HIVE Digital Technologies Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
June 25, 2024

There are 4 speakers on the call.

Operator

Hello, everyone, and welcome to today's webcast reviewing HIVE Digital Technologies Financial Results for the Fiscal Year Ended March 30, 2024. On Slide number 2, I would like to briefly note disclosures. Except for statements of historical fact, this presentation contains forward looking information within the meaning of the applicable Canadian and U. S. Securities regulations.

Operator

These forward looking statements are based on expectations, estimates and assumptions as of the date of this presentation. On the next slide, I'm pleased to introduce today's presenters Frank Holmes, Executive Chairman Aidan Killick, President and CEO and Darcy Duberis, Chief Financial Officer. I would now like to hand the presentation over to Frank Holmes for a macro recap of the quarter. Frank?

Speaker 1

Thank you, everyone. I wish to give you a quick macro recap of Capital Markets, accounting, our results and the granularity, the details, I'm going to leave to our CFO, Darcy Devers, who's probably the longest lasting CFO in the crypto mining industry of consistency and has been through the first having and the second having successfully. And Adi Kulek, who will talk as our CEO, he will give you much more detail on the impact and the difference as accounting. But basically, what's most important is that we continue to have operating income that's positive even after this halving. And we're very thrilled that we've been able to do it from the first halving we've experienced as the first crypto mining company in the world to go public in September 2017.

Speaker 1

And then Ethereum to go away and disappear at the same time, we now have our second having and we've weathered through the storm. So let's talk about the big picture right now look at the next slide. I always like to talk about the DNA of volatility. Investors have to understand that different asset classes based on their maturity, on external risks. And most often it's external risk, not internal risk that create this volatility of countries and stocks and industries.

Speaker 1

And the S and P on a daily basis basically says it's a non event 70% of the time for the S and P to go up or down 1% and over 10 days, it's 2%. Gold is 1% over one day and over 10 days is 3%. And when you go to Bitcoin, you literally go up 4 fold 10 day volatility from the S and P 500. So daily, it's doubled. It's 2% up or down as a non event.

Speaker 1

10 days is 8% and that's quite big. When it comes to the stocks themselves, you can see NVIDIA, it has a much greater volatility over one day, it's the same as Tesla. And over 10 days, it expands to 9% 11%. High is over one day as a non event to go up or down 5%, just like MicroStrategy, but over 10 days, HIVE can go up or down 19%. And now MicroStrategy has a 10 day volatility of plus or minus 21%.

Speaker 1

So you can see these differences. And I think the last time we reported on this, a high was the most volatile over 10 days, and MicroStrategy has now taken to another level. But they've also made some incredible moves in building this epic sized hotel position. And it was great to see, Dell is all of a sudden embracing this idea, this concept of putting on your balance sheet. And Hyve has always done that ever since our initial takeover of a reverse takeover to go public in September 2017, we've been holding cryptocurrency.

Speaker 1

Well, we're proud. We're coming up to the Olympics, and we're proud about having so many firsts like Bolt is always bolting here, the fastest man in the Sprint in the world. And we were the first to go public on the TSX Vancouver, September 2017. We're the first to buy our own data centers and expand and build on them. We're the first to balance electrical grid in Sweden.

Speaker 1

We're the first to develop our own ASIC mining rig with Intel. We're the first to be green energy focused and we're the first to have an AI strategy with GPU chips. Hive is about green energy and sustainability. And that's what I believe greatly and significantly differentiates us from our peers. Focus in Canada, Iceland and Sweden.

Speaker 1

We've been pioneers in the recycling of molecules of electricity. We had a building in Montreal 5 times our size from the same molecule that was used to mine Bitcoin. So we're very proud of being thought leaders and actually creating the leadership in the technology sector. HIVEA has been able to maintain a relatively tight, tight flow. When you compare it to the massive dilution that has happened with our peers.

Speaker 1

When you take a look at issued outstanding basic common shares as of March 31st, I'm amazed that yes, people raised more capital than us, but it's not free and it's been at a huge cost of dilution that over time will start to show up on the value metrics per share. And my experience in the capital markets is that it will show up when the quants really start to analyze 1 mining company versus the other of who has the real value proposition on a per share basis, not top line growth and bottom line growth is a macro number, but what are those metrics on a per share basis? Next please. Bitcoin and Hive outperformed gold in the S and P 500. Now this is going with a 15 month run.

Speaker 1

Hive has put on a wonderful sprint in the past 4 weeks when we look at the data points. But as an asset class, even though it's more volatile, it's done a great job in outperforming the S and P 500 and Spot Gold, which really shocks a lot of people because they focus so much on that short term volatility, not how is Hive done in a diversified portfolio. Bitcoin's volatility is nearing historical low levels. And this has always happened in the capital markets. When Tesla became part of the S and P 500, its volatility dropped dramatically.

Speaker 1

We saw this with gold in 2,004 with the growth of the GLD, which was the 1st bullion ETF. And now we're seeing with Bitcoin, with the creation of the ETF, that the volatility over shorter periods of time will change. Long term supply demand factors will be most significant when looking at Bitcoin as a currency or commodity. But when you look at the stocks, it's different value metrics. And what is the revenue growth on a per share basis?

Speaker 1

What is the EBITDA growth on a per share basis? What are those multiples? And I think as we gone through this having that over the next 6 months, we're probably going to see a reset button on the value drivers on a per share basis when it comes to the miners. And I'm giving you this sort of opinion based on my 40 years of experience with the World of Gold and with the bullion GLD being launched and how it changed the valuation metrics for gold stocks. In the press release, which we you've all read, I think it's important to recognize the differences between U.

Speaker 1

S. Versus Canadian accounting rules. The reason why I bring this up is because Canada was the 1st to have crypto mining companies. First was high and immediately sort of emulating the copy and the model of Hive was Hut 8. And then we had Riot in the US.

Speaker 1

And it's interesting to see that journey that now there's 24 Bitcoin mining companies, and the majority of them are in the U. S. So that when you do that relative comparison, different accounting does create changes and it's just actually trying to recognize that what is the nuance what are the nuances in accounting reporting of IFRS accounting versus GAAP. And once you find the International Financial Reporting Standards and the generally accepted accounting principles in the U. S.

Speaker 1

GAAP, which is both frameworks, major accounting frameworks globally, while they both basically aim to provide transparent and comparable financial reporting. There are several key differences and nuances between them. And I think that's really important that when you look at high versus U. S. Companies who are reporting on GAAP rules, there are big changes.

Speaker 1

And Darcy and Aiden are going to give you more granularity on those changes. I think that in particular is the way things are reported on mark to market. It can have a significant difference. Next, please. When we come to GAAP in the U.

Speaker 1

S, it is more rules based. It includes detailed rules and guidelines for virtually every accounting scenario And this results in less flexibility and provides more specific guidance, which can reduce the level of judgment needed and enhance consistency. So the IRFS is a single model and it provides principle based 5 step model for recognizing revenue from contracts and customers and the focus is on the transfer of control of goods and services. So is this recognizing these difference in nuance? And so how do you actually compare what is unique about HIVE to most of the U.

Speaker 1

S. Peer group? And it was simple when you say, well, we're 100% green energy and they're not, that's simple. But when it comes to accounting, I think the interpretation of mark to market of how you mark to market your Bitcoin position on your balance sheet and depreciation. HIVE has always had an accelerated depreciation, which means that our reported earnings are always going to look less than our peers.

Speaker 1

But we have found, based on operations and based on the new technology of basic ship cycles, about 2 years, not 4 years. So what that means is that our peers depreciate the acquisition cost of an ASIC ship over 4 years and we do it 2 years. If you're going to depreciate a $40,000,000 investment over 4 years, that's $10,000,000 a year makes it simple, dollars 10,000,000 a year. But with HIVE, it's $20,000,000 a year. So therefore, that charge, that non cash charge is going to look like we lost money when it's really accelerated depreciation to better reflect for us in operating the business.

Speaker 1

I do believe that it has shown up in our efficiency ratios, our uptime ratios, of how we manage our facilities, etcetera. Next, please. The other part is just recognizing earnings and bottom line earnings and understanding that operational earnings, cash flow, which is the key for bank financing, and it's looking at this where you have to add investment earnings, realized and unrealized gains and losses from your investments, such as Bitcoin total position, the investments in DeFi, which go down, go back up and they can have sort of what's called realized and unrealized. And with GAAP, you're going to see this, how it flows through is different. And I think that's important for investors to recognize.

Speaker 1

And I believe we're going to walk you through this scenario that if we did apply the unaudited GAAP rules, how well Hive has done will be is really quite impressive on a relative basis. Next, please. Positive corporate margin through the bear market. I'm really thrilled to share with you this visual that even with Celsius going bankrupt, Ethereum disappearing, Bankman frying the industry, Bankman freed, finally getting convicted and going to jail. All those disasters, we were still able to basically squeeze out operating margin, corporate margin.

Speaker 1

And I think that's a real testament of how conservative we run our balance sheet with the inherent volatility, that difficulty of the hashing, the global hashing, more competition coming in, meaning that this is particularly before the having, which was used to be 900 coins a day, now it's 450. But we saw this incredible run up even after the meltdown of Bitcoin going from 60,000 down to 16,000. Fortunately, it climbed back to an all time high in this past quarter. But for investors to recognize, we've been pretty consistent in generating corporate margin. And you can see this past quarter was a huge rebound with the least amount of dilution of shares being issued compared to our peers.

Speaker 1

So I'm very thrilled to share with you on a per share basis how well we did. Next please. So this is an interesting analysis done by an independent consultant. And I think what's for me to share with everyone is that Anthony Power, who works for also for Compass Mining, was a retired accountant, CPA that fell in love with this industry and started doing his own work and due diligence. And all of a sudden, he realized that he had a business, and so he started to change overall his passion for the industry and said, look, if you want to be ranked and compared against the peers, you're going to have to pay because I have to spend so much additional time because there is a proliferation and growth of so many crypto mining companies.

Speaker 1

And so one has to go and look at the overall industry in America, in particular on tax free bonds, which is a $1,000,000,000,000 business and corporate bonds. They have what's called an issuer pay model And the issuer pay model, companies issuing bonds pay rating agencies like S and P and Moody's to evaluate and assign a credit rating to their debt. This model is widely adopted for several reasons. It creates market credibility and consistency, removes a lot of investment banker biases, which are alleged, not that there are always there, but it's sort of this independent person. And then you have a regulatory compliance, the regulatory world is able to oversee.

Speaker 1

But really for the corporation, it's the cost of capital. So we look at Anthony Powers, what he is doing is like S and P or Moody's, providing a relative ranking, to our peers on several different metrics. And I wanna walk you through on several of those metrics. And and I think that's what's important for you, like Moody's and S and P, they don't tell you to buy bond A over B. They do not recommend that.

Speaker 1

They just give you what the credit ratings. And in fact, there's many different types of mutual funds and ETFs that won't buy only A rated bonds or B plus bonds or and that's the when you go to buy those particular funds, you recognize that. That's this is sort of a new industry, and it's good to have this. And what I've found with the capital markets, if you want to get research, all the investment bankers want to do research, they say, but you have to do the ATM with them. That's what they want.

Speaker 1

And I've said day 1 that if there's no research coverage, then I just don't think there's a real passion for how well we're doing what we're doing. And what's interesting is that what we have here is a very driven model. And when we look at Bitcoin mined per exahash per month, Hive does well month in month out. It's always in the top quartile. And most often in this metric, we are 1, 2, and 3.

Speaker 1

So I'm pretty proud about this sort of a metric, but it's all independent. He does not recommend to buy or sell any of these companies. He just gives you a snapshot that's very important to recognize. Next, please. This is another metric and it's looking at revenue by energized hash rate in May of 2024.

Speaker 1

And I'm thrilled to share with you, we did much better. And several of these companies in the far right side, they have a much bigger market caps than Hive and their revenue by energized hash rate is lower than ours. So this is a very favorable metric on a relative basis. Next, please. Ranked by utilization in May, we were number 2.

Speaker 1

So that means that our utilization was 94%. As you can see, companies that have seen to be a big component of energy and taxes had a lower overall utilization rate. And some of these have a partnership balancing the grid, and that's really positive for the overall crypto industry and the energy energy. But I'm really happy to share with you that, the team has done a phenomenal job. So Bitcoin Mining Evaluation metrics, hype ratio per Bitcoin mine, and basically saying, okay, we've used Hive as 1, who has a much greater valuation?

Speaker 1

That's basically saying, what is the market cap per Bitcoin mined? And if Hive is number 1, is the number as a base, then when you look at some of these other names, the most expensive would be Marathon. It trades at 11 times the valuation for the same Bitcoin that's mined. And then you can see comes in Riot and CleanSpark who have been darlings, in the US for a particular tech funds that want to get exposure to it. And you can see this relative rankings is quite significant in you're paying for a much higher valuation for that same Bitcoin mine.

Speaker 1

These are all other companies are great management, but it's sort of nuances that happen in the capital markets and GARP investors are always looking for where do I find the growth at a reasonable price in that industry and I would biasly say Hive. Next, please. May BTC sold percent of production. This is an interesting way of looking at what you're doing with your total amount. And as you can see, some of the other companies I've been building, but Hyve is clearly here in the bottom half, bottom quartile.

Speaker 1

I would say about all the 24 companies, these are all the companies that are paying for the rating services of Anthony Power. And most of the other companies are selling 100% of their production to cover their costs. And this is after the having, and I'm impressed with what the team has been able to do. This is another perspective that you can see of just analytics of looking at the share price, the total energized hash rate, the operational hash rate in April, planned hash rate, total BTC produced in April, BTC per exahash in April. And it's just a good way to look at relative valuations.

Speaker 1

And I think that that's what the service that this industry has. And maybe as this industry evolves, that there'll be a ranking and rating by Moody's and S and P. But right now we have to rely on, Anthony Power, Power of Mining and doing these analytics. But what you can see here is our utilization rate is quite high. It's a significant testament to the efficiency of the HIVE team.

Speaker 1

Well, HIVE's HBT strategy and AI vision for growth, we started off with a quarter 1,000,000 a quarter, got up to a $250,000 a month. We have bought H100s. We have been deployed. We are looking for huge opportunities for energy. It's a big it's been a big challenge to find green energy to get size in the Bitcoin mining sector.

Speaker 1

And it has been a challenge on finding data centers, but we're getting better at analyzing and doing the due diligence on looking at these facilities. So I'm very happy that this sort of growth, this vision is in place and hopefully by our year end this year that we'll be able to get up to a $250,000,000 a day. It's all hands on deck doing this and we're happy that we're throwing out free cash flow from our NVIDIA chips, which we basically earned its money back in mining Ethereum and now focus on the build up and the AI boom. What I want to turn over to hardworking Mr. Dynamite, Darcy Deberis to talk us, give us a snapshot of growth in the financials and then Aydin will come on and give a wrap up of a much more both these guys will give you the granularity, especially for the analysts, what they need of looking at the industry.

Speaker 1

Thank you all for being cheerleaders and supporters of our vision and staying green and mining and holding as much Bitcoin as possible and stay tuned to the station. We have a lot of excitement growth in the future. Thank you.

Speaker 2

Thank you, Frank. As usual at this point to the presentation, I will be taking you through a snapshot of the period, looking at the most recently completed quarter and some financial indicators. First of all, I'd like to remind our stakeholders that our earnings are comprised of our operational earnings or cash flow plus our investment earnings, which includes realized and unrealized earnings, which often includes non cash charges. Moving on to the next slide. So mark to market and accounting is a practice that involves adjusting the value of an asset to reflect its value as determined by current market conditions.

Speaker 2

The market value is determined based on what a company would get for the asset if it was sold at that point in time in the open market. Mark to mark losses are paper losses generated through an accounting entry rather than the actual sale of a security. The swings in digital assets impact paper profits and losses each quarter. So our Bitcoin digital assets do generate unrealized gains and losses each quarter depending on the movement in Bitcoin during the period. It is important that investors understand the differences in operating earnings or losses in addition to mark to market paper gains and losses each quarter.

Speaker 2

Non cash charges is a write down or accounting expense that does not involve the cash payment. These are items like depreciation, amortization, depletion, stock based compensation and asset impairments when those happen. These are common that reduce our earnings but not our cash flows. Moving on to the next slide. During this most recently completed quarter of March 31, 2024, we recorded $36,900,000 of revenue and $16,200,000 profit in adjusted EBITDA, driven by a production of 6.58 Bitcoin equivalent mined and increased Bitcoin prices during the quarter.

Speaker 2

On the next slide, you can see we continue to be proud having a very healthy balance sheet. Our cash position stood at $9,700,000 at March 31, 2024, along with an additional $161,600,000 dollars in digital currencies comprised almost entirely of Bitcoin. This digital currency position is over double from our position at the end of the previous quarter, driven mostly by the increase in Bitcoin prices. We also had $6,900,000 in amounts receivable and prepaids, a decrease from the prior period. The total market value of our strategic investments stayed steady during the period at 7,000,000 dollars We maintain a strong net cash position and healthy working capital to fund our operations and growth objectives.

Speaker 2

With a current ratio, which is our current assets divided by our current liabilities of 6.8, which is extremely strong. Next slide, please. Switching gears and taking a look at our gross operating margin on a year over year basis comparing the Q4 versus the Q4, our gross operating margin, which equates to our total revenues minus direct operating and maintenance costs, increased in absolute dollars to $16,300,000 or 44 percent in the most recent quarter compared to $4,100,000 or 22 percent in the prior year compared of quarter. Gross mining margin is also partially dependent on various external network factors, including the high mining difficulty we are experiencing, the amount of digital currency rewards miners receive and market price of the digital currencies at the time of mining, which were on average higher than the prior comparative period. In this most recent completed year, we are reporting a net loss of $0.57 per share compared to a net loss of $2.85 per share reported in the March 31, 2023 last year.

Speaker 2

Now to note, the net loss reported by Hyve is done using our regulatory requirement of IFRS or International Financial Reporting Standards, as opposed to U. S. GAAP, which quite a few of our competitors use. One of the main differences between IFRS and US GAAP is the treatment of revaluation gains on digital currencies. U.

Speaker 2

S. GAAP allows these gains to be included in earnings per share calculations, which IFRS does not. If Hive used U. S. GAAP and included these gains, our earnings per share calculations, That was gains for the year were $77,300,000 So taking those into account, if we were using U.

Speaker 2

S. GAAP, that adjustment will result in our earnings per share being CAD0.29 per share profit as opposed to the loss that we are required to report under IFRS. Moving on to the next slide, Taking a look at our year over year revenue, we generated total revenue in the Q4 of fiscal 2024 of $36,900,000 versus $18,200,000 in the previous year Q4. The increase in revenues versus the same quarter in fiscal 2023 can be attributable mostly to the average Bitcoin price, which is double what it was last year, even with the ever increasing bitcoin difficulty hash rates over the past year. As mentioned previously, our gross mining margin, which equates to our revenues minus direct operating and maintenance costs, increased in absolute dollars to $16,300,000 in the most recent quarter compared to $4,100,000 in the prior year comparative.

Speaker 2

Turning to the next slide, comparing our current fiscal Q4 quarter to the previous Q3 quarter, we generated revenue in this Q4 of fiscal 2024 of $36,900,000 dollars versus $31,300,000 in the previous quarter. The increase in revenues versus the prior quarter was impacted by an increase in the price of Bitcoin. Our gross operating margin also in absolute dollars increased to $16,300,000 in the most recent quarter compared to $11,300,000 in the prior quarter comparative. The increase in gross mining margin versus the prior quarter was positively impacted by the increase in the price of bitcoin in this quarter. Looking at our financial metrics on the next slide, our adjusted EBITDA in this Q4 of fiscal 2024 was $16,200,000 versus an adjusted EBITDA of $17,400,000 in the prior quarter.

Speaker 2

I will highlight again that adjusted EBITDA is a non IFRS figure. In the Q4 of fiscal 2024, we experienced a loss of $3,500,000 compared to a loss of $7,000,000 in the prior quarter. At this time, I want to thank our loyal stakeholders and turning the presentation over to our President and CEO, Aidan Killick for an executive update. Aidan?

Speaker 3

All right, Garsten. Thank you for that summary. I think it's been a strong year and a great quarter. So let's just zoom out and look at an operational view of what we've accomplished at Hyve. So in the last 12 months, our fiscal year, we mined over 3,100 Bitcoin with clean and green energy.

Speaker 3

So you've seen difficulty substantively increase effectively almost doubling in that period. Nevertheless, we maintained consistent production through the year. And it's worth noting in the first quarter of 2024, while our production was a little bit lower than the winter, it's because we were upgrading our existing fleet to not grow our exahash, but rather to increase our efficiency, right? And we did that strategically going into the having, so we could approach our target 25 joules a terahash efficiency. More on that later, next slide.

Speaker 3

Over the last 3 years, you could see our revenue here in 1,000,000 and our gross mining margin. So the bear market, we made it through that and we mined profitably through those bear market again having high uptime, strong efficiency, low G and A, just really pound for pound, I believe Hive is one of the best miners in the industry. And now things are on the uptick. And by the way, we navigated the Celsius bankruptcy, the Ethereum merge, FTX bankruptcy when Bitcoin hit 16,000. And we still look at those green bars, we still mine profitably even in the worst throes of the bear market.

Speaker 3

And now this quarter, dollars 16,000,000 of gross mining margin, which is fantastic. Next slide. This is that same data just with a bit more granularity. So you could see that things here are really on the uptick. This really covers the last year and a half.

Speaker 3

So again, coming out of the last few quarters, strong uptick in gross operating margin of $16,300,000 And by the way, quarter over quarter, our G and A is usually about $3,200,000 right? So if you want to look at how much money are we making as an operating business, including G and A, you could take any one of these numbers here and subtract $3,200,000 And so fundamentally, we make money as a business on a cash basis. And I know Darcy did a great job of covering everything on IFRS accounting principles. But when you strip up because we have subsidiaries and there's all these non cash items and mark to market, etcetera, when you just look at our gross mining margin, subtract our corporate G and A, right, we still make money as a business, which is fantastic in my opinion. Next slide, please.

Speaker 3

Now on a quarter over quarter basis, this is a Bitcoin production. So you do see this data is similar to what we showed on a monthly, but this actually shows you 6 quarters. So what I actually wanted to emphasize on this slide is that difficulty has grown by almost 100% in this period and quarter over quarter increased 22%, right? So even though difficulty had been steadily increasing over these last 6 quarters, our production was quite steady and in fact grew into the 800 bitcoin a quarter range. And by the way, this is all post ethereum merge.

Speaker 3

And again, in this last quarter, while there was less bitcoin mined overall relative to the last quarter, our fleet efficiency improved and therefore, we had a great gross operating margin. Next slide, please. Now, I wanted to just shine a little bit of light on this. Frank commented, it's very interesting. So I'd be the 1st public crypto miner ever we're Vancouver head office company, our home exchange is the TSXV, yeah, we're on NASDAQ, yeah, we're on the Frankfurt Stock Exchange, but there's a key difference I want to illustrate here.

Speaker 3

A lot of our peers have U. S. GAAP accounting treatment and we do not. We're under IFRS because that's accounting treatment for Canada. Potato, potato.

Speaker 3

I'm an engineer. I'm not an accountant. So I feel more comfortable commenting on this. It's just a different treatment, right? Same business, different treatment.

Speaker 3

We could literally and I think some of our peers, I think Hut 8 now does U. S. GAAP, even though they started in Canada, allows you to realize digital currency revaluation on your income statement. Right? I'm going to say that again.

Speaker 3

Digital currency revaluation can be realized on your income statement if you follow U. S. GAAP. Now on ours, because we're IFRS, it shows net loss of $51,000,000 But if you show our digital revaluation, which is $77,000,000 by the way, that's the center bar, our net income goes up to 25,000,000 dollars And so when you look at an earnings per share, it's usually done on the net income. On our financials, you can see this $25,000,000 figure, but that comes in below the line and that's called comprehensive income.

Speaker 3

But again, if we were doing U. S. GAAP, we'd actually have $0.28 earnings per share. So I just wanted to point that out. And so that way for the analysts and all the shareholders out there, if you want to do an apples to apples, you're better off looking at the comprehensive income comparing to a lot of our peers' net income.

Speaker 3

So let's hop to the next slide. EBITDA is another helpful way to compare our peers. Adjusted EBITDA strips out non cash charges such as share based comps. Sometimes you'll have tax provisions, which are non cash items and derivative liabilities. So the adjusted EBITDA is a good way to do a fairly apples to apples comparison amongst our peers.

Speaker 3

So again, rock solid quarter, dollars 16,000,000 adjusted EBITDA, previous quarter, dollars 17,000,000 EBITDA is up quarter over quarter as well. But if you look at that for the entire year, next slide, you could see that our adjusted EBITDA was $37,000,000 and our EBITDA was $25,000,000 which is very similar to that comprehensive income figure I gave you earlier. So it was a solid year for Hive. And I'm going to point this out for a second here. You look at we're trading at roughly $300,000,000 market cap.

Speaker 3

We have over $150,000,000 of Bitcoin on the balance sheet, right? We have over 2,400 Bitcoin on the balance sheet. So that pegs our enterprise value at maybe $100,000,000 if $130,000,000 right? So on an adjusted EBITDA basis, we're not even trading at 4x, right? And we're not talking 1 year forward.

Speaker 3

This is our adjusted EBITDA for the last 12 months. So, I think Hyve is an amazing value proposition. We're well undervalued amongst our peers right now. Let's look at that next slide. And here it is spelled out, getting a very accurate enterprise value looking at cash, debt and value Bitcoin holdings.

Speaker 3

And this is market cap as of June 20, 2024. And so you'll see that the enterprise value relative to our EBITDA and by the way, this is quarterly EBITDA now, I just want to clarify, right? So this is a quarterly adjusted EBITDA of $16,200,000 dollars You could see that we are trading at a 3.3 multiple by far the lowest multiple in our industry. You see our peers 12, 14, 20, 38x the adjusted EBITDA multiple. So Hive is an absolute bargain right now.

Speaker 3

And we've got solid fundamentals, profitable business, positive corporate margin even after G and A. Let's look at the next slide, please. And so as we were we found ourselves rerated based on a multiple of revenue, we were quite curious to see how our revenue multiple looks compared to our peers. And again, we've got the best value in the industry by a long shot, 1.4x enterprise value to our annualized revenue. Our peers, 4, 5, 6, 7, 8, even 9 times on a revenue basis.

Speaker 3

And so it really makes me think if a company is going to be rerated based on a multiple of revenue, that might make sense if they already are trading at a really high multiple, but we are trading at a bargain. It doesn't matter how you slice it. I think this and I see this confidently, it's clear. Hive is the best bargain in the space bar none. And we're a great operator.

Speaker 3

We've got amazing operational efficiency and uptime, great fleet efficiency coming out of the halving. We'll talk more about that in a moment. Next slide, please. So what we've also looked at is the next 12 months. So we know that a lot of the analysts will have their projections and revenue and adjusted EBITDA for the next 12 months.

Speaker 3

And so running that same analysis, this you see here that we're again trading at a bargain relative to our peers. So we've got 5.5x and some of our peers are trading at 10, 15, 20x. So again, no matter how you slice it, we are the best bargain in the industry. Next slide. On a earnings per share basis, right, this is for the quarter, right.

Speaker 3

Earlier, we were going over the year. So $0.18 earnings per share on adjusted EBITDA basis for the quarter, which stacks up very respectively against our peers. And keep in mind, our shares are trading at $3 right now. Some of our peers are trading at $10 or $20 So you want $0.18 a share yield on a $3 stock or $0.18 a share yield on a $20 stock. So the other point is that we have the tightest flow in the industry, 88,000,000 shares out.

Speaker 3

This is in an industry where the average is 243,000,000 shares out. So we've accomplished this all with the least amount of dilution in the industry as well. Next slide, please. Upgrading our fleet, we've got 1,000 S21 Pros that we announced recently and our recent order of S21s, our June batch is getting upgraded to S21 Pros for free. So that's exciting.

Speaker 3

So again, this is all within our existing data center and we've been upgrading the older 38 joule per terahash machine so that our fleet efficiency is 25 joules a terahash and our target operational efficiency is 5.5 exahash overall, which is putting us in a great position post having where we're able to mine profitably. Next slide, please. You can see here a little bit of post having commentary. So, we actually mined in May 119 coins, which is actually a little more than half of what we mined in April. Again, we've had the RS21s coming in and averaging about 4 coins a day, right, with Bitcoin where it's at, it's over a quarter 1000000 a day in revenue.

Speaker 3

We're operating profitably even post having and I'm very proud to say this, and we worked really hard to do this to upgrade our fleet, to keep our energy costs down. We've always kept our lean G and A and to make sure that on an operating income basis, we're still making money as a company post having, which again we did with little to no dilution. And let's look at that next slide. Here's the real kicker. We actually grew our HODL month over month.

Speaker 3

And you look at our obviously, our year end was $22.87 We actually managed to increase our model in May, right? So if you look at our May production report, it was 2,451, right? We almost increased our HODL by almost 200 Bitcoin in the last 2 months, and we're talking post halving. So I'm incredibly proud of my team. I work closely with Darcy and Frank.

Speaker 3

We've got a rigorous treasury management program as well as selectively selling Bitcoin. And again, you know, just being very prudent and conservative with our share treasury. We haven't done these big dilutive bought deals in the industry. There's always that money if you want to dilute, but it's the path less taken. It requires more fiscal discipline, but we managed to pull it off.

Speaker 3

So low dilution, growing our HODL, profitable post having best value in the entire industry bar none, no matter which way you slice it, adjusted EBITDA, revenue, 12 months forward, you name it. Next slide, please. Just a quick summary of the May production press release. Again, we covered 119 Bitcoin, ended May with 5 eggs of Hash. And again, well on our way to our 25 joule per tera Hash efficiency.

Speaker 3

Next slide, please. So on top of all that, we also have our AI business, which has obviously been a really exciting part of the Hive story. I know Frank covered it. So we're well on our way. We're sort of we had this 4 step vision board, 250 ks a quarter, 250 ks a month.

Speaker 3

Well, this last quarter, we did 1,800,000 in our HPC business. So that puts us right between step 23, trending upwards. And, yeah, so more on that now. We are just giving the market just a little glimpse and we have some exciting things in store as we work on building out this business. Stay tuned for more updates from Hyve.

Speaker 3

Next slide. Please check all our socials. We've got a very active Twitter and of course our press release to find out the latest and greatest of what's happening at Hive Digital Technologies. My name is Ivan Killick, President and CEO and I look forward to speaking with you. If you have any questions 1 on 1, please arrange a meeting.

Speaker 3

Thank you and have a great day.

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Earnings Conference Call
HIVE Digital Technologies Q4 2024
00:00 / 00:00