LM Funding America Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 14, 2025

Key Takeaways

  • Positive Sentiment: We signed a definitive purchase agreement to acquire an 11 megawatt Bitcoin mining site in Columbus, Mississippi for $3.9 million, boosting wholly owned capacity to 26 megawatts (~1.7 EH) and accelerating ROI for shareholders.
  • Positive Sentiment: Our 2 megawatt immersion cooling expansion in Oklahoma remains on schedule for year-end energization, promising higher efficiency, longer equipment life, and improved margins.
  • Neutral Sentiment: We mined 18.4 Bitcoin in Q2, slightly down from Q1 due to summer curtailments and relocations, but generated $223,000 in curtailment and energy sales to partly offset production dips.
  • Positive Sentiment: Q2 net income turned positive at ~$60,000 versus a $5.4 million Q1 loss and core EBITDA reached $2.6 million compared to a negative $2.8 million, reflecting stronger operational performance.
  • Neutral Sentiment: The company highlighted a significant disconnect between its net book value ($31.9 million) plus Bitcoin treasury and its $11.8 million market cap, underscoring potential undervaluation.
AI Generated. May Contain Errors.
Earnings Conference Call
LM Funding America Q2 2025
00:00 / 00:00

There are 6 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the LM Funding America Inc. Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be a question and answer session.

Operator

To ask a question during the session, you will need to press 11 on your telephone. You will then hear automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Cody Fletcher, director of Orange Group Advisor.

Operator

Please go ahead.

Speaker 1

Thank you, operator, and thank you all for joining LM Funding America's second quarter twenty twenty five earnings conference call. Joining us today are chairman and CEO, Bruce Rogers president of US Digital Mining, Ryan Duran and CFO Richard Russell. For today's call we have uploaded an accompanying supplemental investor presentation which can be found under the Events section of LM Funding's Investor Relations website. Before we get started, note that our remarks today may include forward looking statements. These statements are subject to risks and uncertainties and actual results may differ materially.

Speaker 1

We will also reference certain non GAAP financial measures today. Please refer to our 10 Q filing and our website for a full reconciliation of these non GAAP performance measures to the most comparable GAAP measures. For a more comprehensive discussion of these and other risks, please refer to our filings with the SEC, available on sec.gov and in the Investors section of our website at ww.lmfunding.com/investors. I'll now turn the call over to our CEO, Bruce Rogers. Bruce?

Speaker 2

Thanks, Cody. Good morning, and thank you for joining us today. On August 1, we signed a definitive purchase agreement to acquire an 11 megawatt Bitcoin mining site in Columbus, Mississippi from Greenidge Generation for $3,900,000 or approximately $355,000 per megawatt. The 6.4 acre property comes with low power costs and roughly 7.5 megawatts of mining capacity, along with an additional 3,000 kVA transformer. The acquisition is fully funded from our balance sheet with closing expected on or before 09/16/2025.

Speaker 2

This acquisition meets our M and A criteria and is precisely the type of attractively priced asset we are targeting. Once closed, this site will increase our wholly owned US power and Bitcoin mining capacity to 26 megawatts, equivalent to approximately 1.7 exahash capacity, assuming latest generation Bitcoin miners at 15 joules per terahash. It will also accelerate our expansion timeline compared to greenfield builds, maximizing ROI for our shareholders. We also made progress towards our two megawatt immersion based expansion in Oklahoma, which we expect to be completed by the end of the year. In our view, immersion cooling delivers superior ROI in climates like Oklahoma by mitigating many of the performance and maintenance challenges faced by traditional air cooled systems.

Speaker 2

With these strategic expansions firmly underway, we strengthened our operational foundation and positioned LM funding with a strong growth runway. In terms of our financial results for the quarter, we mined 18.4 Bitcoin, down slightly from Q1 due to curtailments for hot summer months and the relocation of approximately 800 minuteers from our third party hosting site in Kentucky to our wholly owned site in Oklahoma. These S21 and XP next generation miners replaced our S19 J Pro miners and increased our overall fleet efficiency. These miners are also now running on approximately 40% cheaper power, thereby increasing our profitability and mining margins. In addition, thanks to our strategic transition to a fully integrated model, curtailment and energy sales generated approximately $223,000 in Q2, which helped offset some of the lower Bitcoin production and drove higher mining margins compared to Q1.

Speaker 2

We ended the second quarter with 155.5 Bitcoin valued at $16,700,000 about $3.25 Bitcoin per share based on June 30 prices and ended July with a 150.4 Bitcoin valued at $17,800,000 or $3.46 of Bitcoin per share. I'll now hand it over to Ryan Duran, president of our US digital mining subsidiary to discuss our operations in more detail. Ryan?

Speaker 3

Thank you, Bruce. Our vertical integration strategy has given us significantly greater control of our operations. We've reduced power costs, eliminated hosting fees, optimized our fleet efficiency with software upgrades, and unlocked high margin power sales back to the grid. A key milestone late in Q2 was the successful relocation of our remaining machines from a hosted facility to our wholly owned Oklahoma site, completing the final step of our third party hosting exit initiative. Our two megawatt Oklahoma expansion is progressing on schedule.

Speaker 3

The two one megawatt immersion containers ordered in April are expected to arrive in the third quarter, and we expect energization later this year. We believe immersion cooling provides improved margins through higher efficiency, longer equipment life in harsh environments, and the ability to access new markets that are not suitable for air cooling. Looking ahead to the Mississippi acquisition, the facility, currently operating around 7.5 MW, provides an excellent platform to deploy miners we have in storage and apply the firmware optimizations that are already boosting margins at our Oklahoma site. We see a clear path to reach the full 11 megawatts capacity in the coming months, and we look forward to updating you on this progress. With that, I'll now turn the call over to our CFO, Richard Russell, to review the financial highlights for the 2025.

Speaker 3

Rick?

Speaker 4

Thank you, Ryan. For Q2, total revenue was $1,900,000 compared with $2,400,000 in Q1 twenty twenty five. The sequential decline was driven by lower Bitcoin production as a result of curtailments during peak summer months and the relocation of third party host miners to Oklahoma, as Bruce mentioned earlier, partially offset by higher Bitcoin prices. The Q2 twenty twenty five average Bitcoin price was approximately $98,100 as compared to Q1 twenty twenty five price of approximately $93,600. Curtailment in energy sales increased 49% to approximately 223,000 from 150,000 in Q1 twenty twenty five.

Speaker 4

In June 2025 alone, we generated $55,000 in energy sales, and in July, this increased to $66,000. This demonstrates the value of our energy sales program as both a cost offset and a hedge against energy and Bitcoin price volatility. We expect curtailments in energy sales to decrease over the remainder of the year as we enter the cooler temperature month and begin emerging mining. Mining margins for Q2 improved to 41% as compared to thirty eight point five percent sequentially, supported by our transition to our lower cost Oklahoma facility. The quarter ended 06/30/2025, we reported net income of approximately $60,000 compared to a net loss of $5,400,000 in Q1 twenty twenty five and a 6,200,000 loss in Q2 twenty twenty four.

Speaker 4

Core EBITDA for Q2 was $2,600,000 versus a negative 2,800,000.0 in Q1 twenty twenty five and negative 2,300,000.0 in Q2 twenty twenty four. As a reminder, our core EBITDA is impacted by the fair market value gain or loss from our treasury depending on Bitcoin price at the respective quarter end. We finished the quarter with $400,000 in cash, and our Bitcoin holdings increased 155.5 Bitcoin valued at 16,700,000 as of 06/30/2025 with an average Bitcoin value of approximately $107,000 During the quarter, we strategically sold a portion of our Bitcoin holdings to support ongoing operations and fund expansion projects while staying firmly committed to our long term accumulation strategy. Given our disciplined cost management and target growth initiatives, we are confident in our ability to steadily grow our Bitcoin treasury over time, creating long term value for our shareholders. Bruce will now provide some thoughts on our outlook and strategy for the remainder of 2025.

Speaker 2

Thanks, Rick. Our acquisition in Columbus, Mississippi for $3,900,000 fully funded by our balance sheet, represents exceptional value at approximately $355,000 per megawatt. Combined with our Oklahoma expansion, we will have up to 26 megawatts of own capacity, positioning us for accelerated growth while maintaining our disciplined approach to capital allocation. Our immersion mining deployment in Oklahoma is on track for energization later this year, and we continue to search for accretive M and A opportunities in the five to 20 megawatt range, our comfort zone for value creation. We took full advantage of our curtailment and energy sales in the quarter, showcasing the benefits of our power contracts.

Speaker 2

As seasonal temperatures moderate and we begin to energize our immersion systems, we expect curtailment revenue to trend lower while Bitcoin production and fleet efficiency increases, thereby improving our cost per Bitcoin and delivering more consistent uptime. Above all, we remain committed to our Bitcoin treasury strategy. We were early adopters adding Bitcoin to our balance sheet in 2021 and have maintained our huddle approach ever since. Going into April 24 halving, we were among the smallest micro cap miners, yet we continue to operate and grow while many larger peers have been forced to exit, highlighting the resilience of our model and our operational discipline. Lastly, I'd like to draw attention to the fundamental disconnect between our balance sheet and our market value.

Speaker 2

Our net book value as of June 30 was $31,900,000 Our Bitcoin treasury as of June 30 was valued at $16,700,000 and $18,000,000 at Monday's Bitcoin prices. Our fully diluted market cap was $14,700,000 as of June 30 and $11,800,000 as of last Monday's close. We remain committed in our conviction that Bitcoin is the world's premier reserve asset and we continue to explore strategic opportunities to expand our treasury through innovative financing structures, building upon the playbook we were early to adopt. Thank you for your time this morning and your continued support.

Operator

Thank you. At this time, we'll conduct a question and answer session. As a reminder to ask a question, you'll need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Kevin Dede of H.

Operator

C. Wainwright. Your line is now open.

Speaker 5

Thank you, operator. Hi, Bruce, Rick, and Ryan. This is Michael Dodgen on the line for Kevin. Congrats on the Mississippi purchase. And I, just want to see after say, so Ryan discussed deploying the machines you have in storage, first for the, seven and a half megawatts in operation.

Speaker 5

How many megawatts would still be free after deploying these machines? My back of the envelope map puts, like, 1,200 units, a little bit over 4.3 megawatts. Is that accurate? I appreciate that.

Speaker 2

So the top number is 26 megawatts of capacity and then you backfill in using the numbers Ryan rattled off. So 11.5 in Oklahoma when that's finished and then we'll have seven in Mississippi once we own it and then we're expanding that.

Speaker 4

Yeah, so I think to your question, any miners right now that are in storage in Oklahoma will be fully used, absent anything else in Oklahoma, I mean, in Mississippi.

Speaker 5

Okay, so let's appreciate that. How should we think about new miner purchases? What do you have planned for there? First deploy everything? Or are you looking at purchasing any more miners at the time?

Speaker 2

So the Mississippi transaction isn't complete as to miners. So we're not certain there yet. But yes, we'll have additional miners we've got to acquire to fill out all this capacity.

Speaker 5

Okay. That's helpful. Appreciate it. Hop back in the queue.

Operator

Thank you. I'm showing no further questions at this time. I'll now turn it back to Bruce Rogers for closing remarks.

Speaker 4

Buddy. Tom, do you have

Speaker 2

any more questions before I leave?

Speaker 4

Michael?

Speaker 2

Joining us this morning, we'll look forward to speaking to you at the end of this next quarter.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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