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Core Scientific, Inc./tx (CORZQ)·Q4 2023 Earnings Summary

Executive Summary

  • Q4 2023 revenue was $141.9M, up 17% year over year; gross margin improved to 28% and Adjusted EBITDA rose to $57.5M, while GAAP diluted EPS was -$0.51 as bankruptcy-related reorganization costs continued to weigh on net income .
  • Strength came from higher bitcoin mining revenue (+$37.7M YoY) and materially lower cost of revenue (driven by lower depreciation and power costs), partially offset by reduced hosting revenue after pruning lower-margin customers .
  • Management highlighted a “stronger, more focused and more productive company” post-restructuring, an organic self-mining growth plan for 20+ EH/s, and a multi-year HPC hosting contract with CoreWeave (> $100M potential revenue) that diversifies cash flows; the HPC contract is expected to be accretive to 2024 earnings .
  • S&P Global consensus estimates for Q4 2023 were unavailable for CORZQ due to mapping limitations; no beat/miss analysis to estimates can be provided (see Estimates Context) [SpgiEstimatesError].

What Went Well and What Went Wrong

What Went Well

  • Revenue and profitability improved: “Total revenue of $141.9 million… Net loss of $195.7 million, an improvement of $239.2 million… Adjusted EBITDA of $57.5 million, an increase of $51.2 million” .
  • Post-restructuring cost discipline: Q4 cost of revenue fell $65.9M YoY, driven by lower depreciation (-$37.6M) and power costs (-$23.7M); operating expenses fell by $12.6M YoY on advisor/professional fee reductions .
  • Strategic progress and positioning: “We have now emerged from our restructuring a stronger, more focused and more productive company with a plan for self-mining growth of more than 20 exahash” . Management also secured a multi-year CoreWeave HPC hosting contract (> $100M potential) with expected 2024 earnings accretion .

What Went Wrong

  • Hosting revenue declined as customers with less-profitable rates were terminated, reducing Q4 hosting revenue by $12.9M YoY .
  • Bankruptcy-related reorganization costs (Q4 reorg items $112.9M) continued to depress GAAP results; diluted EPS was -$0.51 in Q4 2023 .
  • Equipment sales revenue remained at zero following exit from the equipment sales business, removing a past revenue contributor .

Financial Results

Revenue, EPS, Gross Margin – Sequential and Year-over-year

MetricQ4 2022Q3 2023Q4 2023
Total Revenue ($M)$121.250 $112.904 $141.929
Gross Margin (%)(39)%14%28%
Diluted EPS ($)-$1.17 -$0.11 -$0.51
Adjusted EBITDA ($M)$6.311 $14.967$57.532

Notes: Adjusted EBITDA reconciliations per exhibits; all period values unaudited where indicated .

Segment Breakdown (Q4 2023 vs Q4 2022)

SegmentQ4 2022 Revenue ($M)Q4 2022 Gross Margin (%)Q4 2023 Revenue ($M)Q4 2023 Gross Margin (%)
Hosting (incl. equipment in 2022)$46.791 (13)% $29.760 23%
Mining$74.459 (55)% $112.169 29%
Consolidated$121.250 (39)% $141.929 28%

KPIs and Operating Metrics

KPIValuePeriod/Context
Self-mined bitcoin (FY total)13,762 BTC FY 2023
Estimated hosted bitcoin (FY)5,512 BTC FY 2023
Self-mining energized hash rate16.9 EH/s As of 12/31/2023
Hosting energized hash rate6.3 EH/s As of 12/31/2023
Average fleet efficiency27.94 J/TH As of 12/31/2023
Cash cost per self-mined BTC$14,982 FY 2023
Owned, energized infrastructure724 MW 2023
CoreWeave HPC hosting contract>$100M potential revenue Multi-year
January 2024 self-mined BTC1,027 BTC January 2024
Dec 2023 self-mined BTC1,177 BTC December 2023

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic self-mining growth plan (EH/s)Multi-yearNot previously quantified“More than 20 EH/s” plan Raised specificity
HPC hosting revenue (CoreWeave)Multi-yearN/A“Total potential revenue… more than $100 million” New guidance
2024 earnings impact (CoreWeave)FY 2024N/A“The Company expects this contract to be accretive to 2024 earnings” New guidance
Funding of debt service & capexFY 2024N/A“Planned operating cash flow sufficient to fund debt service and capex through 2024” New guidance
Infrastructure expansion2024N/A“72 MW expansion planned for 2024” (Dalton, GA) New guidance

Earnings Call Themes & Trends

Transcript was not available in the document library; themes inferred from management materials and prior filings.

TopicPrevious Mentions (Q2/Q3 2023)Current Period (Q4 2023)Trend
Halving preparationHalvening anticipated in early 2024; industry difficulty increases and electricity cost sensitivity highlighted “Preparations for the halving” including scenario planning, power hedging, firmware upgrades, miner reallocation Proactive readiness improving
Cost discipline & restructuringOngoing Chapter 11 proceedings; reorg items and settlements detailed Post-emergence positioning; lower cost of revenue and OpEx; “stronger… more focused” Material improvement
Hosting portfolio rationalizationTermination of less-profitable contracts impacted hosting revenue Hosting revenue down YoY; mix shift to proceeds sharing and HPC Quality over quantity
AI/HPC diversificationNo HPC guidance in Q2; business focused on mining CoreWeave contract (> $100M), accretive to 2024 earnings; Austin data center lease New growth vector
Fleet efficiency and hash rateSelf-mining EH/s grew; efficiency improvements noted 16.9 EH/s self-mining by 12/31/23; efficiency 27.94 J/TH; continuing upgrades Ongoing improvements
Power management & hedgingCosts/curtailments described; grid support noted in operations Implemented power hedging; grid support delivered (18,487 MWh in Jan) Risk mitigation advancing
Legal/regulatoryChapter 11 process and settlements described Emergence achieved; reorganization items still affecting Q4 Transitioning out of restructuring

Management Commentary

  • “In 2023, Core Scientific earned more self-mined bitcoin than any other listed miner in North America… we have now emerged from our restructuring a stronger, more focused and more productive company with a plan for self-mining growth of more than 20 exahash” — Adam Sullivan, CEO .
  • “We believe our growth plan and diversified platform give us the ability to refresh our fleet… position ourselves well for the upcoming halving and beyond” — Adam Sullivan .
  • “Our strong momentum continued into 2024 as we… announced the expansion of our hosting business with a strategic, long-term contract with CoreWeave… this contract enhances shareholder value” — Adam Sullivan .
  • CoreWeave CEO on partnership: “Our strong business relationship with Core Scientific is based on years of… high uptime data centers, professionalism and trust” .

Q&A Highlights

  • The company hosted a conference call on March 12, 2024, but a transcript was not available in the document set; Q&A details and any guidance clarifications cannot be provided from primary sources .

Estimates Context

  • Wall Street consensus (S&P Global/Capital IQ) for CORZQ Q4 2023 was unavailable due to a CIQ mapping limitation; therefore, we cannot provide beat/miss vs consensus nor estimate-based tables for revenue/EPS. If consensus data becomes available, we will update comparisons accordingly [SpgiEstimatesError].

Key Takeaways for Investors

  • Operational leverage returning: Revenue, gross margin, and Adjusted EBITDA all improved materially YoY in Q4 2023, signaling effective restructuring and cost management .
  • Mining leadership sustained: FY 2023 self-mined bitcoin led North American peers; fleet efficiency and self-mining hash rate improvements continue into 2024 .
  • Diversification catalyst: The CoreWeave HPC hosting contract (> $100M potential) adds recurring, less Bitcoin-price-sensitive revenue and is expected to be accretive to 2024 earnings .
  • Hosting mix shift: Pruning lower-margin hosting contracts reduced hosting revenue but improved margin profile; proceeds-sharing structures are part of the new mix .
  • Halving readiness: Firmware upgrades, power hedging, miner reallocation, and scenario planning should buffer halving-related profitability pressures .
  • Post-emergence balance sheet path: Management outlined a pathway to de-lever through warrant exercises and convertible note conversions; 2024 operating cash flow targeted to cover debt service and capex .
  • Near-term trading: With estimates unavailable, narrative catalysts include continued BTC production strength, efficiency upgrades, and HPC revenue ramp; watch reorg-related items and power prices for volatility effects .
Sources:  
- Q4 2023 8-K and Exhibits (Press Release and Presentation): **[1839341_0001628280-24-010544_core-20240312.htm:1]** **[1839341_0001628280-24-010544_q42023corescientificinc-ea.htm:0]** **[1839341_0001628280-24-010544_q42023corescientificinc-ea.htm:1]** **[1839341_0001628280-24-010544_q42023corescientificinc-ea.htm:7]** **[1839341_0001628280-24-010544_q42023corescientificinc-ea.htm:9]** .  
- Consolidated Statements (Q4/Q4 prior year): **[1839341_0001628280-24-010544_q42023corescientificinc-ea.htm:6]**.  
- Q3 2023 10-Q (trend context): **[1839341_0001628280-23-036849_core-20230930.htm:4]** **[1839341_0001628280-23-036849_core-20230930.htm:20]** **[1839341_0001628280-23-036849_core-20230930.htm:33]**.  
- Q2 2023 10-Q (trend context): **[1839341_0001628280-23-027559_core-20230630.htm:4]** **[1839341_0001628280-23-027559_core-20230630.htm:52]** **[1839341_0001628280-23-027559_core-20230630.htm:44]**.  
- CoreWeave contract 8-K: **[1839341_0001628280-24-009396_finalcorzcoreweaverelease0.htm:0]**.  
- January 2024 production update 8-K: **[1839341_0001628280-24-003172_januarypressrelease.htm:0]** **[1839341_0001628280-24-003172_januarypressrelease.htm:1]**.