Core Scientific, Inc./tx (CORZQ)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 delivered strong topline and profitability: revenue $179.29M (+48.6% YoY), diluted EPS $0.78, operating income $55.23M, and adjusted EBITDA $87.996M .
• Net income was $210.69M, boosted by a $143.8M gain on extinguishment of prior obligations and lower Chapter 11 financing costs; warrants/CVRs created a $60.1M mark-to-market drag .
• Mining gross margin expanded to 46% (from 26% YoY), consolidated gross margin to 43% (from 26%), aided by bitcoin price (+134% YoY) and a 20% increase in self-mining hash rate, partially offset by a 73% increase in global hash rate that reduced BTC mined per unit (-34%) .
• Strategic optionality: management is evaluating transforming >500 MW of operational infrastructure and contracted power to host high‑performance computing (HPC) as AI demand accelerates; delivered 16 MW to an HPC customer >30 days ahead of schedule .
• Wall Street consensus via S&P Global was unavailable for CORZQ mapping; result-versus-estimates comparisons could not be prepared with S&P data (see Estimates Context).

What Went Well and What Went Wrong

What Went Well

• “We delivered outstanding results in the first quarter, earning more bitcoin than any other publicly traded bitcoin miner… strengthening our balance sheet… and improving our fleet efficiency” — CEO Adam Sullivan .
• Consolidated gross margin rose to 43% (26% a year ago); mining gross margin to 46% (26% a year ago), with revenue mix $150.0M mining and $29.332M hosting .
• Balance sheet strengthening: cash and cash equivalents $98.125M at quarter end; total debt decreased by ~$390M between year-end and Q1, and $19M obligations retired shortly after quarter end .

What Went Wrong

• Global hash rate increased ~73%, reducing bitcoin received from self-mining by ~34% YoY despite higher BTC price and self‑mining hash rate growth; mining cost of revenue elevated by higher depreciation from ~18,000 new generation self‑miners .
• Hosting proceeds sharing costs increased ~$2.6M and depreciation rose ~$1.1M, limiting hosting gross margin expansion to 32% .
• Realized losses on energy derivatives rose $3.0M and a $60.1M mark‑to‑market adjustment on warrants and contingent value rights impacted the non‑operating line .

Financial Results

Segment breakdown:

KPIs:

Why the trajectory: Bitcoin price +134% YoY and self‑mining hash rate +20% lifted mining revenue $51.9M YoY, while global hash rate +73% reduced BTC received (‑34%); hosting revenue +$6.7M with new clients, offset by proceeds sharing and depreciation .

Guidance Changes

Note: No formal quantitative revenue/EBITDA guidance was provided in the Q1 2024 materials .

Earnings Call Themes & Trends

Management Commentary

• CEO: “By taking full advantage of favorable market fundamentals and by focusing on productivity and efficiency, we generated strong financial performance that demonstrates our ability to create value for our shareholders.”
• CEO on HPC: “We are in regular discussion with customers to evaluate the potential of transforming more than 500 megawatts of our operational infrastructure and contracted power to host high-performance computing… we plan to expand our bitcoin mining hash rate as we build a high-performance computing offering.”
• CFO: “We continue to model a statutory effective tax rate of approximately 23% for 2024… we also have more than $300 million in net operating loss carry forwards.”

Q&A Highlights

• Capacity and HPC conversion: Discussion centered on repurposing significant MWs for HPC/AI workloads alongside continued bitcoin mining expansion .
• Operating cost and power dynamics: Management detailed cash‑based hash costs and power costs per TH; emphasized cost discipline and hedging .
• Tax and share count housekeeping: Modeled ~23% tax rate, >$300M NOLs, ~182M shares outstanding as of March 31, 2024 .
• De‑leveraging pathway: Clarified use of potential warrant proceeds and optional conversions to reduce debt over time (also reflected in slides) .

Estimates Context

• S&P Global consensus estimates for CORZQ were unavailable due to missing CIQ mapping; therefore, results versus S&P Global Wall Street consensus could not be presented. Where estimates are required, note that S&P Global data was unavailable for this ticker at the time of analysis.
• Investors should be aware that any external references to “beats/misses” from non‑S&P sources are not used here; comparisons are anchored to company-reported figures only (see citations in Financial Results).

Key Takeaways for Investors

• Revenue mix and margin expansion underscore operating leverage: mining gross margin rose to 46% and consolidated margins to 43%, driven by BTC price and hash rate gains despite tougher network dynamics .
• Structural optionality via HPC: Management is actively pursuing conversion of >500 MW to HPC while expanding mining — a dual‑track strategy that can diversify cash flows and broaden access to capital .
• Balance sheet flexibility improving: Cash reached $98.1M; total debt reduced ~$390M vs YE2023, with additional retirements post‑quarter, supporting strategic investments and resilience .
• Fleet refresh and efficiency drive: Deployment of S19j XP and initial S21 miners improved efficiency to 26.85 J/TH; continued upgrades should mitigate halving impacts over time .
• Hosting economics improving but watch proceeds sharing/depreciation: Hosting gross margin reached 32% with new clients, offset by proceeds sharing and higher depreciation; monitor ongoing margin trajectory .
• Non‑operating items will add volatility: Gains on extinguishment, reorganization items, and warrants/CVRs mark‑to‑market can materially swing GAAP earnings; focus on adjusted EBITDA and cash metrics for core performance .
• Near‑term trading implications: Strong operational print and HPC narrative are constructive; absent formal guidance, the narrative pivot to HPC and cost discipline are potential catalysts, while global hash rate growth remains a key headwind to BTC production .