions is expected to drive substantial future growth.

Joseph Vafi of Canaccord Genuity asked about the drivers behind the expected second-half revenue acceleration and for an update on Concentrix's AI strategy, including market recognition and the impact of its proprietary technology.

Answer

President & CEO Chris Caldwell explained that the anticipated revenue momentum is broad-based across geographies and verticals, particularly in banking, tech, and media. He noted that new deals are more complex and often leverage Concentrix's technology. Regarding AI, Caldwell detailed a two-pronged approach: their proprietary iX product suite is gaining traction ahead of schedule and is expected to be accretive by Q4, while their adjacent services that help clients implement third-party AI are also driving significant growth.

Joseph Vafi inquired about the drivers behind the stability in the consumer electronics vertical and asked for clarification on the different use cases and revenue opportunities for the iX Hello AI suite versus internal AI solutions.

Answer

President and CEO Christopher Caldwell explained that stability in consumer electronics stems from market share gains and new data annotation services, not a broader macro recovery. He clarified that the iX Hello suite is a commercialized version of their successful internal AI tools, now being deployed for clients with the goal of being accretive to earnings by the end of fiscal 2025.

Joseph Vafi of Canaccord Genuity inquired about the scale of revenue headwinds for fiscal 2025, specifically from the reduction of low-complexity work and geographic delivery mix shifts. He also requested an update on a previously announced large transformational deal, asking about its progress and expected contribution to the P&L in 2025.

Answer

President and CEO Christopher Caldwell explained that geographic shifts from higher-cost to lower-cost regions continue to be a headwind. He projected that low-complexity work would decrease from 7% of the business to approximately 5% during 2025. Regarding the large transformational deal, Mr. Caldwell stated it will begin generating meaningful revenue in the second half of fiscal 2025, with costs impacting Q1 and initial revenue starting in Q2.

Joseph Vafi asked about the key factors impacting the top-line revenue forecast, the ramp-up timelines for significant new business wins, and the rationale for accelerating merger-related integration costs.

Answer

CEO Christopher Caldwell detailed the Q4 revenue headwinds, attributing them to client volume de-commits, accelerated offshoring, and walking away from price-sensitive deals. He also outlined that new large wins will begin ramping in late Q4 2024 and continue through mid-2025. CFO Andre Valentine explained that accelerating integration costs allows the company to realize its full synergy target a year early and reinvest savings into strategic transformation initiatives.

Joseph Vafi of Canaccord Genuity asked about any notable real-time macroeconomic changes observed halfway through the second quarter compared to Q1, and requested more specific details on the Q1 labor challenges, including geographic scope and progress on remediation.

Answer

CEO David Peacock explained that a task force is addressing the Q1 labor 'bumpiness' and that hiring rates are already improving in Q2, smoothing out regional anomalies. He noted that the affected business segments have higher seasonality in Q2 and Q3, providing an opportunity to recover lost ground. CFO Christopher Growe added that the experiential services execution rate was approximately 93% in Q1, and they expect that rate to improve with better hiring in Q2.

Joseph Vafi inquired about the real-time impact of the macroeconomic environment, particularly potential tariffs, and whether the current climate is conducive to winning new client logos.

Answer

CEO David Peacock explained that potential tariffs are creating market uncertainty, causing some clients to adopt a 'wait-and-see' approach. He noted that while tariffs could disrupt supply chains, this might increase demand for their retail merchandising services. Peacock affirmed that the environment is conducive for new logo wins across all segments, highlighting opportunities to provide retailers with cost-effective labor solutions and expand experiential and branded services, driven by a strong business development pipeline.

Joseph Vafi of Canaccord Genuity sought to understand if there were any 'aha moments' from the strategic review that prompted new organic growth investments and asked for more specifics on the target markets for this investment.

Answer

CEO John Morris responded that an external consulting firm confirmed the significant market potential available with additional investment, reinforcing the decision to commit more resources to organic growth. He specified that near-term investments will target existing verticals in both Consumer and Business Payments. CFO Tim Murphy added that a key focus is on more efficiently targeting, winning, and implementing the largest enterprise logos within these verticals.

Joseph Vafi questioned the current competitive landscape and requested an update on the company's progress and focus within the mortgage vertical.

Answer

CEO John Morris asserted that Repay is well-positioned competitively due to recent investments in its enterprise sales teams, product, and technology, which have resulted in strong sales pipelines. He reiterated that the mortgage vertical is a multi-year organic growth opportunity that is progressing as planned. CFO Tim Murphy added that the company is seeing significant success in specific B2B verticals like healthcare.

Joseph Vafi asked for an update on the progress of the mortgage debit service offering and its potential to be a meaningful contributor in 2025. He also inquired about the 2024 growth mix in the Consumer segment, specifically between same-store performance and new logo acquisition.

Answer

CEO John Morris confirmed that the mortgage debit offering went live with select servicers in Q3 and is expected to be a multi-year growth opportunity beginning in 2025. CFO Tim Murphy added that having live clients helps prove the solution and gather data for future rollouts. Regarding the 2024 growth mix, John Morris stated that the majority of growth came from existing customers and the ramp-up of clients signed in prior periods, with new logos like the auto captive lender expected to drive more growth next year.

Joseph Vafi from Canaccord Genuity asked for clarification on the P&L impact of the significant increase in USDC held per user, considering the associated rewards program and revenue share agreement.

Answer

CFO Alesia Haas directed the analyst to a new disclosure in the shareholder letter, breaking down the economics. In Q1, Coinbase generated $298 million in total USDC revenue. After accounting for approximately $100 million in rewards paid on on-platform balances, this resulted in a net margin of about $26 million from on-platform USDC, plus the full margin from $171 million in off-platform revenue.

Joseph Vafi asked how Coinbase is leveraging its strong capital position to drive dominance for its Layer 2 solution, Base, compared to less capitalized competitors in the space.

Answer

CEO Brian Armstrong explained that Base's success stems from its technical merits rather than aggressive financial incentives. CFO Alesia Haas added that Coinbase's key advantage is its ability to create a flywheel by deeply integrating Base with its entire ecosystem of retail and developer products, an asset competitors cannot easily replicate.

Joseph Vafi asked for clarification on whether the Rocket-Mr. Cooper deal's impact is broad-based or servicer-focused, and requested more detail on the contribution margin of the core mortgage product.

Answer

CEO Nima Ghamsari stated the Rocket deal's impact is broad-based, acting as a catalyst for the entire industry. He noted that servicers are particularly well-positioned for a refinance wave, which is driving strong engagement with Blend. Head of Finance and Operations Amir Jafari explained that while overall contribution profit is increasing, the company is not yet disclosing a breakout for the core mortgage product but plans to build on this metric in the future.

Joseph Vafi questioned if the current rate environment has changed the cadence of discussions with potential new logos and asked for a timeline on when the new 'Rapid' products might begin to make a real revenue contribution.

Answer

Nima Ghamsari, Co-Founder and Head of Blend, stated that the sales pipeline is up 50% year-over-year, with a strong comeback in mortgage-related discussions as customers have stabilized their businesses. He confirmed that the 'Rapid' products are already generating revenue with early customers, and this contribution is expected to ramp up throughout the year.

Speaking on behalf of Joseph Vafi, an analyst asked how conversations with customers have changed sequentially given recent tariffs and market dynamics, and how the pace of discussions differs between hyperscalers and enterprises.

Answer

CEO Adam Sullivan stated that tariffs are expected to increase CapEx by 5-10%, which will likely drive a corresponding increase in lease rates. He noted that discussions with large enterprises have accelerated as they have firmed up their AI growth plans, making this a significant and fast-moving channel for the company.

Joseph Vafi asked about the strategic trade-off between revenue diversification, which may require more CapEx, and less capital-intensive deals with CoreWeave. He also inquired about trends in customer pricing discussions.

Answer

CEO Adam Sullivan stated that customer diversification is a long-term strategic priority essential for achieving an investment-grade credit rating and stability in a high-CapEx industry. Regarding pricing, he noted that after a period of discovery in 2024, pricing is now stabilizing in 2025, though it remains highly dependent on geography and proximity to metro areas.

Joseph Vafi requested an update on efforts to expand power capacity at existing HPC sites beyond the 500 megawatts contracted to CoreWeave. He also asked for commentary on the potential implications of the U.S. presidential election for the Bitcoin mining industry.

Answer

CEO Adam Sullivan reported that the company is pursuing an additional 300+ megawatts of power across its existing HPC sites, viewing this as the most rapid path to capacity growth. On the election, he suggested that a Trump administration could create strong tailwinds for the business, citing the candidate's expressed support for Bitcoin, energy production, and U.S. leadership in AI.

Joseph Vafi of Canaccord Genuity requested an update on efforts to expand power capacity at existing HPC sites beyond the 500 megawatts contracted to CoreWeave and asked about the potential impact of the U.S. presidential election on the business.

Answer

CEO Adam Sullivan reported that Core Scientific is actively pursuing an additional 300+ megawatts at its existing HPC sites, viewing it as the quickest path to capacity growth. Regarding the election, he suggested a Trump presidency could provide "strong tailwinds" due to expressed support for Bitcoin, energy production, and U.S. AI leadership, which align with the company's goals.

Joseph Vafi asked if the Prescreen product is a driver of FRLPC expansion and when the impact of forward flow agreements might become visible in fair value adjustments.

Answer

President Sanjiv Das confirmed Prescreen should positively impact FRLPC by lowering partner acquisition costs. CFO Evangelos Perros added that the focus on high-profitability verticals is driving FRLPC. Regarding forward flows, Perros explained their impact is already visible in the slower growth of the investment portfolio relative to volume and is embedded in the updated FRLPC guidance, with the trend expected to become more apparent later in the year.

Joseph Vafi from Canaccord Genuity asked if it was possible to establish a 'normalized' fair value adjustment margin now that the company is past the recent period of significant write-downs.

Answer

CEO Gal Krubiner stated that while the company is not yet prepared to define a specific normalized percentage for fair value adjustments, a provision for such potential adjustments is already factored into the full-year 2025 GAAP net income guidance.

Joseph Vafi inquired about the mechanics of allocating network volume across Pagaya's various funding sources and the comparative economics of non-ABS channels. He also asked about the long-term growth potential of the point-of-sale (POS) business relative to personal loans.

Answer

CFO Evangelos Perros explained that the funding mix is approximately 60-70% ABS and 30-40% alternative sources like forward flow and pass-throughs, with a blended net risk retention target of 2-3%. President Sanjiv Das added that the company believes the point-of-sale business will eventually be at least as large and profitable as the personal loan segment, driven by key partnerships and product expansion.

Joseph Vafi asked for more detail on the financing strategy with Fortress at Barber Lake, questioning if this capital-light development model would be the preferred strategy for Cipher's entire project pipeline.

Answer

CEO Tyler Page described the Fortress partnership as a crucial first step to validate Cipher's model and land a major tenant, which should help revalue its entire pipeline. He noted that while this capital-light approach is attractive for the first project, Cipher might seek to own more of the economics in future projects if its cost of capital improves. Page also suggested a long-term strategy of recycling capital by exiting mature, leased data centers to fund new greenfield developments.

Joseph Vafi inquired about the commercial energy business outlook, asking if the strong Q1 performance is indicative of the full-year expectation. He also sought clarity on whether stop-work orders are considered temporary or are treated as terminations in the guidance, and asked about the current pace of federal contract awards.

Answer

Executive John Wasson confirmed that guidance assumes the commercial energy business will continue its outstanding growth and strong margin performance for the full year. He clarified that the company's guidance conservatively assumes stop-work orders will ultimately be terminated. Wasson also noted a positive pickup in federal award activity, particularly for contract modifications and recompetes, though the pace has not yet returned to historical norms.

Joseph Vafi asked for more detail on the 2025 guidance, questioning the severity of the maximum downside risk for programmatic revenue and any potential ripple effects on the utility business from federal slowdowns.

Answer

Executive John Wasson clarified that the -10% maximum downside is a conservative floor based on a detailed, project-by-project risk analysis. He noted the IT business could see a mid-to-high single-digit decline while the programmatic side faces more significant impacts, especially at USAID. Wasson also stated he expects no material impact on the commercial utility business, as its robust growth is driven by strong energy demand and state policies, not federal initiatives.

Joseph Vafi of Canaccord Genuity asked about the sustainability of margin improvements driven by favorable mix shifts, particularly from the utility and energy practice, and inquired about any notable impacts from recent hurricanes on the disaster recovery business.

Answer

CEO John Wasson explained that he expects the high-margin commercial energy business to continue its strong growth, providing further room for margin improvement. Regarding disaster recovery, Wasson noted that recent hurricanes (Helene and Milton) have resulted in numerous small disaster assessment contracts, which are crucial for building relationships ahead of larger, long-term recovery RFPs expected in the second half of 2025.

Joseph Vafi of Canaccord Genuity asked for an update on business momentum with large financial services clients and whether the DOGE initiative was slowing down decision-making on new federal contract adjudications.

Answer

Executive Vice Chairman Rand Blazer reported that business flow from large banks, which had previously shown an uptick, leveled off and remained flat during Q1 as these clients assess macroeconomic factors. Regarding DOGE, Blazer explained the impact is more about increased layers of internal agency approval for funding rather than a direct slowdown in the adjudication process caused by the DOGE group itself.

Joseph Vafi drilled down on the financial services vertical, asking about the current mix of 'big bank' clients versus historical levels to gauge potential upside. He also questioned why the assignment business hasn't shown more strength yet and if there's a structural shift towards consulting.

Answer

CEO Theodore Hanson stated that the financial services vertical, which historically comprised 20-25% of commercial revenue, is now in the high teens, suggesting room for recovery. Regarding the assignment business, Hanson and President Randolph Blazer noted a typical lead-lag effect and seasonal patterns, explaining that positive req flow indicates client need is present, and they do not believe a major structural shift away from assignment is occurring.

Joseph Vafi requested more detail on performance within the financial services vertical and asked if there was any chance of a year-end budget flush from enterprise clients.

Answer

Executive Randolph Blazer noted positive signs in financial services, with good results from big banks and improving trends at regional banks, where ASGN is increasing its consulting penetration. However, he stated they do not anticipate a year-end budget flush, as clients seem to be in a preparatory phase for 2025, particularly around data readiness for AI.

Joseph Vafi asked whether 2025 represents a particularly large year for contract renewals compared to historical averages. He also inquired about the drivers behind the expected lower capital expenditures in 2025.

Answer

CEO David Guilmette clarified that 2024 was a slightly larger renewal year and that 2025 is more in line with a normal cadence. CFO Jeremy Heaton explained that the lower CapEx is a direct benefit of completing the multi-year cloud migration, which required elevated spending, and a move to a more efficient product investment profile.

Joseph Vafi of Canaccord Genuity inquired about the specific drivers behind the outperformance and increased guidance for the License & Support (L&S) business. He also asked about the timing and strategic rationale for consolidating application services into a central 'application factory'.

Answer

Michael Thomson, President and COO, explained that the L&S strength stems from broad-based client demand, with customers signing longer-duration contracts, increasing consumption, and recognizing the value of the platform's secure data for modernization and AI. Regarding the application services realignment, Thomson stated it was a planned strategic move to gain leverage and was executed now due to the maturity of the company's leadership and solutions, rather than a specific new event.

Joseph Vafi inquired further about the significant L&S revenue upside in Q3 and Q4, seeking to understand the drivers beyond the initial explanation. He also asked about renewal dynamics for contracts outside of new TCV.

Answer

Chair and CEO Peter Altabef clarified that the Q3 L&S beat was from a renewal moving from Q4, but the raised Q4 outlook represents new, incremental revenue. President and COO Mike Thomson added that clients are extending contracts for longer durations after exceeding consumption limits, proving the platform's value. Thomson also stated that renewal rates remain strong at over 95%, and many renewals include expanded scope, which adds to the recurring revenue base.

Joseph Vafi of Canaccord Genuity asked for management's updated perspective on using debt as a funding mechanism for future growth, particularly as the business is set to become larger and more profitable.

Answer

Aydin Kilic, President and CEO, responded that while HIVE has analyzed convertible debt deals, many had unfavorable terms. He emphasized that the company prioritizes the lowest cost of capital and currently has a strong balance sheet with cash, ATM availability, and significant Bitcoin holdings. However, he noted they remain open to conventional debt financing options, especially for the HPC business.

Joseph Vafi of Canaccord Genuity asked how HIVE is considering the use of debt as a funding mechanism for future growth, especially as the business becomes larger and more profitable, relative to using its ATM facility.

Answer

CEO Aydin Kilic responded that while the company has evaluated debt options, they remain cautious, noting that many recent industry debt deals had unfavorable terms. HIVE's priority is to use the lowest cost of capital, which currently includes its strong balance sheet, Bitcoin holdings, and ATM facility. He did note that more conventional debt financing is a possibility for the HPC business.

Joseph Vafi of Canaccord Genuity Group Inc. asked for a deeper look into the Financial Services vertical, seeking insights on trends for late 2024 and 2025, especially in North America. He also inquired about the key factors driving CI&T's growth outperformance compared to its peers.

Answer

Founder and President Bruno Guicardi highlighted the North American opportunity in using GenAI for legacy modernization within fintech and asset management. Founder and CEO Cesar Gon added that intense competition in Latin America's financial sector is fueling digital investment. Cesar attributed CI&T's outperformance to two main factors: the enhanced competitive offering from CI&T/FLOW and the increased effectiveness of its specialized 'AI growth machine' sales team.

Joseph Vafi inquired about the expected impact of recent credit tightening on approval rates and loan volumes, and asked for more details on the new initiative to provide alternative sources of capital to lending partners, including potential demand and effects on unit economics.

Answer

CEO Charles Jehl explained that the credit tightening was a prudent measure to address an increase in thin credit files, which are higher risk. He estimated this would lower approval rates by about 4%. Jehl noted that the new capital markets initiative is designed to help credit union partners manage liquidity through loan participations and sales, thereby increasing their lending capacity and driving more volume for Open Lending, rather than changing the company's unit economics.

Asked about the potential for a churned customer to return, the specifics of the recent workforce reduction, and the company's path to achieving the Rule of 30.

Answer

Executives are optimistic that one churned customer might return. The workforce reduction was targeted at improving efficiency in R&D, go-to-market pipeline generation, and G&A, without impacting core capacity. The Rule of 30 will likely be achieved with a higher contribution from operating margin than previously anticipated, reflecting a disciplined approach to balancing growth and profitability.

Asked about trends in initial 'land' deals, the penetration of the Zuora Revenue product, and the company's M&A outlook following the Silver Lake investment.

Answer

Executives highlighted their multi-product strategy, stating that Billings, Revenue, and Zephr are all resonating well for initial lands. They noted that penetration for the Revenue product is still early with significant room for growth. Regarding M&A, they confirmed they are actively but disciplinedly looking for acquisitions that fit their strategy, similar to Zephr, and feel they may announce something in the coming quarters.