Martin Toner

Martin Toner asked about Lightspeed's plans for price increases in the upcoming fiscal year and the potential for software ARPU growth from other sources. He also inquired about the overall health of GTV and the performance of the non-core businesses, referred to as 'efficiency markets'.

Answer

CFO Asha Bakshani stated that future ARPU uplift will primarily come from evolving pricing and packaging as new modules are added and customers are moved to higher-tier bundles, rather than broad price hikes, which were largely completed in the latter half of the previous year. She confirmed that the efficiency markets' customer base remains healthy, with software and payments revenue flat to slightly up, and overall location count growing, indicating effective optimization of this portfolio.

Martin Toner inquired about the health of GTV (Gross Transaction Volume) within Lightspeed's non-core businesses, referred to as 'efficiency markets'.

Answer

CFO Asha Bakshani reported that the customer base in efficiency markets remains healthy, with software and payments revenue flat to slightly up despite tempered new business. This is reflected in the overall increase in Lightspeed's total location count and successful churn management within that portfolio.

Martin Toner asked for the drivers of gross margin compression in the payments segment and whether there was a material opportunity to consolidate support costs by sunsetting legacy acquired brands.

Answer

CFO Asha Bakshani explained that payments margin compression is primarily due to converting customers from high-margin residual revenue to Lightspeed Payments, which increases gross profit dollars but lowers the margin percentage. President JD Saint-Martin and CEO Dax Dasilva added that there are no plans to sunset legacy products as they are profitable, have low costs, and contribute to overall EBITDA.

Martin Toner asked about the terms of High-Performance Computing (HPC) deals, noting that recent deals have shown varied, and sometimes improved, terms. He questioned whether Galaxy Digital should be driving a harder bargain on new HPC deals given the market dynamics and choke points in electricity capacity.

Answer

CEO Mike Novogratz explained that the market dictates terms, and Galaxy Digital balances strong partnerships with the best price. He noted that the CoreWeave deal involved credit risk, for which Galaxy was compensated. President and Chief Investment Officer Christopher C. Ferraro added that base rental prices have surprisingly increased due to the choke point in available future electricity capacity at scale.

Martin Toner questioned whether Galaxy Digital should be negotiating harder terms for new High-Performance Computing (HPC) deals, given the strong demand for data center space in Texas.

Answer

CEO Mike Novogratz stated that Galaxy balances securing strong, long-term partners with achieving the best price, noting that the market dictates terms. He highlighted that the CoreWeave deal involved taking credit risk, which was a calculated bet. President and CIO Chris Ferraro added that base rental prices have surprisingly increased due to a choke point in available electricity capacity, playing favorably for Galaxy.

Martin Toner inquired about the type of redundant power systems being used at the Helios site, how that factors into the CapEx estimate, and the dynamics behind the 'peak' 1.5 PUE (Power Usage Effectiveness) figure.

Answer

Executive Christopher Ferraro stated that the facility is being built to a true Tier 3 N+1 redundancy standard across all systems, which is a major driver of the $11-13 million per megawatt CapEx. He explained the 1.5 PUE is a peak design metric to ensure the facility can power the full IT load with redundancy during peak demand, such as on the hottest days, without any downtime.

Martin Toner asked for details on the nonbinding hyperscaler term sheet, including contract length, revenue, capital contributions, and the meaning of 'nonbinding'. He also inquired about the deal's impact on existing Bitcoin mining exahash, the potential for cheaper financing to fuel growth in other business lines, and the expected additional CapEx per megawatt for the high-performance compute (HPC) build-out.

Answer

Founder and CEO Michael Novogratz and Executive Christopher Ferraro responded. They explained that specific deal terms are confidential until a definitive agreement is signed but characterized it as a long-term offtake contract. The partner has options for 100% of the Helios campus's power, implying a full transition from Bitcoin mining at that site. The project will be funded by nondilutive, project-specific construction debt, which is separate from general corporate financing. However, they noted the improving regulatory landscape should lower Galaxy's overall cost of capital for its markets business. They declined to provide specific CapEx figures at this time.

Martin Toner asked about initial customer reactions to the GPU as a Service product and Bitfarms' confidence in timely contract agreements.

Answer

Ben Gagnon (CEO and Director, Bitfarms) stated that GPU as a Service conversations are new, having started in the last 1-2 months, but inbound demand for Washington and Panther Creek is strong. He noted that while it's too early to provide exact economics, internal modeling and recent market transactions suggest compelling economics, especially for smaller, fully funded sites like Washington, where a premium could be extracted for including GPUs.

Martin Toner asked about the company's confidence in timely GPU acquisition and financing options, the expected Q4 exahash numbers, and initial customer reactions and confidence in contracting for the GPU as a Service product.

Answer

Ben Gagnon (CEO) expressed high confidence in sourcing GPUs for Washington by the end of next year, with attractive financing options from OEM manufacturers. He indicated Q4 exahash should remain consistent for continuing operations, with the Paso Pe sale impact uncertain. He noted early, compelling conversations for GPU as a Service, especially for smaller sites like Washington.

Martin Toner of ATB Capital Markets inquired if any barriers prevent an immediate deal at Panther Creek, asked about prospects for portfolio growth in the Northwest, and questioned the timing for the first dollar of HPC revenue.

Answer

CEO Ben Gagnon responded that there are no barriers to signing a deal now at either Panther Creek or the Washington site, as power and land are secured; the timeline is customer-dependent. He stated the current growth focus is on executing at existing sites, particularly expanding Scrubgrass, not new acquisitions. First HPC revenue is tied to customer contracts, with power scheduled to be energized in H2 2026.

Martin Toner inquired about the expected state of HPC development when the two-year Macquarie financing term ends and what conditions would dictate building out infrastructure for an entire site versus just the first building.

Answer

CEO Ben Gagnon explained that the current financing is sufficient for either the first complete HPC data center or the entire site's powered land infrastructure. He anticipates that as development progresses, the company will be able to secure additional, lower-cost financing. The decision on buildout scope will be driven by customer demand and timelines, with an initial focus on foundational infrastructure like substations that serve either development path.

Martin Toner of ATB Capital Markets asked a series of questions about the Sharon, PA site, including the timeline for committing to Bitcoin vs. HPC infrastructure, access to materials, and potential bottlenecks. He also inquired about the pipeline for similar power development opportunities and whether the recent PJM auction provided more cost certainty.

Answer

CEO Ben Gagnon explained that a final decision on the Sharon site's use is needed by late Q4 2024 or early Q1 2025 to meet end-of-2025 deployment timelines, which he believes is sufficient time to procure necessary equipment. He confirmed Bitfarms is actively seeking more opportunities, particularly in the PJM region. Gagnon noted the PJM auction doesn't directly set their cost but confirms the increasing value of energy trading and grid stabilization programs in the region.

Martin Toner asked why the EBITDA per megawatt appears higher for the FluidStack deal than for Core42, inquired about FluidStack's customer base and backlog, and questioned the valuation process for the Cayuga site acquisition.

Answer

CFO Patrick Fleury clarified that the company is now guiding to project-level Net Operating Income (NOI), which is a more appropriate metric than site EBITDA. CTO Nazar Khan declined to comment on FluidStack's confidential customer base. CSO Carrie Langlais explained the Cayuga valuation resulted from a competitive process with third-party bids, with the final deal approved by an independent committee at a discount to those bids.

Martin Toner asked what TeraWulf has learned about the price sensitivity of prospective customers as build costs have increased.

Answer

Executive Nazar Khan explained that the company is transparent with customers about costs. He noted that price sensitivity varies by customer type; for Neocloud players, the lease rate is a small portion of their total cost of compute, while enterprise customers can be more sensitive. Overall, he described discussions as constructive, with customers understanding that cost increases, such as tariffs, must be accounted for.

Martin Toner from ATB Capital Markets asked for the expected timeline to complete the integration of the Cayuga site and inquired about the approval status for the second 250-megawatt power tranche at Lake Mariner.

Answer

CEO Paul Prager described the Cayuga integration as a robust process managed by independent board members and advisors, without providing a fixed timeline. Regarding Lake Mariner, he stated that the power application has been in the queue and approval is expected 'at any time,' noting a constructive relationship with state authorities.

Martin Toner from ATB Capital Markets requested more details on the performance of China-specific merchants in early May following recent tariff escalations.

Answer

Management stated that overall GMV performance remained strong through both April and May. They acknowledged the dynamic environment but noted it was too early to determine the full impact. They declined to provide specific performance data for China-based merchants but confirmed the Q2 guidance accounts for the current trade landscape.

Martin Toner of ATB Capital Markets inquired about the decision-making process for holding versus selling mined Bitcoin given the new flexibility in capital raising. He also asked if the newly acquired land near Corsicana requires a separate regulatory approval process.

Answer

CEO Jason Les explained that the decision to sell or hold Bitcoin is evaluated continuously based on capital needs, with the goal of choosing the lowest-cost, least dilutive option at any given time. He also clarified that the newly acquired land does not require a new regulatory process, as it will utilize the power already approved for the existing substation, making the land and power fungible.

Martin Toner asked about the outlook for Riot's engineering business, specifically when the segment might achieve margins more in line with the industry and its newly acquired company, E4A Solutions.

Answer

EVP and Head of Corporate Development Jason Chung explained that the combination of E4A's higher-margin services business and an expected recovery in the legacy ESS Metron business should lead to significant margin improvement. He also pointed to near-to-mid-term synergy opportunities, such as cost savings and cross-selling, that could further enhance the margin profile.

Martin Toner of ATB Capital Markets asked about the current state and trends of the sales pipeline, particularly seeking to understand what is driving the strong incremental ARR seen in the quarter.

Answer

Interim CEO Alessio Artuffo confirmed that pipeline trends are growing positively, driven by efficiency improvements in demand generation. He identified key drivers including strength in software/cybersecurity, reskilling needs from onshoring, demand for e-commerce capabilities, and strong growth in financial services. He also highlighted the significant and accelerating contribution from the government sector pipeline.